Improving compensation policy for hazardous jobs: the equity approach

Effective strategies for policies on hazard compensation should account for how workers perceive job hazards, form their subsequent demands for wage premiums, and the extent to which they are willing to make trade-offs between wage levels and perceived job hazards. This paper applied the equity model to explain this trade-off among a sample of chemical workers in Egyptian industry. An asymptotic relationship seems to fit the data. At low to medium levels of hazard, the hazard-compensation trade-off ratio appears equal to one. Above this level, the relationship seems to show an increasing function, that is, fair compensation demand is increasing at a higher rate than the rate of change in the hazard. However, at a very high hazard workers expressed their preference for safety improvement over additional financial reward. Implications for American management and industry are discussed.