Tuesday, June 12, 2012

Widening gap in PSU, pvt sector banks employee cost

                                                                Data source: RBI

Public sector banks are no longer the biggest employers in Indian financial market. Despite that, as seen in today's chart, PSU banks' cost per employee expenses has far exceeded that of private sector banks in recent years. The staff strength of PSU banks has gone down dramatically between FY99 and FY11. Meanwhile that of their private sector peers has gone up. The cost per employee of PSU banks was nearly 1.3 times that of private entities in FY11. This is despite the fact that pension expenses of PSU Banks are not fully reflected in their staff expenses. This makes one thing amply clear. PSU banks have lost their competitive advantage in terms of staff costs to private sector peers.

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