17 Dec 2009 13:31:00.000
The average worker is more likely to resent his colleague if both are earning the same wage, economists have revealed.
Conventional wisdom suggests jealousy and friction in the workplace develop when one employee is paid more than another. But a University of Nottingham study has shown equal pay actually causes more problems — because it infuriates the hardest-working members of staff.
They feel so aggrieved that colleagues who put in less effort are getting the same amount that they eventually slack off themselves. The situation breeds more envy and lower morale than one in which individuals enjoy different levels of pay, say economists.
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Researchers from The University of Nottingham’s School of Economics and the University of Bonn carried out the study.
They found the “equity norm” — the idea that an employee “gets out what he puts in” — is important to workers but is often violated in an equal-pay situation. Nottingham research fellow and study co-author Dr Johannes Abeler said the findings proved equality can sometimes be unfair.
He said: “Equal pay is often referred to as a cornerstone of a fair wage scheme and is one of the most prevalent pay modes. But in a work environment the equity norm demands that a person who puts in more effort should receive a higher wage.
“In other words, if equity is important, the often-heard slogan ‘equal pay for equal work’ implies ‘unequal pay for unequal work’.”
Using a controlled laboratory experiment, Dr Abeler and his co-authors found workers who were paid individually put in almost twice as much effort as those who got the same pay. But those who put in more work yet remained on the same pay as lazier colleagues subsequently eased off themselves.
Dr Abeler said: “Hard workers get discouraged under equal pay and reduce their effort levels to those of low-performing colleagues. But under individual pay the high performers keep working hard — and the low performers change their behaviour and get better.”
Dr Abeler, an expert in behavioural economics, stressed there were still environments in which equal pay might make sense.
He said: “These results shouldn’t be interpreted as arguments against equality in general, but they do point to the limits of equal wages.
“Equal pay does have benefits — for example, it’s easier to implement than individual wages and can encourage collaboration. Equality is potentially a good choice in jobs where workers’ performance is difficult to measure or is due to random influences.
“But the benefits sometimes come at a cost, and it isn’t necessarily right to argue equal pay leads to less envy and higher morale.”
The Nottingham School of Economics, based at The University of Nottingham, is regarded as one of the UK’s leading research departments.
Its economists have advised organisations including the Department for Work and Pensions, the World Bank and the Bank of England.
The study can be downloaded at: