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Rediff.com  » Business » Privatisation leads to job growth, says UK institute

Privatisation leads to job growth, says UK institute

July 02, 2003 12:45 IST

Contrary to the belief in many quarters that privatisation lead to job loss, international studies by the Adam Smith Institute, an UK based consultancy engaged in advising various governments on privatisation issues across the globe, has found out that employment opportunities have actually increased in many units after privatisation.

Disclosing this at an interactive session with senior bureaucrats, industrialists, politicians and media persons in Bhubaneswar on Tuesday, international director of ASI, Peter Young, said that one of the benefits of privatisation was improvement in job opportunities and salary structure following privatisation.

To emphasise the point, he said a study of 61 firms in 18 countries in 1994 had showed slight increase in employment apart from the substantial improvement in sales, profitability, investment and operating efficiency.

Similarly, another study of 79 firms in 21 countries in 1998 had found out that in two third of the firms jobs had increased after the sale of the units.

Young said, immediately after privatisation, the job level in a company may come down if it is overstaffed, but the incessant pursuit of the private owners to go for higher output and profitability later creates lot of job opportunities.

Giving an example of the Bhrikuti Pulp and Paper mill in Nepal, he said, there were only 276 workers before privatisation. But the workforce had grown to 595 full time and 500 contract workers after the change over.

Besides, the average wage of the workers increased by 43 per cent after privatisation with the company indirectly supporting 50,000 people.

Closer home, he said, following privatisation of the public sector Orissa Mining Corporation's chrome plant in early 1990s, the capacity utilisation of the plant had increased from 75 per cent to 120 per cent while the average monthly salary of employees had gone up from Rs 2,600 to Rs 9,000.

As per commercial results, the plant, which suffered a loss of Rs 56 lakh (Rs 5.6 million) before privatisation, was increasing its profits now, Young said.

Dillip Satapathy in Bhubaneswar