Wage gaps in the Pacific described as economic apartheid

Transcript

A new study has found that wage gaps between expatriate and local staff in developing countries reduces the effectiveness of aid delivery.

The report says some Pacific Island countries have taken to calling the dual salary system economic apartheid with the ratio of expat to local salaries ranging from 2:1 to 10:1 for staff with similar qualifications.

A co-ordinator for project ADDUP (Are Development Discrepancies Undermining Performance) says the disparities created significant feelings of workplace injustice.

Professor Stuart Carr spoke with Koroi Hawkins about the phenomenon.

STUART CARR: Well I think the first thing is to acknowledge that there is an issue in the room and because of issues of power dynamics and so on people in those structures may feel not able to speak up so research has a role to play in coming in and actually counting and articulating and demonstrating and putting on the record that there is actually an issue. So our first goal was just simply to measure the extent of the discrepancy which is often not talked about it is a bit of a taboo topic. And then we focused on demonstrating or exploring the links between those discrepancies, those differences and well known predictors of work place performance. Such as job satisfaction, workplace engagement, turn over intentions, perceptions of work place justice as well and also brain drain the intention to leave the country which arguably is a major issue for many countries and creates more reliance on international workers if that is fuelled by the very system it is designed to replace.

KOROI HAWKINS: And with these what are the figures saying?

SC: We have found for example that the average ratio between international salary and the local salary was around four to one but it ranged widely anywhere across countries and sectors and so on, anywhere from two to one to around about ten to one. We asked people what was an acceptable threshold or acceptable ratio and consistently whether they were international workers or local workers they said round about two to three to one would be acceptable because people are reasonable and they realise you know recognise that international workers may have extra expenses and so on. But the problem with a ratio of four to one is that it is actually over the acceptability threshold. So the average is over the threshold and as I said it ranged from two to one all the way up to about ten to one. And we also asked people if they had enough to live on and we found for example that the international workers largely said that they did but the local workers who remember are very highly skilled and trained and a lot of hopes and expectations on them, 80 percent of them said they weren't  making it financially. So you know we were sort of looking at a relative poverty and an absolute poverty of opportunity there and in places like Papua New Guinea the dual salary system as it is known is referred to as an economic apartheid. An economic apartheid is quite a strong criticism I think of that system from people on the ground.

KH: And were you able to measure the effect on the delivery of services?

SC: What we found basically I will give you a quick summary. We found that amongst the local workers in particular they felt that the pay system was extremely unfair. And unfairness is a very good predictor of work place motivation and we found in effect that fairness was a good predictor of motivation levels. And unfairness predicted de-motivation and a sense of disengagement and disconnection and we found that in turn was linked to turnover intentions so we know that people thinking about leaving the workplace that they are in is not a good, well is a predictor of less productivity if you like. And also we linked it to turnover intentions in the international sense which is brain drain. So people thinking of leaving the country as well as the organisation they are working in. So that is quite a strong criticism I think empirical criticism of the dual salary system.

KH: And have you proposed solutions? Is there a best practice model in terms of going forward or reducing these discrepancies?

SC: Yes a very interesting question so we conducted the initial study and demonstrated I think that their is a major issue there and since then some of the other major international non government organisations, NGOs have picked up the work and they are already experimenting with different systems because their own surveys have picked up internally that there are issues with the system. And so different organisations have been experimenting with different systems. From you know one salary system to a single salary ladder for example in each of the countries in which they operate. And what we have done is we have received more funding from ESRC and UK Aid and we are working with those international NGOs to measure which of those policy combinations they have chosen and are choosing are actually working the best. So in other words which of policy combinations they have chosen and are choosing are actually working the best. So in other words which policy combinations in and around pay and benefits is seen as fair it leads to the highest motivation the best retention, the best performance, efficiency and so on. So that is currently underway and that has come really as a result of the original project add up which was are development discrepancies undermining performance. So the face we are in now is really asking add up to what and we are working closely with real organisations in the NGO sector directly connected to poverty reduction work of many kinds to figure out good practice. And to make that available to NGOs around the world and indeed across different sectors in so far as it is relevant to other sectors so that they can apply the findings as well.