Understanding the Reason Behind Low Salary Rate in the Private Sector

Understanding the Reason Behind Low Salary Rate in the Private Sector

Most times, we tackle private business owners as if they deliberately wished to use their employees without paying them well for their services. I know that many employers are ruthless. Some of them have a way of owing their workers until those workers resign and they bring in new ones, who will not know the organisation’s “no-steady-salary” culture. We also have those that look for every little opportunity to slash employees’ salaries so that they can reserve some of their money. I know all these, but they are not my focus in this article.

I met the son of a former neighbour, who did his house job in a federal medical centre, somewhere in the eastern part of the country, and is now working in a private hospital. When I asked him how he is enjoying his new job, he hissed and said what everybody that works in the private sector says, “They are stressing me yet they won’t pay me well.”

Well, that private sector stresses employees is a cliché; even private business owners are stressed out too. So being an employee of a business owner that wants to make his profit is naturally stressful in itself. What we need to address here is the “not paying me well” ideology.

When my neighbour’s son was done with complaining of how “low” he earns compared to his expectations or allowances during the house job, I asked him one question that threw him into a reflection. I will still mention the question I asked him later, but first let’s look at this scenario.

A private school just opened and it has to employ qualified teachers even before it enrolled its first student. It is almost impossible for a school to open today and be filled with students tomorrow (unless in rare cases where there are no schools in the town). People will give the school a chance to balance first. Within that period, its standard will be scrutinised and when it is found satisfactory, parents will start bringing in their children to the school, gradually. So, it is possible that this school owner will have to run the school from her pocket until it stabilises and starts making profits. Believe me, this can last for years.

Now, for this school to be considered of good standard, it has to employ qualified teachers. But because it is yet to make profits, it will pay them lowly and also overwork them. If the owner decides to start off with unqualified teachers, its standard will be considered low, hence the reputation of the school will be dragged on the mud.

Why am I saying all these? Teachers in this school will complain that their proprietor is “wicked”. People that know how much these employees are paid will say their employer is using them for cheap labour. Those of us out here will say that private business owners do not pay their workers what they deserve. What most people do not sit back to ask themselves is how much the employer is generating from the business.

Another thing you would have noticed from the case given above is that the employer went for qualified staff. This doesn’t necessarily mean that they are graduates. But let’s say they are graduates, is it wrong for this employer to go for the best even when he or she knows that the business cannot afford it? Let’s rephrase it, if you were the employer, will you go for the best even if they come cheap? Your answer is a reflection, which will explain the nucleus of this essay.

The truth of the matter is this, a lot of businesses do not make as much profit as we assumed. Business owners need to pay their employees from the profits they generated and the only way for these employees to make profit is by putting in their best. So when someone says his boss isn’t paying him the salary of a PhD holder, remind him that he has to make profit for his boss like a PhD holder so that his salary can come out.

Finally, the question I asked my neighbour’s son was, “When you open your own clinic, will you pay your workers more than your boss pays you?” I believe we should also ask ourselves this question when next we make comments about “stingy” and “wicked” employers.

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4 thoughts on “Understanding the Reason Behind Low Salary Rate in the Private Sector

  1. There are multiple sides to this coin.

    First, I understand that there are companies that rarely make profit, hence cheap labour becomes their next search, nevertheless, the situation we find ourselves today is beyond startup companies because most major companies with huge revenues, making profits but still take the advantage of these cheap labour, why is the labour cheap at the first place? Demand and supply!!!

    Secondly, on the teacher case, just because your school is a new school without profit is not an excuse to underpay qualified teachers below market standards. If qualified teachers are expensive you should have known while preparing your business plan before starting your business, and it is expected to be included in your cost-capital for running the business. Your school is not making profit doesn’t mean you shouldn’t pay your staff the worth price. You can’t go to the market and ask a seller to supply you chalks for a price below worth, then stress the seller to supply to your school for free, with the excuse that your school is not making profits yet so you won’t be paying what other schools are paying for the same products, can you do that?? It’s not done with goods, there’s no justification why it should be done with services!!

    Lastly, the question you asked your neighbour’s son, I think the question is incomplete, because it is not specific whether if his clinic is making profit or not, if he’s making good profits then it will be wickedness not to pay staff up to standard, if he’s not making profit and he doesn’t have the money to pay up to standard, let him partner or consult them instead, if he can’t pay full time, let him pay part time.

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  2. Ozioma, for once I disagree with you. I agree with Renner, it depends on the side of the divide you are on. Make proprietress/proprietor no take im reggae spoil teacher blues o. Will the teacher tell his landlord, food seller or transporter to collect less money because they are poorly paid?

    The Nigerian labour laws are not being enforced. If they are, some business owners will not even think of starting businesses. Like you rightly stated, hardly any business starts making profit immediately which is why business owners need to factor that in during the planning process. The owner is going through tough times at the early stages of the business because s/he is building something for themselves not for their employee(s). Let me ask, how many of these owners remember the staff who ‘suffered’ with them when the business eventually stabilizes?

    I agree it is tough starting a business and my advise is to make things easier for such start-up by considering some non-monetary benefits for staff like working shifts or shorter hours or engaging the services of consultants instead of hiring full time staff. Employers will not get the best out of demotivated employees. Transparency in the financials (not sure if this is very safe) and communication with staff is also important. At the point of hiring, it is good to make it clear that this business is just starting and compensation & benefits will not be fantastic so that employee expectations can be managed. I know of a private school in Warri some years ago where staff attrition rate for years was almost zero. I was forced to ask one of the teachers who told me that the pay was not fantastic but was regular. That School Mummy makes sure they are paid monthly without delays. I also noticed that they bring their children to the school creche after maternity leave. Their children in higher classes also pay a fraction of the school fees. I have also seen private schools where teachers’ children attend other schools because they cannot afford the fees in the school where they work. A case of ‘fall for me, I fall for you na im dog play take dey sweet.

    A word for employees of such companies: please manage your expectation, be self-motivated. You may start your own business someday and expect staff to bear with you too. The fact that you wake up daily to go to work means you prefer it to sitting at home and there are people who will jump at this offer. These kind of jobs also present opportunities to learn and grow. Make the most of the positives and then nobody says you should stay there forever.

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  3. Just to add that some private schools also do ‘kill and divide’ for lesson fees to encourage their staff. That is, after school lessons fees are shared between teachers and school owner based on an agreed percentage.

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