Saturday, May 27, 2006

Compensation Considerations

In Iraq, compensation seems mostly unrelated to risk. Jobs that entail the greatest risk of death often pay least, while the cushiest jobs are sometimes the most financially rewarding.

There is no shortage of examples. An enlisted US soldier who spends days on patrols in dangerous areas of Iraq makes a pittance by any standard. Their risk is much greater than PSDs, who sometimes spend weeks without leaving secure areas. Both soldiers and PSDs are here because of their military expertise, but PSD assignments entail fewer risks and their missions are less physically demanding. PSDs are not as much of an insurgent target and have better living facilities. However, the average PSD salary hovers around six figures.

In a comparison of Iraqi and expat salaries, the difference is even more pronounced. Iraqi guards staff the lookouts of most compounds and the perimeter security. They're the first ones that would be killed if there were an attack, and as collaborators in the eyes of insurgents, they're more of a target after they leave work. Though these Iraqis serve as the first line of defense and possess years of experience, their wages are typically an order of magnitude less than their expat supervisors.

This same disparity exists outside of security work. Local staff are the engine behind most development projects. This is more the case in Iraq than elsewhere, because Western staff are not able to travel freely. Though Iraqi staff, even those in senior managerial positions, rarely make more than $2,000 a month. No expat I know would stay in Iraq one day if their salary were anywhere near that level.

I've never heard an Iraqi protest this situation. Some have joked with me that they'd prefer a foreign passport and an expat job in Iraq than asylum in a Western country. Iraqis are pleased to have a job amidst the high unemployment rate and the desperate economic situation. Working for Western firm, their salary is still much higher than if they were employed by an Iraqi company. This does create some awkward situations. An aging waiter told me about a boy cleaning the sidewalk who worked for a development contractor. Though a teenager, the cleaner's salary was several times more than the waiter's. There are economic consequences to these distorted salaries, which are mostly negative. An Iraqi doctor I know performed hundreds of surgeries under Saddam. Though now he'd never go back to work as a doctor. His job as a medical advisor to a relief organization pays him three or four times more than the $300 or $400 Iraqi doctors take home in a month.

How to remedy this situation? One suggestion is to modify the allowance schedule to more accurately compensate for risk. Right now, most development contractors receive a 70% bonus on their base salary. This accounts for some of the disparity in pay between locals and expats. This bonus consists of 35% for danger and 35% for hardship (or post-diffential, in development-ese). However, the danger pay is the same for a post in Erbil where security detail is unnecessary or a base in Anbar whether mortars land every day. The percentages are decreed by the State Department on a country-by-country basis with a few intra-country fluctuations. These rates should be revised with much more geographic specificity and updated as the situation changes. Similarly, the 35% hardship allowance should only apply in situations of genuine hardship. Even if this doesn't remedy the pay disparity, in the interest of fairness this should change. Some development workers in Sudan are living without water or electricity though their rate is only 25%.

This wouldn't resolve the disparity in pay for Iraqis like the waiter and the cleaner, or my surgeon friend and his government counterparts. For the sake of fairness though, the Iraqis should be receive a bonus based on their risk. But this is hardly realistic given the range of factors that contribute to risk in Iraq. Would Iraqis be paid more if they came from an ethnic group that was more likely to be killed? There aren't any solutions. The problem is rooted in basic supply and demand. There are too many unemployed, unskilled Iraqis, and too few expats who will come to Iraq. With so many Iraqis eager to work, danger pay isn't necessary as an incentive. If the extra pay created additional productivity, this wouldn't be a cause for concern, but that's not the case. Maybe the excessive pay for expats helps forget these questions.


Blogger Cajun Tiger said...

While I do agree it is pretty absurd how much I get paid for what I'm doing here, I'm not sure if I would have come for much less. Typically Catch-22.

May 28, 2006 5:15 PM  

Post a Comment

<< Home