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Five cents and all that

It remains to be seen whether or not President Chandrika Kumaratunga’s publicly expressed determination not to give even a five cent increase to the bank employees will remain iron clad. For several weeks they caused immense economic damage to the country, inconvenienced constituents of their banks whose money pays their salaries, and in many instances inflicted considerable losses on their customers. The bank employees themselves must have realised that they had no public sympathy whatever and, as one manager told a customer, ‘’if this goes on much longer we’ll be beaten up by the public." It sounded better in the original Sinhalese: meka vadi kalayak giyoth, guti kanna thamai venne.

The bank employees are among the best paid in the country. So much so, a former finance minister used to say that MPs wanted bank jobs for their progeny and as MPs do, pulled the many strings at their command to get those jobs. The recent statements made by the employers on what bank employees, most of them school leavers with GCE ‘O’ or ‘A’ level qualifications, earn was most educative. The employers, of course, studiously refrained from revealing what the bank executives are paid. But we have it on the authority of the unions that a very large proportion of the total wage bill is swallowed up by the relatively small management cadre.

When it was decided that state bank employees will be made liable to income tax some time ago, losing the privilege they won with other government servants, the banks increased their salaries by what the taxman would collect and effectively picked up that tax burden. That’s what the Central Bank’s Governor wishes to be done elsewhere in the public sector too in order to level the playing field. Nobody on earth can plausibly justify tax discrimination between people earning the same income with some paying taxes and others not. But it is not likely that either the political or bureaucratic establishments will change the order of things because both politicians and bureaucrats enjoy the same privilege.

Very soon after her election, President Kumaratunga made the very pertinent observation that those who are fortunate to be employed must also think of those who have no jobs. But that is something that is not happening in this socialist democratic republic of ours with better paid employees in both the state and private sectors always scrambling for more gravy for themselves without even a passing thought for the hundreds of thousands of unemployed in our midst. The bank employees, given what they earn and the prevailing norms in the country, are a particularly sorry example of this. The politicians who have given themselves pensions after five years in parliament and are now preparing to ladle more gravy into already loaded plates are another.

The two state-owned commercial banks, the Bank of Ceylon and the People’s Bank,carry an overload of staff that they neither need nor can afford. They also carry an astronomically high bad loans portfolios, admittedly for no fault of the employees. This sorry condition is the result of politically influenced crony credit for which both the politicians who exerted the pressure to make questionable loans as well as the senior bank management that lacked the spine to resist such demands must share the blame. Given this unhappy condition, the cost of deposit mobilisation inevitably rises in the state banks and it necessarily follows that the lending rates would also proportionately rise. The result is interest charges that are far too high for a developing country like ours which desperately needs employment generating investment.

Because the two state banks have some 60 percent of the country’s commercial banking business, and their lending rates are determined by high intervention costs, the private commercial banks that do not carry the excessive overheads of the state sector, can and do ride piggy back on the state-bank determined interest rates. They make a killing on that and have long done so. The loser is the country itself with high interest rates reducing the level of vital investment and job creation.

While the wage demands of the bank employees, given what they earn at present and the norms that prevail elsewhere in the country, were unreasonable, they certainly had a valid position on some planned rehabilitation of so-called political victims who were to get double and treble promotions. Given the way that the tentacles of politics spread into various spheres of national life, some political victimisation is inevitable. Where there has been injustice, redress is both fair and necessary. But now we have a situation that with every change of government, people who have been caught with their hands in the tills or have lost their jobs for good reason, all become political victims of one sort or another. They latch on to politicians and use them to win all kinds of concessions for themselves

In this matter, the Ceylon Bank Employees Union has done the banks and the country a service by using their trade union muscle to apply the brakes on flagrant abuses that were being attempted under the cover of redressing "political victimisation". If unions take principled positions on such matters, the institutions in which their members serve will emerge stronger, more vibrant and better able to afford granting their employees tangible benefits in pay and perks.

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