Massive Layoff Begets New Loan; It Also Threathens Stability
President Ellen Johnson Sirleaf's Dilemma

By J. Yanqui Zaza


The Perspective
Atlanta, Georgia
May 3, 2006


Is firing 500 or 66% of the 750 workforce of the Liberia Petroleum Refining Company (LPRC) an introduction of President Ellen Johnson Sirleaf’s program of privatization? Or is her government following the economic prescriptions of the World Bank as part of a deal to renegotiate Liberia's $3.5 billion dollar debt? Predictably, some affected employees would be rehired once the government negotiates new loans and identifies new contractors.

However, how long would it take to get a new loan and bid out contracts, let alone rehire the would-be redundant employees? Wouldn't such a high rate of downsizing increase the already high rate (70%) of unemployment in Liberia, thereby creating conditions that might undermine our fragile peace and stability?

Mr. Harry Greaves, the managing director of the Liberia Petroleum Refining Company (LPRC), announced that he would retire 500 employees to save $850,000 per annual. (FrontPage Africa, 4/15/06) Another managing director of the Bureau of Maritime, John Morlu also recommended the retrenchment of 86 of the Bureau’s 121 employees. (FrontPage Africa, 4/21/06) It is true that our huge debt and hostile business environment are part of the reasons why private employers are shunning away from Liberia. It is also true that the cancellation of our debt would increase the government’s changes to reduce the high rate of unemployment.

But government alone can’t reduce our high rate of unemployment without the involvement of private employers. Unfortunately, key factors that would entice employers are lacking. For example, the prospect of long term stability and the provision of adequate roads, bridges, electricity, etc, skilled manpower and the control of white-collar corruption would surely help. For now our peace is being sustained by the peacekeepers, but they wouldn’t stay for too long. And even president Sirleaf’s advisors would agree that her government might not quickly build our infrastructure within time to lure private employers into Liberia.

In addition to the lack of infrastructure and limited skilled manpower, employers are concerned about the cost of doing business. Without any doubt government should reduce the excessive cost of payroll. But most times investors shun away from a country when government officials, demands kickbacks in exchange to sell public properties and services at hot prices and award contracts with inflated cost.

Independent reports indicate that officials’ demand for kickbacks is prevalent in Liberia. In one of those sweetheart deals, debated via the Internet, is the Comium and Cellcom deal. Officials of the last interim government selected Comium and Cellcom, which paid $40,000 to $50,000 for a deal valued for about $5 to $7 million. (FrontPage Africa, 4/9/06) Also in the case of LPRC, the former management awarded a three-year contract worth $12 million to a company, apparently, in exchange for kickbacks. Evidently, the cost of the LPRC sweetheart deal, $4 million dollar per annual, exceeds the $850,000 to be saved from the payroll. Another area that management could have saved more money, rather than the payroll, is the difference between the $158,000 profits and estimated actual profit of $2.5 million for 2005. According to Greaves, LPRC should have reported $2.5 million dollar rather than the $138,000.

Waite a minute, we had an opportunity to create an environment conducive for good economic activities. Instead, the Bryant interim government under the supervision of the World Bank failed to even prevent NGOs from squandering portion of the $520 millions of dollars? Donors gave the money in 2004 to be used in creating an environment conducive that would have also enable citizens to pull themselves by their bootstraps? Frustratingly, citizens in counties including Lofa County are not only having problems finding jobs, but they are also having problems with former combatants because of ineffective programs of disarmament and demobilization?

Aware that the World Bank failed in helping to lay foundations for spurring economic activities, the “Iron Lady” is now asking workers to accept additional bitter pills from the World Bank. Most workers, even if they understand the reasons for the austerity programs, are unprepared, understandably, to accept additional stiff economic pain. By the way, have those economic policies worked anywhere? Many critics of the World Bank say no. Joseph Stiglitz, a leading critic, and former senior vice president and chief economist at the World Bank, said those rigid economic policies of the World Bank such as massive retrenchment have at most times created disastrous consequences in many countries. (Global Policy Forum, 4/22/06.)

He added that besides its failed economic policies, the World Bank’s loan lending program has become a cash cow for private corporations. Concurring with Stiglitz’s view on corporate corruption, Paul Wolforwitz, the current president of the World Bank, during a Press Conference in April 2006, lamented private corporations and NGOs for inflating cost of contracts in developing countries. In another story of failure, a group of health experts writing in the British Medical Journal, "The Lancet," accused the World Bank of using false statistical data to claim success and wasted money on ineffective medicines in countries such as India.

Shareholders of the World Bank and chief executives have continued to profit form the idea of downsizing corporations at the expense of workers. Even the promise given by our liberal US President, William Jefferson Clinton that merged corporations would rehire many of the former workers has not come true. But when private employers give out pink slips in developed countries, unlike Liberia, affected employees begin to receive different kinds of paid checks such as food stamps, vouchers for housing, Medicaid, etc. Those social dividends help in restoring peace and stability even though chief executives get lavish salaries and generous bonuses.

Mr. Greaves didn’t inform us about LPRC’s salaries and hidden benefits allocated for managers and members of the board of directors. Also, he didn’t indicate whether he would ask for an adjustment in his benefits, since the retrenchment of 500 employees would reduce his responsibilities. However, for curiosity purposes, what is the proportion of the salary of the affected employees as compared to the total salary or more so to the total expenses? Additionally, which of the figures, $850,000.00 or $158,000.00 would be the saving from the retrenchment? Interestingly, if manager Greaves would generate higher profits than the $2.5 million dollar estimated in 2005, why is he proposing a retrenchment? It is a nice thing to report profits and pay dividends as he asserted, but is it not a good thing also to maintain this fragile peace by retaining honest working people? Further, in view of the fact that the would-be retired employees have many dependents, would it not be prudent for the government to delay massive layoff until it can determine with certainty when new employers will help and reduce the high rate of unemployment?

Please let the poor people have a share of the peace dividends.