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Tuesday, January 27, 2015

Banks, unions near deal on wage hikes - AIBEA

Banks, unions near deal on wage hikes

Mumbai: Anup Roy 26 1 2015
Tenth round of the negotiation process—which happens every five years—is
now on; IBA has indicated that it will be closed by mid-February

According to their leaders, the pension corpus of all nationalized banks and associate banks as on March 2014 was at Rs.1.14 trillion, and its interest earnings was about Rs.8,557 crore, against the pension outgo of about Rs. 7,235 crore. Hence, the surplus of Rs.1,322 crore can be included in the wages.

The operating profit of banks, too, has increased in the last five years. The 24 listed public sector banks had an operating profit of Rs.2.57 trillion in March 2010. It has increased to Rs. 4.72 trillion in fiscal 2014. Average business per employee in this period has also increased toRs.14.36 crore in fiscal 2014, from Rs.9.15 crore in fiscal 2010.

These factors are prompting the unions to demand a higher increase in wages, even as bankers say numbers don’t tell everything. No banker wanted to be identified for the story, but they pointed to the capital pressure on banks. Banks have barely managed to maintain capital specified under Basel III norms and with an expected credit pickup, they will need more capital, they say.

Bankers say demands such as five-day working week, housing for all or full rent reimbursement are unreasonable. However, IBA has agreed to provide full reimbursement on medical expenses.

Analysts say the bad debt situation in public sector banks and additional provisioning for pensions have tied banks’ hands.

According to Rakesh Shinde, analyst with Bonanza Portfolio Pvt. Ltd, the present wage offer is handsome given the current context. He expects the offer to be sweetened by a maximum of 1-1.5 percentage points.

“Public sector bankers do enjoy a number of facilities that their private sector counterparts don’t enjoy. The perks and job security offered to PSU bank employees don’t compare with private sector peers, who have a much higher productivity ratio when compared with public sector bankers,” Shinde said.

As per latest RBI data, profit per employee in private sector banks was Rs. 10.7 lakh in 2012-13, compared with Rs.6.3 lakh for public sector banks. Meanwhile, employees are getting restless.

“Given the kind of hours we put in, the pressure we handle, we deserve a hike of 25% and nothing less. But we know the hike will be a lot less,” said a mid-level manager with a public sector bank in Mumbai. The banker expects a hike of 15%.

“My take home is Rs. 55,000 per month in a city like Mumbai, where I am not able to save anything. People who work in the private sector in my level earn four times this,” said the manager.

Even though employees get all the arrears, it won’t carry interest. Employees participating in strikes also lose the day’s salary. 

Venkatachalam acknowledged that the pressure is immense but added the negotiation cannot be settled at the IBA’s terms. “If they are unwilling to increase their offer, we will intensify our strikes,” he said. 


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