Banking Central | Why trade unions will stay in Indian banking

As the last week approached the end, thousands of bank customers and employees were gearing up for major disruptions in banking services on November 19. Bank employee unions had called a nationwide strike to press their demands on a raft of contentious issues including wage delays and sacking of members by various banks.

Subsequently, several banks, including Bank of Baroda and Punjab & Sind Bank, had already informed their customers about the potential impacts. Till Friday evening, there was no clarity whether the strike is on or not as the unions continued to issue statement on the preparedness to stop work. A last minute negotiation called by the Chief labour commissioner, however, managed to bring the truce after both sides agreed to discuss the issues and strike was subsequently called off.

A nationwide strike would have impacted most of the banking activities except services through ATMs such as cheque clearing operations etc.

The biggest issue that unions highlighted this time  is wage settlement.

Trade unions and bank management, the government have had longstanding friction on the wage issue. For several years, unions have complained about wages for PSU bankers being far below government servants, forget the private sector counterparts. With wage disparity between the public and private sector bank employees being a longstanding problem, this has triggered debates among top central bankers.

In August 2016, former RBI governor, Raghuram Rajan kicked off a debate on the subject when he said salaries of top-level employees of PSBs, including the RBI, are way short of global standards. "One of the problems, of course, is that public sectors overpay at the bottom but underpay at the top. I also feel underpaid," Rajan had said.

The IBA and trade unions negotiate wages for over 8 lakh bank employees in member banks once in every five years. The two reached a consensus on the revision that was originally due in November of 2017 after a long delay. In the 2012 round, IBA had awarded a 15 percent hike to employees. This time (2017-2022), unions had originally demanded a 20 percent hike while the IBA initially offered 12.25 percent. The widening salary disparity between public sector and private sector banks make the trade unions’ arguments even more relevant.

Besides the salary disparity, the bank unions have played a vital role in highlighting other issues concerning employees as well. These include long work hours, contract appointments and sacking of members by bank managements. These unions have acted as a corrective force to negotiate terms with bank managements and government. Most recently, one such issue was wage revision in Kerala-based CSB Bank.

The management of the CSB Bank has been at loggerheads with its powerful trade unions over a wage hike. Employees launched a protest as the management, so far, has refused to implement a 15 percent pay hike agreed to by the IBA and the bank’s trade unions. The AIBEA, the national body of bank employees, had escalated the issue to the national level and was one among the contentious topics this time.

There were issues concerning individual banks as well. Unions alleged that in Citi Bank, in the name of selling their consumer division business to Axis Bank, the management is attempting to abolish all workmen in this Division and retrench all the clerical staff. Unions also cited issues in other banks including MUFG Bank (Bank of Tokyo) and Standard Chartered Bank including terminations of employees joining trade unions. At the CLC meeting, bank managements and IBA agreed on most of the issues raised by unions.

It isn’t an exaggeration to say that banks unions continue to be a formidable force in Indian banking. The latest episode yet again proves that India's bank employee unions still commands a big role and remains an influential in the running of banking industry. True, over years, bank employee trade unions may have lost their earlier clout over employees but these organisations are here to stay. That would also mean that bank managements, government will have to learn to live with these outfits

(Banking Central is a weekly column that keeps a close watch and connects the dots about the sector's most important events for readers.)