Professor Huck Gutman of Vermont University (USA), writing on the increasing economic disparities since 1990’s says that the corporates all over the globe have earned huge profits and increased their area of influence. But this has not benefited common American workers as their wages are stagnant at 1978 level or are decreasing. The professor’s research suggests that the top executives get 500 times or more, as compared to an ordinary worker.

Social justice and equity demands that the difference in earnings of the highest and lowest paid employees is as minimal as possible. In 1970s, the then government had grasped the equity issue and moved in that direction by reducing the number of pay scales for the employees of the government and state-controlled corporations.

The equity aspect is today missed altogether, specially in the financial sector, with the creeping wave of globalisation in the shape of sale of banking sector to the foreigners. Currently, half of the banking sector is owned by the foreigners and the trickle down impact on income disparities is fairly visible.

When we compare the pay-outs to the lower staff [like peons/drivers etc. hired through contracting companies at about Rs5000 a month after retrenching regular employees ] in a few commercial banks with that of the chief executive, this ratio far exceeds 1:500; in some cases, it is 1:1200.

The State Bank [SBP] also seems to be on the same path. It has introduced the new pay scales effective June 1,2007. The details are shown in the following table:

The table depicts that higher the cadre of an officer, higher is the increase in the minimum/maximum of his pay scale. The moving over from old to the new scales in the past envisaged that the salary of an employee in the new scale was fixed on point to point basis keeping in view the salary in the old pay scale [after accounting for uniform pay increase announced for all employees].An innovation has been brought this time.

The move over in the new scales, effective June 1, 2007, guarantees provision of minimum monetary benefit based on the confidential report rating of the concerned employee for 2005/06 as per the following criterion: (a) rating A-minimum--- increase 60 per cent, (b) rating B+ --- minimum increase 45 per cent, (c) rating B minimum ----increase 35 per cent, (d) rating C--- minimum increase 30 per cent and (e) rating D --- minimum increase 25 per cent. The dearness allowance at 17 per cent allowed in September, 2006 is adjustable in these minimum guaranteed benefits.

An option has been given to the existing employees to opt for old or new scales. Those opting for old scales have been granted merely 20 per cent increase including the dearness allowance at 17 per cent allowed in September,2006, i.e. an increase of merely three per cent, while they will continue to enjoy the existing pension benefits. Those opting for new scales will have no pension benefits but new retirement benefits scheme has been evolved for them. The overall benefits to those opting for new scales seem to be much higher. Before September, 2006, the pay scale for senior joint director and the director was the same i.e. OG6 while the executive director was in OG7 scale. In September,2006 restructuring, the director in OG6 scale will automatically move to OG7 after lapse of two years.

It will be seen that the executive director [ED] is the main beneficiary of the new structure. ED was placed in OG7 earlier but under the restructuring, OG8 scale has been created for that post. The “maximum” of OG7 under the old scheme was Rs142,100 per month now raised to Rs550,00 per month [OG8]. It reflects a jump of over 276 per cent.

As for the lower grade staff [officer grade I and below], the mindset of the authorities in the SBP seems to be no different than that prevailing in the commercial banks. The SBP authorities also feel that these employees are already getting much more than their market value. While announcing the new emoluments structure, SBP governor had opined: “ The existing salary scales are already highly competitive for lower grades (OGI and below) and the total compensation and benefit package of SBP and SBP-BSC [State Bank of Pakistan Banking Services Corporation (BSC) -a subsidiary of SBP established during the tenure of governor Dr Ishrat Husain] employees in these grades are either at par or above the market rates including all benefits”

So, no new pay structure was introduced by the SBP for them. These categories of officials have been given pay raise of 20 per cent with effect from June 1, 2007 which is inclusive of 17 per cent dearness allowance granted in September,2006. This means that SBP gave an increase of three per cent to them.

Instead of extending the benefit of new salary structure to the employees in OGI and below, the authorities have offered “voluntary separation scheme [VSS]” to them. The signal is very clear that the SBP management wishes to get rid of these employees which may number in thousands.

SBP allowed 10 per cent pay increase to all employees with effect from

September 1, 2007. Those opting for the new scales got hefty increases in moving over to the new scales with effect from June 1, 2007. But merely three months thereafter, these fortunate employees got another pay raise of 10 per cent.