Ep 1.3- What is Society's view of compensation?

WHY MEMBER OF THE SOCIETY SEE COMPENSATION AS A REFLECTION OF EQUITY OR JUSTICE?

The sizable gap in pay compensation is evidently seen between races, genders, color etc. leading to discrimination in financial status which sounds synonymous to the injustice and exploitation issues in society.

However it is also a fact, that it was beyond anyone’s imagination that the salary or wage could be a reason for an oppressive societal injustice to such an extent which would be passed through generations making them feel deplorable. It was evidently seen in a comparison of earnings between men and women that highlights what many consider inequities in pay decisions. I want you to see a clear indication which I managed to learn through the statistics of the year 2013 of the United States as reported by the US Bureau of Labor Statistics, is based on the data collected among full time workers. It was reported the women earned 82 percent of what men earned, which was undoubtedly a  progress in comparison to the statistics published in 1979 where it was reported as 62 percent. However it was seen that even after this much improvement after a long struggle, there is a deep wide chasm between the men and women earnings at present. Under even a best scenario, such adjustments would increase the women/men earnings ratio to as high as about 90 percent, still leaving a sizable gap. 

If the society had not taken interest in such earning differentials then the analysis and suggestions would not have come forth to ameliorate the situation by introducing certain laws which could safeguard these salary or wage interests amongst the people of society like introduction of laws and regulation aiming at the elimination of discrimination in causing them. But how fair such laws and regulations were? And how well they achieved its purpose? Its still a subject of heated debates.  

Some experts suggest to recover the earning ratios caused due to discrimination in color, race, creed, gender etc. through better and equivalent education, experience and union coverage  in the same industries and occupation.

As per the statistics published by renowned journals, it was reported that Social injustice due to compensation affected Healthcare of the people immensely. As the unemployment rate increased , health care coverage declined further. Almost a decade ago it was published through some renowned firms that approximately, 41 million people which is the 14 percent share of the population in the United States have no health insurance. A major reason is that the majority of people who are under the age of 65 but not below the Poverty Line get their health insurance through their employers, but small employers who are the major source of employment, are less likely to offer health insurance to their employees. As a result 8 in 10 of the uninsured in the United States are from working families, justifying People view on health insurance as a sign of how well a prospect is doing in a career.

The Affordable Care Act of 2010 is aimed at increasing coverage and one projection in the number of uninsured will decrease to 23 million by 2023 as per Centers for Medicare and Medicaid Services, National Health Expenditures Data on NHE Factsheet on May 5,2014

The statistics are alarming that the Individuals and Businesses in the United States spend $2.9 trillion per year, OR 17.4 percent of its economic output (gross domestic product) on health care, as per New York times report by Robert Peardec on December 4,2014

Employers spend about 44 cents for the benefits on top of every dollar paid for Wages and Salaries, as published in “Employer Costs for Employment Compensation”.

Some people believe that higher labor costs is another reason for injustice in society. They speculate an increase in Compensation as an indicator of Inflation. Especially, when the lower wages are the only goals. Therefore, the people in the United States are anxious about losing manufacturing jobs to Mexico, China and other Nations, nevertheless the trend in the last two decades was conspicuous enough that the white collar jobs in finance, computer programming and legal services were rapidly outsourced to other countries where the labor costs were comparatively low to US.

The bitter truth which always haunts you is that  “there is always some part of the world that is eagerly waiting and willing to work on lower labor rates”. If the lower is found by the developed market and captured by the developed market for investment, then it opens the gates wide to give four fold returns in any form, be it the education institution, the infrastructure set up or anything.

Although the situation for common laymen in developed countries remains as is, depressing!

Some research explains that the Job losses or gains in a country over time are partly a function of relative labor costs and productivity across countries..

Now did you note that the demand in wages in China skyrocketed, however it is still the fact that the labor costs remain very low in China compared to those in the United States and other advanced economies and as a result we all remember how Foxconn resumed with its larger presence in China.

***Statistics Source

The hourly compensation cost: The Conference Board, International Comparisons of Hourly Compensation Costs in Manufacturing 2013 

Productivity- The World Bank

Though we all Know Compensation refers to all forms of financial returns and tangible services and benefits received as part of an employment relationship.

1. Compensation in Japanese is kyuyo, means giving something in return of services

2. Compensation in Chinese is dai yu, means how you are treated as an employee which counts your wages, benefits, training opportunities

However, it is surprisingly true, "how people view compensation affects how they behave" and also the meaning of  the compensation is not the same for everyone.

Your view probably differs when you look at compensation from the perspective of a member of society, the Salary, Wage and Benefits is somewhere counted as a measure of justice.

When we come to know about these many facts and figures, it is sometimes hard to conclude any of these subjects or to draw any inferences. But it would not be wrong to quote that the “Compensation is a reflection of equity or justice in society” for a member of society.

However, it is the matter of big concern for any Organization to strategize its business move and the member of society should get his fair share of justice in terms of pay and compensation simultaneously.

"ZERO DISCRIMINATION is of course the need of the hour for any organization across the world", that too when we know that we all have stepped into the Digital era and the information world demands nothing less than transparency and nothing more than money.

But how to ensure that the Policies, Rules and Regulation are strong enough to uproot the problem from the roots. It is a daunting question!!

Thanks for reading, see you in my next blog.