Perceptions of per diems in the health sector: evidence and implications

Per diems are recognised as an important factor in motivating health workers, yet they can also distort incentives and may be abused, creating inefficiencies in health systems. Drawing on interviews with various health workers in Malawi and Uganda, this study details the perceived benefits, problems, and risks of abuse of per diems and allowances in developing countries.

The report highlights how practices to maximise per diems have become a defining characteristic of many health institutions and influence how health employees carry out their work. In this sense, it underlines that abuses are more common in the government health sector due to low pay and weaker controls.

Findings include:

• per diems in health sector have many negative effects; they manipulate work practices by slowing progress, scheduling unnecessary trainings, or exaggerating time needed in order to maximise per diem revenue
• in addition, allowances are deemed to provide unfair financial advantages to already better-off and well-connected health staff
• as a result, per diems create conflict among health staff and contribute to a negative organisational culture where people expect to be paid for all activities

The authors conclude that:

• any attempt to reform per dimes’ practice must start with a clear understanding of the incentives for abuse and adopt multifaceted strategies
• consequently, initiatives must reduce pressures and incentives to abuse, while controlling discretion and increasing transparency in policy implementation
• to reduce incentives to abuse, more fundamental reform of health worker payment is needed
• donors can play a role in the reform by supporting development of policy analysis tools, design of control mechanisms, and evaluation of reform strategies