Thursday, November 13, 2008

Evil UN Staff

Pierre-Louis at Rigotnomics does not like us (see here and here). I think that he is completely right in pointing out serious staffing and inefficiency issues at the UN, but his proposed solution (cutting pay) doesn't make any sense.

First of all, we need to find out whether the UN pays too much. This is not an easy task. If we compare UN pay and benefits to those of other international organizations, we find that the UN pays less than, say, the Fund or the Bank (see here for evidence). Of course, this is not a fair comparison, because the quality of the staff might be different. I have only one observation for which I can compare pay, holding constant staff quality: myself. I can assure you, that I make much less money (PPP adjusted) and I have worse benefits in Geneva than in Washington (why did I move? Money isn't everything). So, I feel pretty confident in saying that the UN does not pay too much compared to similar employers. Of course, you can argue that all these employers (the Bank, the Fund, the BIS,…) pay too much and I would probably agree with you (some evidence is provided by the fact that people rarely leave these organizations). However, the fact that the Bank/Fund/BIS pay higher salaries, offer more generous benefits and stronger job security and, yet, have less serious staffing problems is prima facie evidence that high salaries are not the source of the problem.

Of course, one could lower salaries until people start leaving and this would reduce the UN personnel cost but I don't think that such a policy would increase the quality of the staff (it would probably lower it because the first people toleave are usually those who have outside options, see what happened at the Fund last summer).

The parallel with blood donors is also misleading. To be a good blood donor you need to have "clean" blood. Given that donors have private information on the "quality" of their blood, not paying for blood donation allows you to sort people with "good" and "bad" blood. To be a good employee, you don't only need to be idealistic (like for blood donors), but you also need to be intelligent and well-prepared. Staff members of NGOs are often idealistic and well-prepared, but I've seen many NGO idealists who are also complete idiots.

Summing up, we do have a serious personnel problem (please also note that I also have many colleagues who are incredibly hard working and committed, you often find them in their offices late at night and during weekends) but, in my view, cutting salaries is not the right solution (of course, I have a vested interest here).

Let me conclude with one observation about quality of research. In this post, Pierre Louis hints that the quality of UN researchers is lower than that of WTO researchers. Evaluating research quality is very difficult. But, for whatever rankings are worth, this ranking of the top 50 Swiss-based economists only includes 4 researchers who are based in international organizations: 3 are from BIS (ranked nr 4, 10, and 31) and one is from UNCTAD (ranked nr 26). Note that BIS pays much much much much better than the UN.
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Pierre-Louis said...

OK maybe cutting salaries is not the right solution...but how about 4-year fixed term contracts, renewable once or twice?
And what about the fact that UN employees eat at the most expensive restaurants, don't pay taxes on gas (only above P5 right?), have their tax free shops, park in no-parking zones, or more generally behave like elites, wearing 15 rings with huge rocks (aigue marines and rubies) on both hands and still complain that UNCTAD's budget is completly insufficient!

I do believe that fixing international governance has a lot to do with fixing employees incentives...not sure about how to go about this though...

Pierre-Louis said...

Wow! the paper you put a link to is really something I'm gonna look at for my next post!!!

cosimo said...

There are two types of UN employees. Type-1 types cannot afford any of this (even if they wanted) because they are on temporary contracts. The relevant question for this type of guys is whether their incentives to put on-the-job effort are boosted or depressed, see my research paper "Optimal effort on a temporary job"). Type-2 guys, on the other hand, will keep their job forever, no matter what. Within this category, I am sure there a lot of unproductive rent-seekers whose productivity can be measured within an epsilon ball around zero. But do they constitute a majority? I bet they don't. Problem is: these people are more visible because they have nothing to do, if they were working 12 hours like some of us they wouldn't even have the time to show off with their mafioso-style rings.