KARACHI, Aug 2: All banks and development finance institutions (DFIs) operating in Pakistan created 8,748 new jobs in 2004 but most of new jobs were outsourced. In 2003, they had created 4,317 new jobs. State Bank data show that the number of people employed in all banks and DFIs rose from 105,631 at end-December 2003 rose to 114,379 at end-December 2004. That is, 8,748 new jobs opened up in the banking sector in the last year.

However, most new jobs opened up in the outsourced category of employees. At end-December 2003 there were 14,568 outsourced jobs in the banking system; the number rose to 20,817 at end-December 2004. This means that out of total 8,748 new jobs created last year, 6,249 were outsourced.

What is encouraging is that the remaining new jobs were mostly of permanent nature. The number of permanent employees of banks and DFIs rose from 85,073 at end-December 2003 to 87,676 at end–December 2004 showing an increase of 2,603. The fact that out of the total 114,379 employees of banks and DFIs as of last year, 87,676 or 76.6 per cent of them were on the permanent payroll dispels the general impression that most of banks/DFIs employees are contractual.

Contractual or temporary employees made up only 4.3 per cent of the total workforce in the banking sector last year. Besides, the number of such employees did not increase in 2004; it rather declined from 4,973 at end-December 2003 to 4,952 at end-December 2004.

The number of people employed on daily wages declined even more sharply -— from 947 at end-December 2003 to 458 at end-December 2004. But this does not mean that banks and DFIs made the daily wagers their permanent employees; rather, most of them joined in the outsourced workforce or they were shown the doors by their employers.

The SBP data show that the number of people sent to banks and DFIs on deputation from other institutions rose six-fold to 476 in 2004 from only 70 in 2003.

In its Banking System Review of 2004, the SBP links a very big rise in the number of outsourced employees and steady increase in the number of permanent workforce to the change in the nature of the banking business. “Liberalization and technological revolution, by demolishing barriers, have substantially increased competition in the marketplace,” says the SBP.

Banks strive to keep their bottom line intact by adopting cost effective approaches. Efficiency and ability to deliver are the essential qualities, which banks seek in their workforce and functions.

“This inclination of banks has not only rendered a number of traditional jobs redundant but has, at the same time, created demand for many new task-oriented and skilled jobs.”

The SBP believes that because of the growing network of the banking system amidst efforts to improve their services, “the opportunities of new jobs are expected to grow overtime.”

Data compiled by the central bank show that the number of branches of all banks operating in Pakistan went up to 7,049 at in 2004 from 6,904 in 2003.

During the World Bank sponsored banking sector reforms in 1990s large local banks including those in the public sector and partly privatized had made large scale downsizing of staff and closed down hundreds of branches across Pakistan. They had done this to prepare for privatization or to become cost effective for the sake of survival.

Now four out of the five major local banks stand privatized. The only exception is National Bank. The privatized banks are Habib Bank, United Bank, Muslim Commercial Bank and Allied Bank.

Now “the banking system has not only recovered strongly in terms of its operational performance but is also opening up growing opportunities of employment,” says the SBP.