THE IMPACT OF WAGE ON EMPLOYEE PRODUCTIVITY: A CASE STUDY IN

MOGADISHU

Abstract: the purpose of this paper is to introduce practical evidence about The Impact of Wage on
Employee Productivity and to examine what role impact of wage can play employee productivity in
Mogadishu.

A survey research method has been adopted to examine impact of wage on employee productivity. The
data were collected through questionnaires filled by the respondents equally selected from Afi
Mineral water, jema mineral water and Coca Cola Company. The results of the questionnaires were
then analyzed with the aid of SPSS.

The results showed that the wage on positive impact on employee productivity among companies.

Keywords: Impact, Wage, Employee Productivity

1. INTRODUCTION

One of the purposes of someone being the employee or a labor of a company is to earn an income in
the form of wages or compensation. Wages are earned can fulfi ll basic necessities such as food,
clothing and housing. Every company in setting the amount of the wage paid to an employee must be
viable, so that the lowest wage given to meet the needs of their life (Kanzunnudin, 2007). The
calculation of wage increases not only the necessities of worth living but also infl ation, economic
growth, and productivity (Iqbal, 2013).

The concept of productivity of work is divided into two parts: Individual productivity and
organizational productivity. Individual dimension associated with the characteristics of the personality
characteristics of the individual appears in the form of mental attitude and individual efforts to
improve the quality of life. Organizational dimensions look productivity within the framework of the
relationship between input and output techniques (Kusnendi, 2003).

Wages become important In Somalia, because to be effective if linked to Productivity for real. An
effective wage strategy is expected to contribute on the viability of the unit of work, the realization of
the vision and mission, as well as for the achievement of the targets of work (Umar, 2012). Employee
productivity measurement using the net value added shows wages and employee performance has a
positive correlation, but the rate of growth of net value added per worker is lower than the rate of
growth of wages per worker. It means that there are factors other than wages which improving in
employee productivity that is non-monetary factors (Nayak and Patra, 2013). Therefore, In this Study,
we investigate the Impact of wage on Employee productivity empirically. For these reasons, the
researcher had been motivated to carry out such study, which is the critical nature of the issues of
Wages on employee productivity.

2. LITERATURE REVIEW

Wage is one of the most important motivational factors, as we had been told from the time
immemorial that we shall eat from our sweat. The main reason why workers get involved in paid jobs
is to earn a living which is salary or wage. Reasonable salaries must be paid on time, that is, it must be
paid as at when due and promptly, as well. The workers should be able determine the time such
salaries will be paid by the organization. Again, there must be a relative uniformity in the mode and
manner such salaries and wages will be paid to the workers. While fixing salaries, the organization
must consider factors such as the cost of living, company ability to pay, capability of company to pay,
etc (Chukwudi, Odogwu & Adedehinbo, 2012).

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Wages become an important aspect of being effective if linked to the performance significantly
(Umar, 2012). Granting wages remuneration is the most complex task for the industry, is also the most
significant aspects for workers, because of the amount of wages reflects the size of the value of their
work among the workers themselves, their families and communities. Wages are very important for
the industry because it reflects the industry’s efforts to defend human resources in order to have a high
loyalty and commitment to the industry. Effective wages strategy is expected to contribute to
maintaining the viability of the work force, the realization of the vision and mission, as well as for the
achievement of work objectives (Umar, 2012).

Measurement of employee productivity is an activity that is very important because it can be used as a
measure of success in supporting the success of the organization’s employees (Said, 2008). Factors
used in the measurement of labor productivity include the quantity of work, quality of work and
timeliness (Simamora, 2004). Individual characteristics that affect performance include age, gender,
and education, length of employment, job placement and work environment.

The concept of productivity of work is divided into two parts: Individual productivity and
organizational productivity. Individual dimension associated with the characteristics of the personality
characteristics of the individual appears in the form of mental attitude and individual efforts to
improve the quality of life. Organizational dimensions look productivity within the framework of the
relationship between input and output techniques (Kusnendi, 2003).

3. METHODOLOGY

o Research Design and Target Population

This study was employed descriptive study; the purpose of descriptive research is to describe an
accurate profile of persons, events or situations. In addition to, this study will be used quantitative
approach. Quantitative is any data collection technique (such as a questionnaire) or data analysis
procedure (such as graphs or statistics) that generates or uses numerical data (Saunders et al, 2009).
The study was conducted in survey research approach. Surveys are information-collecting method use
to describe, compare, or explain individual and societal knowledge, feelings, values, preferences, and
behavior (Fink, 2009). This study was conducted among mineral water industries in Mogadishu. The
researcher selected a number of industries such as Afi Mineral water, Jema mineral water and Coca
Cola. The researcher selected those companies because they are the main industries that provide
mineral water in Mogadishu. The sample size of this study would be 100 of respondents.

 SAMPLE PROCEDURE

The data for this study were collected through questionnaires that were administered to mineral water
industries in Mogadishu. Questionnaire was used in view of the reality that the study is concerned
with variables that cannot be observing such information is best way of collecting data through
questionnaires (Saunders et al, 2009). The questionnaire contained three sections, namely
demographic information, i.e. age, gender, level of education and experience, research objective one
and research objective two accompanied by a four point Likert scale.

4. FINDINGS

4.1 Profile of the respondents

The profile of respondents was analyzed and presented the following tables. It contained age, gender,
education level and experience.

Age Frequency Percent

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20-25 14 17.5
25-30 27 33.8
30-35 28 35.0
35-40 9 11.2
40 and above 2 2.5
Total 80 100.0

Source: Survey Data 2018

Results in table 4.1 indicate that respondents in this sample were dominated by those between 30-35
years (35%), suggesting that most of the respondents are youths.

Gender Frequency Percent

Male 60 75.0
Female 20 25.0
Total 80 100.0

Source: Survey Data 2018

Regarding gender, results indicated that male respondents (over 75%) were higher than female
respondents (over 25%). This indicates a big gender gap and this gap may be due to women not
participating a lot in industrial productivity.

Educational Background of the respondent Frequency Percent

Had never gone to school 1 1.2
Primary 1 1.2
Secondary 15 18.8
Bachelor`s Degree 53 66.2
Master`s Degree 10 12.5
Total 80 100.0

Source: Survey Data 2018

With respect to educational background, results indicate that majority of respondents are Bachelor’s
degree holders (over 66.2%), confirming that majority of workers in mineral water industries in
Mogadishu-Somalia are qualified.

Experience of the respondent Frequency Percent

1 year 4 5.0
2 years 13 16.2
3 years 22 27.5
4 years 24 30.0
5 years and above 17 21.2
Total 80 100.0

Source: Survey Data 2018

According to Experience of the respondent, the result shows that respondents are experienced with
(over 30%) of doing this job.

4.2 ROLE OF WAGE

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ROLE OF WAGE Mean Std. Deviation
Wage does not influence production 1.85 .858
Employee needs other incentives not only pay 2.89 .955
Employers prefer unskilled labor to give less wage 2.89 .941
Lack of reward is potential reason of decreasing employees productivity 3.35 .828
Successful employee gets his/her rights through pay system 3.20 .906
Some companies do not care work environment 3.18 .839
Employers believe that skilled labor more expensive 3.24 .875
Wage increases talent of labor 3.27 .842
Rewards participate moral of employees 3.36 .846
Mineral water industries give good salary to promote quality of work 3.19 .901
Total 3.042 0.8791

The results (Table above) indicate wages plays a greater role because mean scores for overall of the
total sample (3.042), the highest rated aspect Rewards participate moral of employees and the mean
scale was 3.36. Wages is very important for employee productivity because Lack of reward is
potential reason of decreasing employee’s productivity and wage is the most influence production,
Successful employee gets his/her rights through pay system for their wages.

4.3 EMPLOYEE PRODUCTIVITY

Employee Productivity Mean Std. Deviation

Employees productivity plays important role for organizational performance 3.22 .927
Factors that increase employees productivity are good capital, supervisor
3.24 .815
support and physical work environment
High productivity depends on experience 3.18 .823
Employee turner increases productivity higher than wages 3.18 .868
Luck of infrastructure decreases level of production 3.19 .956
Physical working conditions affect employee productivity 3.35 .797
Using technology decreases employee compensation directly 3.16 .947
Employee Productivity depends on wage 3.38 .786
Total 3.2375 0.8649

The results (Table above) indicate that the employee productivity among mineral water industries in
Mogadishu is generally high and this is indicated by the total mean of (3.2375), and the highest rated
aspect Employee Productivity depends on wage (mean =3.38), Employees productivity plays
important role for organizational performance and the fast Factors that increase employees
productivity are good capital.

5. DISCUSSION

Most of the respondents, were youths, married, and had attained high qualification of Bachelor’s
degree confirming that majority of workers in mineral water industries in Mogadishu-Somalia are
generally qualified. The wage was generally high, which indicated that respondents usually use
enough skills that are required while producing.

Data analysis using means showed that the following wage is high; Wage does not influence
production (mean=1.85) and this was followed by; Employee needs other incentives not only pay
(mean=2.89); Employers prefer unskilled labor to give less wage (mean=2.89); Lack of reward is
potential reason of decreasing employees productivity (mean=3.35); Successful employee gets his/her
rights through pay system (mean=3.20); Some companies do not care work environment

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(mean=3.18); Employers believe that skilled labor more expensive (mean=3.24), Wage increases
talent of labor (mean=3.27), Rewards participate moral of employees (mean=3.36), and Mineral water
industries give good salary to promote quality of work (mean=3.19). The employee productivity was
found to be high all aspects (over all mean=3.2375).

6. CONCLUSION

The purpose of this paper is to study the role of wage and employee productivity in Mogadishu. The
data for this study based on questionnaires were administered to three mineral water industries in
Mogadishu. The results Wages is very important for employee productivity because Lack of reward is
potential reason of decreasing employee’s productivity and wage is the most influence production,
Successful employee gets his/her rights through pay system for their wages and Mineral water
industries give good salary to promote quality of work . On the other hand, the Employees
productivity plays important role for organizational performance and the fast Factors that increase
employee’s productivity are good capital.

7. RECOMMENDATIONS

From the findings and the conclusions of the study, the researcher recommends that there is need to
encourage women also directly involve in production system in mineral water industries in
Mogadishu. There is a need to encourage people in late adults to share their experience and
knowledge with youths hence succeeding in mineral water industries. This is so because the sample
was dominated by youth neglected people in their late adulthoods of Mogadishu. Most respondents
comply there is no minimum wage system, so the government specially, public agencies should
ensure these needs to reach efficiency.

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