Wetenschap - 14 november 2002

Privatisation no panacea for Ghana

Privatisation no panacea for Ghana

Privatisation of state-owned enterprises in Ghana does not seem to be the panacea for improving the welfare of workers. While salaries are indeed higher in privatised companies, many jobs have also been lost in the process.

In the former socialist country of Ghana in West Africa many enterprises, including some agrobusinesses, are owned by the state. These companies are often overstaffed and wages are low. During the past years the government has been privatising many state-owned enterprises, both in industry and the service sector. It has been forced to do so as a result of the structural adjustment programmes of the World Bank. The rhetoric of these policies is that privatisation not only improves the overall economy of a country, but also improves job satisfaction. According to Kofi Asiedu, Ghana was a testing ground for the World Bank.

A Ghanaian himself, Asiedu carried out his PhD research in his home country. He interviewed workers in both state-owned and private enterprises and discovered that the reality is more complex. Wages are indeed higher in privatised enterprises than in state-owned enterprises, but the former invest less in workplace safety, making conditions more dangerous for employees. Asiedu also found that training opportunities were less in the private firms. However, this is offset against better job security in private firms than in the state sector. One of the reasons is that state-owned enterprises are overstaffed, especially on the administrative and clerical staff side. Privatisation often leads to large-scale redundancies. Not surprisingly workers in state-owned enterprises tend to have a low sense of job security and view privatisation as a threat. Trade unions share this view, but had little to say on the matter. Asiedu comments that unions are infiltrated by the government and are thus not independent.

Asiedu concludes that overall job satisfaction after privatisation is composed of positive and negative changes. The government and the World Bank view the economy at the macro level. From this perspective, privatisation benefits the economy at large, as production usually becomes more efficient. But from the workers' point of view there are as many disadvantages as benefits. "Politicians who say to workers that privatisation will solve all their problems are lying," says Asiedu.

Asiedu recommends policy makers to be more selective in their judgement of which firms to privatise. Experience in the Netherlands for example teaches that privatisation of services such as railways tend not to be successful. If privatisation is chosen, Asiedu recommends that the reasons be explained to the workers, and social safety measures be provided for those who lose their jobs. Alternatives to privatisation, such as improving the efficiency of state-owned enterprises without privatising them, also deserve consideration, Asiedu argues.

Kofi Asiedu will defend his thesis on the 27 November. His promotors are Prof. Henk Folmer, professor of general economics and Prof. Wim Heijman, professor of regional economics at Wageningen University.

Joris Tielens

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