EOpriv: Dealing with privatization agencies

[Dan Bell <dbell@kent.edu>]

Dear participants of the "Employee Ownership in Privatization"
discussion group:

Last Spring, I posted a draft of a paper for this discussion
at http://cog.kent.edu/lib/privitization.htm

That paper describes some of the obstacles to using employee
ownership in privatization. In April at the COG meeting in
Chicago, participants brainstormed some strategies for over
coming these obstacles. I will be sending out a summary
of their ideas, one obstacle at a time. I would appreciate
your feedback, comments, ideas!

Here is the first one:

5.1     Overcoming the unwillingness of the privatization agency to consider an
employee bid

        Privatization agency decision makers opposed to employee ownership can 
be
categorized as either those using their position for personal gain or those
sincerely acting in the public interest. Where the public servants are not
serving the public, the options are to (1) remove them, (2) force them to
act appropriately, or (3) collaborate with them. Where the decision makers
are trying to do the right thing, two possible strategies are education and
helping to remove external pressures which control their actions.

        The Russians have a saying: cheloveka nyet, problemy nyet – remove the
troublemaker and the problem disappears. Where a rule of law exists,
exposing and prosecuting corruption may be an effective way of dealing with
bad public servants. Where democratic elections and a free press exist, the
voters themselves may be able to put pressure on elected officials to fire
corrupt bureaucrats. More often than not, though, where corruption is wide
spread, entrenched bureaucrats may be hard to remove.

        Where the players cannot be changed, the next option is to try and 
create
rules of the game which put constraints on their ability to misbehave.
Forcing transparency upon the privatization bidding process can help. Also
lengthening the time frame of the process of privatizing an enterprise and
informing the employees and the public early in the process will allow the
proponents of an employee bid to get organized rather than accepting a fait
accompli. Organized labor can also form coalitions that prepare themselves
in general to deal with privatization opportunities in order to be ready
when situations emerge.

        In some countries, changing the rules of the game may be unrealistic. 
Then
the final option is to build a relationship of trust with the entrenched
bureaucrat and identify ways in which employee ownership can be in his or
her self interest.

        Many people in privatization agencies truly want to do what they believe
is best for their community. In some cases, they may not personally be
against employee ownership, but they may be under pressure from
transnational actors who hold some leverage. For example, the International
Monetary Fund, the World Bank and the US Agency for International
Development all provide funds that can facilitate economic development.
Employees of these agencies sometimes impose their own views about the
"right way" to privatize and make their funding contingent upon
conformance. In these cases, convincing these international actors that
employee groups can be qualified bidders may can help, as well as
organizing political pressure on them.

        Education can be very important for privatization agency personnel. They
need to be made aware of the full process and impact of privatizing an
enterprise. Some view their task as narrowly as simply transferring assets
out of the state's hands, without any concern for how those assets are used
subsequently. Some have unrealistic expectations of the intentions of
buyers to transform the enterprise into an entity that contributes to the
economic well-being of their community. They may be ignoring the economic,
social and political costs of throwing the fate of thousands of employees
into the hands of a profit-seeking investor.

        Many privatization agents simply have not been exposed to the real world
of employee ownership. Well-targeted study tours to visit successful
employee owned companies, both abroad and in their own country, can help to
dispel unwarranted prejudices.

End
--
Dan Bell
International Program Coordinator
Ohio Employee Ownership Center
Kent State University
Kent, OH 44242
(330) 672-0333 << New direct number!
(330) 672-4063 fax
dbell@kent.edu
http://www.kent.edu/oeoc/
http://cog.kent.edu