HR expert calls for productivity-based salaries

wage increases by ensuring that salaries are directly linked to productivity, a human resources expert has said.
One of the critical ways through which this can be achieved is by reducing income tax resulting in a relative increase in disposable income.
Industrial Psychology Consultants managing consultant Mr Memory Nguwi said Government should seriously consider reducing taxes on employee remuneration.
“This will ensure that the little that employees are receiving can go towards meeting their basic needs.
“In other countries, for example, productivity-based remuneration or incentives are taxed at half the normal tax on remuneration,” he said.
This comes as employees in both the public and private sectors have been clamouring for wage increases that are at least in tandem with the Poverty Datum Line (PDL).
Observers have, however, lamented such wage demands arguing that they are unjustifiable in the prevailing economic environment.
Following recent Article IV consultations by the International Monetary Fund, the multilateral agency called for a streamlining and a salary freeze in the public sector arguing that the huge wage bill was constraining an already weak fiscus.
Mr Nguwi says the present system of negotiating for wage increases at National Employment Council level is misconceived insofar as it does not take cognisance of productivity levels within respective organisations. “Deliberations at NEC level are not helping both employees and employers.
They are abstract negotiations, which are far removed from reality. How do you negotiate at NEC level when the specific industries do not have a single credible statistic on sector-specific productivity?
“Until and unless the social partners come together and start collecting data on productivity NEC negotiations will be killing industries. The rate at which wages are moving compared to productivity will eventually choke the whole economy resulting in massive job losses,” he said.
According to Mr Nguwi, more than half of the salary negotiations in more than 40 NECs are deadlocked at the moment because of unrealistic expectations on both sides.
The IPC boss called upon the Government to come up with the legal framework with the assistance of the social partners to enable the effective implementation of such an initiative.
Economists largely anticipate that there are economy-wide benefits from a system in which employees benefit from productivity gains.
For instance, Government in the long run will benefit from increased revenue inflows as a result of such an initiative.