Is there life after public service : the fate of retrenched workers in Conakry, Guinea

Macroeconomic stabilization efforts have focused on the size of the wage bill and the attendant strain that is placed on the government"s limited budgetary resources. However, public sector wage and employment policies also have direct impacts on the efficiency of the sector, as well as numerous indirect impacts on the rest of the economy. Thus, the retrenchment of government workers, as well as the rationalization of public sector pay scales and employment policies, have become essential components of structural adjustment programs in sub-Saharan Africa. This paper will focus on Guinea"s retrenchment experience, which is particularly poignant because of the public sector"s initial dominance of economic activity and severe institutional constraints to effective program implementation. While there is a general consensus on the need for public sector reform, implementation of programs designed to reduce employment have been hampered by concerns about their political and social costs. Retrenchment programs are often perceived as politically costly because they risk alienating civil servants, who form an important political base for most regimes. Furthermore, erosion of civil service support can cripple other reform efforts. Consequently, a number of regimes have lacked the political will to implement retrenchment programs as designed. The social costs of retrenchment programs have also been an important source of concern and inhibited implementation efforts. Large layoffs have the potential of destabilizing private sector labor markets, especially since such programs often occur alongside demand-reducing stabilization policies. Retrenchment programs also raise equity concerns, particularly that women, who are less likely to face job and wage discrimination in the public sector, will be disproportionately hurt. However, perhaps of greatest concern is the impact of retrenchment programs on the welfare of households where key income earners lose their public sector jobs. Will retrenched workers be able to find alternative employment and means of ensuring their families" basic needs, or will they become a new class of poor? Before addressing this question, Section two presents a historical overview of the growth of the public sector in Guinea during the post independence period and how this public sector growth precipitated the need for strong reform measures in the mid-1980s. Section three describes the efforts of the new reform-minded government that took the reigns of power in 1985 to reverse the growth of the public payroll. The section also discusses the effectiveness of the retrenchment program from a macroeconomic perspective, in terms of reducing the budget deficit, as well as from the perspective of institutional strengthening. The transition costs of redeployment are evaluated in Section four, followed by a discussion of the adequacy of compensation programs in Section five. The final section reviews the salient results of the paper, and discusses the policy implications of the findings. (Author abstract)