Should donors pay locally hired staff less to avoid government 'brain drain'?

Donor agencies are considering options to “harmonize” pay scales between locally hired staff and public officials in Afghanistan in an effort to stem “brain drain” away from government posts. The discussions now underway follow on a 2013 study commissioned by the government of Afghanistan to examine the pay gap between donor-supported staff and government employees and to propose a process to narrow it. While donors maintain the discussions are still in their earliest stages, some development implementers are already worried that mandating lower salaries would threaten their ability to hire qualified personnel, introduce new risks to development contracting and create an “unfortunate precedent” other countries might follow. But “the current labor market conditions in Afghanistan are distorted by the unusually higher wages offered by the donors to attract and retain skilled personnel to work on their projects and programs,” according to the report, titled “National Technical Assistance Remuneration Policy: Guideline for NTA Payment.” The Afghan government’s chief concern is that development contractors’ hiring practices lure highly skilled professionals away from government posts to donor-funded projects. The observation has led the government to put forward the salary harmonization proposal included in the report. “Such a mechanism will have [an] important effect on project performance, service delivery for people, job securit[y] and cooperation between different concerned agencies and institutions,” reads the report. The massive influx of aid to Afghanistan has distorted local and national markets in a variety of ways beyond government salaries. Discussions about addressing this particular “market distortion” are part of ongoing donor-funded efforts to increase the Afghan government’s capacity and to help ensure its long-term financial sustainability. At least one donor, the U.S. Agency for International Development, has broached the topic of harmonization with some of its implementing partners and is soliciting feedback from them. "USAID is working with the government of Afghanistan to help draw the best and brightest young Afghan women and men to work in the Afghan civil service,” Jason Foley, deputy assistant to the administrator for Afghanistan and Pakistan affairs, told Devex in a statement. This includes supporting the government's efforts to harmonize salaries across different sectors, he added. Still in the early stages of this process, USAID is consulting with implementing partners and other donors to determine the best way to align the government of Afghanistan's priorities with development goals and employment needs. Donor agencies mentioned in the three-year-old report — and from which its authors say they received input — are: USAID, the World Bank, the Asian Development Bank, the United Nations Development Program, the European Commission, the Japanese International Cooperation Agency, and the U.K. Department for International Development. The discussions have created some anxiety within the U.S. development implementer community. Contractor representatives aren’t sure how broadly any harmonization plan would apply. For example, would a cap on spending apply only to contracts, or to grants and cooperative agreements as well? Would the salary harmonization plan apply only to foreign assistance contracts, or also to defense contractors? But perhaps the central concern raised by implementers relates to maintaining a quality workforce capable of delivering accountable projects. Development implementers compete for talent on the international market, with international NGOs, embassies, and multinational corporations, according to one contractor executive who requested not be named in order to discuss sensitive business concerns. “If we are not able to afford that caliber of person, I’m not sure how we’ll be able to accomplish our work and still be able to hold ourselves to the level of compliance that the U.S. government expects,” the contractor executive said. The same executive expressed concern that if the Afghanistan government were to roll out a salary harmonization plan with USAID’s support, other countries that have observed a similar pay gap could do the same. Read more international development news online, and subscribe to The Development Newswire to receive the latest from the world’s leading donors and decision-makers — emailed to you FREE every business day.