Freedom. Independence. These are inspiring words. But do you really want those things when it comes to your work? Because that is what it means to be an independent consultant, rather than a full-time employee.
I happen to enjoy consulting. I’ve been doing international development for 16 years in this capacity. It has led to a highly satisfying and rewarding career. I have no intention of throwing in the towel. I enjoy the independence as well as the travel. (My parents once told me I was named after Nils Holgersson, the little Swedish boy who flew around the world on a goose. Perhaps another case of nominative determinism?)
But this ‘lifestyle’ isn’t for everyone. Let’s begin with reasons not to work as a consultant:
- The most obvious advantages of full-time work are job security and benefits. If these are important to you, consulting won’t be up your alley. Relying on a slowly rising salary year in year out, regular bi-weekly deposits into your account – not to mention paid holidays, health insurance and other benefits –means one less source of stress in life. Even if job security isn’t what it used to be, full-time work is still far different being an independent contractor. As the latter, you often don’t know what you’ll be doing three to six months from now. And you may only have a ballpark estimate of what your annual income will be.
- You need or like structure in your working life. A staff position comes with stability, interactions with the same colleagues, responsibilities more or less clearly defined. The routine and structure of the workplace appeals to many people. It’s what forces them to get out of bed in the morning. If you have a hard time managing your time or motivating yourself, then working independently could prove to be dispiriting.
- You aspire to a leadership or management position. If you work within the structure of an organization, you can pursue a career track, moving up through the ranks and taking on more responsibilities as you build management and leadership skills. Working as a freelance doesn’t mean you can’t grow and take on more responsibilities. In this field, you can work either as a specialist, or a team leader, which does involve managing other consultants, budgeting, etc . On occasion, headhunters have asked me to apply for director positions at different institutions (I declined). So choosing the path of a consultant doesn’t necessarily take you out of the game. But most are simply not focused on climbing the career ladder.
- You value the status that comes with your title and being part of a (well-regarded) organization or company. Let’s face it, at some level, consultants are just guns for hire.
And now, reasons consulting can be a good career choice
- Consulting gives you a lot of freedom and flexibility with respect to where, what and with whom. You can work just about anywhere – from home, a café, the library, sometimes even the organization which has hired you, such as the World Bank or Inter-American Development Bank. One day here, the next day there, and then off to work in the Caribbean for a couple of weeks, where you set up your laptop by the pool or the beach. Over time, once you’ve built up your reputation, say, by producing reliable, competent and useful analysis, you can pick and choose what jobs to take on. You can say yes to work that looks interesting, and turn down other inquiries. And crucially, when you end up on assignment with a crazy, intolerable team member or manager, you can choose never to work with them again!
- You like the sense of adventure and possibility that comes from not knowing where you’ll be or what you’ll be doing a few months from now. This can keep work from getting routine and dull. You’ll work with an ever-changing mix of colleagues, and make new friends and connections along the way. You will build up a large and valuable network.
- You can increase your earnings. As a consultant, you face a soft earnings ceiling. Depending on how hard you work, the number of offers you get, and the rates you’re able to negotiate, you may be able to increase your annual earnings substantially. You’re not locked in. Experienced consultants can earn more than staff, even when taking the latters’ benefits into account. If you get enough contracts, and manage your projects well, there is no reason for earning less than them.
- Perhaps the best reason to work as a consultant is that most of the work is substantive, i.e. it is about addressing problems ‘out there’ in the world. For example, in the field of evaluation or policy analysis, you spend most of your time working to solve questions about a program, a project or a policy. Conversely, staff at the organizations that rely on consultants like you spend a considerable amount of their time on internal reporting, business development (e.g. writing proposals), budgeting, hiring consultants, and other administrative tasks. These tasks are important, presumably, but not directly related to the problems they are trying to solve beyond the walls of the organization.
I’ve focused on differences. But to be honest, consulting vs. full-time isn’t an either-or proposition. People switch back and forth depending on their career phase, their goals, their options, etc. For some, consulting is a stepping stone to full-time work, a chance to show what they can do, and for the organization to get to know someone before offering them a position. A considerable share of World Bank staff, for example, have worked previously as consultants. For others, it is a way of leaving behind the daily grind that working for an organization entails, and taking control of their lives again.
Government policies create winners and losers
Regardless of what you think of politicians who love to speak in these terms, it is fair to say that the world is full of winners and losers. Government policy may be active, e.g. raising tariffs or taxes to improve its fiscal situation, or it may be passive, e.g. standing by while the forces of globalization and technology sweep jobs from an economy. In either case, some people benefit, some don’t, and some lose out. In fact, just about every benefit comes with a cost, but those costs are not evenly distributed.
Despite great progress in many sectors of the economy, inequality has increased in the US and elsewhere. According to the Pew Research Center, while median real wages have barely budged since 1970, most of the gains since 2000 have gone to the top 10 percent of the population.
How do we know what the impacts will be?
It is extremely difficult to predict the exact impacts of a given policy. Many factors come into play, and there are direct and indirect impacts. However, you can make estimates, and that can be very useful. A big part of my work involves looking at the potential impacts of policy reforms in developing countries. Years ago, the World Bank developed an approach called Poverty and Social Impact Analysis , or PSIA. This is a type of evaluation. It deploys quantitative and qualitative research methods to muck around in people’s financial and economic cupboards (using surveys and focus groups, for example) to try and figure out how they might fare if the government enacts a new policy.
How does this work in practice? I often conduct studies on the effects of price increases on different population groups. Analysis allows us to predict what the effects will be in terms of affordability for different income groups. Quite simply, we assess the winners and losers of a given reform. If electricity rates go up 25%, but you also get more hours of electricity supply per day, what does that mean for you, as a poor household? The risk is that the losers, in the short-term, will be those for whom electricity bills are a serious chunk of their total expenditures.
The agony of asking others to delay their gratification
Of course, reforms typically aim for positive outcomes. But these don’t kick in immediately. In the short-term, most people may experience only costs. The long-term benefits are abstract and perhaps uncertain. This is especially the case if the government has a poor track record of following through on its plans.
The relative costs of a price hike will be higher for those least able to afford the good or service being reformed. Thus, raising water or electricity rates can be a delicate exercise. It can make people quite unhappy, and politicians quite nervous. But those tariffs do need to rise. Otherwise, what will ensure that a utility company can operate sustainably, invest in operations and maintenance, attract external financing, and expand its network?
Tariffs are not boring if you’re poor
If you think utility rates is a boring topic, think again. Such an attitude suggests you are comfortably middle class. Probably your eyes glaze over when you see news reports from some faraway country about the latest unrest over price rises. At most, you may be mildly irritated when your utility bill goes up.
In fact, it is not unusual in some countries that when prices rise, some people pay with their lives. Demonstrations and riots occur on a regular basis. People protest against government attempts to squeeze more money out of people (the demonstrator’s perspective). The argument that it will put a utility on a sustainable footing (the technocrat and economist’s perspective) is not accepted. Especially when the government is perceived as corrupt and unaccountable.
Demonstrations over prices can block policies…and bring down governments
Just last month, violent demonstrations broke out in Cote d’Ivoire against proposed electricity price increases. One person was shot dead by security forces. In Nigeria in 2012 cuts to fuel subsidies led to widespread, violent protests leading to two deaths and many injured. In Bulgaria in 2013 in response to a doubling of electricity rates, six people immolated themselves, and street protests brought down the government. In 2015, Armenians took to the streets to protest proposed electricity price hikes, and dozens were injured. There are many other such cases throughout the world.
The Cochabamba demonstrations in Bolivia, dramatized in the 2010 feature film Even the Rain starring Gael Garcia Bernal, is a great primer on this, although it shows just one side of the story: the poor protesting against the privatization of the city’s water supplier. (It’s also an excellent and evocative film which draws a parallel between oppression by elite outsiders over 500 years of history.) The other side of the story, not covered in the film, concerns the aftermath of the multinational water company’s departure. Sixteen years on, the cost of water has indeed stayed low, but most of the poor still don’t have access to it. In other words, it was Pyrrhic victory for the protesters
Put some effort into finding a way forward
Yet it doesn’t have to be either/or. Yes, tariffs do have to cover costs or the infrastructure will break down and a lot of people will be left without any water at all. But there is more than one way to skin a cat. As a government, you can raise prices – or reduce subsidies, effectively the same thing for the consumer – gradually. You can include protection measures for the poor. You can engage on the problem with people affected. You can be smart about communicating why you have to do this.
In 2003, I was part of a team that studied the impact on the poor of rising electricity rates in Moldova. We found that the poorest 20% of households were not cutting back on electricity use, but were even consuming more. This was because the poverty rate had been coming down, so people in general had more money in their pockets to spend. In another study, in Lebanon, we found that the real (inflation-adjusted) cost of public electricity tariffs had been falling for years, but reliance on expensive private generation has pushed up household electricity expenditures.
The type of approach mentioned above – poverty and social impact analysis – can be usefully applied to all sorts of different reforms, not just utility tariffs. By doing some investigating, and carefully analyzing the data, the road to reforms can be smoothed. Social unrest can be avoided.
Government wins by generating goodwill among the population. It shows cares about them and is trying to work out a solution. And the people win because their needs and circumstances are being taken into account, and painful up-front costs are being reduced.