[nimrody]

But does it give engineers a good incentive to improve product quality and reduce the number of production incidents?

Where I work we are not on-call. Nevertheless, I try to help the ops team when they encounter issues. This does make you improve logging and error handling since you know it takes a lot more time when it's difficult to filter logs for the interesting events.

Engineers not exposed to production issues and customers will never understand why you need these extra measures.

[tjpnz]

Our on-call system gives everyone an allowance per service plus additional time off if you're on-call on weekends and public holidays. You get both regardless of whether you get paged. Getting paid to do nothing is a great incentive for pushing quality, especially when you're on-call for more than one service in a given week.