AN EVALUATION OF WAGE AND SALARY POLICY IN THE PUBLIC SERVICE A CASE STUDY OF WAGE AND SALARY POLICY IN LAGOS STATE

AN EVALUATION OF WAGE AND SALARY POLICY IN THE PUBLIC SERVICE A CASE STUDY OF WAGE AND SALARY POLICY IN LAGOS STATE

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ABSTRACT

The research provides an appraisal of the wage and salary policy in Nigeria.

 It analyses the concept of wage and salary in the public service

It provides a detail study on policy structure and implementation  of wages and salary in Nigeria.

The research appraises the implications of the implementation of wages and salary structures in the

public service and provides a case study appraisal of  the wage and salary policy in lagos state.

INTRODUCTION

Nwachukwu (2000), and Atchison, (2003) have aptly observed wages and salaries constitute a significant

part of the overall cost of operations, observing that in some organizations wages and salaries constitute over

50% of the operating costs. Companies or establishments that lack of ability to pay wages and salaries

regularly are in danger of disintegration. Poor wages are a constant source of frustration and can result in

declines in productivity.

Wages should not only be adequate but they must also show some element of equity, this is particularly true

from the point of the employees. Anything short of a fair and equitable wage or reward can quickly attract

the wrath of employees in an economy such as Nigeria. For many Nigerian employees, wages or salaries are

highly critical issues. They are decisive because without them in sufficient quantities, life becomes

extremely precarious for the worker and members of his/her family. As direct financial rewards, wages and

salaries are the most emphasized by the employees, thus they sort of take a centre stage in the scheme of

things as far as rewards for work is concerned. For many a Nigerian employee, wage or salary is the main

thing. It is thus against this background that the need for a dynamic, intelligent and foresightful wage and

salary administration cannot be overemphasized, particularly for an emerging economy like Nigeria in the

era of globalization.

Institutions or companies that seek to attract and retain highly productive and efficient employees cannot shy

away from facing the challenges posed by the need to pay wages adequately in a competitive environment.

Nwachukwu (2000), and Ngu, (2005) have identified the key features or characteristics of good salary or

wages as follows:

(1) The wage rates that prevail in the local market and in the industry. The main purpose here is that it

will ensure that the company remains competitive.

(2) The internal alignment of wages to ensure equity.

(3) Recognizing for individual Performance. Although two individual workers may have identical

qualification and/or experience, one may earn higher than the other due to his superior performance.

(4) Taking care of Individual Incentives. That is, incentives that:

(a) are easy to administer;

(b) whose results reflect the efforts of the individual;

(c) make the computation of reward easy;

(d) equate reward with the effort expected; and

(e) leave the factors necessary for the attainment of the objects in the control of the employees.

The essence of a wage incentive plan is to relate productivity to reward. Thus, employees who manifest

outstanding performance receive extra pay. Usually, wage incentive in terms of extra pay is a cash payment

made every week or month. It is paid to those employees who exceed their quota of the output. Typically,

incentive plans used by organizations include piece-rate, profit-sharing, premium plans, stock option plans,

to mention but a few.

CHAPTER1

BACKGROUND OF THE STUDY

According to Nwachukwu (2000) and Ogunbameru (2000) “wage and salary administration” refers to the

development, implementation and on-going maintenance of a base pay system. The central objective or

purpose of wage and salary administration is to provide pay that is both competitive and equitable (Atchison,

2003).

In relation to Nigeria, wage and salary administration activities refer to all those processes, strategies, plans

and schemes that give rise to pay policies. Such policies set the overall direction of pay within the

organizations or establishment, public or private as the case may be. The actual development of a base pay

system follows the determination of pay policies. For the purpose of clear direction, this paper embraces a

number of critical and related issues as that impinge on the all-important question of wage and salary

administration in Nigeria. Here, the focus is on relevant suggestions aimed at mitigating the difficulties

encountered in handling the issues of wages and salaries in this country (Nigeria).

International Journal of Basic and Applied Science,Vol 01, No. 02, Oct 2012, pp. 257-268Agburu258 InsanAkademika Publications

Douty (1980) and Ferris (1985) have identified the main wages and salaries structure determinants as those

of (1) economic value or market value of an item which is the price it brings in due to the interactions of the

forces of demand and supply (2) job worth, whose analysis tends to rely more heavily on perceptions of

organization members of the relative value of the job (3) training: with requirements of jobs in terms of

length, difficulty and who provides it. It relates to human-capital analysis and development (4) employee

tastes and preferences. They are also economic factors. Worker expectations of future earnings strongly

influence occupational choice and thus labour supplies. The problem however is that the labour market is

not a perfect one. (5) Unions: Industrial unionism has also been shown by economic analysis to affect wage

structures. Large organizations where employees are represented by industrial unions tend to have a highly

differentiated wage structures (Ferris, 1985).

Apart from the above, other determinants of wage structure embrace (Ngu, 2005):

(a) Discrimination – the trends nowadays is to shift away from wage differentials based on sex or race.

(b) Industrial Relations Factors. Both industrial relations scholars and labour economists are involved.

The industrial relations scholars base their views mostly on non-economic forces while the labour

economists emphasize on such criteria as productivity, efficiency and general performance of the

employee.

(c) Social Determinants: On such things as equity, status, and the preservation of customary relations.

According to Atchison (2003) numerous forces operate as wage determinants. Roughly, these might

be classified as:

(1) economic

(2) institutional

(3) equity considerations.

Several scholars (Nwachukwu, 2000; Ogunbameru, 2004; Agbonifoh et al, 2005) in their studies have

emphasized the need to place premium on productivity in wage and salary determination.

A frequent trend in the administration of wages and salaries globally and in Nigeria in recent times is the

need to recognize the cost living as a critical factor. The cost of living makes workers and unions to pressure

employers (private and public) to increase pay.

David Belcher in Nwachukwu (2000) has advised that prior to embarking on policy regarding wages and

salaries, the organization should bear in mind the following 17 assumptions:

Pay is an incentive job performance.

 Pay in the form of money has more incentive value than pay in the form benefits.

 Employee satisfaction with pay is evidence of its incentive value.

Consistent treatment of employees in the matter of pay is a prerequisite to obtaining incentive value

from pay.

 Incentive value is lost when employees are ores paid.

 Employees react negatively to pay inequalities.

Pay inequalities are similarly defined by all types and levels of employees.

 Employees regard internal pay inequalities as more serious than external inequalities.

 Employees react only to gross external inequalities.

Employees comparisons of pay are made first in terms of jobs, and second in terms of performance on

jobs.

Employees compare their pay with that of people in similar jobs.

Employees comparisons of pay are uninfluenced by levels of aspiration and pay history.

Managers make pay comparisons that are essentially similar to those of rank-and-file employees.

 Professional employees make external rather than internal comparisons.

 Employees accept the concept of hierarchy of jobs and pay.

 Employees’ determinants of the job hierarchy are similar to managements’ determinants.

International Journal of Basic and Applied Science,Vol 01, No. 02, Oct 2012, pp. 257-268

 Employees agree with management on what they are paid for and weigh the factors.

The research therefore intends to provide an evaluation of wage and salary policy in the public service

STATEMENT OF THE PROBLEM

wages and salary has consistently been acontroversial issue in the economy . Inspite  of various policy measures adopted and implemented by government

to meet the demand of the labour force, there is still more pressure on government for increment to meet the current reality of things in the economy.

     With rising inflation, the cost of living  has escalated. Prices of commodities and essential items are getting out reach of the  ordinary worker.

     What then can be an equitable measure to determine an appropriate pay for the worker in the public service to enhance his capability to meet the current reality of

Things.

     The problem confronting this research therefore is to provide an evaluation of wage and salary policy in the public service.with a case study appraisal of

Wages and salary policy in lagos state.

REAEASCH QUESTIONS

what is the nature of wages and  salary

What is the nature of wage and salary policy in Nigeria

What are the determining factor for an equitable wage and salary policy in Nigeria

What is the nature of wage and salary policy in lagos state

OBJECTIVE OF THE RESEARCH

1     To determine the nature of wages and salary

To appraise the nature of wages and salary policy in public Nigeria

To determine the  factor for an equitable wage and salary  in the public service

To determine the wage and salary policy in lagos state.

 SIGNIFICANCE OF THE RESEARCH

1 The research shall highlight the nature of wages and salary

It shall provide a detail study on wage and salary policy in Nigeria

The study shall determine  the factor for an equitable wage and salary policy in the public service

The study shall appraise the wage and salary policy applicable in lagos state

It shall be a veritable source of information to managers,government and economic experts.

1.6   STATEMENT OF HYPOTHESIS

1    Ho    wages and salary in lagos  public service is low

      Hi     Wages and salary in lagos public service is high

2   Ho   The impact of wages and salary in lagos public service is low

     Hi     The impact of wages and salary in lagos public service is high

3   Ho   There is no equitable wage and salary policy in lagos  public service


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