Effect Of Delayed Payment Of Salaries And Wages On Employee Performance In Nigeria

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Effect Of Delayed Payment Of Salaries And Wages On Employee Performance In Nigeria


In recent years, cases of irregular payment of salaries and wages to workers in government ministries and parastatals have become a house hold issue. Hardly would nay month pass with out the media report about the difficulties being faced by workers as a result of delayed payment of their remuneration in the form of salaries, wage gratuity or pensions. At one time it will be in the federal ministry at other time it may be in the state ministries on the local government.

The strategic position assumed to be occupied by financial rewards in the relationship between the workers and their organization aroused the curiosity of the researcher to such extent that he decide to find out the effect of delayed payment of salaries and wage on the performance of employees, using the federal ministry of agriculture and natural resources, Enugu branch as a case study. In carrying out the study, survey methodology was used in gathering data, after gathering and analyzing the data, it was discovered that factors such as financial impropriety, ghost workers syndrome and diversion of funds were instrumental to government decision to carryout series of identification and screening exercises and change in there accounting system which combined to cause delays in the payment of workers’ salaries and wages which I turn resulted in the decrease in the volume of work performed.

Based on these findings, recommendations were made on how to solve the lingering problem. They include. Training the employees especially those in account and personnel department on the modern methods and technique of carrying out their assignment, computerization of the operation at least the above two departments, effort to retain the civil service glamour and a special recurrent expenditure account for the ministries.

Chapter One


1.1 Background of the Study

Every business is of primarily profit oriented, which I see as the objective which it set out achieves. The objective are stated or defined in their policy or mission statement.

In order to achieve the set goal, management ensures that all operations, activities of the organization conform to the established guides. The attitude of the employee leads to the achievement of the organization and the organization should ensure that employees are not created bad so that their attitude could not affect their performance.

Most of the things which affects the performance of the employee is, if there is any delay in payment f their salaries and wages.

What is performance? According to the oxford advance learner’s dictionary of current English (Homby, 1995: 860).

Performance means an action or achievement considered in relation to how useful it is in relation to workers performance refers to the action of the employees as they relate to the achievement of the set objective of the ministry. Employee performance occupies a central position in determine the success or failure of any organization.

This could be the reason why Mba, (1992:25), state that of all the resource of any organization, human resources remain the pivot on which other resource revolve and its performance determined the effectiveness and efficiency of the organization.

In the light of the above it is penitent to ask one vital question. The question remains, what is responsible for employee how performance? To answer question correctly, one has to look into the factor affecting performance e of worker and see it any of them is present in this ministry, one of the known factory militating against workers performance is poor conditions of services.

Chief among these condition is the method of payment and this is one are in which federal ministry of agriculture and natural resources has not being doing well. Reports from the workers themselves indicate that there has been irregular payment of salaries and wages and other fringe benefit to workers in recent times. In the course of this study, we attempt to find out the effect of delayed payment of wages and salaries on employee performance using Enugu branch of federal ministry of agriculture and natural resource as a case study.

1.2 Statement of the Problem

For about two years now, employees of federal ministry of agriculture and natural resources Enugu branch have been facing difficulties in receiving their salaries and wages as at when due. Complaints shown that since the inception of the present democratic government, payment of salaries and other Fringe benefits to workers in this ministry has been irregular. Sometimes it is delayed up to three months and at other times at say up to five months before it is paid this situation has lingered to the extent that the workers have lost hope of ever receiving their salaries at the end of every month, as was the case some years age.

In recent time, changes in the attitude of employees of this ministry have become noticeable. These changes include; going to work later, truancy in the office, quarrelling among workers themselves and frequent absence from duty without leave. All these could be regarded as the result of lack of motivation. The question now is, does delayed payment of workers salaries and wages affect. Their performance? If it does, what should be done to remedy the situation before it gets out of hand?

1.3 Objectives of the Study

The broad objective of the study is to find out the effects of wage incentives and fringe benefits on the productivity of Nigerian workers: a study of Enugu state local government service commission (1999-2007).

The specific objectives are:

  1. Identify why the issue of irregular salaries/wages persists in organizations especially in Enugu state local government service commission.
  2. Identify why the issue of inadequate salaries/wages persists in organizations especially in Enugu state local government service commission.
  3. Find out if the level of fringe benefits paid to workers in the commission affect the morale of workers.
  4. To find out the type of incentives that motivates the workers in the commission and also the relationship between these incentives and workers’ productivity.
  5. Find out whether wages and other fringe benefits are determined by collective bargaining.
  6. To find out the whether financial or non-financial incentives boost the morale of the workers.

1.4 Significance of the Study

Productivity improvement is significant because it has a bearing on the standard of living, the wages the employees can earn and the profit the organization can make. Productivity affects costs, prices, output, employments, and investments and thus plays a part in business fluctuation and in the rise and decline of industries. Understanding the effects of wage incentives and fringe benefits on productivity in the context of any organization helps in improving its efficiency and effectiveness. Therefore, in order to achieve high productivity, those who are instrumental to the high level of productivity must be taken care of, their needs and welfare should be paid adequately and promptly.

The employees should have their own share of the productivity dividends. Many researches have been conducted on the above subject matter on both private and public organizations but none has focused on Enugu state local government service commission. This study however, seeks to fill that vacuum, especially considering the fact that even though there are basic organizational principles, their applicability vary from one organization to another. This work is expected to make some meaningful impact when applied to job situations in Enugu state local government service commission and many other organizations having similar problems. The research will equally discuss the means through which wage incentives and fringe benefits can be used as practical measures to improve productivity. It will serve as a practical operating guide for those who wish to introduce productivity improvement techniques through incentive systems in their organizations.

Empirically, the research will serve as a blue print for organizational personnel who are experiencing decline in productivity and the method to prevent future occurrences. It will be of great help at any organizational level and to those who are responsible for the management of a work place-the executives, managers, supervisors, public administrators, government officials and other human resource managers.

Finally, it will serve as a theoretical base and also add to the existing body of knowledge on the effects of wage incentives and fringe benefits on productivity. It will serve as a resource material in business schools, management programmes, training sessions, development seminars and conferences on how best to motivate workers and improve productivity.

1.5 Scope and Limitations of the Study

The research work will analyze the activities of Enugu state local government service commission in relation to wage incentives and fringe benefits given to the workers of the commission. It has not been possible to generalize all the operational areas of the activities of the commission but to limit the boundary of the study to the policies regarding wage incentives and fringe benefits as it affects the seventeen local government areas of Enugu state. The study will therefore concentrate on the effects of wage incentives and other fringe benefits on the productivity of workers of Enugu state local government service commission between 1999 and 2007. This work has some limiting factors; there is no standard library in the commission to source information on the establishment, policies and overall programmes and activities of the commission. Secondly, there is no database from where other vital information about the commission can be assessed. Some difficulties were also encountered since we are using survey research whose information is dependent on opinions, attitudes, values and preferences of the people. The possibilities of biased answers may not be completely ruled out because the respondents could be apprehensive that their responses could negatively affect their job security.

Furthermore, the resentment by some public officers who are also apprehensive in making vital information available to the researcher on the excuse that information has been classified as “secret”. These limitations were surmounted by visiting some local government headquarters where I was able to collect useful information and document on the administration, functions, and achievements, regulatory and supervisory roles of the local government service commission in Enugu state. I also collected a letter from the head of department, public administration and local government, University of Nigeria, Nsukka, ensuring the commission that my research is merely an academic exercise and the information collected will be treated with utmost secrecy.

1.6 Research Questions

  1. Does Irregular payment of wages/salaries in Enugu state local government service commission hinders the productivity of workers of the commission.
  2. Does Inadequate wages/salaries in Enugu state local government commission hinders the productivity of workers of the commission.
  3. Does The present level of fringe benefits in Enugu state local government service commission affects the morale of workers negatively?
  4. Does The absence of collective bargaining process in Enugu state local government service commission tends to perpetuate meager and irregular payment of workers‟ salaries?

1.7 Operationalization of Key Concepts

For the purpose of this research, some key concepts was operationalized for better understanding of the work.

Local Government:

Local government is a system of local administration under communities that is organized to maintain law and order, provide some limited range of social amentias, and encourage cooperation and participation of inhabitants towards the improvement of their conditions of living. It provides the community with the formal organizational framework which enables them to conduct their affairs effectively for the general good.


Productivity is the achievement of desire output coupled with a utilization of resource (man, money, material and machine).


Wages are the total earrings a worker receives for the performance of services within a period of time. They are equal to the product of an hourly rate, times the number of pieces plus houses, premiums and fringe benefits. Wages means any economic compensation paid by the employer under some contract to his workers for the services rendered by them.


Salary refers to the weekly or monthly rates to clerical, administrative and professional employees. Salary is mostly determined by mutual agreement between the individual and the employer. They are sometimes determined or fixed by the government.


An incentive scheme is a plan or programs to motivate individuals or group performance. An incentive programme is most frequently built on monetary, but may also include a variety of non-monetary reward or prizes.

Chapter Five

Summary, Conclusion and Recommendation

5.1 Summary

This study examined the effects of wages incentives and fringe benefits on the productivity of Nigeria workers, a study of Enugu State local government service commission from 1999 to 2007. It is noted that the ability of an organization to achieve its goals of high productivity depend to a large extent on human resources as well as how effectively they managed workers. The workers should be adequately motivated for enhanced productivity. It was highlighted that the poor performance, lack of dedication and commitment of workers have been a matter of concern and debate among government officials, private organizations and the general public. How to improve the productivity of employees has been the topic of many seminars, symposia and conferences. The reasons for the trend, as well as, appropriate avenue for apportionment of blame, have formed the controversy.

The pertinent questions of the study were also highlighted. The objectives the study intended to achieve were clearly stated, while the significance of study the scope and limitations of the study concluded the first chapter.

In the second chapter, the literature was extensively reviewed in many aspects such as concept of wages and salaries, concept of fringe benefits, wage determination and collective bargaining and principle of motivation. The gap in knowledge came under this chapter, as well as hypotheses and operationalization of key concepts. Methodology for the study was also X-rayed which include types of study, data gathering instruments, validity and reliability instruments, populations of the study, sample of the study and method of data used were, primary and secondary data. Victor Vroom‟s (1964) Expectancy theory was used for the theoretical frame work.

Chapter three of the study dealt with the background information on the study area, functions of the commission, the organogram, funding, and fringe benefits in the commission, salary structure, achievements, major setbacks and tenureship of members of the commission.

Data from the field, their presentation, analyses and testing of the research hypotheses were the major contents of chapter four. Findings from the analysis concluded this chapter.

Chapter five is the last chapter of the study and dealt with the summary, conclusions and recommendations.

The findings revealed that there was low productivity of workers of the commission occasioned by irregular and inadequate wages/salaries, low level of fringe benefits and absence of collective bargaining process.

5.2 Conclusion

This study aimed at investigating the effects of wage incentives and fringe benefits on the productivity of workers of Enugu State local government service commission with a view to finding out whether their wages/salaries were adequate, regular and whether the level of fringe benefits in the commission boost workers morals for high productivity or not and whether workers’ salaries/wages were determined by collective bargaining.

As we earlier stated, the payment of good salaries and wages is fundamental to the increase in the productivity of employee. Therefore, a suitable payment system is a prerequisite for effective performance. In other to motivate people to put maximum efforts, it is essential that their various needs, especially as it concerns wages/salaries and other fringe benefits; be satisfied as far as practicable. In Nigeria, the salary structure falls below the level to maintain efficiency. It is not in line with the economic realities. According to Papola (1970) “a just minimum wage to maintain not only the life but the health and the vigour of the working people is a law of necessity and knows no other law”

The work does not in any way assume that it has found out all the factors responsible for low productivity of Nigerian workers. In the same vein, it cannot be said that the problems of low productivity of Nigerian workers would come to an end if the identified effects were redressed.

It is our belief that an attempt has been made to investigate the problems of low productivity among Nigerian workers. If the findings of this research succeed in making human resources managers and the government to look more seriously on issues that enhance productivity, the study would have achieved its basic objectives. There is no doubt that there might have been issues in the study that were not adequately addressed or equally important issues that were not raised. These lapses or gaps probably might have been included in the scope and limitations of the study.

5.3 Recommendations

The necessity for managers and administrators to motivate their employers through wage/salary incentives and another fringe benefit cannot be over-emphasized. There is no doubt that the ability of any organized enterprise and, indeed any group, to achieve its goals depends to a large extent on the motivation if its employers. Indeed, no management or government can succeed in achieving optimal productivity without knowing what the people want. This study has revealed that the low productivity of workers in Enugu State local government service commission was as a result of lack of regular salaries/wages, inadequate salaries/wages, low level of fringe benefits and absence of collective bargaining process in the commission.

In the light of the above, the under listed recommendation are being made to improve the productivity of Nigerian workers in general and that of the workers of Enugu State local government service commission in particular.
There should be periodic upward review of worker’s wages/salaries and other fringe benefits through collective bargaining process. The economic realities of the time should be considered during the process.

The issue of paying regular salaries to workers should be considered as a priority by the government. A worker depends on his/her monthly salary for the upkeep of his family. So, if it doesn’t come at the end of the month, they are devastated. So, there should be strong and effective legislation on this matter.

Free education at all level should be given to all Nigerians especially the children and youths, just as it exists in many western countries. This will reduce the financial burden on parents who are also the workers in the country.

Government should make it possible for Nigerian workers to buy houses, cars and other necessities of life on mortgage bases. This could be done in partnership with the government and other financial institutions. Any credible workers should be guaranteed by government, methods of payment established and spread over years, depending on the workers status and year of retirement.

There should be a sustainable welfare scheme for all the categories of workers. It should not be assumed that once salaries have been paid to workers, any other thing concerning the workers welfare has been taken care of. The management should not ignore issues like emergency assistance in cases of loss of direct relation, natural disaster, job security etc. Other issues that should be taken care of include insurance, health welfare scheme furniture allowances etc.

There should also be a way of rewarding efficiency at work so that other members of the staff may start to envy those rewarded and through that may change for better. There should be gifts in form of physical things or official commendations for any member of the staff found to be the best among his colleagues within a given period of time.

Promotion and conversion have also been identified as another motivational factor. Workers should be promoted as at when due. A returnee member of staff who came back from training and has acquired additional qualifications should be posted to the relevant department. And acting appointment given pending the availability of vacancy for him. Adequate promotion opportunities should be provided to all cadres who undergo various training. Stagnation should be avoided. These recommendations made cannot be said to be exhaustive, but it is believed that if they are implemented, it will help to boost the morale of the workers and lead to high productivity of workers in the country.

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