THE NEW MINIMUM WAGE AND ITS IMPLEMENTATION ON THE PERFORMANCE OF THE EMPLOYEES IN GOVERNMENT PARASTATAL

THE NEW MINIMUM WAGE AND ITS IMPLEMENTATION ON THE PERFORMANCE OF THE EMPLOYEES IN GOVERNMENT PARASTATAL

BACKGROUND OF THE STUDY

One of the key reasons why people work and labor is to generate income in the form of compensation and salary, especially when they work for a company. Every firm, whether private or public, sets the amount of wage given to an employee in such a way that the lowest pay provided meets their basic needs, even if it is not proportional to their degree of effort. Many nations throughout the world have implemented a minimum wage in order to increase the income of low-wage workers. Fixing the National Minimum Wage is one of the main subjects being debated at the current National Conference in Abuja, Nigeria's Federal Capital Territory. Minimum-wage laws provide the bare minimum that a company can pay for work (Mankiw, 2011). As a result, compelling companies or organizations to pay a minimum wage is an example of a government intervention targeted at improving the income of specified people; the goal is to establish a "wage floor" that will allow low-paid employees to leave poverty (McConnell, et al, 2009). When combined with strong social policies, minimum wage rules are an efficient strategy to reduce poverty and income loss among the poorest households.

According to Herr and Kazandziska (2011), one of the strategies that may be employed to restrict pay difference and thereby reduce income inequality is the minimum wage. It can also help to prevent deflation and a broad reduction in nominal wages. According to the International Labor Organization (ILO), the elements to be considered in determining the level of minimum wages are (a) the needs of workers and their families, taking into account the general level of wages in the country, the cost of living, social security benefits, and the relative living standards of other social groups; and (b) economic factors, such as the requirements of economic development, productivity levels, and the desirability of attaining a certain level of productivity. The minimum wage should be determined on a country-by-country basis. In fact, the minimum wage to average pay ratio in many countries is set at around 40%. (ILO, 2009). The minimum wage, as ill-defined as it is, has been thoroughly investigated and disputed throughout time by economists, each with conflicting views. The goal of the minimum wage is to improve employees' economic standing by increasing their purchasing power, helping them to overcome economic obstacles created by high consumer goods prices, which have undermined the value of their wages. The price of goods and services is rapidly rising. As a result, it's no surprise that employees' earnings are insufficient to support the skyrocketing costs of living. The imposition of a minimum wage protects those who are vulnerable, uninformed, or isolated from being exploited. The minimum wage offers more comprehensive protection than current voluntary bargaining techniques (Fapohunda, Atika, and Lawal, 2013). Another argument is that by establishing the Minimum Wage, businesses are not only deterred from employing unduly low-wage employees, but are also pushed to use human resources more effectively, resulting in higher output.

1.2 STATEMENT OF THE PROBLEM.

The difficulty in the public sector originates from the incapacity of government personnel to negotiate higher compensation, which has serious ramifications for performance. Employees' poor wage has created a heated discussion between the government, labor, and workers. The National Institution for Food, Drug Administration, and Control (NAFDAC) is Nigeria's government institution in charge of food, drug administration, and control. Before it was formed, Nigeria was on the verge of becoming a centre for counterfeit medicines and other consumer products. However, once Prof. Dora Akunyili was appointed Director General, the production and distribution of counterfeit goods and consumables reduced substantially. Following his regime, researchers such as Olaleye (2012) opined that NAFDAC had little success in reducing or eliminating the manufacture and sale of counterfeit pharmaceuticals and other inferior items in the country due to government inconsistency in effectively implementing the legal framework of minimum wage. Workers have long campaigned for better service conditions through their labor representatives, and they are prepared to go to any length to ensure that their wishes are realized (Olaleye, 2012).

Many governments have come and gone, but none of them have done so without arguing what constitutes acceptable or minimal salary or remuneration for government personnel. In rare cases, notably during the military era, it has been free of industrial conflicts, but most civilian administrations have been dominated by trade disputes initiated by the country's major labor centers (Obiora, 2013).

Occasionally, crises arising from such disagreements culminate in the breakdown of law and order, especially when they are hijacked by society's miscreants. Employees have traditionally gone on strike as a result of such activities, with significant ramifications for productivity and output. Poor pay is a constant source of aggravation, resulting in a decrease in production (Nwachukwu, 2009). Previous research has found that low performance and inefficiency have characterized Nigeria's public sector organizations since independence (Mbogu, 2001); and other research has found that the low performance and inefficiency associated with Nigeria's public servants could be eliminated if they were given financial incentives (Tongo, 2005). The empirical literature provided a variety of outcomes, and some of the study is old and must have been replaced by recent occurrences. Furthermore, the bulk of the studies have significant methodological faults, since most of them used a nonparametric approach to data analysis, which is prone to errors. As a consequence, the study will fill the detected gap using a more extensive data analysis technique.

1.3 OBJECTIVES OF THE STUDY

The primary objective of this study is to assess  the new minimum wage and its implementation on the performance of the employees in government parastatal. Specifically the seeks to:

1. Investigate the importance of wage and salaries remuneration in public sector

2. Evaluate if Government of Nigeria has effectively implemented the minimum wage policy

3. Examine the challenges impeding the effective implementation of minimum wage

4. Assess if effective implementation of minimum wage will improve employee performance in government parastatal.

1.4 RESEARCH QUESTIONS

The following questions guide this study:

1. What are the importance of wage and salaries remuneration in public sector?
2. Has Federal Government of Nigeria effectively implement the minimum wage policy?
3. What are the challenges impeding the effective implementation of minimum wage?
4. Will effective implementation of minimum wage improve employee performance in government parastatal?

1.5 RESEARCH HYPOTHESES

The study shall test the validity of the following null hypotheses:

HO1: Government of Nigeria has not effectively implemented the minimum wage policy in  government parastatal.

HO2: Implementation of minimum wage will not have any significant effect on employee performance in government parastatal.

1.6 SIGNIFICANCE OF THE STUDY

The result of the study will be significant to policy makers, civil servant and academia. To government and policy makers, finding from the study will encourage them effective implement the minimum wage policy as this would serve as a motivating tool for civil servant. To civil servant, the study would be beneficial to them as this would lay emphasis for them to put in more effort in their job as this could encourage government to effectively reward them. Empirically, findings from the study will add to the body of existing literature and serve as a reference material to both student and scholars who wishes to conduct further studies in related field.

1.7 SCOPE AND LIMITATION OF THE STUDY

The goal of this study is to determine the impact of the increased minimum wage on the performance of NAFDAC staff. The study examines the significance of wage and salary pay in the workplace. It determines if the Nigerian government has properly implemented the minimum wage policy. It will look at the issues that are preventing the successful implementation of the minimum wage and make recommendations on how the government might improve employee performance in government parastatal. However, the study is confined to the Lagos State National Agency for Food, Drug Administration and Control (NAFDAC).

However, as with any human endeavor, the researchers ran into some minor roadblocks while doing the research. Because there was a scarcity of literature on the subject due to the fact that it was a new discourse, the researcher had to spend more money and time sourcing for relevant materials, literature, or information, as well as in the data collection process, which is why the researcher chose a small sample size. In addition, the researcher will do this research while also working on other academic projects. Despite the limitations faced during the study, all aspects were minimized in order to provide the best results and ensure the research's success.

1.8 DEFINITION OF TERMS

Wage: Wage is a term that's usually associated with an hourly workforce. Hourly individuals typically receive their paycheck in a schedule that reflects getting paid for the previous week worked. Companies can back a salary into an hourly wage.

Minimum Wage: A minimum wage is the lowest remuneration that employers can legally pay their employees—the price floor below which employees may not sell their labor.

Employee Performance: Employee performance is defined as how an employee fulfills their job duties and executes their required tasks. It refers to the effectiveness, quality, and efficiency of their output.

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