Soft options aim to restructure the labor force through the reinforcement of current work regulations. Options include payroll management, enforcement of retirement age, enforcement of disciplinary actions, staff transfers, and freezes on recruitment and promotions. These options can be a starting point to address overstaffing and can lead to substantial labor force reductions, without creating social or political controversy or unrest.
Removing ghost workers, absentee employees, and ghost pensioners is usually an immediate and noncontroversial step toward downsizing. At the enterprise level, however, obstruction can occur where payrolls have been inflated by corrupt and "wellconnected" senior and middle managers. In those circumstances the manager in the implementing agency may need high-level support within government for his or her actions. Often, however, the mere lack of control has enabled the growth of ghost workers, and introducing a staff audit (see module 5) may be enough to yield significant effects. A plant census undertaken at the steel maker SOMISA in Argentina required photo badges for all workers. Reported employment levels of 14,500 employees quickly fell to 12,000 as shadow employees were eliminated (Hess 1997). In Tanzania's civil service, a national census found that 16,000 (5 percent) of the entire payroll of 350,000 were ghost workers (International Records Management Trust 2001b).
Enforcing the retirement age can lead to substantial reductions in some work forces by:
Prior to transition in Hungary, about 20 percent of pensioners were active in the labor market. Privatized firms subsequently reduced these numbers, which fell to 9 percent by 1992, as the companies restricted the employment of workers who had reached pensionable age (Szeman 1994).
Even if there are few employees on civil service deputation in one PPI enterprise, they may create a precedent for other state-owned enterprises that government would rather avoid.
Many work forces have a small proportion of staff who are being investigated on disciplinary grounds. Some of these cases can linger for months and years while workers are suspended and on full salary or still working. If voluntary departure or compulsory redundancies are to be implemented, it is important that these cases are tackled first. This implies:
To accelerate the departure of employees subject to disciplinary proceedings, some PPI enterprises have developed special voluntary departure package. For example, Eskom, South Africa's power utility, developed a special package for employees who had received formal disciplinary warnings and who chose to resign following amicable discussions (box 4.5).
Eskom is South Africa's state-owned electricity company. Government's overall policy is to restructure the sector and encourage competition by (a) creating contestable markets for power generation and allowing the phased entry of private power generation, (b) separating generation from distribution and restructuring distribution and supply into a number of regional electricity distributors, and (c) introducing a regulatory framework.
Government's policy is to avoid retrenchment of workers in state enterprises wherever possible, and the reforms and proposals for PPI have been a key target for opposition by the labor unions. Nonetheless the pre-PPI restructuring of Eskom has resulted in a 40 percent reduction of the work force, from 65,000 to 39,000, over the last six years. This was achieved through a mixture of natural attrition and four different packages of voluntary departure:
Source: International Labour Organisation 1999a.
Tactical transfers can unblock difficult labor problems, but they risk merely transferring the surplus labor from one public organization to another.
One restructuring option is to transfer surplus staff from an infrastructure enterprise to another public sector organization (for example, a ministry, department, agency, or state-owned enterprise [SOE]). Transfers can let the PPI transaction proceed quickly with a much-reduced work force.
The principal argument against such tactical staff transfers is that they can merely shift an overstaffing problem from one part of the public service sector to another. In most cases governments will avoid such transfers unless there are genuine vacancies elsewhere in the public service. Occasionally, however, transfers have been used as a mechanism for quickly enabling urgently needed PPIs and investments. One example is Jordan's Aqaba Rail concession (see box 4.6), which shows both the opportunity and the problems of tactical transfers.
Some infrastructure companies have workers who are government civil servants on deputation. A proportion of those workers might be transferred back in their original department, or elsewhere. This is an option, however, that will be unacceptable for many governments. If the civil service is overstaffed, simply transferring surplus workers from the SOE sector back into the civil service is not helpful for wider efforts to reform the civil service. Even if one particular PPI scheme only has a few workers who have retained their civil service status, a transfer program for those few may set an unwanted precedent.
The government of Jordan has embarked on an economic reform program that includes PPI. Loss of jobs is a concern, however, in an economy with relatively high levels of unemployment. This is particularly the case in the relatively poorer southern part of the kingdom where the Aqaba Railway Corporation (ARC) operates.
ARC was formed in 1972 to carry phosphate rock from the Jordan Phosphate Mines Company (JPMC) mines at El Abiad and El Hassa to the export facility at the main port of Aqaba. ARC had been operating with significant losses for several years, and its overemployment was substantial. As production was shifting from existing mines to the newer phosphate mine at El- Sheidiyeh over the medium to long term, ARC was consequently faced with the need for investment to handle the enhanced production at the El-Sheidiyeh facility.
After extended discussions concerning the fate of ARC's 1,300 employees, the decision was made to extend a 25-year concession agreement leasing ARC assets to an international consortium. The consortium has agreed to retain 500 workers from the existing ARC staff to be deployed in the upgrade and repair of the existing rolling stock and track. The government of Jordan has committed itself to employing the remaining 800 employees, with 150 employees going to other government agencies and 650 transferring to the new JPMC operation at El-Sheidiyeh.
If the government of Jordan had not solved the labor redundancy issue, privatization would not have been achievable. Essentially the approach has been to privatize first, to bring in investment, and to solve the employment issue later. The ARC project will result in an overall investment of US$120 million in railway infrastructure and will paving the way for a separate $600 million joint venture currently under progress between JPMC and an international fertilizer producer to transfer phosphoric acid from the El-Sheidiyeh facility through the port of Aqaba. Overstaffing, however, remains to be tackled as JPMC is prepared for privatization.
Sources: Government of Jordan 1996-99; Jordan Times 1999.
All recruitment freezes are temporary in nature–they have to end eventually.
Recruitment and promotion freezes are always temporary in nature. Even if the freeze lasts a number of years, at some stage new staff must be hired and merit-based promotion reinstated. The implementing agency and the enterprise manager can at least halt increases in staff numbers through:
Soft measures have benefits for the implementing agency. They allow the implementing agency to take action even in difficult circumstances.
Soft measures are particularly relevant if the manager in the implementing agency has some time before PPI and there is little urgency. Such measures offer: