The employees of public sector banks could have a performance linked variable component next financial year onwards.

 The Indian Bank Association is in discussions with employee unions to introduce this variable pay component in the salaries nearly 7 lakh government employees.

A finance ministry official said, "We are trying to take the unions along with us on this (performance variable pay), but if the current employees are not willing to accept a variable pay of 25-30% of salary, they will have to accept the performance variable pay as part of the next hike." The centre will certainly include a variable in the salary packages of new recruits.

Earlier when IDBI had proposed to introduce the variable pay structure, the finance ministry had declined the proposal on the grounds that the bank's employee unions were opposed to it and the ministry wanted to take them along on the issue of variable pay.

According to the structure proposed by IDBI, 70% of the salary was fixed while the balance 30% was linked to the employee's performance.

The finance ministry has already appointed a panel headed by AK Khandelwal, former chairman of Bank of Baroda. According to one of the members, the panel would carry out discussions on possible ways to further professionalise the public sector banks.The centre has recently come out with a wage hike and pension benefits for bank employees. The wage hike would be effective from November, 2007 and would result in an additional outflow of Rs. 4,816 crore annually. This includes a sum of Rs. 2,239 crore for officers and Rs. 2,577 crore for workmen employees for five years. The outflow in case of pension scheme is estimated at Rs. 6000 crore annually.

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