The effects of privatization on wages and job satisfaction: the case of Ghana

<font size="3">Key words : privatization, wages, job satisfaction, state owned enterprise, Ghana, Africa In this thesis, we examine the impact of privatization on wages and job satisfaction in selected urban-based enterprises in Ghana</font>.<font size="3">The fear and anxiety of workers in state-owned enterprises and recent developments in the corporate world have necessitated the need to examine wages and job satisfaction of workers in various enterprises closely. Decades of economic mismanagement and bad policies in Ghana, beginning in the 1970s led to a steady deterioration of the economy, with the situation reaching a crisis point in the early 1980s. To address the deteriorating situation, policy reforms were initiated in the latter part of 1980s. The main instruments used for the public sector were liberalization of the economy and privatization of state-owned enterprises.Most studies of privatization in Ghana put relatively little emphasis on the labor market. We argue that privatization changes the objectives of a firm from objectives formulated by the state to more narrow, profit oriented ones. We also show that the impact of privatization on wages and job satisfaction is theoretically ambiguous. If the state puts relatively little weight on profit maximization but focuses on welfare instead, wages and satisfaction levels may be higher. If transfer payments in the form of subsidies from the government to state-owned enterprises (SOEs) are high, SOEs can afford to pay higher wages and provide better work conditions than privatized enterprises (PEs).Using data from 300 workers selected from 6 SOEs and 7 PEs, we find that PEs pay higher wages than SOEs. In terms of partial satisfaction levels (work safety, job security and training opportunities), work safety is found not to have improved with privatization. The effects of privatization in Ghana are such that a number of enterprises that have survived have done so by restructuring to reduce cost and to be competitive thus affecting investment in work place safety. Compared with PEs, work safety is perceived as better in SOEs. Job security is found to increase with privatization. In PEs, workers report to be more secure with their jobs than those in SOEs. A possible explanation could be the basic problem in SOEs, where too many workers, especially administrative and clerical level staff are employed. Consequently, the transition from an SOE to a PE is seen as a threat to job security. The results also show that both general and specific training opportunities have not improved with privatization. SOEs offer more training, especially general training than PEs.The hypothesis that there is a discernible increase in overall job satisfaction as a result of privatization cannot be confirmed by our study. The effect of privatization on overall job satisfaction could be due to a mix of positive and negative influences mentioned above, which together lead to statistically insignificant impacts at all degrees of privatization. Thus, our study finds no direct relationship between privatization and overall job satisfaction