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Privatization in Public Administration - Essay Example

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Privatization of public enterprises has been a much debated subject over the years. To define, “privatization is the procedure of transferring possession of a business, enterprise, agency, or public service from the public sector to the private sector” (Times of Switzerland)…
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Privatization in Public Administration
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Download file to see previous pages Developing countries have adopted the privatization for planning as a policy and system for national socio-economic development. Privatization involves strategies that would reduce the task of the state by assigning larger roles for the private sector. Despite all identified challenges and disadvantages, the privatization of public administration would bring forth more effectiveness in organizational management and service delivery. Although the change is a major threat to the job security of public employees, it is more likely to continue as the improved level of productivity has already been proved. In delivering the public service, privatization can make use of the advantages of competition and flexibility. These advantages also help in attaining greater effectiveness and increased response to the needs of customers. These objectives are very difficult to be achieved within the public sector either due to the incapability of the government or due to the slow procedures of the government machinery. When the government plans for the privatization of any stream of public administration, it has to enter into a “performance contract” with the commercialized enterprise to determine the post privatization relationship between government and the firm. The performance contract must; Specify the long-term objectives involve performance criteria between the government and the firm specify the level of performance of the enterprise specify the certain penalties if the enterprise fails to fulfill any agreed performance. As Cook and Uchida point out, in many developing countries as well as in the developed countries privatization and commercialization have gained recognition and adequacy (1-23). It also helps the government in putting the government structure on track and strengthening industries controlled or administered by the state. Considering all the aspects of privatization, some support the view that ‘privatization is always political’, by political they mean governments have aims which are non-economic. To illustrate, privatization leads to the transfer of assets into the undesired private hands with the complete knowledge of the government, aiming at only special classes of buyers. On the way to privatization, there would be some political impediments too, such as conventional or disruptive attitude of existing managers and employees of state-owned enterprise who are afraid of the challenges of privatization. A well formulated privatization policy with strong determination can overcome such impediments. On the way to privatization there are many political and economic goals to be achieved and there are some political impediments to overcome. According to Donaldson; -It is the level of government’s strength and commitment that determines the precision in launching privatization. -It is the business needs that describe what sort of buyer should be invited. -Mass privatizations can be welcomed, but they may not help in adequate corporate governance. -A pro-competitive structure is an essential element of privatization which must be obtained. (Source: Donaldson, 19-37). One among the several advantages of privatization is that privatization brings more revenue to the government when compared to the public enterprises; so government can easily earn a little more by leasing out an enterprise to private undertakings. As the private organizations are very much concerned about the quality of service they provide, there will be increased levels of accuracy and commitment towards the job. Besides, the privatization of the public enterprise helps in getting out of the political interference. They have the expertise in proper ...Download file to see next pagesRead More
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