The social impact of privatization in Ethiopia

Abstract

This paper examines the social impact of privatization in Ethiopia. The paper explains the survey result concerning the major social implications or impact issues such as retrenchment or lay – offs, changes in price of product or services, product output, income of employees in privatized companies. The paper also examines the changes in working conditions and the relationship between the management and employees and the management and the labor union. Data are collected from 6 privatized enterprises and other governmental agencies and Confederation of Ethiopian Trade Unions and industry federations. As for study purpose, mixed (qualitative and quantitative) method was used. 120 employees of the privatized enterprises were randomly selected but 108 employees responded to questionnaires. The study revealed that the number of employees retrenched from the privatized enterprises was significant. But satisfactory work has not been done to help and support the retrenched employees to be re-employed or start their own mini-businesses under safety net schemes. The study also revealed that there were significant changes in product, output, quality and income of employees. There was an increase in product output and quality in enterprises which have taken improvement actions in technological, organizational structure and input supplies. The increase in income was also seen in enterprises which have taken fast improvement action. A decrease in income of employees was observed in enterprises which have not taken improvement actions. The relationship between management and employees and labor union was in bad conditions in most of privatized enterprises.