Sources and Consequences of the Public Sector Premium in Albania and Sri Lanka

Across the world, the public sector pays higher average wages than the private sector for similar employees. Using data from Albania and Sri Lanka, the Growth Lab’s Ricardo Hausmann, Ljubica Nedelkoska, and Sehar Noor examined the factors behind public sector wage premiums. They found that in both countries, the government sector pays a premium for all, but its most skilled employees. For this group, the private sector pays better. Moreover, the government sector offers pensions, permanent contracts, and fringe benefits to the majority of its employees, as opposed to the private sector, where these are mainly reserved for the most valued employees. They show that the payment schemes of the public sector are primarily based on qualifications, where private sector wages are additionally influenced by person-specific characteristics, presumably negotiation skills and productivity. The research also shows that among the most valued employees (i.e., the highly skilled and highly paid ones), the best ones opt for the private sector. The best employees among the less skilled ones, opt for the government sector.

In this Growth Lab podcast, Research Assistant Jessie Lu interviews Ljubica Nedelkoska, Postdoctoral Research Fellow at the Growth Lab and co-author on this research study.

Visit our publications page to read the corresponding working paper.

Transcript

Katya Gonzalez-Willette: Hello and welcome to the Growth Lab at Harvard University’s weekly podcast. 

KGW: Across the world, the public sector pays higher average wages than the private sector for similar employees. Using data from Albania and Sri Lanka, the Growth Lab’s Ricardo Hausmann, Ljubica Nedelkoska, and Sehar Noor examined the factors behind public sector wage premiums. They found that in both countries, the government sector pays a premium for all but its most skilled employees. For this group, the private sector pays better. 

Ljubica Nedelkoska: The public sector is very well able to attract the best and the brightest among those with less than tertiary degrees, but is not very good at attracting the best and the brightest among its most skilled workers. 

KGW: In this Growth Lab podcast, research assistant Jessie Lu  interviews Ljubica Nedelkoska, Postdoctoral Research Fellow at the Growth Lab and coauthor of this latest research on public sector wage premiums in Albania and Sri Lanka. 

Jessie Lu: Thank you so much for being here with us today, Ljubica. So to start, I was wondering if you could tell us a little bit about the policy context in which you first approached this topic. 

LN: So back in 2016, the government of Albania actually already made a decision to increase the pay of the public sector, but they weren’t sure by how much they should increase it and who should get how much in terms of a pay raise. So initially the government was thinking of using the public sector salaries in the region as a benchmark, which would have in most scenarios raised salaries for about 30-35 percent. However, we what we ask the government to do more is instead of comparing salaries in the public sector to public sector salaries in other countries to actually compare them to what the private sector in Albania pays for similar workers. So once we we started that analysis, we found out that if anything, on average, the public sector employees were paid above market wages and not below. 

JL: So given this sort of background in which you decided to look into wage premiums, could you talk a little bit about your findings? 

LN: Sure. Sure. So we looked at two countries. We looked at Albania where, as I said, we were asked to do so. And then we also looked at Sri Lanka, where we were also engaged in a applied research project. And we were looking more specifically into the labor market for university graduates. And since similar questions were raised in both countries, we kind of combined the study, and we found some very interesting similarities. So, for instance, in both countries, we found that the public sector pays above market wages, or in other words, has a premium pays a premium for similar workers. And this is the case for almost all employees except for the tertiary educated ones. Among the tertiary educated ones, especially the highly paid tertiary educated ones, so to say the most valuable employees of the public sector, we see that actually below market wages or a negative pay premium. Which then raised the question of, you know, what consequences this has for who decides to to work in the public and the private sector. 

JL: Great. So who does decide to work in the public and the private sector? 

LN: Right. So so that was the natural question. And maybe I should mention one thing more. So we didn’t only look at wages in this case like net wages, but we also looked at the distributions of benefits. So the distribution of benefits, but also the existence of permanent contracts, usual working hours and also pensions. It’s a very important part of the whole compensation package. And sometimes having a pension can dwarf whatever this public sector premium is. So it’s a very important component of understanding who is rewarded, what and who has the incentive to work in the public sector. But we found that the patterns of pay premium are similar to the patterns of benefits. So the same groups that are paid above market salaries are also more likely to have permanent contracts, paid leave, to be paid pensions. So in that sense, the premium, it’s not a compensation for lack of benefits, but they come on top of each other and all of that together suggested that the more able employees among the less than tertiary educated will have the incentives to work in the public sector, while the more able among the tertiary educated and especially the higher paid tertiary educated will have the incentives to work in the private sector. And when we studied the distributions of these abilities, that’s exactly what we found. That’s the kind of sorting you see. The public sector is very well able to attract the best and the brightest among those with less than tertiary degrees, but is not very good at attracting the best and the brightest among its most skilled workers. 

JL: So that’s a pretty thought provoking finding from your research and since it’s been a while since you first got the request to look into it, now that you have these findings – How would you change your policy recommendations to that Albanian and or Sri Lankan governments?

LN: Right. So that’s true. Initially when we did the analysis, we didn’t realize how much variance there was for different groups of employees. So since then, we have expanded the analysis. And I think what’s very important is that the government’s followed more closely what the private sector pays for similar employees and kind of tried to mimic those dynamics. Of course, many governments already are overpaying a large share of their employees, and it would be very unpopular to kind of reduce salaries. And in those cases, maybe one strategy that could work, at least in some places, is to get a little bit help of inflation. So instead of further raising the salaries, waiting for some of that value to depreciate at the same time, and in some places especially where the premium is negative for the most valuable employees, there might be need for more immediate action of raising those wages, since I believe the consequences of not doing so are costly. On the one hand, you don’t want to be over smarted by the private sector in the key areas of policy. So imagine your ministers being less smart than the representatives of the industry. How would you expect them to regulate those industries? And on the other hand, you don’t want to create incentives for corruption. Because we well know that government positions have a lot of political power. So you don’t want to create pervert incentives for abuse of that political power. 

JL: Great. So, so far you’ve been talking about your research findings based on data that you’ve had on Albania and Sri Lanka, and I know that you’ve been involved in both of the Growth Lab projects in both countries and both countries have very unique backgrounds. So what does this diversity in context mean for the validity of your findings and their implications? What are the considerations that we have to take into account when we want to generalize these findings more broadly? 

LN: That’s an excellent question, Jesse. So indeed, Albania in Sri Lanka, they do have some similarities. There are both upper middle income countries. They both have about 15 percent of all employees working for the public sector. But they’re also widely different ethnically, in terms of government structure, in terms of the structure of their economies, and this is why we find it remarkable that the patterns are so similar. Luckily, we are not alone in this research. A lot of similar research has been done for other countries, both developed and developing. And again, the patterns that other researchers find are very similar. So overpaying for most employees and then either paying market wages or even below market wages for the top employees. So I think I can confidently say, based on our study and studies by others, that this pattern is visible around the world. An exception have been countries where due to hyper-inflation, the way the public sector adjusts their salaries, like with a long delay, where hyperinflation literally diminished the salaries of the public sector and the private sector being more dynamic as it is adjusted. So in these countries, what colleagues find is that across the whole spectrum of workers, the public workers were paid less. And in addition, they find that the way they compensated for that lack of income is bribes. So once they compared the level of earnings with the level of consumption, they all of a sudden found that their level of consumption was comparable to that of the private sector. And the only way to enable that is to have sources of income that were just not reported in the salaries data. So that’s kind of a strong indication of what happens when you underpay your public sector employees. 

JL: Great, so I just want to stay on the global scale for this next question. I want to ask you, based on sort of your experience and your knowledge and what you’ve seen and current events, what are some exciting implications of these research findings on real world policy questions? 

LN: So it’s very interesting. So Albania has not been the only country where there has been change in the distribution in the public sector. But for instance, in 2018, the incoming president of Mexico decided to slash his salary by 40 percent. And subsequently, the Mexican parliament passed legislation prohibits that any public sector worker is paid more than the president. So effectively, they capped the salaries on top. Similarly, in Kosovo less than a month ago, the incoming prime minister decreased his salary by 50 percent and did the same for all the cabinet members. And, you know, while these changes are very recent, I think what we will see and what is probably already happening in Mexico is that they’re just going to lose some of the talent that they had within the top of the government to the private sector. So this shows that these changes are not something that was there in the moment when we did this study. But what we see in the news is more and more changes in the structure of pay in the public sector resemble or even more reinforce the pattern that we have seen in our study. 

JL: Well, that’s very encouraging that your research findings have such wide applicability and are so relevant in this modern context. So thank you so much for talking to us both about the research and the process that you went through for that as well as the implications of it. I just want to end with a more open ended question and just ask you if in an ideal world, if you had all of the appropriate data, what would your next research question be on this topic? 

LN: So there are two issues that we have not been able to tackle. There is one implication of underpaying people in terms of sorting. But there is another implication of those employees that are kind of nominally underpaid, but actually stay the public sector because they find other sources of income using their political power. I think it would be very interesting to indeed match this data we have with data on actual consumption to see how much of underreporting of income there is and to see whether, according to our predictions, we indeed find more underreporting of actual income among those who are nominally underpaid in the public sector. So I think that would be a promising way to enhance and expand our findings. Another thing that I think it’s very important and I don’t have a straightforward answer to this, but in the context of countries like Albania, more and more as the country opens up, the outside option for public sector employees is not the private sector in Albania, but the private sector in the EU. And here the public sector faces much more significant problem of recruitment because an Albanian who would find a job in Greece or in Italy can immediately increase their standard of living and adjust their salary by multiple times like two, three, 4 times than what they would have if they would have stayed in Albania. So that’s a far larger problem than the few percentage difference in the premiums that we see between the public and the private sector. And that’s an issue I would like to study. 

JL: Great. Thank you so much, Lupita, for having this conversation and for telling us so much about your research. 

LN: It has been my pleasure. Thank you. 

KGW: If you want to learn more about the Growth Lab’s latest research and events, please visit growthlab.cid.edu. See you next week.

The Double Crisis: Insecurity and Humanitarian Plight at the Colombia-Venezuela Border

In 2019, Dr. Annette Idler wrote Borderland Battles: Violence, Crime, and Governance at the Edges of Colombia’s War (Oxford University Press, 2019). Based on her extensive research on this issue, her book reveals why the Colombian-Venezuelan borderlands are enabling crucial, but largely unacknowledged interactions between Venezuela’s devastating crisis and ongoing political violence in Colombia. Failure to tackle the issues at the border could have serious long-term implications for stability in the region, which makes long-term plans for sustainable peace and security across and along the border an urgent necessity. In this Growth Lab podcast, Research Assistant Ana Grisanti interviews Annette, who discusses how the so-called border effect has facilitated violence, undermined trust relationships, attracted numerous violent non-state groups, and obscured the nuanced realities of multiple insecurities.

Interview recorded on Dec. 4, 2019.

About Annette Idler: Annette Idler is a Visiting Scholar at Harvard University’s Weatherhead Center for International Affairs. She is also the Director of Studies at the Changing Character of War Centre, Senior Research Fellow at Pembroke College, and at the Department of Politics and International Relations, University of Oxford. She is Principal Investigator of The Changing Character of Conflict Platform and of the CONPEACE Programme at Oxford. Annette Idler has conducted extensive fieldwork in war-torn and crisis-affected borderlands, including in and on Colombia, Ecuador, Venezuela, Myanmar, and Kenya (on Somalia), analysing people-centred security dynamics.

Transcript

Katya Gonzalez-Willette: Hello and welcome to the Growth Lab at Harvard University’s weekly podcast. In 2019, Dr. Annette Idler wrote “Borderland Battles: Violence, Crime and Governance at the edges of Colombia’s War” based on her extensive research on this issue. Her book reveals why the Colombian Venezuelan borderlands are enabling crucial but largely unacknowledged interactions between Venezuela’s devastating crisis and ongoing political violence in Colombia. Failure to tackle the issues at the border could have serious long term implications for stability in the region, which makes long term plans for sustainable peace and security across and along the border an urgent necessity. And this Growth Lab podcast. Research Assistant Ana Grisanti interviews Annette, who discusses how the so-called border effect has facilitated violence, undermine trust relationships, attract numerous violent non-state groups, and obscured the nuance realities of multiple insecurities at the Colombian Venezuelan border.

Ana Grisanti: Thank you, Annette, for being here today and giving us such an interesting talk on this topic. I wanted to start with asking if you could just give us a brief introduction to your recent book titled Borderland Battles Violence, Crime and Governments at the Edges of Columbia’s War. What is your book about and what are some of the points you outline today at the Growth Lab seminar?

Annette Idler: Sure. Thank you so much and thanks for having me here. So in the book Borderland Battles, I examine the micro dynamics among different violent non-state groups that includes different patterns of months at all. So I look at how armed groups are engaged in enmity, rivalry or friendship. And then I show how each of those clusters has distinct security implications for individuals and communities on the ground. An added to that I then show how borderland spaces consistently intensify the security impacts of how these groups compete for territorial control, how they cooperate in illicit cross-border activities, and how they replace the state in exerting governance functions. And so today I basically use that and the fact that I’ve spent a decade researching these border areas and have traced a changing security landscape over time, and I’ve used the way in which my work is fieldwork based, where I traveled to those regions. I lived with local communities and regularly went back to understand how things have evolved based on interviews as well and looked at how this is relevant right now for the crisis at the border. The double crisis, as I call it, this is also based on the research program that I’m leading on peace, which is from conflict actors to architects of peace at the University of Oxford, where we continue to trace those dynamics. So I explained how a borderland lands that I developed in the book, how that helps us understand the situation at the Colombia Venezuela border today. And of course, Venezuelans who left their country faced challenges across the region. But as I argue, the combination of ongoing conflict and presence of multiple non-state groups in Colombia and the serious humanitarian situation in which Venezuelans find themselves when they arrive in the Colombian border area has a particular severe effect in that in that border area and that ultimately marriage destabilized the entire region if we don’t take any appropriate measures.

Ana: To elaborate on that, you spoke today of the border effect that you have found in your research. Could you explain exactly what is different about crises that border lands generally and how this manifests in the Colombia Venezuela border specifically?

Annette: So the border effect is something that I’ve identified as as a main feature in Borderlands, especially in one of the regions. So border lands. I look at them as transnational spaces that straddle both sides of an international border. And generally they have two features, which is first of all the distance from the center and secondly, their trans nationality. And in vulnerable regions, that translates into three specific characteristics. First of all, weak state governance. So we often see hardly any infrastructure or basic services. It also translates into a proneness to impunity, which results from the fact that there is a lack of coordination or a mismatch of security and justice systems on both sides of the border. So it’s very easy for non-state actors, especially violent actors, to engage in crime and cross-border crime because they’re using the border as an advantage because law enforcement authorities are stuck at the borderline. And then the third characteristic is this low risk, high opportunity environment that we see at border areas, which arises from the fact that borders are very porous. So it’s very easy to cross without any control in those regions. But at the same time, they are high opportunities in the illicit economy because the economic system is also not necessarily coordinated in a proper way and both sides of the border. So basically cross-border smuggling, illicit cross-border activities are very easy in those areas. They promise high profits and therefore high opportunities in such an environment. Now, the confluence of those factors produces what I call the border effect. And the border in fact, intensifies people centered insecurities and also obscures it from the outside. In the context of the presence of violent non-state actors, as is the case in that border. That, of course, has a huge impact on the local population and in the current situation at the Colombia Venezuela border, this is even more critical because of the humanitarian situation that we see there. So basically the border then acts as a facilitator, as a deterrent, as a magnet and as a disguise. And just to give some examples in how this plays out, it basically means that, first of all, as a facilitator, it facilitates cross-border violence. So we’ve seen lots of Colombian armed groups present on Venezuelan soil because it’s an advantage for them to then engage in cross-border strikes across the border. And that has expanded now in recent years. So for example, is now present in twelve different states on the Venezuelan side of the border. At the same time, we’ve not also seen more and more Venezuelan groups crossing over to Colombia. So why are those cross-border dynamics have been there for a long time and we see to them in other parts of the world, what is more new right now to the current situation is that Venezuelan groups are expanding on Colombian territory as well. That includes the Venezuelan T’was was much smaller armed groups, but it also includes new gangs that are establishing themselves on the Colombian side of the border. The second mechanism that I mentioned before is the border as a deterrent. And that basically means that trust relationships are deterred. It’s much harder to engage in trust relationships that starts from the armed groups. So one known group crosses the border and is no longer in their own territory. It’s much harder for them to engage in business deals with others, but that, of course, translates into mistrust towards the local population. Now, again, that’s something that we’ve seen for a long time and in other parts of the world as well. But given the large number of Venezuelans that are arriving in Colombia, that has a huge impact in terms of how these people are being perceived and how they are received as well by the Colombian communities. There are no more than 1.4 million Venezuelans that have arrived in Colombia. A huge part of them are staying in the border area. And that has led to a situation where there’s a double pressure on the local services. It’s a precarious situation already for Colombians. Now, with the Venezuelans arriving, that has led to grievances and tensions among the communities, which then has led to a rise in xenophobia. We’ve also seen how Venezuelans arriving in Colombia are not aware of the rules that the different groups have been imposing and therefore have become victims of assaults, especially Venezuelans who are living in improvised accommodation, who have to sleep on the street. So that all is related to this constant mistrust, of course, that the space has right now. And then, of course, there’s also a lot of stigmatization towards Venezuelans because they’re seen as potentially being involved in organized crime, in violence, even if they’re common Venezuelans. So it has led to a situation of heightened xenophobia in that space. The third mechanism that I mentioned is the border as a magnet. And here, I mean, how violent non-state actors are attracted by this space, because there are these high opportunities in the illicit economy and of course, because there’s a lack of state control in a way as well. In the current situation this has led to a rise in human trafficking. There are human trafficking rings present that take advantage of the situation. But we also have to think about outside actors like the Mexican cartels that have been present there for a long time, but they’ve now expanded their presence because of the messy situation across the border. So it has led to a situation where numerous criminal groups, including large scale organized criminal groups, but also more common criminal groups, have been using this situation, which has had an impact on the on the local population. And then finally, for the mechanism that I mentioned, that is also in the book and that I know in the talk of kind of apply to the current situation is to look at the border as a disguise. And that basically means how borders are considered to be generally violent spaces. So border areas are seen, especially from the center, from the state center as unruly spaces that are just generally dangerous and violent without really looking at the nuances there. And that is important right now because, of course, we’ve seen new forms of violence that are not necessarily related to the other types of violence that have been present already. But they are now adding to the situation because of this huge flow of people that is crossing the border. That means, for example, that women have been abused when they tried to cross the border. People are asked to pay at informal cross border checking points by armed groups. If they can’t pay, they’re abused. We’ve also seen how this has led to a situation where the Venezuelan groups have been using the same means of violence that previously the parties have been using. So there are multiple different types of violence and insecurity. Some of them are related to human trafficking. Some of them are related to the ongoing political violence in Colombia and some are related to just common crime. But they’re all being lumped together into this unruly space of border areas. And that, of course, has an impact because we can’t clearly see what are the adequate responses in order to address those different nuances of violence.

Ana: Thank you so much for that summary. You mentioned that you see this border effect in many different borders across the world. You have done extensive research also in Ecuador, Myanmar, Kenya. Is there anything that stood out in your fieldwork in this particular border in Colombia, Venezuela?

Annette: Yes. I mean, what really stands out, right? Now is the added pressure because of the humanitarian situation that we see and the Colombia Venezuela border. So the arrival of these large numbers of people means that it’s not only which is already severe enough, but it’s not only the ongoing insecurity that is related to the Colombian conflict, but it adds this additional layer of having to deal with those people that are arriving. That means that an already precarious situation is complicated even further. And it means that it’s what I call this double crisis of insecurity and a humanitarian crisis. It’s going in both directions. So people, for example, have fled from Colombia in the past and have become refugees on the Venezuelan side of the border. They’re now becoming returnees. They’re moving back again to Colombia. But, of course, they’re not arriving into a into a safe space because it’s important to highlight that Venezuelans are not the root cause of the insecurity. As I said, I mean, there’s ongoing insecurity, but it adds those tensions in a context where capacities are not high enough to deal with this in a long term sustainable way. But I also would like to add that if we compared to other places like Myanmar or the Kenya Somalia border, I think there’s also hope at the Colombia Venezuela border because other contexts have more entrenched problems. If we think about groups fighting for independence in parts of Myanmar, if we think about grievances that are rooted in ethnicity or religion that we see other parts of the world, it might be even easier to deal with what we have at the situation with Colombia and Venezuela, where it’s about ideology, it’s about economics, but it’s also an issue of development rights, of promoting legal economic opportunities, of promoting cross-border trade. And there are solutions to those issues that are perhaps less complicated than in other parts of the world.

Ana: Well as a Venezuelan it’s good to hear that there’s some hope. Moving on to my next question, could you speak of any existing differences between the way that Colombian and Venezuelan violent non-state groups participate in violent activity, particularly how they compete for governance and legitimacy among locals and the levels of, quote unquote, success they achieve?

Annette: Sure. So there have been differences for a long time, but we’ve also seen how they’ve changed now in the recent situation. So it used to be the case that the Colombian armed groups were considered to be more professional, in quotes, but they were considered to be better trained. They were considered to be professional in organized crime. And it used to be the Colombian groups that were led by Colombians, but sometimes with Venezuelan members. Now, this has changed. The Venezuelans have become more powerful, as I mentioned before. There’s no presence of Venezuelan led groups also on the Colombian side. Interviews have indicated that Venezuelan groups have adopted the same strategies that were used by the Colombian groups. So just a given learning there is actually this there’s some learning as a skill transfer in a way as well. And that has been seen in the way that attacks are being staged, but also the way that people have been killed. Colombian parameters in the past have used dismember in of bodies, burning of bodies to keep homicide rates low, to kind of hide the deaths. And that is not the modus operandi that has been used by Venezuelan groups as well. We also know that when it’s groups have received advice from Colombian groups in the past. One example is the Colombian rebel group ELM that advised the Venezuelan group in southern Venezuela on how to deal with local communities, on how to ask to have presence there. And again, this is something that has been going on for decades. But right now, what we see is that it’s becoming increasingly intertwined because we have no movements that go not just from Colombia to Venezuela, but also the other way around. They are also similar ways in which they gain legitimacy in both Venezuelan groups and Colombian groups, for example, have based their control on to some extent the provision of basic services, rules of coexistence and the provision of security and justice. But of course, it’s important to highlight that they do this with their own means and they decide what kind of security it is. They decide what kind of justice system it is. And that’s a way, then, of gaining the support of the local population, especially when the population feels neglected by the central state, when they feel abandoned and they feel they don’t have any alternative means to organize their daily lives. So today it’s becoming more blurred moments when groups operate in Colombia and vise versa. But there’s also this additional component, which I think is important, and that is it’s not just Colombia and Venezuelan groups. They’re outsiders as well. The Mexican cartels have expanded their presence as I mentioned that before. And that adds, of course, complications to those local dynamics and thinking again about the impact it has on the local communities, because of this quickly changing constellation of multiple different types of armed actors. It’s very challenging for people to just maneuver their daily lives in that situation and understand which is the group that is imposing control, that is imposing rules right now and how to deal with this on a daily basis.

Ana: I was wondering if there was any questions of legitimacy, considering that there’s all these different types of groups like coming from Venezuela or coming from Colombia in the Venezuelan territory or in the Colombian territory, also external actors from Mexico. What is the reaction of the local population? And do they see those differences and where these groups are coming from? And does that play a role into the legitimization of each group?

Annette: Yeah, I mean, there are differences, but there are also differences on each side of the border. So, for example, the rebel groups called ELM. They’ve historically basically established control through providing services or through also having a close relationship with the local communities, which is not so much the case with Right-Wing paramilitary groups, which were more focused only on security and justice on the Venezuelan side. The F.B.L. Is very much similar to ELM in that regard. In a sense that they are closer to the local community, but even their perceptions differ. Community members, for example, said to me that they would respect the ELM more on the Venezuelan side than the F.B.L. Is perceived to be less professional than the ELM. The FBL was seen as being composed mostly of teenagers, of younger fighters, and therefore people wouldn’t take them as seriously as the ELM. So in that case, it doesn’t matter whether the Colombian or Venezuelan. But the outside activists and especially thinking about the Mexican cartels, they often use a very different modus operandi. They don’t have an interest necessarily in having this close relationship with the community. There are many groups that are also aiming to have a low profile of just mingling with the local population without having the territorial control. So it’s really about the objective of the group. Is it just about economic incentives? Is it about ideology as well? And that influences, of course, the way they are perceived by their local communities.

Ana: You mentioned that this has had a particular impact on women. I was wondering if you could expand a little bit on that.

Annette: Yeah, sure. The problem for women is particularly severe at those border crossings between Colombia and Venezuela. So we see how local armed groups have taken advantage of the situation that a huge number of Venezuelans is crossing the border. They’ve established checkpoints at the border. These so-called structures, which are the border crossings and women, for example, have been exposed to situations of sexual abuse. If they weren’t able to pay the bribes, they’ve been abused by those local groups that are in control of those checkpoints. There have been cases of killing women as well. And the problem is that it’s basically obscured from the outside. There’s hardly any data available. There’s some efforts by local NGOs to track those incidents, to understand what is the scale of this phenomenon. But it’s still very much in the early stages. Human trafficking has increased across the border. So the trafficking of Venezuelan women, but also children has increased. These are often teenagers, female teenagers that arrive in Colombia that are then being used by prostitution rings at the local level. And of course, they have hardly any access to help to support in these kind of situations, especially if they’ arrive as minors without supporting them. Another problem is prostitution that has increased a lot at the border area. And here the problem is really the stigmatization that is happening. Many Venezuelan women arrive and they are automatically stigmatized as prostitutes, even though often they are high skilled workers. These include teachers, these include doctors. They arrive in Colombia and often they can’t find any other jobs. They don’t have the opportunity to engage in other jobs, which then takes them two options, like prostitution, but also those who have another way of sustaining their livelihoods, they’re just being labeled as prostitutes. Just an example, we had a case of someone who was selling coffee on the street. Tintori, as it’s called. And then the question would automatically be, well, how much is the entire turmoil? Which basically means how much is the entire body? Wow. So the problem is really how the perception has shaped the opportunities of these people. And women are particularly strongly affected in this situation because of those labels.

Ana: Well, that’s awful to hear. Moving on and to the more political nature of this conflict or violence at the border, what are some implications of this violence for the political and civilian relationship between Colombia and Venezuela in the future.

Annette: I think it’s important from the Colombian perspective, first of all, to understand that this is not just a humanitarian issue, which is an important one and which requires a sustained response, but also an issue that has destabilising effects on on its own country. So that means that responses need to tackle the insecurity and the humanitarian plight at the border together. And that is important because Colombia is still dealing with lots of issues in its old country. And after the peace deal that was signed in 2016, they are still presence of many different types of violent non-state actors, especially the border area is affected by ongoing violence, but ongoing clashes and because of the humanitarian situation at the border. This has fueled political violence in Colombia as well. So from the political perspective, it’s really important not to separate completely out the humanitarian issue, the political issue. And, you know, in their own country on the Venezuelan side, it’s important to understand that the situation in the country is not just a question of what happens in Caracas or at the national level between the government and the opposition, but that actually at the local and the regional level, political and social order is much more fragmented. And it’s important to understand these dynamics at the local level to identify appropriate solutions. So if we don’t understand the fragmentation of who’s controlling certain territories, what’s happening at the local level, we’ll never be able to have the right response. And then, of course, together it’s very difficult right now to find a solution at the at the national level because the diplomatic relations are complicated, to say the least, right now. But there are impressive cross-border initiatives led by civil society activists, by local academia that aim to reduce the negative impact of the border effect and of promoting solidarity. And it’s important to take these into consideration. And of course, we also need to remember that there was a lot of solidarity by Venezuelans towards Colombians when they arrived in Venezuela only a few years ago still. So using those initiatives and promoting dialog across the border at the local level. To me is very important, especially if it’s more complicated at the national level and basically identifying what are those existing initiatives that help to then start from the bottom up and enhance it more at the national level. And long term, of course, it’s important to invest in legal, economic, cross-border activities, in promoting cross-border trade and to coordinate those policies across the border, to take away the incentives for the illicit economy and instead boost the legal economy.

Ana: It’s great that you mentioned these solutions that are happening right now by different actors. I want to add in a positive note. Maybe you could expand a bit more on that. As part of your research, you led initiatives to design a tailor made post-conflict strategy for the best hope of a successful resolution to the crisis at the Colombia, Venezuela and Ecuador borders. What are some of the conclusions of these projects that you have led and what should governments of Colombia, Venezuela and the larger international community do? What would be their role?

Annette: So what we found in the previous project was that we really need to focus on three points. And the first one here is to move away from state neglect and invest in sustainable development. The second one is to move away from the insecurity produced by those multiple violence groups to a citizen security which is focused on people. And the third one is to take away the opportunities for transnational organized crime and invest more in law for economic cross-border opportunities. And of course, these three elements are all intertwined. And if we look at the situation right now where we have the additional impact of the Venezuelan crisis, it’s basically still those three points that are very important and focusing on people’s sense of security is particularly important here. So that means understanding what the needs are of the people, what those local communities are concerned about and how they are affected by the violence. First point. Second point is that it’s also still important to promote dialog to bridge the gap between centrists and peripheries. That’s something that we’re doing with my with my program, compiz, where we look at bringing together policymakers in the capital city with civil society, representatives from the border areas, but also with academics, with the international community to promote dialog so that local initiatives are being seen, local people, local voices are being listened to. And the center is not just imposing initiatives on local areas. Right. But it’s also the other way around. Whereby you need to establish more confidence and make sure that communities in the border areas understand that there are representatives in the government that are willing and able to help change the local situation. Now, with regard to the specific points by the border effect that I mentioned before, I think there are ways of dealing with all of them and changing the situation. So if we think about how the border facilitates violence, it’s important as a response to coordinate justice and security mechanisms across the border. And that way, basically, we can take away the space of impunity. With regard to the second mechanism, the border as a deterrent, it’s important to promote solidarity and an increase in the social fabric between and among Colombians and Venezuelans. So that can be done, for example, through social cohesion projects that can be promoted in those regions. The third point, the border as a magnet, of course, here the crucial point is what I mentioned before already is to offer legal economic opportunities. If we take away the incentives to engage in the illicit economy, that would have an impact to also make sure that people are less affected by the presence of those groups. And then finally, on the fourth point on the border as a disguise, which basically means that which has lumped together all those different types of insecurity here, it’s really important to collect better data and also raise awareness about those multiple insecurities, including violence that is directly targeted towards women, for example, and the way that women are affected by those by those insecurities. And more broadly, I think it’s important, first of all, to account for the interdependence of insecurity and humanitarian crisis. Secondly, it’s important to enhance transnational border land policies and not just national border line control. So this is a transnational space and that needs to be acknowledged in policies. And then finally, it’s important to prevent the further expansion of the crisis to other border areas, including the Colombia Ecuador border, because the fact that these border areas are more distant from Venezuela doesn’t mean that the problem goes away. I mean, we see very similar challenges there. And it’s a question of time on when this might escalate further. So it’s important to think about this early to avoid that.

Ana: Thank you so much for your time today and for being with us. If you want to read more about Annette or grab her book, it’s online on the Oxford University Press. And we will also include a link in the description.

Annette: Thank you so much for having me.

Ana: Thank you.

Annette: Thanks.

Katya: If you want to learn more about the Growth Lab’s latest research and events, please visit growthlab.cid.harvard.edu. See you next week.

The making of the crisis in Venezuela

Economist Ricardo Hausmann joins Cardiff Garcia to discuss the historical foundation of Venezuela’s current macroeconomic and humanitarian crisis, what may happen with its debt and what the future holds for the country.