Bank mergers cast shadow on wage negotiations between IBA and unions

The terms of the ongoing negotiations between the Indian Banks’ Association (IBA) and bank unions over the 11th bipartite settlement may have to be reworked, following the announcement of big bank mergers of state-run banks.

The IBA has formed a sub-committee on performance-linked incentives. The matter will be discussed at its first meeting in New Delhi on September 11.

The sub-committee, headed by State Bank of India’s (SBI’s) Deputy Managing Director Prashant Kumar, was set up after the last meeting between the bankers’ lobby and the United Forum of Bank Unions (UFBU) in Mumbai on August 29.

“Talks on the 11th bipartite settlement are in the final round and now we have these mergers. We thought if at all the mergers were to happen, it would have been after a settlement had been drawn up,” said a senior office-bearer of a bank officers’ union.

A bank official said, “While it’s unlikely new demands will crop up, what has to be worked out is on what parameters are staffers across banks with different business and cultural orientations to be evaluated. This is a tricky issue. You now have the variable of performance-linked pay in the wage talks.”

While a staffer may have been a top performer at a bank prior to the merger, it might not be the case in the merged entity, as the standards will be different. It is speculated that the middle ground may be to evaluate performance as it stands and craft a new human resource policy.

It was pointed out that the speed and breadth of the developments of the past few days have placed all concerned in unchartered territory.

Mergers in the recent past — be it State Bank of India’s merger of its five associate banks with itself, or the three-way Bank of Baroda-Dena Bank-Vijaya Bank transaction — had come well within the indicated time frame for hammering out the settlement.

The Centre’s decision to go ahead with four sets of mergers — Punjab National Bank, Oriental Bank of Commerce, and United Bank of India; Canara Bank and Syndicate Bank; Union Bank of India, Andhra Bank, and Corporation Bank; and Indian Bank and Allahabad Bank — has put bank managements and senior bank union officer-bearers in a spot.

Bank unions — officers and workmen — had buried their differences and sat across the table on August 29 to work out a fresh deal with the IBA involving a 20 per cent wage hike.

The IBA though refused to entertain UFBU’s demand for a 20 per cent wage hike and stuck to its stand that it will be 10 per cent at best; not even the 15 per cent which the unions had asked for in the earlier round of talks.

UFBU’s revised demand from the earlier 15 per cent was on grounds that the gap between what bank employees earn when compared to those in the government’s equivalent grade has widened. And that even after a 20 per cent pay hike, this difference will stand reduced only at the beginning of the scale, but it will still be at about half of the same at the end of it.

The spate of bank mergers will mean that the IBA and UFBU will have to rework the terms of their engagement. The 10th settlement had elapsed in October 2017, and it had been agreed with the IBA that a new pact will be effective from November 2017. The finance ministry, too, had instructed that negotiations begin six months earlier from the date of expiry of the previous settlement.