State-run banks may get flexibility in deciding employees' salaries

Topics Banks | PSB

The 11th bipartite wage settlement talks between the Indian Banks’ Association (IBA) and state-run banks have included a new formula under which the latter will be given the flexibility to pay their employees in accordance with their profitability and capacity to absorb higher wage costs.

This proposal featured in the talks between bank unions and bank managements, which resumed on June 21 under the aegis of the IBA, after a three-month break for the Lok Sabha polls. The next round of talks is expected to be held after the Union Budget.

The fresh approach, centred on the ability of specific state-run banks to absorb a wage hike, will mark a significant departure from the practice followed so far. The banking industry-level wage pacts have been one-size-fits-all exercises ever since the first such settlement was hammered out 53 years ago on January 19, 1966, and which came into effect from April 1, 1966.

“The capacity to pay is an important ingredient while deciding the amount of wage increase. A new formula has been proposed by which there will be a minimum increase in the wage up to a certain percentage; over that, it will be market-driven wage, based on a bank’s profitability and paying capacity,” said a senior executive involved in the talks.

While the granular details are not clear, a proposal to introduce variable pay is on the table. This is to be based on banks’ return on assets and operating profit, but a few union leaders had dismissed the concept.

The talks, which resumed this month, also saw all four bank officers’ unions — All India Bank Officers’ Confederation (AIBOC), All India Bank Officers’ Association (AIBOA), Indian National Bank Officers Congress (INBOC), and National Organisation of Bank Officers (NOBO) — hold separate talks with the IBA — a first-of-its-kind.

Their heartburn is over the fact that while State Bank of India , Bank of Baroda, Punjab National Bank, Union Bank of India, and Indian Bank have given the mandate for talks up to the level of senior manager (Scale III), other state-run banks are for all seven scales up to the general manager to be covered under it.

Cracks first started to appear in the United Forum of Bank Unions — an umbrella organisation of both workmen and officers’ unions — in its talks with the IBA, with the AIBOC and the NOBO being peeved that the deal will only cover those up to the rank of assistant general manager. The officers’ unions wanted it to include deputy general managers, and general managers as well. The IBA, on its part, is of the view that officers in these senior ranks are not unionised. Two more officers’ union — the AIBOA and INBOC — have now taken a similar position. As in let’s get what the mandate is all about; and up to what level it is to cover.

Sources said that separate packages will now be worked for the five workmen’s unions — All India Bank Employees Association, the National Confederation of Bank Employees, Bank Employees Federation of India, Indian National Bank Employees’ Federation, and National Organisation of Bank Workers; and for the officers — the AIBOC, AIBOA, INBOC, and NOBO. 

This is because the concerns of the workmen and officers’ unions are completely different.

The 11th bipartite wage settlement talks have been on since May 2017. The tenth round in May 2015 (for the five-year period November 2012-17) saw a 15 per cent increase in wages. In the latest round, the offer — as it stands — is for an 8 per cent hike in wages, an improvement from the 6 per cent in the earlier rounds of talks. 

The unions so far had been firm that the starting point has to be the 15 per cent given out under the tenth settlement, but these stated positions could change.
  • New formula will allow better state-run banks to pay higher salaries
  • Separate packages for workmen, officers on cards
  • Next round of talks in the fortnight after the Union Budget on July 5
  • The 11th bipartite wage settlement will mark a break from the prevailing practice since 1966


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