THE IMPACT OF WAGE ON EMPLOYEE PRODUCTIVITY: A CASE STUDY IN MOGADISHU

December 18, 2018 Articles, Main Activities Leave a comment 14,561 Views

Abstract: the purpose of this paper is to introduce practical evidence about The Impact of Wage on
Employee Productivity and to examine what role impact of wage can play employee productivity in
Mogadishu.

A survey research method has been adopted to examine impact of wage on employee productivity. The
data were collected through questionnaires filled by the respondents equally selected from Afi Mineral
water, jema mineral water and Coca Cola Company. The results of the questionnaires were then analyzed
with the aid of SPSS.

The results showed that the wage on positive impact on employee productivity among companies.

Keywords: Impact, Wage, Employee Productivity

INTRODUCTION

One of the purposes of someone being the employee or a labor of a company is to earn an income in the
form of wages or compensation. Wages are earned can fulfi ll basic necessities such as food, clothing and
housing. Every company in setting the amount of the wage paid to an employee must be viable, so that
the lowest wage given to meet the needs of their life (Kanzunnudin, 2007). The calculation of wage
increases not only the necessities of worth living but also infl ation, economic growth, and productivity
(Iqbal, 2013).

The concept of productivity of work is divided into two parts: Individual productivity and organizational
productivity. Individual dimension associated with the characteristics of the personality characteristics of
the individual appears in the form of mental attitude and individual efforts to improve the quality of life.
Organizational dimensions look productivity within the framework of the relationship between input and
output techniques (Kusnendi, 2003).
Wages become important In Somalia, because to be effective if linked to Productivity for real. An
effective wage strategy is expected to contribute on the viability of the unit of work, the realization of
the vision and mission, as well as for the achievement of the targets of work (Umar, 2012). Employee
productivity measurement using the net value added shows wages and employee performance has a
positive correlation, but the rate of growth of net value added per worker is lower than the rate of
growth of wages per worker. It means that there are factors other than wages which improving in
employee productivity that is non-monetary factors (Nayak and Patra, 2013). Therefore, In this Study, we
investigate the Impact of wage on Employee productivity empirically. For these reasons, the researcher
had been motivated to carry out such study, which is the critical nature of the issues of Wages on
employee productivity.

LITERATURE REVIEW

Wage is one of the most important motivational factors, as we had been told from the time immemorial
that we shall eat from our sweat. The main reason why workers get involved in paid jobs is to earn a
living which is salary or wage. Reasonable salaries must be paid on time, that is, it must be paid as at
when due and promptly, as well. The workers should be able determine the time such salaries will be
paid by the organization. Again, there must be a relative uniformity in the mode and manner such
salaries and wages will be paid to the workers. While fixing salaries, the organization must consider
factors such as the cost of living, company ability to pay, capability of company to pay, etc (Chukwudi,
Odogwu & Adedehinbo, 2012).

Wages become an important aspect of being effective if linked to the performance significantly (Umar,
2012). Granting wages remuneration is the most complex task for the industry, is also the most
significant aspects for workers, because of the amount of wages reflects the size of the value of their
work among the workers themselves, their families and communities. Wages are very important for the
industry because it reflects the industry’s efforts to defend human resources in order to have a high
loyalty and commitment to the industry. Effective wages strategy is expected to contribute to
maintaining the viability of the work force, the realization of the vision and mission, as well as for the
achievement of work objectives (Umar, 2012).

Measurement of employee productivity is an activity that is very important because it can be used as a
measure of success in supporting the success of the organization’s employees (Said, 2008). Factors used
in the measurement of labor productivity include the quantity of work, quality of work and timeliness
(Simamora, 2004). Individual characteristics that affect performance include age, gender, and education,
length of employment, job placement and work environment.
The concept of productivity of work is divided into two parts: Individual productivity and organizational
productivity. Individual dimension associated with the characteristics of the personality characteristics of
the individual appears in the form of mental attitude and individual efforts to improve the quality of life.
Organizational dimensions look productivity within the framework of the relationship between input and
output techniques (Kusnendi, 2003).

METHODOLOGY

Research Design and Target Population

This study was employed descriptive study; the purpose of descriptive research is to describe an
accurate profile of persons, events or situations. In addition to, this study will be used quantitative
approach. Quantitative is any data collection technique (such as a questionnaire) or data analysis
procedure (such as graphs or statistics) that generates or uses numerical data (Saunders et al, 2009). The
study was conducted in survey research approach. Surveys are information-collecting method use to
describe, compare, or explain individual and societal knowledge, feelings, values, preferences, and
behavior (Fink, 2009). This study was conducted among mineral water industries in Mogadishu. The
researcher selected a number of industries such as Afi Mineral water, Jema mineral water and Coca Cola.
The researcher selected those companies because they are the main industries that provide mineral
water in Mogadishu. The sample size of this study would be 100 of respondents.

SAMPLE PROCEDURE

The data for this study were collected through questionnaires that were administered to mineral water
industries in Mogadishu. Questionnaire was used in view of the reality that the study is concerned with
variables that cannot be observing such information is best way of collecting data through
questionnaires (Saunders et al, 2009). The questionnaire contained three sections, namely demographic
information, i.e. age, gender, level of education and experience, research objective one and research
objective two accompanied by a four point Likert scale.

FINDINGS

4.1 Profile of the respondents

The profile of respondents was analyzed and presented the following tables. It contained age, gender,
education level and experience.
Age Frequency Percent

20-25 14 17.5

25-30 27 33.8

30-35 28 35.0

35-40 9 11.2

40 and above 2 2.5

Total 80 100.0

Source: Survey Data 2018

Results in table 4.1 indicate that respondents in this sample were dominated by those between 30-35
years (35%), suggesting that most of the respondents are youths.

Gender Frequency Percent

Male 60 75.0

Female 20 25.0

Total 80 100.0

Source: Survey Data 2018

Regarding gender, results indicated that male respondents (over 75%) were higher than female
respondents (over 25%). This indicates a big gender gap and this gap may be due to women not
participating a lot in industrial productivity.

Educational Background of the respondent Frequency Percent

Had never gone to school 1 1.2

Primary 1 1.2

Secondary 15 18.8
Bachelor`s Degree 53 66.2

Master`s Degree 10 12.5

Total 80 100.0

Source: Survey Data 2018

With respect to educational background, results indicate that majority of respondents are Bachelor’s
degree holders (over 66.2%), confirming that majority of workers in mineral water industries in
Mogadishu-Somalia are qualified.

Experience of the respondent Frequency Percent

1 year 4 5.0

2 years 13 16.2

3 years 22 27.5

4 years 24 30.0

5 years and above 17 21.2

Total 80 100.0

Source: Survey Data 2018

According to Experience of the respondent, the result shows that respondents are experienced with
(over 30%) of doing this job.

4.2 ROLE OF WAGE

ROLE OF WAGE Mean Std. Deviation

Wage does not influence production 1.85 .858

Employee needs other incentives not only pay 2.89 .955

Employers prefer unskilled labor to give less wage 2.89 .941

Successful employee gets his/her rights through pay system 3.20 .906

Some companies do not care work environment 3.18 .839

Employers believe that skilled labor more expensive 3.24 .875

Wage increases talent of labor 3.27 .842

Rewards participate moral of employees3.36 .846

Mineral water industries give good salary to promote quality of work 3.19 .901

Total 3.042 0.8791

The results (Table above) indicate wages plays a greater role because mean scores for overall of the total
sample (3.042), the highest rated aspect Rewards participate moral of employees and the mean scale
was 3.36. Wages is very important for employee productivity because Lack of reward is potential reason
of decreasing employee’s productivity and wage is the most influence production, Successful employee
gets his/her rights through pay system for their wages.

4.3 EMPLOYEE PRODUCTIVITY

Employee Productivity Mean Std. Deviation

Employees productivity plays important role for organizational performance 3.22 .927

Factors that increase employees productivity are good capital, supervisor support and physical work
environment 3.24 .815

High productivity depends on experience 3.18 .823

Employee turner increases productivity higher than wages 3.18 .868

Luck of infrastructure decreases level of production 3.19 .956

Physical working conditions affect employee productivity 3.35 .797

Using technology decreases employee compensation directly 3.16 .947

Employee Productivity depends on wage 3.38 .786

Total 3.2375 0.8649

DISCUSSION

Most of the respondents, were youths, married, and had attained high qualification of Bachelor’s degree
confirming that majority of workers in mineral water industries in Mogadishu-Somalia are generally
qualified. The wage was generally high, which indicated that respondents usually use enough skills that
are required while producing.

Data analysis using means showed that the following wage is high; Wage does not influence production
(mean=1.85) and this was followed by; Employee needs other incentives not only pay (mean=2.89);
Employers prefer unskilled labor to give less wage (mean=2.89); Lack of reward is potential reason of
decreasing employees productivity (mean=3.35); Successful employee gets his/her rights through pay
system (mean=3.20); Some companies do not care work environment (mean=3.18); Employers believe
that skilled labor more expensive (mean=3.24), Wage increases talent of labor (mean=3.27), Rewards
participate moral of employees (mean=3.36), and Mineral water industries give good salary to promote
quality of work (mean=3.19). The employee productivity was found to be high all aspects (over all
mean=3.2375).

CONCLUSION

The purpose of this paper is to study the role of wage and employee productivity in Mogadishu. The data
for this study based on questionnaires were administered to three mineral water industries in
Mogadishu. The results Wages is very important for employee productivity because Lack of reward is
potential reason of decreasing employee’s productivity and wage is the most influence production,
Successful employee gets his/her rights through pay system for their wages and Mineral water industries
give good salary to promote quality of work . On the other hand, the Employees productivity plays
important role for organizational performance and the fast Factors that increase employee’s productivity
are good capital.
RECOMMENDATIONS

From the findings and the conclusions of the study, the researcher recommends that there is need to
encourage women also directly involve in production system in mineral water industries in Mogadishu.
There is a need to encourage people in late adults to share their experience and knowledge with youths
hence succeeding in mineral water industries. This is so because the sample was dominated by youth
neglected people in their late adulthoods of Mogadishu. Most respondents comply there is no minimum
wage system, so the government specially, public agencies should ensure these needs to reach efficiency.

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