This paper attempts to explore the employment implications of disinvestment of State Owned Enterprises (SOEs) in India. Contrary to popular belief that disinvestment would severely undermine employment growth in central SOEs, the present analysis suggests that such fears are largely exaggerated, if not mistaken. There has been a uniform decline in growth rate of employment among all SOEs during the post reform period viz 1991–2000. As a result, the share of employment in disinvested SOEs and non-divested SOEs to total SOEs has remained constant. Another important conclusion is that the decline in absolute employment during this period was more a result of changes in the macro policy regime (e.g. a more open economy) than of disinvestment per se. Specifically, competition was more closely linked to employment than ownership, implying a more significant role of factors other than disinvestment. The apprehension that disinvestment may result in layoffs/retrenchment on a large scale is thus unwarranted.
Get full access to this article
View all access options for this article.
References
1.
AlchianADemsetzH. (1972). Production, Information Costs and Economic Organization. American Economic Review, 62, 777–95.
2.
AlchianA.KesselR., (1962). Competition, Monopoly and the Pursuit of Money. In National Bureau of Economic Research, Aspects of Labour Economics, Princeton, N.J.: Princeton University Press.
3.
AmanteS. (1995): Privatization, the internal labor market, and human resources in Philippine state-owned firms (supplied by the Confederation of Independent Unions in the Public Sector).
4.
BaumolW.J. (1967). Business Behavior, Value and Growth, New York, Harcourt, Brace and World.
5.
BhagwatiJ.SrinivasanT. N. (1993): India's Economic Reforms, Ministry of Finance, and Government of India, New Delhi.
6.
DattR., (1997), ‘Employment Policy for the Ninth Plan, 'presented in the seminar on Employment policy for the Ninth Plan’ 27 March, organized by Institute of Applied Manpower Research, New Delhi.
7.
DevM.S. (2000): Economic Liberalization and Employment in South Asia, Economic and Political Weekly, Jan 15.
8.
FernerA.CollingT., (1993) in ClarkeT.PetelisC. (eds). The Political Economics of Privatization, Privatization of the British Utilities Regulation: Decentralization and Industrial Relation, P. 125–141, Routledge, London.
9.
FurubotnE.G.PejuvichS., (1972), Property Rights and Economic Theory: A Survey of Recent Literature. Journal of Economic Literature, 10 (4): 1137–1162.
10.
GalalA.JonesL.TandonP.VogelsangI. (1994). Welfare Consequences of Selling Public Enterprises: An Empirical Analysis. The World Bank. Washington, DC.
11.
GalalA.ShirleyM. (1994). Does Privatization Deliver? EDI Development Studies. The World Bank. Washington, DC.
12.
GhoshJayati (1995): ‘Employment and Labour Under Structural Adjustment: India Since 1991’, The Indian Journal of Labour Economics, Vol. 38, No.4.
13.
Government of India.Index Number of Wholesale Prices in India. Various Issues.
14.
Government of India (1984). Report of the Committee on Public Sector Enterprises. (Sengupta Committee).
15.
Government of India, Ministry of Industry, Department of Public Enterprises.Public Enterprises Survey. Various Issues.
16.
Government of India.The Economic Survey. Various Issues.
17.
Government of India, Ministry of Finance (1993). Report of the Committee on the Disinvestment of Shares in Public Sector Enterprises (Rangarajan Committee). April.
18.
Government of India, Ministry of Finance (1996). Committee on Overlooking Modalities of Disinvestment. (Ramakrishna Committee).
19.
HortonSKanburR.MazumdarD. (1994) Labor Markets In An Era Of Adjustment, Volume 1 and 2, EDI Development Series, World Bank.
20.
International Labor Organization (1997) ‘Labor And Social Dimensions Of Privatization And Restructuring’ By L.de Luca.
21.
ILO-SAAT (1996): India: Economic Reforms and Labour policies, New Delhi.
22.
JoshiVijayLittleI. M. D. (1996): India's Economic Reforms: 1991–2001, Oxford University Press, Delhi.
23.
KaurS. (1998a). The Indian Experience with the Memorandum of Understanding. Abighyan, Vol. 3, No. 16 July-August.
24.
KaurS. (1998b). Public Enterprise Disinvestment in India – A Theoretical and Empirical Framework. The Journal of Institute of Public Enterprise, Vol. 21, 1 and 2.
25.
KaurS. (1999a). Financing Indian Infrastructure-A Greenfield Privatization Approach. In Contemporary Issues In Finance, edited by BhallaV. K., Anmol Publications Pvt. Ltd. New Delhi.
26.
KaurS. (1999b). Soft Targeting In Indian Public Sector Enterprises. Paper presented at the XII World Congress of the International Economic Association held at Buenos Aires, Argentina, August 23–27.
27.
KaurS. (2001) ‘Reforming Indian Public Enterprises: The Efficiency Dimension’ In Journal Of Management ResearchVolume 1, November 3, May – August.
28.
KikeriS. (1998) Privatization And Labor: What Happens To Workers When Governments Divest? World Bank Technical Papers.
29.
KunduA., (1993), ‘Employment Growth, Changing Workforce Structure and Poverty Employment Linkages in Urban Areas’, International Labour Organization, New Delhi.
30.
KunduA., (1997), ‘Trends and Structure of Employment in the 1990s: Implications for Urban Growth’, Economic and Political Weekly, 14 June, pp 1399–405.
31.
MegginsonW.NashC.RandenborghM. (1994), The Financial and Operating Performance of Newly Privatized Firms: An International Empirical Analysis. The Journal of Finance, Vol. XLIX, No. 2, pp. 403–52.
32.
MooreJohn (1992). British Privatization-Taking Capitalism to the People. Harvard Business Review (Jan/Feb), 115–124.
33.
MukhopadhayayS., (1994), ‘Casualization of Labour in India: Concept, Incidence and Policy Options’, in DeshpandeL.K.RodgersGerry (eds), The Indian Labour Market and Economic Structural Change, B.R. Publishing Corp. Delhi, pp. 141–8.
34.
RamamurtiR. (1992). Why Are developing Countries Privatizing?Journal of International Business Studies, Second Quarter, pp. 225–249.
35.
OestmannC. (1994): Privatization of public services and public utilities, sectoral activities. Oil & Gas Journal (17/10/91): “The ASEAN pipe dream” (pp. 111–112).
36.
RamamurtiR. (1999), Why haven't Developing Countries Privatized Deeper and Faster. World Development Report, Vol. 27, No. 1, pp. 137–155.
37.
SayrsL. (1989). Pooled Time Series Analysis. Sage University Press. London.
38.
SinghA. (1999) Liberalization, The Stock Market, And The Market For Corporate Control In India's Economic Reforms And Development Edt AhluwaliaM.LittleI.M.D.JoshiV.. Oxford University Press.
39.
VickersJ.YarrowG. (1988). Privatization; An Economic Analysis. MIT Press. Cambridge, MA.
40.
VisariaPravin, (1996), ‘Structure of Indian Workforce, 1961–1994’, Indian Journal of Labour Economics, Vol. 39, No. 4, pp. 725–40.
41.
WhiteK. (1993). Shazam: The Econometric Computer Program. McGraw-Hill Book Company.
42.
WilliamsonO.E. (1969). Corporate Control and the Theory of the Firm, In Economic Policy and the Regulation of Corporate Securities. Edited by ManneH.. American Enterprise Institute, Washington, DC.
43.
WilliamsonO.E. (1970). Corporate Control and Business Behavior: An Inquiry Into The Effects of Organizational Form on Enterprise Behavior. Englewood Cliffs, N.J.: Prentice Hall.
44.
WolfC. (1979), A Theory of Non-Market Failure: Framework for Implementation Analysis. Journal of Law and Economics, Vol. 22 April.
45.
World Bank (1995): World Development Report 1995: Workers in an Integrating World, Oxford University Press, New York.
46.
YarrowG. (1999), A Theory of Privatization, or Why Bureaucrats are still in Business. World Development Report, Vol. 27 No 2157–168.
