When state-owned enterprises preparingfor privatization have very high levels of redundant workersand when social safety nets and redundancy provisions inlabor laws are inadequate or lacking, the political andsocial implications of layoffs mean that the governmentshould be involved in the design and funding of specialprograms to deal with unemployment and labor unrest. Thisnote reviews the main elements of such programs severanceand retirement benefits, retraining and redeploymentsupport, employee share ownership schemes, and importantly,mechanisms to ensure labor consultation and participation.In many countries these programs need to go hand-in-handwith reforms to expand private labor markets: removingobstacles to job creation, ending restrictions on hiring andfiring, and eliminating taxes that raise the cost of labor.
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