A reasonable offer

The Indian Banks' Association's offer of a 8 per cent wage hike to around nine lakh bank employees is more than justified against the backdrop of mounting pressure on banks' profitability. This is, however, less than what employees had got during the last wage settlement (10.5 per cent), and is far short of the unions' demand of a 25 per cent hike. Predictably, bank unions are not happy with the offer, and are busy drawing up agitation plans. Even the 8 per cent rise will not be palatable to some of the weak banks like Uco and UBI, which are burdened with low productivity and surplus work force. To make matters worse, tighter provisioning norms and higher capital adequacy ratio are staring at these banks. The 8 per cent rise will translate into an annual outgo of Rs 930 crore towards the wage bill of the industry, which was pegged at Rs 12,800 crore in fiscal 1998. Some weak banks have indicated that they would be forced to opt out of the settlement if the unions insisted on a higher quantum of hike. The IBAhas kept the pressure on the unions by making the new wage settlement effective prospectively.

Bank unions should have shown the courage of accepting a bank-specific settlement as it would have benefited employees of profit-making banks. Now that they have decided to settle for an industry-wide pact, it is time the unions accepted the IBA offer keeping in view the present economic scenario and banks' paying capacity. In case of a delay, bank employees will be the losers as the new pact will be effective on the day it is signed. The industry has already lost one year as the last settlement expired in October 1997.

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