1. INDIVIDUAL ASSIGNMENT
NEWSPAPER CUTTING:
“Government announces new salary rules for
hiring foreign workers”
PREPARED BY: SEREDUPMAYA
GROUP : ABM223/5B
COURSE : COMPENSATION (MGT648)
PREPARED FOR: MADAM K
DATE OF SUBMISSION: 5TH JUNE, 2013
2. 1.0INTRODUCTION
Equal pay for equal work and equal pay for work of equal value is common sentences
that keep pop-up among the workforce. It is sound easy right? Unfortunately, as a result
of new challenge and technology it influences the payment decision that has been
made. Government also plays prominent roles in setting the right regulation and policies
to ensure the pay equity is match with the job position. Based on News Strait Time
dated 30th April 2013, it stressed on the firm who put an interest to hire foreign
employee, at first they must set the wage of local employee that currently employed at
least RM2500.
According to Hlongwane (2004), in his journal he defined clearly what is equal pay for
equal work and equal pay for work of equal value as follow. The concept ‘equal pay for
equal work’ is based on gender equity and it is implies that women and men who
perform substantially similar work within the same job setting must receive similar
wages. While, the concept ‘equal pay for work of equal value’ refers to if a woman is
employed in a female working environment, her work has the same value as that of men
working in a male environment. So here, issues of discrimination of payment should not
be existed and why the government set at least RM2500 salary paid to the local
employee before the firm can start hiring the foreign worker, why it is not set higher than
RM2500?
Matching job with pay is very important to differentiate the worth of the job. Generally, it
can be determined by job evaluation. So, how much is the job worth? Employer might
use a variety of technique such as through pay structure, ranks its value in the
organization or assign number to the compensable factor such as education, skill, ability
and knowledge. According to Weiler, comparable worth makes that employer pay a
comparable wage for different job that are comparable in value or worth. So, job
evaluation is important role in determining the wage paid by the employer to the
employees. Hay is the developer of the Hay Job Evaluation System that most widely
used by large corporations and he claim that job evaluation establishes the relative
value of jobs based on their content, independent of a link to the market.
So, the issues of minimum requirement for enable the firm in hiring the foreigner as their
employees is because it is depend on the worth of the job and it is can be measured by
job evaluation. As defined by Macgraw in his book, job evaluation is the process for
linking job content and internal value with the external market. The aspect of job content
for example like skills required and customer contacts and it take on value based on
their relationship to market wages. This is because higher skill level will influence the
wages paid and thus lead to differentiation among the job worth. Highly skilled worker
may give the organization a value added instead of just focusing on the profit. Thus,
based on the cited news in the News Strait Times, the government who set the rules to
3. the firm in hiring foreign worker is way to ensure the fairness toward the local
employees. Then, to know the worth of the job it can be done through the job evaluation
method.
2.0LITERATURE REVIEW
In annual survey for hour and earning in Scotland College (2009), it is stated that there
are three main factors causing the pay gap in term of gender which is Occupational or
job segregation, lack of flexibility in working practices and pay structures that have a
different impact on women and men. For example, include pay structures that allow
employees to negotiate their starting salary. According to Ali (2011), consistency of pay
towards the employees is an important and complex issue. It is for the purpose of
satisfaction and as a factor of motivation to ensure that the employees have a better
performance. Hence, the factor that contributes to the consistent pay is internal and
external consistency.
Ali (2011) defined internal consistency as a hierarchy of value among jobs and that pay
is determined according to the worth of each. The rate of pay should be proportionate to
the worth of the job as compared to the other job within the organization. It is because
the pay structure is varying among the organizations. As defined in Mcgraw
International Edition, pay structure refer to the array of pay rates for different work or
skills within a single organization. Then, the structure is describe when there is
existence of number of level, the differentials in pay between the level and also the
criteria used to determine those differences that describe the structure.
First factor that contribute to the wage consistency set by the government is internal
consistency. It is also refer to the internal worth of the job. Although the position of job
offer is similar but the determined relative value for a job in an organization is
inconsistent with other organization or their competitors. Basically it is depend on the
employer perceptions about the work performed by the employee. Although the
government set the minimum requirement, the organization should first determined the
job-related factor in which will be the base for the compensation level of the job.
However, the job-related factor or known as compensable factor will differentiate
between the job for highly skilled worker and low skilled worker. A job evaluation
approach can be applied in order to determine the internal worth of the job for example
through job ranking, classification and point method.
Second, external consistency also affects the pay level decision in an organization. It
exist in the external environment consist of labor market including the competitor, the
level of unemployment and the opportunity to get a job (Ali, 2011). External consistency
can be referred as to the external competitiveness. As defined by Milkovich, G.,
4. Newman, J., and Gerhart, B. (2011), external competitiveness refers to the pay
relationships among organization or the pay relative to its competitors. In setting the pay
level there is three strategies which is above, below and match with competitor.
Although the government set new rules of hiring foreign worker, organization can used
any of the strategies of pay as it follow the minimum requirement. As a result both
internal and external consistency reflect the employee payment level through job
evaluation but basically it concerned more on internally than external relationship
between jobs.
3.0SUGGESTION
There must be a reason why government proposed new rules of hiring foreign worker to
the firm. So, the firm who want to build a good image of their organization, they should
pay more than the going rate for the purpose of having a good reputation as a high
paying company. Then, it will attract more local and foreign employees to work in the
organization. Besides that, it is necessary to view the individual consistency before view
it in a broad aspect. This is because this will greatly affect the employee motivation as
they tend to compare their pay with the other co-worker within the organization. Thus,
the organization should not ignore the pay equity and consistency in the organization.
In order to ensure fairness toward the employees, the firm should firstly focusing more
on the local employee before the foreign employees. Some firm may use foreign
employees for the purpose of cutting their labor cost. Employing foreigner as their
contingent employees will reduce the cost of hiring because the foreign employees get
less benefit packages as they is not a citizen of the country. Some firm should not take
the advantage of the opportunities because sometimes it will affect the local employees’
level of motivation and job satisfaction. This is a reason why employee tends to have an
illegal industrial action.
5. 4.0CONCLUSION
Wage payment is very important to all categories of workers. Their life, social and status
is depend on the wage payment. Job evaluation is a systematic approach to measure
the consistency of pay within the organization. Basically a lot of factor has been studied
by scholar in determining the pay level but actually it is depend on the organization
decision on how the will pay their employees. It is important to align with the
government policies and regulation as it will greatly affect the employees’ welfare
especially to locally employ. According to Brown (2001), he found that a sense of fair
and consistent administration together with good internal relations is an important
determinant of the perceived equity upon when the employee satisfaction resulted in
pay that they received. Hence, the organization should provide all of the employees with
equal monetary and monetary benefit and also a detailed of pay statement to ensure
that the employees have an evidence once there is arising problem due to the
employment. Lastly, the organization should ensure that the sources of fairness in pay
including both procedural justice and distributive justice are existed within their
organization.