Examine how performance-linked incentive schemes in public sector undertakings can create internal wage disparities. Illustrate with the recent bank employees' PLI dispute.

Public sector wage structures rest on uniformity and collectively negotiated parity. Performance-Linked Incentive (PLI) schemes inject variable, merit-based pay into this framework — a necessary efficiency reform, but one that breeds internal disparity when eligibility and quantum are selectively designed rather than jointly settled.

How PLI schemes generate internal wage disparities

• Selective eligibility: restricting incentives to senior grades splits one workforce into an incentivised and a non-incentivised cadre — the Department of Financial Services' revised PLI for public sector banks applies only to Scale IV officers and above [1].
• Quantum asymmetry: senior executives become eligible for up to 365 days' basic pay, while the rest of the staff remain on a flat formula of 15 days' basic pay plus dearness allowance [1] — a widening ratio at the top of the pyramid.
• Individual versus institutional metrics: performance is realised collectively, yet measured individually; front-line workmen's contribution to deposits, recovery and customer service stays statistically invisible.
• Bypassing negotiated machinery: compensation in banking is governed by the Bipartite Settlement process between the Indian Banks' Association and unions [2]; a unilateral executive scheme erodes that institutional route.
• Discretion risk: subjective appraisal invites perceptions of favouritism, weakening the 17% uniform wage revision consensus achieved under the 12th Bipartite Settlement [3].

Illustration: the bank employees' PLI dispute

• Unions invoked the earlier understanding that PLI must follow overall bank performance and apply uniformly across staff [2].
• The 12th Bipartite Settlement/9th Joint Note (8 March 2024) also recorded the five-day banking week, with compensatory working hours [2].
• The United Forum of Bank Unions struck work nationwide in September 2026 even after the scheme was kept in abeyance, since the pause addressed only one grievance — showing that partial concessions do not close negotiations.

Incentive pay is not the problem; asymmetric design is. Graded PLI extending to all cadres, a blend of collective and individual metrics, transparent appraisal, and routing changes through the bipartite process would reconcile efficiency with equity — upholding the Article 39(d) ideal of equal pay principles and sustaining industrial peace in public banking.