Dr. Ezeani, Onyebuchi Emmanuel
Department of Political Science
University of Nigeria, Nsukka.
The article examines the impact of privatization on, labour in Africa. It argues that the impact of privatization on labour can only be fully understood or appreciated within the context of the political economy of privatization. Thus, it notes that as part of the strategy of reproduction of capital, privatization is based on capitalist values, assumptions arid ideologies. As a neo-liberal capitalist initiative which is driven primarily by efficiency and/or profit motives, privatization has led to marginalization of labour through work-force reduction, hike in the prices of items and services, and erosion of industrial democracy, among others. The article recommends a halt in the current privatization policy in Africa. It calls on the governments of various African countries to show more commitment, sincerity and political will to tackle the problems of state-owned enterprises.
Privatization policies are currently being implemented in many countries of the world. In most African countries, privatization of public enterprises (PES) as a major instrument of economic reform has been on the increase since the late 1980s, mainly due to shifting ideologies, donor pressure, and dismal performance of public enterprises with the resultant public dissatisfaction. In Nigeria, the sheer waste and inefficiency of PES became glaring from the early 1980s with the inception of economic crisis. Therefore, after many years of unsuccessful efforts to reform the public enterprise, sector, the privatization option was recommended and adopted as the most viable strategy for attracting investment and achieving efficiency, which are necessary for economic growth. As Adamolekun and Layeye (1986: 13) succinctly put it:
Contrary to the Keynesian -inspired; proposition that government intervention is indispensably to avert crisis, to increase aggregate demand of commodities and employment opportunities and to bring down the interest
rate, the neo-liberal economists suggest: that the crisis resulted from unchecked government interference with economic matters. In other words, they started reaffirming the need to respect scrupulously the market and perfect
The idea of privatization is therefore the outcome of efforts by the liberals to emphasize the ‘virtues’ of private initiative and the ‘superiority’ of its management principles (Adamolekun and Layeye, 1986:13). Proponents of privatization argue that state control has devastating effects because it involves excessive public intervention in spite of the inherent inefficiency of government. Thus, encouragement of private entrepreneurship, the market and perfect competition is recommended as the solution to economic crisis.
But, the privatization option either couldn’t have ‘been adopted, or preceded as fast as it has in many African countries, without external pressure. According to White and Bhatia (1998: 29), “without donor pressure and support, it is doubtful that privatization would have progressed as’ fast as it has in Africa. Donors have put pressure on governments to divest”. It is important to mention here that privatization is a key component of the World Bank/International Monetary Fund inspired Structural Adjustment Programmes (SAPS) currently being implemented in many African countries (Obadan, 2000: 1). It is on record that the World Bank in particular, has moved beyond merely making privatization a precondition for loans by setting goals and schedules for meeting divestiture targets (Commonwealth Secretariat et al, 1994: 24).
One of the main criticisms leveled against the privatization exercise currently embarked upon by the governments of most developing countries has been its; negative impact on labor particularly, work force reduction. Foremost among the critics of privatization are state enterprise workers and unions who fear retrenchment and the loss of benefit, often compounded by lack of social safety nets and functioning labour market (Chotten panda, 2000: 229).
The main objective of this article is to examine the impact of privatization on labour from a political economy perspective. It is important to mention here that the majority of studies on privatization have concentrated the impact of privatization on the efficiency of the privatized public enterprises; the objective being to support or refute the efficiency claim. The other side of the story, namely, the social consequences of privatization on labour, is the least investigated aspect. The study by White and Bhatia (1997) on privatization ifi Africa which dealt with labour did not adopt the political economy perspective.
This article adopts the Marxian political economy framework of analysis. This framework derives from the writings of Marx (1968). Marx developed a materialist theory, often called historical or dialectical materialism. According to him, political economy is “the anatomy 8f civil society” and this entails “the study of the sum total of the relations of production, the economic structure of society” (Aina, 1986: 4). The political economy approach emphasizes the centrality of the “mode of production” in the study and analysis of political phenomena. The “mode of production of material life” according to Marx (1968: 181) “conditions the social, political and intellectual life processes in general”. The “mode of production” refers not merely “to the state of techniques …but to the way in which the means of production were owned and the social relations between men which resulted from their connections with the process of production” (Dobb, 1948: 7). Also it emphasizes “the importance of domination, exploitation, struggles and conflict between classes in arty mode of production” (Aina, 1986: 4). Government and the state are class instruments employed to protect and promote the interests of those in control under capitalism –the bourgeoisie (Dyke, 1969: 168).
Implicit in the political economy perspective or framework is that the hierarchical structure of the society emanates from the established ways of organizing production and distribution in material and spiritual life, which ensures the unequal expropriation of nature and the results of human work by social classes and groups.
The utility of the Marxian political economy framework m the analysis of privatization, especially its impact on labour, cannot be over-emphasized. Applying this framework to the subject matter of this article, privatization is regarded as a product of the shifting emphasis of international capitalism from a policy of active vote in the economy through the establishment of Public Enterprises (PES) to provide goods and services, to a policy of gradual withdrawal from the provision of certain goods and services. As Friedman (1970:389) rightly stated:
the precise interpretation of the status of public and private enterprise in the contemporary non-socialist, mixed economies will continue to shift with changing ideas, policies and emergencies.
But does the current privatization policy signify a passive role by the state in the economy? The answer is simply no; rather, the privatization option represents a strategy by the indigenous capitalist class in Africa (who incidentally constitutes the ruling and governing class) in collaboration with their foreign collaborators to increase their ownership and control of the means of production. In the quest for efficiency and/or profit for the dominant capitalist class, the privatization policy has resulted into mass retrenchment of workers, like in prices of goods and services beyond the reach of most workers, and the erosion of industrial democracy.
It is important to state here that the efficiency and/or profit and higher productivity sought by the privatization policy is for the benefit of the indigenous capitalist class and their foreign collaborators alone. As Nnoli (1999: X) rightly stated, the primary contradiction of capitalism, relates, on the one hand, to the social nature of production by which capitalists and workers collaborate to create products and, on the surplus from production by which the capitalists alone partake of the profits. Therefore, it is in the interest of capital to downsize the workforce, increase process of goods and services in order to increase the profit which it enjoys alone.
Definition and Objectives of Privatisation
There are various definitions of privatization some of which do not recognise its diverse forms. Adam et al (1992: 6) noted that the term has been used to describe an array of actions designed to broaden the scope of private sector activity, or the assimilation by the public sector of efficiency-enhancing techniques generally employed by the private sector. The UNDP Guidelines on Privatization (1991) defines it as the marketization of public sector activity, that is, the subjection of microeconomic decision -making to market forces, since this is a feature of profit-oriented private sector activity.
For the purpose of this article, privatization is defined as a deliberate government policy of stimulating economic growth and efficiency by reducing state interference, and broadening the scope of private sector activity through one or all of the following strategies: transfer of state -owned assets to private ownership through sale of shares; private control or management of state -owned assets; encouraging private sector involvement in former public activity; and shifting decision making to agents operating in accordance with market indicators. This definition is encompassing and accommodates different forms of privatization.
It is important to make a distinction between privatization and commercialization. Commercialization programme does not automatically entail divestment or the introduction of private management into Public Enterprises. Instead, it involves reorganization of public enterprises that are wholly or partly owned by government to become self-sustaining, profit making ventures, which are either completely independent or slightly dependent on government or government subvention (Obadan, 2000: 17). Commercialization, therefore, rightly fits into the wider concept of public enterprises reforms, and not privatization. It is related to privatization insofar as commercialized enterprises are expected to operate like private enterprises.
The objectives of privatization are usually formulated by policy makers. Some relate to economic gains while others emphasize socio-political gains. Some objectives are, however, not stated. The objectives of privatization have been summarized as follows (Obadan, 2000: 21-22):
- improving economic efficiencies (productive, allocative and X-efficiencies produced by the enterprises) against the background of poor economic performance of PEs. Improved efficiency is to be reflected in lower product prices and improved product quality;
- reducing fiscal deficits through increased tax revenues on enterprise output, reduction in central government transfers to the enterprise sector, and receipts from
- reducing government interference in the economy and shifting of the balance between public and private sectors, as well as developing the private sector and promoting market forces in the economy. This is a more ideological and controversial objective as it rests on the idea that the role of the state should be diminished (Cook and Kirkpatrick 1998: 4);
- broadening ownership of businesses through wider shares and assets ownership, thus creating popular capitalism and fostering economic equity;
- generating new investments, including foreign investment;
- developing the capital market and deepening the financial system;
- enabling PEs to access markets, capital and technology, and expose them to market
- reducing the administrative burden of government; and
- providing the opportunity to introduce competition. African countries have, however, generally not been citing the encouragement of competition as a specific objective of privatization, although it may be inferred from the objectives of private sector development and increased economic efficiency.
Another important objective of privatization is to enlarge individual choice andfreedom. According to Veljanovski (1987: 206) “The link between private property, markets and liberty is a strong one and is the primary defence of privatization”. And for Thatcher (1993: 676), privatization “was one of the central means of reversing the coercive and corrupting effects of socialism… (and) is at the center of any programme of reclaiming territory for freedom”. Therefore, by reducing state control privatization is believed or assumed to increase individual choice or freedom and enhances democracy (Cf, Almond, 1991).
Forms and Methods of Privatization
Privatization takes diverse forms. Broadly, the four main ways of making an activity private are: divestment, delegation, displacement and decentralization. The various forms of privatization are presented in Table I.
Divestment means transfer of state -owned assets to private ownership; or an enterprise may be liquidated or sold. Delegation implies transfer of control of state assets or activities to private control/management, eg by leases, concessions, management contracts, or by contracting out the provision of inputs to public sector activities.
In the case of displacement the government passively allows the private sector to expand, or engages in active promotion of private sector involvement in former public activities, including build -operate transfer and similar project.
Decentralization, implies the shift of decision -making to agents operating in accordance with market indicators, together with the introduction of private sector ownership and incentives (maintaining state ownership and ultimate control), such as performance contracts, statement of intent and framework documents.
Table I: Forms of Privatisation
|I.By divestment||A. Sale||(1) to private buyer (2) to the public (3) to employers (4) to users or customers|
|B. Free Transfer||1. to employees 2. to users or customers|
|3. to the public 4. to prior owners (restitution)|
|II. By Delegation||A. Contract B. Franchise||1. Public domain (concession) 2. Public assets lease|
|III. By Displacement||A. Default B. Withdrawal C. Deregulation|
|IV Decentralization||A. Transfer of decision -making to agents B. performance contracts, framework documents etc.|
Source: Adapted with slight modification from Savas (1992: 822).
A number of privatization methods have been adopted by governments of African countries. The main privatization methods used in Africa, together with the number of reputed completed transactions are presented in Table 2.
Table II: Privatization Methods used in Africa
|Method of Privatization||No. of reported completed transactions|
|Sales of shares i. Pubic flotations ii By competitive Tender iii. By existing shareholders with Re-emptive Rights iv. Non-competitive v. Management/employee buyouts vi. Sales by Open Auction Share Dilutions Debt/Equity Swaps Joint Ventures Sales of Assets: competitive basis Sales of Assets: on-competitive basis Formal Liquidations Transfers at Nil value Transfers to Trustees for follow-on divestiture Restitutions Leases||9.1 912 157 85 34 71,286 6 10 39 501 38 5521,091 12 19 48 126|
|Concessions Management Contracts Merger Method not reported||4 53 2 450|
Sources: World Bank Africa Region Privatization Database cited in White (2000:39)
As can be seen from Table 2, divestment is the main method of privatization used in Africa followed by delegation.
Status of Privatization in Africa
Despite the growing interest in privatization as shown in existing literature, it is difficult to get hard data and an overall picture of the status of privatization worldwide, and in developing countries in particular. The difficulty notwithstanding, existing studies show that there has been far less privatization in developing countries than in developed countries (see UN, 1999: 2). Even in developing countries, the rate of privatization varies according to the income level of each country and the level of their commitment to the implementation of the IMF/World Bank conditionalities. In Africa, about 3,400 privatization transactions were reported as finalized with total sales value over $7.1billon as at the end of June 2000 (White, 2000:1). Details of the reported privatization transactions are contained in Table 3. If provision is made for the incomplete data for many countries, then total privatization activity in Africa should probably be in the order of 4,000 finalized deals with a total sale value of some $8billion.
Table 3: Reported Privatization Transactions in Africa
|S/No||Country||Last year for which Data reported||No. of Transactions Reported||Total reported sale values (US &|
|Central African Republic||1993||35||n.r|
|Cote d’ Ivoire||2000||105||601.7|
|Nigeria (Federal Government only)||1994||81||206.9*|
|Sao Tome & Principe||1995||9||n.r|
n.r = no sale values reported *Sale values not reported for all transactions
Source: White (2000:37-38).
It is possible to identify from Table 3 African countries with most activity by June 2000. Mozambique has the highest number of transactions totaling 579, followed by Angola, Tanzania, Zambia, Ghana, Kenya, Ethiopia, Guinea, Cote d’ Ivoire, Uganda, Madagascar and Nigeria each with a total of 331, 283, 268, 233, 188, 125, 117, 105, 91, 86 and 81 transactions. Rwanda has the lest number of transactions-a total of 2. The status of privatization in Africa probably increases as the level of commitment to it increases.
Privatization and Mass Retrenchment of the Labor Force
Privatization, as we stated earlier, has always been accompanied and sometimes preceded by massive job losses. The desire to achieve the goal of greater efficiency, higher productivity and better service delivery require downsizing of the labour force and in some instances, reduction in income of the workers. This is not surprising because it is in the interest of capital to retrench workers and reduce income in order to maximize profit. We had earlier noted that privatization is based on capitalist value/ideology, orientation and assumptions. Such capitalist value ideology de-emphasizes the role of labour in production. It treats labour as merely one of the factors of production employed by capitalists and which, like the other factors, can be expanded or contracted as the case may be, in order to increase productivity (Nnoli, 1999:X)
The main reasons often adduced to justify the downsizing of the labor force is that many state -owned enterprises have excess staff, often necessitating massive retrenchments if they are to compete under commercial conditions. The over staffing was due to the fact that these enterprises were used as vehicles for job creation and political patronage.
For example, in the early 1990s, state enterprises in India and Turkey, were estimated to be over staffed by nearly 35 percent (Benerji and Sabot, 1994). In Zambia, state -owned Airways before it was liquidated in 1990s employed nearly 300 staff per plane as against the industry norm of 140, while the bus’ company employed nearly 15 drivers per bus (Kikeri 1998, Chotten- panda, 2000: 232). In Egypt, some steel companies were overstaffed to the tune of 80 percent in 1991 (Benerji and Sabol, 1994), while loss -making state enterprises in Turkey were overstaffed by 30 percent (Chotterpanda, 2000: 232).
Governments often preferred to downsize the labor force prior to privatization, because forcing investors to start operations with unpopular moves like massive retrenchment is likely to deter bidders. In the alternative, a government can shift the responsibility to the investor, in return for a lower price (Ernst 2000: 53).
Examples of countries that have downsized the labor force as a result of privatisation abound In Argentina, review of privatisation exercises in several large public enterprises in telecommunications, steel, railways, energy and water and sanitation revealed that their work force declined by 50 percent (Ernst, 2000: 53). Similarly, Cook arid Kirkpatrick (1995) reported losses of 40 to 50 percent of total employment in privatized enterprises in Bangladesh and Pakistan. The privatisation of Bangladesh’s jute industry for instance, at the instance of the World Bank has led to the retrenchment of 12, 000 workers. Additional 20,000 workers were expected to be laid off within a few years (Windel, 1995).
In the case of Africa, a world Bank (White and Bhatia, 1998) study on the impact of privatisation on labor in Benin, Ghana, Zambia, Burkina Faso and Togo reveal an overall employment decline of almost 15 percent across the five countries (see Table 5).
Table 4: Losses in Selected African Countries Due to Privatization
|Country||Period||No. of Privatized Firms in the same||Employment at privatization||Employment first quarter 1996||% change in employment|
|1 Benin 2 B u r k i n a 3 Ghana 4 Togo 5 Zambia Total||1988-95 1991-95 1990-95 1984-95 1993-96 –||8 10 7 10 54||1.872 895 5,363 2,882 6,150 17,162||1,197 901 4,431 2,338 5,733 14,600||-36.0 0.1 -17.3 -18.8 6.7 -14.9|
Source: White and Bhatia, (1997).
As shown in Table 4, republic of Benin recorded a percentage change in employment of -36.0 in a sample of 8 privatized firms from 1980 —95; Ghana recorded -17.3 percentage change in employment in 7 privatized firms between 1990-95; Togo had -18.8 percent change in employment in a sample 19 privatized firms from 1984-6.7 change in employment in a sample, of 10 privatized firms from 1993-96. However, Burkina Faso had 0.1 percentage positive change in employment in a sample of 10 privatized firms from 1991-95.
It is important to note that in Ghana, retrenchment has reduced the total membership of trade union centre the Ghana Trade Union Congress -from 700. 000 in 1983 to a little over 500, 000 by the end of 1993 (Musa, 2002). In Zimbabwe, privatization has also led to retrenchments. The cotton company of Zimbabwe, for example, reduced its workforce from 3,000 to 500 after privatization (http:/www. google. com/Search). The situation in Sudan is not different. Article 4 (f) of the 1990 Act empowered the High Committee for the Disposal of Public Enterprises (HCDPE) to “exercise any legal power to terminate the service of the employee of the privatization candidates without any prejudice to their end of service benefits (ESB)”. As a result, in all privatization operations, the first step has been to lay off all workers of a privatization candidate before it is offered for sale. Although data on retrenchment at the national level in Sudan is hard to come by, 5900 workers are believed to have, been retrenched as a result of liquidation of public agricultural corporations and tens of thousands of workers are also said to have been retrenched in the manufacturing sector (Musa, 2002).
From the foregoing, it is not surprising that workers and labour unions are at the forefront of opposition to privatization, causing governments sometimes to delay or postpone privatization.
Varieties of retrenchment techniques have been adopted by government of most developing countries who have embarked on privatisation exercise. Natural attrition is no doubt the most politically and socially acceptable technique of downsizing the labor force. However, this approach is too slow to accomplish the objective and is inadequate to deal with overstaffed enterprises requiring immediate privatization” (Chottenpanda, 2000: 233). As a result, some other techniques of retrenchment have been deviced and utilized. They include (see Haltiwenqer and Singh, 1999): (a) early retirement and voluntary separations; (b) Contracting arrangements; and (c) involuntary separations
Early Retirement and Voluntary Separations are the most commonly usedtechniques of downsizing. The strategy used by government to effect early retirement andvoluntary separation has been to offer generous pay packages. The severance packages vary from country to country and even within the same country from one enterprise to another. However, despites the popularity of the voluntary separation in terms of the percentage of programs, most downsizing were accomplished through involuntary methods. In many cases, the severance packages were not sufficient or generous enough to compel workers to retire.
Contracting Arrangements is another efficient technique of downsizing the labor force. The technique consists of a menu of contracts that induces self –selection”(Chottenpanda, 2000: 235). Expatiating further on this technique, Chottenpands (2000: 235) states:
It is achieved through a contract composed of a chance of staying in the public sector and a monetary transfer. Each worker attaches a different value to the possibility of keeping a job in the public sector according to the workers productive efficiency in the public sector and job opportunities in the private sector. Whether the public sector should start to layoff the efficient workers or the inefficient workers depends on each type full -cost of staying in the public sector… Involuntary Separations is yet another technique of retrenchment in Africa. As we noted earlier in this article, although the voluntary methods of downsizing the labor force appear to be the most popular, most reductions were achieved through involuntary methods. One of such methods is the removal of ghost workers which is quite prevalent in Africa. Another involuntary method is layoff of mainly redundant workers. The third and final involuntary method is the enforcement of rules. This was usually effected through such exercises as declaration of birth certificates, educational certificates, et cetera. Those found guilty of violating the law were retrenched.
It is important to mention that various compensation packages have been used bycountries to reduce labour opposition as well as address its concern (See Campbell and Bhatia, 1998; Haltiwanger and Singh, 1999; Kikeri, 1998). They include the following: payment of severance and pension packages; employment insurance; employee ownership schemes at reduced prices and easy credit items; special lines of credit to assist the re-entry of redundant “workers into employment; and subsidized private employment.
In Ghana, for instance, the General Food, Processing (TFCC) Textile Companies pay US$ 1, 955, US$ 2, 258 and US$ 744 respectively as severance pay. This represents an average of 52 months 14 months and 6 months’ salary of employees respectively (Sunita, 1998). In Sudan, the High Committee for the Disposal of Public Enterprises (HCDPE) gives displaced workers post service benefits. In most cases, this is equivalent to six month’s salary and transportation cost to displaced workers’ home village or town.
However, a close look at the compensation packages reveals that they are cosmetic and inadequate. Some of them either exist on paper or are not fully implemented. Therefore, they are grossly inadequate to compensate for the economic and psychological crises suffered by the retrenched workers.
In summary, the worst consequence of privatization in Africa is the retrenchment of thousands of workers who are rendered jobless and hopeless. This is very serious when one considers the fact that wages of African workers support large families in urban and rural areas and retrenchments, therefore, lead to increased levels of poverty. The worst hit are the African women who have to shoulder the main burden of running the household, raising the children and looking after the sick and elderly Qauch, 2002: 2)
Privatization and the Rising Cost Of Living
The privatization of state-owned enterprises (SOE) has led to increases in the prices of essential services. Among the worst hit are food items and building materials which have experienced astronomical hike in prices. For instance, in Nigeria the prices of a, bag of cement which was sold at between
N650 to N 700 naira early 2003 is now sold at a price above N1000. Driven primarily by profit motives, privatized states-owned enterprises usually do not hesitate to increase prices and to offer services only to those who can afford them. In the context of mass poverty that exists in most African countries this usually means that a large part of the population cannot pay for services and therefore does not receive them.
Table 5: Composite consumer Price Index in Nigeria (1996-2002)
|Drinks, Tobacco and Kola||2,762.60||2,846.20||3,148.30||4,359.20||5,409.00||3,074.60||3,037.30|
|Clothing and footwear||2,657.7||2,919.4||3,001.7||3,001.70||2,978.90||6,029.10||7.051.00|
|Accommodation, fuel and light||2,394.1||2,252.6||3,644.70||4,945.50||6,067.70||3,947.80||4,059.70|
|Medical care and Health Expenditure||2,728.3||3,116.1||3,281.00||3,473.70||3,625.90||5,062.80||5,275.10|
|Recreation, Entertainment, Education and Cultural Services||2,878.4||3,556.6||3,856.30||4,083.70||4,650.70||4,948.40||5,855.10|
Sources: CBN, (2000; 130) CBN (2002:128)
Table 5 shows that the average all-item composite consumer price index (CPI) increased from 2,628.1 in 1996 to 4,817.80 in 2002. The composite consumer price index for food items increased from 2,630.7 in 1996 to 4,560.70 in 2002. This is serious because food is the most basic need on which the survival of man depends. A rise in the prices of food items means that fewer people can afford them. Equally very serious is the increase in consumer price index of medical care and health expenditure from 2,728.4 in 1996 to 5,275.10 in 2002. This means that more workers and other poor Nigerians may not afford the high cost of medical services. Clothing and footwear recorded the highest consumer price index from 2,657.7 in 1996 to 7,051.00 in 2002. The consumer price index for transportation; recreation, entertainment, education and cultural service; and other services also recorded substantial increases from 3,022.80, 2,878.4 and 2,526.7 respectively in 1996 to 5,275.10, 5,811.80, and respectively in 2002. The prices of household goods and drinks, tobacco and kola recorded the lowest increases from 3,464.3 and 2,762.60 respectively in 1996 to 3,566.70 and 3,037.20 respectively in 2002. Given this very high rate of increase in the cost of living, it is clear that the increase in the salary of workers made by the Obasanjo regime has failed to keep pace with the rate of growth in the prices of goods and services.
Most African countries now experience an unprecedented hyper inflationary trend. In Nigeria for instance, the inflationary rate which stood at 8.5 percent in 1997 skyrocketed to 18.9 percent in 2001 and then declined to 15 percent in 2004. In Ghana, the introduction of cost recovery programmes were part of the privatization and resulted in increased fees for health and education prices. As a result, the poor can no longer afford them. In most African countries, the rate of school drop-out has increased and there is increasing patronage of traditional medicine. The African workers are hard hit by the privatization policy. With very low and static salaries, most African workers cannot afford to build houses or own cars; even some cannot afford to pay their children’s school fees and medical bills. This is because their salaries are rendered worthless by the hyperinflation and the resultant high cost of living.
Privatization and the Erosion of Industrial Democracy
Another negative effect of privatization of state-owned enterprises in Africa is the erosion of industrial democracy. By industrial democracy we mean the “involvement of workers in decision -making processes…” (Ezeani, 1995: 169). The overall objective of industrial democracy is therefore to ensure effective participation in decision making within an enterprise by all who have interests in it.
Many African countries have created participatory structures at the enterprise level to grant workers more say in the decision making process. For instance, in Tanzania, the Presidential Directive of 1970 had created Workers’ Councils in the state-owned enterprises. Similarly, in Ghana, the government introduced a participatory structure, known as Joint Consultative Council (JCC) in state-owned enterprises to assume similar functions, (Musa, 2000). Industrial democracy in Nigeria takes the form of workers council or serf-management (Ezeani, 1995: 176). In Sudan, workers’ participation in enterprise decision making was encouraged in 1976 when the government issued the Public Corporations Act which provided for the representation of workers in Public enterprises’ board of directors. As a result, almost all public enterprises had worker representatives on board of directors, although sometimes it is management which appoints them.
Regrettably, the current privatization exercise in African countries is gradually dealing a blow t industrial democracy. This is primarily because, workers participation in decision making is confined to the public sector in almost all African countries. As a result, once the public enterprise is privatized, workers representatives can no longer sit on the board or any other participatory structure; only the shareholders are entitled to sit on the participatory structure (s). In Sudan, for instance, the implementation of privatization programme, shuck a serious blow to workers’ representation on the board of directors of public enterprises as the company’s Act of 1925 provides that only shareholders can sit on the board of directors of private companies. The future of industrial democracy in Africa, therefore, is very bleak.
Labour Resistance against Privatization
Privatization as we pointed out earlier in this article is a neo-liberal economists initiative which is being promoted by the IMF and Work Bank as well as many African governments as a viable strategy towards solving financial problems and inefficiency in parasitical. However, the privatization option has encountered serious resistance by down trodden people in Africa. State enterprise workers and unions are often the most vocal and organized opponents of privatization.
The legitimate fear of labour is that privatization results, in most cases, in reduction in the work-force, lower wages, deteriorated working conditions and other benefits being enjoyed by the workers. As we discussed earlier, privatization has imposed untold hardships on African workers. Trade unions in African countries have therefore embarked on protests against privatization. For example, South Africa’s trade union federation (COSATV), staged national strikes in August 2001 and October 2002 to demand an end to privatization, especially when it concerns basic services and national infrastructure (Jauch, 2002: 3). In the same manner, the National Union Of Namibian Workers (NUNW) in the year 2001 presented several proposals to the Namibian government, suggesting how the performance of parastatals could be improved without privatizing them (Jauch, 2002:3). In Nigeria, the Nigerian labour congress (NLC) has also on several occasions criticized government policy on privatization.
In many African countries, fear of opposition by labour unions is a major deterrent to rapid progress in privatization efforts. African workers will likely become more militant with the likely increase in hardship imposed on them by privatization policy and other policies of the state.
In addition, opposition against privatization has prompted against governments to devise ways of managing labour-related problems, such as severance and pension packages for redundant employees, retraining and redeployment programmes and special lines of credit to assist laid-off workers in starting their own business. But these measures are at best inadequate and cosmetic and therefore do not address adequately the economic and socio-psychological problems imposed on labour by privatization.
The Way forward
The African experience so far with privatization of state-owned enterprises (SOES) shows that it has negative consequences for the workers. Privatizations has led to pauperization of the workers through mass retrenchment of the workforce, contributed to increase in the cost of living and eroded of industrial democracy.
Therefore, in spite of its benefits such as higher profit and improved service delivery, privatization is not in the best interest of the working class. The privatization option is not a viable solution to the problem of inefficiency of state-owned enterprises in Africa. As Ademolekun and Laleye (1986; 25-26) rightly pointed out:
Privatized enterprises may have their management significantly improved but a serious problem arises from the fact that government has some global objectives that transcend micro-organizational efficiency. Moreover, even when financial efficiency is achieved, it is at ‘the expense of some social and political problems and it cannot therefore be said that it has improved the general condition of the economy.
It is important to note that government by some of its actions is a major contributor to the inefficiency of state-owned enterprises. Public ‘enterprises in Africa have over the years been used as instruments of political patronage. As a result, incompetent party members and sympathizers have, often been appointed as members of the board of directors and into management positions. It is no surprise therefore that most SOES are inefficiently run.
Also as a corollary to the above point, Nigerian government, for instance, has nomany occasions failed to pay its debt to some SOES such as Nigeria Electric Power Authority. (NEPA), state-owned hotels, et cetera. It is no surprise thereforethat some of them have failed to record any profit.
It is our position that the current privatization policy in Africa should be halted. The governments of African countries should show greater commitment and political will in addressing the problems of state-owned enterprises as identified in the reports of the various commissions set up to look into the problems of SOES.
For instance, government should ensure that public enterprises are insulated from political interference, by law if necessary. By so doing, only qualified and competent persons should be appointed as board members and managers of state enterprises.
Furthermore, government should provide the enabling environment for public enterprises to operate, through the provision of the necessary infrastructural facilities.
Finally, government should show more sincerity and commitment in the enforcement of its anti-corruption law and the code of conduct for public officers. This will promote accountability and tr-.in-Transparency in the running of public enterprises.
So far in this article, we have discussed the impact of privatization on labour in Africa -using the political economy perspective. We noted that the privatization policy was based on capitalist values and/or ideology and orientation. Consequently, in its pursuit of profit, privatization has led to the pauperization of the working class through mass retrenchment, increase in the cost of living, and erosion of industrial democracy. The article recommends the abandonment of the current privatization policy because it is anti-labour. It calls on governments to show greater commitment and political will in tackling the problems of state-owned enterprises as identified in the reports of the various commissions set up to look into the problems of SOEs.
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