Fair points, all well made and is so often the case, I think we are actually in vast agreement.
Sorry for not being clear on my analogy to overheads. The discussion of ‘overheads’ often feels to me like a proxy for a larger, ethical discussion on whether intrinsic motiviation for charity work should be priced into the finances of an organisation. I agree whole-heartedly with you and disdain the ‘overheads’ framing for evaluating the financial health and financial models of organisations. Similarly, I don’t think intrinsic motivation should be priced into team member pay, and I understand you feel the same way.
Upon reflection on this discussion, I am trying to think through reasons why we observe different labor dynamics in the NGO-space in parts of Africa as opposed to what I have observed in South Asia and the West. Perhaps the labour markets in these various African markets have been distorted by international funding with significantly greater purchasing power parity. In India, we observe that most NGOs are significantly funded by local sources of funding meaning that the funding dynamics are somewhat calibrated to existing, domestic market forces. Would be interested on your experiences and why you believe you see these multiples of salaries in your local context?
Yeah I’m not sure we’re disagreeing on anything here really lol.
Wow I knew NGOs in India had local funding, but that its significant enough to mean that NGO wages are similar to the local economy is pretty great. Go geneorus Indians. Labour dynamics in Africa are a conundrum to economists in general, and I don’t have great answers I’m confident in. What’s for sure is that in general wages in the formal sector in Uganda are weirdly high and its not fully understood.
“Why, when I run a survey in rural Uganda, do youth with the same education and experience expect a wage three to four times higher than the youth I worked with in India?….. Neither the government or NGOs, moreover, seem to set wages according to the local market or local conditions...”
I think a big part of the reason is that much of what’s considered the “formal” sector here is basically a tiny false economy. A small group of entities which include the government, foreign companies that collude with govt (Oil companies, banks, tourism) and NGOs pay weirdly high salaries. This means there is a weird bubble where salaries are far higher than the vast majority of people (85%-90%) who work within the real local economy. Everyone working in this informal sector wants a “salaried job” because that basically means they get to enter the false, bloated economy.
This phenomenon has consequences outside of the NGO sphere too, such as absurdly high oil prices, and banks having both the highest fees and profit margins in the world, while locals suffer. There’s also almost no correlation between wages and productivity in this fake sector of the economy.
In the NGO sector, a decent part of the reason for absurdly high wages is because of Western Guilt. Here unlike India there are often (or usually) Westerners working alongside locals in NGOs, with the Westerners earning western salaries. They then feel like local pay should be kind of close to theirs. In the capital Kampala this is often the case with NGO office staff often on close to Western salaries. My solution is that the one case where there should be an “altruism tax” is when Westerners work here—they shouldn’t be on western salaries. This in practise will mean that fewer westerners will be willing to work. I don’t think this is bad, there’s oodles of local talent and experience here that can manage just fine most of the time.
Fair points, all well made and is so often the case, I think we are actually in vast agreement.
Sorry for not being clear on my analogy to overheads. The discussion of ‘overheads’ often feels to me like a proxy for a larger, ethical discussion on whether intrinsic motiviation for charity work should be priced into the finances of an organisation. I agree whole-heartedly with you and disdain the ‘overheads’ framing for evaluating the financial health and financial models of organisations. Similarly, I don’t think intrinsic motivation should be priced into team member pay, and I understand you feel the same way.
Upon reflection on this discussion, I am trying to think through reasons why we observe different labor dynamics in the NGO-space in parts of Africa as opposed to what I have observed in South Asia and the West. Perhaps the labour markets in these various African markets have been distorted by international funding with significantly greater purchasing power parity. In India, we observe that most NGOs are significantly funded by local sources of funding meaning that the funding dynamics are somewhat calibrated to existing, domestic market forces. Would be interested on your experiences and why you believe you see these multiples of salaries in your local context?
Yeah I’m not sure we’re disagreeing on anything here really lol.
Wow I knew NGOs in India had local funding, but that its significant enough to mean that NGO wages are similar to the local economy is pretty great. Go geneorus Indians. Labour dynamics in Africa are a conundrum to economists in general, and I don’t have great answers I’m confident in. What’s for sure is that in general wages in the formal sector in Uganda are weirdly high and its not fully understood.
https://reason.com/2008/01/22/africa-are-wages-too-high/
“Why, when I run a survey in rural Uganda, do youth with the same education and experience expect a wage three to four times higher than the youth I worked with in India?….. Neither the government or NGOs, moreover, seem to set wages according to the local market or local conditions...”
I think a big part of the reason is that much of what’s considered the “formal” sector here is basically a tiny false economy. A small group of entities which include the government, foreign companies that collude with govt (Oil companies, banks, tourism) and NGOs pay weirdly high salaries. This means there is a weird bubble where salaries are far higher than the vast majority of people (85%-90%) who work within the real local economy. Everyone working in this informal sector wants a “salaried job” because that basically means they get to enter the false, bloated economy.
This phenomenon has consequences outside of the NGO sphere too, such as absurdly high oil prices, and banks having both the highest fees and profit margins in the world, while locals suffer. There’s also almost no correlation between wages and productivity in this fake sector of the economy.
In the NGO sector, a decent part of the reason for absurdly high wages is because of Western Guilt. Here unlike India there are often (or usually) Westerners working alongside locals in NGOs, with the Westerners earning western salaries. They then feel like local pay should be kind of close to theirs. In the capital Kampala this is often the case with NGO office staff often on close to Western salaries. My solution is that the one case where there should be an “altruism tax” is when Westerners work here—they shouldn’t be on western salaries. This in practise will mean that fewer westerners will be willing to work. I don’t think this is bad, there’s oodles of local talent and experience here that can manage just fine most of the time.