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EFFECT OF NEW MINIMUM WAGE ON EMPLOYEES TURNOVER INTENTION IN PUBLIC SECTOR

ABSTRACT

The study exammes effect of new minimum wage on employee turnover intention in public sector. The objective of the study was to examine the relationship between the new minimum wage and employee turnover. The survey research method was adopted and a sample size of 68 respondents was selected from the population of study through stratified random sampling technique. Questionnaires were administered as the instrument of data collection and statistical tools were employed for data analysis. Findings of the research reveal that the new minimum wages is a step in the right direction. However, the determination of the wages without the input of the trade union representatives has generated a lot of controversies but does not have significant negative effect on labour turnover in the public sector. It was recommended among others that government should desist from the practices of unilateral determination of wages and salaries in the public sector. Workers wages should be considered a crucial issue.

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND TO THE STUDY

Organizations invest a lot on their employees in terms of Induction and training, developing, maintaining and retaining them in their organization. Therefore, managers at all costs must minimize employee's turnover. Although, there is no standard framework for understanding the employees turnover process as whole, a wide range of factors have been found useful in interpreting employee turnover, one of such crucial facto is pay (Kevin, 2004). Pay reform has been an important issue in public service management throughout the world over the past two decades. Pay is a significant feature of human resources management, and these resources are the most crucial factor in the delivery of public services. The economic crises and the attendant deterioration in service delivery that confronted most governments in the 1970s and 1980s have brought public service employment and pay reform at the fore of the policy agenda in virtually every country, except the mineral-rich exporters, since the early1980s (Kiragu, 2003). Minimum wage issues have been a major factor in the determinant of workers stay on the job in the Nigeria public sector. However, the extent to which workers is satisfied on the job is also another area of interest in public discuss. Therefore, this study shall be conducted to examine the effect of minimum wage administration on worker turnover in the civil sector.

1.2     STATEMENT OF PROBLEM

The minimum wages payable to civil servants in Nigeria has been review over the years in a bid to better the lots of the public service workers. However, the review has been met with several confrontations which often led to series of industrial actions led by the labour unions in the country. Recently, the federal government introduces the new minimum wages designed to offer workers a basic pay of #18,000. This had generated several controversies as well as many crisis in form of strike actions, absenteeism, sabotage and many more on the part of the workers. In the heart of the controversy is the fact that some state government have refused to honour the agreement. The Lagos State government is one of those states with strong argument against the payment of the new minimum wage. It is therefore pertinent to investigate how the new minimum wages have affected employee turnover in the Lagos state civil service.

1.3     OBJECTIVES OF THE STUDY

The primary objective of the study is to examine the effect of the new minimum wage on employees' turnover in Lagos State. However, the specific objectives shall include:

i.  To examine the relationship between minimum wage and employee turn over in the public sector.

ii. To assess the effect of failure to honour the new minimum wage legislation on the performance of workers in the public sector.

iii. To investigate the role of Labour unions in the wages and salary administration in the public sector.

iv. To find ways by which cnsrs relating to mimmum wages administration can be resolve.

1.4   RESEARCH QUESTIONS

The following questions shall guide the study:

i.  Is there any the relationship between minimum wage and labour turnover in the public sector?

ii. What is the negative effect of failure to honour the new minimum wage legislation on the performances of workers in the public sector?

iii. What are the role of Labour unions In the wages and salary administration in the public sector?

iv. In what ways can the CriSIS relating to mmimum wages administration be resolve?

1.5   RESEAREH HYPOTHESES

The following hypotheses shall be tested in the course of the study; 

Hypothesis 1

Ho: There is no significant relationship between the minimum wage administration and labour turnover in the public sector.

HI: There is a significant relationship between the minimum wage administration and labour turnover in the public sector.

Hypothesis 2

Ho: Labour unions do not play significant role in the wages and salary administration in the public sector.

HI: Labour unions plays a significant role in the wages and salary administration in the public sector.

1.6     SIGNIFICANCE OF THE STUDY

Following the introduction of the new minimum wage in the civil service, there have been several issues revolving around how the new minimum wage affects the workers. Therefore, this study will be of significance in the following areas: Government at both the federal and state level will find the study useful in the area of implementation of the new minimum wage as the findings of this research will help them to realize the implications on civil servants. Students as well as other researchers will find the outcome of this study relevant to future research in the area of wage administration in public sector.

1.7     SCOPE AND LIMITATION OF THE STUDY

The scope of the study covers the effect of the new minimum wages on labour turnover in the Lagos State civil service. Focus was on the review of previous minimum wages and how they affect the condition of service of workers. However, the scope of the study is limited to workers in the Lagos State Secretariat Alausa, IkejaLagos State.

1.8     DEFINITION OF TERMS

The following are the definitions of terms used in the course of the study:

Incentives: Benefits given to employees to motivate them for efforts expanded at work.

Minimum wages: The minimum sum payable to a worker for work performed or services rendered within a given period.

Salary: This refers to the recommendation of executives, supervisors, office employees and salesmen hired on a basis other than hourly rate, such as weekly, biweekly, semi monthly or annually.

Turnover: This refers to the rate at which employees leave an organization for another for one reason or the other.

Wages: This refers to compensation paid on workers hired on an hourly basis and who are paid the actual spent on the job.

Wage Commission: Government agency or committee set up to review wages and salaries of workers.

Turnover: is the process through which staff leave a business or organization and that business or organization replaces them. Turnover intention is a measurement of whether a business' or organization's employees plan to leave their positions or whether that organization plans to remove employees from positions. Turnover intention, like turnover itself, can be either voluntary or involuntary. 

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