Expatriate: Local Remuneration Differences across Six Countries:

Do they undermine poverty reduction work?

Malcolm MacLachlanCentre for Global Health

Trinity College Dublin

Stuart Carr & Ishbel McWhaPoverty Research Group

Massey University NZ

Adrian FurnhamPsychology Department

University College London

• “Australians are coming in with a higher and higher and better lifestyle, making a lot of money, what they might get in one week is what Solomon Islanders might live on in a year. That’s sure to engender some bitterness generally”– Local perspective: Solomon Islander Church Leader

• “I was introduced to your work recently during a visit to the Solomon Islands when an [aid agency] employee was talking about her experiences in this location, in particular her guilt regarding the gulf that exists between herself and the local Islanders”– Expatriate perspective: Senior Aid Agency Counsellor

An Inter-disciplinary TeamLandlocked Economies

Alister Munthali, University of Malaŵi Callist Tumwebaze & Leon Matagi, Makerere University, Uganda

Island NationsJohn Peter Peniop, Christian Salini, Genesis Kofana, University of the South Pacific, Solomon Islands

Leo Marai, Vincent Kewibu, Elly Kinkin, University of Papua New Guinea

‘Emerging’ EconomiesIris Zhou, Tian Li, Zhao u, Xiaoyan Li, Huazhong University of Science & Technology, China

Trilok Singh Papola, Jesim Pais, Partha Pratim Sahu, Institute for Studies in Industrial Development, India

Coordinating and Advisory InstitutionsStuart Carr & Ishbel McWha, Massey University, New Zealand

Malcolm MacLachlan, Trinity College Dublin, IrelandAdrian Furnham, University College London

Tony Banks, NZAIDRod McBride, AusAID

INTER-DISCIPLINARY ETHOS: Health, Education, Management, Economics, D/Studies, Counseling, Sociology, Disaster Relief, & Work ψ

Context and Objectives

• Millennium Development Goals (MDGs)– Keeping the Promise (2010)

• MDG1 includes: Decent Work & liveable wages• Process includes Principle of Alignment (Paris, Accra)• An Elephant in the Room: Dual Salaries• Objectives in ADDUP:

(a) document the gaps(b) explore their consequences for work(c) determine potential for enabling capacity (via decent pay)

Methodology – Sample Design

• Skilled workers = Year 1: Critical Incident Technique; Year 2: Survey N=1290; Year 3: Workshops n=100Survey sample: Local workers = 992; expatriate = 298

• Organisations (n=202)• Aid (n=60), Govt (n=40), Education (n=27), Business (n=75)

• Countries:• Landlocked: Malaŵi; Uganda• Island Nations: Solomon Islands; PNG• Emerging economies: India, China

Methodology – Measures

a) Self-reported pay and benefits (compared using the World Bank’s “Purchasing Power Parity”)

b) Variables (with checks for common method variance): i. Self-assessed ability, pay comparison, feelings of pay

(in)justice, pay (de)motivation, thinking about turnover, thinking about international mobility, job satisfaction, work engagement

ii. Covariates: cultural values, culture shock, age, gender, experience, highest qualification, social desirability ()

c) Recommendations from in-country workshops

Model of Double Demotivation

Source: adapted and modified from MacLachlan, M., & Carr, S.C. (2005). The human dynamics of aid. OECD Policy Insights, 10.

Findings (a) Pay & Benefits

• Pay disparities exist• Overall pay ratio: 4:1 (ranged from 10:1 in SI and 8.5:1 in

PNG to 2:1 in China)• Some difference in pay was tolerated (2-3:1) but actual

ratio exceeded this• Pay sufficient to meet everyday needs?

• Local workers: 80% said No (Oceania and Africa, 29% in Asia)• Expat workers: 81% said Yes

• Poverty is both (i) absolute and (ii) relative

Findings (b) Consequences for Work?

Mean scores for justice and de-motivation (/5)_______________________________________________________________________________________________________________________________________

Site Ratio Justice De-motivation (local-int’l) (local-int’l)__

Overall 4.1 2.6 vs. 3.1 3.1 vs. 2.5Oceania 9.4 2.5 3.0 3.4 2.5Africa 3.4 2.4 3.1 3.2 2.6India 2.6 2.8 3.2 2.9 2.4China 1.9 3.0 2.5_______________________________________________________________________________________________________________________________________

As Ratio drops below tolerance threshold, differences are NS.

Findings (b) Consequences for Work?

Irrespective of pay group, significant predictors of de-motivation were:

1) Feelings of pay Injustice (.50)2) Remuneration Comparison (.11)3) De-motivation predicted thinking about Turnover (.18)4) De-motivation predicted thinking about international

mobility (.13) (brain drain of locals and, to a lesser extent, early return of expatriates)

(c) Organisations as ‘Capacitors’?

• Organisations moderated the links between:• De-motivation and i) injustice; ii) comparison• Turnover and i) de-motivation; ii) injustice; iii) comparison

• Organisations with higher levels of comparison (r=.37) and injustice (r=.85) had more de-motivation

• Organisations with higher levels of de-motivation (r=.59), injustice (r=.37) and comparison (r=.46) had higher levels of thinking about turnover (r=.59)

• Important implications for Organisational Climate

(c) Organisations as ‘Capacitors’?

• Workshop presentations• 5 x 20 stakeholder representatives• Expatriates invited, almost none turned up• Local organisations/representatives agreed:

• CLOSE THE GAP• Transparency of compensation systems• Pay for performance (need for performance

management/appraisal)

How can the gap be closed?

1. Localisation • Local salaries only. Localised selection policy. Respect threshold

2. Globalization• Global salaries for a job. Single competency-based market

3. “Glocalisation” • Local package, globally attractive

Our next Step: “ADDUP to What?” (Intervention & Evaluation)i.e., Keeping our own promise!

Selected Outputs and Impact

Outputs• Carr, S.C., McWha, I., MacLachlan, M., & Furnham, A. (Eds.).

(2010). International Journal of Psychology: Special Section on Psychology and Poverty Reduction, in press.

• MacLachlan et al, The Aid Triangle: recognising the human dynamics of dominance, justice and identity (London/NY: Zed)

Impact• Global Task Force for Humanitarian Work Psychology (

http://www.humworkpsy.org)• Contributor to the 2010 “Review of the PNG-Australia

Development Cooperation Treaty (1999),” through Mr. Leo Marai (Country Team Leader, PNG)

• Contributor to the 2010 UN MDG Summit Civil Society consultation report: http://www.un-ngls.org/mdgconsultation