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HR transformation is required to address the issue of lower productivity
According to RBI data, the average cost per employee for public sector banks has overtaken that of their private sector peers since FY11.This has prompted RBI to raise issues of productivity. The central bank has warned that public sector banks are losing their cost advantages with per-employee expense of public sector banks today being 150% of their peers in the private sector. The central bank has said that an HR transformation is required to address the issue of lower productivity as there is competition for talented manpower.
Traditionally, jobs in public sector banks were seen to be relatively low-paying but secure as salaries were not subject to the vagaries of economic cycles or the bank's performance. Also, in cities, several banks provided accommodation to staff in company-owned quarters, which was seen as an advantage. However, bank unions have been successful in negotiating higher salaries under bilateral pacts. There is also a large component of the wage bill in the public sector, such as dearness allowance, petrol allowance and rents that rise with inflation.
Source: The Economic Times
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