An analysis of compensation programmes for redundant workers in Egyptian public enterprises

The purpose of this chapter is to analyse alternative designs of severance programmes to reduce labour redundancy in Egyptian public enterprise slated for privatization, restructuring or liquidation. Given Egypt’s existing labour code, which makes involuntary layoffs impossible, compensation programmes must be able to exit the desired number of workers while remaining voluntary in nature. An efficient voluntary severance programme must be targeted in such a way so as to compensate workers for the individual-specific losses. Like other public policies that require targeting under conditions of incomplete information about workers, labour compensation schemes face agency costs. An efficient design would attempt to minimize these costs.