Labor Redundancy, Retraining, and Outplacement during Privatization : The Experience of Brazil's Federal Railway
One of the most complex challenges of infrastructure privatization is its impact on employment. Often (but not always) private operators' main approach to cost-cutting is labor reduction. Private operators cannot afford the low levels of labor productivity typical in public companies if they ar...
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| Format: | Publications & Research |
| Language: | en_US |
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World Bank, Washington, DC
2015
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| Online Access: | http://hdl.handle.net/10986/21296 |
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okr-10986-21296 |
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okr-10986-212962021-04-23T14:04:01Z Labor Redundancy, Retraining, and Outplacement during Privatization : The Experience of Brazil's Federal Railway Estache, Antonio Schmitt de Azevedo, Jose Antonio Sydenstricker, Evelyn Labor redundancy Retraining Outplacement Privatization Railway sector Reduction in force Training programs Infrastructure privatization Labor productivity Labor redundancy Early retirement accidents accounting assets auctions balance sheet debt decision making discussions employment employment contracts employment opportunities employment policy fixed costs government intervention housing intervention job search assistance jobs labor law labor market labor markets Labor redundancy Layoff layoffs legislation Managers new entrants outplacement outplacement assistance penalties private concessionaires private sector privatization Professional training public enterprises recruitment Reduction In Force redundant workers reorganization retirement savings savings accounts social needs Social Security staff staff productivity staff retrenchment termination training courses Transport turnover unemployment unions wages One of the most complex challenges of infrastructure privatization is its impact on employment. Often (but not always) private operators' main approach to cost-cutting is labor reduction. Private operators cannot afford the low levels of labor productivity typical in public companies if they are to be competitive and to deliver on their contractual obligations to provide cheaper, more reliable infrastructure services. But labor issues are so sensitive that government's early, direct involvement is seen as a way to address what potential investors see as a risk of privatization as well as to address the social concerns of the population, including the workers. When Brazil's Federal Railway was privatized, the team in charge of privatization made a significant effort to complement the incentive for voluntary reduction with an elaborate menu of training options. The authors describe this experience in dealing with labor redundancy problems. They discuss the design of the program, highlight the connections between its components, and assess the program's achievements. All things considered, they conclude, this staff reduction program was reasonably successful. The aimed-for improvements in productivity were achieved without major problems through a government-stimulated and -sponsored combination of early retirement and voluntary retrenchment. The concessionaire was willing to make quick decisions about the number of involuntary retrenchments it wanted to make, which helped sustain the momentum created by the government's prompt implementation of its own decisions and the fair treatment of workers. The main problems came from the underestimate of time needed to agree on the strategy for implementing the training and outplacement programs. Informal evidence suggests that most workers found new jobs before many of the training programs were available. And the strategy adopted gave workers a good incentive (one month's pay) to sign up for the courses but provided little incentive for workers to show up, since they were paid up front. 2015-01-20T16:57:47Z 2015-01-20T16:57:47Z 2000-10 http://hdl.handle.net/10986/21296 en_US Policy Research Working Paper;No. 2460 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Latin America & Caribbean Brazil |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
en_US |
| topic |
Labor redundancy Retraining Outplacement Privatization Railway sector Reduction in force Training programs Infrastructure privatization Labor productivity Labor redundancy Early retirement accidents accounting assets auctions balance sheet debt decision making discussions employment employment contracts employment opportunities employment policy fixed costs government intervention housing intervention job search assistance jobs labor law labor market labor markets Labor redundancy Layoff layoffs legislation Managers new entrants outplacement outplacement assistance penalties private concessionaires private sector privatization Professional training public enterprises recruitment Reduction In Force redundant workers reorganization retirement savings savings accounts social needs Social Security staff staff productivity staff retrenchment termination training courses Transport turnover unemployment unions wages |
| spellingShingle |
Labor redundancy Retraining Outplacement Privatization Railway sector Reduction in force Training programs Infrastructure privatization Labor productivity Labor redundancy Early retirement accidents accounting assets auctions balance sheet debt decision making discussions employment employment contracts employment opportunities employment policy fixed costs government intervention housing intervention job search assistance jobs labor law labor market labor markets Labor redundancy Layoff layoffs legislation Managers new entrants outplacement outplacement assistance penalties private concessionaires private sector privatization Professional training public enterprises recruitment Reduction In Force redundant workers reorganization retirement savings savings accounts social needs Social Security staff staff productivity staff retrenchment termination training courses Transport turnover unemployment unions wages Estache, Antonio Schmitt de Azevedo, Jose Antonio Sydenstricker, Evelyn Labor Redundancy, Retraining, and Outplacement during Privatization : The Experience of Brazil's Federal Railway |
| geographic_facet |
Latin America & Caribbean Brazil |
| relation |
Policy Research Working Paper;No. 2460 |
| description |
One of the most complex challenges of infrastructure privatization is its impact on employment. Often (but not always) private operators' main approach to cost-cutting is labor reduction. Private operators cannot afford the low levels of labor productivity typical in public companies if they are to be competitive and to deliver on their contractual obligations to provide cheaper, more reliable infrastructure services. But labor issues are so sensitive that government's early, direct involvement is seen as a way to address what potential investors see as a risk of privatization as well as to address the social concerns of the population, including the workers. When Brazil's Federal Railway was privatized, the team in charge of privatization made a significant effort to complement the incentive for voluntary reduction with an elaborate menu of training options. The authors describe this experience in dealing with labor redundancy problems. They discuss the design of the program, highlight the connections between its components, and assess the program's achievements. All things considered, they conclude, this staff reduction program was reasonably successful. The aimed-for improvements in productivity were achieved without major problems through a government-stimulated and -sponsored combination of early retirement and voluntary retrenchment. The concessionaire was willing to make quick decisions about the number of involuntary retrenchments it wanted to make, which helped sustain the momentum created by the government's prompt implementation of its own decisions and the fair treatment of workers. The main problems came from the underestimate of time needed to agree on the strategy for implementing the training and outplacement programs. Informal evidence suggests that most workers found new jobs before many of the training programs were available. And the strategy adopted gave workers a good incentive (one month's pay) to sign up for the courses but provided little incentive for workers to show up, since they were paid up front. |
| format |
Publications & Research |
| author |
Estache, Antonio Schmitt de Azevedo, Jose Antonio Sydenstricker, Evelyn |
| author_facet |
Estache, Antonio Schmitt de Azevedo, Jose Antonio Sydenstricker, Evelyn |
| author_sort |
Estache, Antonio |
| title |
Labor Redundancy, Retraining, and Outplacement during Privatization : The Experience of Brazil's Federal Railway |
| title_short |
Labor Redundancy, Retraining, and Outplacement during Privatization : The Experience of Brazil's Federal Railway |
| title_full |
Labor Redundancy, Retraining, and Outplacement during Privatization : The Experience of Brazil's Federal Railway |
| title_fullStr |
Labor Redundancy, Retraining, and Outplacement during Privatization : The Experience of Brazil's Federal Railway |
| title_full_unstemmed |
Labor Redundancy, Retraining, and Outplacement during Privatization : The Experience of Brazil's Federal Railway |
| title_sort |
labor redundancy, retraining, and outplacement during privatization : the experience of brazil's federal railway |
| publisher |
World Bank, Washington, DC |
| publishDate |
2015 |
| url |
http://hdl.handle.net/10986/21296 |
| _version_ |
1764447858545655808 |