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  • This toolkit was made possible through financial contributions from the Netherlands Ministry of Foreign Affairs.

    Labor Issues in Infrastructure Reform

    A Toolkit



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    Labor Issues inInfrastructure Reform

    A Toolkit

  • 2004 The International Bank for Reconstruction and Development / The World Bank

    All rights reserved.

    1 2 3 4 07 06 05 04

    The findings, interpretations, and conclusions expressed herein are those of the author(s) and do not neces-sarily reflect the views of the Public-Private Infrastructure Advisory Facility (PPIAF), or the Board ofExecutive Directors of the World Bank, or the governments they represent.

    Neither PPIAF nor the World Bank guarantees the accuracy of the data included in this work. The bound-aries, colors, denominations, and other information shown on any map in this work do not imply any judg-ment on the part of PPIAF or the World Bank concerning the legal status of any territory or the endorse-ment or acceptance of such boundaries.

    Rights and Permissions

    The material in this work is copyrighted. Copyright is held by the World Bank on behalf of both the WorldBank and PPIAF. No part of this work may be reproduced or transmitted in any form or by any means,electronic or mechanical, including copying, recording, or inclusion in any information storage and retrievalsystem, without the prior written permission of the World Bank. The World Bank encourages disseminationof its work and will normally grant permission promptly.

    For permission to photocopy or reprint any part of this work, please send a request with complete informa-tion to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone978-750-8400; fax 978-750-4470;

    All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of thePublisher, World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax 202-522-2422; e-mail

    ISBN 0-8213-5470-1

    Library of Congress Cataloging-in-Publication Data

    Labor issues in infrastructure reform : a toolkit / Public-Private Infrastructure Advisory Facility (PPIAF).p. cm.

    Includes bibliographical references.ISBN 0-8213-5470-1

    1. Public worksManagementHandbooks, manuals, etc. 2. Public contractsHandbooks, manuals, etc. 3. Labor contractHandbooks, manuals, etc.4. Public worksPersonnel management. 5. Public worksEmployees. 6. Public worksCosteffectiveness. 7. Contracting out. 8. Infrastructure (Economics) I. Public-Private Infrastructure Advisory Facility. II. World Bank.

    HD3850.L23 2003352.7'7268dc22 2003061161

  • Contents




    Introduction to the Toolkit 1Objectives 1Structure of the Toolkit 2Support for and Contributors to the Toolkit 3

    Labor Issues In PPI: An Overview 4Labor Issues in Infrastructure Enterprises 4Labor Impacts of PPI 8Dealing with Labor Issues In PPI 10

    Defining Objectives 12Assessing the Size and Scope of Labor Restructuring 14

    Staff Audits 14Benchmarking 15Work Force Analysis 16

    Developing Strategies and Options for Labor Restructuring 17Timing and Sequencing Issues 17Restructuring Options 19

    Developing Key Elements of a Labor Program 20Severance Payments 20Pension Arrangements 24Redeployment Programs 27Employee Share Ownership Plans 29

    Managing the Restructuring Process 30Engaging with Stakeholders 30Implementation Arrangements 34

    Monitoring and Evaluating Labor Programs 37Objectives 37Concepts and Approach 38

  • Integrating Labor Programs in the PPI Process: A Road Map 41

    Phase 1: Initial Assessment 42Phase 2: Design of the Labor Program 44Phase 3: Implementation 44Phase 4: Monitoring and Evaluation 44Additional Material (on the CD-ROM) 45Background and Overview Articles 45PPIAF Case Studies of Labor Issues in PPI 45Web Sites 45References 45

    FIGURES1.1 Organization Chart for a PPI Team (Sample) 351.2 Road Map for Labor Adjustment 42

    BOXES1.1 Technology and Reform in Ports 51.2 Argentina Rail: Crisis and Reform 61.3 Evidence of a Public Sector Wage Premium 81.4 Labor Market Flexibility and Work Force AdjustmentA Snapshot in Estonia and Slovenia 111.5 Generic Labor Benchmarks 141.6 BrazilWork Force Analysis in Rail Privatization 161.7 World Bank Support for Severance 231.8 South AfricaPensions at Johannesburg Water Company 251.9 Bolivias Capitalization Program 261.10 Brazil RailPension Reform and Labor Adjustment 261.11 Active and Passive Labor Market Programs 271.12 MalawiExperience of Consulting with Labor in Privatization 301.13 Key Points for Stakeholder Analysis 321.14 Cte dIvoire RailwaysParticipatory Processes 341.15 Port of Santos, BrazilThe Special Labor Fund 361.16 British Coal EnterprisePrivatizing Redeployment 371.17 Monitoring vs. Evaluation 401.18 Guidelines for Submissions to Decisionmakers 43

    TABLES1.1 Standard Severance FormulasAdvantages and Disadvantages 211.2 Benefits and Costs of Participatory Engagement Processes 311.3 Understanding Stakeholder Interests 331.4 Analysis, Monitoring, and Evaluation in Labor Adjustment Programs 38



  • Acknowledgments


    This toolkit was funded by the Public-PrivateInfrastructure Advisory Facility (PPIAF), a multi-donor technical assistance facility aimed at help-ing eliminate poverty and achieve sustainabledevelopment through private involvement ininfrastructure. Funding was also provided by theWorld Bank and the Netherlands ConsultantTrust Fund.

    The toolkit was managed and led by SunitaKikeri of the World Banks Investment ClimateDepartment. Olaf Smulders, a consultant fundedby the Netherlands Consultant Trust Fund, pro-vided research and analytical support. The toolk-it was prepared by the Adam Smith Institute(ASI) of the United Kingdom. The team com-prised Terry Green (team leader), BrendanMartin, and Roberto Battista, and was super-vised by Roger Usher, ASI Director.

    The toolkit benefited from the inputs of representa-tives from international development institutions,the labor movement, and colleagues in the WorldBank Group. They included Alberto Chong (Inter-American Development Bank); Antero Vahapassi(Asian Development Bank); Cleopatra Doumbia-Henry (International Labor Organization); MikeWaghorne (Public Services International); PeterBakvis (International Confederation of Free TradeUnions); David Cockroft and Stuart Howard(International Transport Workers Federation); andAmit Dar, Amy Luinstra, Anita Schwarz, BillKingdom, David Fretwell, Gordon Betcherman,John Speakman, Jordan Schwartz, Lou Thompson,Marc Juhel, Martin Rama, Omer Karasapan,Richard Hinz, Robert Mertz, Warrick Smith, andYash Pal Kedia (the World Bank). Maria Honradoand Rosario Bartolome provided logistical support.

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