Proposal of a Salary Structure Based on Educational Qualifications and Work Experience

Discovering of price of labour is perhaps one of the grand challenges in micro-economics because the issue is beset with politics, and behavioural economics. But, if we cast a glance at the amount of time citizens around the world spent on education, it would not be difficult to convince citizens that it is proper and right to link educational attainment with salary level. Add to this is the reward for work experience in an industry. What is difficult to benchmark is how we develop an incentive for good work performance on the job. This issue can be partially solved by tying work performance (such as units of production or houses sold) with a bonus, which is an addon to the basic salary. Thus, the basic model is that should we pay a basic price for educational level plus an add-on depending on the difficulty level of the job. This will level the playing field for different industries and allow different sectors to attract good workers. Jobs chosen by people will be largely based on career interest and development goals. Price of wages at each certificate or degree level would be the average wage that allow 80% of certificate holders to be employed at that skill level. This can be determined by a survey of employers and removing the bottom and top 10% of outliers. Such a pay structure is very different from the common free market mechanism, which is not the best approach for price discovery of wages because of the breakdown of one key assumption: each worker is not substitutable as they have different motivation, values, ethics, educational attainment (overall understanding of concepts), work experience, and productivity. In essence, each worker is different, and brings something different to a company. The key is how to tap this talent, and reward this talent. Each is a talent