20 November 2003

Dr Rozali bin Mohamed Ali
Chairman
The Association of Banks in Malaysia
34th Floor, UBN Tower,
10, Jalan P. Ramlee
50250 Kuala Lumpur


20 November 2003


Dear Sir

SBEU/SCBA COLLECTIVE AGREEMENT 2003-2005 NEGOTIATIONS


1. We have been negotiating with the Sarawak Commercial Banks Associations since the beginning of the year. The negotiations are conducted in a very positive manner and are progressing well with only the following issues yet to be finalized:

A. Performance Related Remuneration System (PRRS)
B .Salary Revision
C .Transfer Package
D .Senior Special Grade 
E .Housing/Banking Facilities.

2. The rest of the articles are agreed including effective date. The only improvement SCBA has offered (apart from the 5% salary revision) are these:

• Family Medical Annual Limit increased by RM100 to RM1100
• RM5 increases in Monthly shift allowances & inconvenience allowances
•  Insurance Coverage increased by RM10,000 to RM110, 000

3. You will be pleased to note that SBEU initially proposed a PRRS whereby the annual increment will be based on performance of the individual as well as the Banks Industry performance. After much in-depth discussion between SCBA and us, it was felt that while some member banks are ready, quite a number do not as yet have the necessary infrastructure as well as the corporate culture to implement such a system.

4. As SBEU remain committed to a PRRS, the negotiations are now focused on how to change the annual contractual bonus to one that is based on performance.

5. SBEU believe that PRRS is crucial to the banks to remain competitive and cost effective. We have had always maintained the need for the workforce in the banking industry to improve efficiency and customer service. 

6. Our initiative to further reduce sick leave entitlement is one of the many initiatives we have taken the past several years in this endeavour. 

7. We have also agreed to reduce EPF contribution during the Financial crisis of 1997.

8. We are now also prepared to reduce the computation for overtime worked on public holidays from 41/2 times to 3 times.

9. In a concerted effort to conclude an equitable agreement, SBEU would like to make our proposals to ABM. In making the proposals, we have carefully considered all relevant factors, including but not limited to:

· Introduction of PRRS

• SBEU ever readiness to reduce benefits.
• The very positive outlook for the Banking & Finance Industry in Malaysia
• Increased in Profitability & increased in Assets per employee
• Reduction in staff numbers and increased profitability per employee
• Need to attract and retain best employees
• Increase in job scope, job content and higher responsibilities
• Reduction in disposal income of bank employees
• The continued improvement in the Malaysian Economy.

We enclose our proposals and we seek your kind indulgence. We appeal to you to use your good office to kindly grant us, on behalf of all your employees our humble requests.

We assure you that it is our every intention and our commitment to work towards the continued progress of the banking industry in Malaysia for the benefit of the shareholders, the employees and most importantly, our customers.

Thank you.


Yours faithfully,




ANDREW LO KIAN NYAN
GENERAL SECRETARY

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SBEU PROPOSALS TO SCBA/ABM - November 2003

A. PERFORMANCE RELATED REMUNERATION SYSTEM

1. SBEU is committed to the introduction of a Performance Related Remuneration System. It is likely that the SBEU/SCBA Agreement will provide a breakthrough in the banks' efforts to introduce a PRRS and a "thrive for excellence culture" in the banks, not only in Sarawak but through out the whole country.
2. We believe that with the current industrial relations climate in the Industry, SBEU & SCBA should take the lead to implement a transparent and equitable PRRS for the whole industry in the country.
3. This is a tremendous opportunity and SCBA must be prepared to invest in to achieve an equitable breakthrough after nearly a century of salary system based on length service. In all likelihood, a successful implementation of our proposal (on the Bonus component) will eventually lead to a PRRS on annual increment as well.
4. We must be ready to invest in a PRRS to take the performance of the Banking Industry to greater heights. SBEU is investing all our political capital. We are asking Banks to set aside just 5% in additional salary adjustments to Existing employees.
5.  The PRRS will have the following key features

• One-month contractual bonus. The other fixed one-month will be based on performance.
• Total Pool of 1.25 months. (Minimum) to be made available for distribution & Distribution to be based on performance of employee using Performance Appraisal.
• Pool size to be increased in subsequent years at banks' discretion based on banks' performance
• Guidelines on PA to be based on Appendix A.
• Initially Minimum for each employee will be 0.75 months for 1st year, 0.5 months 2nd year and 0.25 for 3rd year and zero from 4th year onwards. This is necessary for confidence building and mind set change 
• All Bonus (Contractual & PRRS) to take into account Sarawak Allowance

6. Annual Increment - we are proposing a percentage based of 6% instead of the current fixed amount. This will facilitate the introduction of a performance based annual increment systems. SCBA & SBEU to set up joint study to implement by next CA
7. Naturally we would like to see that performance appraisal system is objective, transparent and with reasonable checks and control plus meaningful participation by the Union. There will have to be provisions for training and regular reviews.
   
   

B SALARY REVISION

1. In line with the salary revision granted to Executives and Class one officers in the Top 2 banks in the Country, we are asking that Salary increase be at 9%.
2. In addition we are also requesting for an additional 2% multiply by 42 months one off payment as proposed to employees under ABOM.
3. If one were to look back to the past 4 agreements, Salary revision is on a downward spiral - from a high of 25 to 30 % to 14 to 16% and down to 11.5 to 12 %. We are trying to maintain 11%.
4. The mergers will continue to lead to a further reduction in number of employees especially in clerical and therefore the cost impact of any salary revision will be limited.
5. Reduction in promotion opportunities- due to outsourcing and contracting out has a negative impact on our members' disposal income and increased in living expenses as members approached later years.
6. CPI only takes into account increased in cost of living over the same basket of goods year on year. It does not take into account the additional expenses as lifestyle changes- from single to married for example and living in a more affluent society.
7. More compelling is that Banks offered NUBE and Sabah BEU 11.5 to 12% during the last Collective Agreement at a time when the banks just faced the financial crisis and in 1998 suffered its biggest loss. Now that the banks have return to record profitability, the very least it can do is to maintain the same level of salary revision.
8. It would be worth remembering that in its argument before the Industrial Court in Award 798/2002, SCBA contended that they offered the 11.5 to 12% salary revision because of the good will and good relations between SCBA/Sabah BEU and MCBA/NUBE and the cooperation that the unions extended.
9. We believe that SBEU and SCBA have developed very harmonious relations and goodwill since and we have extended full cooperation to the Banks during the recent mergers and the integration processes.
   

C. TRANSFER

1. Our proposals on TRANSFER are part of our commitment to improve the mobility of our members that will benefit the bank in managing headcount due to mergers and rationalization of branches. Other benefit includes exposure & training, increases in adaptability of employees and multi-skilling. A coherent transfer policy will also improve risks managements.
2. Transfer is therefore a key management issue and it would be inequitable to transfer staff hundreds of miles away from their hometown which will result in their cost of living increasing by at least 20 to 30%, without paying any transfer allowance.
3. It will also be not equitable AND unfair labour practice for SCBA to refuse to agree on a core employment benefit when some member banks are already paying transfer benefit and most member banks are paying transfer benefits to higher categories of staff.
4. Our proposal is actually proactive, as it will allow banks to manage transfer in a transparent and professional way.
5. We are asking that SCBA follow the transfer packages introduced by Standard Chartered Bank & more than 10 years ago and more recently by HSBC. As the Banking Industry aspire to be world-class standards we must addressed a key management issue in a professional and world-class manner. The transfer policy has enable Stanchart & HSBC to implement a rigorous and fast track branch rationalization, which enable them to increase market share.
   

D. SENIOR SPECIAL GRADE & ACTING ALLOWANCE

1. Acting allowance will encourage job empowerment and on the job training. It will also reduce cost to banks and reduce the need to maintain a relief pool for officers and higher grades. Our proposals on Senior Special Grade are also consistent with this endeavor. Experience in Banks that introduce the Special Grade would strongly indicate that the benefits are mutual - lower operating cost and increased flexibility for Banks and more opportunities for employees. They will be less reliance of outsourcing vendors, contract staff and marketing agents.
   

E. HOUSING LOAN

1. Housing loan is a core benefit for employees in the Banking industry as granting of loans is the core business of our employers. Sarawak allowance is to all intent and purposes, a component of cost of living and housing is the main basket in cost of living index. It follows therefore Sarawak allowance must be taken into account in both loan entitlement and repayment limit.
2. We are requesting a quantum of RM160,000 and 2% interest rate, monthly rest and progressive repayment.
3. Progressive repayment is necessary to ensure that the housing entitlement is not just an illusory benefit but to ensure that employees actually can enjoy the benefit. Prices of houses are higher in Sarawak.
4. We also ask that all employees are entitled to standing instructions free, where such banks have has such service to customers. Again this banking facility also reflects the core business of our employers.
5. Cost implications are practically zero - with the excess liquidity in the Banking System and the low interest regime in the near to medium/long term, Staff loans actually generate a profit, as given the low credit risks.
   

F. REDUCTION OF SICK LEAVE/OTHER BENEFITS

1. As proof of SBEU's commitment to improve efficiency and productivity, we commit to further reduce sick leave entitlement from 30 to 22 days.
2. We are now also prepared to reduce the computation for overtime worked on public holidays from 41/2 times to 3 times.
3. We also do not seek to increase leave entitlement, apart from some flexibility in compassionate leave in case of serious illness of the employees' family, and death of grand parents in law to allow employees to observe cultural/religious obligations.
4. Our proposal on Miscarriage is in recognition of the need that we must assist those who are in genuine need of assistance. Nobody intends a miscarriage, Miscarriage is not an abortion, and banks currently recognize sick leave granted by doctors on account of miscarriage. It is a medical condition and there is no real likelihood of abuse.

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Appendix A.

Sarawak Bank Employees' Union proposals

ARTICLE 11 - ANNUAL INCREMENT 

(Performance Related Remuneration System)

(1)

(b) The individual performance shall be appraised through an open appraisal system. Such system shall amongst others, have the following features:

• Clear and objective targets for the employee shall be set and agreed with the employee - such targets shall take into account the views of the employee and the union.

• The Bank shall provide the union with relevant details of the grades awarded to each employee

• Where an employee is not satisfied with his appraisal, he may invoke the Grievance Procedure under Article 4, beginning with section (c) - Settlement of Dispute at Branch Level.