Strategic Reward deals with issues related to citizen compensation, including social benefits or social protection programs, as well as strategic rewards for efforts. Equally important, remuneration policies are designed following the economic position of states, which can be represented in several rating scales; one of the most famous is the GDP scale. Strategic rewards make extensive use of statistical information on employment, types of employment, and the effectiveness of social policies. Moreover, social policy programs usually include laws that purposefully change the practices and procedures of remuneration, which is a mandatory norm for companies.
Often, due to current labor market situations or inconsistent approaches to remuneration, the authorities responsible for implementing policies may face strategic remuneration issues. Such issues tend to be complex and relate to global or national trends. Failure to address these issues leads to an imbalance in the economic sphere, as committees overseeing remuneration policy work to maintain balance in the national and global economy. Therefore, when companies comply with legal regulations and requirements, they contribute to the economy. But the irrelevance of laws, rules, and guidelines can lead to massive economic collapse.
Scholars have recently identified the most pressing issues in strategic rewards. These issues include rising wages in China, underemployment, the compensation-productivity gap, and other problems. Concerning the first problem, the growth in production and exports leads to an increase in the cost of labor, which can potentially slow down the growth of production. At the same time, higher wages boost consumption, which strengthens local markets. Labor shortages and an aging population are also pushing up wages in China. Overcoming these challenges can be compensated by general economic processes, such as the growth in consumption, which has been observed for several years, and the growth of the segment of the population with an average and higher income.
Underemployment describes a situation where people who are looking for a job and are willing to work full time only find an opportunity to work part-time. General economic problems of various types can lead to unfavorable situations in local and national labor markets. Notably, statistical offices measure this indicator to get an idea of the economic potential of the labor market. Since the beginning of the pandemic, the underemployment rate has risen strongly in the US compared to the previous periods of 2018 and 2017 due to the economic downturn, although there has been some decrease in 2021 (Berkowitz & Basu, 2021). Today, most analysts are concerned about how employment figures, which show moderate growth, will change.
Notably, the unemployed usually have trouble even finding part-time jobs, while the part-timers eventually find full-time job options. Goods-producing industries provide more opportunities for full-time work than service-providing industries. Average hourly earnings are a metric that helps assess whether wages are in line with average purchasing power. These rates should be consistent in normally functioning economies, although part-time employment is also associated with lower hourly wages. Interestingly, the median hourly wages vary by level of education and in pre-pandemic periods, was: “High school dropout: $11.23, High school graduates: $11.78, Bachelor’s degree holders: $14.35, Master’s degree or higher: $21.46” (Martocchio, 2017, p. 353). Thus, factors of education and skills significantly impact the ability to find a job and receive higher remuneration for work. The reasonably small gap between low-paid and high-paid jobs indicates a normally functioning economy. In developing countries, such as China, this gap can be much higher, which leads to general economic problems.
References
Berkowitz, S. A., & Basu, S. (2021). Unmet social needs and worse mental health after expiration of COVID-19 federal pandemic unemployment compensation: Study examines unmet social needs and mental health after Federal Pandemic Unemployment Compensation expired. Health Affairs, 40(3), 426-434.
Martocchio, J. J. (2017). Strategic compensation: A human resource management approach. Pearson.
Zhang, L., Qiu, B., Xu, X., & Sun, S. (2021). Offshoring, Wages, and Skill Premiums: Firm‐level Evidence from China. China & World Economy, 29(5), 1-27.