Monday, August 06, 2007

Public Versus Private Sector Employment: Making a Choice

Tungnung, Zamlunmang Zou

It is time to ponder on the value of working in a private company. Dont be dismay or fear for your future. Even the govt. institutes ceased to have a pension scheme. In this case, private and govt is in the same ground.

One more similarity in the metropolitan cities is that, the working hours in both the institutes have no dofferent, 8-9 hours each.

One of the least recognized elements in the current privacy debates is the profound difference between governments and the private sector in how they come to privacy. The two have radically different incentives when they collect, use, and store personal information about consumers and citizens. They operate in entirely different legal regimes, as well.

Government-owned organisations are, however, very different from private sector organisations. They are usually far more regulated, subject to scrutiny from their shareholder and other governmental and quasi-governmental organisations and often work in areas where they are required to assist the government of the day to implement its policy platform. Government entities are often expected to achieve societal or environmental outcomes in addition to financial targets.

Many people would characterise government-owned businesses as inherently less risky than private-sector enterprises. This is a misconception. Frequently, government businesses work in fields in which commercial business cannot operate effectively. Monopoly status leads to conflicts between the need to generate profits and the need to supply essential services. An elected shareholder, responsible for supplying the community with adequate levels of service, as well as for effective stewardship of assets, is an imperfect solution to this problem, but it appears the best solution available. In addition to the usual business risks there is a greater risk to society or the economy that arises from the often essential nature of the goods or services provided. Balancing the risks and rewards is a constant challenge. Often asset lives are very long and the need to gain a 'market-level' reward for the risks of the business would lead private companies to charge excessively or to fail to reinvest appropriately.

The main aim of the government in establishing an independent board to oversee the management of government-owned entities is to remove the risks of directorship from the Minister and the department and reposition them with the board and management. Accountability in the government-owned sector is as real, and often more rapid, than in the private sector.

The difference between privacy in the public and private sector is clear. In the public sector, the citizen has no choice but to provide the federal government with legally required information in the form of tax returns, a Social Security number, student loan information and other data to the federal government. It is precisely because of this authority that the government has the highest legal and moral obligation to ensure that this information is protected, especially as citizens have little recourse to compensation if it is used incorrectly.

In the private sector and on the Internet, however, the citizen has numerous options to withhold information—the ability to disable cookies, use P3P technology built into browsers, and examine a site's privacy policy and move on if the provisions are unsatisfactory, just as one would walk out of a store with poor service or quality in the offline world. Additionally, if users feel the site is not complying with its posted privacy policy, just as they do when a business promises and fails to keep personal information private, while causing harm, they have recourse to legal action*. (* Eugene Volokh, Law Professor, University of California-Los Angeles, "Warning, Congress! Look Before you Leap into Internet Privacy Thicket,")

When the NLRA was being drafted and debated in the 1930s, a central question was whether or not compulsory unionism should apply to government employees. The growing pool of government employees made a tempting target for union organizers, but there was great opposition for a number of reasons.

First, opponents of mandatory collective bargaining for government employees argued that compulsory unionism would threaten public safety. Forcing military leaders to bargain collectively with armed forces personnel unions, for example, would pose a serious threat to the effectiveness of the national defense. A union contract that specified how military personnel should perform would take the discretion and flexibility away from commanders who were required to act creatively and decisively at a moment's notice. And what would happen, they asked, if Air Force pilots threatened to strike during war time, or local police or firefighters staged a walkout, threatening the safety of their community?

Second, critics argued that there is a major difference between government and the private economy in the areas of competition and consumer choice. For example, private-sector businesses that negotiate union contracts with extravagant wages and inefficient work rules are soon forced to drive up their prices and sacrifice customer service to meet the demands of their labor agreement. But consumers have choices, and they will avoid high prices and poor service by patronizing other businesses. This competition forces the labor unions to be reasonable in their demands or face losing employment for their members by precipitating a business bankruptcy.

With government, however, there is no such competition. If a state government negotiates costly and inefficient union contracts with state employees, citizens and taxpayers have no alternative. Without packing up and moving to another state, citizens have no direct way to drive on lower cost roads, support a less expensive prison system, or otherwise seek options in the functions of state government.

Citizens who do not or cannot move are forced to either continue to pay higher taxes or else spend their time, energy, and money lobbying their elected officials for change, which most just cannot afford to do. Unlike in the private sector, citizens cannot easily choose a better provider of government activities.

Government employee unions therefore experience little external pressure to moderate their demands. This is one reason why salaries and benefits for government employees are routinely higher than salaries and benefits for private-sector employees (see Chart 2).

It is certainly debatable whether collective bargaining as an institution is appropriate to government.

Another concern over compulsory unionism for government employees focuses on the incentives it creates for agencies to become politicized. For example, private citizens have little financial incentive to get involved in politics because they could work long hours to bring about change and end up reaping only a few dollars, if any, off of their tax bills. Government employees, on the other hand, have significant financial incentives to get involved in politics because they can help elect their "boss." By electing public officials who are friendly to union interests, government employees can expect favorable treatment, which may come at the expense of the citizens and taxpayers.

Compulsory union laws force government employees to financially support labor unions. The unions contribute heavily to candidates seeking positions on political bodies such as the local school board, county commission, state legislature, or even Congress. If the union-backed candidates are successful, they may support policies that benefit government employees at the expense of citizens and taxpayers.

Few Michigan citizens fully understand the pervasive influence that government unions have on Michigan politics. For example, the Michigan Education Association (MEA), the state's largest government school employee union, is frequently the largest single contributor to Michigan political campaigns. In 1998, the MEA's political action committee (PAC) topped the list of contributors to the Democratic party, giving $1,075,050 to various political campaigns. Government employee unions have extensive networks of supporters to rally their members and make partisan politics an institutional priority.

One example of how citizens and taxpayers can be harmed by compulsory unionism in government is the unions' categorical opposition to privatization, whereby government services such as trash collection are contracted out to a private firm. Many communities have found that privatization saves significant amounts of tax dollars and improves services. Flint Mayor Woodrow Stanley, for example, once saved $1.4 million out of a $6.2 million waste collection budget simply by threatening to privatize unless the union workers performed more efficiently.37 Most unions strongly oppose privatization because they believe that it always means unionized government employees will be replaced with private, non-union workers.

Union-backed public officials may also oppose any efforts to repeal compulsory union laws, work to strengthen those laws, or support forcing all workers covered by collective bargaining agreements, including non-union members, to financially support unions.

Such public officials may also keep more government employees on the payroll just to increase their political support. They may also support "prevailing wage" laws which require contractors working on government projects to pay union-scale wages, benefits, and employ restrictive work rules, effectively eliminating more efficient, non-union competitors and driving up costs to taxpayers.

Recognizing these and other potential problems with public-sector compulsory unionism, Congress exempted government employees from mandatory collective bargaining. Some states, however, ignored these concerns and enacted their own mandatory collective bargaining laws for government employees. With PERA's passage in 1947, Michigan became one of them.

Currently there are 36 states that have mandatory collective bargaining for all or some government employees.38 In addition, federal legislation was enacted in 1978 that implemented mandatory collective bargaining for many federal employees.

You are close to graduation and giving serious thought to what you would like to do with your fine educationbesides make money. When searching for employment, what do you look for in a job description to determine whether you are interested in pursuing the opportunity? Considerations like meeting the minimum qualifications for the job, the rate of pay, job location, the fit with your career goals, and the reputation of the potential employer are some of the issues that need to be evaluated before you invest the time and effort in pursuing an opportunity.

The potential employer's reputation is very important. Your attitudes toward work and the path that your career takes depend on the work environment your employer provides for you. Choosing the right employer is not trivial.

GOALS:

There are fundamental differences in the objectives of the public and private sectors. The role of government in the scientific field is to expand the knowledge base and provide for the public good. This is usually referred to as high-risk research because the payback on the initial expenditures is neither guaranteed nor near-term.

Government R&D programs are set-up such that the public-at-large benefits from the results (e.g., the space program, medical research on genetics and diseases such as AIDS, and defense-related technologies that have civilian uses). Private-sector R&D is focused on short-term results for developing a new product or improving an existing product to provide a competitive edge for the company or to increase profits. Private-sector research in the minerals industry is not normally high risk or long term.

ENVIRONMENT:

Both sectors can provide exhilarating and satisfying jobs, depending on what you want. The government is better suited to provide for the overall long-term R&D needs of an industry, whereas, a company is better suited at meeting company-specific R&D needs.

If you can work on a project for 3­5 years and be comfortable with the possibility that results will not be implemented for another decade, then the government would be a suitable employer. The USBM, for example, provided the basic R&D needed to develop new technologies that were a decade or two ahead of what was needed by the industry. The USBM's research provided companies with a basis to start tailoring the technology to their particular need.

If you need to work on projects that are short term with immediate results, you may want to seek employment in the private sector. Many of the projects I currently work on last less than four months. The results of the test work are used to make decisions that effect plant operations almost immediately. For instance, Newmont's short-term goals include annual gold production; the work that I am asked to do in the laboratory is designed to help meet that goal for the year.

EXPERIENCE:

When I graduated from college with a B.S. in metallurgical engineering, I did not have a clear idea of where I wanted to go in my career. So, I went to graduate school and got a M.S. in nuclear engineering. The two years I spent in graduate school really helped me recognize that I wanted to do research; thus, I joined the USBM in Reno after graduation. Here, I could quite conceivably work on developing a new process for the recovery of iron from the Duluth Gabbro one year and work on the recovery of gold from disseminated sulfide ores the next. The USBM also focused on the environmental needs of the minerals industry. This provided a young metallurgical engineer with quite a well-rounded background.

Industry provides the opportunity for a young engineer to apply his or her understanding of the scientific principles to actual processes. This is what most of you will end up doing. The results of the test work that I do at Newmont have immediate application. This is a much more satisfying scenario than working at the USBM, where the application of results was not always guaranteed. At Newmont, the work I do is initiated by a request from an operational unit. This means someone is waiting for the results before I start my work.

A significant difference between public and private sector R&D is how far a project is taken from the laboratory to commercial operation. For instance, Newmont Gold Company started looking into the treatment of low-grade sulfide ores. The company started with a R&D phase to develop a process, followed by smallscale demonstrations and largescale demonstrations. It is now planning to commercialize the process. This scenario is typical for the introduction of new processes in industry. Public sector R&D, however, stops at the small-scale demonstrations. In some cases, an industrial partner who needs the technology immediately will take the technology to commercialization.

PROFESSIONAL DEVELOPMENT:

There is a major difference in philosophy between the public and private sectors regarding participation in professional societies. Active participation in professional societies such as TMS was encouraged and accepted by the USBM as part of the job. Newmont employees attend pertinent meetings, but Newmont does not actively encourage its employees to do more than attend meetings.

The value of networking with other scientists working on long-term R&D in the same field cannot be over-emphasized. When I first moved to Washington, D.C., to take over the management of the USBM recycling R&D program, I had no knowledge of the field besides curbside programs that I participated in as a homeowner. My participation in the TMS Recycling Committee helped me get into the technical aspects of the recycling industry much faster than I would have done otherwise. The network I established through TMS helps me in my current position as well. The importance of establishing networks is paramount. You do not want to reinvent the wheel if you do not have to!

The publication of research results is another area that is different between government and private industry. The government is interested in disseminating research results far and wide. When I joined the USBM, I was asked to work on developing a process to treat refractory gold ores in an alkaline system. Within eight months I was writing a paper for publication. If I had worked for a gold company, I would not have breathed a word of this to anyone outside of the company because this process could have ended up providing a competitive edge to my employer.

DECISION:

Should you focus your job search in the private or public sector? I joined the government for my first job not out of any ideals, but because it appeared to provide the kind of work environment I could feel comfortable in. I felt at the time that I needed to work in an environment where being a woman would not be a hindrance. Eight years later, I came to industry much better prepared to deal with the conservative nature of the mining industry.

Your decision depends on whether you are looking to get into the R&D field or if you are looking to get some practical operating experience. For someone not quite sure where his or her interests lie, the government agencies are a good source of varied work without having to change employers. If you know you want to get into the practical side of being an engineer or scientist, look to the private sector for employment.

References

1. This story appears in The Minerals, Metals & Materials Society's student newsletter Professional Preface, vol. 4, no. 3, p. 1.

2. Corporation secretaries (Management), Corporate governance, Corporation secretaries (Aims and objectives), Public enterprises (Management)

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