WE needed some furniture to be upholstered and found a person to do the job through a friend. The upholsterer took our furniture, with the promise to get back in five days on the outside. Instead, he took 20 something days to get back to us. Whenever we would call, he would have a reason for the delay: a worker got sick, there was a death in the family, the other workers had not returned from the Eid break in time, he could not get some fabric that was needed, and so on. The quality of work, when we eventually got the furniture back, was fine. But, it took 15 extra days to get it done.

This is just one example of the kind of interaction I have had with service providers in recent times. The person installing air conditioners could not understand why we were insisting that the AC should not be at an angle and should be level. We had the same problem with the person installing our television on the wall. The plumber had to be convinced that a newly installed but dripping geyser was a problem and that he should fix it before getting paid. A company delivering some construction material had to be told that a Monday delivery does not mean getting the delivery on Thursday.

In all of these cases whether the cause had to do with function, aesthetics or time delays, one thing was common — there were no consequences, for delay or shoddy work, for the service provider. In all of the cases mentioned above, there was no intention of defrauding a client but, there was also no regard for the quality of service. This disregard for quality of service is the issue that needs further discussion.

When the upholsterer kept delaying work, what could we, as clients, have done? We kept calling him and kept urging him to do the best he could. Irrespective of whether or not his reasons for the delay were genuine — I am sure at least some were — it cost us another 15 days and delays in a lot of other things we were trying to get done. I will not use this upholsterer again but I do not think that is any great privation for the gentleman. There is no reputational or other cost of the delay to him. There is no cost-effective legal remedy that is available. The upholsterer knew that. At worst I could have yelled at him whenever I called him. And I did. A few times. But that did not seem to have any effect on him.

There are no minimum standards available in service delivery.

One can withhold payment till work has been done to one’s satisfaction. This is what had to be done with the plumber and the person installing air conditioners, but this remedy does not work in time-delay issues.

This seems to be an incentive compatibility issue. There are no consequences for delays or poor quality work for the service provider. So the service providers provide the minimum quality that they can get away with. If the plumber can get away with leaving a dripping joint, he will. If you stand on his head and insist on getting it fixed, he will oblige grudgingly.

There are, of course, no minimum service standards in almost any area in Pakistan. The minimum, therefore, cannot come from the law. It has to be what the service provider can get away with and this might vary with the client. This seems like a case of low-level equilibrium. The provider has no reason to provide quality as, most likely, he cannot charge a premium for quality compared to other providers of the same service. But if all compete on prices, quality will go down to the lowest acceptable level. And this will be determined by the client. If a client is okay with a dripping geyser joint, why would the provider fix it? If a client insists, the provider will fix it. The bare minimum, depending on the client, will rule.

How does one get out of low-level equilibrium? It is hard to see this happening through the ‘pride of work’ dynamic. That might motivate the odd service provider, but it is unlikely, given the price competition, that it will change the entire equilibrium.

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There are no minimum standards (as in products) available in service delivery. Even important areas, like medical care, do not have minimum standards that are clearly stipulated. But even if there were, our legal system is too expensive and time-consuming to invoke. Even with effective and optimal legal systems, as in many other countries, the law can only be invoked in more serious cases and occasionally. Mostly, it acts as a deterrent. This is not available in Pakistan.

The only way forward, for us right now, seems to be through the development of reputational networks and consequences. With online possibilities, this should be very possible in Pakistan and on a significant scale. This is the repeated games framework. If a service provider does not care if he/she messes up and does not mind losing me as a customer, will he/she behave the same way if a majority or a major portion of the clientele gets to know of the poor service provided and considers withdrawing patronage? Service providers need to be rated, ratings need to be credible and public and this will have consequences, in terms of reputational impacts.

It is hard to give warranties and/or guarantees in service areas. Here we need minimum standards and then ways to ensure service providers stick to minimum standards. This requires a lot of work. It is unlikely, for most service sectors, that we will be able to do it through legal means and regulatory structures. We will have to rely on market structures that leverage reputational impact to ensure compliance with higher standards.

The writer is a senior research fellow at the Institute of Development and Economic Alternatives, and an associate professor of economics at Lums.

Published in Dawn, August 19th, 2021