INTERNATIONAL JOURNAL OF PSYCHOLOGY, 2010, 45 (5), 376–380
SPECIAL SECTION COMMENTARY
Decent work and decent pay: Dual salary systems
and poverty reduction policy
Raymond Saner
Sciences Po, Paris, France, University of Basle, Basle, and Centre for
Socio-Economic Development, Geneva, Switzerland
REMUNERATION DISCREPANCIES AND
POVERTY REDUCTION: ELEPHANT
SALARIES IN THE INTERNATIONAL
DEVELOPMENT PARLOUR
Context for the research
This special issue is a very timely and most relevant
contribution to current policy discussions on aid
effectiveness. These are being held at various
international
institutions,
including
the
Organization for Economic Cooperation and
Development
(OECD),
World
Trade
Organization (WTO), the World Bank, the
United Nations Development
Programme
(UNDP), and the United Nations Council for
Trade and Development (UNCTAD). They
include donor agencies from developed and industrialized countries such as the United States Aid
and International Development (USAID),
Deutsche
Gesellschaft
für
Technische
Zusammenarbeit
(GTZ),
Department
for
International Development (DFID), Swedish
International Development Cooperation Agency
(SIDA), Swiss Development Cooperation (SDC),
but also numerous organizations in the ‘‘developing’’ countries and ‘‘least developed countries.’’
Whether or not disparities in remuneration
between expatriate and local staff undermine
or even jeopardize the achievement of poverty
reduction or, worse, prevent the achievement
of the United Nations’ Millennium Development
Goals (to reduce poverty by 2015) concerns
all actors in the field of international cooperation,
i.e., governments, technical cooperation agencies
(state and private foundations), and nongovernment organizations, national and international.
As stated by the lead author of the introductory
article (Carr et al., 2010 this issue, p. 323), ‘‘Not
surprisingly perhaps, discussion around remuneration differences between expatriate and local
workers is taboo; a sentiment that has left the
topic almost completely unresearched’’ (emphasis
added). I agree with this statement and extend my
thanks to the researchers and their organization,
ADDUP, for taking on the formidable challenge
of looking into this taboo topic through a scientific
lens, without falling prey to either doctrinaire
righteousness or opportunistic softening of the
key findings.
A practice perspective
Having been active in the field of technical
cooperation for the past 25 years in various
functions ranging from project designer to
programme manager, technical expert, evaluator,
trainer, and educator in all continents of this
world, I had to face the challenge of remuneration
differences on a personal level. I was highly paid as
a western expert, compared to local staff; but also
had to take management decisions regarding
recruitment and salary payments of foreign and
Correspondence should be addressed to Raymond Saner, CSEND, C.P. 1498 Mt Blanc, 1211 Geneva 1, Switzerland
(e-mail: saner@csend.org).
ß 2010 International Union of Psychological Science
http://www.psypress.com/ijp
DOI: 10.1080/00207594.2010.491989
COMMENTARY
local staff. Hence I will make my comments from
personal experience, with reflections based on my
own research combined with case examples. These
will hopefully provide food for thought in regard
to the larger discussion about the validity of the
research findings described in the four papers. As a
caveat, I would like to clarify that my comments
do not focus on the methodology used by the
researchers. The research methodology used in the
four papers, the soundness of the hypotheses
developed and operationally defined through the
studies, as well as the various statistical means
used to verify or disprove the hypotheses, appear
very robust and sound. Reviewers have already
given their inputs covering content and research
methods. Thus I will focus in the commentary on
external validity.
The authors have been able to confirm some of
their hypotheses; others were disconfirmed and
a number of hypotheses were neither confirmed
nor disconfirmed, leading to suggestions for future
research. In light of this, I would like to build
on the results already achieved, by outlining
possible avenues for future additional hypothesistesting.
Remuneration differences and povertyreduction through economic and social
sciences policy-making
There is no agreement in the development field as
to what causes poverty or what should be done to
help ‘‘developing’’ countries and ‘‘least developed
countries’’ get out of poverty. The first article cites
Reddy and Pogge (2005), who offer very valuable
leads as to how ‘‘not to count the poor.’’ As the
title suggests, different schools of development
studies have their own views on what causes
poverty and how to understand it. They all
agree, however, that poverty is a multicausal
phenomenon. It cannot be reduced to simple
definitions. The same holds for remedies offered
to ‘‘developing’’ countries and ‘‘least developed
countries’’ about to how to get out of poverty.
The International Financial Institutions, known as
the Bretton Woods Institutions (the World Bank
and the International Monetary Fund), tried to
reduce poverty using their Structural Adjustment
Programs in the 1970s. When they realized that the
adjustments failed, a new generation of advice and
conditional help was developed, called ‘‘Poverty
Reduction Strategy Papers.’’ The results of these
country-based strategic plans for poverty
377
reduction, however, are mixed. It is not clear
whether they have helped ‘‘least developed
countries’’ move out of poverty, or indeed why
they have worked in a few cases where a
least developed economy was able to reduce
poverty.
What seems to be mainstream thinking is that
the original remedy for poverty-reduction, called
the Washington Consensus, is dead. Yet there is
no clear succession in development policy so far.
The International Monetary Fund has learned its
lessons from the 1980s, when it tended to link
financial support to the Highly Indebted Poor
countries with prescriptions (‘‘conditionalities’’)
based on the Washington Consensus formula.
Still, some of the damage has been done (Saner
& Guilherme, 2007). What most scholars of
development studies can agree is that current
trade conditions are skewed in favour of industrialized countries and poorer countries cannot
generate sufficient supply (goods or services) at
competitive prices, nor sell them successfully into
the ‘‘developed’’ country markets. The current
Doha Round at the World Trade Organization is
trying to find remedies to this imbalance though
an extension of Aid-for-Trade, and other technical
cooperation mechanisms, called Trade Related
Technical Assistance. While valuable, the quantity
and quality of such assistance to poorer countries
remains inadequate (Saner & Paez, 2006).
Alternatives to the above disconcerting cacophony of poverty analysis and poverty reduction
strategies have been put forward by various
scholars. An extreme case is represented by advocates suggesting discontinuity of assistance, on the
grounds that western aid has led to corruption,
inaction, and paralysis in most lower-income
counties. The most vocal advocate of this radical
position is Dambisa Moyo, in her book entitled
Dead Aid (Moyo, 2009). Looking at some of the
lower-income countries’ dependence on foreign aid
and how this has generated dependency and
corruption, Moyo makes some valuable points.
On top of this, a large number of foreign aid
projects are in fact examples of lower-income
countries’ governmental failures to provide basic
services to their own people—which instead end up
being provided by foreign aid programs,
for example in health and education services.
However, to stop the flow of aid to lower-income
countries would mean that the poor had to
suffer even more deprivation than they do at
present.
378
SANER
Faced with such complexities and policy ambiguities, aid experts providing policy advice will be
under great strain to explain the soundness
of their work in and through organizations. In
addition, a growing number of citizens in lowerincome countries have studied development theory in western universities. Indigenous graduates
who join foreign aid programs can be intellectually
more demanding, requesting from western
expatriates high levels of excellence when providing their development analyses and policy
advice. One could hence propose the following
hypothesis:
H7: Local staff with high academic degrees in
development studies of a more recent date will
show a higher sense of injustice when faced with
western expatriate ‘‘superiors’’ with (a) lower
academic achievements and (b) more distantly
dated qualifications, who are also paid higher
remuneration for equal work.
Relatedly, I anticipate that foreign experts
working in fields of more concrete activities such
as road construction, power plants, or medical
research will be less challenged by local staff if
their competency in the field is evident to all
personnel participating in the projects. Hence:
H8: Local staff working in physical infrastructure
and natural sciences will report less injustice, even
if their foreign superior is paid a higher salary,
provided the expatriates are judged to be (a)
competent and (b) performing on the job.
Remuneration differences in aid
projects involving developing country
expatriates representing international
organizations
International organizations such as the United
Nations Development Programme, the World
Bank, and the International Monetary Fund
have recently increased their recruitment of personnel from ‘‘developing’’ countries. This has been
done partly as a response to criticisms that they
practise a ‘‘soft’’ form of colonialism, namely
employing too many experts from mostly
‘‘Western, developed’’ countries. As a consequence, an increasing number of international
civil servants have been hired from lower-income
countries, and paid on international rates.
Local
staff
of
lower-income
countries,
facing superiors from other lower-income
countries, express in confidence doubts about the
competency of non-western experts—sometimes
inadvertently succumbing to a form of
south–south racism or prejudice.
As an example, the International Labour
Organization has come up with a proposal of
‘‘Decent Work for All and Employment Creation’’
as an alternative to the Washington Consensus.
This policy suggestion has had mixed success since
most lower-income countries have a predominantly informal economy, and hence cannot
easily create decent jobs for their own people.
Creating decent jobs would mean in fact increasing
the formal sector in their economies (Bacchetta,
Ekkehard, & Bustamante, 2009). While this could
be achieved with extensive external support, such
substantive support cannot be guaranteed.
On a personal basis, the International Labour
Organization experts stationed in lower-income
countries are not above criticism. Besides
proposing better gender justice in remuneration
(a traditional International Labour Organization
theme) their own experts receive higher pay and
better remuneration packages than their local
staff. Even if such International Labour
Organization experts are themselves from a
lower-income country, their higher remuneration
leads at times to intense feelings of injustice from
their local staff, especially if the international civil
servants in question do not perform as expected.
The following hypothesis could hence be
proposed:
H9: Remunerative comparison between international organisation experts from lower-income
countries and their local staff will result in a high
sense of injustice, especially if international organisation representatives are not delivering on
performance at work.
Labor turnover of local staff in
commercial sectors will be linked more
to career strategy than to remuneration
differences alone
Labor turnover in Asian countries has been studied
in detail in Saner and Yiu (1993, pertaining to
Taiwan) and in Yiu and Saner (2008, pertaining to
India). Leaving aside periods of economic downturn with consequently lower labor turnover due to
COMMENTARY
limited job alternatives, these studies of labor
turnover in East Asia and India showed that
locals tend to leave their jobs for reasons
other than perceived injustice in remuneration
differences. For instance, East Asian employees
left a company for better-paid jobs elsewhere. In
addition, and much more surprisingly for
Westerners, employees from Asian nations leave
their companies if they consider that their respective local or foreign boss has been acting in an
authoritarian manner. This leads us to the following hypothesis:
H10: Labor turnover will be high in Asia-based
organizations when young local employees have
to work for local and foreign bosses who practise
authoritarian and paternalistic management
styles.
Young Chinese and Indian employees are most
of the time well aware of glass-ceiling-like limitations that are typically practiced by foreign multinationals. They often know in advance that
once they have reached a certain management
level in the foreign company, no more promotion
will be possible, with higher-level jobs being
reserved for expatriates from the mother-company’s homeland. They therefore benefit as much
as possible from what they can get in regard to
training and remuneration, which most of the time
is better than in comparable local companies.
Once they have reached the glass ceiling, they
leave the company. The next hypothesis would
hence be:
H11: Labor turnover in foreign owned enterprises
in China and India will be linked to personal
career plans rather than to feelings of injustice
about remuneration differences.
Related to the above and applied to internationalizing enterprises from emerging countries,
similar behavior can be expected by employees of
Indian, Chinese, Malaysian, etc. companies
recruiting staff in African, Latin American, and
Pacific lower-income countries. Hence:
H12: Labor turnover in subsidiaries of enterprises
from emerging economies such as India, China,
Brazil, and Singapore established in African,
Latin American, and Pacific countries will be
linked to glass-ceiling-limited career options for
local professional workers.
379
Reducing remuneration differences
through abolishment of dual pay
systems in countries with multi-ethnic
composition will be difficult
As described in the second article, countries such
as the Solomon Islands and Papua New Guinea
practice a dual-pay system favouring foreign
experts. Recommendations have been made that
such discriminatory pay systems be abolished,
coupled with introducing and implementing
localization policies and the establishment or
strengthening of existing salaries commissions to
move towards a more merit-based recruitment and
selection process, including fairer remuneration
practices.
While the reasons for such intentions are
understandable,
their
implementation
will
probably be more difficult. Several lower-income
countries in Asia, the Pacific, and Africa practice
nepotism along ethnic lines of tribal communalism. Each time multiethnic lower-income countries
change government along ethnic lines, incumbent
job-holders lose their job and often less competent
persons from the new government team get hired
at remuneration levels that are neither merit-based
nor more equal. This leads to the following
hypothesis and prediction:
H13: Abolishing dual pay system in multi-ethnic
lower-income countries will be no guarantee for
sustained merit based remuneration and nondiscriminatory recruitment practice.
In closing, it might be better in such situations to
bring respective countries into regional trade and
economic associations, with legally binding rules
against discriminatory recruitment and pay
practices. This would give their citizens recourse
options in cases of blatant human resources
discrimination.
First published online July 2010
REFERENCES
Bacchetta, M., Ekkehard, E., & Bustamante, J. (2009).
Globalization and informal jobs in developing countries. Geneva, Switzerland: International Labour
Organisation.
Carr, S. C., McWha, I., MacLachlan, M., & Furnham,
A. (2010). International-local remuneration differences across six countries: Do they undermine
poverty reduction work? International Journal of
Psychology, 45, 321–340.
380
SANER
Moyo, D. (2009). Dead aid: Why aid is not working and
how there is a better way for Africa. New York:
Macmillan.
Reddy, S. G., & Pogge, T. W. (2005). How not to count
the poor. New York: Columbia University.
Retrieved July 8, 2009, from www.socialanalysis.org.
Saner, R., & Guilherme, R. (2007). The International
Monetary Fund’s Influence on trade policies of
low-income countries: A valid undertaking? Journal
of World Trade, 41, 931–981.
Saner, R., & Paez, L. (2006). Technical assistance to least developed countries (LDCs) in the
context of the Doha Development Round
(DDR): High risk of failure. Journal of World
Trade, 40, 467–494.
Saner, R., & Yiu, L. (1993). Coping with labour
turnover in Taiwan. American Asian Review, XI,
163–194.
Yiu, L., & Saner, R. (2008). India employee turnover
study: Research report. Retrieved from www.
adequate.org/Page%20Files/file/20080127-Saner-Yiu
%20Research%20Paper_Turnover%20in%20India
%2027.01.08%20(Final).pdf.
Copyright of International Journal of Psychology is the property of Routledge and its content may not be copied
or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission.
However, users may print, download, or email articles for individual use.
Purchase answer to see full
attachment