What is Cost To Company In Wage Revision

                          While going through the reports on 10^th BPS meet held at Mumbai on 22^nd April 2013, between UFBU and IBA it can be seen that there may have a change in concept of compensation package  of Bank Employees in forthcoming wage negotiations in tune with MOF's directions.

                    Hitherto bank employees wages were arrived during bipartite settlements on the basis of percentage of cost of establishment expenses of past year( Now it may be 31^st March 2012 ).Where as this time ,there may be a change in concept to Cost -to- Company (CTC)basis as per IBA.

                    Let us look at what is the concept of CTC?

In nutshell, the amount that employee cost to company is called CTC. Entire amount spent by company directly or indirectly will be included and shown under CTC. At present Basic Pay, DA and other allowances are included under salary and after deductions one will get his take home pay. But under CTC all other components such as Medical allowance, Leave Travel Allowance or Concession (LTA / LTC),Vehicle Allowance, Telephone / Mobile Phone Allowance,Special Allowance, reimbursements to medical bills, news papers etc are also become part of ones salary.By including all these components in salary in fact the compensation in paper seems to be high whereas monthly in-hand salary may be less. Most of the Private and IT companies are following CTC concept where money given to employee as well as spent on employee is shown together.

                        General Secretary of AIBOA has stated that 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, 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.

                        Trade unions, already expressed their 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.

                     As per reports, it is also learnt that 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.

                  IBAs  new proposal will have impact on resolving issues of Pensioners also, for which we have to wait for further discussions taking place in coming days.

- 

Mr. L S Raman Submit his opinion as under 
 

The real colour of IBA as a negotiating organisation is visible.

 It is nearly five months after the due date for revision of salaries and allowances, and now IBA  is in the process of presentation of basics. This is a clear case of delaying tactics by presenting extraneous matters before the negotiating table
.

Regarding the expenditure of 56,292 crs, IBA should note that the PSBS have generated a net profit of nearly 50, 000 Crs for the same year after providing for the Establishment Expenditure including pension, Even assuming the same level of profit for the next five years the surplus in terms of net profit available would be in the order of 2.5 lacs crores,of which 60% could be earmarked for revision of salary and  pension with updation. Assuming an increase of 20%  in profits  on a year to year basiis the net profit projections for the next five years ending 31.3.2016 would be in the order of 4.464 lacs crores. and 60% the net profit amounting to Rs 2.4784 lacs crores  would be more than adequate to cover the salary and pension revision expenditure including updation for the next five years.

   Since the Officers and employees as a team have  performed in generating this level of profit they deserve substantial pay hike as an incentive.

Commented by Mr. L. S.  Raman