Trade Unions in Banks Remain Relevant

Are Trade Unions Relevant in theIndian Banking Sector?” by Bino Paul G D and Pooja Gupta Mahurkar (EPW, 16 April 2016) in its attempt to study the effect of trade unions in banking in India, fails to focus on current problems and emerging challenges.

Distinction between IR and HRM

The authors classify the issues of dealing with the two categories of bank employees as paradigms: handling non-managerial jobs as “industrial relations” (IR) and handling managerial jobs as “human resources management” (HRM). In the present context this kind of distinction is illogical.

HRM is a broad concept. Human resources literally encompass the entire workforce, irrespective of the jobs, the roles and the tenure of service (permanent, casual and contractual). Optimal utilisation of every employee’s capabilities becomes imperative for the success of the enterprise. This applies to banks as well.

Who, then, constitutes the management in banks? It becomes a relative term in hierarchical organisations. For non-supervisory employees, the supervisors are the management. For the supervisory staff, those in the top executive cadre are the management.

Differences between each category of employees and the next category in the hierarchy are likely to emerge from time to time. Treating the conflicts between non-supervisory groups of employees and the management as an IR conflict, and those between the supervisory group and the management as HRM issues has, therefore, no logical basis.

Generalisations

The article makes a series of generalisations about bank unions. A few are given below:

(i) After the first Narasimham Committee Report (NCR) on banking reforms (1991) there was chronic insecurity for workers.

(ii) As unions have no representation in policymaking bodies, the union movement is not strong.

(iii) Many banks do not give mandate to Indian Banks’ Association (IBA) to negotiate wage revision.

(iv) The dominance of caste- and gender-linked discrimination within the union movement has affected union efficacy.

(v) The prospects for strong union movement are weak because of risk aversion by employees, price sensitive financial products, technology-driven products and surplus labour supply.

All these claims are debatable.

Chronic Insecurity of Workers?

The NCR had essentially addressed the reforms in banking in relation to capital adequacy, regulation, directed lending and adoption of international accounting standards to make the banks financially sound. None of its recommendations impinged on employees’ security. If there is any, the authors have not spelt them out.

In conformity with the changing times, banks had to adopt new technology in their operations. In doing so, it is to the credit of both the unions and the managements in the banks that through bipartite settlements, large-scale automation was introduced progressively.¹ This, however, has not affected the security of employment.

In 2000–01, at the behest of the government, public sector banks (PSBs) introduced the Voluntary Retirement Scheme (VRS) for employees. The banks offered attractive incentives for whoever volunteered to retire early. The objectives were twofold: to cut costs and to infuse new blood. As much as 14.24% (about 1,25,000) of the employees retired under VRS. Thereafter there has been massive recruitment of employees at all levels in the banks. The total workforce of scheduled commercial banks (PSBs have a lion’s share in them) was 8,69,412 as on March 2009. It reached 12,91,542 in 2015 according to Reserve Bank of India (RBI) data. These new employees are also unionised.²

Bank employees continue to enjoy fairly reasonable job security even today. The workmen and the officers are governed by the provisions of the bipartite settlements (BPS) and the Officers’ Service Regulations (OSR) respectively. The hiring as well as firing of bank employees of all categories has to be in conformity with these time-tested regulations. The inference of erosion of job security of bank employees is, therefore, not tenable.

Unions on Policymaking Bodies

Bank unions associate themselves with policymaking in PSBs at two levels. At a formal level they have a representative on the board of directors of each PSB. This system came into force after the nationalisation of banks. The Bank Nationalisation Acts (1970 and 1980) have a provision to appoint one director each from among the workmen and the officer category of employees. The persons to be appointed by the government as owner, are generally the principal office-bearers of recognised unions of workmen and officers. The recognition of a union is accorded by the management on the basis of its strength; the one with the majority is recognised as sole bargaining agent for its constituency.

At another level, through the machinery of bipartite discussions both at the industry and the individual bank, the unions influence the policies. Conventionally, these discussions were limited to wage issues. But over the years issues like technology upgradation, customer service, business strategies, prevention of frauds, motivation, skill building, and training have figured in these meetings.³

It is relevant to note that union movements became active and strong much before such formal participation was accepted. The formal recognition came as a consequence of the activism. Therefore, the view of the authors that as unions have no representation in policymaking bodies, the union movement was not strong, is untenable.

Not Many Banks under IBA?

The article contends that fewer number of banks give the mandate to IBA to negotiate wage revision. The 10th BPS signed by IBA with the unions and the joint note signed with officers’ associations in May 2015 had the mandate from 43 banks (25 PSBs, 11 private banks and seven foreign banks) which accounted for more than 85% of the workmen and officers in the banking industry. It is only the new generation banks and newly established foreign banks which do not join the IBA team. It is not the number of banks that matters, it is the number of employees covered by the settlements and joint notes which are relevant in assessing the effectiveness of unions.

Caste and Gender Discrimination?

The authors have presented a laboured argument that socially vulnerable groups (SVGs) of employees are discriminated against in appointment, assignments, posting and in the workplace. They buttress their view by saying that SVGs are given menial jobs like subordinate staff (sub-staff) and clerks.

Before drawing any conclusion we need to understand the hierarchy of employees in banks, their qualifications and the nature of their jobs. The job of a sub-staff does not need much education. Their job, like in any public office, is to run errands inside and outside the office; carry the books into the safe room, stitch documents, bring tea to entertain guests, go to the post office to deliver letters, accompany officers while remitting cash, etc. In the post-nationalisation era, these posts were to be filled up from the list of job aspirants registered with local employment exchanges with reservations for persons from SVGs as per government guidelines. This mandate continues even today.

For clerks, the entry-level qualification now is a graduation degree. Traditionally their job was to record the bank’s transactions and maintain books of accounts. There is mandatory reservation for SVGs. These ground realities are the causes for larger enrolment of persons belonging to SVGs into the lower cadre. Neither the bank managements nor the unions have a say in the posting of employees belonging to SVGs to menial and clerical assignments.

The article contains a statement that for inspection jobs, which involves constant travelling, officers hailing from SVGs are posted. There is, however, no supporting data to substantiate this claim. As a former insider, I had come across several cases of officers from upper castes asking for inspection assignments for two reasons: there is no risk of accountability unlike the field assignment, and continuous tours would fetch them additional allowances. Some would choose such assignment as it would widen their knowledge of ground realities.

That there is discrimination in canteen and accessing drinking water is not borne by facts. As a union activist for nearly three decades I had moved extensively in different places all over India, dined with thousands of colleagues including the members of the sub-staff. There was not a single case of such discrimination practised in the PSB for which I worked.⁴ There are exclusive associations of SVGs in the PSBs which have not pointed out the existence of such practices. Members of these associations are also members of regular bank unions.

In the matter of promotion opportunities to SVGs, all the PSBs are governed by board-approved promotion policies tempered by relevant government guidelines. In recent years, PSBs have seen many officers belonging to these groups going up the promotion ladder to become general managers, executive directors and chief executive officers (CEOs).

That bank unions do not evince interest in enrolling employees of SVGs as members is not corroborated by verifiable data. On the contrary, unions of both the workmen and officers are eager to enrol the new entrants of all categories into their folds as they believe that larger the numbers, the greater is the strength. In several associations today members belonging to SVGs hold key positions at the highest level.

The authors’ contentions that women are discriminated in banks is surmised based on exceptional incidents shared with them by respondents. With the pan-India character of PSBs, common rules governing transfers and postings of officers, the scope for gender-based discrimination is limited. Most PSBs today have mechanisms to redress grievances to address complaints of sexual harassment at the workplace.

In many banks, in consultation with unions, the policies on transfers and postings are suitably modified to accommodate women employees. When both spouses are working in the same bank they are generally posted in a centre where there is more than one office. Single women are not posted to remote corners where there are no basic amenities like accommodation and conveyance. For promotion from one scale to another, an officer has to undergo compulsory rural service (branches in centres with a population up to 10,000). As many rural areas do not have basic amenities for stay and commuting, women need not undergo rural service for promotion. Instead, their service in semi-urban centres (population of 10,000 to 1,00,000) is deemed as rural service.

The statement that as women are generally teetotallers, and that they suffer in the race for promotions is once again not borne out by evidence. The very fact that during the last decade and a half several women have occupied the position of CEOs of PSBs is a proof of the absence of gender-based discrimination in promotions.⁵

In the trade union movement too, there is no discrimination against women. In fact both the workmen and officers’ associations have, over years, set up separate women’s wings with a woman office bearer who would be in the central committee of the respective union. Some unions have made pioneering efforts in integrating women into union activism.⁶ In the light of these facts, the statement made by the authors that women who hold key positions in a union are subjected to various forms of sexual harassment and defamation threats is a generalisation based on surmises.

The conclusions about dominance of gender- and caste-based discrimination in Indian banks and bank unions are, therefore, not in conformity with facts.

Weak Prospects for Unions?

The article argues that because of risk aversion by employees, price sensitive financial products, technology-driven products, and surplus labour supply, the prospects of strong unions emerging are low. It is, however, unable to provide empirical data about risk aversion and price sensitivity of products. The weaknesses of the unions are on account of different factors.

World over, the trade union movement itself is on the decline. The deepening consumerism makes the new employees look primarily into financial benefits that union memberships can provide. With the standardised service conditions, promotion and placement policies in banks, the new employees do not find collective resistance relevant any more. They join the unions under peer influence, but their participation in union meetings and activities has been a matter of concern for senior leaders of bank unions.⁷

The managements have also been aggressive in the recent years. For legitimate trade union protests, disciplinary actions are initiated compelling unions to approach the judiciary to redress grievances. The case of disciplinary actions against State Bank officers in 2012 is one example (Bhat 2013). The dismissal of the general secretary of the Kerala-based Dhanlaxmi Bank Officers’ Organisation in July 2015 triggered a prolonged strife in that bank. The most recent case is of IDBI Bank management bringing a judicial restraint on its officers against going on strike in March 2016.

Contradictions and Inaccuracies

The article contains many observations which are inconsistent, contradictory and inaccurate. I quote just two examples:

(i) Kanha Gedam joins the Collective Bank (a PSB) in 1995; serves it for 20 years; he is active in the union and renounces promotion. As the union is not sensitive to the problems of SVGs he resigns and joins SC/ST association in 1995 (p 75) (emphasis added).

(ii) On p 74, it is mentioned that the management of the bank cancelled the registration of the union. The powers to register, and cancel the registration of, a trade union is vested with the Registrar of Trade Unions according to the Trade Unions Act, 1926 and not with the management. The management can only refuse to recognise the union or it can withdraw the recognition granted after a due process.

Challenges before Bank Unions

The periodic settlements between IBA and bank unions at the industry level and the structured bipartite relationship in individual banks are critical evidence of the continued relevance of the collective strength. While the ranks of bank unions have grown progressively in the recent years due to massive recruitment, making the new entrants active in the union movement is the biggest challenge before union leaders. The second challenge is related to alternative strategies to realise their demands. The conventional strategies of work to rule, demonstrations and strikes do not impact the working of the banks on account of varied choices like ATMs, mobile and internet banking available to the customers to undertake their transactions. The third challenge the unions have to seriously address is that of refurbishing their poor public image. The paper fails to focus on these challenges.

Notes

1 The Memorandum of Settlement dated 29 March 1987 between the IBA and unions was a landmark. In the 1990s officers’ associations were also taken on board through additional compensation. The later settlements were more broad-based. The unions also agreed for redeployment of surplus labour, if any, ensuring that there was no retrenchment of surplus staff.

2 In Corporation Bank, out of 6,497 officers as on December 2012, as many as 6,277 were unionised leaving 3.39% as neutrals. By December 2015 out of 8,474 officers 8,313 were unionised leaving less than 2% non-unionised. A large number of non-unionised officers belong to the senior executive cadre.

3 Two specific cases merit attention here. In 1990–91, the Mangalore-based Corporation Bank had organised a three-day workshop involving the top functionaries of recognised workmen union and officers’ association and top executives of the bank, including the chief executive officer, to jointly evolve a strategy to enhance the performance efficiency of the bank which was under severe financial stress. For more details see T R Bhat, In Search of an Identity-CBOO through 25 Years (published by Corporation Bank Officers’ Organisation, Mangalore in 1999, pp 32–58). The next four years saw a sweeping transformation of the bank to emerge as a viable growing bank. The second one was the attempt made by the State Bank of India in 2006. In a conclave held in Jodhpur, the leaders of both the unions and the management were involved in working out a strategy for transforming the bank. For details see, Lal and Tahilyani (2011).

4 While discharging my role as general secretary of the officers’ association of a PSB, I had come across cases of officers of SVGs asking for change of their postings from one place to another. Their reasons were eye-openers: in their places of posting they would not get houses on rent as the landlords would refuse to rent out houses to Scheduled Caste or Scheduled Tribe employees/officers. A similar problem was encountered by a few minority-community officers. We had to intervene on their behalf and get their postings changed to places which were more cosmopolitan in outlook.

5 The first case was of Ranjana Kumar. Starting her career as a junior officer in Bank of India in 1966, she rose to become executive director of Canara Bank. When later she was posted as CEO to Indian Bank in June 2000, she had the biggest challenge of her professional career: turning around a sick bank which had 48% non-performing assets. Her tenure ended in December 2003 with the bank coming out of woods. There have been more women CEOs of PSBs in the recent years: Vijayalakshmi Iyer, Archana Bhargava, H A Daruwalla, Shubhalakshmi Panse, Usha Ananthasubramaniam, and Arundhati Bhattacharya. There are also good number of women executive directors, chief general managers and general managers in PSBs.

6 In 1983, the then All India Confederation of Bank Officers Organisations (AICOBOO) had set up a separate national women’s wing with a senior activist as its convener. She was part of the top policymaking body of AICOBOO. Corporation Bank Officers’ Organisation (CBOO) set up an exclusive women’s wing in 1985 with a secretary to be elected from the women delegates to the general body. In 1995, CBOO along with the Karnataka state unit of its national body All India Bank Officers’ Confederation (AIBOC) organised a state-level workshop with “women in banking” as the theme. The two-day workshop was followed by a national convention leading to the setting up of a national-level women’s wing. Private sector bank officers have gone further. Dhanlaxmi Bank Officers’ Organisation elected a woman as its president in 2013; Catholic Syrian Bank Officers’ Association has a woman as its general secretary.

7 Several of my junior colleagues who today hold key positions in different bank unions both at the unit level and industry level have been sharing with me that mobilising the members for meetings is a difficult task. Even if their travelling and food expenses are taken care of, fewer and fewer members take these meetings seriously.

References

Bhat, T R (2013): “Right of Unions to Demonstrate Peacefully,” Economic & Political Weekly, Vol 48, No 43, pp 15–17.

Lal, Rajiv and Rachna Tahilyani (2011): State Bank of India: Transforming a State Owned Giant, Sales and Marketing Case Study, Harvard Business School.