Effect of Salary Stagnation on Work Performance among Public Servants

Effect of Salary Stagnation on Work Performance among Public Servants: Evidence from the National Youth Service, Kenya Abstract This study examined the effect of salary stagnation on work performance among public servants at the National Youth Service (NYS), Kenya. The study investigated the influence of purchasing power, employee morale, and employee turnover on work performance. Guided by Equity Theory, Maslow’s Hierarchy of Needs, Expectancy Theory, and Herzberg’s Two-Factor Theory, a descriptive mixed-methods design was adopted. From a target population of 352 employees, a sample of 187 respondents was selected through stratified and simple random sampling, with 164 valid responses analyzed. Descriptive statistics, Pearson correlation analysis, and multiple regression analysis were employed. The findings revealed that salary stagnation significantly reduced purchasing power, lowered employee morale, and increased turnover intentions. Purchasing power exerted the strongest negative influence on performance (β = -0.384), followed by turnover (β = -0.267), salary stagnation (β = -0.245), and morale (β = -0.198). The model explained 66.3% of the variation in employee performance (R² = 0.663). The study concludes that prolonged salary stagnation undermines employee welfare, motivation, and service delivery. Regular salary reviews, inflation-indexed adjustments, and enhanced employee welfare programs are recommended. Keywords Salary stagnation; employee performance; purchasing power; employee morale; employee turnover; public service; National Youth Service; Kenya 1. Introduction Salary stagnation remains a major challenge in public sector organizations globally. Despite rising inflation and increasing living costs, wage growth has remained relatively slow, reducing employees’ real incomes and weakening motivation. Within Kenya’s public service, concerns regarding compensation have become increasingly important as employees face growing financial pressures. This study investigates the effect of salary stagnation on work performance among employees of the National Youth Service (NYS). 2. Literature Review The study was anchored on Equity Theory, Maslow’s Hierarchy of Needs, Expectancy Theory, and Herzberg’s Two-Factor Theory. Existing literature suggests that stagnant wages reduce purchasing power, lower morale, and increase employee turnover, ultimately affecting organizational performance. 3. Methodology A descriptive research design was adopted. The target population comprised 352 NYS employees. A sample of 187 respondents was selected using stratified and simple random sampling. Data were collected through structured questionnaires and analyzed using SPSS Version 25. Descriptive statistics, Pearson correlation, and multiple regression analysis were employed. 4. Results and Discussion The findings demonstrated widespread perceptions of salary stagnation within NYS. Respondents reported declining purchasing power, reduced morale, and increased turnover intentions. Correlation analysis revealed significant negative relationships between salary stagnation variables and employee performance. Regression results showed that purchasing power was the strongest predictor of work performance deterioration. 5. Conclusion Salary stagnation significantly affects employee performance by reducing purchasing power, lowering morale, and increasing turnover intentions. Sustained periods without meaningful salary adjustments weaken employee motivation and institutional effectiveness. 6. Recommendations The study recommends periodic salary reviews linked to inflation, performance-based incentive systems, improved employee welfare programs, and competitive compensation structures to enhance employee retention and performance. 7. Limitations and Future Research The study was limited to NYS employees and relied on self-reported data. Future studies should adopt longitudinal approaches and include multiple public institutions for broader generalization.