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This work examined The Effect of Wages and Salaries Administration on Employee a Case Study ofAmuwo-Odofin Local Government. It has been observed that with proper motivation through adequate wage system and fringe benefits in organization, Nigerian workers‟ moral will be boosted for higher productivity. The methodology adopted in this study is empirical approach. Data for the research were generated from both primary and secondary source. Primary sources included questionnaire and personal interview. In the area of secondary sources, documented materials used include text books, journals, conference and seminar papers, newspapers, the internet and other non-classified documents. The major findings of this study was that irregular and inadequate wages/salaries, low level of fringe benefits and lack of collective bargaining process brought about low productivity of workers of Amuwo-Odofin Local Government. The research also found out that financial as well as non-financial reward, promotion and conversion are strategic in the promotion of productivity in organizations. On the basis of the findings, the following recommendations were made; salaries and allowances should be very regular, free education at all levels, especially workers children, buying own houses and cars through mortgage system-partnership with government and other financial institutions, sustainable welfare scheme and insurance policy for workers, reward for efficiency and hard work and timely promotion and conversion of workers.
1.1 Background to the Study In any organization, be it in the private or public sector, money is a very sensitive issue, not only to management but also to employees (Nwachukwu, 2009). Wages and salaries constitute a significant part of the total cost of operation in any organization or establishment. In some organizations, such as civil/ public service, they make up more than 50 percent of operating costs. In the organized private sector, large organization’s ability to attract and retain valuable employees in part depends largely on how much the pay. Poor wages are a constant source of frustration if labour and management are engaged in constant strife with resulting decrease in productivity (Nwachukwu, 2009). Wages administration in Nigeria is as old as civil service itself. Many administration have come and gone but not without deliberating on what constitutes the appropriate or minimum wage or salary of civil servants should be. In some situation, it has been without industrial disputes, especially during the military era while most of the civilian regimes were dominated by trade disputes initiated by major labour centers in the country (Obiora, 2013). Sometimes, the crises arising from such dispute leads to break down of law and order, especially when they are hijacked by miscreants in the society. Workers, through their labour representatives have always asked for improved conditions of services and can go to any length to press home their demands. To Egbo and Okeke (2009), salaries and wages of civil servants are not left to the discretion of employers. They are usually backed by a legal instrument stating the minimum pay for workers. For instance, the Obasanjo led government in 2003 pegged the minimum wage rate for federal workers at N7,500.00. It was initiated through rigorous consultations between worker’s representatives and the government, before the wages and fiscal commission forwarded the agreement to the National Assembly for necessary legal backing. Nigeria being a federal structure, it was expected that the federating states should fix the salaries and wages of their workers. However, what has happened over the years is that the state workers representatives (labour unions) through the joint public service Negotiating council (JPSNC), usually adopt the Federal Government’s rate of federal workers to engage their respective state governments in negotiating for their workers and this has always created problems in the system. However, some states, especially those from the oil producing area often adopt the federal rate as soon as it is announced, many other states often allege that their allocations from the federation Account cannot sustain such rates and this becomes a good reason for the state workforce to embark on an indefinite strike action. For instance, in Anambra State like many other states of the federation, the problems caused by federal government’s 2011 minimum wage pronouncement are still being felt very strongly as the prolonged industrial dispute over the minimum wage pitched the workers against the government thereby making the work environment very un-conducive with negative implications for productivity and output in the sector. According to Nwokolo (2011), such poor labour-management relations affects productivity severely as workers assume that the government does not appreciate their efforts by refusing to pay them federal government rate after all, everybody buy from the same market. Trade dispute is an evil wind that blows nobody any good. Therefore, every effort must be made always to avoid it. It must however be understood that when workers are not properly treated as ought to, they will not only be demoralized but will also exhibit some negative behaviours in the workplace. Such corrupt practices manifesting in embezzlement, misappropriation of public funds as the feeling of insecurity overwhelms them. They start to steal public funds to take care of the present and also ensure that during retirement, they have enough to fall back on. There is no doubt that an effective and efficient state civil/public service makes every other sector of the state economy vibrant by facilitating the desired development that will impact positively on the quality of life of the citizenry. The exponents of scientific management Taylor (1911), and his followers –maintained that the basic motive of man at work was economic. Money was seen as a principal motivation instrument. While the motivating power of money and material rewards could not be ignored, emphasis later shifted from economic man to social man. (Ezeani. 2005:135). This was the outcome of the Hawthorne experiment conducted by Elton Mayo at the Western Electric Company. The experiment drew attention to the effects of group membership and interaction on production, attitude and job satisfaction. The study gave rise to human relations movement which maintained that man does not just work for money, that other personal and interpersonal considerations, such as personal worth, recognition, friendship, social pressures from group members and status are powerful in determining production and level of job satisfaction. (Osuji,1985:91). In other words, it has become increasingly clear that beyond economic needs, man has some social-psychological needs that should be stratified in order to elicit behaviour towards increased productivity. While the traditional theories of management as exemplified by the Scientific Management Movement, stress the motivating power of money and material rewards, the classical theories take note of the latter, but, lay greater emphasis on satisfying the psychological needs of the employees. 12 Wage incentives and fringe benefits are motivational factors. According to Croft, (1996:46), motivation can be defined as “impulses that stem from within a person and lead him to act in ways that will satisfy those impulses” In other words, the concept, motivation, implies that there is some driving force within individuals, which drives to attempt to achieve a goal or objective, in order to satisfy their need or needs. (Croft, 1996:46). Therefore to say that managers motivate their employees is to say that they do those things which they hope will satisfy those drives and desires and induce the subordinates to act in a desired manner. (Koontz et al, 1983:632). Alugbuo (1981:13) asserts that people work to get reward for their efforts. The exchange of labour for financial rewards is the heart of pay process. People do not put forward their best unless they get reward for their work, based on what the current social and economic climate dictates as fair. Ubeku (1975:301) stated that, the payment of good salaries and wages is fundamental to the increase in the prerequisite for effective performance. In order to motivate people to put maximum efforts, it is essential that their various needs, especially as it concerns their wages and other fringe benefits, be satisfied as far as practicable. In Nigeria, the salary structure falls bellow the level to maintain efficiency of employees. The salary structure is not in line with the economic realities. According to Papola (1970:79): “a just minimum wage to maintain not only the life but the health and the vigour of the working people is a law of necessity and knows no other law”. 13 The single most important obligation owed by an employer to an employee is to pay his or her wages. Typically, wages, salaries and other related costs (pensions, etc) make up about 60 percent of the total costs of running a major business. Employers, therefore have more than a passing interest in this aspect of their operations. There are other important influences on these activity-trade unions negotiating a higher price for labour, competitors seeking to attract the best staff and the state seeking to impose minimum standards of working conditions for all employees (Cole, 2005:30). A benefit is an additional compensation given to employees as a reward for organization membership. Because of fringe benefits cost to employers, it is important to indicate the scope and the overall costs associated with providing such benefits to employees. According to Zolthistsch et al (1970:136), it‟s all financial and non-financial payments to employees that are over and above the agreed upon basic salary rate due to the employee for the minimum result expected on the job. Armstrong etal (1970:36) also said that “fringe benefits when combined with the basic pay of an individual forms that total remuneration which is the entire package of pay and benefits received by each employee, their value to an individual in more accurate basis for comparison with outside market rates than straight salary”. According to Sunken (2008:20) “Motivation and productivity are twin concepts in organizational development. First, motivation works as the means toward attaining productivity as an end, secondly, motivation is the best cause to reach productivity as favourable effects and lastly, motivation is the stimulus to 14 trigger productivity as a response”. People need motivation just as pieces of equipment need fuel and operators. This is highly demanded to ensure that they are always at their optimum working condition. In turn, this will absolutely lead to optimum productivity. (Sunken, 2008:20). The necessity for managers and administrators to motivate their employees cannot be over-emphasized. There is no doubt that the ability of any organized enterprise and, indeed any group, to achieve its goals depends to a large extent on the motivation of its employees. Indeed no manager or administrator can succeed in achieving optimal productivity for his or her enterprise without knowing what motivates the people. (Ezeani 2005:136). As Koontz et al (1983:631) pointed out, all those who are responsible for the management of any organization most build into the entire system factors that will induce people to contribute as effectively and efficiently as possible. A manager does this by building into every possible aspect of the organizational climate those things which will cause people to act in desired ways”. According to Onah (2008:279), employee motivation represents one of the largest competitive reserves and a key element for increasing competitive advantage of any organization. Motivation is a central force and a strong factor in employee performance equation. It is a set of force that leads people to act in particular ways. Motivation represents the forces within a person that affect his or her direction, intensity, and persistence of voluntary behaviour. (Moorhead and Griffin, 1995:78). According to Pinder, (1984), direction refers to the fact that motivation is goaloriented, not random. People are motivated to arrive to work on time, finish a 15 project a few hours early, or aim for many other targets. Intensity is the amount of efforts allocated to the goal. For example two employees may be motivated to finish their job a few hours early (direction), but only one of them puts forth enough effort (intensity) to achieve this goal. Motivation also involves varying levels of persistence, which is continuing the efforts for certain amount of time. Moorhead and Griffin (1995) further assert that the starting point in a motivational process is a need. Motivated behaviour usually begins when an individual experiences a deficiency in one or more important needs. When aemployee believes that equity does not prevail; he is bound to withhold a measure of his productivity in order to restore equity. To encourage higher productivity, it is essential that a system of reward be designed that attempts to relate hard-work to reward. 1.2 Statement of the Problem Wages and salary administration in Nigeria is as old as the civil service itself (Olaleye A.O. 2012). Nigeria operates a federal structure in which the states constitute the federal units. On issues of salaries and wages, the minimum wage is on the exclusive list of the federal government. The implication of this is that when the federal government fixes the minimum wage, the federating states are expected to take a queue from that and do likewise for the state civil servants Nwokolo J.I, (2011). But contrary to this expectation, many state governments including Anambra State have always claimed that they don’t have the financial capacity to pay the minimum wage fixed by the federal government. The consequence of such actions has always been industrial actions of large proportion by the workers with negative implications for productivity and output Olaleye A.O. (2012). Currently, the poor performance, lack of dedication and commitment of employee have been a matter of concern and debate among government officials, private organization and the general public. How to improve the productivity of employees has been the topic of many seminars, symposia and conferences. The reasons for this trend, as well as appropriate avenue for the apportionment of blame, have formed the basis for the controversy. Many reforms in the public service such as work ethics, transparency, dedication and commitment to duties are some of the ways of trying to improve productivity of employeein the country. According to Nwachukwu, (1988:29) Nigerian people have always come with the impression that generally, Nigerian employees are lazy, sleepy, reluctant to act, unconcerned and deceitful in their approach. These employees are said to lack the zeal, the briskness and the momentum of hardworking people and generally, they dislike hearing anybody talk about efficiency, dedication, competence, determination and productivity, of which characterize people in a production oriented society. In production oriented societies, the employers do everything humanly possible to retain their workforce and also recruit high quality staff. The employers strive to boost the morals of their employees with a view to eliciting positive attitude towards work, while the employees respond by fashioning ways of making their organizations successful. In Nigeria, there is inadequate stimulus to attract such responses, so the employeeare still performing below average, moral still down and efficiency still nil. The problem of this study therefore, focuses on the low productivity in Amuwo-odofin localgovernmentService Commission, in the face of irregular and inadequate salaries and other fringe benefits. The problem can best be described with some pertinent questions. 1. Does the issue of irregular salaries/wages persists in Amuwo-odofin local government service commission? 2. Does the issue of inadequate salaries/wage persists in Amuwo-odofin local government service commission? 3. Are the levels of fringe benefits in Amuwo-odofin local government service commission affect the moral of employees? 4. What can be done to enhance employees productivity in the commission? 5. Are the salaries and other fringe benefits determined by collective bargaining; the trade union and the management in the commission? 6. What type of incentives and fringe benefits (financial/non-financial) boost the morale of employees of Amuwo-odofin local governmentservice commission? 1.3 Objectives of The Study The broad objective of the study is to find the effect of wages and salaries administration on employee productivity a case study of Amuwo-odofin local government. The specific objectives are: 1. Identify why the issue of irregular salaries/wages persists in organizations especially in Amuwo-odofin local government service commission. 2. Identify why the issue of inadequate salaries/wages persists in organizations especially in Amuwo-odofin local government service commission. 3. Find out if the level of fringe benefits paid to employees in the commission affect the morale of employees. 4. To find out the type of incentives that motivates the employees in the commission and also the relationship between these incentives and employee‟s productivity. 5. Find out whether wages and other fringe benefits are determined by collective bargaining. 6. To find out the whether financial or non-financial incentives boost the morale of the employees. 1.4 Hypotheses 1. Irregular payment of wages/salaries in Amuwo-odofin local governmentservice commission hinders the productivity of workers of the commission. 2. Inadequate wages/salaries in Amuwo-odofin local governmentcommission hinders the productivity of workers of the commission. 3. The present level of fringe benefits in Amuwo-odofin local governmentservice commission affects the morale of workers negatively. 1.5 Significance of the Study The findings and the recommendations there after of this study will be of immense benefit to the government and in particular the government of Anambra State were the study is taking place. This is because, the relationship between the government and the workers through their representatives (labour unions), would be strengthened and made more cordial by the report. Both government and the unions will see the need to always jaw-jaw- that warwar because, all over the world, dialogue has become the most effective means of settling disagreement even among nations or regions. This is with the understanding that harmonious co-existence would lead to improved productivity and output in civil service. 1.6 Scope and Limitations of the Study The research work will analyze the activities of Amuwo-odofin local government service commission in relation to wage incentives and fringe benefits given to the employees of the commission. It has not been possible to generalize all the operational areas of the activities of the commission but to limit the boundary of the study to the policies regarding wage incentives and fringe benefits as it affects the seventeen local government areas of Enugu state. The study will therefore concentrate on the effects of wage incentives and other fringe benefits on the productivity of employees of Amuwo-odofin localgovernmentservice commission. This work has some limiting factors; there is no standard library in the commission to source information on the establishment, policies and overall programmes and activities of the commission. Secondly, there is no database from where other vital information about the commission can be assessed. Some difficulties were also encountered since we are using survey research whose information is dependent on opinions, attitudes, values and preferences of the people. The possibilities of biased answers may not be completely ruled out because the respondents could be apprehensive that their responses could negatively affect their job security. Furthermore, the resentment by some public officers who are also apprehensive in making vital information available to the researcher on the excuse that information has been classified as “secret”. These limitations were surmounted by visiting some local government headquarters where I was able to collect useful information and document on the administration, functions, and achievements, regulatory and supervisory roles of the local government service commission in Enugu state. I also collected a letter from the head of department, public administration and local government, University of Nigeria, Nsukka, ensuring the commission that my research is merely an academic exercise and the information collected will be treated with utmost secrecy. 1.7 Operationalization of Key Concepts For the purpose of this research, some key concepts was operationalized for better understanding of the work. (i)LOCAL GOVERNMENT: Local government is a system of local administration under communities that is organized to maintain law and order, provide some limited range of social amentias, and encourage cooperation and participation of inhabitants towards the improvement of their conditions of living. It provides the community with the formal organizational framework which enables them to conduct their affairs effectively for the general good. (ii)PRODUCTIVITY: Productivity is the achievement of desire output coupled with a utilization of resource (man, money, material and machine). (iii)WAGES: Wages are the total earrings a worker receives for the performance of services within a period of time. They are equal to the product of an hourly rate, times the number of pieces plus houses, premiums and fringe benefits. Wages means any economic compensation paid by the employer under some contract to his workers for the services rendered by them. (iv)SALARY: Salary refers to the weekly or monthly rates to clerical, administrative and professional employees. Salary is mostly determined by mutual agreement between the individual and the employer. They are sometimes determined or fixed by the government. (v)INCENTIVE: An incentive scheme is a plan or programs to motivate individuals or group performance. An incentive programme is most frequently built on monetary, but may also include a variety of non-monetary reward or prizes. (vi)FRINGE BENEFITS: all financial and non-financial payments to employees that are over and above the agreed upon basic salary rate due to the employee for the minimum results expected on the job. A benefit is an additional compensation given to employees as a reward for organizational membership. These are wide of variety of items which organizations typically pay to their workers. (vii)COLLECTIVE BARGAINING: It is a method through which the wage rates and other employment conditions are determined. It also establishes a set of rules guiding relations between the parties during the life of collective agreement, as well as providing for an orderly method of settling grievances that are bound to occur from time to time. (viii)MOTIVATION: It is a set of forces that lead people to act in particular ways. Motivation represents the forces within a person that affect his or her direction, intensity, and persistence of voluntary behaviour. (ix)EMPLOYEES: By employees, we mean workers of Amuwo-odofin local government service commission. These include both staff and line workers of the commission. (x)MEAGRE: This means deficient in amount or quality. It implies that in the commission, workers wages/salaries are deficient in amount. It is not adequate enough to meet up their immediate needs. (xi)IREGULAR PAYMENTS: Salaries and allowances of workers are said to be irregular when they not paid at the end of every month as stipulated by law. Salaries that are consistently paid at the end of every month is regarded as regular, while it is regarded as irregular when it is once in two, three or even four months. (xii)INADEGUATE SALARIES/WAGES: Salaries/wage is said to be inadequate when it fails to meet the basic necessities of life-food, shelter, clothing, etc and also not in tune with the economic realities of the time. (xiii)MORALE: This emotional or mental condition with respect to cheerfulness, confidence, zeal etc. Emotional and mental conditions of employees needed be boosted if high productivity is to be achieved. Employers are usually faced with the challenges of boosting workers morale. Unhappy, disinterested employees can lead to poor productivity. (xiv)FINANCIAL INCENTIVES: These are incentives paid to workers as money or physical cash. This is usually added to the basic salary at the end of the month as a total emolument for the month. (xv)NON-FINANCIAL INCENTIVES: These are usually given to workers in kind or in materials like radio, television, motorcycles, cars, health facilities, free education to their children and wards.