Wage Worries

For some time I’ve struggled with the concept of paying the typical market wage to employees from developing/transitioning countries working for Western NGOs. For example Kosovars working for a US NGO will be paid about 6 euros an hour while their American colleagues will be paid about 20 euros an hour … in many cases for doing the same work.

The motivation for this imbalance makes sense, you need to pay a Kosovar like a Kosovar and an American like an American. If Kosovars were paid like Americans, then less Kosovars would be able to be employed. If Americans were to be paid like Kosovars, then no Americans would work for US NGOs.

Unfortunately I am confronting this challenge as I start my own company here in Kosovo. The following is an e-mail exchange I had with some members of my team about how we should pay one of our colleagues. I’ve also added some text relating to some (perhaps) cultural differences in work behavior.

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Argen:

       “Hi, James, 

            When I went out with Rafet yesterday to Mitrovice, I offered him either equity or cash in return for his services (driving, translating etc.) 

            He preferred cash  - that’s fine, I’m working with $X,XXX for the summer – I just wanted to check with you what an appropriate wage would be. I probably should have asked you this before Rafet and I came to an agreement yesterday, but Rafet asked for 6 euros per hour and I agreed to pay that yesterday.

        Is this a fair amount?

       thanks,

       Argen”

James:

      “Hi Argen!

            According to payment for Rafet, make in mind that average m. wages in Kosovo are very low. Doesn’t matter, when it comes to 8 hours x 20 working days, sum is €1.000 what is absolutely too much. For example we at KAYE are giving to director full time € 850 gross. with at least 10 years of expeeriences from the field. One is intellectual work, other driving etc.

If I would hire Rafet with 0 previous experiences, he start with € 450-500 in such a kind of int. Ngo or company, than depends on results. You should declare with him what is intelectual work could be € 5 per haour with contolling results. Rest could be done for 2-3 per hour. Remember this is a cash with no taxes, for him. Finally, if you want to evaluate this inputs as expenses, that the project should prepare the basic contract with him for administrating per working days/month. Board of directors should than confirm or upgrade the contract with needed annex. This is the case how to protect yourself!

    Thats is all!

    James”

Argen:

     “Rafet, 

          We need to be smart about how we use our project grants. That being said, and please do not be offended by this, I can not pay you 6 euros per hour in the future, it’s just too high – please read James’ e-mail. 

           I am willing to pay 3 euros per hour. 

           If this is unacceptable, please understand that as the administrator of these funds, I will look for another person to assist me in future field work. 

            This has nothing to do with you personally in any way – if I had my way I would pay you much more – but this the reality of business. Also, be mindful that this payment is without taxes, so you are receiving still a very good deal for 3 euros per hour. 

       let me know,

        Argen”

Rafet:

       “Hey Argen,

            So, I’m making a big sacrifice for the business and accept your new offer to work for 3 euros per hour only because I understand that if all of us is making an effort to spend the funds smartly.

       Argen, we both know that 3 euro per hour is very low, but since we all want to be conservative and it is the initial phase in seting up the business, I took this into account and decided to continue. 

      See you soon 

      Rafet”

Argen:

    “Hi, James,

    Could you please read the message that Rafet sent me? 

    On Friday I asked Rafet how he envisions himself in the company and he said that he sees himself doing “office duties”.  But I pressed him further to find out what he meant and he did not have a clear answer.

      James, I am a little concerned about this because it would be great to work with Rafet  as a person, but I am not entirely sold on the idea of him being a valuable employee to the company. 

      When we went out into the field on Friday, in Mitrovice, I experienced a few difficulties in working with Rafet, that I think I worth sharing:

1. It did not appear as though Rafet had a firm understanding of the functions of the company – people would ask him simple questions about the company and he fumbled in his answers and would ask me for help. 

2. I am not sure how much of this was RAfet and how much of this was the real challenge of finding the farms we were looking for, but Rafet would get directions and then drive for a minute and ask for directions again. We stopped probably 8 times before we made it to the first farmer. 

3. I found that Rafet was often not tactful in his interactions with people/strangers. This may be my cultural misunderstanding as an American, but when Rafet would get directions from people he would not say “excuse me” (“me falni”). And only half of the time would he say thank you for the directions. I would be worried about Shpend representing the company.

4. When Rafet was translating for me, he would often become engaged in a small conversation with our interviewee and would completely ignore translating the conversation  for me. This had me worried because he had already shown his unclear understanding of the company and I was concerned that during these small conversations, he was giving incorrect/false information.

5. Rafet’s phone was not working properly on Friday so for all of our calls to the farmers we used my phone. Shpend failed to inform me that during his calls on my phone an automated voice from IPKO said that my credit was running low. I did not discover this until we were about to call a farmer to inform him that we were headed to his location and Shpend told me the phone was out of credit….. I pressed him why he didn’t tell me before, but he did not have an answer.

       The above interactions in addition to other experiences the past worry me. I feel as though many times when I am having a conversation about the business with Shpend, he does not completely understand the concepts and does not independently develop a sense of strategy.

      thank you for your time, James.

      Argen”

James:

      “Hi Argen!

      It is so funny to read your conclusions on Rafet’s behavior, ha, ha..this is Kosovo my friend!!! People are in general of speculative nature. Your culture or mine is something different. From my experiences, Shpend is looking for to get as much benefits from the project, what is not an entrepreneurial thinking. Yes, I am working almoust every day with such young people.

      Everything will be fine, don’t worry!

      James”

///

This was a response we got from a long time American expat when we asked him what would be an acceptable salary for our future employees in the fall:

        “I had to do a quick survey and research to confirm what I already knew. The spectrum of average salaries of new college graduates runs between 250/300 euros/month. Government employees would be earning the low end with those working for international agencies (NATO, EU, OSCE etc) earning the higher end. If lucky enough to work for an international business, you may expect higher salaries. Those working for international agencies also earn better health/vacation benefits. More technical and professional jobs obviously can earn more. An unskilled employee still probably earns in the 200 euros/month range; they are also working seven days a week with no vacation/no benefits.

       With unemployment about 40% business have been exploiting the demand for jobs with this low wage/no benefit fire at will condition.

        Hell the current president of Kosovo’s net worth as formerly Kosovo’s top cop was a reported $8K for the car her family owns (she rented and apartment before becoming the president).”

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EPI Criticism of Globalization

I’ve recently become skeptical of the global trade imperative that many of the world’s economies have been whole-heartedly subscribing to over the past 20 years.

Originally my sensitivity to the issue was spurred by a lecture I attended by Dr. Ron Hira, about the outsourcing of white collar jobs in America.

Since then, I’ve been mindful of the way in which global-market determinism has manifested itself in public policies in both the developing and developed worlds.

In the developed world, namely the policies supporting H1-B visas, such as those which allow American companies to temporarily train Indian software developers in America. After their training they take their American trainer’s jobs with them back to India. If you read the EPI article, which you definitely should, there is a reference to Milton Freidman, who said that H1-B visas are unjustified subsidies for businesses – so much for laissez-faire international trade.

In the developing world, namely policies which support the de-regulation of nationally owned businesses. De-regulation can definitely be good a good thing when business operations become inefficient, but recently, it’s created, in some sense, a new wave of colonialism. Open market policies and de-regulation have created the opportunity for many multinational companies dealing in commodities to quickly move into the developing world and control large quantities of previously state-owned natural resources. I describe this paradigm as a form neo-colonialism because the support of de-regulation coupled with the global emphasis on market specialization, has dissuaded developing countries from creating their own manufacturing. The argument behind this is Pareto efficiency through comparative advantages among countries – so, for example, if one country has a lot of oil and another country has a successful car industry, that oil bearing country should spend little of its resources in attempting to develop its own car industry. The effects of this relationship are that developing countries are encouraged to be the producers of raw commodities and the consumers of finished goods, thus mimicking the relationships found among Western European countries and their colonies during 18th and 19th centuries.

Now, regardless of where you stand on the issue of global free markets, the EPI article offers a compelling argument for the implementation of international trade regulation to ease the detrimental effects of this 20th century trade innovation.

Agenda for Shared Prosperity

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Kosovo Wind Gardens Video

The video my team submitted to the Dell Social Innovation Competition:

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My Company Appears In RIT news

RIT News: Student project named semifinalist in Dell Social Innovation competition

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The Story of Stuff

The video’s a bit Gonzo, but nonetheless intellectually provocative :

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Carbon Micro Finance: Kosovo Wind Gardens

I may have found a solution to a problem my company was experiencing earlier – how do we access the voluntary carbon trading market?

If we could access a voluntary market to sell our offset carbon emissions, we could effectively subsidize the cost of our turbines to the rural Kosovar.

 

The two issues I experienced prior to reading this article were:

1. Kosovo is not a signatory of the 2005 Kyoto Protocol which means that Kosovar companies (including mine) have no access to the Clean Development Mechanism – the UN facilitated carbon trading market. But, who can blame Kosovo for not signing the Protocol – they’ve only been a country since February of 2008.

2. My company delivers household wind turbines, which means a decentralized, energy infrastructure - this formula is a nightmare for energy auditing. That is why nearly all companies which sell credits to the voluntary market are centralized and large scale – they are effectively much easier to audit.

 

I may have found my solution in the following article: Innovations and Challenges in Carbon Finance by NextBillion.net.

My next step is to reach out to the named companies and see if I can couple our future remote data acquisition software and hardware with the companies’ energy auditing software.

More to unfold in coming weeks….

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Downsizing Industries Technology

I cite this SciDev article all the time so I might as well add it here.

Among several case studies the article describes an ingenious engineer who took the ‘fish meat deboning machine’ used by large fishing companies and downsized it for the local poor fisherman.

The device has benefitted not only the local fisherman by efficiently cleaning off their catch and thus allowing them to sell more meat, but also benefitted the environment by reducing the amount fresh meat geting thrown into the water.

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