Changes in the nature and structure of work are also useful tools for the implementing agency. They can enable control or reduction of staff costs while maintaining the work force largely intact until such time as the new PPI investor can select the staff needed.
Reduced working hours can cut salary costs through various approaches, including:
Those are typically short-lived measures, best suited to situations where managers can expect a turnaround in demand for staff. Those approaches were used, for example, by the airline and airports industries during the sharp downturn in demand for air travel in late 2001.
In China and the former Soviet Union, economywide adjustment has placed several million workers on administrative leave.
Employees placed on administrative leave ("furlough") remain formally employed with the establishment but do not report to work. For professional staff, administrative leave may include periods of sabbatical or training. Administrative leave can be unpaid or partially or fully paid, depending on labor laws and labor agreements.
Administrative leave has been used in a number of countries. For example, in Argentina's major infrastructure privatizations some workers were sent home with 50 percent of their salaries (Kikeri 1998, p. 6). By far the most extensive use of administrative leave, however, has been in the state enterprise and newly privatized sectors in China (box 4.7) and the countries of the former Soviet Union (FSU). An International Labour Organisation (ILO) survey of several countries of the FSU found that 30 to 80 percent of privatized enterprises made use of administrative leave, as did 60 percent of enterprises in China (see table 4.2). The survey observed that:
In the context of the FSU countries, administrative leaves are fairly costless to employers, reducing wage bills without the burden of severance payments, while providing an easy way to increase labor should conditions warrant. The disadvantage to workers is (at best) reduced income, but with the advantage, over displacement, of retaining rights to certain services or benefits provided by their employers. The most important of these rights may be adding work months to pension eligibility (Evans-Clock and Samorodov 1998, p. 68).
In response to surplus employment in public enterprises in China, in the early 1990s there was a new policy: Xiagong. This form of administrative leave allows state-owned enterprise (SOE) workers to remain at home and still be regarded as employees (zhigong) of the SOE. The government does not then consider Xiagong to be unemployment, and Xiagong workers retain the right to company-owned housing and eligibility for social and medical benefits. The number of workers in this category rose from 3 million (1993) to 9 and 12 million in 1996 and 1997, respectively.
It is the responsibility of the individual SOEs to provide compensation for these workers, and the expectation is that a regular cash allowance of up to 70 percent of the original wage will be paid. In practice, however, because there is no government regulation, allowances vary and many workers receive nothing. Xiagong workers are also encouraged to seek alternative employment.
Sources: Cao, Qian, and Weingast 1999; Rawski 1998.
Administrative leave was also used to cope with the high levels of unemployment that arose in Russia, where the number of people employed had decreased from 73.8 million in 1991 to 65.4 million at the end of June 1997. At that time approximately 4 million workers were on administrative leave (Prokopenko 2000).
Administrative leave can provide workers with some form of social assistance until retirement, thus removing them from the enterprise work force but not placing them on a possibly overloaded pension system. This approach has been used in Poland (coal sector restructuring) and in Spain (steel and shipbuilding sectors). In Spain the programs were funded through an Employment Protection Fund, which provided (a) workers under 55 with three years of benefits equivalent to 80 percent of their gross pay, (b) workers of 55 and older with 80 percent of gross pay up to the age of 60, and (c) workers 60 and older with 75 percent of gross pay up to the age of 65 (Campa 1996).
| Country | Administrative leave | Reduced work schedules | ||
|---|---|---|---|---|
| Percentage of establishments placing workers on leave | Percentage of employees placed on leave a | Percentage of establishments placing workers on reduced schedules | Percentage of employees placed on reduced schedules a | |
| Armenia | 40.2 | 18.5 | 24.6 | 8.7 |
| China | 63.1 | 4.8 | - | - |
| Georgia | 43.0 | 37.5 | 10.1 | 5.3 |
| Kyrgyzstan | 79.7 | 37.4 | 28.0 | 28.8 |
| Russia | 30.1 | 13.0 | 19.3 | 16.8 |
| Ukraine | 43.8 | 15.6 | 32.5 | 12.3 |
- Not available.
a. Percentage of all workers in surveys placed on leave or given reduced work hours during some period in the preceding year. Data on work time were not collected for China. Data relate to the period 1994-96.
Source: Evans-Clock and Samorodov 1998.
New ways of working, sometimes called "atypical" work, are becoming more typical.
A key change in human resources management over the last two decades has been the shift from asking "how many people do we need to do the job?" to asking "what is the best way to get the work done?" In other words there is a shift from focus on inputs (how many workers) to outputs (products or services). This shift has had a profound effect on the structure of the work force in many organizations, including infrastructure enterprises. Work force reorganization includes:
These measures may not have a large impact on work force numbers. Their importance lies, however, in the challenge of creating a more flexible but adequately represented and protected work force.
Enterprise restructuring may lead to posts becoming redundant as a result of the closure, disposal, or transfer of:
Historically these activities have been necessary to keep the PPI enterprise running effectively. Functional reviews may identify benefits to the enterprise if these activities are abolished, transferred to other government agencies, spun off, privatized, or contracted out (sometimes to redundant employees).