Bank wage talks get a jolt as IBA offers lowest-ever increase

The eighth bipartite wage negotiations in the banking industry have virtually come to a standstill with Indian Banks’ Association (IBA) offering the lowest-ever percentage wage hike. IBA sources said that the association has offered a wage increase of just 7.4 per cent of the total establishment expenses as on March 31, 2002, which will cost the banks an additional annual expenditure of around Rs 717 crore. The unions of the bank staff and officers, on the other hand, have demanded a hike to the tune of 20 per cent of the total establishment cost, which works out to an additional annual expenditure of around Rs 1,937 crore.

The total establishment expenses in the banking industry as on March 31, 2002, work out to Rs 9,683 crore. However, the figure excludes the industrywide voluntary retirement scheme, which had cost the banks over Rs 600 crore. Incidentally, the earlier i.e. the seventh bipartite wage agreement came to an end on March 31, 2002, and the next i.e. the 8th bipartite wage agreement will be effective from April 1, 2002.

IBA sources said the main contention of the association is that the total establishment cost as on March 31, 2003, at Rs 9,683 crore excludes the massive expenditure of over Rs 600 crore incurred due to the VRS payout. ‘‘All the banks are still bearing the amortised portion of the VRS expenditure. In such a situation, if they are forced to maintain parity with the wager hike in earlier bipartite agreements, the balance sheets of many of the banks will be under pressure in the following financial years,’’ an IBA associate said.

However, the agreement put forward has not been accepted by the United Forum of Bank Unions (UFBU), which is the umbrella organisation of nine officers’ and staff associations operating in the banking industry. The UFBU convenor, Ashok Kumar Dutta, said while IBA is highlighting the additional expenditure on account of VRS, it is neglecting the fact that the number of bank employees to be covered under the eighth bipartite wage agreement is fewer than covered under the seventh bipartite agreement.