A Public Sector Salary Survey undertaken by the Salaries and Remuneration Commission (SRC) in the year 2020 sought to determine employees on the maximum salary points/notches in public service institutions and mechanisms employed by such institutions to manage employees at the maximum points.
The survey, which sampled 187 public institutions, included: civil service (national government) and county governments, State corporations (commercial and service), Constitutional Commissions and Independent Offices; teaching service, and public universities.
The findings of the survey established that 83 per cent of the respondent institutions had employees serving on the maximum salary points/notches. Consequently, the institutions employ various strategies to address the challenge of employees on the maximum salary points/notches.
The institutions use stagnation, promotions or award of annual increments as mechanism to manage stagnation. 62 per cent of the institutions stagnate employees at maximum salary point, 69 per cent use promotion subject to a vacancy and 8 per cent use payment of annual increments.
The survey established that some commercial and service State corporations paid annual increments to stagnating employees based on either the cost of living adjustment or performance.
An analysis of the requests for remuneration reviews submitted to SRC by public service institutions revealed that stagnation has been occasioned by several factors.
These are; automatic annual increments that result to attainment of maximum salary points; retention of the prevailing structures by public service institutions; and implementation of shorter salary notches by institutions.
Others factors are; incorrect mapping of employees to new salary structures after salary review; lack of a robust performance management system in public service institutions; fixed salary points; and delays in concluding Collective Bargaining Agreements (CBAs).
Further, stagnation is also caused by delayed promotions due to lack of vacancies and organisational restructuring; inadequate employee skills and abilities; and insufficiencies in career management.
Low levels of productivity and performance
When employees continue working in the same job over a long period of time earning the same salary without increments or reviews, they tend to lose morale.
This then connects to several negative work outcomes such a lack of job satisfaction, lack of job commitment, increased level of turnover intention, absenteeism, and creation of creativity inertia. This negatively impacts on individual and the overall organisational performance and productivity.
2. Staff turnover
Staff turnover, in most instances, have been associated with stagnation, where opportunities for promotion are not forthcoming. At the same time, an employee is unable to get any more increments in salary after attaining the maximum salary point.
In such instances, individuals become aware of their situation and choose another alternative such as, quitting or looking for jobs outside the organisation where better remuneration and opportunities for advancement in their careers are offered. When staff turnover rates are high, it affects productivity and performance, thus, compromising service delivery.
3. Challenges in retention of highly skilled staff
Stagnation across public service institutions has resulted in loss of highly specialised skills. When highly skilled employees reach the maximum of the salary scales and prospects for salary increments/reviews or incentives lack, they feel that they are unfairly treated and inadequately compensated for their skill. They, therefore, look for greener pastures elsewhere in the private sector or public service.
4. Erosion of the purchasing power
Periodic adjustment of wages and salaries are meant to compensate employees for the Cost of Living Adjustment (COLA), thereby, cushioning employees against the erosion of purchasing power due to inflation. However, in circumstances where an employee’s salary stagnates (without increments/reviews), this disadvantages employees on the maximum point.
5. Employee unrests
When the majority of employees in an institution are at the ceiling of their salary bands, with no prospects of salary reviews or promotional advancements, they may become frustrated and agitated due to unfulfilled needs of individual expectations, and increased stress levels.
Consequently, a fertile ground for clamour for salary increases is executed through go-slows, picketing, demonstrations or even strikes. This affects an institution’s operations and reduces productivity.
Fixing stagnation requires the collective effort from all the relevant stakeholders, including SRC, affected institutions, scheme administrators, and goodwill from the government as a whole.