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Wage Revision:10th Bipartite Settlement:

Bank Employees Stand for 25 % Salary Hike is Just and Sacrosanct! : Complete Book

By: S.SRINIVASAN, Retired Bank Unionist,      Update:07 Sep 2014

Bank Employees Stand for 25 % Salary Hike is Just and Sacrosanct! : Complete Book    - by S.SRINIVASAN, Retired Bank Unionist

 

 

This approach paper is an attempt by an retired bank trade unionist (retired very recently) having over four decades of experience in contributing substantially to bipartite settlements with independent insight and commitment in the past ,including writing script for the 10 bipartite charter  on16-06-2012 itself , which received wide publicity, acknowledgment, appreciation accolades in many social networking sites

 

The goal of this dissertation in this approach paper is to enhance the awareness of the bank employees and their well wishers to generate inquiring minds, with view of galvanizing strategies to settle the present impasse in the ongoing 10th bipartite negotiations. The goal is to prepare and merge their hearts and minds to resist, repulse the intransigence of IBA /Government combine in denying bankers just wage revision by considering their demand of minimum 25 % that too in pay slip components as against the tradition till 9th bipartite of settling wage load on establishment expenditure.

   

The author to the best of his ability enumerated things and events from an historical perspective. This paper for obvious reasons cannot be a full commentary of the finished and unfinished tasks we have.

 

The author is not merely pro or anti establishment.  This written with approach to develop and drive a self critical and critical viewpoint with view of generating, thinking, enquiring minds, enhance awareness and learning. In this process we learn, unlearn and relearn.  It is with this sole objective this approach paper is presented.

 

The history of collective bargaining also highlights that the management as well as the unions have always operated with a win lose strategy and both the parties have attempted to BAR the GAIN (rather than bargain) of each other. As a result, there have been various strikes. In their absence the industrial relations have been far from peaceful. The management—workers and earlier union members allege—does not accept the idea of collective bargaining in its true spirit.

 

Even in the ongoing negotiations in the 10 bipartite we find this unhealthy bar the gain trend, against the ethos of true biapartism.  While the unions have reduced their demand from 30%, IBA a has moved an inch from 10 % to 11 % only during the last round of negotiations on 13-6-2014 .There after stalemate continues

Thereafter we find a spectacle of negotiations across the table totally stalled, put to comatose and is replaced with exchange of three letters between the parties much to disgust and disenchantment of the bank employees. Thus the 10th industry-wide bipartite wage settlement negotiations in the banking sector have dragged on for more than one-and-a-half years now without making much headway.

 

Only a meaningful dialogue is regarded primarily as a means aimed at achieving these goals. It is an effective tool for solving collective challenges by creating the structure and environment suitable for more efficient problem-solving.

 

Our public sector banks are major foundation our economy and with changing times they need to rejuvenate themselves like the private or foreign counterparts, thus giving India a new momentum. So I genuinely believe, reasonable but just wage structures paripasu with the peers, healthy and professional work culture is the utmost requirement for public sector banks today. A healthy wage structure and service conditions   shall inspire further the bank employees to be productive and tech savvy will bolster their motivation to be more fruitful. Periodical appraisals and recognition for good work will lead to greater returns rather than making it a typical slow growing, take-for-granted government job. It’s a dismal picture that once a job of reputation is losing its value. So nowadays there is huge change in career priorities of youngsters, they prefer to experiment with their careers, prefer central government jobs because of improved pay structure prevalent today and further value additions the anvil sequel to the seventh pay commission rather than settling and languishing in conventional public sector bank job in government jobs, of abysmally low wages compared with other peers in public or private sector.  

 

It is in this context the just demand of union of 25% wage hike that too in pay slip components  will alone  end discrimination and bring semblance of  parity , retain  existing , attract  dynamic, innovative , qualified  youth to take banking career as primary option..

 

The various chapters on justification of just demand of negotiating union in the banking industry   in this booklet are based innovative, thoughtful and thought provoking, ,critical  suggestions and  comments  given by humble members of the movement in many social networking sites, circulars issued by much union on the progress on the ongoing 10 bipartite talks, other important reference materials.

 

It is hoped that this booklet will assist in a better understanding of the issues and aspects raised and discussed and end the stalemate, expedite amicable but honourable settlement.

 

 

The complete book is presented for making more aware :

 

 

INDEX

 

 

CHAPTER

SUBJECT

-

Introduction

After 100 Days Of New Government

No Khushi, Still Gham

For Bank Employees

Our Stand Of 25% Hike Is Just And Sacrosanct

-

Preface

I

Justification I - It is lawful

II

Justification II - Need to reify historic distortions in bank employees scales of pay

III

Justification II I- Our demand is a justifiable demand

IV

Justification IV- Our Demand is commensurate with the increase in our productivity and efficiency

V

Justification V-  Our demand Demolishes untruths & falsehoods

VI

Justification VI- Our demand is reasonable and achievable

VII

Conclusion – Way Forward

VIII

The Scintillating Voyage So Far

IX

bank employees improvements in wages & service conditions

awards / settlements

 

AFTER 100 DAYS OF NEW GOVERNMENT

NO KHUSHI, STILL GHAM

FOR BANK EMPLOYEES

by S.SRINIVASAN, Retired Bank Unionist 

OUR STAND OF 25% HIKE IS JUST AND SACROSANCT!

  

In 1933, when Franklin D Roosevelt summoned a special session of Congress that would run for three months, the newly elected president got the Democrats and Republicans to work together and give Congressional passage to a series of measures aimed at job-creation and providing an impetus to a tottering economy. Those 100 days of Congress, also his first 100 days as president, saw 15 major bills get passed, a record for US legislation that FDR would go on to call the 'New Deal'.

 

That’s how the "first 100 days" yardstick of measuring the effectiveness of new governments came to be fashioned, a measure of how much a government can achieve when it’s still in the afterglow of electoral success, riding high on public opinion and driven by high expectations.

 

At the end of 100 days there is, doubtless, a stock-taking. There are be more pithy slogans and catchy, self-congratulatory phraseology.

During thee 100 days Bank unions met Finance Minister to press for early wage revision on June27, 2014. Despite a lapse of 21 months since the start of negotiations, no significant improvement has been made towards expeditious conclusion of settlement.

 

Make no mistake, the speeches to the countrymen by the new government will continue to be fine tuned, but the first 100 days is just bluster for bank employees expecting just wage revision of at least restoring parity with Central Government Employees sequel to the 6th pay commission, going by early indications and reports.

 

Yes, “ache din” (good days) have indeed come for some. But “bad days” have befallen to the Bank employees. The preposterous, stubborn stand of IBA

resulting in replacement of traditional ‘round table negotiations’ with ‘correspondences’ after the last meeting on 13th June 2014 has shattered our hopes and battered our dreams of an early settlement.  The entire workforce  have felt the insult inflicted by IBA, who failed to live upto the expressions made by IBA Chairman in the first round of discussions held on 22-03-2013 that “the settlement would be concluded at the earliest with reasonable, respectable and comparable wage revision compared with external factors”.

 

In short we are not  hearing sunny sonnets or moonlit melodies of successful breakthrough in the  wage revision , but fumbling by the  Government, bungling by IBA  combine , crumbling of industrial peace,  grumblings by the customers and rumblings of a might upsurge of bank employees, who awakened and are in readiness to write history with blood  and tears.

 

CHAPTER - I


JUSTIFICATION I: IT IS LAWFUL

 

The intransigence  stand of IBA in not calling union for negotiations, disregarding sprit of bipartite culture , unique in banking industry  culminating in 9 bipartite  settlements so for, suddenly without any logical, transparent reasons, during this 10 bipartite under progress after 13-06 -2014 is preposterous.

 

Even with 25% increase we will be lagging behind the government employees if one realistically evaluates their projection in wake of announcement of 7 pay commission in the anvil.

 

My arguments is backed By Justice Kantilal Desai in his award popularly known as Desai Award. Hence our demand of 25% hike to restore parity with government employees and other PSU‘s is just and right, and is accordance with awards in force for bank employees. Abrogating the legal sanctity of these awards of learned judges by peddling spurious logic tantamount to disrespecting the laws of the land.

 

Our terms have always been clear.  The IBA’s terms have also been clear, of course according to them, for which we can never come to terms.  They always find, as was the experience in the earlier negotiations, our demand and our stand to be irrational and unreasonable and yet to have conceded to some of them.  So whatever we conceded is reasonable for them and what we do not concede is unreasonable for them.  The reality today is nothing is well settled in labour matters in our country.  The little achievements we have secured are not because our demands were reasonable but that each achievement is incomplete inspite of its reasonableness.  It required bitter struggles before inch of progress could be made.  Throughout this historic century of struggles runs one red thread of continuity is - resistance - by the employers to demands of the employees for improvements even though reasonable.  The strange arguments advocated by the Bank Lords before the Tribunal for the Bank’s disputes and now by IBA, stand eloquent witness to this conviction. I request the readers to google and go through the spur4ios arguments denying bank employees reasonable wages even during the Desai award (1962) days (see para 5.159. to 5.161, page 170 desai ward)

 

We know the methods IBA used to adopt to dilate our issues and hoodwink our demands.  But this time the boldness, sophistry, ruthlessness and courage with which they have come out openly and spelt out their unwillingness to accept our reasonable demands and response makes bipartite culture a mockery.

 

Denial of our just demands is unconscionable and unjustified. 

 

If today in our anxiety to secure arrears and marginal increase in wages, we compromise on principles in accepting their unreasonable, irrational demands, tomorrow we will be compelled to sign on dotted lines even in matters suicidal to our interest.

 

IBA’s spurious, perverse theories which we exposed and exploded as the past are again in the market of industrial relations with their spurious products sowing seeds of industrial unrest.  Their pet theories are standing monuments of our agony and stumbling block for industrial peace.

 

I have made some made so modest attempt to enhance the awareness of bank employees culling important facts form the glimpses of history. Let history record that in spite of the greatest odds Bank employees would stand up and resist injustice and reject with disdain and contempt the demands of IBA with logic and reason, retaining the ground sells of historical perspective. Needles to underscore that the present is imbedded in the past and from the present future grows as per law of nature. 

 

Let us get emboldened form history:

 

Principles of Wage Fixation Source: Desai Award

 

5.35. This Tribunal has been constituted under the Industrial Disputes Act, 1947. The preamble to the Act indicates that the said Act was enacted to make provision for the investigation and settlement of industrial disputes, and for certain other purposes appearing in the said Act. Under section 7B, the Central Government is empowered to constitute one or more National Industrial Tribunals for the adjudication of the industrial disputes which, in the opinion of the Central Government, involve questions of a national importance or for the adjudication of industrial disputes which are of such a nature that industrial establishments situated in more than one State are likely to be interested in, or affected by, such disputes. In considering disputes the adjudication whereof involves questions of a national importance it would not be out of place to refer to the following words of the Preamble to the Constitution of India which express the will of the people of India :—

“We, the People of India, having solemnly resolved............to secure to all its citizens : Justice, social, economic and political; ............ Equality of status and of opportunity; and to promote among them all Fraternity assuring the dignity of the individual..................... give to ourselves this Constitution.”

 

By the Directive Principles of State Policy embodied in Article 43 of the Constitution it is provided that the State shall endeavour to secure, by suitable legislation or economic organisation or in any other way to all workers, agricultural, industrial or otherwise, work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities.

5.36. On 21st December 1954 the Lok Sabha adopted a resolution by which the establishment of a socialistic pattern of society has been accepted as the objective of State Policy with the consent and concurrence of all the political parties in the country. The adjudication in respect of the matters referred to the Tribunal has to be done in the background of the statement in the Preamble to the Constitution, the Directive Principles of State Policy and the resolution unanimously adopted by the Lok Sabha.

 

5.37. The jurisdiction of a National Industrial Tribunal in determining matters which come before it is in certain respects wider than the jurisdiction of an ordinary Court of law. An ordinary Court of law proceeds on the footing that no power exists in the Courts to make contracts for persons and that the parties must make their own contracts. The Courts reach their limit of power when they enforce contracts which the parties have made. An Industrial Tribunal is not so fettered and may create new obligations or modify contracts in the interest of industrial peace, to protect legitimate trade union activities     and to prevent unfair practice or victimisation. It has been so held by the Supreme Court in Rohtas Industries Ltd. v. Brijnandan Pande and others, 1956 Supreme Court Report 800, 1956 (II) Labour Law Journal 444 at page 449. As observed by Ludwig Teller in Labour Disputes and Collective Bargaining, Vol. I at page 536:—

“Industrial arbitration may involve the extension of an existing agreement, or the making of a new one, or in general the creation of new obligations or modifications of old ones, while commercial arbitration generally concerns itself with interpretation of existing obligations and disputes relating to existing agreements.”

The Federal Court in the case of Western India Automobile Association Ltd. v. Industrial Tribunal and others, 1949 Federal Court Report 321 at page 345, 1949 Labour Law Journal 245, has observed that the above statement by Ludwig Teller was a true statement about the functions of an Industrial Tribunal in Labour disputes. The relations between employers and employees

are no longer left to the free play of economic forces. The concept of social and economic justice as embodied in the Directive Principles of State Policy comes into play. The needs of the industry have to be harmonised with the needs of the workmen and the dignity of the individuals. To secure a living wage is the objective of State Policy. Before a living wage can be secured to workmen various factors have to be considered. The industry concerned must have the capacity to bear the burden of a living wage to workmen

 

5.38. Wages have been considered under three different heads:—

 

(1) Living Wage,

(2) Fair Wage, and

(3) Minimum Wage.

 

These concepts have been fairly dealt with in the report of the Committee on Fair Wages. A large part of its conclusions has been accepted by the Supreme Court in the case of Express Newspapers (Private) Ltd. and another v. The Union of India, 1959 Supreme Court Report 12, 1961(1) Labour Law Journal 339. The most expressive definition of a living wage is that given by Justice Higgins of the Australian Commonwealth Court of Conciliation in the Harvester case. A living wage is defined by Justice Higgins as one appropriate for “the normal needs of the average employee, regarded as a human being living in a civilised community.” This cryptic pronouncement has been explained by Justice Higgins by saying that a living wage must provide not merely for absolute essentials such as food, shelter and clothing but for “a condition of frugal comfort estimated by current human standards.”It must be a wage   “sufficient to insure the workman food, shelter, clothing, frugal comfort, provision for evil days, etc. as well as regard for the special skill of an artisan if he is one.” In a subsequent case he observed that “treating marriage as the usual fate of adult men, a wage which does not allow of the matrimonial condition    and the maintenance of about five persons in a home would not be treated as a living wage”.

 

In the Report of the Committee on Fair Wages it is stated in paragraph 7 as under:—

“there is general agreement that the living wage should enable the male earner to provide for himself and his family not merely the bare essential of food, clothing and shelter but a measure of frugal comfort including education for the children, protection against ill-health, requirements of essential social needs, and a measure of insurance against the more important misfortunes including old age.”

 

5.39. A reference may be made to the following observations of Mr. Philip Snowden at pages 1 and 6 of “The Living Wage” in connection with the concept of a living wage and the problem of converting the concept into monetary terms :—

“It may be possible to give a precise or satisfactory definition of a living wage, but it expresses an idea, a belief, a conviction, a demand. The idea of a living wage seems to come from the fountain of justice which no man has ever seen, which no man has ever explained, but which we all know is an instinct divinely implanted in the human heart. A living wage is something far greater than the figures of a wage schedule. It is at the same time a condemnation of unmerited and unnecessary poverty and a demand for some measure of justice.”

• • • •

 

“The amount of the living wage in money terms will vary as between trade and trade, between locality and locality. But the idea is that every workman shall have a wage which will maintain him in the highest state of industrial efficiency, which will enable him to provide his family with all the material things which are needed for their health and physical well being, enough to enable him to qualify to discharge his duties as a citizen.”

The Supreme Court in the case of Standard Vacuum Refining Company of India Ltd., v. Its workmen (including clerical staff) and another (Petroleum Refineries Employees’ Sabha) reported in 1961(1) Labour Law Journal page 227 at page 234 has observed that it is in the aforesaid broad and idealistic sense that a reference has been made in Article 43 of the Constitution to the living wage. The concept of a Living Wage is not a static concept. In connection with the concept of basic minimum wage, fair wage and living wage, the Supreme Court has in the aforesaid case observed at page 233 as under:—

“the concepts of these wages cannot be described in definite words because their contents are elastic and they are bound to vary from time to time and from country to country.................................... What is a subsistence wage in one country may appear to be much below the subsistence level in another; the same is true about a fair wage and a living wage; what is a fair wage in one country may be treated as a living wage in another, whereas what may be regarded as a living wage in one country may be no more than a fair wage in another.” It has further observed at page 239 that under the living wage a workman would be entitled to claim an optimum diet as prescribed by Dr. Aykroyd. Similarly the requirements as to clothing and residence which have been recognised in the tripartite resolution, though appropriate in reference to a need based minimum wage would have to be widened in relation to a living wage. Besides, in determining the money value of the living wage it would be necessary to take into account the requirements of “good education for children, some amusement, and some expenditure for self development.”

 

5.40. In connection with the concept of a minimum wage, it has been observed by the Committee on Fair Wages that a minimum wage must provide not merely for the bare sustenance of life but for the preservation of the efficiency of the worker by providing for some measure of education, medical requirements and amenities. It has been further observed that the minimum wage must be paid irrespective of the capacity of the industry to pay the same. In connection with the concept of minimum wage a reference is necessary to the resolution passed at the 15th Labour Conference held at New Delhi on 11th and 12th July, 1957 wherein certain norms have been laid down. The same have been considered at some length in another part of this award.

 

5.41. In connection with the fair wage, it is observed by the Committee on Fair Wages that there was complete unanimity of opinion that the fair wage should on no account be less than the minimum wage. The Supreme Court in the case of the Express Newspapers (Private) Ltd. has observed at page 364 that the fair wage is “a mean between the living wage and the minimum wage.” As observed by the Committee on Fair Wages while the lower limit of the fair wage must obviously be the minimum wage, the upper limit is equally set by what may broadly be called capacity of industry to pay. Between these two limits the actual wages will depend on:—

 

(1) the productivity of labour;

(2) the prevailing rates of wages in the same or similar occupations in

     the same or neighbouring localities;

(3) the level of the national income and its distribution; and

(4) the place of the industry in the economy of the country According to    

     the Report of the Committee on Fair Wages in determining the capacity of an   

     industry to pay, it would be wrong to take the capacity of a particular unit or  

     the capacity of all industries in the country. The relevant criterion should be

     the capacity of a particular industry in a specified region to be ascertained by

     taking a fair cross section of that industry. The Supreme Court in the case of

    the Express Newspapers (Private) Ltd. at page 366 has observed that:—

 

“The capacity of an industry to pay should be gauged on an industry cum-region basis after taking a fair cross-section of that industry. In a given case it may be even permissible to divide the industry into appropriate classes and then deal with the capacity of the industry to pay classwise.”

 

5.42. The level of wages should be so fixed as to enable the industry to maintain production with efficiency. The fair wages fixed should not be so out of tune with wages in other industries in the region as to cause movement of labour and consequent industrial unrest. The Supreme Court in the case of Express Newspapers (Private) Ltd. has observed at page 336 as follow:-

 

“The main consideration which is to be borne in mind is that the industry should be able to maintain production with efficiency and the fixation of rates of wages should be such that there are no movements from one industry to another owing to wide disparities and employment at existing levels is not only maintained but if possible increased.”

 

5.43. E. M. Burns in the book “Wages and the States” has at page 387 referred to various considerations which have to be borne in mind when fixing wages.

“It would be necessary to inquire inter alia into the elasticity of demand for the product, for on this depends the extent to which employers could transfer the burden of the increased wage to consumers. It would also be necessary to inquire how far the enforced payment of a higher wage would lead employers to tighten up organisation and so pay the higher wage without difficulty.

• • • •

 

Similarly it frequently happens that an enhanced wage increases the efficiency of the lowest paid workers: the resulting increase in production should be considered in conjunction with the elasticity of demand for the commodity before the ability of a trade to pay can fairly be judged.

• • • •

 

Again unless what the trade can bear be held to imply that in no circumstances should the existing rate of profit be reduced, there is no reason why attempts should not be made to discover how far it is possible to force employers to bear the burden of an increased rate without driving them out of business. This would involve investigation into the elasticity of supply of capital and organizing ability in that particular trade, and thus an inquiry into the rate of profits in other industries, the ease with which transferences might be made, the possibility of similar wage regulation extending to other trades, and the probability of the export of capital and organizing ability, etc.”

 

5.44. In the First Five Year Plan the authors thereof have observed at page 584 as follows :—

2 (a) All wage adjustments should conform to the broad principles of social policy and disparities of income have to be reduced to the utmost extent. The worker must obtain his due share in the national income.

(b) The claims of labour should be dealt with liberally in proportion to

the distance which the wages of different categories of workers have to cover before attaining the living wage standard.

 

5.45. The principles of industrial adjudication have been well set out in the decision of the Supreme Court in the case of M/s. Crown Aluminum Works v. Their Workmen, reported in 1958 (1) Labour Law Journal page 1 at page 6 in words following which may well be reproduced here :—

“Though social and economic justice is the ultimate ideal of industrial adjudication, its immediate objective in an industrial dispute as to the wage structure is to settle the dispute by constituting such a wage structure as would do justice to the interests of both labour and capital, would establish harmony between them and lead to their genuine and wholehearted co-operation in the task of production. ** In achieving this immediate objective industrial adjudication takes into account several principles such as for instance, the principle of comparable wages, productivity of the trade or industry, cost of living and ability of the industry to pay. **** In deciding industrial disputes in regard to wage structure one of the primary objectives is and has to be the restoration of peace and good will in the industry itself on a fair and just basis to be determined in the light of all relevant considerations.”

 

5.46. This Tribunal will have to keep in mind these principles to the extent that they are applicable in the circumstances of the case.

 

5.47. The problem of wage determination cannot be considered in isolation from the larger economic and social background obtaining in the country. A delicate balance has to be struck between fair wages to workers and officers fair profits to the shareholders and fair service at reasonable rates to the community, after taking into account the share of the Government in profits in the shape of taxes and after considering the amounts of reserves and depreciation necessary for the stability and healthy functioning of the industry.

From the purely economic point of view the wage policy has to take into account the inflationary pressures. It is necessary to provide for wage differentials based on job evaluation as the economic structure in India’ is not founded on the principle : “to each according to his needs and from each according to his capacity

 

 

Para 5.137(page 135)

CAPACITY OF THE INDUSTRY TO PAY

 

5.137. Whilst considering the question of wages in the banking industry, it will be necessary to consider the question of the capacity of the industry to pay wages above the bare minimum wage and the place of the industry in the economy of the country. The question concerning the capacity of an industry to pay wages has been dealt with at some length by the Supreme Court in the case of Express News Papers (Private) Ltd., and another v. The Union of India and others, reported in (1959) Supreme Court Reports, page 12 at pages 89 to 93. As the Supreme Court has observed in that case, the capacity of industry to pay can mean one of the three things, viz., (i) capacity of a particular unit, (marginal, representative or average) to pay, (ii) the capacity of a particular industry as a whole to pay, or (iii) the capacity of all industries in the country to pay. After considering the various aspects of the matter, the Supreme Court has, at pages 92 and 93 of the aforesaid report, observed as follows :—

 

“The principles which emerge from the above discussion are:—

(1) that in the fixation of rates of wages which include within its     compass the fixation of scales of wages also, the capacity of the industry to pay is one of the essential circumstances to be taken into consideration except in cases of bare subsistence or minimum wage where the employer is bound to pay the same irrespective of such capacity;

(2) that the capacity of the industry to pay is to be considered on an industry-cum-region basis after taking a fair cross section of the industry; and

(3) that the proper measure for gauging the capacity of the industry to pay should

take into account the elasticity of demand for the product, the possibility of

tightening up the organisation so that the industry could pay higher wages

without difficulty and the possibility of increase in the efficiency of the lowest

paid workers resulting in increase in production considered in conjunction with

the elasticity of demand for the product no doubt against the ultimate background

that the burden of the increased rate should not be such as to drive the employer

out of business.”

 

The Supreme Court has observed in an earlier paragraph that in a given case it may be even permissible to divide the industry into appropriate classes and then deal with the capacity of the industry to pay class-wise. The industry of banking, in cases where the banks have branches in more States than one, has been dealt with class-wise, and the capacity of the industry which, so far as the banks before me are concerned, has to be determined class wise.

 

Having regard to the principles enunciated by the Supreme Court, the capacity of the industry considered class-wise will have to be determined after taking a fair cross section of each class. As observed by the Sastry Tribunal the wage structure should be such as to be within the capacity of the Industry to bear in the light not apply of its present position, but of its future possibilities also.

 

5.138. The industry of banking does not produce goods but produces services. It is an extremely important service which is rendered by banks and on the continued and efficient functioning of banks depends the smooth functioning of a large number of other industries in the country. In order that the economy of the country may develop and other industries may function smoothly, it is necessary that the industry of banking should also develop to meet the growing needs of the country. Banking has to be regarded as a public service and its activity to a certain extent is being regulated in the public interest. There are various provisions in the Banking Companies Act, 1949, and in the Reserve Bank of India Act relating to the regulation and control of the industry in the larger interest of the country. Banks have to work in a more or less rigid framework set by law. The depositing and investing public always plays for safety for its deposits and stability for its investments. Prudent banker not merely provide for what are sometimes known as secretor undisclosed reserves but provide for easy liquidity of some of its assets in order to meet any emergency. They also consider the advisibility of following the policy of maintaining stable dividends. Every effort has to be made together the confidence of the public and the depositors so that the working funds and operations of the banks may grow.

 

5.139. The stability of the industry depends upon the over-riding factor of credit. The banks are very often described as delicate instruments of credit. The failure of the bank has its repercussions on the other banks and on the deposits made with other banks. Great care is required to inspire the confidence of the public. Deposits received by the banks constitute, to a very large extent, the raw material for providing advances to persons needing the same. A bank unlike a manufacturing concern obtains a very large proportion of its working funds from the depositors and only a small proportion from its shareholders. In considering the claims of employees, the claims of the depositors and other constituents of the bank have also to be kept in mind.

 

5.140. In considering the capacity of the industry of banking to bear the burden of increased wages which may be required to be paid having regard to the workmen’s claims based on social justice, it is necessary to bear in mind the claim of the shareholders to a fair return on the capital invested by them.

 

5.141. Banking is one of the key industries in the country. The successful implementation of the Third Five Year Plan depends to a considerable extent on the successful operation of banking in the country. It is requisite that the available resources of the country should be harnessed for the successful implementation of the Third Five Year Plan. Banks have an important role to play in moblising the resources of the country and canalizing them to productive purposes. It is necessary that the banking habit should spread throughout the length and breadth of the country so that the unused wealth of the country is not merely gathered but is put to effective use. The dependence of commerce upon banking has in modern times become exceedingly great and matters have reached a stage where the cessation for some length of time of banking activity may paralyse to some extent the economic life of the nation. Bankers issue credit. Large transactions are effected by means of cheques rather than by the exchange of currency. Banks assist the industrial undertakings by underwriting their debentures and shares and occasionally finance the purchase of real property. Banks serve as custodians of stocks and shares and other valuables. Imports into and exports out of the country are financed by banks and documents relating to the goods so imported and exported pass through the hands of the bankers. They have to deal with warehouse warrants, bills of leading, railway receipts, bills of exchange, marine insurance policies and various other documents. They advance moneys on securities and issue letters of credit and travellers cheques to customers. The functions which the bankers discharge are numerous and varied. The transactions on the Stock Exchange may be affected by the policy adopted by banks in connection with the advance on shares and securities. Transactions of purchase and sale of various commodities may be affected by the policy adopted by banks in connection with the advance on such goods. Expansion or retraction of credit may affect financing of various transactions. The smooth functioning of banks is necessary for the economic growth and welfare of the country. Peace in this industry is requisite for the economic progress of the country at the pace set by the Third Five Year Plan.

 

5.142. Having regard to these factors, wage scales have to be fixed in connection with each class of banks before me, so that the burden ultimately imposed may not be such as may drive any bank managed with reasonable efficiency, out of business. The wage structure should be such that it should not be unduly below the paying capacity of the bank at the top of the class, nor unduly above the paying capacity of the bank at the bottom of the class, which is reasonably well-managed. One does sometimes come across banks in the private sector which continue to function for a number of years without distributing a naya paisa by way of dividend, which do not show any substantial profits or which show even losses for a number of years without any special reason, when other banks functioning in the same region with smaller working funds and reserves make considerable profits. Such banks which continue to exist for various reasons peculiar to those who run the banks cannot be taken into account to depress the wages of the class in which such banks fall. It would be putting a premium on the existence of unhealthy banks if they are encouraged to continue their activities by the incentive of lower wages.

 

5.143. There are various restrictive provisions contained in the Banking Companies Act. By Section 17 it is made obligatory on a banking company incorporated in India to create a reserve fund. A banking company is under an obligation “out of the balance of profit of each year as disclosed in the profit and loss account prepared under section 29 and before any dividend is declared” to transfer to the reserve fund a sum equivalent to not less than 20 per cent of such profit until the amount of such reserve fund together with the amount in the shares, premium account, equals the amount of the paid-up capital of the company.

 

(xvi) Prevailing Rates of Wages in Comparable Concerns (See page174 - 

        175 of Desai Ward)

 

5.176. One of the important factors to be taken into account in fixing wage scale is the prevailing rates of wages in the same or similar occupations in the same or neighbouring localities.

 

5.177. The Sastry Tribunal in considering the prevailing rates of wages has observed that helpful comparisons could be made between wages in major banks and those in small banks, between banks on the one hand and certain industries on the other, between the bank awards and the awards in insurance companies, oil companies and textile companies and that the rates of pay in certain departments of Government such as the Posts and Telegraphs and in State Governments would also furnish material for the construction of a pay scale for the bank workmen. It also referred to there port of the First Pay Commission and stated that there were several affinities between bank workmen and Government clerks, bank subordinates and Government menials. The Sastry Tribunal has set out the scale of pay for clerks in the service of the various State Governments and also in the service of the Central Government. In paragraph 260 of its award it has observed as follows:

“Or again we may take a cross section of the wage map of India for clerical staff and compare the prevailing rates in a mixed bag consisting of industrial concerns, municipalities, insurance companies, government departments, Port Trust and Reserve Bank of India.”

The Sastry Tribunal has then set out the emoluments received at the initial start by members of the clerical staff of various concerns in this mixed bag. It has also given a summary of the emoluments given to clerks under the more important award relating to various concerns.

 

5.178. The Labour Appellate Tribunal after referring to the fact that the Sastry Tribunal had set out in its award the total emoluments of a mixed batch of industries and Government and quasi-Government institutions stated that it had collected other material also. The Labour Appellate Tribunal has thereafter set out the total emoluments payable to a clerk at the initial start in28 different concerns. After considering the emoluments payable in these

 

1. Burmah Shell                                            ---- 195.00 224.65

2. Standard – Vacuum                                ---- 190.00 224.65

3. General Motors                                         ---- 170.00 — closed down

4. Ford Motors                                                ---- 154.56 — closed down

5. Glaxo Laboratories                                   ---- 161.69 192.32

6. Imperial Tobacco                                      ---- 195.00 225.00

7. Hindustan Vanaspati Hindustan

8. Lever Brothers                                           ---- LIvers 174.87      220.00

9. United Traders

10. Tata Oil Mills                                           ---- 154.56          178.65

11. Volkart Brothers (Voltas)                 135.00    183.60

12. Greaves Cotton                                       ---- 154.56 193.50 (Under appeal in Supreme

       Court)

13. Swastik Oil Mills                                     ---- 149.56    179.75

14. Larsen & Toubro                                    ---- 161.12          190.86

15. Grahams Trading Co.                            ---- 154.56   168.54

16. Imperial Chemicals                                ---- 139.00    176.00

17. Tata Industries 120.00               ---- Not available

18. Associated Cements                              ---- 138.00    169.00

19. Oriental Assurance                                ---- 124.50   154.39 Now part of Life Insurance

                                                                              Corporation

20. Reserve Bank of India 142.50             ---- Under adjudication

21. British Insulated Calenders                  ---- 138.00 178.00 Cables Ltd. (Indian Cables)

22. Bombay Gas Co. 125.00                       ---- Not available

23. Fortes, Forbes Campbell                       ---- 151.00 161.25

 

Note: - Existing dearness allowance in the concerns in Bombay is calculated on Bombay consumer price index slab (411-420) for February 1961 at 420 Bombay index number when the corresponding all-India consumer price index with base as 1949, was 123.

 

If the method adopted by the Labour Appellate Tribunal for the purpose of fixing the total emoluments of a clerk in an A Class bank in Area I is adopted, there is a good case made out for revision of the emoluments ofworkmen in the banking industry.

 

(xvii) New Scales of Pay (SE PAGE 176-177 OF DESAI AWRDS)

 

5.179. There is considerable material placed before me to show that as a result of the awards of adjudicators and wage boards and agreements arrived at between employers and employees, there has been a considerable increase in the level of total emoluments paid by various concerns. Some of these are comparable and some are not. By and large, they show that there is an upward trend in wages payable both to the members of the clerical staff and members of the subordinate staff.

 

5.180. It has been strongly urged on behalf of the banks that the Sastry Award as modified having linked the dearness allowance with the consumer price index number has provided for an increase in the amount of wages having regard to the increase in the cost of living and that no case exists for any further increase in the remuneration payable to workmen. There is no doubt that workmen are being paid more today than what they were receiving at the time when the Labour Appellate Tribunal’s decision was implemented. The workmen, however, contend that there is no increase in their real wages and that, on the contrary, there is considerable erosion in their real wages having regard to the increase in the cost of living and the reduction in the purchasing power of money. The arithmetical erosion that has taken place has already been set out earlier in this chapter. A member of the clerical staff employed by an A Class Bank in Area I in the first year of his service receives at the Index No. 123 (1949=100) by way of basic pay and dearness allowance Rs. 152.85 and Rs. 8 as house rent allowance if he is employed at Bombay and Calcutta and Rs. 6 as house rent allowance if he is employed at other places with population over 7 lakhs. The question that arises for consideration is whether what is being given under the Sastry Award as modified is sufficient having regard to the changes in the circumstances that have taken place.

 

5.181. Having considered all aspects of the matter, I am of the view that to the extent that prevailing rates of wages in similar occupations in the same localities play a part in the fixation of wages, the workmen have made out a case for an upward revision of their emoluments.

 

 

CONCLUSION (just)

 

  1. Today the banking industry with nationalized banks forming major share as a whole (unlike the award days) has immensely prospered and tremendously expanded.
  2. Cost of living has substantially gone up throughout India.
  3. National income under Five Year Plans has considerably increased.
  4. Prevailing rates of wages in other industries, including government employees have also considerably gone up. The government as model employer cannot deny justifiable and justisiable wages at par with government employees, to bank employee alone.
  5. The existing  wage scales as per the comparison shown in the Annexure A  between government and bank employees  are not at all adequate to ensure minimum subsistence wage for the clerical and subordinate staff, having regard to the high cost of living prevailing all over the country.
  6. Not only the rise in the cost of living should be fully neutralized but there should be improvement in the real standard of living of the employees.
  7. The nature of work in the banking industry today requires greater skill, involves risks accuracy, responsibility and hard labour than that required in other industries.

 

Thus it is imperative that bank employees are adequately compensated due to their glowing responsibility, transferability, accountability in order to maintain high standards of honesty, integrity as their job demands in a highly competitive and sensitive sector of the Indian economy, in view of the following

 

Public sector banks  practically   government institutions today as could be seen form the additional auxiliary work performed by bank employees which was hitherto performed by government employees and in view of the reasons adumbrated ,adduced below

 

1.    All public sector banks acquired the public sector characteristic by virtue of a special act passed by the Indian Parliament.

2.    Central Government directly and indirectly through other PSUs like LIC of India etc. holds majority of the shareholdings in public sector banks.

3.    Several public sector banks are bankers to the government - Central or State - either as a lender or a custodian of government funds. Public sector banks have subscribed to several Government Promissory Notes, Treasury Bills and Bonds and Debentures issued by State/Central PSUs.

4.    Public Sector Banks have established and manage Currency Chests throughout the country on behalf of RBI, thus playing a vital role in currency issue and management (printing is the sole prerogative of RBI).

5.    Public Sector Banks run clearing houses throughout the country, thereby helping the government manage the nation's economy, trade and commerce.

6.    Even today, Public Sector Banks have the majority share of the public savings (more than 77%), enjoying the confidence and trust of most of the common citizens.

7.    But for the low wages, public sector banks are one of the dream destinations for thousands of aspiring youth in the country.

8.    Public Sector Banks as a group are the second largest employer, next only to Indian Railways, providing employment to lakhs of unemployed youth.

9.    Public Sector Banks as commercial entities and the staff working in them are one of the major contributors to government's kitty, as they are one of the few honest tax paying groups.

10. Under the guidance and supervision of RBI, public sector banks play a vital role in managing the precious foreign exchange assets of the country.

 

  1. Banking Regulation Act, 1949 and Negotiable Instruments Act, 1881 are two important Acts of Union of India, which broadly govern the functioning of general banking in India.
  2. Banking policies and operational guidelines are broadly designed by Department of Financial Services, Finance Ministry, Government of India and the banking industry is monitored and controlled by the government, in association with RBI.
  3. Bank Holidays are decided by the respective State Governments and published in official gazettes.
  4. Public Sector Banks issue Bank Guarantees on behalf of ‘President of India’.
  5. In 1979, Central Government had accepted Pillai committee recommendation on the point that the Bank officers’ salary will be equal to that of Class 1 officers.  By doing this, the central government has indirectly admitted that public sector bank employees are to be treated on equal footing with the government employees.
  6. Central government uses PSBs for various purposes like Tax collection, implementation of socio-economic policies of the nation viz. targeted lending (priority sector lending), distribution of subsidies and grants, financial inclusion etc.
  7. Bank employees are invited to apply for vacancies on deputation basis in institutions like DRT, CBI, FIU-IND, IBA etc.
  8. Bank staffs are drafted for election duties by Election Commission of India.
  9. Bank Managers are empowered to attest certain documents for limited purposes, by the government.
  10. Successive Finance Ministers have acknowledged the fact that only because of the public sector banks in India, we as a nation could successfully insulate ourselves against the tribulations that jolted the South East Asian Countries in the late 1990s, the global recession that turned the economy of several American States topsy-turvy in 2008-10 and the very recent crisis that enveloped the European nations like Spain, Greece, Italy etc
  11. .Last but not the least, public sector banks generate very substantial revenue for the Union Government, by way of issuance of dividend on their shares
  12. volume and varieties of work handled by bank employee are beyond comparison
  13. The productivity per employee, business per employee and branch and profitability of public sector banks ahs enhanced many folds.
  14. It is pertinent to mention here that 7th Pay Commission has been constitute for revision of salaries of central government employees, whereas bank employees are yet to catch the salaries they are getting as per 6th Pay Commission report.
  15. There is steep raise in CPI inflation and the salaries in absolute terms have also been eroded. consumer price index ahs already increased by 1501 numbers over 4440 which was prevailing on 01-11-2012 i.e. the level at which IBA ahs agreed to merge the DA with basic pay
  16. And above all there is  a danger of pouching of the existing young and trained staff of public sector banks by new generation of private sector bans and foreign banks  which will merge as per banking policy.

 

HENCE OUR DEMAND FOR 25 % HIKE IS JUST AND RIGHT.

 

Even with 25% hike we will just be inching towards some semblance of parity with pay of government employees if we evaluate the projected salary in anvil in the wake of 7the pay commission.

 Friends

 

The capacity to pay is never the standard of any capitalist when he starts an industry. They study the market some where they find the rate of profit to be 20, somewhere 30 and some where 50. They try to cash on it and come with their accumulated capital, reserves or some things – Rs. 5 crores or Rs. 10 crores and put it in to much machinery, so much raw material and go on hunting for the worker see at what will they can buy the labour power. Then they calculate that if the labour power is purchased Rs.10 a day their rate of profit will go down from Rs.50 to 30. So they reduce the rate. So the capacity to pay is really the capacity to earn the highest rate of profit. And we (The trade Union) change the wage rate up by bargaining, by organising ourselves and by strikes. So capacity to strike determine the capacity to pay on the part of the employer. The capacity to pay is not an abstract, unbreakable inviolable principles. It is a determinable thing determined by the rate of profit and capacity of the worker to bargain and strike for it. As the trade union maintain, it is not the industry’s alleged capacity to pay that is material to urge fixation put the workers capacity to work without which there can be no production.

 

So long as there is a high volume of NPAs in banks, there cannot be defined, expected profits .NPA is not our creation.   So we cannot accept this shallow and unfounded logic of capacity of the banks to pay. If that be the case wage hike for government employees cannot be granted  unless The central government brings down the current account deficit to 'Zero' ,the fiscal deficit to 'Zero' (CAD was at Rs.216,000 crores for 2013-14 as per the news item in NDTV Profit on 21-05-2014. Fiscal deficit was at Rs.519,529 Crores for 2013-14 as per the news item published in various newspapers.

 

If the central government recovers a fraction of  NPA which around six lakh  crores through stringent legislations and measures   and further  recovers the huge tax arrears due from big industrial houses, large corporate groups, MNCs and high net worth individuals (HNIs), in Income Tax, Service Tax, Customs Duty, Excise Duty, Property Tax etc. in full (Income Tax arrears alone stood at Rs.580,000 crores as at the end of March, 2014), bank and government employees can be easily granted just  share of value added  in the forms of just wage revisions.

In view of the aforesaid principles laid by Indian jurisprudence , for bank employees our demand of 25 % hike in pay slip components is fair , just meets ends of justice and should be seized form unyielding hands no holds barred.  

If today in our anxiety to secure arrears and marginal increase in wages, we compromise on principles in accepting their unreasonable, irrational demands, tomorrow we will be compelled to sign on dotted lines even in matters suicidal to our interest

 

This in short is the emerging scene and engulfing situation.  We know that wages or privileges we get today are not charity of IBA.  It is the heritage and legacy of our sustained struggles and inspiring sacrifices.  We have survived furious storms and gusty winds.  We know as a responsible Union, when to organise and how to agitate.  We have the glorious past, potential present and challenging future.

 

Therefore let history record that in spite of the greatest odds Bank employees irrespective of their union affiliations  would stand up and resist injustice and reject with disdain and contempt the demands of IBA

Our response to IBA’s offer can only be our unity.  Let us demonstrate once for all that the dedication and conviction we have in upholding our dignity cannot be high jacked by IBA nor it can be purchased or bartered.  Let the world know our consciousness is not for sale.

 

We are sure you will draw appropriate conclusions and proper decisions in this regard. (See Annexure A)

 

 

ANNEXURE A

 

MONTHLY SALARY OF CENTRAL GOVERNMENT STAFF AND BANK STAFF (OTHER THAN OFFICERS) AS ON 01-08-2013 – A COMPARISON

 

Various Components

of Monthly Pay

Central Govt. Staff

(in Pay Band –1)

Sub-staff in Banks

Central Govt. Staff

(in Pay Band – 2)

Clerical staff

in Banks

Basic Pay

4,860

5,850

8,700

7,200

Grade Pay

1,800

N I L

4,200

N I L

Special Pay (at the minimum for bank staff)

N I L

340

N I L

500

Total

6,660

6,190

12,900

7,700

Dearness Allowance

5,994

(@90%)

5,506

(@88.95%)

11,610

6,849

H.R.A.

1,998

(@30%)

619

(@10%)

3,870

770

C.C.A.   

N I L

N I L

N I L

N I L

Education Allowance

(maximum for 2 children)

2,500

500

2,500

500

Transport Allowance

1,140

(600+90% DA)

225

3,040

(1,600+90% DA)

225

 

Staff Welfare/Provisions

N I L

500

N I L

500

Newspaper

N I L

100

N I L

100

Gross Monthly salary

18,292

13,640

33,920

16,644

 

 

 

CHAPTER - II

 

 

JUSTIFICATION II:

NEED TO REIFY HISTORIC DISTORTIONS IN BANK EMPLOYEES SCALES OF PAY 

 

For convenience and proper presentation this JUSTIFICATION 2 is set forth under paras A, B, C.

 

A)   There is a popular belief that the wages of bank employees stand stands when compared with government and other public sector undertakings after the advent of the 6 pay commission. This is a misnomer. The reality is that the wages of bank employees when compared with other peers in the industry has lagged behind ever since 5th bipartite settlement. In proof thereof I give the following facts. These figures shall stunt our conscience as how we ranked with other peers right from 5th bipartite. 

 

The study based on agreements of major Public Sector Un- dertakings in India and a comparative study with bank employees was published by Shri. Arvind Shrouti on behalf of Maniben Kara Institute (HMS) in July 1991will unveil the truth.  The following undertakings are covered in this study-

 

 

Sl. No.

Name of the Undertaking

Abbreviations

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

5th Pay Commission

Nationalised Banks

Bharat Earth Movers Limited

Bharat Electronics Limited

Bharat Heavy Electricals Ltd

Coal Industry

Hindustan Aeronautics Ltd

India Farmers Fertilizers Coop. Ltd

India Trade Promotion Organization

Indian Tourism Development Corp. Ltd.

Life Insurance Corporation

Madras Fertilizers Limited

Mother Dairy

Mahanagar Telephone Nigam Ltd

National Thermal Power Corp. Ltd

Oil India

Oil & Natural  Gas Commission

Ports & Docks

Reserve Bank of India

___

Banks BEML BEL BHEL COAL HAL IFFCO ITPO ITDC LIC MFL

MTNL NTPC

—- ONGC

—-

RBI

 

I give below the genesis of this very informative thought provoking study which will provoke the conscience of the bank employees that we they did not get fair deal in wage revisions right form 1991 onwards.   These historic blunders cascaded during the subsequent wage revision too, widening the disparity of bank employees with comparable peers like central government, insurance, RBI employees, leave alone other PSU undertakings tilting the scales of justice of the doctrine of equal work equal pay.

 

Wage in Public Sector in India

- A comparative study with Bank Employees Wages -

 

 

 

TOTAL WAGES (INCLUDING ALLOWANCES) OF

SUB STAFF AT VARIOUS STAGES OF PAY

(Arranged in descending order)

 

Rank

 

1ST

STAGE

5TH

STAGE

10TH STAGE

15TH STAGE

20TH STAGE

25H

STAGE

1

12337

IFFCO

13519

MD

15130

MD

16667

MD

18304

MD

1940

MD

 

2

12290

MOTHER DAIRY

13130

IFFCO

14194

IFFCO

15702

ONGC

17440

ONGC

19508

ONGC

 

 

3

12245

ITPO

12786

ITPO

14090

ONGS

15385

OIL INDIA

17240

OIL INDIA

19338

OIL INDIA

 

4

11759

ONGC

12732

ONGC

13671

OILINDIA

15183

IFFCO

16172

IFFCO

17530

MTNL

 

5

11185

OIL INDIA

12222

OIL INDIA

13537

ITPO

14670

MTNL

16150

MTNL

17442

NTPC

 

6

11172

MFL

12045

MFL

13290

MTNL

14305

MFL

15396

MFL

17242

IFFCO

 

7

10731

MTNL

11835

MTNL

13214

MFL

14213

ITPO

15233

NTPC

16591

MFL

 

8

10587

BHEL

11534

BHEL

12689

BHEL

13908

BHEL

15053

BHEL

16297

BHEL

 

9

9466

NTPC

10414

NTPC

1768

NTPC

13413

NTPC

14890

ITPO

15566

ITPO

 

10

9366

ITDC

9918

ITDC

10607

ITDC

11354

ITDC

13160

RBI

15245

RBI

 

11

8911

PORTS & DOCKS

9426

BEL

10160

COAL

11065

COAL

12471

COAL

 

13451

COAL

 

 

 

12

8885

BEL

9411

PORT & DOCK

10137

BEL

10855

BEL

12286

COAL

13014

ITDC

 

13

8602

BEML

 

9220

COAL

10066

PORT & DOCK

10847

PORTS & DOCK

12127

PORT & DOCK

12907

PORT & DOCK

 

14

8496

COAL

9143

BEML

9854

BEML

10572

BEML

11584

BEL

12312

BEL

 

15

8212

HAL

8669

HAL

9283

HAL

10545

RBI

11300

BEML

12029

BEML

Rank

 

1ST

STAGE

5TH

STAGE

10TH STAGE

15TH STAGE

20TH STAGE

25H

STAGE

 

 

16

7233

5TH PAY COMMISSION

7978

5TH PAY COMMISSION

8909

5TH PAY COMMISSION

9907

HAL

10846

5th pay

11776

5TH PAY

 

17

6097

RBI

6850

RBI

8574

RBI

P839

5th pay

10566

HAL

11191

HAL

 

18

5282

LIC

6072

LIC

7106

LIC

8186

LIC

9520

LIC

11017

LIC

 

19

5133

BANKS

5607

BANKS

6538

BANKS

7760

BANKS

9213

BANKS

10730

BANKS

AVERAGE

9366

10132

11201

12336

13629

14896

RATIO OF MINI : MAXI

1:2.40

1:2.41

1:2.31

1:2.15

1:199

1:1.85

 

 

SIGNIFICANT FINDINGS AND ANALYSIS

 

  • When one compares the minimum wages paid in various PSU’s on finds a good deal of variation. Wages vary not only with the level of skills of the employees but also with the industries or units.

 

  • As far as the quantum of wages in these units is concerned one finds that wages in the Banking industry at the recruitment stage are low for sub staff i.e. Rs. 5133 p.m. at 2600 CPI. While for the same level wages paid in IFFCO are very high Rs12337. The wage disparity ratio at the   said level is 1:2.40. The average total wage of sub staff at the recruitment level is Rs 9366. At the 25th stage is the lowest i.e. Rs10370 & and MOTHER DAIRY is Highest i.e. 19840.

 

  • Wages for clerical staff at recruitment level on 2600 CPI again bank is the lowest i.e. Rs.5579, while for the same level wages paid in IFFCO are very high i.e. Rs. 19077. The wage disparity ratio is 1:42 at this level. At the 25th stage of clerical staff HAL is the lowest, i.e. Rs. 18430 & ONGC is the highest. i.e. Rs. 33455. The average wage for clerical staff at recruitment level is Rs.12194. Here again in most stages bank employees are paid less than the average.

 

 

  • At one time Banking Industry was the second highest paying organization (clerical grade –at higher stages) within PSU’s. But now that is not the case. At hat time in most of the PSU’S a flat rate D.A. was in existence and very few undertakings had double linkage D.A & and Bank was one of them .Now mostly all PSU’S have double linkage D.A scheme with 100% neutralization at al levels.

 

  • Average HRA for sub staff in Banking industry is Rs.345 which is lowest while at the same level OIL INDIA is the highest i.e. Rs. 1962. For the clerical grade also the situation is the same. The reason behind such scenario is the rate of HRA. In BANKING industry the HRA is paid @ 8.5% while in most of PSU’s this rate is 30%(A + cities)

 

  • Other allowances paid in most of the PSU’S are very high as compared to banks. The average of total allowances in banking industry is Rs 723 while for the same level it is Rs.4544 in MOTHER DAIRY. This is also one of the major factors contributing to huge wage disparity between banking sector and other PSU’s.

 

  • There is no much increase in real wages of Bank employees as compared to other PSU’s. In the period of last 12 years the wage growth in BANKING industry is nearer to growth in AICPI. In short the real wages are maintained in banking industry. While in other PSU’s there is a fantastic raise in real wages.

  

  • Inference: bank employees are high wage island is a canard.  Our charter in the VIII Bipartite Wage Revision is therefore just and right.

 

 

B)   In Annexure A reproduced again in the Justifications I had given the comparison of monthly salary of central government staff and bank staff (other than officers) as on 01-08-2013. A close scrutiny of the same will reveal that Sub Staff and clerks already lag behind The Central Government Employees by 25.43% and 50.93%

 

 

 

 

 

 ANNEXURE A

 

MONTHLY SALARY OF CENTRAL GOVERNMENT STAFF AND BANK STAFF (OTHER THAN OFFICERS) AS ON 01-08-2013 – A COMPARISON

 

Various Components

of Monthly Pay

Central Govt. Staff

(in Pay Band –1)

Sub-staff in Banks

Central Govt. Staff

(in Pay Band – 2)

Clerical staff

in Banks

Basic Pay

4,860

5,850

8,700

7,200

Grade Pay

1,800

N I L

4,200

N I L

Special Pay (at the minimum for bank staff)

N I L

340

N I L

500

Total

6,660

6,190

12,900

7,700

Dearness Allowance

5,994

(@90%)

5,506

(@88.95%)

11,610

6,849

H.R.A.

1,998

(@30%)

619

(@10%)

3,870

770

C.C.A.   

N I L

N I L

N I L

N I L

Education Allowance

(maximum for 2 children)

2,500

500

2,500

500

Transport Allowance

1,140

(600+90% DA)

225

3,040

(1,600+90% DA)

225

 

Staff Welfare/Provisions

N I L

500

N I L

500

Newspaper

N I L

100

N I L

100

Gross Monthly salary

18,292

13,640

33,920

16,644

 


In respect of officers the disparity stand more pronounced as the following cogent, pellucid reasoning and statistics will reveal.

 

MONTHLY SALARY OF CENTRAL GOVERNMENT OFFICERS AND BANK OFFICERS AS ON 01-08-2013 –

A COMPARISON

 

 Various Components

of Monthly Pay

Central Government Officers (in Pay Band – 3–

Stage I)

Bank Officers

 in JMGS I

Central Government Officers (in Pay Band – 3 –

Stage II)

Bank Officers

in MMGS II

Central Government Officers (in Pay Band – 3 –

Stage III)

Bank Officers

 in MMGS III

Basic Pay

15,600

14,500

18,930

19,400

21,900

25,700

Grade Pay

5,400

N I L

6,600

N I L

7,600

N I L

Total of Basic + Grade Pay

21,000

14,500

25,530

19,400

29,500

25,700

Dearness Allowance

18,900

(@90%)

12,898

(@88.95%)

22,977

17,256

26,550

22,860

H.R.A.

6,300

(@30%)

1,233

(@8.5%)

7,659

1,649

8,850

2,185

C.C.A.

(Maximum@4% for bank officers) 

N I L

540

N I L

540

N I L

540

Education Allowance (maximum for 2 children)

2,500

N I L

2,500

600

2,500

1,000

Transport Allowance / Monthly Conveyance

6,080

(3,200+90% DA)

2,200

(30 litres of petrol)

6,080

(3,200+90% DA)

3,000

(40 litres of petrol)

6,080

(3,200+90% DA)

3,750

(50 litres of petrol)

Staff Welfare

N I L

500

N I L

500

N I L

500

Staff Entertainment Expenses (pro rata)

N I L

300

N I L

400

N I L

500

Gross Monthly salary

54,780

32,171

64,746

43,345

73,480

57,03


 

 

In proportion therefore, as the repulsiveness of the work increases, the wage decreases.” ― Karl Marx, The Communist Manifesto.

 

Ricardo developed a theory of distribution within capitalism, that is, a theory of how the output of society is distributed to classes within society. The most mature version of this theory, presented in On the Principles of Political Economy and Taxation, was based on a labour theory of value in which the value of any produced object is equal to the labor embodied in the object. (Adam Smith also presented a labor theory of value but it was only incompletely realized.) Also notable in Ricardo's economic theory was that profit was a deduction from society's output and that wages and profit were inversely related: an increase in profit came at the expense of a reduction in wages. Marx built much of the formal economic analysis found in Capital on Ricardo's theory of the economy. Marx employed a labour theory of value, which holds that the value of a commodity is the socially necessary labour time invested in it. In this model, capitalists do not pay workers the full value of the commodities they produce; rather, they compensate the worker for the necessary labor only (the worker's wage, which cover only the necessary means of subsistence in order to maintain him working in the present and his family in the future as a group). This necessary labor is, Marx supposes, only a fraction of a full working day - the rest, the surplus-labor, would be pocketed by the capitalist.

 

Marx theorized that the gap between the value a worker produces and his wage is a form of unpaid labour, known as surplus value. Moreover, Marx argues that markets tend to obscure the social relationships and processes of production; he called this commodity fetishism. People are highly aware of commodities, and usually don't think about the relationships and labour they represent

 

Karl Marx argues in Capital that "the relation between wage-labor and capital determines the entire character of the [capitalist] mode of production. Due to the functioning of the market, the way that exploitation takes place under capitalism is more disguised than in previous modes of production. An important tool in uncovering this process is Marx’s "law of value" or "labor theory of value." Marx theorized that the gap between the value a worker produces and his wage is a form of unpaid labour, known as surplus value. Moreover, Marx argues that markets tend to obscure the social relationships and processes of production; he called this commodity fetishism. People are highly aware of commodities, and usually don't think about the relationships and labour they represent.

With these clear understandings he philosopher Karl Marx said

One factor in restoring profitable accumulation is a depreciation in the price of variable capital (workers’ labor power)–in other words, a reduction in the wages and benefits paid to workers. Marx summarizes this process as follows: "the stagnation of production would have laid off a part of the working class, and would thereby have placed the employed part in a situation where it would have to submit to a reduction of wages even below the average. This has the very same effect on capital as an increase of...surplus value at average wages would have had. A contemporary example of this process involves the computer software industry. Technology workers perform an average of 50 hours of work per week, yet with recent increased layoffs, are accepting lower and lower wages and salaries for their work. At the same time, they are producing the same (and sometimes more) value for their employer. This fact helps restore and increase the capital accumulation of a section of the capitalist class.

 

Economic crisis also produces desperate attempts by capitalists to shore up their profits at the expense of each other. As Marx notes, "as soon as it is no longer a question of sharing profits, but sharing losses, everyone tries to reduce his own share to a minimum and to shove it off upon another.... How much each individual capitalist must bear of the loss, i.e., to what extent he must share in it at all, is decided by strength and cunning, and competition then becomes a fight among hostile brothers. For example, when facing problems in extracting surplus value from workers, or in realizing surplus value, capitalists will often prefer to use their "idle money" for purposes of speculation in things such as stocks or currencies, rather than investing in new capital. This occurs at the end of every business cycle as profits begin to decline; hence the "irrational exuberance" of the stock market Marx's analysis leads to the consideration of economic crisis.

 

"A propensity to crisis—what we would call business cycles—was not recognised as an inherent feature of capitalism of by other economist of Marx's time," observed Robert Heilbroner in The Worldly Philosophers, "although future events have certainly indicated his prediction of successive boom and crash including The Recent Global  Economic Recession Crash Of 2008

 

This is as true today as it was over 150 years ago as said by the great philosopher of working class -Karl Marx.

 

 

C)   Prior to 1979, Group ‘A’ Officers of Central Government were earning less than bank officers. In 1979, the Pillai Committee was constituted to study the salary structures of bank officers and Group ‘A’ Officers of the Central Government and bring equity among various banks.

 

The Committee observed that the functions and responsibilities of bank officers in the new set-up were comparable to those of Group ‘A’ Officers in the Central Government and suggested pay parity between them.

 

The Pillai Committee recommendations were implemented in banks with effect from July 1, 1979, and the pay scale of the lowest rung of officers in banks were equated with pay scales of the lowest rung of Group ‘A’ Officers of Central Government at Rs 700.

 

The parity which was established by implementing the Pillai Committee Recommendations was distorted by subsequent Pay Commission revisions. In the Sixth Pay Commission, the wages of Group ‘A’ Officers zoomed past the bank officers’ wages. External relativity was given a quiet burial.

 

It is quite appropriate to compare the salary of bank officers with Group ‘A’ Officers of the Central Government to ascertain whether bank officers constitute a high-wage island.

 

The basic pay according to the Fifth Pay Commission for Group ‘A’ Officers was Rs 8,000 and the corresponding pay for bank officers was Rs 7,100. But in the Sixth Pay Commission the basic pay for Group ‘A’ Officers of the Central Government went up to Rs 21,000 (basic pay Rs 15,600 + grade pay Rs 5,400) whereas the pre-revised basic pay of bank officers was only Rs 10,000.

 

Between the Fifth and the Sixth Pay Commissions, the basic pay of Group ‘A’ Government officers went up by 162.5 per cent.

 

The gross salary of government officers was Rs 31,312, whereas the bank officer’s salary was only Rs 16,110. It can be seen that a bank officer draws a gross salary which is just 51.45 per cent of the gross salary of Group ‘A’ officers at the lowest rung.

 

Even house rent allowance was paid at 30 per cent of basic pay for government officers, whereas bank officers were getting a maximum of 8.5 per cent in metros. The pre-revised salary of the bank clerk was Rs 6,600 as compared with the Central Government clerk’s salary of Rs 11,000.

 

Many State Governments have adopted the Sixth Pay Commission Recommendations. A number of public sector undertakings have implemented the Pay Commission recommendations as a benchmark for their salary revision.

 

The Central Government Employee gets the pension 50% of the his average emoluments per of the last month before his Superannuation from the consolidated fund from the Government of India who joined before 2004 while the bank Employee does not get it from the consolidated fund of Government of India.

 

For the Central Government Employees in the past, the revised scales are close to 300% (3 times) every time, in the 10 years cycle. In case of bankers, the revised scales are 150% (1.50 times) after revision once in 5 years. Thus in each cycle of 10 years, the revision amounts to 225% (2.25 times) for bank staff. Precisely because of this reason, our wages have consistently come down relatively. Today, we have sunk to the bottom, from the top position we enjoyed 30 years ago.

 

Our HRA when compared with Central Government staff & and PSU the system rates (varying from 10% to 30% of the revised basic pay). Right form 5th bipartite onwards is the lowest

 

If we compare the limited working hours a day and 5 day week for central government employees , officers in particular  bank officers  need to be paid additional amount for the extra hours worked ( 40%) more than the government officers.

 

NOTE: The demand of government employee or employees of financial sector including Banking , for that matter any section of the working class for just wages and service conditions has antimonopoly content and therefore they are not non-antagonistic. Our interests and that of government employees are complementary and not contradictory. We wish to underscore here that government employees deserve further and assure them of bank employees’ solidarity to their just cause in tune with our slogan working class unity zindabad! For further   improvements and value additions in the 7th pay commission. Nor do we envy Government Employees getting better share of wages in the 6th pay commission. All that we are emphasizing and demanding is semblance of  parity with the Central Government Employees wages as on date as the Central Government  which the real owner of the Public Sector Banks  in India as a model employer is duty bound  like all organs of State should be committed to the Directive Principles of State Policy and Article 39  which enshrines the principle of equal pay for equal work

 

The volume of and varieties of work handled by bank employees are beyond comparison.

 

Public sector banks are required to perform all types of non productive work such as payment of pension, old age pension, MANREGA payment, teacher salary payment, tax collection, shoulder the responsibility of target for Financial Inclusion fixed by the government. Recently The Prime Minister has already sent 7.25 lakh emails to bank officers informing them about the financial inclusion scheme PMJDY, which he had announced in his Independence Day address to the nation. The PMJDY has been conceived as a national mission on financial inclusion with the objective of covering all households in the country with banking facilities and having a bank account for each household. Transcending the vision of the honorable Prime Minster into reality will involve bank employees working beyond working hours and even on Sundays as per the targets set by the respective banks higher echelon which the conscious bank employees perform without demur without any additional compensation.

 

It is also an irrefutable fact that during last two years banks have opened more than 5000 branches in rural areas without adding number in their total manpower. Business of banks have almost doubled without any increase in total number of staff .In the name of Financial exclusion , management of each bank is busy in making effort to please minister and forcing available staff to work in late hours and on Sundays and holidays. As such bank staffs are facing Social Exclusion in their effort to get success in Financial Inclusion.

 

To add fuel to fire public sector banks did not make any employment or made negligible recruitment since 1991 due to which average age of bank employee in PS banks is more than 45  which having deleterious effect  to cope with this extra  workload.

 

If the working hours, leave and holidays of bank staff and ground realities are taken into account, bank staff in fact deserve much more than the salaried class of people from any other part of the society. If the risks and responsibilities, link failures and late sitting are taken as the yardstick, ‘risk allowance’ of not less than 30% of the Basic Pay must be paid to all bank staff.

 

An overstretched business plan and over exerting pressure on clerical strength due to continuous depletion, if the present trend continuous will naturally reach a breakpoint.  If we take into consideration that 80% of staff are above 45 years, marketing of business strategies, may get affected under the weight of work pressures due to age related problems.

 

Ground realities:

Here I would like to bring to the notice of the readers and top echelons in IBA / Finance Ministry,  a news item appearing in the Hindu Business Line , august 24,2012 under the title “Challenge for banks: Get people to join up, stay”

 

“Recently, at the graduation day ceremony in a B-school near Mangalore, some students approached a former senior banker, who is the head of academic council there, for his blessings before starting off on their career in banking. He had this piece of advice for them: “Build loyalty to the organisation you work for.”

 

When we posed the question of loyalty to another banker, who heads the regional office of a public sector bank in Mangalore, he said: “That is for later. The first challenge is to get people to join the banking sector.”

 

Citing the example of his bank, he said there were over 900 vacancies for the post of officers. After completion of the selection process, hardly 200 among the short-listed candidates confirmed their willingness to join. And, finally, only 20 per cent actually joined the bank.

 

Lest we thought the problem was unique to his bank, he hastened to add: “This is not limited to our bank alone. It is an industry problem.”

 

NOT SATISFIED

 

Here is another instance: Four people joined a public sector bank in Mangalore city as probationary officers. No sooner had they joined the bank, than they started surfing the Net for better opportunities in other sectors. A banker in the know of this happening said the new recruits were told about the benefits of a bank job vis-à-vis those in other sectors. Besides, banks also offer accommodation/quarters at some locations.

 

But these benefits don’t seem to impress many engineers and B-school graduates, for whom a bank job is only a stopgap arrangement. “They join a bank only because they want a job. And before long, quit to join elsewhere,” said a banker in Coimbatore. Bankers feel that management grads and engineers are overqualified for clerical jobs in a bank, yet they apply and get in because they want to be employed somewhere.

A public sector bank official says the trend is almost similar in the officer category too.

 

“Even if they join as probationary officers, they don’t stick on for long as in the past. They are invariably posted to the credit section and are set responsibilities. The present day youth is not prepared to take on the burden of responsibility. Youngsters feel their package is not commensurate with the hours they toil in the bank.”

 

Source: http://www.thehindubusinessline.com/industry-and-economy /banking/ challenge-for-banks-get-people-to-join-up-stay/article3817060.ec

This is the ground reality. Considering the present rate of inflation, future inflation and the anticipated salaries of central government staff after 7th CPC, it is be very fair and just for the bank staff to demand 25% hike in pay slip component to retain existing talents , stop exodus, attrition  and open window for future talented qualified  youth to take up jobs in Public Sector Banks and meet the challenges in manpower planning posed due to  the huge retirement likely to incur from 2016 onwards.

 

Hence it is all the more imperative that the Government and IBA ensures that  that Public sector banks have the  uniform wage structure as prevalent in Government Departments and other public sector undertakings. 

 

Needless to underscore that the difference between a highly successful organization and those lagging behind is due to how efficiently and effectively the human resources are planned, developed , retained  with just salary packages, incentives and service conditions and utilized.

 

Stephen Richards Covey (October 24, 1932 – July 16, 2012)

an American educator, author, businessman, and keynote speaker said”

 

 

“But first you have to treat your own people the way you want them to treat your best customers”

 

I append below thought provoking model of human resource development formulated by Vineet Nayar, CEO of HCL Technologies, a global IT – services firm, published his book “Employees First, Customers Second” which had yielded better results, turning Conventional Management Upside Down, “What our experience at Merck Ltd., Thailand had shown us was: If we take good care of our employees, they will take good care of our customers. Happy customers will buy again and again which will generate profits for our shareholders. And happy shareholders will return profits to the society.  Like this, everyone can be a winner.”

 

Ends of  justice demands  that   learned people in Finance ministry  and IBA  will take import these sound logic and consider our sacrosanct  demand of 25% hike  objectively , to augment staff motivations to higher levels , in fulfillment of the ambitious , pragmatic targets set by our Prime Minister and his government in respect financial inclusions and growth of public sector banks in full gears. 

 

CHAPTER - III 

 

JUSTIFICATION III: OUR DEMAND IS A JUSTIFIABLE DEMAND

 

Let us   compare the chart of the price of 14 commodities, which go into the computation of minimum wage. Placed here under is the computation of the Minimum wage on the basis of the prices of the requisite articles as in January, 2013. It could be seen that while the prices on an average registered an increase of 243.26.% the DA compensation had only been 76.50%

(For Nov-Dec-Jan 2012-13, AICPI 4877, slabs 510 and % 76.5)

 

If we take the quarter July 2010-Sept2012, it was 63% in February 2012).

This fact may kindly be used to bring home the necessity of revision of wages and arriving at minimum basic wage immediately Rates and Present Rates Common Items Used on Daily Basis.

 

 

Comparative Chart:

 

 

 

 

S,No

Item

Per

Rates as on 1.1.2006* in Rs

Rates as per CPI as on 1-1-2013 in Rs

Rates as per market rates in a government departmental store in Rs as on1-1-2013

% change compared

to 1-1-2006 prices

1

Rice

Kg

18

26

55

266

2

Dal (Toor / urd)

Kg

40

59

85

145

3

Raw Veg

Kg

10

15

50

500

4

Greenleaf Veg

Kg

10

14

25

250

5

Other Veg

Kg

10

17

40

400

6

Fruits

Kg

30

25

80

266

7

Milk

lt

24

26

34

125

8

Sugar and jaggery

Kg

24

34

40

166

9

Edible Oil

Kg

50

96

100

200

10

Fish

Kg

120

157

320

266

11

Meat

Kg

120

257

320

266

S,No

Item

Per

Rates as on 1.1.2006* in Rs

Rates as per CPI as on 1-1-2013 in Rs

Rates as per market rates in a government departmental store in Rs as on1-1-2013

% change compared

to 1-1-2006 prices

12

Egg each

each

2

4

5

250

13

Detergents etc

Kg

200

240

350

175

14

Clothing

Mt

80

61

150

187

15

Cokked meals

 

 

32

70

187

 

Total % increase

 

 

 

 

3649/15=243.26%

 

 

 

Market Rates as per local market  rates in metro

 

 

 

 

*Rationale of comparison as on 1-1-2006:

These are   prices as mentioned in table 2.21 of 6th pay commission 

Source: table 2.2.1 Pg.53 Chapter 2 of Sixth CPC Report

 

We note from above as against the increase of 243.26%. %, the bank employees were granted DA @76.50%% as on January 2013

Minimum Wage based on* 15th ILC Norms

As per the prevailing rates of commodities as on 01.06.2013

Item

Per Day

PCU ( in Grams)

Per month

3 CU ( in Kg)

Price per Kg

As on 01.01.2013

Total cost per month

Rice/Wheat

475

42.75

55

2351.25

Dal Toor / Urad / Moong

80

7.2

85

612

Raw Veg

100

9.00

50

450

Green Leaf Veg

125

11.25

25

281.25

Other Veg

Onion, potato, tomato

75

6.75

40

270

Fruits

120

10.8

80

864

Milk

200 ml

18 Lt

34

612

Sugar/Jaggery

56

5.00

40

200

Edible Oil

40

3.6

100

360

Fish

 

2.5

320

800

Meat

 

5.00

320

1600.00

Egg

 

90 Nos

5

450.00

Detergents etc

Bath & washing soap, washing powder, etc

 

 

350

per month

350

Clothing

$

 

5 mtrs per month. Deduced from 60 mtrs per annum

Rs150. per meter

750.00

Cooked food meals like Maggie and idli  flour, pizza  etc during expediency on some days

 

10 days in month Due to late sittings etc.. 

70

2100

Total

 

 

 

12050.50

Misc. @ 20%

*

 

 

 

2410.10

Total

 

 

 

14460.60

Addl. Exp @ 25%

**

 

 

 

3615.15

Total

 

 

 

18075.75

Housing

 

 

 

1500

Grand Total

 

 

 

20654.25

 

PCU   = Per Day Consumption Unit

 

3 CU = Three Consumption Unit

 

*        = 20% miscellaneous charges towards fuels, electricity, water, etc

 

**      = Additional Expenses @ 25% includes expenditure towards education,

            medical, treatment, recreation, festivals, etc. as per Supreme Court decision.

 

$ Clothing as prescribed is 70 yards per year.  This will work out to 5 mtrs per month and the cost include the ancillary charges like stitching etc

 

 

 

Hence the minimum wage to be demanded for 9 bipartite settlements should be Rs.20654 that is basic pay applicable to sub staff employees.

 

Whereas the Basic Pay Based on 4440 merger at 60.15% of DA is only Rs.9369

 

Taking the relativity formulae of 9th bipartite at the initial stage between clerk and sub staff which is.5850:7200, the minimum basic pay for clerical staff works out to Rs.. 25404/-

 

Whereas the Basic Pay Based on 4440 merger at 60.15% of DA is only Rs. 11531.

 

Infact a Clerk in Central Government Service (in Pay Band – 2) earns a monthly salary of Rs. 33,920, sub staff 18,292 whereas the monthly salary of JMGSI officers in bank is Rs.32,171. (Both at the beginning of the scale). Compare this with the salary of Central Government Officers (in Pay Band – 3–Stage I) which is Rs. 54,780 (See: justification I, II of this article series) this is the mother of all injustice. As stated above   the rules of the game have now changed totally, with the constitution of 7 CPC. So it will be imprudent to  demand less than 50% wage hike, in order to settle for 45% ultimately remember, even with 45% increase in establishment cost components (26.5% of pay slip components) we will be marginally better off as compared to 6 the CPC scales . So after 1-01-2016 Central Government Staff will surpass us again and we will be left far behind.

 

So let us be bold and ask for realistic salary suiting our intelligence, work load, risk, completive sprit demanding minimum25% hike in pay slip components.

Even though the Seventh Pay Commission is due from 01.01.2016 only, the Government has approved composition of Commission well before its due date to decide about the pay structure of Central Government employees which will be revised after the report is submitted by the 7th Pay Commission with effect from 01.01.2016. (This in addition to the provision of 50% merger of DA with Basic Pay during the intervening period) The comparative scales since 1979 are as under:-

 

 

 

Year

Group-A Officers of

Govt. of India

Scale-I Officer in a Bank

Prior to 1979

Rs.450/-

Rs.500/-

In 1979

Rs.700/-

Rs.700/-

In 1986

(4th pay commission from 1987)

Rs.2,200/-

Rs.8,000/-

Rs.2,100/-

Rs.7,100/-

In 1996

(5th pay commission from 1997)

Rs.12,500/-

Rs.10,000/-

In 2006

(6th pay commission)

Rs.15,600/- + GP Rs.5,400/-

Total Rs.21,000/-

Rs.14,500/-

 

There is steep rise in the CPI inflation and the salaries in absolute terms have also been eroded. Consumer price index has already increased by 1501 numbers over 4440 which was prevailing on 01/11/2012 i.e. the level at which IBA has agreed to merge the DA with basic pay.

 

Therefore minimum 25 % hike as demanded by the union is a justifiable and reasonable demand which will meet  and ends of justice and minimize the gap between  the Minimum Wage based on* 15th ILC Norms and actual basic pay sequel 4440 merger at 60.15% of DA as mentioned above

 

NOTES:

 

I adduce and adumbrate the above logical, rational, approved concepts further as under:

 

 `1) *Resolution1.7.1, 1.7.2 adapted in 15th Session of the Indian Labour    

      Conference held at New Delhi in July 1957

 

*1.7.2    At the 15th Session of the Indian Labour Conference held at New Delhi in July 1957, an important resolution was passed, which laid down that the minimum wage should be need-based and should ensure the minimum human needs of the industrial worker.  The following norms were accepted as a guide for all wage- fixing authorities including Minimum Wage Committees, Wage Boards, Adjudicators, etc.:

             I.        In calculating the minimum wage, the standard working class family should be taken to comprise three consumption units for one earner, the earnings of women, children and adolescents being disregarded.

 

           II.        Minimum food requirements should be calculated on the basis of a net in take of 2700 calories, as recommended by Dr. Akroyd for an average Indian adult of moderate activity. 

 

          III.        Clothing requirements should be estimated on the basis of a per capita consumption of 18 yards per annum, which would give for the average workers family of four a total of 72 yards. 

 

         IV.        In respect of housing, the norm should be the minimum rent charged by Government in any area for houses provided under the Subsidised Industrial Housing Scheme for low  income groups ; and

 

           V.        Fuel, lighting and other miscellaneous items of expenditure should constitute 20 per cent of the total minimum wage.  The Resolution further laid down that wherever the minimum wage fixed was below the norms recommended above, it would be incumbent on the authorities concerned to justify the circumstances which prevented them from adherence to the aforesaid norms.  The Resolution, thus, tried to give concreteness to the whole concept of minimum wage. 

 

**In 1991, the Supreme Court in its judgment expressed the view that  children’s education, medical requirement, minimum recreation, including festivals ceremonies, provision for old age and marriage should further constitute 25 per cent and be used as a guide for fixing the minimum wage.

 

  1. Fifteenth Session, (1957) The Thirtieth Session (1992) The Indian Labour Conference once gain ratified the above resolutions.

 

  1. The theory of 3 consumptions units of single bread winner as prescribed by experts of the Fair Wages Committee 1947 after the industrial truce resolution of 1947 which is basis for wage structure in India and Indian labor conference 1952 mentioned above is valid even today.  A released Census 2011 data shows that  An overwhelming 51 per cent of urban households live on the income of a single earner, while double-income families are a distant 26 per cent. In rural areas, the situation is quite different. While 34 per cent of families have a single worker, double-worker families are slightly more at 35 per cent. In fact, the double-income-no-kids (DINK) lifestyle celebrated as a cosmopolitan aspiration is prevalent in nearly 42 per cent of two-member rural families compared to just 22 per cent of similar urban families. Most of the bank employees belong the single income bracket of sole bread winner with minimum 4 dependents.

 

a)    In 1940 Central Govt. appointed on Enquiry committee consisting of BN Raw, Shri. Shafat Ahmad Khan and Mr. Humes ICS to report on the grant of war DA to employees in GIP Railways.

“What has been the rise in the cost of living for the lower paid worker      since the outbreak of war? Committee came to a conclusion that Industrial worker needs 3 c.u

 

b) Subramanian’s Report findings 1924 prescribed that Middle class         

    worker requires 3.6 c.u at start, 5.6 c.u eight years of service, After      

    allowing a deduction of 8 units for wife and 0.6 unit for each of two     

    children

 

c) Thereafter. Justice Rajadhakshya posted/telegraph award 1945 came to  

    the conclusion after family budget enquiry, and thorough investigation  

    and study that  Cost of living of Middle class = 80% cost of living  

    Industrial worker.  This 1.8 coefficient became the bench mark us to

    determine the remuneration payable to members of   Sub staff in Justice

    Sen. award of 1951, Sastry Award 1953 and Desai Award of 1962.

 

d) Deshpande's Report submitted based on the representation submitted   

    by employers to government thereafter reduced the Minimum

    requirements of a new entrant to 2.25 c.u.

 

e) But the Sen tribunal without intending to lay down rule or formulate a

    definite principles, the Sen Tribunal believed that it was not like to be

    much mistaken if the requirement of an employee in the 1st year of

    Service were taken to 2.25 c.u. The Sen tribunal also considered that in

    the 8th year of his service on employee has to maintain 3 c.u. and that

    towards and of his service he would have to maintain 4 c.u.

f) The Sastry Tribunal held the following views

 

 

1.    Proper method was to provide for an employee and his wife at the initial start and then provide for reasonable increments for the growing needs of himself and his family including children that are likely to be born.

2.    Calculating in according with the to Lusk coefficient it came to conclusion: 1st year 1.8 c.u., 10th year 3.c.u. towards the end 3 c.u.

3.    It changed 8 yrs to 10 yrs.

4.    It stated that since quite an appreciable number of workmen remained unmarried in the age group of 25-30 and suggested to take 10th year as the proper stage in which 3 c.u. should be allowed.

 

    6) The unions wanted the consumption units as per Subramanian Report.

 

7) Lest this article does not become research paper by itself  on determination of consumption of sole breadwinner alone  fudging the focus of the main article  without haranguing further on this concept I give below the summary of findings of Sen, Sastry And Desai Tribunal with regard to  consumption units

 

 

Sen

Sastry

LAT

Desai

1st Year

2.25

1.8

2.25

2.25

8th Year

3

3

3

3

End scale

4

4

4

4

 

The Sen award-1949 fixed the span of 25 years , Sastri award(1953) 25 years , LAT (1954) 25 years , Bank Awards Commission (1955) 25 years and Desai award modified it to 20 years and thus the demand of union for fixing span of 20 years which still in  vogue since Sen award was  finally  fulfilled.

 

These sacrosanct awards governing the bank employees even in vogue today concluded that   a young man of India starting his careers as a clerk has to shoulder the obligations imposed on the social structure of which he is a part. It may be demands of Joint Hindu family system or other claims of Kith and Kin. It may not be a wife or child at the commencement of his employment, but it can be a father of mother or both or a sister or a younger brother and to ignore such members of the family as not being workman’s early responsibilities on the context of our social and economic conditions are just unrealistic.

Let us see how LAT approached the problem. “We consider Sastry Tribunal’s approach to the subject is very narrow. We have to take a common sense view of these matters. A young man having matriculated joins a bank as a Clerk mostly because he is unable to afford a higher education. It is the economics necessity which forces him to work at early age. The extent of necessity is a question of fact in each particular case but no investigation has been made in this field or to as to this particular aspect. Wages are necessarily fixed in accordance with the normal expectations of family even though a particular workmen will may never marry and nor have any dependent”.

 

Note: It is because of this sound logic that bank employees get graded increments commensurate with responsibilities and obligations to his family and dependents in accordance with the increase in age when compared with other industries who have fixed increments.

 

All the above irrefutable facts mentioned above  is covered in the REPORT OF THE NATIONAL COUNCIL OF APPLIED ECONOMIC RESEARCH NEW DELHI ON WAGE STRUCTURE IN INDIAN BANKING  PUBLISHED BY NONE OTHER THAN  THE INDIAN BANKS ‘ASSOCIATION, BOMBAY ON 18TH  APRIL 1969. FORWARDED BY THE THEN DEPUTY CHAIRMAN F.K.F.NARIMAN.

 

  1. Even the 6th pay commission adopted above principles while arriving at just conclusions as below.

 

“The sixth pay Commission Report says that it has attempted an in-depth study into working of the private sector and noted that the compensation structure in the private sector is quite different as compared to Government sector. Since the establishments in private sector primarily work for commercial purposes the employee‘s cost is compared to the business worth. Such comparison is not feasible in Government jobs obviously for the reason that the Government sector is primarily service oriented. Also the variation in range of salaries in private sector is quite wide.

 

On comparison with Government sector it noted that the salaries can be said to be definitely better in private sector only in reference to jobs which can be compared to Group A services. However in that respect the prestige and challenge offered by the Government jobs is also quite high and the Government jobs also provide incentives by way of compensatory allowances, housing and transport facilities etc... The biggest advantage offered by a Government job is the job security attached to it and the assured retirement benefits. Commission has attempted to make the retirement benefits more attractive.  It has thus attempted to harmonize the tangible and intangible benefits offered by the two sectors for achieving some element of parity. 

 

For tackling the demand of the Government employees for making the minimum salary in the range of Rs. 10000/- per month the Commission has followed a multi pronged approach. Firstly it worked out the minimum monthly requirements for the family of lowest paid employee It has based its calculations keeping in view recommendations of the 15th International Labour Conference. The expenses when calculated on a family size of three units which is the expected family size for a job entrant came out in range of Rs.5500/-per month.

 

Thereafter the pay scales were fine tuned to make the minimum salary in the range of Rs. 6600/- in order to make the same approximate to the minimum needs of the lowest paid employees. Commission feels that the addition of HRA and other allowances would make it some where in range of Rs.10000/- as was demanded.

 

However simultaneously it also had to ensure that the relief is not considered as a windfall gain for the employees. It has therefore suggested transformation of the lowest paid employees into multiskilled workers whose skill levels could justify the higher wages. The Commission has therefore recommended that the Group D employees be converted to Group C employees in those cases where they fulfill the qualifications prescribed for Group C posts.

 

This would ensure that they not only get higher wages but also handle higher responsibilities. The employees who do not possess the minimum qualifications should be trained for skill up gradation and subsequent transition to Group C posts. Recruitment to Group C posts is proposed to be stopped forthwith”

 

 Hence my calculation of minimum basic pays of Rs 25404   clerical staff   and Rs.20654. For substaff is per principles adopted by the 6the pay commissions, which was basis in  Sen , Sastri, Desai awards too as explained in Justification I of this  article series .  

 

5)    Comparing price rise in last 30 yrs are so we can observe in last six years the price rise graph has risen dramatically, i.e. the prices have increased to a maximum beyond common mans reach,  the rupee value has gone down drastically , internationally the dollar rate is higher, GDP is very low just around 6%.  The purchasing power has gone down. The value of our salary six years back and now if we make a simple compare, our salary is nothing compared to private market

 

6)    There are nearly 252 items in the consumer basket for determination of consumer price index, in real terms the essential items for determination of CPI should have been only 52 items as per need based wages, by keeping a vast items in the basket the actual price rise is not reflected.

 

7)    The Miscellaneous articles weight age accounts for 25%. the food articles accounts for 58% weight age. Even if the rise in food articles is there, the cost of TV, Computer, and Mobile etc where there is reduction is taking place, thus depriving of the actual increase in CPI. Overall the Consumer Price Index for the Bank / Govt. Employees is not satisfactory, this has deprived us of the actual DA & wages

 

8)    The actual cost of the goods at villages and the cities are differently different The cost of one kg of tomato will cost around Rs 15 in a village after it brought to a retails shop in a city it is sold at Rs 40/- per kg. The weight age of just 20% is not correct it should be 40%.

 

9)    The whole system of the  All India Consumer Price Index Number for Industrial Workers (CPI-IW) on base 2001=100   & DA formula for the Government employees is wrong and needs a relook

 

10) as in case of petrol prices as and when the international crude is increasing the oil companies raise their prices of petrol, so no burden on them,  same should be the case of bank employees  as and when the AICPI increase then the DA should automatically increase every month and not average of quarter and   the Basic  Pay  should be suitably increased with appropriate  merger &loading to take care

 

11)  In view of the existing system of quarterly average being accepted between the parties to the negotiations rectify the same as pointed by a reader Compensation for increase in AICPI in the form of D.A. must be not less than 0.15% each slab of 4 points in the 1960=100 series. It will be suicidal to agree for 0.10% and if there is any psychological barrier to accept 0.15%, then 0.14% increase for each slab may be insisted upon and achieved. 

 

12)  Now finally let us answer the question of government paying capacity. One can find cogent article and through analysis, contributed by ebullient bank employee uploaded by  to All Banking Solution .com. giving Performance  highlights of specific parameters of Public Sector Banks in F.Y.2012-13

 

This thoughtful article reveals the following inalienable truth

 

Ø  Staff Cost as compared to Total Income is only 10.48% in all Public Sector Banks

 

Ø  Provisions & Contingencies are higher than the Staff Cost in all Public Sector Banks.

 

Ø  Provisions & Contingencies constitute 11.66% of the Total Income in Public Sector Banks.

 

Ø  Provisions have a direct bearing on Net Profit and also the leverage for giving higher compensation to the bank staff.

 

Ø  Except the provisions made for terminal benefits (and wage arrears, if any).

 

Ø  Bank staffs are in no way responsible for keeping higher provisions.

 

Ø  Even if additional 2% of Total Income is spared for hike in Staff Benefits of Public Sector Banks, it will amount to Rs.12, 233.16 Crores.

 

 

13) Only our demand of 25 % hike can compensate to some extent the erosion in real wages due to inflation as explained below

 

Inflation in simple terms is the rise in prices of various goods over a period of time.  However, if everyone’s income went up by the amount of the prices, then no problem would arise except that in nominal terms things would seem more expensive.  The difficulty arises when some people gain out of inflation.  Typically in inflation, the prices rise faster than the wages do. In other words, those who have property income like profits and rent, gain more than the others.  Actually, the properties gain at the expense of the wage and salary earners.  Through indexation of wages to prices, the workers try to protect themselves.  However, this is usually not enough. Further, as   soon as inflation levels reach into double digits, there is pressure to break this link.  Finally, in India 90% of the work force is in the unorganized sectors and is unable to protect its income from the ravages of inflation.

 

Basically inflation is caused due to two broad reasons:

The ‘cost push’ given to the prices of key inputs like petrol, coal, steel etc. By the government which translates into an escalation of prices all around, and 

increase in the supply of currency circulating in the economy resulting in ‘too much money chasing too few goods’.  For example, the money supply in the economy is increased whenever the government faces a shortage of funds to balance its expenditure.  The impetus for this comes either because some import prices have risen (like, petroleum goods) or margins of trade and industry have risen or there is a bottleneck in supply leading to increased margins (like, drought or floods or speculation).

 

A close examination of the economy reveals a number of additional culprits:

 

The indiscriminate increases in indirect taxes affecting prices of essential commodities, and the entry of vast amounts of black money in the trade of various goods and increased speculation in real estate.

 

Even the Consumer Price Index may not reflect the real rate of inflation, as experienced by common people, for several reasons.  First, the basket of commodities that is chosen for the purpose of measuring price rise may not reflect actual consumption patterns – either the commodities may be different, or the weightage given to each commodity may be different.  Secondly, the reporting of prices from various centers may be understated.

 

A third reason is one that is particularly relevant now, when there is rapid price rise in essential commodities:  During such a period, despite the higher prices, people cannot greatly reduce their consumption of such commodities (the term used is that “demand is inelastic in relation to price changes”); consequently, in their total basket of consumption, common people cut back more on other commodities.  In that case, even if the consumption basket for CPI were initially correct, it would get rapidly outdated during such a period.  Let us assume that food items have a weight of 60 out of 100 in a consumer price index; when prices of food rise rapidly, food items might actually consume 70 per cent of the expenditure of that section of consumers.  but the inflation rate would still be calculated as if they only made up 60 per cent, and hence the official rate would understate the real consumer price inflation.  This is one reason why people feel the official rates have little to do with the real rate they experience, and the impact of it on their lives.  (Another reason is, of course, the fact that most common people are already having difficulty making ends meet.  In such circumstances even a ‘moderate’ price rise can push them over the edge into dire poverty.)

 

Source: know globalization beyond jargon published me for my union on 24-7-2004

With this understanding let us grimace and gloss through Inflation by country / region

  • - The inflation tables below features and overview of the inflation by country in 2006 & 2013: The inflation rate is based upon the consumer price index (CPI).

CPI inflation 2006 by country / region

 

 current inflation / country

annual inflation (dec vs. dec)

average inflation 

 CPI inflation Austria 2006

1.49 %

1.44 % 

 CPI inflation Belgium 2006

1.64 %

1.79 % 

 CPI inflation Brazil 2006

3.14 %

4.20 % 

 CPI inflation Canada 2006

1.67 %

2.01 % 

 CPI inflation Chile 2006

2.57 %

3.40 % 

 CPI inflation China 2006

2.81 %

1.65 % 

 CPI inflation Czech Republic 2006

1.78 %

2.55 % 

 CPI inflation Denmark 2006

1.81 %

1.89 % 

 CPI inflation Estonia 2006

5.14 %

4.44 % 

 CPI inflation Finland 2006

2.20 %

1.57 % 

 CPI inflation France 2006

1.53 %

1.68 % 

 CPI inflation Germany 2006

1.39 %

1.58 % 

 CPI inflation Great Britain 2006

2.97 %

2.33 % 

 CPI inflation Greece 2006

2.91 %

3.20 % 

 CPI inflation Hungary 2006

6.50 %

3.92 % 

 CPI inflation Iceland 2006

7.03 %

6.68 % 

 CPI inflation India 2006

6.53 %

5.79 % 

 CPI inflation Indonesia 2006

6.60 %

13.34 % 

 CPI inflation Ireland 2006

4.93 %

3.94 % 

 CPI inflation Israel 2006

-0.10 %

2.12 % 

 CPI inflation Italy 2006

1.87 %

2.09 % 

 CPI inflation Japan 2006

0.30 %

0.24 % 

 CPI inflation Luxembourg 2006

2.34 %

2.67 % 

 CPI inflation Mexico 2006

4.05 %

3.63 % 

 CPI inflation Norway 2006

2.24 %

2.33 % 

 CPI inflation Poland 2006

1.40 %

1.31 % 

 CPI inflation Portugal 2006

2.51 %

3.11 % 

 CPI inflation Russia 2006

9.02 %

9.69 % 

 CPI inflation Slovakia 2006

4.17 %

4.48 % 

 CPI inflation Slovenia 2006

2.77 %

2.46 % 

 CPI inflation South Africa 2006

4.82 %

3.24 % 

 CPI inflation South Korea 2006

2.09 %

2.24 % 

 CPI inflation Spain 2006

2.67 %

3.52 % 

 CPI inflation Sweden 2006

1.64 %

1.36 % 

 CPI inflation Switzerland 2006

0.62 %

1.06 % 

 CPI inflation The Netherlands 2006

1.00 %

1.17 % 

 CPI inflation Turkey 2006

9.65 %

9.59 % 

 CPI inflation United States 2006

2.54 %

3.24 %

- See more at: http://www.inflation.eu/inflation-rates/cpi-inflation-2006.aspx#sthash.eaVtI8Ay.dpuf

CPI inflation 2013 by country / region

 current inflation / country

annual inflation (dec vs. dec)

average inflation 

 CPI inflation Austria 2013

1.87 %

2.00 % 

 CPI inflation Belgium 2013

0.97 %

1.11 % 

 CPI inflation Brazil 2013

5.91 %

6.21 % 

 CPI inflation Canada 2013

1.24 %

0.94 % 

 CPI inflation Chile 2013

3.02 %

1.79 % 

 CPI inflation China 2013

2.51 %

2.57 % 

 CPI inflation Czech Republic 2013

1.40 %

1.42 % 

 CPI inflation Denmark 2013

0.78 %

0.78 % 

 CPI inflation Estonia 2013

1.40 %

2.79 % 

 CPI inflation Finland 2013

1.61 %

1.48 % 

 CPI inflation France 2013

0.69 %

0.86 % 

 CPI inflation Germany 2013

1.43 %

1.51 % 

 CPI inflation Great Britain 2013

2.00 %

2.56 % 

 CPI inflation Greece 2013

-1.71 %

-0.92 % 

 CPI inflation Hungary 2013

0.37 %

1.74 % 

 CPI inflation Iceland 2013

4.16 %

3.88 % 

 CPI inflation India 2013

9.13 %

10.92 % 

 CPI inflation Indonesia 2013

7.72 %

6.82 % 

 CPI inflation Ireland 2013

0.20 %

0.50 % 

 CPI inflation Israel 2013

1.84 %

1.55 % 

 CPI inflation Italy 2013

0.66 %

1.22 % 

 CPI inflation Japan 2013

1.61 %

0.36 % 

 CPI inflation Luxembourg 2013

1.54 %

1.74 % 

 CPI inflation Mexico 2013

3.97 %

3.81 % 

 CPI inflation Norway 2013

2.04 %

2.13 % 

 CPI inflation Poland 2013

0.73 %

0.99 % 

 CPI inflation Portugal 2013

0.20 %

0.27 % 

 CPI inflation Russia 2013

6.48 %

6.77 % 

 CPI inflation Slovakia 2013

0.43 %

1.40 % 

 CPI inflation Slovenia 2013

0.68 %

1.77 % 

 CPI inflation South Africa 2013

5.30 %

5.77 % 

 CPI inflation South Korea 2013

1.14 %

1.28 % 

 CPI inflation Spain 2013

0.25 %

1.42 % 

 CPI inflation Sweden 2013

0.14 %

-0.04 % 

 CPI inflation Switzerland 2013

0.07 %

-0.22 % 

 CPI inflation The Netherlands 2013

1.70 %

2.53 % 

 CPI inflation Turkey 2013

7.40 %

7.49 % 

 CPI inflation United States 2013

1.50 %

1.47 % 

:http://www.inflation.eu/inflation-rates/cpi-inflation-2013.aspx#sthash.GloAMJrq.dpuf

 

The average inflation of India in 2006: 5.79 % rose to 10.92 % in 2013 (See: Source: India, Ministry of Finance, Monthly Economic Report, December 2012) and the inflation India is the highest as above table reveals.

 

14) Procrastination Is the Culture of The Bankers

 

With the government/s  failing miserably  to curb inflation undertaking control of inflation reforms  ,despite pool promises and policy pronouncement while in power  there is strong case made by us to  the  GOVERNMENT /IBA considering our just demand of 25 % increase ,more so when wages in other countries in the table is for above the wages paid in India , despite  their lesser inflation rates , especially when the globalization , LPG  rhetoric are buzz words and mantras of the successive Government in power since 1991, in respect any factors ,including denationalization , mergers & acquisitions ,  Indian banks to achieve global standards etc ,blah, blah ;blah .. etc, etc.. .. ….     in Indian economy.

 

My article  demanding  5 day charter with its exhaustive memorandum to government of 133 pages with its well researched  justifications, in tune with the global trends  in vogue    which was covered in 38 social networking sites and recognized and appreciated  in  media w as rejected by the government / IBA

 

Another article of mine in demanding increase in retirement age for well with its once gain well researched memorandum within 24 hours after the news papers published report that the government is planning to increase the retirement age for whole time directors, in consonance with global trends in force which was once again covered in 39 social networking sites and media is also not considered by the IBA/ Government combine till date.

 

During 1996, on account of Supreme Court Judgement in the matter of Steel Authority of India Vs Union of India, the appointment on compassionate ground was not to be claimed as a matter of right, but management to offer it on the basis of the ‘penury’ and ‘precarious’ living conditions of the family of the deceased employee. The Government of India, advised all Public Sector Banks to adhere to the spirit of the Supreme Court Judgement on compassionate appointment. They also laid down penury norms for appointment on compassionate grounds. However, in case of death while on duty, on account of dacoity, violence, robbery etc., compassionate appointment as well as cash compensation was made available.

 

Subsequently, based on the recommendations of the IBA, Payment of ex-gratia to the dependent family members, instead of appointment was introduced during 2005.

One of the reasons for depriving the appointment was, the IBA Managing Committee felt that, such appointments will dilute the efficiency of the Bank.

 

After protracted struggles, strikes ever since this noble scheme, prevalent in Government services was annulled only in banks since 1996, UFBU submitted scheme for compassionate appointments in Public Sector Banks at par with government employees’ scheme on 03-04-2008 explaining and justifying the reintroduction with rationale and logic.

 

Even this noble scheme was considered by the government  after  repeated memorandums,  delegations , struggles  only after 18 years , only very  recently during July 2014. This in quintessence shows the culture of procrastination of the IBA/ Bankers combine.

 

Needles to underscore here that in respect above three demands, introduction of 5 day week at par with government employees , increasing retirement age, and introduction of compassionate appointment scheme in banks at par with central government schemes, during negotiations, as the circulars the union reveals  IBA has consistently adapted either neutral or agreed (without assurances)  favourable recommendation to the Government, which was  kept in cold storage by the Government for many years. As mentioned above barring compassionate appointment scheme ,that too after 18 years , none of  the so called favorable recommendation by IBA in respect other two important  demands mentioned above, which does not cost any exchequer to the banks,  have been considered by the Government till date.  

 

That being the case, logically our demand should be on global standards as applicable to bank employees in our countries. . Since it my look utopian, or ambitious, desirable  but not possible we have constricted our demand to  that too in just 25 % hike in pay slip components  cannot rejected out rightly by IBA without dialogue and discussion, disregarding historic traditions of bilaterism and bipartite on spurious and jest  grounds. Is this not double talk or peddling in sophistry?  At whose instance?

 

15) Learn from history:                                                                                                                                                                                          

Friends,

 

We learn from history as well as fail to learn from history sometimes history repeats itself. The reality underlying the edifice and life of tradition movement in India is that nothing is ever settled and methodical in labour matters in our country. The little achievements we have secured required bitter struggles before each inch of progress could be made. Throughout this millennium of struggles runs one red thread of continuity and synonimity – struggle-success- struggle

 

History records that when the year 1947 witnessed industrial unrest in the country on an almost unprecedented scale and the number of man days lost during the year was 16.6 million, the highest recorded since 1939. Production had also fallen all round and the engineering and manufacturing concerns. Of ‘produce or perish was raised. In Dec. 1947. the Govt. of India called a tripartite conference of representatives of the control and state Govts. Employees, employers in order to consider what action should be taken to remedy the situation.

 

The conference unanimously adopted what has since come to be known Industrial Truce resolution. The object of that resolution was to recommend measures to arrest the rapid. Deterioration in relations between employers and labour and to ensure conditions that would encourage production, which was so vital to the economy of the country, could not be achieved without the fullest corporation between labour and management.

 

In consonance with ITR, the Fair wages committee and profit sharing bonus committee, which were tripartite in character, were constituted by the central govt.

The report of this committee forms an important land mark in the evolution of the wage level and the wage structure in Indian industry. Its main task was to define the ‘fair wage’ in Industry, but in its terms of reference it was asked to state in addition what was understand by:

a)    Minimum wage

b)    Fair wage

c)    Living wage

These concepts were explained by me with great details in JUSTIFCTION 1 of this series

The experts committed were of the view that the level of national income at that time doe not permits payment of living wage. In deciding the question as to whether the Living wage  has been introduced by any employer  the experts  opined as per studies reveal” it not be necessary to examine the wage structure paid to the relevant  working class  as a whole .It is well established that the claim for bonus is recognized on the basis of the contribution made by the working as a whole to the profits of the employer and we think of will be invidious and on principles unreasonable to isolate a few cases where higher wages may be paid and to claim immunity from the payment of Bonus .

 

With today amendment to  bonus act being our long pending demand ever since 1986, none of bank employees in subordinate and non subordinate cadre coming  within  the bonus ceiling  brackets as applicable as per acts in vogue, payment  of  Bonus  to bank employees for the value added by them in creation profits has become a distant dream.

 

Thus:

Living wage is our dream!

Fair wage is our goal!

Minimum wage is our protection!

In view of fact the realistic calculations as above calculations are based on the sound principles laid by experts committee set by Governments such as fair wages committee 1947, Indian Labour Conference Resolution etc which stand test time even today before many wage boards, The in evitable conclusion which leads therefore as a corollary is our demand of 25 % hike in pay slip components is fair, just meets ends of justice  of securing Just and fair wage and should be seized form unyielding hands no holds barred

 

P.S Read my article titled “What Constitutes a Reasonable and Justifiable Hike in Basic Pay in the 10th BPS?” written a year ago even before the commencement of 10 bipartite wage negotiations in conjunction with this article.

 

 

CHAPTER - IV

 

Justification IV: Our Demand is commensurate with the increase in our productivity and efficiency

 

Since the process of liberalisation and reform of the financial sector were set in motion in 1991, banking has undergone significant changes. The underlying objective has been to make the system more competitive, efficient and profitable.

 

With greater globalisation and expansion of financial services, risk management has become critical and indispensable. Since 1991, there have been two major stock market scams — those engineered by Harshad Mehta and Ketan Parekh. These were systemic crises that cast doubts about the efficacy of the banking system. Low labour productivity was cited as one of the important factor for this state of affair.

 

The standard measures of productivity, better known as accounting measures, involve calculation of output per unit change in a single input assuming that other variable factors, technology and institutions remain unchanged (average productivity). Business per employee, profit per employee, ratio of operating costs to average assets or ratio of operating income to staff expenses are often used as traditional measures of productivity in the banking sector

 

Banking, by nature is an information and human capital intensive industry, notwithstanding the increased reliance on technology solutions for improving productivity. Hence, labour cost plays an important role in determining the profitability of banks. Therefore, at a disaggregated level of operating costs, labour cost (expenditure on salaries) per unit of earning assets assumes importance among the components of operating costs.

In manufacturing, value added or net output is taken for output measurement. In the services sector, output is not tangible; therefore, it is difficult to quantify.

 

Different proxy indicators such as profit and volume of business per employee are used to measure labour productivity, an important but not the sole factor influencing profitability. The real variable, such as the number of accounts per employee, is the other indicator of labour productivity. Against this backdrop, we try to analyse the concept of productivity and profitability. Output of bank employees India measured in real and monetary terms.

 

 

Table A

 

PERFORMANCE HIGHLIGHTS OF PUBLIC SECTOR BANKS

FOR THE PERIOD 2006-2007 & 2011-2012

 

 

2006-2007

(in Rs.Cr.)

2011-12

(in Rs.Cr.)

Increase in %

CAGR%

Deposits

1994200

4372985

119.28

21.7%

Investments

664856

1328534

99.82

18.9

Advances

1440146

3305632

129.53

23.1

Total Business

3434346

7678617

123.58

 

Int. income

164185

366318

223.11

22.2

Int. expended

101960

231153

126.70

22.7

Net int. income

62225

135165

117.21

21.4

Business per employee (in Rs.Lakhs)

471.18

1013.63

115.12

 

Profit per employee (in Rs.Lakhs)

2.76

5.93

114.85

 

Source R.B.I

 

 

 

 

 

If we look at 5 years historical performance (i.e. from the 9th bipartite settlement) Public Sector Banks as per above table

 

Ø  Public sector bank has grown its deposits, advances and business per employee by the highest rate 21.7%, 23% and 21.1% respectively.

 

Ø  As far as net interest income is concerned it has grown in Pubic Sector Banks by 21.4%.

 

Ø  The total business has grown by 123.58%

 

Ø  The growth in the business per employee and profit per employee has been the highest for public sector banks, in absolute terms, and has almost doubled. The average business per employee of all PSBs taken together increased from Rs. 47.84 in 1992-93 to Rs. 215.60 lac in 2002-03 to Rs. 1013.63 i.e.  21.55 times when compared with 1992-93, 4.70 times when compared with 2002-03 and 2.16 times when compared with 2006-07

 

Staff strength in   public sector banks

 

Ø  Concurrent to  his increase in volume  of business in the banks as the figures in the table reveals ,The staff strength of public sector banks which stood at 8,83,648 in 1998-99 has reduced to 7,57,535 as on 2010-11 – a drastic reduction of  1,26,111.

Where as the number of branches in public sector banks increased from 42301 to 64673an increase of 52.88% during the period 1998- 2011 .As on 31-3-2012 number PSB branches is 67,930.The year 2013 -2014 witnessed aggressive and intensified branch expansions with respective managements .bank managements opened hundreds and thousands of branches during last two years without adding equivalent number of employees in their bank.

 

Ø  Whereas during the same period private sector banks staff strength increase from 60,777 in 1998-99 to 2,18 679 an increase of 1,57,902 underscoring a vital point that Public Sector Banks are no longer the major employment provider in the financial market.

 

It may be noticed from below given chart that total number of employees in public sector banks has come down from 8.83 lacs in the year 1998-99 to 7.71 lac in the year 2012-13. In a span of 13 years of reformation, number of branches has increased at least two fold and the volume of business has gone up by at least ten times.

Though per employee business of state run bank has increased compared to that in private banks to labour exploitation policy adopted by these banks, the quality of assets is much better in private banks than in public sector banks. Customers get better service in private banks and investors give better value to shares of private banks.

 

 

Moreover during sixties and seventies, public sector banks used to have one officer over five to six clerical staff. It means clerk to officer ratio used to be 5: 1 or 6: 1. As of now the situation is just opposite to it. Now in public sector banks ratio of clerk to officer is now 1: 5 or 1: 6

 

These Banks may achieve the target of number of branches under Financial Inclusion to please their mentor ministers but may not stop escalation in resultant risk banks likely to face in future. They may not stop rise in bad assets and rise in quick mortality of assets. These banks may show little rise in profit by manipulation, they may fraudulently show bad assets as good assets by using the tools of restructuring bad assets , they may reduce provision on bad assets to book more profit and so on. But no power on earth can save these banks from going from bad to worse as long as these reduction of jobs persists, inadequate manpower planning whims and fancies bereft of logic and science at the cost of quality of their assets and at the cost of joy and pleasure of human resources working at grass root level by denying them competitive, comparable and justifiable wage.

 

Ø  This other words  means   there is  an increase in pressure of work on  public sector bank employees , increased work load due reduced staff strength and disproportionate increase in branches , and as a result  additional of other auxiliary works instructed by Government like collection tax, electric bills, telephone bills, other miscellaneous  government department work at state and central  level  from time to time such as disbursement of pension to unorganized ,  rojgar yojnas, NREG  schemes  and  etc in addition to routine bank work.

 

Ø  The current sensex index is at an all time high but 65% of Indian households do not have bank account (in rural India that is 70% according to the Census of India household survey). In this context we appreciate and support the steps taken by the Hon.  Prime Minister with a view to eradicate poverty, to get rid of “financial untouchability,” in his Independence Day speech to the nation launching the campaign Pradhan Mantri Jan Dhan Yojana stressing the importance of financial inclusion. Even as Prime Minister launched the scheme in New Delhi, officials from various banks simultaneously brought financial services to 77,852 towns, villages and remote hamlets across the country. The Prime Minister has also asked that the target of opening 7.5 crore bank accounts is to be completed by 26th January, 2015.Reports confirm that almost all the bank managements has decided that henceforth, the bank will be holding such camps on weekly basis, from 8 am to 8 pm on all Saturdays so that the target of covering unbanked households is achieved well in time for the success of this scheme.

 

Ø   Needless to underscore here even before launching this scheme   bank employees have been actively participating the CASA, NO FRILLS ACCOUNTS, NPA Recovery campaigns. The respective unions and officers association in tandem have whole heartedly supported and will be supporting in the days to come, the endeavor the bank management spiritedly all these days, even campaigning on Sundays, holidays and beyond the working hours on week days expecting no incentives or monetary compensations   to meet the targets set in the quarterly business plan in their respective banks.  It is because of the commitment shown by the bank employees that the business and productivity parameters shown in the table above   have increase in leaps. Naturally such business promotions have resulted in higher work load on the staff. in pursuance of success of such campaigns  employees are required and found to be working beyond their stipulated working hours after completing the days routine transactions which on normal days , due to depleted  man power, even extends  beyond working hours. Needless to emphasize here, bank employees and their unions/ officer associations uphold the doctrine, ‘our progress is intertwined with banks progress banks prosperity is our security‘, have exhorted and participated in such noble endeavors . This being an irrefutable fact ‘higher the work load – higher should be wage ‘and hence our demand in this regard is just and right.  .but wage as a ratio to total expenses has down.

 

Ø  Compounding to above problem is the special efforts taken for educating customers, more so illiterate customers to fill up account opening forms in strict observance of KYC norms as per extant RBI guidelines. The consequent time taken by an employee to educate, create awareness and key date in the KYC module exercising due diligence   consumes at an average minimum of 10 minutes (provided there is no link failures). This naturally results in extended hours of work as one has to also attend to other allotted routine work. When it comes mass CASA campaigns , the task force entrusted with the task with view of mobilizing substantial counts in day gets the forms filled up and keys the data after the campaign hours often sitting late to some times even upto  late nights, sacrificing  their social time, leisure and work –life balance   if the target set up the prime minister of opening  7.5 crore bank accounts is to be completed by 26th January, 2015 is be met than will translate into  opening 573770 accounts per day  resulting in 95628 additional hours.

 

Ø  If the objective  analysis of the time available per man per year has to estimated on following assumptions

 

 

 

Days in a year

Saturdays in a year

Sundays in a year

Gazetted Holidays in a year (Excluding Sundays)

Casual Leaves

Days average leave availment by employee / year

Days Sick Leave

Days training and other purposes

 

Available working time per man year (Minutes) should be calculated as

 

Available time / man / day = 7 hrs – 0.5 hrs (for lunch)

Monday to Friday = 6.5 hrs – 390 minutes

Available time of Saturday = 4 hrs = 240 minutes

Available time / man / year   =        [ {365 days – (52 Sundays + 22 days Gazetted Holiday + 12 days Casual Leave + 15days Average Earn Leave + 10 days Average Sick Leave + 5days Training)} X 390 Minutes + {52 Saturdays X 240 minutes}] = 89310 Man – Minutes / year

 

Based on the above adequate manpower planning should be made by the bank management  providing necessary additional allowances for exigencies such as availment of leave, retirement, resignations, promotions, death etc

 

With cost cutting only on labour ,  down sizing being the order of the day , need based recruitments and business mix consequent  to the above  additional tasks being mismatch in practice , ahs  put enormous work strain on the existing employees.

 

Ø  Added to this additional work pressure is the Menace of Counterfeit Currency and sorting of soiled notes. The problem has acquired serious proportions of late. Setting aside the primitive printing methods criminals involved, the racket of fake currency now use sophisticated gadgets to manufacture fake India currency notes which conform to almost all security parameters. Hence differentiating between the fake and genuine ones is rendered very much difficult. More so in the midst of our preoccupation with our routine duties extending precautionary measures beyond a certain level is rendered not possible. The quality of counterfeiting has scaled new heights that only a close scrutiny and that too by an expert alone can detect the discrepancy. In Chennai in one instance the police referred two wads of Rs.500/- denomination to a Nationalised Bank which was passed by them for genuine. However further verification sought through the Reserve Bank of India proved that it was fake. Under such a serious risk only we are constrained to carry out our duty across the counter in the Currency Chests. It is ascertained that the number of cases registered has been increasing year after year. The Govt. itself has conceded that through some District in Jharkhand and West Bengal State placed near the border with Bangladesh, the fake currency is pumped into the country by Pakistan based Agencies.

 

An RBI data reports  that for year  2010-11 the counterfeit  notes detected 435607 pieces, and for 2011-12 as 521155 pieces , out of which Rs 500 denomination fake notes for the relevant period were 2,46,049 and 3,01,678 respectively .

 

Denomination-wise Counterfeit Notes Detected by the Banking System (April- March)

 

(No. of pieces)

 

Year

`2

`5

`10

`20

`50

`100

`500

`1000

Total

1

2

3

4

5

6

7

8

9

10

2010-11

-

-

139

126

10,962

1,24,219

2,46,049

54,112

4,35,607

2011-12

-

-

126

216

12,457

1,23,398

3,01,678

83,280

5,21,155

2012-13

1

1

321

221

9,759

1,08,225

2,81,265

98,459

4,98,252

 

 

We reproduce herewith the relevant excerpts from a latest RBI Report on this subject Currency Management which is self explicit.

 

Source:  Report of the Central Board of Directors on the working of the Reserve Bank of India for the year ended June 30, 2013 submitted to the Central Government in terms of Section 53(2) of the Reserve Bank of India Act, 1934, in VIII Currency Management 

   “Managing currency is one of the core functions of the Reserve Bank, being the central bank of India. Although coins of all denominations are issued by the government, they are put into circulation through the Reserve Bank. The Reserve Bank is the sole authority for issuing banknotes in India under Section 22 of the Reserve Bank of India Act, 1934. The Reserve Bank has the responsibility for providing banknotes throughout the country and also for maintaining the quality of the banknotes.”

 

“At 11.6 per cent, the growth in value of banknotes outpaced the growth in volume terms (6.0 per cent) in 2012-13. Notes of denominations of `500 and `1,000 together accounted for around 83 per cent of the total value of banknotes in circulation during the year”

                                                                                                                                                                                       

“The total supply of notes received from the Presses in volume terms increased by 8.6 per cent in 2012-13 /the supply of coins also increased during the period by 12.9 per cent over the previous year”.

 

“A r o u n d 14.1 billion pieces of soiled banknotes (20.4 per cent of banknotes in circulation) were processed and removed from circulation during 2012-13”.

 

The number of banknotes withdrawn from circulation and eventually disposed of at the Reserve Bank offices increased over the previous year by 358 million pieces. During 2012-13, around 8.97 billion pieces were processed through 59 Currency Verification and Processing Systems (CVPS) and the remainder were disposed of under other modes.

 

Due to the increased use of NSMs, bank branches detected more than 94 per cent of the total detected counterfeit banknotes during 2012-13 (Table VIII.7). Of the counterfeit notes detected by the Reserve Bank in 2012-13, around 79 per cent (23,093 pieces) were detected in the soiled note remittances by banks and about 21 per cent (6,107 pieces) were tendered over Reserve Bank counters”.

 

‘During 2012-13, the detection of counterfeit notes in the denomination of `1000 increased by18.2 per cent, whereas detection of counterfeit `500 and `100 notes decreased by 6.8 per cent and 12.3 per cent, respectively, in comparison with the previous year”.

 

Number of Counterfeit Notes

Detected (April-March)

(No. of Pieces)

Year                               Detection at                                     Total

 

Reserve Bank       Other banks

1                                          2                           3                          4

2010-11                      45,235              3,90,372              4.35,607 (10.4)                  (89.6)

2011-12                      37,690              4,83,465              5,21,155 (7.2)                  (92.8)

2012-13                      29,200              4,69,052              4,98,252 (5.9)                  (94.1)

Note: Figures in parentheses represent the percentage share in total.

 

 

 

 

 

 

 

 

 

 

 

The total expenditure incurred on security printing (note forms) during 2012-13 (July-June) was `28.72 billion as compared to ` 27.36 billion in 2011-2012 (July- June). The increase in security printing charges by `1.36 billion (5.0 per cent) over the previous year was mainly on account of increase in the supply of banknotes during 2012-13. Expenditure on remittance of treasure has increased from `528 million in 2011-12 (July-June) to `641 million in 2012-13.

 

Ø  Here again the blame is put on the employees working in the chests and branches handling sorting and counting machines when something goes wrong and many times amount is recovered form them leave alone other disciplinary proceeding launched against them for negligence... Bank employees through their unions have seen impressing upon the administration that when such notes escape the scrutiny of he machines it has to be treated as a risk inherent in the system itself. To arrive at an amicable solution which will safeguard the interest of the Institution as well as the individual union have been impressing upon the administration to arrange for a meeting with the administration. Unfortunately notwithstanding the repeated assurances from the administration such a meeting is yet to take place.

 

The total number of accounts per employee for PSB AND RRB‘s is the highest even as of financial year 2000.

 

Source: The Hindu business line Wednesday, Sep 03, 2003.

An  analysis of the Banking Statistics Report  For The Year 2000, RBI  Annual Report  makes it pellucid that,   “when it comes to  productivity and profitability of the banking sector, it is found that the total number of accounts per employee, at 885 for (RRBs)., 834 for public sector banks, other scheduled banks  505 . It is highest for regional rural banks .For foreign banks it is 291, the lowest amongst the bank groups. But a further break-up into credit and deposit accounts shows that the large number of accounts per employee in RRBs is because of higher deposit rather than credit accounts. This is true in the case of other traditional bank groups as well.

 

The workforce composition shows that foreign banks have the highest percentage (61) of officers. Surprisingly, RRBs have the highest percentage (41) of officers amongst Indian banks. Around 50 per cent of the staff in Indian banks is clerical and 20-35 per cent subordinate.

 

Considering the country's overall requirement, what is optimal workforce mix? As a large portion (70 per cent) of the population still lives in rural areas, spreading the banking network and the basic activities of savings mobilisation and lending should remain the core objective. Much of rural India's credit needs are still met by local moneylenders.

 

Bringing clerical and subordinate staff into the mainstream will promote productivity. This would not only lower the cost of service but also enhance profits and business volumes.

 

As far as central banking is concerned, its activities broadly comprise currency management, supervision of banking activity and formulation of monetary policy. Country-wise data on central bank staff per 1, 00,000 population is rather revealing.”

 

Source: The Hindu business line Wednesday, Sep 03, 2003.

 

Over the period  the number of accounts per employee ahs increased manifold in RRB’s and Public Sector Banks with the public sector banks alone  undertaking other schemes to buttress financial  inclusion as per government dictates , ‘dikats’  and or other wise. 

 

Ø  Contrary to the general impression that labour cost and wage expenses are going up, it would be observed as shown below that over the years, the ratio of wages to total expenses has slided down.

 

Wage as to % total expenses

 

In public sector banks  Year

%

31-3-2008

14.66

31-3-2009

13.88

31-3-2010

14.79

31-3-2011

17.50

31-3-2012

13.72

 

 

The above observations of my study have been endorsed by experts, proficient personnel’s in business schools as adduced below.

 

Studies of experts on increased productivity and efficiency of public sector employees

 

A)   A study on  Productivity and Cost, a comparative study of banks in India during 1997 to 2008 by Sharad Kumar and M Sreeramulu, published by the Reserve Bank of India (RBI) as one of its occasional papers  reveals the following ( Source The Financial Express, Tuesday  June 12,2012)

 

  • Business per employee for traditional banks—public sector and old private sector banks—has continuously improved during the past 12 years by nearly 7.29 times. Employees' Productivity and Cost, a comparative study of banks in India during 1997 to 2008 by Sharad Kumar and M Sreeramulu, published by the Reserve Bank of India (RBI) as one of its occasional papers, noted that business per employee for traditional banks has gone up from Rs 75.28 lakh to Rs 549.21 lakh between 1997 and 2008

 

·         “In case of modern banks — new generation private sector banks and foreign banks — the business per employee has increased only 3.06 times, less than half compared to the increase for traditional banks during the same period. It has, however, marginally declined during 1999, 2001, 2002, 2005 and 2007 compared with the previous years for the modern banks. The ratios of business per employee between modern and traditional banks have decreased drastically from 5.28 times in 1997 to 2.21 times in 2008, indicating that the gap in business per employee between modern banks and traditional banks is consistently reducing due to the efforts made by the traditional banks,” said the study.

 

·         Talking about the profit per employee, the study revealed that this parameter has increased both for traditional and modern banks from 1997 to 2008. However, this increase has been significantly higher for traditional banks (6.79 times) compared to modern banks (2.73 times) during the period of 12 years. There has been decline of profit per employee during 1999, 2001and 2005 compared with the previous year both for traditional and modern banks, indicating effect of some external factors impacting profitability of banks during these years.

 

  • The employee cost as a ratio of operating expenses in traditional banks has remained more or less constant from 1997 to 2002, and reduced gradually thereafter. In case of modern banks, the ratio fluctuated within a narrow range and reduced marginally up to the year 2006, before showing an upward trend during 2007 and 2008.

 

·         The employee cost to operating expenses for traditional banks remained more than double for modern banks till 2006. This ratio, however, decreased significantly during 2007 and 2008 (1.77 and 1.65 times, respectively), indicating that efforts made by the traditional banks to reduce the wage bills in relation to operating cost made an impact during recent period, said the study.

 

·         As regards employee cost to total business, it has been consistently reducing for traditional banks from 1.45% in 1997 to 0.68% in 2008. On the other hand, it has been increasing for modern banks in a very narrow range from 0.57% to 0.64% up to 2004, thereafter increased drastically to 1.23% in 2005 and again reduced to 0.88% in 2008. This trend clearly indicates that the traditional banks have reached the level where they can very well compete with the modern banks as regards to the marginal cost of expanding new business (deposits plus advances).

 

·         While comparing the 12-year data from 1997 to 2008 on productivity factors like business per employee, profit per employee and employee cost factors like employee cost to total business, employee cost to total assets and employee cost to operating expenses, it was observed that the performance of the modern banks like foreign and new private sector banks was much superior than the traditional banks like public sector and old private sector banks.

 

·         However, the gap between the performance of modern and traditional banks on all the five variables has shown a decreasing trend, which. has significantly reduced during the period of 12 years under study…

 

·         It is interesting to observe the reduced gap in business per employee owing to improved performance of traditional banks. This gap is likely to be reduced further due to certain measures taken by the traditional banks recently. However, the trend has to be closely monitored to come to a firm conclusion.

 

·         In case of modern banks— new generation of private sector banks & foreign bank — the business per employee has increased only 3.06 times during 1997 to 2008, less than half compared to increase for traditional banks; It has, however, marginally declined during 1999, 2001, 2002, 2005 and 2007 compared to the previous years in respect of modern banks

 

·         The employee cost as a ratio of operating expenses in respect of traditional banks has remained more or less constant from 1997 to 2002 and thereafter reduced gradually

 

·         In case of modern banks, the ratio fluctuated within a narrow range and reduced marginally up to the year 2006 before showing upward trend during 2007 and 2008

 

(B) Another study on Productivity, cost and profitability performance of scheduled commercial banks in India - a comparative evaluation by K. Sarala Rao Assistant Professor, Tata Institute of Social Sciences, Mumbai, India gives the startling revelations as under, grinding to dust the canard let loose by business houses, vested interests, with oblique motives about performance and productivity of public sector bank employees.

 

Business per employee: The business per employee of traditional banks increased 2.68 times (Rs.32.87 million to Rs.88.20 million) from the year 2005 to 2011, whereas in case of modern banks the increase in only 0.79 times (Rs.91.55 million to Rs.114.60 million). The business per employee has marginally declined during 2007 in case of modern banks. The ratios between the modern and traditional banks have shown a significant decline from 2.78 times in 2005 to 1.30 times in 2011, implying that traditional banks made a significant improvement on this indicator.   The gap between the modern and traditional banks reduced significantly from 47.15 percent in 2005 to 13.02 per cent in 2011(72.39 per cent reduction

Profit per employee: the profit per employee of traditional banks during  the  period 2005-2011 increased from Rs.0.13 million to Rs.0.55 million (4.34 times increase), while for the modern banks the increase is 1.80 times (Rs.1.01 million to Rs.1.82million). It is pertinent to note that the profit per employee declined in 2010 as compared to previous year for modern banks. The ratios between modern and traditional declined from 7.96 times in 2005 to 3.31 times in 2011 indicating improvement shown by traditional banks on this front. The gap between modern and traditional banks reduced from 77.70 per cent in 2005 to 53.67 per cent in 2011(30.93 per cent reduction

 

Net  income  per  employee:  Per employee net income of  traditional banks increased from Rs. 0.98 million in 2005 to Rs.2.22 million in 2011 (2.26 times increase) and that of  the modern banks reported an increase from Rs.2.78 million to Rs.5.43 million (1.95 times  increase)  during the same period. The gap between the traditional and modern banks revealed a slight decline till 2007 and thereafter assumed low to moderate fluctuations for the remaining years during the period of the study.

 

Business per branch: The business per branch of traditional banks increased from 456.4 million in 2005 to Rs.1048.41 million in 2011 (2.29 times increase) ,whereas in case of modern banks the increase in only 1.67 times. It is pertinent to note that the modern banks have shown exemplary performance through out the period as compared to traditional banks The gap between the modern and traditional banks reduced significantly from 164.72 in 2005 to 153.20 in 2011 (6.99 per cent reduction).

 

Profit  per  branch:  The  profit  per  branch  of traditional banks increased steadily during the period 2005-2011 from Rs.2.0 million to Rs.6.5 million (3.21times increase), whereas in case of modern banks, profit per branch increased from Rs.55.1 million to 133.1 million (2.41 times increase) during this period. Modern banks reported decline   in profit per branch in 2010 as compared to the previous years. The gap between the modern and traditional banks reduced marginally from 9.30 per cent in 2005 to 9.06 per cent in 2011 (2.48 per cent reduction)

 

 

Staff cost as % to operational expenses: The staff cost as a ratio of operating expenses  with regard to traditional banks is more or less constant with slight fluctuations towards the close of the period. In case of modern banks, the ratios revealed a upward trend during the entire period The  gaps  between  the  modern  and traditional banks on this indicator  reduced from 37.77 per cent in 2005  to 20.39 percent  in 2011 (46.02 per cent reduction) implying the efforts made by traditional banks to reduce the percentage staff cost to operating expenses.

 

Staff cost to net income: The staff cost to net income of traditional banks and modern banks remained more or less constant with slight to moderate fluctuation during the period. The staff cost  to net income  of traditional banks were almost double the cost of modern bank during the yea 2005, 2006 and 2007 and thereafter showed a declining  trend  revealing significant efforts made by traditional banks to be cost efficient. The gap index between the traditional and modern banks reduced from 38.99 per cent in 2005 to 23.39 per cent in 2011 (40.02 per cent reduction)

 

Staff cost as % to total business: staff cost to total business of traditional banks revealed an declining trend from 0.96 per cent in 2005 to 0.71 per cent 2010 and then an increase in 2011, while in the case of modern banks the staff cost to total business increased form 0.63 per cent in 2005 to 0.96 per cent in 2009, then declined in 2010 and again increased in 2011. The staff cost to total business of modern banks remained significantly lower as compared to traditional banks up to 2006, but the traditional banks overtook the modern banks during the next 5 years of the study period. During this period the gaps between the modern and traditional banks reduced drastically from 20.75 per cent to -11.11 per cent (153.54) per cent reduction

 

Return on Assets: The traditional banks have reported a steady increase in terms of ROA during the study period except for the year 2007 and 2010 wherein the ROA was reported significantly high and significantly low as compared to the previous years. The ROA has increased 1.66 times (0.55 per cent to 0.91 per cent) from 2005 to 2011. In case of modern banks the ROA has increased 1.21 times. The ratios of ROA between modern banks and traditional banks have decreased from 2.24 times in 2005 to 1.59 times in 2011. The gap index between traditional and modern banks reduced from 38.2 in 2005 to 22.88 in 2011 (40.10 per cent) implying the traditional bank made efforts to improve on the profitability front.

 

Interest income as % to Total income: It can be observed that the income interest to total interest of traditional banks remained more or less constant with sight fluctuations in their year to year performance and so is the case of modern banks during the study period. The ratios between traditional banks and modern banks decreased marginally from 1.42 times in 2005 to 1.15 times in 2011. The gap index between traditional and modern banks reduced from 17.38 in 2005 to 7.06 in 2011 (59.38 per cent)

Spread as % to total assets: The traditional banks reported an increase in 2006 as compared to the previous year, subsequently registered decline from 2007 to 2010 and significant increase in the year 2011. In case of modern spread as % to total assets increased from 2.76 percent in 2005 to 3.25 per cent in 2011(1.17 times increase). Except for the year 2005, modern banks have reported higher ratio on this indicator during the period of study. The gaps between traditional banks and modern banks during the period of study revealed year to year fluctuations.

 

Credit -Deposit Ratio: Credit -deposit ratio of traditional banks increased by 1.27 times (57.49 per cent to 73.18 per cent) from the year 2005 to 2011. In case of modern banks the credit -deposit ratios were more or less constant except for the year 2010. The gap index between traditional and modern banks reduced from 18.04 per cent to 5.75 per cent (68.13 per cent)

 

The expert based her just conclusions after objective analysis as below:

 

 

The analysis of data on productivity ratios i.e. Business per employee, Profit per employee Net income per employee, Business per branch, Profit Per Branch reveal that modern banks have outperformed the traditional banks. However the gap between the modern banks and traditional banks registered a declining trends on all the five indicators during the period 2005-2011.

 

 

On cost efficiency ratios, modern banks out performed traditional banks in terms Staff cost as % to operational expenses and Staff cost to net income. Traditional banks registered exceptional improvement post 2006 with regard to Staff cost as % to total business by registering low on this ratio.

 

In terms of profitability, modern banks have registered above the benchmark (more than one per cent) on ROA, while the traditional banks displayed a significant improvement on this ratio during the period of study.

 

With regard to interest income as % to total income, traditional banks outperformed the modern banks while modern banks performed better than traditional banks in terms Credit -Deposit ratio.

 

Source: International Monthly Refereed Journal of Research in Management & Technology ISSN-2320-0073 Volume II, March’2013

"... the driving force in the path ahead will be the immense capabilities that we possess in terms of human resource. In the years to come the `human bias' is likely to get stronger and the quality of human resource would become the cutting edge of competitiveness... "

 

Dr Bimal Jalan.  Former Governor of Reserve Bank of India

 

JUST CONCLUSIONS:

Ø  If the influx of new recruitment continues in the same trend not commensurate with the vacancies arising due huge retirements as result of superannuation and voluntary retirement under pension regulations, and other wastages, increase in volume of business, rapid branch expansion, the workload on the existing employees has increased manifold.

 

Ø  It is estimated that 75,000 bank employees are set to retire by 2015. Taking into account the present trend of huge attrition rate among the new recruits mainly due to better salary packages and perks privileges offered by comparable peers in pubic and private sector there is need for better compensation package to retain young employees in future.

 

Ø  In the context of    all-round increase in the cost of living, erosion in wages of the employees, spiraling price rise, increased work load on the employee, freezing of recruitment, contribution of the employees in improving the business of the Bank, present wage structure with comparable peers our  demand of minimum increase of 25% in pay slip components  in the 10th Bipartite  is fair , just  & right

 

 

EXPLODING THE MYTHS   UNVEILING FACTS AND TRUTH: REVEALING STATISTICS:

 

After a gap of 3 months with the last negations held on 14-3-2014 which was especially for non-monetary issues raised by the unions, another round of discussions took place with IBA on 13-6-2014 .

 

IBA informed, profits of the banks have come down as on 31-3-2014 and therefore they can offer maximum of 11 %( increase of meager 1 % our emphasis! )  on the cost of Pay Slip components of the wage bill which would amount to Rs.3,465 crores and which would be exclusive of other costs on retirement benefits, LFC, hospitalization expenses, etc Since negotiating unions rejected the  offer of 11% increase, IBA wanted to know the expectation of the union. A representative of the umbrella of nine unions   informed that their minimum expectation is 25% increase in the Pay Slip components cost.