Wage Revision in Banking Sector, Business Manager

Business Manager, HR magazine, March, 2013

Despite the Govt’s conciliatory efforts, nearly a million bank employees joined trade unions’ nationwide strike on 20-21 Feb. with demands of early age revision.

Wage Revision in Banking Sector

M G WARRIER, Former G.M., RBI, Mumbai

“The need of the hour is a national policy on prices, wages and income that looks beyond adverse inflation figures, which are eruptive symptoms of an ailing economy.

The Centre should perhaps consider a quick review by such an expert group which should go into the adequacy of wages, minimum and maximum remuneration across sectors.”

The wage revision for about 8 lakh bank employees (estimated 7 lakh employees in public sector banks and about one lakh employees in old private sector banks) happens at a regular periodicity of 5 years under the aegis of Indian Banks Association (IBA). The last revision was effective till October 31, 2012. Usually, the wage negotiations in the banking sector draw public attention when the trade unions and IBA fail to reach a settlement initially and employees go on a couple of token strikes and later declare an ‘indefinite’ strike, by which time government will persuade the IBA to fast track negotiations and come to some amicable settlement to which trade unions will agree. This has become a routine and a deviation to professional approach to such public-sensitive issues is overdue.  The advantages of a delayed settlement for institutions is buying some time to actually make the enhanced payments and for the trade unions, the comfort of collecting a higher amount of levy from the higher amounts of arrears that will be received by employees. The wage settlement for the current period (November 1, 2012 to October 31, 2017) is likely to be different from the above pattern, as Reserve Bank of India (RBI) has stepped in, to ask public sector banks to start make adequate provisioning against liabilities the banks will have to meet on account of wage revision from November 1, 2012 from January-March, 2013 quarter and IBA has almost committed to reach an agreement with unions on wage revision by March 2014. This is a move in the right direction.   

The next wage settlement in banking industry will have to factor in, among other things, the following ground level realities:

i)                    After the introduction of New Pension System (NPS), there are two categories of employees in banks. The claims of employees covered by NPS for higher wages factoring in the reduction in real wages on account of subscription to NPS and the need to save more to ensure income comparable to the pension available to the employees who joined earlier than them are genuine.

ii)                   Industry parity. Workmen staff/Officers doing similar work in different categories of banks will have to be given comparable wages, additional compensation being provided for extra work.

iii)                 Outsourcing. Let us not forget Maruti experience. Employees who are on regular employment of banks, even on contract, will have to be given clarity about their absorption in the institutions and a living wage till then. Circumventing labour laws is not in the long term interest of industry.

iv)                 Institutions will have to revisit the recruitment policy (right from basic qualifications needed), career progression (traditional path is no more relevant or practical) and placement policy (rural posting, need for special skills etc.)

While on the subject of wages, thought goes to certain related India-specific problems concerning Human Resources Management and Development (HRMD) in general. These emanate from factors like acute unemployment situation which is exploited by employers (or hirers?), built-in social disparities like uneven development, varying literacy and poverty levels and several geographical and political factors. Enlightened employers in the government, public sector, media and certain groups in the industry factor in the employees’ minimum needs for maintaining a lifestyle commensurate with the jobs they do in the remuneration package and provide social security benefits like pension, provident fund and medical facilities. This, unfortunately, covers a very small portion of the country’s workforce.

It is evident from the pattern of asset-formation that with the exception of a small percentage of employees who could come under the category ‘intellectual workforce’ who could reach middle management level and upwards, a majority of workers even in the lucrative sectors like services, construction, mining, IT and processing are paid starvation wages. While everything else can be safely left to the mercy of the market forces, government has a social responsibility to protect employees’ interests by providing a guidance on minimum wages for unskilled and skilled workers in different sectors, factoring in workers’ minimum needs and employers’ paying capacities. The need of the hour is a national policy on prices, wages and income that looks beyond adverse inflation figures, which are eruptive symptoms of an ailing economy.

 For sometime now, we are being told that regular employment which encourages trade unionism and resultant collective bargaining is the culprit stifling growth in India. Entrust responsibilities to private sector, allow freedom to outsource and do not worry much about the niceties like job security and social justice or equity, we are being advised by people who have built empires around them. There is an obedient government in place, who, in turn, tells us that poverty will be alleviated, once the rich are adequately rich, as there is going to be the trickling effect, once the pot is full! Till then, poor will be forced to survive through sprinkler irrigation strategies like one thousand rupees a year swavalamban and doles like that. The new Direct Cash Transfer is a reformed combo avatar of this concept. If you legislate to equate contract workers with regular employees, or for that matter, public sector executives with private sector bosses for compensation, where will the private sector go for expertise and making profits or how governments will find the margins for winning elections? Impossible.

Last year one CEO together with his wife accepted a total salary of Rs128 crore. No idea, what percentage of the company’s profit this amount worked out. Another company which finds it difficult to manage its borrowings in thousands of crores has a CEO who spends in crores to maintain his lifestyle. Maruti hiked the pay for its Manesar unit employees by 50 to 75 per cent in September. Nurses in several hospitals in India are paid starvation wages, while the hospitals they work for make huge profits.

Time is opportune for a National Commission on Remuneration Practices. The Centre should perhaps consider a quick review by such an expert group which should go into the adequacy of wages, minimum and maximum remuneration across sectors, their relationship to lifestyle needs of employees and paying capacity of employers and the need to factor in social security needs like healthcare and old age care in wages. The findings of such a study will help government in providing some broad policy guidelines to be followed by industries across public and private sectors, while negotiating wage structure. Transparency in policy will go a long way in reducing sporadic eruptions emanating from suppression of genuine human aspiration for a reasonably comfortable life, safe and secure in all respects.

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