Linking Of Pay To Productivity In PSBs

Linking Of Pay To Productivity In PSBs

It is nevertheless difficult for the Public Sector Banks to match the salary and other compensation packages paid by the new Private Sector Banks.

The main difficulty in the service approach of PSBs was attributed to their inability to match with the pay compensation of their counter parts in the Private Sectors, which was essential in the current scenario.  Management Graduates and other professionals are always on demand and are picked up by the Private Sector banks at a very high cost, which at no point of time would be comparable to that of the PSB salary structures.  Thus we see that there is a uniform pay scales across the PSBs, irrespective of size or financial health, and workings.

Deviating from the conventional practice, PSU Banks have now proposed bank-wise compensation for executives, depending on the strength of each person.  Also, under the guidance of Indian Banks Association (IBA), the PSBs have also propose to come out with a proposal for a wage increase which would be linked to the productivity, which would be a deviation from the automatic pay hike followed at present.    The basis of taking such initiatives is to bring in the COST TO COMPANY concept, which is in vogue at the private sector banks.

However, the Bankers’ Association has been planning to make a strong move to place their plea for large variable component in the compensation be introduced for the new hires.  This will be in line with the pension reform which was made applicable to new employees.

The previous wage settlement has cost the exchequer Rs. 4,725 crore per annum for the 45 banks which were the part of the negotiation which paid with retrospective effect from 2012.  The union has contended that merger of banks would not solve the issue of NPAs and that the merger of subsidiaries with SBI has resulted in a business loss of Rs. 2 lakh crore.


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