Privatization, Social Impact, and Social Safety Nets

BySanjeev Gupta, Henry Ma, Christian Schiller

May 1, 1999

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Privatization promotes economic efficiency and growth, thereby reinforcing macroeconomic adjustment. In the short run, however, it can lead to job losses and wage cuts for workers and higher prices for consumers. This paper discusses these impacts and the fiscal implications of privatization. It then reviews various methods of privatization and finds that public sales and auctions can have more negative effects on workers but maximize the government’s revenue gains. Policymakers’ options for mitigating the social impact of privatization are surveyed, and experiences under adjustment programs reviewed.

Subject: Economic sectors, Employment, Expenditure, Labor, Privatization, Social assistance spending, Unemployment, Wages

Keywords: adverse impact, Central and Eastern Europe, electricity company Chilgener, Employment, enterprise change, firm level, labor market, Privatization, privatized enterprise, Social assistance spending, social safety nets, social welfare, state-owned enterprises, transition, Wages, WP

Pages:
27
Volume:
1999
DOI:
https://doi.org/10.5089/9781451848977.001
Issue:
068
Series:
Working Paper No. 1999/068
Stock No:
WPIEA0681999
ISBN:
9781451848977
ISSN:
1018-5941

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