Privatization, Social Impact, and Social Safety Nets

Author: Mr. Sanjeev Gupta, Mr. Henry Ma, and Mr. Christian Schiller

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.

Volume/Issue: Volume 1999 Issue 068

Publication date: May 1999

ISBN: 9781451848977

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Topics covered in this book

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

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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.