100000 Man years of Experience Lost | Retiral Effect on SBI

Most PSUs (public sector units) in India report to market how much they provision for gratuity every year.

And gratuity is a simple calculation, viz. Gratuity = 15 / 26 X Number of years of experience X Base salary

With this we can calculate

Number of Man years (experience) lost for the year = ( Gratuity provision X 26 / 15 ) / average base salary

I did this for one of the largest PSUs of India namely State bank of India and here is what I got

Number of employees = 222933

Total Staff Cost = 14480 Cr

Provision for Gratuity = 1565 Cr

Provision for Pension = 2473 Cr

Average Salary = 0.0468 Cr (4.68 lakhs) (this number includes both base salary and other perquisites/bonuses)

Number of Man years (experience) lost for the year (min estimate) = ( 1565 X 26 / 15 ) /0.0468) = 57962 man years

Even if you consider double this average salary as Base salary this accounts for 26000 man years (experience) loss per year.

That is a significant level of experience to lose every year and seeing that provisions have increased by almost 40 times this issue will only get much worse going forward

That is one of the grandest problems of KM I have ever encountered

UPDATED: doubled average salary at retirement as it was more realistic



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