Privatisation, Labour Conditions and Firm Performance in Uganda

Abstract

This paper investigates the effect of motivation of privatisation by comparing before and after privatisation. Before privatization, both salaries and wages on one hand and fringe benefits on the other were determined by the nature of ownership as well as industry type on the other hand. In purely SOEs, the determination of workers’ conditions was political. Purely SOEs were lavish in granting salary and other benefits to staff explained by state ownership and existing trade unions. FDI, however, tended to ignore the idea of collective agreement and fluffed the trade unions and their restrictive working practices such as working 8 hours a day. Bad conditions in FDI firms always resulted into strikes with varying intensities with casualties to either the crop or management staff. The salary and other benefits also differed among industries, the poorest being recorded in the textile, followed by the plantation-based industries, and utilities last. These SOEs’ lavish conditions of service changed drastically after privatization from permanent and pensionable (PP) to temporary and retrenchable (TT). After privatization, the new buyers cunningly increased salaries for managerial, technical and clerical staff on paper. Practically, however, they recruited most staff to high positions as group employees who did not enjoy negotiated terms. In addition, PSOEs laid off group employees earning shs. 300, 000= and replaced them with those willing to work for shs. 100, 000= per month. The terms casual, temporary, and contract in PSOEs and meant ‘daily but continuous,’ ‘six months to one year,’ and ‘one to three years’ respectively. This was made possible by high unemployment levels in the country. This resulted into falling wage-bill as well as product quality in the tea and sugar sectors. With respect to benefits, after privatization, these depended on industry and profitability unlike before privatization.