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Bangladesh: Separate Pay-Scales for BB, State-Owned Banks Approved
Source: http://www.thefinancialexpress-bd.com
Source Date: Sunday, December 27, 2009
Focus: Institution and HR Management
Country: Bangladesh
Created: Dec 28, 2009

The finance ministry has given approval to separate pay-scales for more than 60,000 staffs of the central bank and state-owned financial institutions to narrow their growing salary gaps with the private sector.

Finance Minister AMA Muhith last week okayed a proposal to raise wages of the officials and employees of the Bangladesh Bank and 12-state-owned banks and financial institutions.

The approval is seen as a major victory for BB governor Atiur Rahman who has been relentlessly pursuing a separate wage structure for the "poorly-paid" officers of central bank and other financial institutions.

Muhith's endorsement means the board of directors of the BB and other government-owned banks and financial firms can set market-driven salary scales of their own.

Major public banks such as Sonali and Janata will now form their own pay structure and send it to the finance ministry for a final approval.

Top state-owned banks have long demanded market-driven pay scales for tens of thousands of their officers, complaining that low wages have prompted many of their young talents to join private banks en masse.

"A probationary officer at a state-owned bank earns only around Tk10-12,000 per month while a similar officer in private bank earns twice or thrice the amount," said a senior state banker.

"In the mid-level, a private banker earns six-figure salary, which is more than twice the amount a senior banker makes in a state-owned bank," he said.

Multilateral aid agencies trying to push reforms in the state-owned banks have also said that poor wages were a big obstacle to better performance and growth of these financial behemoths.

In 2007, the then caretaker government approved several-fold hike in salaries of the chief executives of Sonali, Janata and Agrani after the country's top three public banks were corporatised.

But there has been no marked improvement in the wages of mid or entry-level officers, which has made the state-owned banks less attractive to finance and accounting graduates of top universities.

Salahuddin Ahmed, the immediate past governor of the BB, had appealed for a separate pay-scale for the central bank in 2008. But the finance ministry flatly rejected his demand.

Despite a 5500-strong staff, the central bank is short of skilled manpower to oversee the country's booming financial sector, said a BB official.

"The central bank is losing 15 to 20 newly recruited talented assistant directors every year since 2003," he said, adding BB recruits about 100 new officers every year.

Finance ministry officials said the okayed proposal would now be sent to the Cabinet for customary approval.

Under the proposal, BB and state-owned banks and financial institutions have been excluded from the 'Government Service (reconstitution and conditions) Act 1975'. Instead, the board of respective institution has been empowered to fix wages.

According to clause 5(1) of the Act, no separate pay scale for any state-owned organisation -- be it fully government or autonomous -- is justified.

BB officials said Bangladesh is the only country in South Asia where central banks and state-owned financial institutions don't have separate pay-scales.

Central banks in Pakistan, Sri Lanka and India have fixed their salaries in a way that their employees don't find it attractive to join private companies.

Together, the 12 state-owned financial institutions and the Bangladesh Bank employ around 60, 000 officers and employees, making them key public sector employers.

The financial institutions are: Sonali Bank Ltd, Agrani Bank Ltd, Janata Bank Ltd, Rupali Bank Ltd, Bangladesh Krishi Bank, Bangladesh Shilpa Bank, Bangladesh Shilpa Rin Sangtha, Investment Corporation of Bangladesh, Ansar-VDP Unnayan Bank, Karmashangstan Bank, House Building Finance Corporation and Rajshahi Krishi Unnayan Bank.
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