Impact of privatisation on employment and output in Pakistan

Abstract

The study assesses the impact of privatisation on employment and output in Pakistan by using edible oil and cement sectors for a case study. Though the term privatisation has broad connotations, it stands for the transfer of ownership to the private sector in Pakistan. By the end of 2000, the Privatisation Commission had privatised 103 public enterprises. Though the gross privatisation proceeds stand at Rs 82.0 billion or US$2.3 billion, the telecommunication and power sectors alone account for around 65 percent of all the proceeds. The study is both a policy and empirical analysis. The review of literature sets the stage for policy analysis, and assesses the policy implications of adopting privatisation vis-à-vis efficiency and equity. At the empirical level, the study uses a firm-level pooled dataset compiled separately for managers' and workers' employment and wages, as well as output. By adopting a simple to complex strategy, first general trends from the data are presented which are later tested with the help of dynamic panel regression analysis. The results show a negative and statistically significant impact of privatisation for total and workers' employment. It is negative, though statistically insignificant, for managers' employment and output. The impact of macro-economic policies,r eflected through the structural adjustment programme dummy variable, is negative and statistically significant for workers' employment and output. It is positive though insignificant for managers' employment.