To protect a benefit

Print edition : April 21, 2006

Over two lakh employees of the State Bank of India go on strike over the issue of pensions.

IT was not a flash strike. It was played entirely by the rulebook. Months of preparation preceded it. On February 25, the officers and workers of the State Bank of India (SBI) issued a notice to the management announcing their plan to go on an indefinite strike from April 3 if their long-pending demand for a revision of pension ceiling was not accepted. The Union government too, as the owner of the biggest public sector bank in the country, knew what was coming.

The main demand is the lifting of the pension ceiling, which has been capped for more than a decade. The strike has brought about unprecedented unity, drawing support from all sections of the employees. The All India State Bank of India Staff Federation (AISBISF) and the All India State Bank Officers' Federation (AISBOF), representing more than two lakh employees, are its organisers.

The pension scheme in the SBI, which is celebrating 200 years of its existence, is unique in the industry. Its earlier avatar, the Imperial Bank of India, was born out of the amalgamation of the three Presidency Banks in Bengal, Bombay and Madras in 1921. Most senior officials in the banks were whites. Upon superannuation, the employees were entitled to provident fund (P.F.) as well as pension. At the time of the formation of the SBI in 1955, the pension was set at 50 per cent of the last drawn salary. However, there was a ceiling of Rs.750 a month for employees up to Officer Grade I; for senior officers it was Rs.1,000.

Until the early 1980s, the pension scheme worked fine. However, since the 1980s, the government preferred to drag its feet in the matter. The issue was fought in courts, which directed the government to revise the ceiling. The last revision was in 1992-93, when the pension was capped at Rs.4,250. At this time the gap between pensions in the SBI and the rest of the industry was Rs.1,400. Over time this widened. While the pension for employees in other banks was revised during the tripartite wage settlements in 1997-98 and June 2005, it remained frozen in the SBI.

There are serious anomalies in the SBI's pension scheme, particularly when compared to other employees doing similar work in publicly owned financial institutions such as banks and insurance companies. For instance, while a clerk in the SBI whose last drawn pay was about Rs.18,000 would be entitled to a pension of about Rs.3,500, his or her counterpart in another public sector financial institution with the same scale of pay would be eligible for a pension of over Rs.9,000. The issue of the non-revision of the cap on pensions has obviously been festering for a long time. At the last round of negotiations, the SBI management told the unions that this issue would be settled later. Shantha Raju, general secretary, AISBOF, said that in the nine months since the last settlement, there was no move by the management or the government to settle the issue.

Those opposing the strike argue that "giving in" to the demands of the SBI employees will lead to similar demands from workers in the rest of the financial sector. They point to the fact that upon retirement, SBI employees, unlike those in the other public sector banks, get "triple benefits" - pension, P.F. and gratuity. Other workers, they note, can opt for either P.F. or pension, not both. In case they opt for pension, a part of the P.F. acts as the corpus for the pension. If the government "succumbs" to the SBI employees' demand, they argue, employees in the rest of the industry will raise the demand for a full-fledged separate pension scheme.

Shantha Raju disagrees. He points out that the pension scheme is funded from the profits of the SBI, "which is how it should be in any industry". He asked: "How can any trade union worth its salt surrender a benefit that it has fought for and protected for more than a century?"

Those sympathetic to the unions point out that the notion of pension rests on the logic that it is a benefit for employees who lose their earning capacity in old age and that it makes eminent sense to fund pensions from profits that were generated during the employees' tenure in the organisation.

Striking SBI employees at a demonstration in Bangalore on April 4.-K. GOPINATHAN

The strike, the biggest in recent memory, had a huge impact. This was only to be expected. After all, the SBI accounts for about one-fifth of the deposit base in the banking sector. The stoppage of work at its 9,000 branches across the country affected the clearing of cheques. For the first two days, SBI's customers could draw money from the ATMs of the SBI; but after that they had to depend on the ATMs of banks which shared them with the SBI. More important, cheques issued on the bank remained stranded. Tax payments and repayments were also affected because the bank processes a significant portion of these transactions.

The government's response has followed two tracks: ignore the demands and issue veiled threats. It is obvious that the SBI management has no say on the issue. Realistically speaking, any reaction to the demands of the employees has to come from the Union Finance Minister. But apart from asking the workers to resume work, citing "inconvenience" to customers, P. Chidambaram has not addressed the issue. Instead, there have been hints that his Ministry may move its accounts to other banks.

The Reserve Bank of India (RBI) has attempted to get cheques issued by the SBI cleared by other banks. This has met with resistance from the unions in other banks, which have expressed solidarity with the striking workers.

The strike has important implications for the banking sector. It is now well recognised that workers in the public sector financial institutions, particularly the banks and insurance sectors, represent the last bastion of resistance to financial sector reforms. Indeed, this explains the strong positions adopted by the unions and the Finance Ministry. The Ministry already has a heavy agenda for the days ahead. On the top of that list is the plan to lift the caps on insurance and banking; there is also the demand for the dilution of government ownership in public sector banks. The unions and the Ministry clearly have a lot at stake in the SBI strike.

On the sixth day of the strike, Shantha Raju said that the unions are open to a "negotiated settlement, even willing to modify our demands, if necessary". However, the government, he said, needed to make a "counter-offer". "How can we withdraw the strike without any commitment from the other side?" he asked.

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