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EFFECT OF MONETIZATION ON EMPLOYEES PERFORMANCE IN PUBLIC SECTOR

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Monetization policy is a new approach to the remuneration of public officers in Nigeria which was given effect through the passage of certain Political and Judicial Office Holders. Acts 2002 which provided the reference point for monetization of the salaries and allowances of all categories of Federal Public Servants stipulated that the fringe benefits which were formally paid in kinds be converted to cash by the salary and wage commission. The policy however involves a systematic cash payment. Under the scheme, the government’s houses, cars, furniture etc which were for the use of bureaucrats and other Political Office Holders were to be converted into private property (Jimoh, 2007).

It is clear from the various definitions and explanations that the concept of monetization is an extreme broad one that encapsulate virtually every payment other than the basic pay, basic wage, or basic salary of an employee and could therefore vary in nature form one country to the other.

The policy makers believed that the scheme will encourage private initiatives and facilitate creativity and motivation and most importantly, improve the service of quality delivery, promote patriotism and efficiency among civil servants. Another added advantage of the policy is that the scheme may act as an incentive to the employees to work harder. For example, with regards to accommodation, it may be necessary for the employee to reside in better accommodation to enable him perform his functions effectively. Thus, the economic effect of monetization on development cannot be over emphasized. The policy if well implemented will upgrade the living standard of the public workers and minimized poverty, inflation, wastage, slow economic growth, unemployment and underemployment (Adeyemo and Aremu, 1999).

Since 1986 when Nigeria first launches its structural adjustment programme, a good number of public reforms have been implemented. One of such reforms is monetization of the fringe benefits of the public servants. This reform took its root from the growth of public sector which put greater strain and stress on government budgets as the number of public officers who were entitled to fringe benefits escalated. This, no doubt, had direct impact on government recurrent expenditures which necessarily increases as the public service increases. The first critique of the Keynesian economic model, therefore, lent its support for big government which has been found to be inefficient and wasteful. An effort to extricate Nigeria from the inefficiency of the welfares’ state, therefore, led to the monetization of the fringe benefits of the public servants. This policy was based upon the formal analysis of the marginal cost of public funds analyzed by Pigou (1928).

Although workers morale such as satisfaction are not a major determinant of monetization, they are nonetheless important. They contribute to (or discourage) absenteeism and affect turnover, and they help establish the culture of the organization.

According to Edward (1999), there are four major generalizations about workers morale. First, employee satisfaction is influenced by how much is received and how much the individual thinks should be received. Second, employee satisfaction is affected by comparisons with what happens to others.

Third, employees often misperceive the incentives of others. When an employee believes that someone else is making more money than that person really makes the potential for dissatisfaction increases. Fourth, overall job satisfaction is affected by how satisfied employees are with both the extrinsic and the intrinsic rewards they derive from their jobs. Drawing from the content theories and expectancy theory, this conclusion suggests that several needs may cause behavior and that behavior may be channeled toward various goals.

Pigou (1928) noted that public expenditure “ought plainly to be regulated with some reference to the burden involved in raising funds to finance them”. In a famous quotation, very much in the utilitarian spirit, he went on to say that: “If a community were literally a unitary being, with the government as its brain, expenditure should be pushed in all directions up to the point at which the satisfaction obtained from the last naira expended is equal to the satisfaction lost in respect to the last naira called up on government service”. Of course, as Pigou recognized, no community is a unitary being in this sense. The governments must thus in practice pursue a policy capable of minimizing inefficiency and wastages. The costs of doing so—both the administrative and compliance costs and the excess burden or deadweight loss of taxation— ought, he argued, to be taken explicitly into account in determining the appropriate level of public expenditure (Alkali, Sambo & Musa, 2005).

According to Mimiko (2003) monetization of fringe benefits is “a precipitate of government concern with the continued escalation of cost of running the machinery of government as a result of the huge bureaucracy with which the economy is delivered”. It has thus long been clearly understood that whether or not a particular expenditure is worthwhile depends to some extent upon how it is financed. Monetization of fringe benefits of the public servants is a right step in this direction.

1.2 Statement of the Problem

Nigeria is faced with several problems such as socio-political and economic problems, high cost of governance, inefficiency in the public service, inefficient use of public facilities etc.

The monetization policy has also generated some problems such as retrenchment of workers, apprehension of the civil servants as to whether it will lead to further retrenchment, inability of the workers to save enough money to buy their own houses due to the payment of the benefits in installments.

There was an unbridled waste in the public service as a result of the mismanagement of public property such as houses, vehicles, furniture and several other assets. It was expected that when fully implemented, monetization policy will minimize the waste and the abuse of public fund and facilitates; encourage public servants to own personal houses; enable public servants to plan for a more comfortable post service life; reduce capital cost and reduce rent as public servants who constitute majority of tenants in the urban centres will have developed their personal houses.

 Finally, the reversal of the policy especially as regards the sold government properties shows that there is confusion in the implementation of the policy. By implication, many civil servants especially the middle and low-income earners were not likely to be a benefactor.

1.3 Aims and Objectives of the Study

This research work examines the monetization policy on the morale of Nigeria workers and the objectives of this study include:

To know whether monetization of policy has reduced running cost of government.

To investigate the effect of monetization on the morale of civil servants.

3.    To find out the benefit of monetization policy on Nigeria Workers.

4. To identify the problems hindering effective implementation of the monetization policy.

1.4   Relevant Research Questions

Does monetization policy reduce running cost of government expenditure?

How effective is the policy of monetization on the morale of civil servants?

3.    What are the benefits of monetization on Nigeria workers?

4. What are problems hindering the effective implementation of monetization policy?

 1.5   Relevant Research Hypotheses

The following hypotheses were developed for the study:

Ho: There is no significant relationship between monetization policy and the morale of Nigeria workers.

H1: There is significant relationship between monetization policy and the morale of Nigeria workers.

Ho: Monetization policy has not reduced the running cost of government expenditure

H1:     Monetization policy has reduced the running cost of government expenditure

 1.6 Scope and Limitation of the Study

The work examines “Effect of Monetization Policy on the Morale of Nigeria Workers” with a view to explore The Federal Ministry of Works, Lagos. In addition, the study covers the roles of monetization policy, its components, functions, objectives as well as how it affects civil servants.

 Some perceived constraints may be encounter by the researcher in the course of carrying out the research work. The limitations are as follows:

Inadequate material: Inadequate material constituted one of the limitations of the research work. The non-availability of materials like journals, textbooks etc the research study.

Finance: The researcher also may encounter some financial constraints which will contribute in limiting the work in the sense that fund available was not enough to carry out the research to a logical conclusion.

3. Time: Time is also another factor or limitation that may affect the research work. The limited time may not give the researcher enough opportunity to do more rigorous work.

1.7 Significance of the Study

It is hoped that the findings and recommendations of the study will be of great benefit through the following ways:

The study will broaden students understanding about the relevance of monetization policy on the morale of Nigeria workers and it effect on their performance

To this end it will therefore serve as a benchmark for financial researchers to further evaluate the efficient allocation of resources and equity in the provision of amenities for public officers.

Consequentially, it aids the Government, policy makers and stakeholders to properly articulate critical areas when allocating resources and equity for public officers.

The knowledge derived from the study will help the policy makers to stop the culture of waste in the guise of maintaining the government housing estate.

1.8    Definition of Terms

Monetization: Monetization is the process of converting or establishing something into legal tender. It usually refers to the coining of currency or the printing of banknotes by central banks.

Morale: the confidence, enthusiasm, and discipline of a person or group at a particular time.

Workers: An employee, especially one who does manual or non-executive work.

 Incentive: A thing that motivates or encourages someone to do something.

Organization: An organized group of people with a particular purpose, such as a business or government department.

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