The state owned financial institutions, the National (NBE), Development (DBE), and Commercial (CBE) banks of Ethiopia, introduced a new salary structure and gave two months' salary as a bonus to all their employees, over the course of last week.

The news came as a pleasant surprise for many of the employees, but employees at the CBE, whose labour union was entangled with the management over the very issue, were not as pleased.

The new salary structure, which has not yet been sent to the labour union, is being kept under wraps, and branch managers are under strict orders to only show salaries to employees individually, according to sources at the bank.

The pay at the biggest and oldest commercial bank is considered by many to be one of the lowest in the industry. The starting salary of a clerk at the bank, which is known as a maker-checker is 2,158 Br, which was adjusted to 3,500 Br under the new structure, much less than the industry average of close to 4,000 Br.

"What this has done, in effect, is make the salary scale of both senior and junior employees almost the same," said Damtew Woldetekle, president of the labour union.

The management of CBE had written a strong letter three weeks ago, in which it accused the labour union of attempting to derail the operational and structural reform that it was implementing. It was lowering the morale of its employees, it also said, following the letter that the union wrote to all employees about their benefits on August 17, 2010.

The union had asked the bank, which in the last fiscal year made a 2.8 billion Br profit, to pay overtime as stated in the collective agreement and the labour law, especially for Saturday afternoons on which it had started giving service.

The bank, in its bid to meet the goals set for next year to increase its deposit mobilisation by 50pc and its foreign currency mobilisation by 40pc, has plans to open up five new branches in its 15 districts. The bank expects the number of branches it plans to open, along with the provision of Saturday afternoon services, to help it achieve the goal, according to sources at the bank.

Taking a reconciliatory tone, following the announcement of the new salary scheme and the bonus, the labour union wrote a letter to all employees and sent a copy to the management, thanking the bank and urging employees to continue to work hard.