PSU bank staff strike: Govt should find a solution and end the IBA, union drama

The United Forum of Bank Unions (UFBU), an umbrella body of some nine bank unions in the public sector banking industry (and in some old generation private banks), is on yet another all India strike today to press their demand on wage increase for employees in government banks.

As in the past, the strike is likely to impact the normal retail banking operations in state-run banks, including cheque clearances and other normal banking activities, since majority of the employees have allegiance to union activities, at least on the strike day.

Bank employee unions want at least 25 percent rise in their wages, while the bank management’s lobby is unwilling to offer more than 11 percent.

Even at 11 percent, the burden of wage increase on PSU banks is an estimated Rs 3,150 crore, according o IBA officials. The figure will rise to almost Rs 7,000 crore if arrears of pension and other perks are included. The new contract will come into effect from November 2012 for a five year-period.

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Going by the current signal, it is unlikely that the IBA and the UFBU will reach an agreement on the wage issue any time soon, which would mean that more staff strikes and more disruptions of banking services.

This is not the first time UFBU is striking work demanding wage increase since the last five-year bilateral contract between UFBU and Indian Banks’ Association (IBA) expired in October 2012. According to the claim of union leaders, about 10 lakh employees, majority of them from 27 public sector banks, will participate in the strike.

Besides, wage revision, other demands of unions include regulated working hours, five-day a week and filling up of the vacant posts in the banks.

Trade unions in state-run banks, which have acted in the past as a corrective force against the excesses by bank managements, have somewhat lost steam in the recent years with the newly joined young officers and employees showing no active interest union activities, even though most of them religiously contribute to the monthly subscription fees.

In the recent past, the country’s largest lender, State Bank of India had unleashed a severe attack on its trade unions by discontinuing the check off facility for unions (which they use to collect monthly contributions from members) and taking punitive actions against union leaders. SBI later did a U-turn and restored the facility following a court directive.

Still, even today, PSU bank unions still manage to mobilise mass support from employees to carry out strike and bring banking services to a standstill.

What should be the new order for the wages of PSU bank employees is something which only an expert panel should decide at the initiative of the government and not between endless arguments between an industry lobby and employee unions.

The widening wage gap between the workforce in public and private banks have been highlighted in the past as a major reason for high attrition and more corruption in sarkari banks. This is something which former RBI governor, D Subbarao, had highlighted in the past.

Given the majority ownership it enjoys in state-run banks, which control at least 70 percent of the total banking industry even now, it is the responsibility of the government to ensure that normal banking activities aren’t disrupted on account of the frequent strike calls by trade unions on wage issue.

So far, there has not been any meaningful intervention from the government in resolving the wage issues in the public sector banks.

The government should change the current system of wage negotiation for employees of all state-run banks at industry level and, instead, bring in a system to allow individual banks to decide the salary structure for their employees depending on the size of the bank and business generated. It doesn’t make sense to offer the same salary structure to employees of a large and small bank.

Also, the salaries should be linked to the performance of employees like in the case of private and foreign banks.

If increasing the efficiency of the public sector bank workforce and changing state-run banks as better institutions is the idea of the government as it preaches often, there must be an end to the cat-and-mouse game between trade unions and bank managements and the government should step in to find a solution at the earliest.