As a people, the Swiss are known for two things: neutrality and national pride. Ethnically heterogeneous, the Swiss are held together by love of the country and adoration of national symbols. For decades, one of those symbols was the national carrier Swissair.
The fortunes of the airline began to decline in the late 1990s and the Swiss government had to pump in a pretty penny to keep the carrier afloat. But the rot continued. Anyone who travelled by Swissair as late as the first half of the last decade would recall that its operations were marred by delay and missing baggage. Finally, in 2005, things came to a head and the airline was taken over by German national carrier Lufthansa. A potent national symbol of Switzerland thus became the subsidiary of a German company.
Fairly recently, in another famous case of acquisition, the US-based Microsoft purchased the Finland-based cellular phone giant Nokia.
The point is that privatising national assets or selling them off to foreigners doesn’t bring a bad name to a people. Nor does a government or a company which makes such a decision put national honour or interest in disregard. If an enterprise is making losses for years on end, a change in management is one of the options to set things right. Of course, there’s no guarantee that the new management will turn the fortunes of the company around. But persisting with the status quo is a recipe for disaster.
Once a big success story, PIA has been in dire straits for years. Things have come to such a pass that the airline is incurring annual losses of Rs28 billion, with its accumulated debt having soared to Rs300 billion. Flight delay and cancellation have become a matter of course. Predictability of operations and excellence in service – and consequently customer trust – have long been given a short shrift in PIA.
One obvious problem is the employee-aircraft ratio, which at 450 is one of the highest in the world. Successive governments used the airline as an employment bureau. Being a corporation, PIA offered an attractive salary package, which made it a first choice for job seekers.
Elementary economics tell us that an excess number of employees leads to diminishing returns. In case of PIA, to keep the organisation alive, the government put in more money without addressing the structural issues facing the organisation. That only made things worse.
Notwithstanding their claims, people at the helm have been shy of restructuring PIA, because such a step would require cutting back substantially on the strength of the workforce, which might strike at their vote bank. When political expediency rather than utility prescribes what the government does in the realm of economics, white elephants like PIA and Pakistan Steel Mills are inevitable.
One may ask whether there’s anything wrong with the government providing jobs to the people. Not in the slightest. In fact, it’s the other way round. The public sector being the largest employer all over the world, government departments take the lead in job generation. It’s therefore hard to find fault with the employment-creation role of the government. What, however, may come under question is the way this role is performed.
Governments generate jobs in three broad ways. One, they create jobs directly by filling posts in government, semi-government and autonomous departments. Even in a relatively small economy like Pakistan, normally thousands of vacancies arise in the public sector every year.
Two, through economic policies and administrative measures, the government creates conditions that are conducive to employment creation in the private sector.
Three, the government helps people get jobs by investing considerably in human resource development. By imparting quality education and training, the government can enhance the productive capacity of the labour force and make it easier for it to get employed.
Giving jobs is only one instrument of employment generation for the government. However, in Pakistan, a mixed economy where public and private sectors co-exist, governments deem it to be the only one. Even this instrument is used in a way that plays havoc with the management of the economy as well as the public sector and results in more jobs being lost than created.
Political appointments hamper the efficiency of the organisation. If an organisation is run by incompetent persons appointed on a political basis, it will soon be off-track. In case of a public-sector enterprise (PSE), the government will have to put in heaps of money just to keep it alive. A cash-starved government like Pakistan’s will have to resort to bank borrowing to save its loss-making enterprises.
Political interference results in both induction of incompetent people and over-staffing of PSEs. Surplus employees are not only a burden on the finances of the organisation they are also a drag on its output and efficiency. Unemployment can’t be eradicated just by inducting the entire jobless labour force in the public sector.
The present government claims it wants to privatise PIA only partly by offering for sale 26 percent of its shares and making strategic partnership with an investor – similar to what was done in case of PTCL. PIA employees are, however, against the very idea of selling off their organisation, and understandably so. The transparency of the privatisation process, which is of equal if not more importance, is not figuring in the debate.
If PIA is not sold off, what’s the alternative? Restructure it. Yes, but restructuring, like privatisation, would entail shedding staff and would avoid strong opposition from persons likely to be affected. The other alternative is to keep things as they are, with the government continuing providing massive subsidies to PIA and thus making the situation worse.
This write-up may be concluded with an anecdote: Once a distant relation of a nawab begged him for a job. The nawab in his infinite generosity appointed him the head of treasury. When it was submitted to his highness that the applicant didn’t possess the relevant credentials, the nawab thundered that being the ruler of the state it was for him to decide whether a person deserved a job and that it was beneath his high office to turn down a job application especially when approached by someone related to him. The new head of treasury made a mess of the finances of the state and in a few years it was reduced to insolvency.
The writer is a graduate from a western European university.
Email: hussainhzaidi@gmail.com
