Sonam Sonika

S11145116

State owned enterprises are those enterprises which are owned by a countries government. For
example the civil aviation, telecommunication, defense, electricity and forestry of a country. It
can also be said that the state owned enterprises are likely to remain as an important tool in any
of the government’s toolbox for social and public significance establishment given the right
context. According to www.psrc.pwc.com the state owned enterprises are a powerful and
growing force worldwide. For instance, the percentage of state owned enterprises amongst the
Fortune Global 500 has grown from 9% in 2005 to 23% in 20142, motivated mainly by the
growth of Chinese state owned enterprises. Thus this essay will discuss how the restructuring of
state owned enterprises have an impact on employees and the organization.

Firstly, the impact on restructuring of state owned enterprises on the employees is that there will
be a change in the labor demand or job creation. Due to the restructuring of state owned
enterprises there is an increase in labor demand. When state owned enterprises such as Fiji
Airways, Energy Fiji Limited and others are restructured or organized differently than the
demand for labor increases since more job opportunities are available. For example after the new
Boeing 737 MAX 8 aircraft’s arrival, there is a demand for more cabin crew. Similarly when the
Nadi International Airport was renovated there was a high demand for more employees. Thus
when the state owned enterprises are restructured there is an increase for labor.

Moreover, restructuring of state owned enterprises also have an impact on the human resource
development. The development of human resource helps in the training, organizing and career
development efforts to improve the employees. When the state owned enterprises are organized
differently the labor demand increases which leads to hiring more employees which further leads
to the training and preparing the newly hired employees to work perfectly. When the new
employees are hired then companies have to train the employees to their standard of work and
this is where the human resource development comes in. For example when hiring the new cabin
crew, the airline company provides training on the customer service. Therefore, the development
of human resource plays an important role in the restructured state owned enterprises.

However, there are some negative impacts of the restructuring of state owned enterprises.
Surplus worker is one of the results of the reform of the state owned enterprises. Despite being
continually cutting down on the labor there is still a labor surplus. Surplus labor means more
expenses for the company in terms of paying more wages to the employees which makes the
organizations to cut down on their labors. To decrease the cost of surplus labor, employees are
being given reduced working hours and unpaid leaves. This later leads to poverty since the
surplus labor are not getting enough money for feed their families since they are either working
less hours or are being laid off. In some cases companies also give early retirement to their
surplus staff to cut on the labor costs.
Furthermore, the impact of restructuring process on the organization can both be negative and
positive. One of the positive impact or restructuring state owned enterprises on the organization
is that during the reform there is a decrease in government holdings in the state owned
enterprises assets by either partially or full privatization of the state owned enterprises. This has
a dual impact firstly, reducing the government cost in the inefficient state owned enterprises.
Secondly, it creates opportunities for the private firms to buy shares in the state owned
enterprises and it helps the enterprises to expand. The private firms participate and expand the
inefficient running business. For example the Telecom Fiji Limited has got a number shareholder
which includes Fiji National Provident Fund, Vodafone Fiji Limited, Fiji Directories Limited,
TransTel Limited and other institution. Privatization of state owned enterprises has a positive
impact on the enterprises after reforms.

Moreover, another positive impact of restructuring the state owned enterprises is that after
privatization there is a positive impact on the organizations performance. It is found that net
income, the profitability of the organization, operational efficiency, asset size and other aspects
have improved considerably after the privatization of some state owned enterprises. The
restructuring of the state owned enterprises has showed that the organizations becomes more
resourceful and has a high profit after the inefficient organizations are privatized. For example
the Fiji Electricity Authority is now privatized. The Fijian government of giving free shares to
the Fijian citizens who are residing in Fiji with domestic electricity account holders to be a
shareholder in the new privatized Energy Fiji Limited. The privatization with reduce the
government interferences and is also associated with improved efficiency due to profit
incentives.

Finally, it can be said that the restructuring of state owned enterprises has both negative and
positive impact on the employees and the organization. The impact of restructuring of state
owned enterprises on the employees are in terms of labor demand, human resource development
and surplus labor. Labor demand is where there is a demand for employees to work in the state
owned enterprises. Human resource development is for the hiring, training and organizing the
new employees. Surplus labor is when there are excess workers in an organization which is a
negative impact on the workers. However, the impact of restructuring of state owned enterprises
on the organization are that there will be a decrease in government holdings in the state owned
enterprises and the privatization of the inefficient state owned enterprises.

925 Words
References
www.psrc.pwc.com

http://fijianstudies.net/wp-content/uploads/FS/8(2)/SOEs.pdf

https://www.adb.org/sites/default/files/project-document/66736/39664-mld-tar.pdf

https://fijisun.com.fj/2017/07/07/fea-privatisation-by-the-end-of-2017-a-g/

https://www.investopedia.com/terms/l/labor-productivity.asp

http://efl.com.fj/shares/

https://pmg.org.za/committee-meeting/3977/