Missing Links

The Digital Drain

Yegor A. and Mikhail L. got their degrees in computer science from Moscow State University in the same year. Today, Yegor’s yearly income is 15 times higher than Mikhail’s. Yegor works for a private Internet company. Mikhail, on the other hand, is "just" in charge of information technology at an important Russian ministry where he ...

Yegor A. and Mikhail L. got their degrees in computer science from Moscow State University in the same year. Today, Yegor’s yearly income is 15 times higher than Mikhail’s. Yegor works for a private Internet company. Mikhail, on the other hand, is "just" in charge of information technology at an important Russian ministry where he makes about $140 per month. Another example of the catastrophic situation of the Russian state?

No. The annual salary of the top computer manager at the U.S. Department of the Treasury or the Central Intelligence Agency is about $130,000, while the average salary of their colleagues in the private sector is more than $400,000 a year, not counting stock options. In Italy, information technology managers in the private sector make eight times more than their peers in government, in Brazil four times, in China five, and in Mexico three.

New, global, and dangerous, this trend undermines the ability of governments to perform just about every critical function, from running public hospitals to collecting taxes or gathering intelligence. To fight it, governments must discard principles that have long remained unquestioned.

The idea that government salaries worldwide lag those in the private sector is not new. On average, the gap is about 20 percent. What is new is the digital drain, the powerful pull that private companies in the "new economy" exert over information technology specialists in government jobs. Salary gaps have widened to the point where many governments cannot compete even for merely adequate computer talent. Moreover, the market for such skills has become global. Thus, computer experts in government are not only migrating to the private sector, but many are leaving their countries altogether. The international mobility of workers in the new economy is less constrained by borders, immigration limits, or guild-like certificates of professional equivalence than that of, say, doctors or lawyers. Even language requirements are no longer that important, as long as the person is fluent in Java or html and can communicate in broken English.

The digital drain is hitting governments just when their need for computer skills is soaring. Tax collection will soon mean the supervision of e-commerce. The regulation of banks and other financial institutions will depend more than ever on the effective use of computers, as will the administration of welfare programs and national security. Businesses, individual citizens, and nongovernmental organizations (as well as drug cartels and terrorists) empowered by the Internet are creating new challenges that public agencies will not be able to meet unless they become much more technologically savvy.

True, the Internet is also giving new tools to governments. Thanks to information technology, a "digital dividend" might enable governments to be more efficient and poor countries to leapfrog some historical developmental hurdles. But concern about the "digital divide"—the gap between the minority in the world that benefits from the Internet and the large majority that does not even have running water or electricity—also looms large. Yet both those who hope for a digital dividend and those who fear the digital divide have ignored two important consequences of the digital drain. First, the competence gap between governments and businesses or criminal cartels creates a different digital divide that places governments, even those of the richer countries, among the "computer disadvantaged." Second, governments that lack the capacity to attract and retain the professional talent needed to navigate the information revolution will not be able to cash whatever "digital dividend" is theoretically available.

The obvious answer to this problem — raise salaries for government computer specialists — is not a solution. The number of highly skilled information technology professionals needed and the high salaries they command imply a wage bill beyond the means of most governments. More innovative approaches are needed. These will require breaking three beliefs that have long guided governmental staffing strategies: 1) Equal rank deserves equal pay; 2) employees are more reliable than contractors; and 3) governments should employ only their own citizens.

Government may not be able to pay all its computer professionals salaries that match those in the private sector, but it needs to staff some positions with the best talent available. The salaries for these critical jobs need to be closer to those in the private sector and will therefore be higher than the pay of other government employees with similar or higher rank and longer tenure. Thus the need to break with the principle that rank and salary are tightly linked.

A second sacred belief that should be questioned is the idea that long-term employment is the best way to staff public agencies. Although some countries outsource governmental tasks to private companies, the assumption that an employee is more loyal and reliable than an outside contractor is still deeply ingrained. Most governments continue to rely on underpaid, undertrained, and undermotivated bureaucrats rather than on more-skilled professionals employed by a private company working under contract. This tendency will have to change. In the United States, even sensitive defense-related tasks are customarily outsourced to private contractors. This practice has presented occasional problems, but it has been largely successful. The key to its success is that contractors are monitored by government employees who are mostly competent and honest.

Finally, governments that are allowed by their legislatures to employ foreigners will be more capable of coping with the extraordinary new demands they face. In most countries, nationalism, concerns about sovereignty, and sheer xenophobia make the employment of foreign citizens in government a laughable proposition. But once governments realize that they can vastly improve their citizens’ well-being and even national security by tapping into the global market of skilled computer specialists, more countries may start to experiment with this approach. For example, in New Zealand, Chile, and some African countries, foreigners work in a variety of important government positions. This trend, of course, belongs to the outer limits of globalization and is not likely to happen in the next decade.

At a time when we are constantly dazzled by the triumphs of private corporations, it is important to bear in mind that a healthy civil society and a competitive business sector cannot survive without a competent government. It has also become too easy to forget that governments can neither make nor implement the right policies without skilled personnel. That means governments will have to find new ways to plug the digital drain.

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