Get Paid to Reform?
Anyone who has tried to provide a plan to a minister for implementing reform (market-based ones) in the public sector will soon run into the thorny issue of labour unions. It is a tough nut to crack! Ironically, West Bengal seems to have have found a way, and that too by making somebody else pay for it.
West Bengal’s state-owned handloom promotions company, Tantuja, … employs 1,100 people. No one can remember when the government enterprise set up in the 1950s to serve “the marginal weavers in villages in West Bengal” last made a profit. Last year it lost 80m rupees. Tantuja is almost certain to be closed down using taxpayers’ money from Britain. … In an unprecedented move, the UK’s Department for International Development (Dfid) will spend 15bn rupees (£200m) in West Bengal to fund generous retirement packages for employees of loss-making state-owned companies, which make up almost two-thirds of the state’s 90 public sector units (PSUs).
Read more about it in the Guardian article Reform or perish: Marxist state’s sunrise tinges red rupee pink.
The remarkable aspect (if one depends on the anecdotal evidence) is the reluctant acceptance of it by the employees. Perhaps there is a lesson hidden in it. In terms of realpolitik it is probably easier to let the loss-making organisation “bleed” and then convince the workers to tread on the path to reform. Especially if somebody is willing to pay with no strings attached!