Labor Toolkit: Framework and Overview
DEFINING OBJECTIVES
Work force reduction is rarely an objective in and of itself. Rather, the objectives of labor restructuring are better defined in terms that focus on the developmental, economic, and social goals sought from PPI or from enterprise reforms more broadly. In cases where stakeholder opposition is high, it is particularly important to communicate these objectives. If the objectives are not credible, or are vague or poorly articulated, the implementing agency will have more difficulty securing the support and resources needed for labor adjustment.
One tool to help clarify objectives is to describe carefully the ultimate desired outcomes, and to use those as a basis for setting objectives. Possible outcomes are:
- More efficient operations and better service for customers: Today's surplus labor often reflects the inability or failure of past managers to respond to changing circumstances. These surpluses need to be addressed if future PPI operations are to become efficient in adjusting to new markets, new technologies, and increasing competition (see module 2).
- Lower operating costs: The overall goal of many labor adjustment schemes is to help make the infrastructure enterprise or PPI scheme financially viable. Ideally this implies that it can reduce costs, including labor costs, and achieve sufficient levels of operational profitability to yield a return on investment and provide for reinvestment in maintenance or expansion of the infrastructure.
- Better skills mix: A better work force-perhaps one with fewer people who are better paid, better trained, and more capable-is a common objective. The enterprise may be overburdened with skills that have become redundant and may face a shortage of other, perhaps newer skills. For example, in telecommunications firms there may be a critical need to change the skills mix in response to new technology and changing customer requirements.
The bottom line: although labor issues are often challenging, experience shows that they can be addressed in a fair and professional way and need not be an obstacle to PPI success.
Thinking about the desired outcomes is one way to define objectives.
A reduced work force is not usually the main objective of a labor program. Rather it is a means to an end (such as improved efficiency or better service)
- A more adaptable work force: In addition to skill improvements there may be a desire for greater labor flexibility in work hours, work practices, or the structure of the work force.
- Better labor relations: There may be a need for new negotiation frameworks or a new labor contract to replace older ones and increase flexibility.
Outcomes may be short-term and urgent (for example, reducing operating costs), medium-term (improved services to consumers and business), or long-term (improved international competitiveness in the sector).
In addition to outcome objectives, governments will also have process objectives - that is, objectives dealing with how work force restructuring is to be done. Such objectives generally aim to ensure that:
- The adverse social costs of labor restructuring are mitigated by social safety net and redeployment programs.
- Implementation of the program is fair and transparent and balances the interests of the various parties involved.
- There is sufficient consultation and dialogue with key stakeholders, particularly unions and workers, during the restructuring process.
These objectives provide a framework for discussion and debate within government about the tradeoffs that must be made in designing a labor program, and help identify and make midcourse corrections during implementation as needed.
