CPC. Vs. Bipartite Settlement

Beautiful  write up by unknown  person  received  on Whatsapp is posted below

17.11.2019

To,

All Constituents of UFBU

Subject:  CPC VS Bi-partite Settlement, unprofessional & unprincipled approach of IBA

4 officer’s associations of banks after looking at the Pay Scales of Central Government employees/officers submitted COD to IBA during the deliberations of 11th bi-partite settlement for matching the starting pay scales of Junior Management officer in banks with the starting salary of Grade 1 officer of Central Government. Under the 7th Pay Commission, wages has been defined as basic pay plus DA, while other allowances such as HRA, conveyance, CCA etc. are not part of wages, as these are paid over and above the wages.

As per 7 th CPC, the starting Pay Scale of sub-ordinate staff in Central Government has been fixed at Rs. 18,000/-, while for Grade 1 officer, the same has been accepted at Rs. 56,000/- per month. Common factor of 2.57 was applied on all the pay scales and therefore the minimum wages increased from Rs. 7000/- in 6th CPC to Rs. 18,000/- in 7th CPC. Similarly for senior officers, higher grades have been fixed with common factor of 2.57.

GOI approached IIM, Kolkata to submit report on wage revision for 7 th CPC and during the course of their study, IIM has gone through the day to day requirements of one small family consisting of one couple and two kids. IIM worked out the requirements on the basis of the consumption of all items, such as Wheat, Rice, Pulses, Spices, cooking oil, Milk, Vegetables, Fruits, clothing, Education of kids, Renting of house and other Misc expenses. CPC also advised that pay scales should be worked out in a manner that the employees/officers of Central Government can lead their lives in a decent manner. After taking into account, the consumption/requirements of all the above necessities, IIM Kolkata submitted their report and  CPC accepted the minimum wages for subordinate staff at Rs. 18,000/- PM, while  and the wages of grade one officer was fixed at Rs. 56,000/-, besides other benefits such as HRA, conveyance, CCA etc.

Under 7th CPC, the pensioners are the biggest gainers. Overall Pay package of serving employees increased by 16% for serving employees, while for pensioners; there was increase of 23.63%. Under 6th CPC, the rise in over package of central Government employees was 40%.

CPC has been fixing the pay scales in a professional manner, keeping in mind the basic requirements of a small family and the pay scales are fixed accordingly. Common factor of 2.57 was applied on all scales. CPC never went for percentage formula, rather worked in a professional manner by computing wages on the basis of all the basic requirements of a small family. CPC always believed that the life style of Government employees/officers is changing over a period of time and every family of Government employees needs certain minimum level of necessities for leading a decent life.

CPC also takes care of retirees of Central Government employees concurrently with revision in their pension increase for pensioners during 7th CPC were much higher than the serving employees. Let AIBEA and IBA should learn lessons for CPC.

Contrary to the above, IBA does not have a professional team and nor they are engaging some reputed professional organization, while arriving at the wage revision under bi-partite settlements. They never considered the actual day to day requirements of a small family of bank’s employees, rather just carrying out deliberations like an unprofessional shopkeeper, small trader & broker.

IBA always preferred to offer hike in wages by percentage method. IBA does not call for the bank’s retirees associations for deliberation in Bi-partite settlements and nor IBA has made any guidelines in this regard. The main two retiree’s associations are offshoot of serving employees associations and therefore the retirees automatically become an integral part of serving associations, as the retirees associations are working as per the guidelines of serving employees’ associations.

Pension is a deferred salary and falls under the definition of salary as per Income tax Act 1961 and they have to pay income tax on the pension received. DFS must give instructions to IBA, as out of total banker fraternity of 15 lacs, more than 33% of the same are in retiree’s cadre. Further, if we exclude 3 lacs serving employees, who joined the bank after 31.03.2010, the percentage of retirees to serving employees eligible for pension comes to 42% app. (5 lacs/12 lacs). How IBA can ignore the interest of such huge population of retirees?

It is a matter of shame & humiliation that IBA initially offered hike in wages by just 2% in the present 11 th Bi-partite settlement, which is still in progress. Precisely, the officials of IBA, who participate in the initial deliberations, are retired officers of few nationalized banks, who can’t enter into the shoes of bank employees/officers/retirees, since they are getting pension from the respective banks and handsome salary from IBA after retirement from the banks.  They can’t feel the pinch the sufferings and agonies of bank’s employees/officers/retirees. IBA alone can’t be blamed for the sufferings of retirees, as AIBEA has joined hands with IBA and talks the voice of IBA only.

Before discussing about the acumen of IBA’s officials, we will have to come back to the banking history about 50 years back.

Most of the Commercial banks prior to 68 were sanctioning loans to the borrowers on the basis of the securities offered by the borrowers. Precisely, the landing was security based and not need based. This approach did not help in providing proper growth of loans to traders and industrialists. Sadly, this approach was just casual, unprofessional & unprincipled and consequently that resulted in the retardation of economic growth of the country.

RBI was not satisfied with this casual approach of commercial banks  and therefore constituted Tondon committee, which came out with a report for computation of working capital requirements for industrial and trading units, by fixing the holding period (in days) of Raw Materials, Stock in Process, Finished Good and Receivables for different types of industries. The committee also came out with a detailed Performa called CMA, describing therein the past performance of borrowers for the last two years and Projections next the 2 years and on the basis of the same, Maximum Permissible Bank Finance (MPBF) was computed and banks were advised to sanction working capital facilities on the basis of this format, with a clear cut instructions that working capital facilities below the MPBF can lead to poor growth of industry and in some cases, this approach of lending less than MPBF can be instrumental in closure of some of the industrial units. Banks started following this concept of lending and that led to the economic growth of the country and the business of the banks also improved substantially.

It looks that officials in IBA responsible for initial deliberations in the bi-partite settlements are not fully aware of these guidelines and therefore they don’t have the matching knowledge of this concept of lending in the banks and consequently can’t estimate perfectly the day to day financial requirements of the bank’s employees/officers/retirees in a professional manner, so that bank’s employees/officers/retirees can lead a decent life befitting with the present market conditions and environment. The above example was cited just to demonstrate that there should be some technical formula and system with IBA in arriving at the wages in the bi-partite settlements.

Therefore, IBA must appoint some reputed professional organization, who could assess the need based requirements of one small family of one couple and two kids, keeping in mind that there have been sea changes in the needs of bank’s employees/officers during the last 20-25 years. Further, over a period of every 5 years, there is again a change in the living style, market conditions & environment.

During the period 1970-75, the salary package of officers in banks was slightly better than officers in Government of India but it went on coming down and at present the salary package of bank’s officers is just 55% of its counter parts in Central Government of India.

During the period 1970-75, there was concept of joint family and most of the married couples and their kids were staying with their parents, almost most of the families were not having white goods in their houses, most of the joint families did not have even a four wheeler, few of them had two wheelers, there was no concept of fast food, there were just few items in the market for kids, toys in those days were just for name sake, kids wore home-made clothes, the structure of the houses was just simple, the land prices were just low and remained stagnant over a period of time, there were no builders, rather every family constructed their houses just by hiring masons and laborers. In nut-shell, the living was very simple and modest and small banker’s family was able to meet out their budget smoothly.

Economic liberalization in India was initiated in the year 1991 by Prime Minister P.V. Narasimha Rao and his then finance Minister Manmohan Singh. Mr. Rao was often referred to as Chanakya for his ability to steer tough economic and political legislation through the Parliament at a time, when he headed a minority Government. This led to improvement in GDP & Foreign reserves of our country over a period of time.

With this liberalization, the income level of employees in all sectors starting going up and there were sea changes in the life style of people at large. The concept of joint family slowly diminished, anxiety to acquire white goods, vehicles, houses, and so many capital goods went on increasing year by year.

During the next 10 years, Mobiles entered the market, Malls were opened year after year, many foreign companies were established in India, concept of Private schools gained momentum, every middle class employee started sending their kids to Private Schools, Primary/secondary education became costlier, higher education became costlier, admission for engineering and medical colleges became costlier, fast food culture developed gradually, small operating dhabhas in localities vanished out gradually, costly restaurants came in existence. Builders stepped in the market, the prices in housing sector increased rapidly and renting of houses also became costlier. In nut shell, there were newer and newer needs emerging in the market and every one of us had the desire to buy all such items and when such trends are there in the entire environment, no one can keep himself aloof from such items.

In nut-shell, the needs of the single small family have gone up substantially and Government of India recognized the newer concepts & style of living of people in general and Government employees in particular and therefore keeping in view all these developments, CPC after every 10 Years fixed wages of Central Government Employees matching with the prevailing market conditions and environment in a most professional manner.

In the 7 the CPC, the pay scale of grade one officer was fixed at Rs. 56,000/- (Basic+DA), while the pay scale of bank officer is just Rs. 38000/-. Overall salary package of bank officer is just 55% of grade one officer of Central Government of India in the event all the allowances are considered.

The reason for low level of salary of bank’s employees is that UFBU accepts percentage formula, while CPC works out salary package on the basis of basic requirements worked out through a reputed professional organization. In bi-partite settlement, IBA gives a fixed load of specified amount in crores and that becomes an upper limit, while there are no upper limits set by CPC.

Our leaders do not have the bargaining capacity with reasons known to all of us and therefore there is no craving and anxiety on the part of our leaders to participate in the bi-partite settlements in an effective and efficient manner.  Our leaders don’t prevail upon IBA forcefully & vehemently  for arriving at appropriate pay scales and most importantly the GS of AIBEA is dominating the entire team of UFBU, as something is stopping him in arriving at matching pay scales of bank’s employees/officers/retirees with the employees/officers/retirees of the central government. Officer associations are supporting the cause of retirees but they are not able to influence IBA in the bi-partite settlements as there is no unity in the different constituents of UFBU.

IBA in its bi-partite deliberations on 15.11.2019 on retiree’s issues described the life expectancy of retirees as 80-84 years, while as per Government data, the same is still 69 years till 2019 but UFBU did not respond back on the correct position it bi-partite deliberations. This speaks of weak bargaining power of UFBU.

The revision in salary of serving employees and revision of pension are inseparable and Government can’t take a plea of shortage of funds as per Supreme Court of India judgment dated 01.07.2015 but GS of AIBEA never made reference of this judgment in 11th Bi-partite settlement, rather he is siding with IBA.  The plea of GS of AIBEA that pension funds are not sufficient is an excuse, as it is the duty of the employer to make suitable arrangements for revision in pension along with the revision in salaries and Government can’t take the plea of shortage of funds. Let GS of AIBEA study the judgment thoroughly.

Although 4 officers associations are keen to take forward this demand of revision of pension but they are not able to prevail upon AIBEA and this is the precise reason & cause that the pension of the retirees is not being revised.

AIBEA has buried the 100% DA neutralization for Pre -2002 retirees and this demand is not figuring in the deliberations of 11th bi-partite, although major part of the claimants are from employees cadre. 

Let us all be united and take up the matter with DFS to scrap bi-partite system in banks and instead replace it with CPC. There is lot of resentment in serving employees and time is not far away, when bi-partite settlement will be replaced by CPC. The plea of GS of AIBEA in one of the interview in TV channel that bi-partite is better than CPC does not hold good, as CPC has awarded much better wages than bipartite settlements and bankers are getting just 55% of the wages being enjoyed by Central Government employees.