BSP Bank Tells Of Union Threat

BSP wants the Fiji Banks and Finance Sector Employees Association to explain why it is claiming a 4.4 per cent salary increment for its members.

Bank country head Haroon Ali said the bank continued to strive to be an employer of choice.

BSP is offering 1.44 per cent pay increment derived from the method used in previous years where it was 80 per cent of the Consumer Price Index (CPI) while the union is demanding 4.4 per cent.

Mr Ali yesterday explained that BSP has, over the last 12 months, engaged with the Union’s General Secretary Sailesh Naidu in good faith, in relation to the annual salary reviews.

Unfortunately, they were unable to reach a consensus despite several rounds of discussion.

There are more than 120 BSP staff who are members of the union.

Mr Ali said: “We continue to pay our staff increments every year, compared to other banks who stopped paying, but then continued paying it again.

“In late 2018, when I came in together with Kevin (former CEO Kevin McCarthy), we started talking to the union around Fiji, to get into the one group operating model.

“Despite the fact that they didn’t have a formal agreement with the union, BSP continued to operate within the spirit of the agreement and nothing has changed.”

Last Friday, BSP advised the union that it would not delay remuneration to its staff any further and align all staff salary in accordance with its Group mandate. This was rejected by the union, resulting in a deadlock in negotiations.

He said the board had advised them that it was not only about salary review, but about the entire operations of the bank.

“Throughout all the countries that we operate in, we should be the one group operating model.

“As a consequence, the bank is now buying a new core banking system as part of the strategy,” Mr Ali said.

“So, over the last 12-18 months, we’ve been able to align all the operating matters and this was the last one that was left.

“So in 2019, we said, we might get an exception or we might not.

“But from 2019, we definitely have to align to Papua New Guinea (PNG) model, no two ways about it.

“Obviously, the union made some noise at that point in time.”

In 2019, he said while discussing the 2018 salary review with the Union, the Bank had clearly stated that it will move to the Group Model to align Fiji to one single Group Operating Model that also had the two common previous components:

I. A market movement rate based on 80 per cent of CPI; and

II. A performance-based rate. Last year the Bank accepted a 3.3 per cent market movement as the average CPI for 2018 was recorded at 4.08 per cent which at 80 per cent equates to 3.3 per cent.

This is exactly the same formula used for 2019.

Reserve Bank Report

Based on Reserve Bank of Fiji’s report, the average CPI for 2019 is 1.8 per cent.

An important point to note is that since the last quarter of 2019, inflation rate has been reported as “negative” or in other words, Fiji has been experiencing a deflationary period.

This has further increased to negative 3.0 per cent in February. In essence, the CPI for the last five months has been at an average of negative 1.4 per cent.

The bank acknowledged the union’s comments around the bank’s profit performance between 2017 and 2019.

“While the Union accepted the BSP market movement rate last year, which is based on the PNG model it has rejected the same this year. So we asked the union, what do you want? The union said we want four per cent.

“I am giving you the math behind how we reached 1.44. So you have to tell me how you reach 4.4 per cent in the current market conditions.

“We’ve been talking for a while and in November, I pointed out to the union that listen since October, the CPI has been reported as negative.

“We are offering 1.8 per cent which is quite reasonable, given the market conditions, and we all know things are tough out there, where there are a lot of people who have been made redundant by big corporates.

“But BSP continues to look after its staff.

“So I said to them, that the board wants a decision by mid February, because the board is meeting at the end of February.

“So when I was in PNG in February to do the proposal, I was waiting for them, they were not able to tell me where the 4.4 per cent came from.

“I was advised by my group chief executive officer (CEO), that there is no exception to Fiji, all the countries will get 80 per cent of the CPI. So if the CPI is 1.8, it will be 1.8. Next year the CPI is at 8 per cent, it will be 80 per cent of 8 per cent, that’s how it works.

“So, I was asked to implement it, so I wrote to all the staff, this is it, they will be paid next Tuesday.

“The union stomped out of the office totally rejecting the offer. In his parting comments he said ‘Let’s take off the tie and roll up the sleeves’.

“I did say to him, that you need to be responsible as well as BSP tries to be a responsible bank.

“You have to first go and seek feedback from your members as a responsible union.

“One thing he said to me in a bit of anger, that BSP made $52 million. Somebody leaked this information to him it was not public information by then.

“He said, I know you guys made $52 million, why are you only offering 1.44 per cent?

“So I said, listen, that $52 million profit that we delivered if that’s the correct number, the bank also paid $2.2 million in bonus to all the staff for that profit performance.

“And then I said to him, after the global financial crisis, it’s been now an accepted culture that the banks need to be profitable, so that the sound financial stability of the country remains.

“And then, you pay adequate returns to the shareholders, and you pay a bonus to your staff if they perform.

“So you don’t come and tell me today that oh $52 million is a big number. Well it’s a big number, the bonus payout amount is also a big number $2.2 million. So we parted ways.

“And then out of the left field on Tuesday, we see this notice, going to the staff from the union, saying that we have rejected outright, the bank’s offer.

“Our demand is for 4.4 per cent, don’t sign anything with the bank.

“In the next hour I received a letter, directed to me, saying that your offer is rejected and BSP will now face industrial disturbances. This was a threat within the letter.

“I said okay, I will reply to it later and, which I did yesterday (Wednesday afternoon) which was a comprehensive reply.

“I am asking them the same question, where did you get the 4.4 per cent from?

“Again I reiterated that the CPI for February is minus three.

“If anything, the bank should be talking about a salary deduction this year, but no we won’t. We are still paying something all and above the bonus.

“And then my group CEO said Haroon perhaps the union doesn’t know all the non cash benefits that we provide to our staff.

“When responding to them, you highlight it to them even if its minor thing. Staff amenities like tea, coffee, sugar, milk for staff morning and afternoon tea.

“I have reminded the union since I’ve started here that BSP will always be a responsible bank, and will always negotiate with you in good faith.

“I give him an example: In late 2018, I’m looking at my operational costs and I asked the retail team to give me the breakdown of all the costs that were incurred when staff worked on Saturday and Sunday.

“We traded when most of the banks didn’t trade over the weekend. So I got the number and I found out that we only paid a flat rate of $40 to our staff for working on Saturday and Sunday.

“I came and said no, the law says they should be paid time and a half and double time.

“And I quickly switched from $40 standard to what the law says for us to pay.

“Now I see that all the staff have suddenly come in and worked on Saturday, because of the changes.

“I’m just quoting this one example, around fairness and I explained this to the union.”

Mr Ali said they have noted with concern the Union Secretary’s comments about a potential industrial disturbance at BSP.

“We have him referred to the definition of ‘strike’ in Section 4 of the Employment Relations Act 2007 and also refer your attention to Part 19, Division 8, Section 191BN and 191BQ of the same Act.

“We trust that the law will be complied with.

“The Union Secretariat should realise that any adverse impact from industrial disturbances will no doubt have unintended consequences on staff rewards in 2020.

“Therefore, to protect the interests of our staff and customers, BSP will take all necessary steps to protect its business.

“We trust that the Union will work with BSP in an open and transparent manner which promotes good faith and is in the best interest of BSP staff and your members.”

When approached for a comment, Mr Naidu said the meeting with BSP union members yesterday was closed to the media and that he would not comment on the issue.

About BSP

BSP is one of the largest and most successful banking organisations in the South Pacific.

In addition to being the largest bank in Papua New Guinea, BSP is represented in Fiji, Solomon Islands, Samoa, Tonga, Cook Islands, Vanuatu and Cambodia.

Feedback: maraia.vula@fijisun.com.fj