PSUs pay the most to bottom employees, the least to top ones, says Raghuram Rajan

RBI governor Raghuram Rajan is of the view that lower-ranked babus are in a better position than a top official in public sector entities, when it comes to their payments.

"The middle management ranks of public sector banks are being thinned by retirements. In addition, they need experts in specific areas like project evaluation and risk management. All public sector entities across the world tend to pay more than the private sector to lower level employees, and less than the private sector to higher level employees," Rajan told the audience.

While this attracts good people to lower levels, it becomes hard to hire top talent for senior positions, he added.

Rajan, however, added that with these views, he just wants to start a discussion and the views do not represent the formal stance of the RBI.

It’s a tough task to get a job done in PSUs, to which he went on to suggest a solution.

"Perhaps part of the solution is to enable such new hires, with technology and training, to do far more responsible work than they were given in the past, and give them a brighter prospect of movement up the officer ranks. Banks can also use the opportunity offered by retirements to reorient hiring towards the skills they need, and to offer attractive rapid career progression supported by strong training programs to new hires - with thinning middle management, the mix of experience and capabilities should shift towards capabilities," he said.

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