Design and Implementation of Redeployment Programs
Some governments have helped employees set up their own enterprises to contract services that were previously provided by the state enterprise, or set up workspaces and small business incubators.
Contracted-out services are one way to encourage employee enterprise and thus reduce unemployment among displaced workers. The enterprise awards limited-term, outsourced subcontracts to firms set up by former employees. Those new small businesses may then create jobs themselves.
Contracts are usually awarded with exclusivity periods for a relatively short period-typically no more than two years-long enough to provide a secure environment for the new business to learn the disciplines required of private enterprise. The limited life of the contract provides an incentive to them to improve their performance and innovate in order to successfully bid competitively at the end of the contract. It also encourages them to devote time to finding new work and opportunities from other clients.
Counselors should caution workers against overly ambitious or risky business start-ups.
Contracting out also may be part of a wider strategy for restructuring of the enterprise. Ancillary functions (for example, catering, building and equipment maintenance) and core functions (such as revenue collection) can be separated from the main business and the services purchased from private providers. In cases where the private sector is still developing, there may be limited skills and capacity in the market to provide certain specialist services. These contracted-out services may contribute to overall employment but need not necessarily employ the redundant workers.
Examples of contracting out include:
Special assistance and training in setting up a business can be offered because workers may not be familiar with all the requirements and principles of small business. The implementing agency can therefore engage specialist small-business development agencies to undertake a selection and training program for applicants for contracted-out schemes.
If successfully designed, such programs can win the support of workers. Trade unions may be opposed to contracting out, however, because of concerns about workers moving into so-called atypical employment and less formal contracts that offer less protection to the workers.
Road maintenance in Malawi has been transformed from an activity managed by the (former) Department of Roads using government road gangs to one that is managed by a new Roads Authority, where the actual work is undertaken by private sector contractors. This change did not occur overnight, however, and there was a two-year interregnum between the old and the new management. During those 24 months, basic road maintenance was carried out through contracts issued to small contractors by the Department of Roads. In practice these were groups of retrenched workers formed around former charge hands and foremen who provided skills and continuity. It may have been somewhat messy, and undoubtedly that was a period of muddling through, but this approach did allow workers and the government time to adjust to the new regime and the new arrangements, and provided something of a safety net for workers who were displaced from regular government employment.
Training for livelihoods or self-employment may be as important as, or more so, than training for jobs where the opportunities for new employment in the formal sector are poor.
Not all employees are suited to employee enterprise, and not all the new companies formed are likely to succeed. This is normal-many small business start-ups fail, although ones that receive professional support have a higher success rate.
The prospects of creating sustainable new employee enterprises can be improved by:
