Structural Adjustment Employment Policy

"The interaction of structural adjustment policies with the evolution of wages and employment worldwide, and ... the examples of Chile and Indonesia during recent periods of policy reform."--Page 4 of cover.

Since the introduction of structural adjustment policies in the 1980s, the ILO has expressed concern that their implementation should be consistent with basic ILO standards, particularly certain core human rights conventions.

The soft budget constraint allowed the public enterprises to hire more workers than was necessary, with the result that losses increased and productivity remained low. For the private sector, lax credit discipline was the analogue of the soft budget constraint, with similar result in respect of productivity. As the reforms progress, particularly as fiscal and credit disciplines are strengthened, it is no longer possible to sustain the surrogate social security system. The author argues that efficiency improvements are necessary for industries in an open and outward looking economy. He also places the issue of industrial workers in the overall context of unemployment and poverty.

Structural adjustment programmes are the largest single cause of increased poverty, inequality and hunger in developing countries. This book is the most comprehensive, real-life assessment to date of the impacts of the liberalisation, deregulation, privatisation and austerity that constitute structural adjustment. It is the result of a unique five year collaboration among citizens' groups, developing country governments, and the World Bank itself. Its authors, the members of the Structural Adjustment Participatory Review International Network (SAPRIN), reveal the practical consequences for manufacturing, small enterprise, wages and conditions, social services, health, education, food security, poverty and inequality. The stark conclusion emerges: if there is to be any hope for meaningful development, structural adjustment and neoliberal economics must be jettisoned.

Work relief is critical to any structural adjustment program, so long as the skills needed to provide public works match the skills held by the (mainly) manual workers needed. Women and displaced white-collar workers may be better served by public service employment or subsidized private employment.

The paper provides an overview of the main elements of pay systems that are typically used to remunerate government employees and, with reference to the experience of developed and developing countries, discusses structural issues frequently arising in the formulation of government pay policies: (1) the role of fringe benefits in the compensation system; (2) the pros and cons of a greater merit orientation in the pay system and of special pay schemes designed to remunerate staff at the professional and managerial level; and (3) factors determining internal pay differentials with special emphasis on the compressing effect of flat amount cost of living adjustments.

Overstaffed bureaucracies afflicted by eroding salaries, demoralization, corruption, moonlighting, and chronic absenteeism are often unable to carry out the key tasks of economic recovery. What should the Bank do about it?