The Indian Banks’ Association (IBA), an industry lobby of Indian banks, on November 11 said it has signed a bipartite settlement with bank unions agreeing a 15 per cent increase in pay slip for bank employees.
The 15 percent wage bill hike is for the five-year period between November 2017 and October 2022.
Also, 'to inculcate a sense of competition and also to reward the performance, the concept of Performance Linked Pay has been introduced for the first time' IBA said in a press release.
A 15 percent hike in wage cost will mean a yearly burden of Rs 7,900 crore for the banking industry. The meeting was held between IBA representatives and bank employee union representatives led by UFBU Convener, C H Venkatachalam.
The revision in wages will impact employees across 35 banks, Venkatachalam 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.
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.
But, the government has not acted to reform the pay structure so far except for minor tweaks. 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.
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