Human Resource Management and the Restructuring of Public Utilities: Water and Electricity in Africa

By Lesueur, Jean-Yves; Plane, Patrick | International Labour Review, January 1, 1994 | Go to article overview

Human Resource Management and the Restructuring of Public Utilities: Water and Electricity in Africa


Lesueur, Jean-Yves, Plane, Patrick, International Labour Review


The public utilities in Africa are living through a period of thoroughgoing reform. Until the early 1980s their activities were not restricted to the pursuit of economic objectives, since they were also expected to act as an instrument of social policy in rapidly growing urban areas. As the biggest employers in the modern sector of the economy they operated an active recruitment policy, with objectives extending beyond simply meeting short-term production requirements. The second oil crisis (1979-81), and the consequent heavy build-up of debt, meant that a return to more economical management became more desirable as it grew harder to mobilize the already limited financial resources available. Local banking institutions, themselves in the process of restructuring and facing far tighter monetary policies than before, were extremely cautious about making loans to these companies. At the same time governments often became unable to maintain previous levels of budgetary transfers. The macroeconomic situation therefore compelled enterprises to reorganize, both reassuming their original social role--which was basically to manage employment and wages--and considering ways of balancing their books.

This article is based on a survey carried out between 1986 and 1989, a period of considerable difficulty financially because of high levels of debt and the demands of structural adjustment. Our intention is to define the role of human resources in the retrenchment policies adopted by 20 or so water and electricity production and distribution companies in sub-Saharan Africa. (In five cases the two utilities--water and electricity--are managed as a single unit; these have been placed in the electricity category, to reflect the utilities' relative importance within their companies.)(1) The first part of the article contains an analysis of strategies aimed at adjusting the wage bill to changes in apparent labour productivity. We will show that the most effective policies consisted in either reducing employment whilst guaranteeing a certain degree of real wage stability or in reducing both employment and real wages, but in moderation. The second part is devoted to an analysis of the distortions that occurred in employment structures and salary scales. Low employment growth was accompanied by a tendency to promote operative staff to managerial posts. In addition, there was a narrowing of the internal wage range, similar to that observed by other authors in the civil services of some African countries (Robinson, 1990).

WAGE BILL CUTS AND PRODUCTIVITY

African companies sought to reduce the burden of their wage bill on operating costs. Clearly any such move had to be made sensitively in view of the workers' status as public employees. In the majority of the enterprises under consideration the workforce was governed by the labour code, backed up by the provisions of collective agreements and the benefits acquired under company agreements; they enjoyed a level of employment protection similar to that of civil servants. Dismissals were exceptional and occurred only as a result of serious misconduct, never for business reasons. Top management staff usually had senior civil servant status and their remuneration was virtually unrelated to results. To achieve a cut in their wage bills, therefore, enterprises had t make a choice between a number of strategies, all carrying a social cost, and with distinct effects on distribution. Lindauer (1989) has examined the relations between wages, employment and productivity. His study is interesting, not least because it can be used to classify the various strategies and thereby interpret management policies on the use of human resources.

CLASSIFICATION OF WAGE/EMPLOYMENT POLICIES FOR PRODUCTIVITY

As Lindauer (1989, 1991) has suggested, the criterion of profit maximization which controls labour demand in private enterprises cannot be applied to the specific framework of human resources management in the public and "parastatal" sector. …

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