Banks may pitch for ‘cost-to-company’ wage concept during talks with unions

MUMBAI, APRIL 18:  

The collective bargaining exercise for wage hike in public sector and old generation private sector banks could take an interesting turn.

Bank managements are likely to broach the sensitive ‘cost-to-company’ compensation concept with the 11 trade unions in the banking sector during negotiations.

The trade unions represent the interests of close to 10 lakh employees and officers in public sector and old generation private sector banks.

Public sector bank honchos have a buy-in from the Finance Ministry on pitching the CTC (cost-to-company) concept to the trade unions, said a top bank official clued in to the wage negotiations.

A management consulting firm is believed to have been given the mandate by the Indian Banks’ Association, the self-regulatory organisation of all banks in the country, for working out the modalities of the CTC concept.

UNIONS APPREHENSIVE

Trade union representatives feel that the CTC concept is a piece of financial engineering whereby the compensation appears attractive on paper but when it comes to in-hand salary, it could be as much as 30-40 per cent less that what is promised.

They fear that employees may actually be worse off as bank managements could push variable pay through the backdoor, thereby undermining the cardinal principle of labour rights – equal pay for equal work.

According to S. Nagarajan, General Secretary, All India Bank Officers’ Association, bank managements will bring up financial constraints being faced by them due to implementation of Basel-III regulations, which require banks to hold more and higher quality capital for making loans; and provisioning for bad loans and pension during the wage revision talks. Given the pressure on raising capital and provisioning, Nagarajan said bank managements will try to minimise the outgo on account of wages in the garb of transforming human resource processes and implementing new age concepts like CTC.

The Indian Banks’ Association has constituted a wage negotiating committee under the leadership of T.M. Bhasin, Chairman and Managing Director, Indian Bank, to negotiate with the trade unions on wage settlement. The first round of talks was held on February 22 and the next round is scheduled on April 22.

The ninth bipartite five-year wage accord in the banking sector expired on October 31, 2012.

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