Wage and salary inequities that plague the nation
Manifestation of the salary inequity problem
Unrest among employees in state and corporations sectors has become rampant with demands for the rectification of salary anomalies, higher wages and benefits. Lightning strikes by railway workers have left commuters stranded. Strikes without due notice is against existing trade union laws. The loss incurred by the Railway Department during the past runs into millions of rupees. The public is being taken for ransom by indisciplined workers. In dealing with situations involving wage problems, two principles have to be relied on — equal pay for equal work and more pay for more work. To determine what employees do and to arrive at a hierarchical order of jobs and thereby an equitable wage structure, experts adopt the technique of job evaluation.
Nature of the problem
Confusion in pay structures are claimed to be the cause of trade union action leading to crippling strikes and consequent breakdown in the provision of amenities as the country has been experiencing like in transport, electricity, railways, health services and education sectors. Most deplorable has been the strike by academics in universities and teachers whose unruly and in-disciplined behaviour will have far reaching consequences on the younger generation of students who will naturally emulate their mentors. Failing to provide the correct response by way of universally accepted means of resolving the wage and salary grievances, authorities have been groping in the dark as it were.
Under mounting pressure successive governments have invariably given in, causing a ripple effect in the rest of the economy, leading to inflation as well. These ad hoc wage increases without a rational basis, bring about the phenomenon called “wage drift”. All such ad hoc increases have an effect on production costs, whether in electricity generation, the plantation sector or otherwise and the economy as a whole suffers.
Earlier salary revisions
Among the salary revisions that were effected, the 1997 salary revision circular 2/97 caused severe problems in fixing the suggested scales to the prevailing salary structures. The upward revision of salaries did not eliminate salary anomalies. According to the systems adopted during the 70s and 80s the minimum and maximum salary payable to the different categories were to be followed. During the initial stages many corporations resolved the wage inequity problem by job evaluation. Job evaluation committees comprising the management and trade unions carried out the job evaluation programmes after a training programme and several large scale manufacturing organizations also adopted the technique.
Technical evaluation
In order to determine the correct differentials and arrive at the correct hierarchical order of jobs, the Salaries Commission enlisted the services of a Technical Evaluation Committee as far back as the year 1995. This committee comprising two WHO Consultants attached to the Ministry of Health, a professor from the University of Ruhuna, Additional Secretary of the Ministry of Health and the Director, Management Consultancy, National Institute of Business Management evaluated 18 categories, including staff nurses, midwives, medical lab technologists, radiographers and pharmacists among others. The trade unions assisted the committee in the preparation of job descriptions. The entire process was transparent and the point rating technique of job evaluation was adopted.
Need for a national wage policy
It is of national importance that wage determination in the state, statutory boards and corporations are governed by a national wage policy and a systematic approach is vital to resolve problems.
Contribution of individuals vary according to the extent of job factors prevalent in a job, like know-how, effort and responsibility. Know-how varies according to academic and professional qualifications pertaining to a given profession and the experience acquired on the job which makes one more proficient, making his contribution to reach a higher level. The identification of relative differentials between jobs is vital in designing wage and salary structures. Trade unions are justified in asking why a particular job or jobs are paid more in comparison to others.
The answer to such questions is found by arriving at a hierarchy of jobs through the process of job evaluation which enables point scores to be determined by the use of appropriate factor manuals; in other words a” yardstick” to measure the relative worth of each job to the organisation. The standardised point rating technique of job evaluation can solve wage problems industry-wide; job evaluation can also be an instrument in controlling pay inflation.
Union participation
Job evaluation plans make wage grievance settlements easier by enabling unions to air their view points and arrive at an acceptable hierarchy and appropriate wage bands as well as reduce intra union conflicts between occupational groups. If unions do participate in the deliberations, they accept certain responsibilities to support the plan before the membership. Anomalies arise when some employees draw higher wages while others get lesser pay, although their contribution is comparable. The other situation which gives rise to external inequity is where the wage structure is not geared to going rates or market rates. There is indeed a relationship between perceived equity, motivation and higher output. Equal pay for equal work is considered to be equitable in the eyes of the workers. Contribution varies, depending on the prevalence of job factors in a job and it is for the level of job factors prevalent in a job that a particular salary is paid. An incentive is an additional payment for the contribution over and above the standard or normal contribution, systematically calculated. Additional payments or incentives can vary but the characteristic of a basic pay is its certainty.
Public sector pay – western experience
Pay grading by job evaluation schemes had been extensively used in Western countries to cover the majority of the population as in the US, UK and a national scheme had been in operation in Holland to cover the employed population since 1948. Equitable wage payment is an important factor in maintaining peaceful industrial relations.
Job evaluation
There are many methods of job evaluation for the determination of equitable wages and they vary in complexity. The methods applied are either non analytical where jobs are compared on “whole job” basis like in the ranking and classification or grading techniques to arrive at a wage and salary structure or analytical techniques where jobs are compared by way of job factors like skill, etc like in the point rating or classification methods. Under the ranking and classification methods jobs are ranked in order of importance or difficulty. The point rating and factor comparison techniques are more objective and qualitative judgments of the raters are quantified to arrive at point scores for each job. All these systems require jobs to be analyzed and job descriptions to be prepared and agreement reached with trade unions, whereby internal equity is assured with transparency.
Point rating technique
The point rating technique of job evaluation had been widely used throughout the world in respect of all categories of jobs. The technique is useful when a single top-to-bottom evaluation method is required as the basis for integrated pay and grading structures. The method can be tailored to the requirements of the user organisation both by manual or computer assisted processes. Staff in any organisation can be categorized into professional and managerial, conforming to senior and middle management levels, supervisory, clerical and allied technical and manual and operative levels at the lower level of the hierarchy.
A defensible grade structure and fair pay as a result of job evaluation makes it acceptable to the unions. Secondly, having measured the relative worth of jobs, external equity is also ensured by gearing the wage rates to going rates or market rates for the jobs concerned. Cost of living, prices of commodities, an organisation’s ability to pay and the contribution of the job incumbents, the scarcity value of jobs are also factors that affect wage determination. Accordingly, the widely accepted technique of job evaluation as opposed to ad hoc measures like arbitrary salary increases appear to be the only solution to the so-called ‘salary anomaly’ problem that is plaguing the country with strikes and industrial action.
(The writer is a former Director, Management Consultancy at the National Institute of Business Management).