How can privatization be defined? Every public organization has the option to sell its shares and get the ownership of a private individual. Most government companies take this step when the productivity of a company has to be increased. However, this step does not carry positive factors only and certain negative parameters are involved. Let’s glance at both of them.
When a private group takes over a government organization, it usually increases the salary scale and increment rate. This is to maintain a sense of attraction for the employee. After privatization, employees get a feeling that the job security is reduced. This is a fact. As compared to the government of a country, private owners have fewer resources and they seek larger profits as well. Hence, they reduce the staff so that their expenses for salaries are lessened. People usually start seeking alternate job opportunities when their organizations are privatized.
According to the legal agreements in most countries, a company is privatized when fifty one percent or more of its shares are sold. In some cases, a private owner may take over a public company even when it does not own fifty percent of the shares. Privatization agreements are quite complex and detailed. Apart from the share percentage, the ownership also depends on the clauses used in the agreement.