Want to grow the economy? Pay hustlers well

Envelope with money (courtesy)

In developed countries, hustlers are usually paid an hourly wage instead of a monthly salary. In the US, you get about $10 (Sh1,000) an hour. It sounds like a lot of money until you go shopping in a supermarket.

Still, hourly pay makes workers more productive. Their job security is the quality of their work. This kind of payment system is rare in Kenya – we prefer monthly salaries or daily wages. The amount paid per hour depends on the cost of living. Life is more expensive, say, in Nairobi than Shamakhokho, or in California compared to Mississippi.

The pay is often indexed to inflation to ensure that workers don’t lose their purchasing power. The annual increments in Kenya are supposed to factor in inflation. Well used, such increments could stop annual strikes. That’s why the public funds the Kenya National Bureau of Statistics. We should use such data instead of hunches to make economic decisions.

Hustlers in other countries are rewarded in another way beyond hourly pay – they’re paid twice or one-and-a-half times more if they work at night. It’s riskier to work then. If hourly pay is $10, then you get $15 (Sh1,500) or $20 (Sh2,000) if you work the night shift, which is normally from 11pm to 7am.

In Kenya, on the other hand, night workers are paid less, including security guards and ‘ladies of the night’.

The secret

In developed countries, hourly pay is for jobs with high turnover, such as nursing care, because they are unglamorous or physically and mentally taxing. In most developed countries, such jobs attract immigrants, and the less educated or underprivileged. If a Kenyan living abroad stammers when asked to describe what job he has there, you can now guess why.

Will hourly pay become common in Kenya? Only if we change labour laws to ensure it’s easy to hire and fire workers as per economic circumstances.

Currently, the law wants you to make casual workers ‘permanent’ if they work continuously for three months. While that’s supposed to protect the worker from exploitation, it doesn’t protect the employer from economic downswings when demand for services or products go down.

The secret is in mixing permanent and temporary workers, and paying temporary workers fairly for their work. But while permanent jobs are great because of their security, they’re often a risk to productivity. Lots of workers relax once a permanent job is guaranteed.

The biggest problem in Kenya is that too many people don’t want to work, yet they want to be paid well. No wonder strikes are so common. If we linked productivity to pay, the economy would grow faster, create more jobs and we would end up a happier nation.

Research has shown that human beings react to incentives – and not just pay, but even simple things like praise and recognition.

It’s not an exaggeration to conclude that Kenya, particularly the public sector, needs a better incentive system. That might be another way to reduce corruption and catalyse economic growth, which is about people, their needs, dreams, aspirations, prejudices and realities.