Downsizing, Privatization, Labor Flexibility, Wage Cuts:
Selected Summaries of IMF/World Bank Country Policies

Argentina
• World Bank sector support for a “massive and ambitious” privatization program of local water systems
• Nearly half of provincial government-owned enterprises have been privatized, including a majority of provincial banks
• In 1994 the pay-as-you-go pension system was replaced by a mixed public/private pensions system
• In 1999 new laws were passed to “enhance labor flexibility” for small and medium sized enterprises, lengthen the probation period for new workers, employer contributions to social security have been reduced

Belarus
• Government is preparing legislation to create the legal framework for accelerated privatization (2001)
• Government is working on “liberalizing” the labor market in order “to increase the flexibility” of wages, particularly at state-owned enterprises

Bolivia
• Central government employment targeted to fall from 13,000 to 9,400 (1999)
• In 1996 the public pension system was replaced by a defined-contribution, privately managed system with individual accounts
• Over 50 medium-sized enterprises along with some airports, water and sewage systems, telecommunications companies, and the national airline and railroad have been privatized, yielding about $100 million
• In preparation for privatization of the state smelting company, 890 employees were laid-off
• Government proposal to “modernize” labor legislation to foster small-scale enterprises and generate employment

Cambodia
• Seven state-owned rubber plantations to be corporatized and gradually privatized (1999)
• Size of the civil service to be reduced through elimination of redundant workers, normal attrition, limited hiring, etc.

Ecuador
• New laws passed aimed at increasing productivity by increasing labor market “flexibility” (2000)
• Bids have been or are being invited for private operation or ownership of urban sewage and water systems, seaports, oil refineries
• In 1998 the government created a plan to reduce public sector employment by 26,000 by 2002
• The government “is committed to allowing private sector participation in the provision of pensions” and reforming the current pay-as-you-go system

Egypt
• Plan for competitive, commercialized port industry being developed, that will involve the ‘redeployment’ of redundant labor (1998)

Ethiopia
• Proposals developed for the privatization of 114 public enterprises (1998)
• Limits of foreign company participation in joint ventures are being removed (2001)
• From 1998 to 2000, some 175 formerly public enterprises were liquidated or privatized

Ghana
• In January 1995 the Government announced plans to privatize 114 enterprises
• An estimated 40,000 employees would lose their jobs due to privatization, and another 60,000 due to civil service reforms
• Water and sewage systems are being downsized and operating contracts signed with the private sector

Haiti
• More than 5,000 government jobs (>10% of the total) were eliminated in 1998
• In 1997 the process of restructuring and/or divesting major public enterprises including airport, seaport, power, and telecommunications was begun
• Half of the employees of state-owned Banque Nationale de Credit were downsized (2000)
• 1,000 port authority employees were to be downsized by June 2001 in preparation for privatization

Honduras
• Planned 2000-2002 structural reforms include the privatization of telecommunications, airport, electricity distribution, port, and water and sewer management enterprises
• Because “collective contracts at large enterprises often act as straightjackets,” more labor flexibility is being introduced

Indonesia
• In the 2000 fiscal year, 19 public enterprises were to be privatized, including the Soerkarno-Hatta Airport Concession Company
• One third of the branches of state-owned Bank Mandiri were to be closed and 12,000 jobs eliminated

Jordan
• Strategies have been formulated for the privatization of the telecommunications company, airline, railway, power generation and distribution, etc.
• Contracts were being awarded for the operation of waste-water treatment and urban water systems

Kenya
• Civil service reform program eliminated 33,000 government employees (1996)
• Public ownership was reduced or completely sold in more than 100 enterprises including tea factories, banks, electricity production and distribution companies, and Kenya Airways
• From 2000-2002, it is estimated that 48,606 government employees will be retrenchedLaos
• Civil Service to be reduced by 5% (2001)

Malawi
• In 1997 a list of 100 public enterprises to be privatized by 2004 was approved, including banks, the airline, telecommunications, housing, and tourism enterprises, and the Blantyre Water Board
• Civil service reforms include the retrenchment of more than 1,300 permanent and 20,000 temporary employees, implementation of a merit-based pay system, and outsourcing of ministry functions

Mozambique
• Privatized operations include customs management, 32 large enterprises, and more than 100 small and medium sized enterprises raising total to more than 900 privatized entities (1997)
• As part of “structural reforms,” the ratio of highest to lowest civil service salaries was raised from 9.6:1 in 1997 to 15:1 in 1999
• Attempts have been made to privatize urban water systems, the national airline, and all state-owned banks

Nicaragua
• Pension system changed to be individual account-based and privately managed (2000)
• Minimum retirement age and length of service for pension benefits will be raised, and payroll contributions will go from 5.5% to 10%
• New labor code introduces “greater flexibility in the contracting of labor” (1994)
• Public employment reduced from 290,000 in 1990 to 107,000 in 1993 and less than 80,000 in 1999
• 346 of 351 government-owned companies were privatized or liquidated (1990-1995).

Nigeria
• Public enterprises slated to be privatized include Nigerian Airways, a fertilizer company, refineries, telecommunications, and power companies
• All benefits of public service employees are being monetized

Senegal
• Since 1996, public enterprises that have been privatized include the power company, road maintenance operations, urban transportation systems, water supply company
• Eighteen public enterprises were to be privatized in 1999-2000 with the goal that only utilities, social services, and industrial promotion companies would be government owned

Tanzania
• Dar es Salaam Water and Sewer systems to be operated by private enterprise (1999)
• From 1994 to 1998 270 public enterprises were privatized including a brewery, cigarette factory, and leather company
• Government aim in 1996 was to have all 230 public enterprises privatized by 2000 including ports, telecommunications, railways, banking, agriculture, etc.
• 1999 privatization of six major public enterprises was estimated to necessitate six to ten thousand retrenchments
• Public service employees reduced by 27% from 355,000 in 1992 to 260,000 in 1999

Turkey
• Government is planning and/or implementing privatization of public electricity generation and distribution enterprises, gas, telecommunications, petroleum, steel, tobacco, etc. companies
• Government intends to launch voluntary private pension system
• Public pension system reforms include increase in minimum retirement age and minimum contribution period and reduction in salary replacement ratio

Uganda
• 85% of public enterprises privatized by 1998
• Size of civil service cut in half to 150,000, target of 58,100 by June 1997
• Government is working on legislation to change pension system into a defined benefit-contribution system (1997)
• Public operations having been or to be privatized include the Uganda Commercial Bank, Uganda Clays Ltd., Uganda Airlines, Uganda Telecom Ltd., meat, spinning, hotel, tobacco, and others (1999)

Uruguay
• Government pushing a move from national, centralized labor agreements to local, decentralized bargaining (1999)
• From 1996 to 1998, more than half a million workers were shifted to private pension plans
• Civil service reforms initiated in 1997 have resulted in the loss of 14,000 public sector jobs
• Bids issued for privatization of port facilities and toll roads are being transferred to the private sector (1999)

Yemen
• Privatization program aims to divest 70% (“in employment terms”) of public sector enterprises by 2000
• Major enterprises to be privatized include a refinery, airport services, land transportation company, cement production, and pharmaceuticals
• Civil service reform initiative is expected to reduce public payrolls by 20%
• From 1995 to 1998, 40% of small and medium-sized public enterprises were privatized

Zambia
• Privatization process begun in 1995 of public copper mines
• Railroad staff reduced from 5,500 to 3,300 and plans for privatization are being developed (2000)
• 20% of Civil Service laid-off in 1998 and 1999 and a wage freeze was implemented
• 80% of state-owned enterprises privatized in 1998-1999
• Long term goal of reducing civil service from 110,000 (2000) to 10-12,000 workers
• World Bank support for public sector salary decompression (2000)
• Government commissioning study of “pay as you go” pension system (2000)

Zimbabwe
• World Bank support to “commercialize, out-source, or privatize” some public agricultural service (1998)
• Received World Bank support for railroad restructuring and privatization process, a project which included a $56 million in staff rationalization costs (1998)
• World Bank support for privatization of public power generation and distribution operations (2000)
• More than 14,000 civil service jobs cut (1999)
• Privatization process launched for public telecommunications company, airline, railways and forestry commission

Source: IMF and World Bank documents available at www.imf.org and www.worldbank.org. Precise citations are available at http://www.essentialaction.org/labor_report.