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.

///

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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About walkadm

I am an MS candidate is Science and Technology Policy. I have founded two startups in emerging markets; the first was in clean generation; the second is in smarter meter - the second has raised its first round of investment. My research focuses on agriculture and energy technology in emerging markets; inclusive business models; and entrepreneurship theory - my thesis concerns the dichotomy in survival rates between B2B and B2C startup copmanies
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