Why you should pay your maid more

Lowly job There is a need for better money and incentives KK MUSTAFAH

Given better options, the rural poor are not keen on domestic work. Its for the middle class to be pragmatic and generous

Finding domestic help is very hard. Even harder is retaining such help assuming you do find them, and next to impossible if they are good. One response to this problem has been the mushrooming of agencies offering placement services of maids, cooks or drivers in exchange for a commission, often equivalent to two or more months salary. These contracts, renewable every 11-12 months, are unstable if not uneconomical arrangements.

A number of forces have contributed to the market for domestic workers taking this shape over the last decade or so. The first is liberalisation and economic growth, which have brought about an expansion in job opportunities for both skilled and unskilled workers. In addition, several welfare programmes initiated in the last few years provide wage support either directly through MGNREGA or indirectly in the form of highly subsidised foodgrains, mid-day meals to schoolchildren and other in-kind entitlement benefits.

All these have increased the value of what we call the outside option, that is, the benefits to be derived from choosing the next best alternative job. Unless the benefits from an alternate job are large enough, a worker will not want to switch from the job he/she is already doing.

While working at construction sites in cities may provide an attractive enough outside option, one cannot really say this about the job of domestic workers. The latter have to work long and odd hours, while engaging in every conceivable task from cooking and baby-watching to cleaning, washing and gardening. Why do this when the individual might as well stay in the village and do MGNREGA work and some seasonal farm labour?

Consequently, while rising middle-class incomes in recent times have driven up the demand for domestic workers, their supply corresponding to the outside option has gone down. It has led to an increase in wage rates in this market, but probably not enough.

The shortage of domestic workers we are seeing is, perhaps, only a consequence of their not being offered equilibrium market wages. This has a lot to do with middle-class attitudes that havent kept up with the new growth realities and even their own rising incomes. Wages in the domestic worker sector have simply not grown.Hence our first suggestion if you want to hire domestic help is: Offer equilibrium wages. When negotiating, think of the alternatives before the same workers and also the rate at which your own income has grown.

Efficiency wages

Our second suggestion is that having hired the domestic help that you now wish to retain, go beyond even paying equilibrium market wages. Pay higher than market wages what economists call efficiency wages. Henry Ford tried this first in 1914 and found the companys productivity and profits going up significantly.

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Why you should pay your maid more