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CHAPTER ONE
INTRODUCTION
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.
257-268. Agburu Insan Akademika 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 a controversial 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.
RESEARCH
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.
2. To
appraise the nature of wages and salary policy in public Nigeria.
3.
To
determine the factor for an equitable
wage and salary in the public service.
4.
To
determine the wage and salary policy in lagos state.
SIGNIFICANCE OF THE RESEARCH
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.
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
Hi
There is an equitable wage and salary policy in lagos public service
SCOPE OF THE STUDY
The
study provides an evaluation of wage and salary policy in the public service in
Nigeria
with a
case study of the wage and salary policy in lagos state.
DEFINITION
OF TERMS
Compensation:
The
term “compensation” simply refers to the wages paid directly for time worked as
well as more indirect
benefits
that employees receive as part of their job or employment relationship with an
organization (Otobo,
1987).
Wages or salaries paid are typically payments made in cashable (naira) form
that reflect work done
and
related remunerations such as base pay or bonuses such as paid workers during
the end of the year (e.g.
New
Year packages and the like).
Benefits
are forms of compensation beyond wages, for time worked including various:
protection
plans e.g. health insurance or life insurance;
services;
pay for
time not worked e.g. vacations or sick leave;
income
supplements such as stock ownership plans.
Job
Evaluation: An Integral Element in Wage and Salary Administration
According
to Mullins (1999) job evaluation is the process of systematically determining
the relative worth of
jobs to
create a job structure for the organization. The evaluation is based on a
combination of job content,
skill
required, value to the organization, organizational culture and the external
market.
WAGE
AND SALARY ADMINISTRATION DEFINED
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.
Wage
Structure Determinants
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).
Simplicity. To reduce dissatisfaction
arising from feelings of unfairness in the grading and salary
scales
attached to the job, it is important that whatever system employed must be
simple enough for
employees
to understand.
Essential features of job
evaluation
According
to Ogunbameru,(2004) are:
(1) Impersonality.
It must be impersonal; it is the job, not the person that is the subject of
analysis.
(2) Simplicity.
To reduce dissatisfaction arising from feelings of unfairness in the grading
and salary
scales
attached to the job, it is important that whatever system employed must be
simple enough for
employees
to understand.
(3) Flexibility.
It should be flexible enough so that jobs can go up and down depending on the
changes in
the
content of the job.
(4) Verifiability.
The results obtained for the exercise should be verifiable and capable of being
validated
and
upheld by another expert.
REFERENCES
Atchison,
T.J. (2003). Wage and Salary Administration, in Personnel Administrator
January, 2003.
International
Journal of Basic and Applied Science,
Vol 01,
No. 02, Oct 2012, pp. 257-268
Agburu Insan Akademika Publications
Cole,
R. E., P. Bacdayan, and B. J. White.(1993). Quality, Participation and
Competitiveness. California
Management
Review, Vol. 35, No. 3., 1994
Collard,
R. (1989). Total Quality Success Through People. IPM, London.
Davis,
K. (1981). Human Behaviour at Work: Organizational Behaviour. McGraw-Hill, New
Delhi.
Douty,
H.M. (1980). The Wage Bargain and the Labour Market. (Baltimore: John Hopkins
Ltd).
Dwivedi,
D. N. (2002). Managerial Economic. Vikas Publishing House, New Delhi.
Ferris,
B. (1995). “Informal Survey of San Diego County Compensation Practices Group”
Unpublished
Paper,
1985.