Answer to Question #229304 in Macroeconomics for Tshepi

Question

Question 7
What is meant by the term privatization? Identify 3 reasons why some parties are against the concept of privatisation

Answer 1

Privatization refers to the transfer of ownership, business or property from the government to the private sector.

Reasons why some parties are against the concept of privatization

• It leads to unemployment. This is because there will be retrenchment of employees due to emphasis on performance which results in work pressure which some workers find difficult to adjust to.
• Possibility of long term risks. Privatization involves decisions to start venture which result in short term benefits but may not be good for long term.
• Less social development. Private companies have no obligation to do social work as the government or the public sector keeps doing simultaneously.