Wage rates and productivity are positively correlated, but why are the relevant wage laws not enforced in Uganda?


This note will attempt to answer the raised question of fact (i.e., point of fact) by reference to the relevant material facts and evidence obtained from a case study of our local community found in a country called Uganda, and inferences arising from those facts. And this note will try to answer the posed question of law by applying the relevant legal principles and points of law, derived from the present written law (both national and international) now in force. The subject matter raises several issues of fact and law.

Relevant Factual Background

Wage rates and productivity are positively correlated (Vonderembse & White2004). Wages to workers and labour productivity are positively correlated(Hicks, 1932). Organisations with high productivity can pay higher wage rates (Vonderembse & White 2004). Wage rates and productivity are positively correlated; means that organisations with high productivity can afford to pay their workers better wages because their workers produce more output (Vonderembse & White, 2004) This correlation has implications for companies that are selecting locations for their operations (Vonderembse & White 2004). A country with low wage rates does not necessarily have low unit labour costs because workers in the country may have low productivity (Vonderembse & White 2004). Increases in productivity reduce costs, lower prices, and provide a basis for competing in world markets (Slack, Chambers and Johnston, 1993).

To show that wage rates and productivity are positively correlated, a real life scenario of a road construction project was given: if you were asked to move a pile of dirt from one point to another and you were given a shovel and a wheelbarrow to do the work, your productivity would be relatively low (Vonderembse & White 2004). On the other hand, if you were given a bulldozer and proper training, your productivity would be much higher. As you can see, wage rate is not the sole determinant of unit labour cost. The bulldozer operator is paid substantially more than wheelbarrow operators because he does more work (Vonderembse & White 2004). The other important ingredient is productivity or the number of units produced (Vonderembse & White 2004). Productivity improvements, such as, earth moving equipment, are essential for designing and building more goods and services at a much lower cost and they increase our living standard (Vonderembse & White 2004).

A wage is a reward for labour (Ddumba – Sentamu, 2004). A wage is a regular payment to an employee for his or her work,according to the Oxford English Dictionary. A wage is money given to us for thework we do, according to the New Concise English Dictionary. In the factor market, labour is rewarded with a wage or a salary as its price (Mankiw, 2003). An organisation’s compensation structure includes wages (Foot & Hook, 2002). Several words are commonly used to refer to the wages to people at work, and these include the terms ‘compensation’, ‘remuneration,’ ‘reward’ and ‘pay’ (Foot& Hook, 2002). An organisation’s compensation system has an impact on strategic performance (Montemayor, 1996).

One secret for success in organisations is motivated and enthusiastic employees(Grant 1998). Most of today’s organisations develop compensation plans to raise productivity and cut labour costs in a competitive global environment (Daft,2003). Motivation is a powerful tool that can be used to increase productivity in any job that is labour intensive (Vonderembse & White 2004). Employee motivation affects productivity, and part of a manager’s job is to channel motivation toward the accomplishment of organisational goals (Steers and Porter, 1983). Very low wages demoralise workers, as they may feel their work is undervalued (Herzberg, 1968). Offering a decent wage provides an incentive for people in work to improve their performance (Montemayor, 1996).

Productivity is defined as the organisation’s output of goods and services divided by its inputs (Daft, 2003). Productivity is also defined as the ratio of the outputs achieved from an activity to the inputs consumed to make those outputs (Vonderembse& White 2004). This definition,while accurate, does not convey the central role that productivity and productivity improvements have in determining our standard of living.

Productivity means efficiency in industrial production, according to the Oxford English Dictionary. Productivity is often associated with efficiency and lowering costs, which have positive connotations (Vonderembse & White 2004). Labour is one of the four factors of production (Harvey,1988). Productivity measures our ability to produce goods and services compared to the inputs or resources used in the process (Deming, 1982). Production involves the making of goods and services (Ddumba– Sentamu, 2004).

Labour productivity is the output achieved from an activity divided by the labour inputs (Vonderembse,& White, 2004). Labour productivity growth is the only way to raise living standards in the long run, and real wages are the most direct mechanism to transfer the benefits of productivity growth to workers (Bernstein and Mishel, 2007). Labour input is required to produce both wage and labour productivity (Bruce, 2002). A measure of Labour input can either be emeasured in terms of the average number of workers or in terms of the total number of hours worked (Dostie, 2006). The simplest way to measure labour productivity is to measure output per labour output (Slack, Chambers and Johnston, 1993).

Productivity is a key to increasing our standard of living (Slack, Chambers and Johnston, 1993). Economists believe that productivity growth is an avenue through which to raise peoples’ living standards, and wage growth is expected to track increases in productivity (Cashell 2004). If a company can’t pay its workers enough to live on, then it isn’t a viable business (Henderson, 1985). The minimum wage mostly hangs on the idea that companies have a responsibility to ensure that their workers earn enough money to live on (Grant, 1998). “No business which depends for existence on paying less than living wages to its workers has any right to continue in this country” ~ President Franklin Delano Roosevelt, 1933. There are ways to check whether salaried staff are being paid the minimum wage (Congreave, 2000).

The most direct mechanism by which labour productivity affects living standards is through real wages, that is, wages adjusted to reflect the cost of living (Bruce, 2002). Only labour productivity growth can raise living standards (Bester and Petrakis, (2003). According to economic theory, productivity growth is an avenue through which to raise living standards, and wage growth is expected to track increases in productivity(Cashell 2004).

A relationship between wage rate and productivity may arise through two ways, first of all, where a wage increaseraises efficiency of workers and secondly, a wage increase improves efficiencyof management (Mortensen, 2003). According to the efficiency wage theory, a higher wage rate leads to more efficiency which in turn increases the productivity (Mortensen, 2003). A well planed monetary and non monetary incentive scheme could be perceived positively and likely to increase motivation among the labourers and it leads to improving their productivity (Hicks, 1932).

The different wage policies in the EAC countries are still hard to harmonise which may badly affect the EAC economic integration. For example, in neighbouring Kenya,on the recent Labour Day, President Uhuru Kenyatta’s Govt adjusted and increased the minimum wage by 14% to Sh13, 674 up from Sh11, 995. President Kenyatta said the pay increase was geared to address the needs of the lowest paid workers and cost of living while ensuring a conducive environment for investment and job creation. When foreign policies are different, it is difficult to harmonise common external tariffs and that is a disadvantage to economic intergration (Tayebwa, 2007). Several underpaid and marginalised Ugandan workers find it easy to compare their low wage earnings with workers in other countries doing similar jobs. With regard to the harmonisation of terms and conditions of employment,there is currently no common system of payment in the EAC countries. The different monetary and fiscal policies are still hard to harmonise in the different sovereign East African countries, which apparently have different stages of economic development and industrialisation.

Relevant Statistical evidence gathered:

According to a pilot survey, which was conducted two weeks ago, in Kampala/Kyaddondo and Mukono/Kyaggwe, found in the Buganda region, located in the central part of a country called Uganda, 76% of the interviewed 134 Ugandan operatives(adult and young employed workers), by way of questionnaires, agreed that their current remuneration does not provide them as a minimum, with fair wages to necessary to meet basics like adequate food, clothing, shelter and a decent living for themselves and their families, and also confirmed that their cost of living drastically increased but their wages were not increased. Thepilot survey was conducted to study the extent of wage rates (welfare) and productivity of ordinary workers employed in the construction sector, stone quarrying and sand-digging sector, as well as in the mining, manufacturing and factory sectors. In the pilot Labour Force Survey,67 male and 67 female operatives, between the ages of 20 and 64, were selected and interviewed orally and in writing. Basic quantitative or statistical methods were used for collecting, analysing, summarising and presenting the data. The interviewer used percentages to for making comparison. The statistical investigation had four stages namely (1) pose questions (2) collect relevant data (3) analyse the data and (4) interpret the results.

The statistics principle of Bivariate analysis was applied in the pilot survey, to establish how strong the relationship between the two variables is (correlation) before modelling the relationship (regression). A scatter plot of the collected data was used to investigate, if wage rates and productivity, are positively or negatively correlated. The correlation analysis was used to assess the strength of the linear association that may exist between the two variables (i.e., wage rates and productivity).The results of the study, indicated that wage rates and productivity are positively correlated. The evidence gathered from the study shows that as one variable (wages) increases so does the other variable (productivity), and low values of one variable (wages) are associated with low values of the other variable (productivity) and high value of one variable (wages) are associated with high values of the other variable (productivity, which means that there is a positive correlation. The degree of a perfect positive correlation was also established and illustrated using scatter plots in the study.

LEGISLATION

All organisations are affected by the laws of the country in which they operate (Foot & Hook, 2002). The relevant provisions of the legislation are not in doubt. All public officials are expected to know, understand and comply with the legal requirements that relate to performance of official duties. Legal responsibility defines what society deems as important with respect to appropriate corporate behaviour (Szwajkowski (1985). Laws are basically formalised sets of rules for regulating the behaviour of individuals and organisations in society (Ayres, 1999). All modern societies lay down ground rules, laws, and regulations that businesses are expected to follow (Szwajkowski (1985). Organisations are expected to fulfil their economic goals within thelegal framework (Gellerman, 1985). Organisations ultimately pay for ignoring their legal responsibilities (Daft, 2003). The National Minimum Wage provides some legal protection for the lowest paid groups of workers (Foot & Hook, 2002).

Clearly,the problem is not the absence of laws in Uganda which protect basic working rights like minimum wage, but rather a perceived impunity and/or a conspiracy to prevent or defeat enforcement of the existing written laws that relate to fixing the required statutory minimum-remuneration. The statutory duty of the Executive of Govt, to determine, set and enforce the minimum wage, is well stipulated in the present Minimum Wages-advisory Board and Wages Councils Act, of Uganda. The enforcement provisions in that Statute are not repugnant or inconsistent with the current 1995 Constitution of Uganda, and they are not difficult to be performed or enforced, nor are they incompatible with ratified International Laws. Uganda has International Legal obligations, to protect-basic human rights, such as, the “right to just and favourable remuneration”which provides all workers as minimum with “fair wages” and a decent living for themselves, protected by Article 23 (3) of the Universal Declaration of Human Rights [“UDHR”], Articles 7 (a)(i)(ii), 9 & 11(1) of International Covenant on Economic, Social and Cultural Rights [“ICESCR”], Article 5 of the African Charter on Human and Peoples’ Rights [“ACHPR”], and the Minimum Wage-Fixing Machinery Convention which was domesticated by enactment of the present Minimum Wages Advisory Board and Wages Councils Act.

The relevant Constitutional provisions :

The present 1995 Constitution of Uganda is currently the highest form of law in Uganda. Below are relevant law provisions of the Ugandan Constitution, now in force:

Article 2(1) re: ‘Supremacy of the Constitution’ says: “This Constitution is the supreme law of Uganda and shall have binding force on all authorities and persons throughout Uganda.”
Article 17(1)(c) re: ‘duties of citizens’ says: “it is the duty of every citizen of Uganda to protect vulnerable persons against any form of abuse,harassment or ill-treatment.”

Article 17(f) of the Constitution states: “it is the duty of every citizen of Uganda to cooperate with lawful agencies in the maintenance of law and order.”

Article 72(2) provides: “an organisation shall not operate as a political party or organisation unless it conforms to the principles laid down in this Constitution and it is registered.”

Principle XXIX(f) of National Objectives and Directive Principles of State Policy re: ‘duties of a citizen’ says: “it shall be the duty of every citizen to promote democracy and the rule of law.”
Principle XIV(b) of National Objectives and Directive Principles of State Policy states: “the State shall endeavour to fulfill the fundamental rights of all Ugandans to social justice and economic development and shall, inparticular, ensure that all Ugandans enjoy rights and opportunities and access to education, health services, clean and safe water, work, decent shelter, adequate clothing, food security and pensionand retirement benefits.”

Principle XXIX(b) of National Objectives and Directive Principles of State Policy re: ‘duties of a citizen’ says: “it shall be the duty of every citizen to engage in gainful work for the good of that citizen, the family and the common good and to contribute to national development.”

Article 40(2) re: ‘economic rights’ states: “every person in Uganda has the right to practise his or her profession and right to carry on any lawful occupation, trade or business.”

Article 17(1)(g) says: “it is the duty of every citizen of Uganda to pay taxes.”

Article233 (2)(b) (iii)says that the Leadership Code of Conduct shall prohibit conduct which is detrimental to the public welfare or good governance.

Article 29(1)(e) says: “every person shall have the right to freedom of association which shall include the freedom to form and join associations or unions, including trade unions.

Article 160(1) states: “the public debt of Uganda shall be charged on the Consolidated Fund and other public funds of Uganda.” US$6.4 billion is the external public debt of Uganda repayable by all Ugandan workers and taxpayers, including those workers e.g in Mukono/Kyaggwe without access to basic road transport infrastructure for economic activities.

Article 40(3)(c) states: “every worker has a right to withdraw his or her labour according to law.”

Article 25(2) says: “no person shall be required to perform forced labour.”

Article 20(2) says: “the rights and freedoms of the individual and groups enshrined in this Chapter shall be respected, upheld and promoted by all organs and agencies of Government and by all persons.”

Principle XXVIII (i)(b) of National Objectives and Directive Principles of State Policy re: ‘foreign policy objectives’ says: “the foreign policy of Uganda shall be based on the principle of respect for international law and treaty obligations.”

The relevant International Legal Framework:

The present Government of Uganda is under a duty to comply with its international legal obligations by virtue of being a signatory to the under-mentioned relevant provisions of International Laws and Instruments, now in force:

Article 7 (a)(i)(ii) of International Covenant on Economic, Social and Cultural Rights [“ICESCR”] states: “the States Parties to the present Covenant recognize the right of everyone to the enjoyment of just and favourable conditions of work which ensure, in particular remuneration which provides all workers, as a minimum, with fair wages and equal remuneration for work of equal value without distinction of any kind, in particular women being guaranteed conditions of work not inferior to those enjoyed by men, with equal pay for equal work; and a decent living for themselves and their families in accordance with the provisions of the present Covenant.”

Article 23 (3) of the Universal Declaration of Human Rights[“UDHR”] states:“everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection.”

Article 29 (6) of the African Charter on Human and Peoples’ Rights [“ACHPR”] says: “the individual shall also have the duty to work to the best of his abilities and competence, and to pay taxes imposed by law in the interest of the society.”

Article 10(3) of ICESCR provides: “young persons should be protected from economic and social exploitation.”

Article 5 of ACHPR says: “all forms of exploitation shall be prohibited.”

Article 9 of International Covenant on Economic, Social and Cultural Rights[“ICESCR”] provides: “The States Parties to the present Covenant recognize the right of everyone to social security, including social insurance.”
Article of the Minimum Wage-Fixing Machinery Convention requires the Govt to adopt measures to fix statutory minimum rates of wages.
Article 11(1) of International Covenant on Economic, Social and Cultural Rights [“ICESCR”] states: “the States Parties to the present Covenant recognize the right of everyone to an adequate standard of living for himself and his family, including adequate food,clothing and housing, and to the continuous improvement of living conditions.”

Article 28 of ICESCR provides: “The provisions of the present Covenant shall extend to all parts of federal States without any limitations or exceptions.”

Article (3)(a) of International Covenant on Civil and Political Rights [“ICCPR”] says: “no one shall be required to perform forced or compulsory labour.”

Article 7(4) of United Nations Convention against Corruption [“UNCAC”] requires State parties to establish measures and systems requiring public officials to disclose to appropriate authorities their outside employment or activities, or investments and substantial gifts, that conflict with official Government duties and responsibilities and from which a conflict of interest may result with respect to their functions as public officials. This conflict of interest rule applies to public officials on the taxpayers’ public pay roll, but at the same are shareholders, beneficiaries and directors in companies in the private sector, allegedly with low productivity and paying extremely low wages to their workers.

The Relevant Statutory provisions of Uganda:

Below are the existing criminal and civil law provisions, in Uganda that relate to wage rates and labour, now in force:

Section 392(a) of the Penal Code Act created a discrete criminal offence against any person who conspires with another to prevent or defeat the execution or enforcement of any written law.
Article 238 of the Penal Code Act forbids assaulting any person pursuing to raise the rate of wages.
Section 15 of Minimum Wages Advisory Board and Wages Councils Act provides:“an authorised officer may, if it appears to him or her that a sum is due fro man employer to an employee by reason of a failure to pay remuneration not less than the statutory minimum remuneration,institute on behalf of and in the name of that employee proceedings by civil suit for the recovery of that sum.”
Section 46(1)(a) of the Employment Act says: “deductions from remuneration due to an employee are permitted in respect of any tax, subscription or contribution imposed by law.”
Section 116 of Penal Code Act forbids disobedience of statutory duty. E.g. the Govt is under a statutory duty to adjust and fix the minimum wage under the Minimum Wages Advisory Board and Wages Councils Act of Uganda
Section 14 of the Minimum Wages Advisory Board and Wages Councils Act provides a penalty for failure to pay the fixed statutory minimum wage.
Section 309 of the Penal Code Act forbids any person from conspiring with another by deceit or any fraudulent means to affect the market price of anything publicly sold, or to defraud the public or any person. E.g. the price of labour on the labour market.

Section 252 of the Penal Code Act created the statutory crime of unlawful compulsory labour
Section 251 of the Penal Code Act created the offence of inducing a person to give up himself or herself as a slave.

Section 52(1) of the Penal Code Act forbids acts or omissions which incite a delay or refusal for payment of a lawful tax.

Section 307 of the Penal Code Act created the criminal offence of cheating against any person who by means of any fraudulent trick obtains from any other person anything capable of being stolen.

Section 129 of Traffic and Road Safety Act forbids actions or inactions which impede the progress of any motor vehicle, by which damage might be caused to the motor vehicles of persons. E.g several groups of worker are incurring heavy vehicle repair costs and experiencing mobilities difficulties due to travelling on unsafe and potholed murram/feeder public roads.
Section 19(1) of Minimum Wages Advisory Board and Wages Councils Act states:“where a minimum rate of wages and other conditions of employment have been determined in accordance with this Act and become effective in respect of any person or persons, every authorised officer shall have power to require the production of wages sheets or other records of wages kept by an employer.”
Section 21 of Minimum Wages Advisory Board and Wages Councils Act created as penalty for making false entries or records of wages.
Section 326 of the Penal Code Act forbids fraudulent false accounting.

The relevant Commonwealth Common Law or Case Law:

In Beveridge v KLM (UK) Ltd [2000] the court’s position was that, subject to any express or impliedagreement to the contrary an employee’s right to pay is in return for willingness and availability to work.

In Milesv Wakefield Metropolitan District Council [1987] the courts established a principle that: “an employee’s right to remuneration depends on his doing or being willing to do the workthat he was employed to do and if he declines to do that work the employer neednot pay him.”

In Inland Revenue Wales & Midlands vBebb Travel plc [2002] the court held: “under the enforcement provisions inthe National Minimum Wage Act, a compliance officer may serve an enforcementnotice only in respect of current or future failures to pay the minimum wage.”

In Unisonv United Kingdom [2002] the courts ruled that legislation limiting strike actionto trade disputes between existing workers and their current employer was heldto be in breach of the right to freedom of peaceful assembly and to freedom of association with others, including the right to form and to join trade unions for the protection of his interests.
In Her Majesty’s Commissioners for Revenue & Customs v Rinaldi-Tranter [2007] the Employment Appeal Tribunal held that a trainee was entitled to the national minimum wage.
In Edmondsv Lawson QC and others [2000] the court declared that “a pupil barristerwho had attained the age of 26 was a “worker” within the meaning ofthe National Minimum Wage Act because she was employed under a contract of apprenticeship.”
In R(International Transport Roth GmbH) v Secretary of State for the HomeDepartment [2002], Simon Brown LJ observed: “the court’s role under thehuman rights legislation is as the guardian of human rights.”

DISCUSSION

Although wage and other costs of employing people can vary between different areas in any country, it is more likely to be a significant factor when international-comparisons are made (Slack and Lewis, 2002). Labour is one of the factors considered by managers making business-location decisions (Schmenner, 1982).Two factors can influence labour costs.The first is the productivity of labour. This is often inversely related to labour costs, which means that the average amount produced by each individual-employed in a given unit of time is greater in countries with higher labour-costs (Slack and Lewis, 2002).. This is at least partly because in countries with high labour costs there is more incentive in productivity-enhancing technology.

The second factor which influences the productivity of labour is the rate of exchange of countries’ currencies (Slack and Lewis, 2002). According to Prof.Ddumba-Sentamu (2004), the exchange rate means the rate at which one currency is exchanged for other countries. Changes in exchange rate can have major implications for the profitability of international operations that exchange-millions of dollars into other currencies every day (Kogut, 1985). The exchangethe rate is the rate at which one country’s currency is exchanged for another country’s(Daft, 2003). It is the second factor which influences labour productivity (Slackand Lewis, 2002).

There-are both wage and non-wage costs of employment in a number of countries (Slackand Lewis, 2002). Wage costs mean those costs to the organisation of paying wages directly to individual employees (Slack and Lewis, 2002). Non-wage costs are the employment taxes, social security costs, holiday payments, and other welfare provisions which the organisation has to make in order to employ people. (Slack, Chambers and Johnston, 1993)

For most firms the largest and most important expense they face is their wages and it there foreneeds to be controlled carefully (Burns, 2001).. According to Paul Burns(2001), for many firms this is most easily measured by the simple percentage ofwages to sales. However, with break-even, as a firm grows, its wage costs tendto increase, and wages are often best measured in relation to the productivitythat they generate (Burn, 2001).

Whereas wage rates and productivity are positively correlated, Uganda still has the lowest productivity and wage rates in the East African Community (EAC), according to a survey that was conducted recently. This means that improvements on wage ratesand productivity are required. As productivity increases, organisations can do the same work with less effort or can do more work with the same effect (Chew,1988). Productivity can be improved be by either increasing the amount ofoutput using the same level of inputs or reducing the number of inputs requiredto produce the output (Deming, 1982).

Enhancing productivity can be done by human resources, learning and expertise, job designand work measurement, technology innovation, automation, economy of scale andbusiness process redesign (Nelson, 1993). Computers together with technicalpersonnel qualified and skilled in business information systems (informationtechnology), can be applied to improve productivity in manufacturing and service operations (Hill, 1993). Labour is, of course, not the only input into production (Mankiw (2003). Capital is the other major input (Harvey,1988). Transport infrastructure is another vital catalyst. A country’s physical facilities that support economic activities make up its infrastructure, which includes transportation facilities such as roads,airports, harbours, railroads, among others (Daft, 2003).

In improving the standard of living, productivity is more important than moneybecause productivity determines the output while money measures the value ofthe output (Vonderembse & White 2004). In essence, money is a way to keepscore for organisations and individuals. The example of castaways is given;they consume only consume what they produce. The same is true for our society.The money does not create a single glass of water or one bit of food. It isonly specialisation of labour, automation, and technology that productivity canbe improved and the wealth of society can be increased (Vonderembse & White2004).

Whenan organisation decides that improving productivity is important, there arethree places to look: worker productivity, technological productivity andmanagerial productivity (Daft, 2003). Increased worker productivity meanshaving workers produce more output in the same time period. Worker productivitycan be enhanced by motivating employees (Daft, 2003)

Productivity improvements are beneficial to workers (labour), organisation and to consumers. In fact, productivity is essential for improving peoples’ living standards (Vonderembse, 2004).. In many cases,when firms seek productivity improvements, trade-offs between the inputs occur.Managers may be trading capital for labour, capital for energy, or material forlabour in order to get an overall increase in productivity (Chew, 1988).

Often there are industry norms that can be used to measure productivity (Burn, 2001). To assess productivity, it is essential to define and the inputs and the outputsfor the process or activity (Deming, 1982). The primary inputs to production are labour (workers, managers, andexternally purchased services), capital (land, facilities, and equipment), andmaterials, including energy (Vonderembse, 2004).

Infact, some businesses are more concerned only with measuring labourproductivity because it is easy to calculate and many managers believe it isone factor under their direct control (Bester and Petrakis, 2003)Labour is often measured as the number of units produced per hour (Hill,1993).Labour productivity is probably the most obvious input in the productivityequation (Vonderembse,& White, 2004).The equation ofcalculating labour productivity is: labour productivity = units produced (or value of units produced)divided by labour hours (or labour cost) (Slack, Chambersand Johnston, 1993).

Fair wagesdo improve staff morale and motivationand therefore productivity (Henderson,1985). Motivation is highest whenequity exists and outcomes are distributed to workers on the basis of theirinputs to the organisation (Gray and Starke, 1988). Unmotivated workers do the minimum amount ofwork, causing product and service quality to suffer and the organisation to loseits competitive edge (Hayes and Wheelwright, 1984). Good hygiene factors (e.g. fair wages and goodworking conditions) and motivators (e.g. opportunity for growth, achievementand recognition) prevent employee dissatisfaction and increase satisfaction (Hymowitz,2000).

Human resource managers design the pay and benefits system to fit company strategy and provide compensation equity (Daft, 2003).The equity theory of workmotivation was developed in the 1961 by J. Stacy Adams. Equity theory is aprocess about work motivation that focuses on workers’ perceptions of thefairness of their work outcomes and inputs. Equity exists when a worker’soutcome/input ratio equals the outcome/input ratio of the referent (Martin,Melanie & Peterson (1987). Equity means fairness according to the OxfordEnglish dictionary. Inequity means unfairness.

The opposite of equity is inequity, or lack of fairness, which exists whenoutcome/input ratios are not proportionally equal (George & Jones, 2002). Inequity creates tension and unpleasant feelings inside a worker and a desire to restore equity (Hymowitz, 2000). Inequity motivates the individual worker to try to restore equity by bringing the two ratios back into balance (Grayand Starke 1988). There are two typesof inequity: underpayment inequity and overpayment inequity (Torrington and Weightman, 1993). Overpayment inequity exists when anindividual employee perceives that his or her outcome/input ratio is greaterthan that of a referent (Grayand Starke 1988).

Underpayment inequity exists when a person perceives that his or her outcome/input ratio is less than that of a referent (Gray and Starke 1988). When workers perceive underpayment inequity, for example, they can restore equity by reducing inputs such as effort (Lawler, 1990). An underpaid work may try to change his or her outcomes by asking for a raise in wage to restore equity (Gray and Starke 1988). In order to restore, an underpaid worker can leave the job or organisation or force the referent to leave – the most common example of this approach is employee turnover, and, not surprisingly, leaving the organisation or company is most prevalent in situations of underpayment inequity (George& Jones, 2002). Thus the worker maybe motivated to look for a job elsewhere or start up his or her own small business.

According to Stacy Adams (1965), equity theory is based on the premise that a worker perceives the relationship between outcomes, what the worker gets from a job and organisation, and inputs, what the worker contributes to a job and organisation. Inputs include time, special skills, effort on the job, training,education, work experience, time and anything else that workers perceive that they contribute to an organisation (Adams,1965). Outcomes include pay, job satisfaction, job security, opportunities for advancement and anything else that workers get from an organisation. (Adams, 1965).

Job design involves the application of motivational theories to the structure of work for improving productivity and satisfaction (Daft, 2003). In 1911, Frederick W. Taylor published one of the earliest approaches to job design, “The Principles of Scientific Management”(Taylor, 1911). Taylor was concerned that workers were slacking off and not performing as highly as they should on their jobs (Farnham , 1997). Scientific Management, a set of principles and practices stressing job simplification and specialisation, was developed by Taylor to increase the performances of individual workers (Claude George, 1968).

Scientific management has been instrumental in helping organisations to implement worker effectiveness and productivity (Kanigel, 1997). Scientific management, one of the first approaches to management, focused on the efficiency of individual workers (Kanigel,1997). Frederick Winslow Taylor is most closely identified with this approach. Taylor developed an interest in efficiency and productivity (Wren, 1987). While working as a foreman at Steel Company in Philadelphia from 1878 to 1890, he became aware of a phenomenon called soldiering – employees working at a pace much lower than their capabilities (Taylor, 1911). Because most managers had never systematically studied jobs in the plant – and, in fact, had little idea how to gauge worker productivity – they were completely unaware of this practice. To counteract the effects of soldiering, Taylor developed several innovative techniques. For example, he scientifically studied all the jobs in the Midvale plant and developed a standardised method of performing each task, and also installed a piece-rate pay system in which each worker was paid for the amount of work that each individual work completed during the workday rather than fo rthe time spent on the job (Wren, 1987).

Frederick Taylor (1856-1925) developed a body of principles which came to be known as“Taylorism” (Wren,1987). Taylor analysed each job by breaking it down into its component parts and then designed the quickest and best methods of operation for each part (Taylor, 1911). By doing this he was able to establish how much workers should be able to with equipment and materials available, and how far pay could related to levels of productivity (Claude George, Jr, 1968). This process developed into a differential wage rate system based on greater pay for greater productivity which in turn,would lead to greater profits. The higher payments would continue, Taylor thought, because-they were scientifically correct rates set at a level that was best for the company and the worker. Increased profits would encourage companies to expand and ensure continued employment for those workers able to meet the required productivity standards. Taylor introduced rest periods during the working day and a differential pay rate-system. The results were increases in productivity, quality, earnings and morale and a fall in costs (Farnham , 1997)

Taylor believed that money was the only important motivational factor, in the work place. These innovations boosted productivity markedly and are the foundations of scientific management(Green, 1993). His book “Principles of-scientific Management” published in 1911, was greeted with enthusiasm practicing managers and quickly became a standard reference. Scientific management quickly became a mainstay of business practice. It also demonstrated to managers the importance of enhancing performance and productivity (Kanigel,1997).

If a conclusion can be drawn from the factual issues tackled discursively, it would be that the evidence obtained from all case study projects undertaken, reveals that wage rates and productivity are positively correlated. As one variable (wages) increases so does the other variable(productivity), and low values of one variable (wages) are associated with low values of the other variable (productivity) and high value of one variable(wages) are associated with high values of the other variable (productivity,which means that there is a positive correlation. Clearly, the problem is not the lack of laws in Uganda which protect basic employment rights like minimum wage, but rather a perceived impunity and/or refusal to implement and enforce those law.

Bibliography and further reading:

· Bruce, C. (2002) “The Connection between LabourProductivity and Wages,” Economica Newsletter

· Bernstein, J. and Mishel.L (2007) “Economy’sGains Fail to Reach Most workers’ Paychecks,” EPI Briefing Paper, September.

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