This article is not in defense or castigation of the doctors strike; it is not about the validity or invalidity of their collective bargaining agreement (CBA); it is not about the merits or demerits of their demands. This is a letter to the students currently studying medicine or nursing in Kenya.
It is also a letter to those in high school, aspiring to be future nurses or doctors. It is a letter to those parents and guardians who desire that their children will be nurses and doctors when they grow up. It is a letter to those who finance their education.
It is a letter to all of us.
As a future doctor or nurse, you should be a worried lot. If I were you, I would not be rejoicing at this strike. Not because the calling demands allegiance to the Hippocratic Oath, but because as a rational human being, I seek to save my own life first.
But how can I not rejoice, you may ask? How can I not, when I know that my first salary will be in the range of Sh400,000?
Your union officials have wooed you to support the strike with the disguised fallacy that they are doing this for you. Let me educate you on something they don’t teach you in medical or nursing school.
The only beneficiaries of this strike or any strike, are the labour cartels, fondly christened as unions. Unions are like parasites. They get fed, but they end up eating the host. You, are that host. Here’s how:
Unions create unemployment
How, you ask? Think of the various cadres in your profession as a ladder. When the minimum wage is raised, it cuts off the bottom rungs of the ladder. This means that no doctor would be hired below Sh396,060 threshold.
The World Health Organisation (WHO) recommends an optimal ratio of 2.3 per 1,000 of health workforce-to-population. According to 2016 Economic Survey, Kenya’s ratio was 22 per 100,000 people (equivalent to 0.02 per cent).
To meet this deficit, 1,200 doctors need to be hired annually over the next four years. (This figure does not include the required nurses and midwives).
An estimated 5,000 doctors work in the public sector. At the demanded minimum wage, the monthly total wage bill will be an estimated Sh2 billion. If we add the requisite 1,200 additional doctors, the wage bill will rise to Sh2.5 billion.
The outcome would be that fewer doctors would be hired on any given year to maintain or reduce the wage bill. Hence the unemployment rate in the public service of qualified doctors would naturally rise.
If you were in Prof Walter Block’s class, he would tell you politely that it is a misnomer for you to think that the minimum wage is a floor; and that when the wages rise, the floor also rises. It is not a floor.
It is a barrier of entry into employment. You cannot be employed, because your employer would be breaking the law.
Unions create misallocation of labour
A study on health professionals brain drain by Kirigia (and others) 10 years ago on the cost of health professionals brain drain in Kenya found that the cost of educating a single medical doctor is Sh6.7m ($65,997) and Sh4.5m ($43,180) for a nurse; and for every doctor and nurse who emigrates, Kenya loses about Sh53.1m ($517,931) and Sh34.7m ($338,868), worth of returns from investment, respectively.
Scarcity is a reality of life. That is why rational beings allocate the available resources.
If this is what it costs to educate you, and given what it will additionally cost the employer to pay you upon graduating, the rational thing for him to do is train fewer of your kind.
If you are among those who cannot afford private tuition, then your valid dream of becoming a doctor suddenly becomes a mirage.
Being the judicious person I know you are, you will naturally divert your passion to other professions.
What unions will not tell you is that their intention is to create a monopoly of labour in certain sectors to get a higher monopoly price.
Unions veil the opportunity cost
Given the fervour and public clamour of your support for this strike, and this being a period to woo voters, you are likely to succeed in arm-twisting the government to acquiesce. Do you think you have won?
In this season, you are only valued as a political good by those in the political class purporting to support your cause. The benefits of political goods are readily evident but the costs are not.
If the government gives in to your demands, the equivalent of the 300 per cent increment will be re-directed from a different service or good that must be foregone.
This could be the construction of the road to your village that you have been clamouring for.
Unions promote Robin Hood Economics
So your union is making demands to government to increase your salary. Very well. But have you stopped to wonder where your employer gets the resources to pay your salary? Or pay for your education?
He relies on my honesty, goodwill and hard work to pay you. That’s right.
If I may educate you, the Laffer Curve relates tax rates and revenues: It means that the higher your employer taxes me to meet your demands, the less the incentive for me to work hard and hence the lower the revenue he will be able to forcefully extract from me.
The lower he also taxes me, the less revenue he will get because his forceful extraction can only realise so much revenue.
So can you see this vicious cycle? Your employer needs not only to negotiate with your union on your behalf, but he also needs to negotiate tacitly with me on a reasonable percentage that will not impact on my current productivity.
Now that we have come this far together, are you still picketing?
“Do not let your schooling interfere with your education” – Mark Twain.
Ms Mugwe is a freelance political economist; [email protected]