Mitigating the social impact of privatization and enterprise restructuring

This paper focuses on the role the of social programs in economic restructuring. Restructuring often results in significant downsizing of labor. When this occurs a negative social reaction can slow and/or stall restructuring. This is increasingly recognized by development agencies, governments, and enterprise managers and as a result social programs are increasingly becoming part of the design of enterprise restructuring programs. There are economic, social and political objectives for providing social support packages (SSPs) to workers displaced by restructuring and privatization of State Owned Enterprises (SOEs). Social support programs should include elements that combine to"pull"and entice excess labor to leave overstaffed enterprises, while at the same time helping"push"and assist displaced workers to quickly rejoin the labor market. These measures usually include both temporary income support and active labor programs. To be effective the measures must be carefully designed and targeted, and social monitoring of displaced workers should be an integral part of the design to ensure the services are reaching the most needy workers.<BR>