11th Banker's Union View on Performance Linked Pay Scale in 11th Bipartite Wage Revision


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Thursday, 5 September 2019

Banker's Union View on Performance Linked Pay Scale in 11th Bipartite Wage Revision

IBA has already dictated theit terms for settling the 11th Bipartite Wage Revision and asked the union to incorporate the Performance Linked Pay Structure in their charter of demands for 11th Bipartite Wage Settlement.

What is the Union views on this ? Let's know it

1. Indian Banks' Association (IBA) has refused to raise the wage increase offer from 10% but agreed to review the proposed performance-linked pay (PLP) scheme for about 8.5 lakh public sector bank employees, raising concerns over further delay in bipartite wage negotiations. 

The bankers’ body has, in the last   meeting with bank unions, proposed to form a sub-committee to deliberate on the contentious variable pay issue and have  issued letters ot negotiating unions .

Nothing has been settled yet. The United Forum of Bank Unions (UFBU) will meet on September 11 to discuss the issues at hand and decide the future course of action.  

Wage revision in public sector banks takes place every five years. The 11th bipartite settlement is due from November 1, 2017. 

IBA appears to be in favour of dealing with the pay hike, variable pay and the mandate issue simultaneously while bank unions led by UFBU are rightly looking to settle the pay hike issue first. 

Earlier, IBA had raised the wage hike offer to 10% on fixed pay component in February while it had reduced the variable offer to 6.2% from 8.2%. 

IBA had also proposed a split mandate for officers up to scale V suggesting bank-wise increment for officers in Scale VI and VII. Deputy General Managers and general managers in public sector banks are in scale VI and scale VII, respectively. Public sector banks cumulatively have 3.76 lakh officers up to scale V on their rolls which is 99.27% of total officers in these banks at present 

All these issues appear to have now taken a backstage. IBA is pushing us to agree to variable pay first.

Even the Two bank unions -- the All India Bank Officers Confederation (AIBOC) and National Organisation of Bank Officers (NOBO) -- which boycotted the previous rounds of wage talks protesting against the mandate issue, took part in the last   meeting

There are many un answered question as under with regard to a low wages will be linked ot productivity linked pay as a variable component.

In banking circle it is very difficult measure productivity per employee as could be done in manufacturing and other service units dealing with tangible production. There are various methods of measuring Labour Productivity and various indexes are being used to suit the requirements of different industries. In the absence of a single index to measure Labour Productivity in all industries,

2. Hither to the method followed in banking industry India is defining productivity as ratio between total business mix and total manpower. In other words it is linked to denominator  management.  the lesser the denominator more the productivity and vice versa. over the years manpower base of clerical , sub staff and sweepers have reduced considerably while the business mix have increased exponentially  . If this theory is applied cadre wise then productivity of the sweepers and sub staff whose strength has decreased to nadir will be the highest and for other cadres up to scale VII the productivity ratio will go on steadily decreasing. this will defeat the theory of wages linked to relativity higher the responsibility higher the wages hitherto practiced which is preposterous. .

3.In the absence of a single index to measure Labour Productivity in all industries, what has been attempted in this table is to relate Value Added to Manpower Cost i.e. Value Added content per rupee of Labour Cost. This ratio would indicate the Labour Productivity in terms of Value Added.  I will explain this concept with the following is a statement showing the Manpower, Value Added, and Value Added per rupee of Manpower Cost.

see example in the attachment  if the figures below are unclear

For example:

Sl No. Name of industry  Manpower Cost ( Rs. In Lakhs )

 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88

1. xyz 39973 47417 59716 59911 66177 73319 85307

Sl No. Name of industry Value Added ( Rs. In Lakhs )

 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88

1. xyz 55339 62854 74071 111907 163827 146719 170787

Value added divided by Manpower Cost

Sl No. Name of industry Value Added ( Per Rupee of Manpower Cost )

 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88

1. xyz 1.38 1.33 1.24 1.87 2.48 2.00 2.00

 Here again the PLP will vary with regard OT wage costs of bank and business growth. With the wage cost remaining fixed, higher wage cost and lower growth means less PLP. This will give rise s to different PLP in different banks.   Hence there is need to define the following before introduction of PLP 

3.Whether PLP  will be linked to business   growth and productivity of all banks combined irrespective of the classification recently made while announcing merger such as Global, Nation And Regional Banks  or it will be made bank wise ?

4. If it is made bank wise the employees   the banks classified a regional banks which includes IOB not considered for merger (as there were no takers!)   WILL BE THE WORST SUFFERERS. in view of the fact these four banks do not have healthy balance sheet and still posting losses   THEY WILL BECOME INELIGIBLE FOR PLP and will draw only minimum wages fixed, there by leading to distortion of practice of uniform wages, equal work equal pay hitherto followed, irrespective of the fact the employees of these bank continue to put in best and work extra hours as their tradition at par with other banks. The fundamental s for these four not merged  banks are weak and  posting continuous  loses due to over provisioning for NPA  Aggressive lending with a big appetite for risk and lack of proper systems to recover bad loans, resulting in alarming levels of  NPA   , no sound HR, policies of motivation , stoppage of existing incentives due PCA frame work   , no recruitment, no adequate staff at branches ot management d customer s and improve efficiency  in customer service, poor IT audits in applications  ,   high cost deposits ,  irresponsible expansion etc. . A humble lolly sweeper or peon or clerk or junior management cadre employees are not responsible for the above mess as the above misdemeanours are beyond their control , discretion , powers, and responsibility and they continued work with devotion, dedications working late hours without any compensations in the interest of the bank like those competitive peers in  so called global or national banks , who are ipsofcto   eligible for PLP . These employees constitute major chunk to whom wage revision applies why they should penalised  for  their sincere actions not involving any malfides or transgressing  limits of law  for the mismanagement  of the top echelons are not consideration of PLP . 

Hence there is need to increase the minimum fixed wage from proposed 10% to mid-way between the demand of unions viz 25% and offer of the IBA i.e. 10% by at least 17.5 % before entertaining any talks of additional variable PLP 

4. A look in an historical perspective evolution of wage structures in the banking industry 

• In the year 1952 Sastry award classified banks into 4 categories and 3 areas  giving rise  to 12 wages structures as per classification banks  The Desai  award retained the same classification of banks and areas ..

• During the first bipartite settlement due to sustained struggles of bank workers area I was upgraded to include various centres . 

• And finally only during the second bipartite settlement in1970 AREA WISE Classification  was abolished due to continuous  arduous struggles of bank employees paving way for uniform wage structure for all employees in banks which followed date 

• During the 8,9and 10 th bipartite settlements attempts were made by IBA to foist individual bank wise wage structures which was thwarted by the unions.

• During the  10 bipartite settlement IBA attempted to introduce retrograde  CTC ( cost to company ) formula  whose myth was exploded and exposed by the social media forcing the  unions  ot reject the demand and make IBA relent 

• Now in this on-going 11 the bipartite negotiations under progress IBA is up to its usual mischievous tricks exerting pressure on unions for introduction of PLP without increase fixed woes from 10% offer.

• Since deduction from salary for not meeting the production level would be a violation of payment of wages act. Which It lists the deductions which are allowed., All other deductions are illegal. Instead of deduction, we have structure to have an incentive amount which will come into effect only on reaching production target (PLP, With a fixed salary that will be payable irrespective of production levels. 

•  hence an talk of PLP  loading   without increasing he base fixed wages to at least 17.5% is retrograde, regressive  and has to rejected with disdain and  contempt it deserves


Retired Bank Unionist

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