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Part 6
Changes in the Organization of Labor

Most privatized enterprises tend to preserve or increase the number of workplaces. This is related to the fact that up to now privatization has essentially involved the creation of new private enterprises or expansion of the activity of already operating ones. To some extent the increase in employment is also due to the fact that preserving or increasing the number of jobs is stipulated as a condition in the contracts in most privatization transactions. As indicated by the study, that condition was present in the contracts of 4 out of the 5 enterprises, with only one of them having made 500 workers redundant. (see Table 4).

The data about concluded large privatization transactions show that of the transactions concluded by the Privatization Agency (they all fall within the category of "big privatization transactions"), 7 included a condition of termination requiring the creation of new jobs, in 5 of the contracts the condition was to preserve existing jobs, and only 2 included no such clause, with no information being available about the rest.

The commitments concerning the number of jobs are related to agreed additional investments. Such commitments have been made in more than 45% of the concluded transactions.

The results of the survey refute the common assumption that privatization leads to job cuts. Only less than 10% of all privatized enterprises in the country reduced the number of workplaces, and the rest either increased or preserved existing jobs. The reason for this specific to Bulgarian privatization phenomenon lies in the fact that privatization in Bulgaria was delayed. During the pre-privatization stage, owing to the limitation of state subsidies (see Table 6), there were significant personnel cuts in the state-owned enterprises, and in some cases it even fell to a level below the minimum necessary for the normal operation of the enterprises. The phenomenon "unpaid leave" turned into a mechanism for mass discharge of labor force.

In this respect, however, Bulgaria is not unique. "The empirical analysis of the Chilean experience shows that the change in ownership related to privatization does not in itself affect employment but leads to greater efficiency without bringing about an increase in the general level of unemployment".(1)

Table 6.














Source: State Budget Bill for the resective year

The data from the survey indicating an increase in the number of workplaces in the privatized enterprises ought to dispel the fears of privatization of the employees and the trade unions.

The increase in employment also results from the general expansion of production and enhanced efficiency of the overall activity of the privatized enterprises.

Another characteristic tendency related to the organization of labor in the privatized enterprises is the change in working hours, with modifications in the organization of shift work. Furthermore, there appears to be greater interchangeability and rotation, especially in the enterprises bought by the staff.


(1) Dominique Hachette and Rolf Luders, Privatisation in Chile: An Economic Appraisal, ICEG, 1993, p. 10

In all of the studied enterprises the system of remuneration of labor was changed after privatization. The common tendency was to change the relative share of, or abolish payment by the hour and replace it with piecework or a payment-by-results system. In view of the size and characteristics of most of the privatized enterprises, the relative extension of the piece rate system of labor remuneration is often combined with internal economic differentiation of separate structural units and occasionally even specific workplaces.

The observed tendencies in employment and organization of labor, even if of a fragmentary and non-representative character, are an indicator of extensive increase in the employed labor force and the effectiveness of labor in most enterprises privatized to date.


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