Impact Of Salary Increase And Fringe Benefits Among Nigerian Workers

Impact Of Salary Increase And Fringe Benefits Among Nigerian Workers: (A Case Study Of Enugu Railway Corporation)

Impact Of Salary Increase And Fringe Benefits Among Nigerian Workers: (A Case Study Of Enugu Railway Corporation)


Armstrong (1980) opines that a number of situational aspects affect wage payments; legislation and geographic location are beyond the control of the wage and salary administration but others including wage, comparable wage ability to pay and productivity influence the wage payment.

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i) NATURE OF THE DUTIES PERFORMED: Charles and Pigors (1981) opine that the duties of a particular job classification influence its level of pay. Wage rates tends to increase with higher still requirement les desirable surrounding greater physical effort and the works relevance to organization purpose.

ii) LABOUR SUPPLY AND DEMAND: According to Samuelson (1980); the market maintains that the forces of supply (labour seeking employment) and demand organization biding for this reserve interact in the market place when the available supply equals the demand (this state is called equilibrium). The wage level is established consequently a scarce skill that is much in demand commends a higher wage level.

iii) THE COST OF LIVING: Olaleye (1991) remarks that, this criterion is based on the cost of living index and tends to overshadow the importance of the other criteria. Any increase in cost of living result in greater pressure for increase in wages. The cost of living allowance (CODA) has remained a household word since the Adebo commission on wage and salaries in 1971.

iv) COMPERATIVE WAGE: “Business and Economic Report, September (1987)”. The amount being paid in the area or the industry for similar work is the going rate in order to retain employee an organization must pay at or near prevailing wage for each classification. Compensation administrators who want their organization to remain competitive in the labour market must have knowledge of customary pay practices in both the industry and the geographic area.

v) ABILITY OF THE EMPLOYER: “Lipsey and Richard (1980)” believe that wage levies must accord with the financial condition of the employer and his ability or inability to pay. It is not necessary that all industry operating in the same wage rates for the same skill or job large and medium industries may possess the ability to pay higher wage and salaries than small/infant industries.

vi) PRODUCTIVITY: “Libeku (1984)” suggests that, this is another important index stimulating the wage level. Recent concern with spirally living cost has focused attention on improved productivity as justification of pay increase. Increased efficiency through automation and improved methods often enable organization to pay higher wages.

vii) BARGAINING POWER: Nigeria Economist (1988) contends that”, although there is no concrete evidence that union activity causes higher wage rates, it is obvious that some unions have successfully bargained for pay increase for their members. The power force of wage theory believe that collective bargaining accelerates wage rises in unionized forms, opponents of the view point, particular proponent of the labour market theory content that difference between union and non-union wage can be explained on economic ground minimizing the importance of union activity in wage field.

vi) LEGISLATION: “Olaleye (1991) confirms that,” various law and federal regulations influences pay scales and the administration of compensation plans.


Wages are fixed in the following ways

i) AGREEMENT BETWEEN EMPLOYER AND EMPLOYEE: Applicant responding to advertisement for job are already aware of the pay for the job, the employer, haven considered what is applicable in the labour market is also prepared to pay a comparable wage if it is to attract and retain qualify staff.

ii) COLLECTIVE AGREEMENT: This is by fixing wages in the private sectors since individuals workers cannot always successfully negotiate the wage rate, there is tendency to form themselves into unions so as to negotiate with greater strength with the employer.

iii) VOLUNTARY OR COMPULSORY ARBITRATION: The trade Act of 1976 made arbitration compulsory under the Act, in industrial arbitration panel is established with the duty to arbitrate in all industrial disputes, including pay disputes on the basis of these, the panel makes an award in terms which it considers to be socially just, economically sound and in the interest of the parties to the dispute. When the award is ratified by the labour minister, it becomes binding on both parties.

iv) MINIMUM WAGE BOARDS: This is system of collective bargaining of living wages. The union must be strong and knowledgeable enough to be able to understand the implication of the bargaining. In some firms the union are weak, ineffective or non-existent, hence, wage agreement are concluded to the detriment of the employee. It is in such undertaking that we have governmental intervention in the form of statutory regulation of wages.

v) GOVERNMENT ORDER LAW AND WAGES COMMISSIONS: A government order law may fix a minimum wage to be paid by all employers in the country. A good example is the National Minium Wage Act 1981, which fixed the National Minimum Wages at N125 per month. There is also another Act/Decree that fixed the minimum wage at N250 per month in 1990. Government had from time to time set up wage and salaries commission.


A. TIME RATES: This is a system of allocation of job and remuneration of the basis of the period expended on the task. The concept of time is merely on administrative devise to ensure attendance of the workers within the given periods. The system have advantage because;

i) They are simple to operate and minimize administrative cost.

ii) Overhaul labour cost control is made easier informed of all its detail and implications.

iii) Employee tends to prefer a stable pay structure (provided it is equitable) and know weekly or monthly sum.

B. DAY RATES: This amount of work expected to be completed, a day is assessed and designed. The workers are those paid time rate plus a bonus as long as he maintains the agreed output.

C. PIECE RATES OR PAYMENT BY RESULTS: There seems to be limited incentive in the time rate system, hence, the resource to piece rates. Piece rates are more rational in the sense that, you are rewarded in accordance to the effort expanded. Piece rate provides for wage payment, which are based on the quality or units produced. However, piece rate is a scheme that provides no security for the worker and it is now among casual workers. The principle behind this system is that a worker is paid on the basis of quantity produced irrespective of the time taken to perform the function.

D. BONUS SCHEME: There are various types of bonus scheme there are:

i) THE HALSEY BONUS SCHEME:- In this system, the worker is rewarded for, his efficiency in production by applying the day or time rate on half of the time saved. The worker’s total earning for the period would be ascertained by considering, the total time taken in production plus half of the time saved times the day or time rate.

This is computed by the formula:-

Bonus = ½ Ts X Day/Time Rate

Total wages = (T T + ½ TS) Day/Time Rate

Where TS = Time saved

TT = Time taken to complete job

ii) THE HALSEY WEIR BONUS SCHEME:- Under this system, bonus is being determined based on the proportion of time saved. Bonus paid is based on one-third of the time saved. This is computed by the formula:-

Bonus = ½ Ts X Day/Time Rate

Total Earnings = (T T + 1/3 TS) Day/Time Rate

iii) THE ROWAN BONUS SCHEME:- Under this system, the proportion of the time saved to be used in the determination of the bonus is the relationship between the time taken and time allowed. Therefore bonus paid is based on a proportion of time saved. This is computed by the formula:-

Bonus = (TT/TA X TS) X Day/Time Rate profit for that:

i) It aids the sense of identification with organization among workers;

ii) It foster loyalty and of long term commitment;

iii) There is increasing awareness of how well the organization is performing;

iv) It enhances understanding of the relationship between the staff, cost and productivity;

v) It brings together staff from various diverse parts of the organization and identify with its achievement.


Wages and salaries programme enable organization to attract, maintain and develop the best available talent. Theoretically, it can be designed to achieve these purpose, but in practice it rarely accomplished complete satisfaction in all three areas. Compensation programmes perform the following functions.


It can attract the best available individual since the demand for Total Earnings = T T + TT/TA X Day/Time Rate

For example, if a factory has a system of incentives for a worker based on the following information.

Time allowed for production 74 hours

Time rate 44 hours

Basic rate 30k per hour

To calculate the total wages payable under the Rowan Bonus Scheme, it will be Rowan Bonus Scheme.

Total wages = (TT + TT X TS) X Time Rate


= (44 + 44 X 30) 30k


= (44 + 17.84) 30k

= (61.84) 30k

Total wages = 18.55

Time saved = TA – TT

= 74 – 44

= 18.55

A. PROFIT SHARING:- Under this scheme, the employer and his worker enter into an agreement for remuneration to be based upon a rate plus an agreed share of the profits of the undertaking.

It is a bonus sharing method through which the employees are given a bonus at the end, depending on the state of the company’s labour is competitive.

B) PROVIDE EQUAL PAY FOR EQUAL WORK:- Equal in compensation programme is controversial, organizations to compare their work and pay with what is obtained in other companies.

C) RETAIN GOOD EMPLOYEES: Organization want to retain employees who posses the right skill and performs well. When workers earners much as they could elsewhere and pay scales keep peace with the cost of living, they are likely to remain in the job.

D) PROVIDE INCENTIVE:- Under certain condition, momentary reward can motivate people to produce more. When pay is given as a form of reward or recognition for effective job performance, it can encourage workers to strike for higher achievement.


Programmes relating to compensation to productivity are called incentives system. Foremost, organization workers that enjoy monetary incentives are believed to put in more extra efforts so as to produce more.


i) The benefit should relate to the effort put, be fair and just to both the worker and the employer.

ii) The work content must be measured accurately

iii) Payment should be made as soon as possible after the completion of the work.

iv) The worker should be paid in direct proportion to his individual effort rather than the groups.

v) The scheme should be able to give room to easy supervision and production control.

There are two types of incentives that can be distinguished.

A) INDIVIDUAL SCHEME:- This scheme includes piece rate, bonuses, commission suggestion scheme and measure day work. These are to include to work through monetary incentive to increase the quality of production while piece relate quality of output to wage rate bonus system is based on the measurement of output to wage rates, bonus system is based on the measurement of output in units of time. In the case of measurement, day work earnings are direct proportional to the time worked but rates are graded.

B) GROUP INCENTIVE SCHEME:- The schemes are similar to the individual one except that the emphasis is on group, cooperation as individual output is uncertain. For example, a machine crew, machine operator and other less skilled workers, financial reward may be graduated according to the importance of the function performed. The effort of the individual may not be adequately rewarded because it is submersed in the group effort. Profit sharing is not common in Nigerian industries, the Christmas bonus was originally intended to serve as an incentive scheme.


In the study, the researchers examined the impact of salary increase and fringe benefits among Nigerian workers, with special reference to Nigerian Railway Corporation, Enugu.

It also relates to the effect of salary increase and fringe benefits among Nigerian workers by motivating and inspiring the employees to work more.

Fringe benefits are monetary incentives given to employees to propel them to put in extra effort and therefore produce more. Allowances or benefits to workers will induce them on efficiency and effectiveness.

Finally, workers would produce more if they are given incentives, and as a result, there will be room for organizational growth and efficient management.


This chapter deals with the way the data are being presented for analysis and interpretation.

The answer, which the researchers recorded, are arranged in logical sequence. The researchers decided to use statistical table, figure and essays for the data presentation and analysis.


During the period of conduct of this research, the researchers found out the following as impact of salary increase and fringe benefits among Nigerian workers.

It is worthwhile to note that the outstanding effect of salary increase is in two folds. It serves as a motivational force of inflationary trends prices of commodities are raised.

Most consumer items are then out of reach of ordinary consume. From the survey conducted, both durable from the survey conducted, both durable and non-durable goods are now costly out of reach of the workers. For example, a bedroom which used to cost between N500 and N600 in Enugu is now between N1000 and N1500. Transportation fare has also increase tremendously. Feel that their rights are being impede upon and easily negotiated in clued wage and salaries, over times rates, hours of workers annual leave, allowances, acting allowances, transfer/ disleave and redundant benefit.

In all therefore research had show that some workers see the recent salary increase and fringe benefit as a set back and believed that the old salary structure was preferable.


Based on the findings in the previous chapter, we therefore put forward the following recommendation to correct and improve the impact of salary increase and benefits among Nigerian workers.

1. For the fact that workers believe that increase in salaries and fringe benefits act as a motivation force towards high productivity capacity, organization or corporation must pay attention vigorously to this aspect so as for productivity to increase.

2. Effect of salary increase: This aspect has contributed to the downs fall of the economy in general.

First of all, salary increase leads findings have revealed that people can only give their best if their needs are satisfied. These cannot be successfully achieved except through monetary incentive to workers.


This occurs as a result of disagreement between workers and management. It is a means through which dissatisfaction is shown by workers. The trade dispute Act of 1976 define strike as “the cessation of work by a body of persons employed, acting in combination or a concerted refusal under a common understanding of any person employed in consequence of a dispute done as a means of compelling their employer or body of person employed to accept or not to accept term of employment and physical condition of work.


This is the machinery of interaction between employers and employees or workers.

Collective bargaining ad defined is “the negotiation about working conditions and terms of employment between the employers and a group of employees or labour union in an organization with a view of researching an agreement.

Workers in the public sector, especially the Nigerian Railway Corporation, resort to the use of collective bargaining if they increase in all prices of commodities as this therefore lead to inflation. If salary is increased, it will lead to a situation whereby consumers will not be able to reach certain needs and as such when increasing salaries, consideration must be given to its side effect and not just increasing it to motivate workers alone.

3) As part of motivation structure design, management must ensure that various allowance are given to each individual worker in order to enable them carry out their duties effectively and efficiently.

4) I will strongly recommend that any increase in salaries should not be proclaimed but should be awarded in the form of bonuses for the workers, and this will enhance the productivity of the workers since no one knows about his salary package.

In conclusion, if corporation or management wants the duties assigned to workers to be carried out effectively and efficiently as well as for workers to be happy in all their undertakings in the company, adequate motivations system, fringe benefit, allowance etc must be designed or built in the plan of the company.


Development of salary increase and fringe benefits on workers largely depends on the plans laid down. In order that the contribution of workers in the public sector could be determined, it is necessary for workers in the public sector to follow up systematically steps involved in planning as well as adopted recommendation highlighted below.

Therefore, in future occurrence, all these should be examined before determining any salary increase for workers. If a worker who was receiving N125.00 having his salary increased to N350.00, and the price of garri rises to 50kobo instead of 20kobo. That would mean reducing the purchasing power of money, which make money valueless. What useful purpose will such increment serve?

Impact Of Salary Increase And Fringe Benefits Among Nigerian Workers: (A Case Study Of Enugu Railway Corporation)

To place an order for the Complete Project Material, pay N5,000 to

GTBank (Guaranty Trust Bank)
Account Name – Chudi-Oji Chukwuka
Account No – 0044157183

Then text the name of the Project topic, email address and your names to 08060565721.  

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