Engaging with Stakeholders
COOPERATION
Where circumstances are favorable, effective communication strategies, consultation exercises, and negotiation processes can lead to deeper forms of engagement in which stakeholders actively participate in the design and implementation of PPI and labor adjustment programs.
Cooperation in Practice
Consultation and negotiation with labor can lead into more active forms of participation in the design and implementation of programs to deal with labor issues. These more cooperative forms of engagement are based on a win–win philosophy whereby most stakeholders obtain mutual benefits, as illustrated in box 6.9.
Box 6.9: From Confrontation to Cooperation in Indianapolis
When the U.S. city of Indianapolis, Indiana, decided to invite the private sector to bid to run most of its services, the city's workers, organized in the American Federation of State, Country and Municipal Employees, planned to resist the plans, with militant action if necessary. The union also proposed an alternative based on the idea that if the workers were given a fair shot at putting into practice their own ideas about how to improve services while spending public money less wastefully, they could compete with the private contractors and win.
The city's mayor, Stephen Goldsmith, was skeptical at first but decided that the workers had valuable knowledge they could contribute to the PPI process. As a result, the workers were involved through their union in designing the competitive bidding program, improving their own efficiency, and competing with private companies. A great deal of restructuring was required, and the city established a labor pool to which surplus workers were transferred and from which other departments of the city and private employers could recruit. Training was provided for these workers.
Indianapolis succeeded by this route in reducing its annual budget by $12 million and services have improved so much that the city and the workers' union were jointly awarded an Innovations in American Government Award by the Ford Foundation and the John F. Kennedy School of Government at Harvard University. Workers' earnings have greatly increased because of a gain-sharing agreement under which workers are awarded 25 percent of the savings their efforts achieve below already reduced budgets.
Source: Martin 2004 (forthcoming).
Cooperation is a win–win approach.
Cooperative approaches to engagement during work force restructuring have parallels with the concept of "social dialogue." That concept implies going beyond the traditional forms of collective bargaining to a continuous process of engagement among the social partners–government, business, labor, and (in some circumstances) other civil society interests. Social dialogue aims to build an environment in which engagement with labor can bring sustainable gains to both sides within a longterm perspective, and has been defined by the ILO as "all types of negotiation, consultation or simply the exchange of information, between and among representatives of governments, employers and workers, on issues of common interest relating to economic and social policy."
Social dialogue is seen not as single event but a continuous process of consultation, negotiation, or both, among employers (public and private) and workers' representatives, which does not end when the PPI is implemented. The process may be time consuming and long, but it is rewarded by sustainable results and ownership of all stakeholders in the decisions made.
Social dialogue encompasses all aspects of economic and social policy.
Cooperation is most appropriate in four circumstances.
Circumstances that Suit Cooperation
The nature of cooperation will vary greatly according to circumstances. Cooperation is, however, likely to be most appropriate in any of four circumstances:
- Where large-scale, fundamental restructuring of a sector critical to economic development is foreseen: Here the agenda is not simply downsizing, but more a question of sector reform. Where it is clear from past history that this restructuring–including PPI and work force restructuring–will be complex and protracted, then cooperation may be more likely to lead to success than relying only on other less participatory forms of engagement. It may take much longer, however (see box 6.8).
- Where private participation and labor adjustment are deeply opposed, perhaps by a strong and powerfully organized work force with public support: In this case, cooperation is the only way forward and government has fewer choices. Attempts at overt coercion by government may lead to vigorous industrial action, disruption of infrastructure services, and discredit to PPI as a whole
- Where there are acute social challenges: For example, if PPI involves drastic job losses in monoindustrial towns (some port or railway towns, mining towns), with few alternative employment options, then community-based redeployment measures are likely to be needed (as discussed earlier). In such circumstances, participative and cooperative approaches among government, local government, municipalities, enterprises, trade unions, and other NGOs are likely to be needed.
- Where there is a strong political consensus in favor of inclusive processes and social dialogue: South Africa is one example of a country where government has established formal frameworks for the participation of trade unions and workers' organizations in policy formulation and implementation on PPI and enterprise restructuring.
If cooperation is about mutual advantage and win–win relationships, why is cooperation not always the norm, and why do tough negotiations or strikes occur? Circumstances vary greatly, but three points can be made:
- In practice, consultation and negotiation usually work. Engagements that lead to mutually successful negotiations are in fact more common than one expects at first sight. High-profile industrial disputes catch the attention of the media, but overlook the many more disputes that are resolved through negotiation, arbitration, and other mechanisms. This should give the implementing agency some confidence–engagement usually has positive, not negative, outcomes.
- Parties may misjudge one another's position (information asymmetry). Government, workers, unions, and other parties may each lack complete information. One party may misjudge another's position, and it is only later that each becomes aware that the other party did indeed mean what it had said. For the implementing agency, this reinforces the need to prepare well for negotiations and, at the outset, to ensure that the messages and rationale for PPI and work force restructuring are well made and well communicated.
- Negotiating credibility must be demonstrated occasionally. If government is to be credible in undertaking reform, or if a trade union is to be credible to its membership, from time to time each may have to demonstrate that credibility. Resolving an acrimonious strike can be portrayed as a success for both parties if each audience believes that the credibility of its "side" has been enhanced. The strike can earn one or both parties the right to a fair hearing for several years because the threat of action has become more credible. The implementing agency has limited options here. If government (or labor) has decided that such a strong demonstration of credibility is needed, then all that can be done is to manage the situation by (a) continuing to communicate accurate, honest information to all stakeholders to reduce any information asymmetry; (b) taking steps to reduce adverse impacts of strikes or other industrial action on the public, consumers, and business users of infrastructure services (for example, by stockpiling fuel reserves for power stations, contracting for substitute transport services, using new modes and routes of transshipment, and emergency liberalization of services to private operators); and, perhaps more important, (c) keeping the channels for discussion and debate open so that engagement is facilitated when it is (sooner or later) resumed.
