Multinational Monitor

SEP 2001
VOL 22 No. 9


Against the Workers: How IMF and World Bank Policies Undermine Labor Power and Rights
by Vincent Lloyd and Robert Weissman

Privatization Tidal Wave: IMF/World Bank Water Policies and the Price Paid by the Poor
by Sara Grusky

Dubious Development: The World Bank’s Foray Into Private Sector Investment
by Charlie Cray

Big Oil And The Bank: Clear And Present Danger
by Stephen Kretzmann


The Power of Protest: Critics Explain How People Can Affect the IMF and World Bank
interviews with
Njoki Njoroge Njehu, Joanne Carter, and Neil Watkins


Behind the Lines

Toward a New Washington Consensus

The Front
Coke Abuse in Colombia

The Lawrence Summers Memorial Award

Names In the News


Against the Workers: How IMF and World Bank Policies Undermine Labor Power and Rights

by Vincent Lloyd and Robert Weissman

After a decade of economic “reform” along lines advised by the International Monetary Fund (IMF) and World Bank, Argentina has plunged into a desperate economic crisis.

The economy has been contracting for three years, unemployment is shooting up, and the country is on the brink of defaulting on its foreign debt payments.

To avoid default, Argentina has negotiated for a new infusion of foreign funds to pay off the interest on old loans and obligations, and to forestall a pullout by foreign investors.

Traveling down that road took Argentina to the gatekeeper for such loans: the IMF. In August, the IMF agreed to provide a new $8 billion loan for Argentina, intended to forestall default. That followed a nearly $40 billion January bailout package with a $14 billion IMF loan as its centerpiece.

But like the loans Argentina has negotiated with the IMF and World Bank over the last decade — and like all other such loans from the IMF and Bank — the new monies came with conditions.

Among them are requirements that Argentina: promote “labor flexibility” — removing legal protections that inhibit employers from firing workers; revamp its pension system to generate “new savings” by cutting back on benefits for retired workers; slash government worker salaries; privatize financial and energy operations of the government.

These requirements, and others, infuriated the Argentine labor movement, which responded in March with general strikes that stopped economic activity in the country. In August, with the latest loan package, tens of thousands of workers took to the streets in protest.

That the IMF would demand such terms is no surprise. A Multinational Monitor investigation shows that the IMF and World Bank have imposed nearly identical mandates on dozens of countries. Based on reviews of hundreds of loan and project documents from the IMF and World Bank, the Multinational Monitor investigation provides detailed evidentiary support for critics of the international financial institutions who have long claimed they require Third World countries to adopt cookie-cutter policies that harm the interests of working people.

Multinational Monitor reviewed loan documents between the IMF and World Bank and 26 countries. The review shows that the institutions’ loan conditionalities include a variety of provisions that directly undermine labor rights, labor power and tens of millions of workers’ standard of living. These include:

  • Civil service downsizing;
  • Privatization of government-owned enterprises, with layoffs required in advance of privatization and frequently following privatization;
  • Promotion of labor flexibility — regulatory changes to remove restrictions on the ability of government and private employers to fire or lay off workers;
  • Mandated wage rate reductions, minimum wage reductions or containment, and spreading the wage gap between government employees and managers; and
  • Pension reforms, including privatization, that cut social security benefits for workers.

The IMF and Bank say these policies may inflict some short-term pain, but are necessary to create the conditions for long-term growth and job creation.

Critics respond that the measures inflict needless suffering, worsen poverty and actually undermine prospects for economic growth. The policies reflect, they say, a bias against labor, and in favor of corporate interests. They note as well that these labor-related policies take place in the context of the broader IMF and World Bank structural adjustment packages, which emphasize trade liberalization, orienting economies to exports and recessionary cuts in government spending — macroeconomic policies which further work to advance corporate interests at the expense of labor.

The Incredibly Shrinking Government Workforce

Perhaps the most consistent theme in the IMF/World Bank structural adjustment loans is that the size of government should be reduced.

Typically, this means that the government should spin off certain functions to the private sector (by privatizing operations), and that it should cut back on spending and staffing in the areas of responsibility it does maintain.

The IMF/Bank support for government downsizing is premised, first, on the notion that the private sector generally performs more efficiently than government. In this view, government duties should be limited to a narrow band of activities that either the private sector cannot or does not perform better, and to the few responsibilities that inherently belong to the public sector.

In its June draft “Private Sector Development Strategy,” the World Bank argues that the private sector does a better job even of delivering services to the very poor than the public sector, and that the poor prefer the private sector to government provision of services.

A second rationale for shrinking government is the IMF and Bank’s priority concern with eliminating government deficits. The institutions seek to cut government spending as a way to close and eventually eliminate the shortfall between revenues and expenditures, even though basic Keynesian economics suggests that slow-growth developing nations should in fact run a deficit to spur economic expansion.

In most countries, rich and poor, the government is the largest employer. In poor countries, with weakly developed private sectors, the government is frequently the dominant force in the nation’s economy. Sudden and massive cuts in government spending can throw tens or hundreds of thousands out of work, and contribute to a surge in unemployment, and to a consequent reduction in the bargaining power of all workers.

In Nicaragua, for example, the Chamorro administration that followed the revolutionary Sandinista government worked with the IMF to slash the public sector. In the first three years of the new regime, the number of government employees plummeted from 290,000 to 107,000 (resulting in loss of employment for more than 9 percent of the Nicaraguan labor force). Through 1999, the government eliminated more than 18,000 additional jobs.
The closure or downsizing of state-owned banks “yielding a total reduction from 9,100 employees in 1990 to 3,500 in 1993” was the first in a series of financial sector reforms resulting in smaller government payrolls and greater foreign ownership of Nicaraguan businesses, according to a Nicaraguan report to the IMF.

The dramatic two thirds reduction in the size of government was driven in part by a concerted government effort “to strip out the Sandinistas from government jobs,” according to Marie Clarke of the Quixote Center, but was also directed and required by the IMF and World Bank in a series of loan agreements through the 1990s and in the present decade. A 1991 World Bank Economic Recovery Credit was designated to assist with “downsizing and restructuring the public sector.” Continually reducing the size of government has been a consistent benchmark criteria included in IMF and World Bank loans, with specific cutbacks designated as evidence of Nicaragua’s adherence to structural adjustment conditions.

Nicaragua is presently undergoing a “second generation” of structural reform programs, including yet another round of government cutbacks. Unemployment now stands at 14 percent, but combined unemployment and rampant underemployment totals 50 percent.

Other countries have witnessed similar emaciation of the public sector under IMF and World Bank tutelage:

  • In Kenya, the government plans to cut nearly 50,000 employees from 2000-2002.
  • In Uganda, by early 1997, the size of the civil service was cut in half to 150,000, and the government set a target of 58,100 by June 1997.
  • In Yemen, a 1999 IMF document reported plans for a civil service reform initiative expected to reduce public payrolls by 20 percent.
  • In Zambia, 20 percent of the public sector was laid off in 1998 and 1999. IMF loan documents set a goal of reducing government employment from 110,000 (in year 2000) to 10,000 to 12,000.

Privatize, Privatize, Privatize

The civil service downsizing included in IMF and World Bank conditionalities is frequently bound up with privatization plans: under IMF and Bank instruction, governments agree to lay off thousands of workers to prepare enterprises for privatization. But privatization itself is frequently associated with new rounds of downsizing, as well as private employer assaults on unions and demands for wage reductions.

Privatization is a core element of the structural adjustment policy package. Blanket support for privatization is an ideological article of faith at the IMF and Bank.

The range of IMF and Bank-supported or -mandated privatizations is staggering. The institutions have overseen wholesale privatizations in economies that were previously state-sector dominated — including former Communist countries in Central and Eastern Europe, as well as many developing countries with heavy government involvement in the economy — and also privatization of services that are regularly maintained in the public sector in rich countries, such as water provision and sanitation [see “Privatization Tidal Wave,” page 14], healthcare, roads, airports and postal services:

  • In Argentina, according to the World Bank, “virtually all public services and federally owned enterprises” have been privatized, including postal services.
  • In Ecuador, the government reports that bids have been or are being invited for private operation or ownership of urban sewage and water systems, seaports and oil refineries, among other facilities.
  • In Malawi, a massive privatization effort has included the “outsourcing, privatization or liquidation of specific services and agencies of the four largest ministries (Health and Population, Education, Transport and Public Works, and Agriculture and Irrigation,” according to a government submission to the IMF, and “the government also intends to increase private sector participation in the roads sector.”
  • In Nigeria, public enterprises set for the auction blocks have included the national airways, power generators, and oil refiners. In a 1999 IMF document, the government stated it would study privatization of customs clearance at major ports.
  • In Uruguay, ports and roads have been privatized.

Labor unions do not offer blanket opposition to all privatization. Particularly in the case of Central and Eastern Europe, but also in many developing countries, unions have agreed that privatization of some government operations may be appropriate. But they have insisted on safeguards to ensure that privatization enhances efficiency rather than the private plunder of public assets, and insisted that basic worker rights and interests also be protected.

But those safeguards by and large have not been put in place.

“Unfortunately, trade unions’ proposals regarding the form of privatization, the regulatory framework and treatment of workers were usually not listened to during the massive privatization wave in Central and Eastern Europe,” notes the International Confederation of Free Trade Unions (ICFTU) in a report published in advance of the fall 2001 IMF and World Bank meetings. The IMF and Bank acknowledge some of their mistakes in Central and Eastern Europe, ICFTU notes, but “similar mistakes may well be repeated in Central and Eastern Europe and in other regions.”

The ICFTU report highlights the case of Pakistan, where the military government is planning, with World Bank assistance, a major privatization initiative. The Bank’s support for the initiative comes “despite the potential for abuse in privatizing natural monopoly services, especially given the lack of democratic control, and the refusal of the authorities to negotiate with trade unions affected by the privatization program,” ICFTU notes. The Bank “does candidly admit that a risk exists that Pakistan’s economic reform and devolution plan ‘could be hastily implemented and captured by powerful interest groups,’ but makes no suggestion as to how to avoid such an eventuality.”

The Freedom To Fire

Another core tenet of IMF and Bank lending programs is the promotion of “labor flexibility” or “labor mobility,” the notion that firms should be able to hire and fire workers, or change terms and conditions of work, with minimal regulatory restrictions.

The theory behind labor flexibility is that, if labor is treated as a commodity like any other, with companies able to hire and fire workers just as they might a piece of machinery, then markets will function efficiently. Efficient functioning markets will then facilitate economic growth.

Critics say the theory does not hold up. Former World Bank chief economist Joseph Stiglitz described the problem to Multinational Monitor: “As part of the doctrine of liberalization, the Washington Consensus said, ‘make labor markets more flexible.’ That greater flexibility was supposed to lead to lower unemployment. A side effect that people didn’t want to talk about was that it would lead to lower wages. But the lower wages would generate more investment, more demand for labor. So there would be two beneficial effects: the unemployment rate would go down and job creation would go up because wages were lower.”

“The evidence in Latin America is not supportive of those conclusions,” Stiglitz told Multinational Monitor. “Wage flexibility has not been associated with lower unemployment. Nor has there been more job creation in general.” Where “labor market flexibility was designed to move people from low productivity jobs to high productivity jobs,” according to Stiglitz, “too often it moved people from low productivity jobs to unemployment, which is even lower productivity.”

Indeed, some of the IMF and Bank documents treat labor flexibility almost as code for mass layoffs. For example, a “structural benchmark” in Nicaragua’s dealings with the IMF is that the country “continue to implement a labor mobility program aiming at reducing public sector positions.”

But the essence of the problem from the point of view of labor is that the IMF and Bank’s version of labor flexibility is synonymous with stripping away legal protections for workers. In Honduras, more labor flexibility is being introduced because “collective contracts at large enterprises often act as straightjackets,” according to a World Bank document. In Ecuador, the use of temporary contracts is touted in an IMF document as a means to improve labor flexibility.

In its recommendations to the new Mexican government of Vicente Fox, the World Bank has spelled out just how far-reaching its promotion of labor flexibility is. The Bank encourages Mexico to phase out a wide array of worker rights and protections: “the current system of severance payments; collective bargaining and industry-binding contracts; obligatory union memberships; compulsory profit-sharing; restrictions to temporary, fixed-term and apprenticeship contracts; requirements for seniority-based promotions; registration of firm-provided training programs; and liability for subcontractors’ employees.”

Spreading The Wage Gap

Few things more clearly run contrary to workers’ interest than wage reductions. Wage freezes, wage cuts and wage rollbacks are all commonplace in IMF and World Bank lending programs, as is “wage decompression” — increasing the ratio of highest to lowest paid worker.

These initiatives usually occur in the public sector, where the government has authority to set wages and salaries, and where the rationale is to reduce government expenditures. (A different logic is applied to managers, however, where the assumption is that higher salaries are needed to attract quality personnel and to provide incentives for hard work.)

Sometimes the IMF and World Bank-associated wage freezes or reductions do apply to the private sector, as in cases where the minimum wage is frozen or reduced.

Sometimes the overarching policy is referred to as “wage flexibility” and is undertaken in connection with labor market reforms.

  • In Argentina, the August 2001 bailout monies was conditioned on a 13 percent wage reduction in the public sector.
  • In Belarus, according to IMF documents, the government is working at “liberalizing” the labor market in order to “increase the flexibility” of wages, particularly at state-owned enterprises.
  • The Nigerian government reported in an 1999 IMF document that 1998 wage increases “had been partially rolled back.”
  • In Turkey, the government agreed in 1999 IMF loan documents to work to limit public sector and minimum wage increases to the inflation rate. This position was reiterated in 2000 and 2001.
  • Wage decompression is pervasive in IMF and Bank loan documents, and has been a condition applied in Ghana, Kenya, Uganda and Zambia, among many others. In Mozambique, under IMF guidance, the government highest-to-lowest government salary ration went from 9.6:1 in April 1998 to 13.2:1 in August of that year, and the government announced plans to “top up” civil service salaries and expand the ratio to 17:1.

The institutions have elaborate justifications for opposing wage supports. An April 2001 World Bank policy working paper, for example, concludes that minimum wages have a larger effect in Latin America in the United States — including by exerting more upward influence on wages above the minimum wage — and promotes unemployment.

Pensions: Work Longer, Pay More, Get Less

Pension and social security reform has emerged as a high priority of the IMF and Bank in recent years, with the World Bank taking the lead.

The thrust of the World Bank and IMF’s proposals in this area has been for lower benefits provided at a later age, and for social security privatization.

In Nicaragua, for example, one of the performance criteria for continued IMF support has been the adoption of drastic pension reforms, including raising the retirement age, increasing the minimum contribution period to receive benefits, and upping the level of employee contributions.

A 1999 informal World Bank report on Nicaragua’s social security system concluded, “The parameters of the system need to be re-defined and a mandatory, defined contribution system based on individual capitalization accounts introduced.” The Bank recommended these accounts be managed by private companies determined through an “international competitive bidding process.”

Drawn up under World Bank supervision, Nicaragua’s new pension system is designed to “increase contribution rates, raise the retirement age, standardize eligibility requirements, reduce replacement rates, increase collection efficiency and tighten eligibility for disability benefits.” Under the new system, Nicaragua has satisfied its IMF performance criteria: payroll contributions have nearly doubled, mandatory length of service to receive a pension has been increased by nearly 10 years, and the retirement age has been raised by nearly a decade.

Again, the policies foisted on Nicaragua have been pushed around the world:

  • In Bolivia, under World Bank instruction, the government in 1996 privatized its pension system, replacing a defined benefit, publicly managed system with a defined-contribution, privately managed system of individual capitalized accounts.
  • A 1998 IMF document stated that in Turkey “a sweeping reform of the social security system is obviously needed,” and detailed Turkish plans to raise the minimum age for retirement, extend the minimum contribution period to receive a pension, and increase the level of contributions required. In a 1999 IMF report, Turkey indicated its new social security law achieved all of these goals, surpassing even the proposals in the 1998 document. The 2000 report announced a plan to undertake a new round of reforms, involving social security privatization.

The ICFTU reports that the World Bank has been involved in pension reform efforts, increasingly driving toward privatization, in over 60 countries during the past 15 years.

Dean Baker, co-director of the Washington, D.C.-based Center for Economic and Policy Research, says the Bank’s support for social security privatization is not based on the evidence of what works efficiently for pension systems. “The single-mindedness of the World Bank in promoting privatized systems is peculiar,” he says, “since the evidence — including data in World Bank publications — indicates that well-run public sector systems, like the Social Security system in the United States, are far more efficient than privatized systems. The administrative costs in privatized systems, such as the ones in England and Chile, are more than 1500 percent higher than those of the U.S. system.”

Baker adds that “the extra administrative expenses of privatized systems comes directly out of the money that retirees would otherwise receive, lowering their retirement benefits by as much as one-third, compared with a well-run public social security system. The administrative expenses that are drained out of workers’ savings in a privatized system are the fees and commissions of the financial industry, which explains its interest in promoting privatization in the United States and elsewhere.”

Wither Labor Rights?

Few labor advocates argue that privatization should never occur, or that no government lay off is ever necessary, though many would argue in almost all cases against certain IMF and Bank policies, such as reductions or mandated freezes on the minimum wage, and privatization of Social Security.

But among the most striking conclusions from the Multinational Monitor investigation of IMF and World Bank documents is the near-perfect consistency in the institutions’ recommendations on matters of key concern to labor interests.

None of the documents reviewed by the Monitor show IMF or Bank support for government takeover of services or enterprises formerly in the private sector; they virtually never make the case for raising workers’ wages (except for top management); they do not propose greater legal protections for workers.

And on-the-ground experience in countries around the world shows little concern that implementation of policies sure to be harmful to at least some significant number of workers in the short-term is done with an eye to ameliorating the pain. Worker safeguards under privatization, for example, repeatedly requested by labor unions around the world, are rarely put into force.

For former Bank chief economist Joseph Stiglitz, as well as unions and worker advocates, the IMF/Bank record makes it imperative that basic worker rights be protected. If there are to be diminished legal protections and guarantees for workers, and if IMF and Bank-pushed policies are going to run contrary to worker interests, they say, then workers must at the very least be guaranteed the right to organize and defend their collective interests through unions, collective bargaining and concerted activity.

But the Bank has stated that it cannot support workers’ freedom of association and right to collective bargaining.

Robert Holzmann, director of social programs at the World Bank, told a seminar in 1999 that the Bank could not support workers’ right to freedom of association because of the “political dimension” and the Bank’s policy of non-interference with national politics.

Holzmann also raised a second “problem” with freedom of association. “While there are studies out — and we agree with them that trade union movements may have a strong and good role in economic development — there are studies out that also show that this depends. So the freedom by itself does not guarantee that the positive economic effects are achieved.”

Shortly after the 1999 seminar, labor organizations met with the World Bank and IMF. According to a report from ICFTU, World Bank President James Wolfensohn reiterated Holzmann’s point, saying that while the Bank does respect three out of the five core labor rights (anti-slavery, anti-child labor and anti-discrimination) it cannot respect the other two (freedom of association and collective bargaining) because it does “not get involved in national politics.”

ICFTU reports that “this statement was greeted with stunned disbelief by many present.”

Vincent Lloyd is an intern with Multinational Monitor. Robert Weissman is the magazine’s editor. This article is based on a review of IMF and World Bank documents. Full citations and excerpts from relevant documents are posted at

Downsizing, Privatization, Labor Flexibility, Wage Cuts:
Selected Summaries of IMF/World Bank Country Policies


  • World Bank sector support for a “massive and ambitious” privatization program of local water systems
  • Nearly half of provincial government-owned enterprises have been privatized, including a majority of provincial banks
  •  In 1994 the pay-as-you-go pension system was replaced by a mixed public/private pensions system
  • In 1999 new laws were passed to “enhance labor flexibility” for small and medium sized enterprises, lengthen the probation period for new workers, employer contributions to social security have been reduced


  • Government is preparing legislation to create the legal framework for accelerated privatization (2001)
  •  Government is working on “liberalizing” the labor market in order “to increase the flexibility” of wages, particularly at state-owned enterprises


  • Central government employment targeted to fall from 13,000 to 9,400 (1999)
  • In 1996 the public pension system was replaced by a defined-contribution, privately managed system with individual accounts
  • Over 50 medium-sized enterprises along with some airports, water and sewage systems, telecommunications companies, and the national airline and railroad have been privatized, yielding about $100 million
  • In preparation for privatization of the state smelting company, 890 employees were laid-off
  • Government proposal to “modernize” labor legislation to foster small-scale enterprises and generate employment


  • Seven state-owned rubber plantations to be corporatized and gradually privatized (1999)
  • Size of the civil service to be reduced through elimination of redundant workers, normal attrition, limited hiring, etc.


  • New laws passed aimed at increasing productivity by increasing labor market “flexibility” (2000)
  • Bids have been or are being invited for private operation or ownership of urban sewage and water systems, seaports, oil refineries
  • In 1998 the government created a plan to reduce public sector employment by 26,000 by 2002
  • The government “is committed to allowing private sector participation in the provision of pensions” and reforming the current pay-as-you-go system


  • Plan for competitive, commercialized port industry being developed, that will involve the ‘redeployment’ of redundant labor (1998)


  • Proposals developed for the privatization of 114 public enterprises (1998)
  • Limits of foreign company participation in joint ventures are being removed (2001)
  • From 1998 to 2000, some 175 formerly public enterprises were liquidated or privatized


  • In January 1995 the Government announced plans to privatize 114 enterprises
  • An estimated 40,000 employees would lose their jobs due to privatization, and another 60,000 due to civil service reforms
  • Water and sewage systems are being downsized and operating contracts signed with the private sector


  • More than 5,000 government jobs (>10% of the total) were eliminated in 1998
  • In 1997 the process of restructuring and/or divesting major public enterprises including airport, seaport, power, and telecommunications was begun
  • Half of the employees of state-owned Banque Nationale de Credit were downsized (2000)
  • 1,000 port authority employees were to be downsized by June 2001 in preparation for privatization


  • Planned 2000-2002 structural reforms include the privatization of telecommunications, airport, electricity distribution, port, and water and sewer management enterprises
  • Because “collective contracts at large enterprises often act as straightjackets,” more labor flexibility is being introduced


  • In the 2000 fiscal year, 19 public enterprises were to be privatized, including the Soerkarno-Hatta Airport Concession Company
  • One third of the branches of state-owned Bank Mandiri were to be closed and 12,000 jobs eliminated


  • Strategies have been formulated for the privatization of the telecommunications company, airline, railway, power generation and distribution, etc.
  • Contracts were being awarded for the operation of waste-water treatment and urban water systems


  • Civil service reform program eliminated 33,000 government employees (1996)
  • Public ownership was reduced or completely sold in more than 100 enterprises including tea factories, banks, electricity production and distribution companies, and Kenya Airways
  • From 2000-2002, it is estimated that 48,606 government employees will be retrenchedLaos
  • Civil Service to be reduced by 5% (2001)


  • In 1997 a list of 100 public enterprises to be privatized by 2004 was approved, including banks, the airline, telecommunications, housing, and tourism enterprises, and the Blantyre Water Board
  • Civil service reforms include the retrenchment of more than 1,300 permanent and 20,000 temporary employees, implementation of a merit-based pay system, and outsourcing of ministry functions


  • Privatized operations include customs management, 32 large enterprises, and more than 100 small and medium sized enterprises raising total to more than 900 privatized entities (1997)
  • As part of “structural reforms,” the ratio of highest to lowest civil service salaries was raised from 9.6:1 in 1997 to 15:1 in 1999
  • Attempts have been made to privatize urban water systems, the national airline, and all state-owned banks


  • Pension system changed to be individual account-based and privately managed (2000)
  • Minimum retirement age and length of service for pension benefits will be raised, and payroll contributions will go from 5.5% to 10%
  • New labor code introduces “greater flexibility in the contracting of labor” (1994)
  • Public employment reduced from 290,000 in 1990 to 107,000 in 1993 and less than 80,000 in 1999
  • 346 of 351 government-owned companies were privatized or liquidated (1990-1995).


  • Public enterprises slated to be privatized include Nigerian Airways, a fertilizer company, refineries, telecommunications, and power companies
  • All benefits of public service employees are being monetized


  • Since 1996, public enterprises that have been privatized include the power company, road maintenance operations, urban transportation systems, water supply company
  • Eighteen public enterprises were to be privatized in 1999-2000 with the goal that only utilities, social services, and industrial promotion companies would be government owned


  •  Dar es Salaam Water and Sewer systems to be operated by private enterprise (1999)
  • From 1994 to 1998 270 public enterprises were privatized including a brewery, cigarette factory, and leather company
  • Government aim in 1996 was to have all 230 public enterprises privatized by 2000 including ports, telecommunications, railways, banking, agriculture, etc.
  • 1999 privatization of six major public enterprises was estimated to necessitate six to ten thousand retrenchments
  • Public service employees reduced by 27% from 355,000 in 1992 to 260,000 in 1999


  • Government is planning and/or implementing privatization of public electricity generation and distribution enterprises, gas, telecommunications, petroleum, steel, tobacco, etc. companies
  • Government intends to launch voluntary private pension system
  • Public pension system reforms include increase in minimum retirement age and minimum contribution period and reduction in salary replacement ratio


  • 85% of public enterprises privatized by 1998
  • Size of civil service cut in half to 150,000, target of 58,100 by June 1997
  •  Government is working on legislation to change pension system into a defined benefit-contribution system (1997)
  •  Public operations having been or to be privatized include the Uganda Commercial Bank, Uganda Clays Ltd., Uganda Airlines, Uganda Telecom Ltd., meat, spinning, hotel, tobacco, and others (1999)


  • Government pushing a move from national, centralized labor agreements to local, decentralized bargaining (1999)
  • From 1996 to 1998, more than half a million workers were shifted to private pension plans
  • Civil service reforms initiated in 1997 have resulted in the loss of 14,000 public sector jobs
  • Bids issued for privatization of port facilities and toll roads are being transferred to the private sector (1999)


  • Privatization program aims to divest 70% (“in employment terms”) of public sector enterprises by 2000
  • Major enterprises to be privatized include a refinery, airport services, land transportation company, cement production, and pharmaceuticals
  • Civil service reform initiative is expected to reduce public payrolls by 20%
  • From 1995 to 1998, 40% of small and medium-sized public enterprises were privatized


  • Privatization process begun in 1995 of public copper mines
  • Railroad staff reduced from 5,500 to 3,300 and plans for privatization are being developed (2000)
  • 20% of Civil Service laid-off in 1998 and 1999 and a wage freeze was implemented
  • 80% of state-owned enterprises privatized in 1998-1999
  • Long term goal of reducing civil service from 110,000 (2000) to 10-12,000 workers
  • World Bank support for public sector salary decompression (2000)
  • Government commissioning study of “pay as you go” pension system (2000)


  • World Bank support to “commercialize, out-source, or privatize” some public agricultural service (1998)
  • Received World Bank support for railroad restructuring and privatization process, a project which included a $56 million in staff rationalization costs (1998)
  • World Bank support for privatization of public power generation and distribution operations (2000)
  • More than 14,000 civil service jobs cut (1999)
  • Privatization process launched for public telecommunications company, airline, railways and forestry commission

Source: IMF and World Bank documents available at and Precise citations are available at


Mailing List


Editor's Blog

Archived Issues

Subscribe Online

Donate Online


Send Letter to the Editor

Writers' Guidelines