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    A BANGLADESHI SOAP OPERA: PRIVATISATION, ACCOUNTING, CONSENTAND CONTROL

    Shahzad Uddin

    and

    Trevor Hopper

    Manchester School of Accounting and FinanceUniversity of Manchester

    1.0 INTRODUCTION

    Policy prescriptions within development economics, influenced by neo-classical economics,assume an infusion of private property rights into failing public enterprises will increase their efficiency via better controls, including accounting ones. This research, based on an intensivecase study of a recently privatised Bangladeshi corporation, argues that such beliefs can besimplistic and erroneous: privatisation does not necessarily transform controls to the publicgood.

    Participant observation studies of accounting remain small: those constructed bottom-up fromthe perspective of labour are even fewer. This study addresses this lacunae through labour

    process theory, especially the contributions of Burawoy, with respect to the following researchquestions:

    1. How have control systems at the shopfloor level changed following privatisation? (theempirical question)

    2. Are these practices and changes consistent with the control and consent theory of Burawoy and how do they relate to the political economy of accounting moregenerally? (the theoretical question)

    3. What are the ramifications of these changes upon organisational performance, its

    participants, public policy and economic development issues more generally? (the policy questions)

    2.0 THE POLITICS OF THE BANGLADESHI ECONOMY AND PRIVATISATION

    Bangladesh is a largely homogenous society in terms of culture, language, race and religion.With nearly 120 million people, it has the world's ninth largest population with the highestdensity in the world among non-city states. Despite reductions to poverty almost half the

    population still below the poverty line partly because Bangladesh's rapid population growthoutstrips gains from economic growth.

    Bangladesh (previously East Pakistan) was liberated on 16 December 1971 and the newgovernment led by Sheikh Mujibur Rahman was committed to socialism - including the

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    nationalisation of heavy industries. Whatever, significant readjustment to the industrial sector was essential as fleeing West Pakistanis abandoned their substantial share of industrial andcommercial enterprises leaving a leadership and management vacuum. The Awami LeagueGovernment responded by nationalising all abandoned property and hundreds of industrial andcommercial enterprises. Unfortunately the enabling legislation was imprecise, disorganized andconfusing (Sobhan and Ahmad, 1980) and it was functionally untenable since the Ministry of Industries did not have the personnel to discharge their responsibilities on the resulting boards.As a consequence of these events, the running of enterprises came to rest with a fluctuatingcoalition of union leaders, managers and nominated outsiders with deleterious effects. In someenterprises inventories of finished goods and raw materials were sold to pay the wages of thestaff and workers and/or to line the pockets of the board members (Sobhan and Ahmad,1980).

    The Bangladesh government faced acute problems as the nationalized industries had hugeliabilities along with the loss or damage to physical facilities and personnel; the destruction of

    power lines, bridges and road culverts; and damage of port facilities and rolling stock. Thenew socialist government adopted policies aimed at agricultural self sufficiency, importsubstitution and industrialization through state intervention and central planning. Thisinterventionist approach to development resulted in serious macroeconomic difficulties. Owingto the cost of capital, subsidies, and huge investments in the unprofitable public sector, the

    public sector budget deficit rose. Public enterprises were responsible for 25% of grossdomestic capital formation and their inefficiency had a direct impact on the allocation andquality of public investment (World Bank, 1993). Their losses hit 30% of annual project aiddisbursements thereby diverting resources from other high priority activities. The poor

    performance of nationalised industries in Bangladesh strengthened the hands of their critics.Ghafur (1976) argued that the poor performance of the public sector was a result of poor government decisions, managerial failure, political interference and misconceived price policy.

    As a consequence of socio-political factors it was not easy to maintain proper control systemsin public sector enterprises which were officially structured through three tiers: the Ministry,the Corporation Board, and Enterprise Management. Individual units have little power as aWorld Bank report indicated, "Though autonomous in theory, public enterprises are still defacto under government control and government interference is the rule rather than theexception." (reported in "The Bangladesh Observer", 24 March, 1992). Public sector enterprises are principally controlled by their respective Ministries but the financial authority isthe Ministry of Finance. This dual authority can impede proper financing decisions and control

    systems. Theoretically Parliament is the highest tier of control but performance reports arerarely presented to it. Even if a report is submitted politicians do not take action. The weak controls are exacerbated by excessive bureaucracy. As public enterprises tend to be in chronicdeficit and Bangladesh Annual Development plans are dependent on international aid (WorldBank, 1996a) international agencies such as the World Bank and the IMF are major playersand an uncomfortable source of pressure over public enterprises. Public enterprise labour unions in Bangladesh are organised on political lines being affiliated to parties such as theAwami league and the Bangladesh Nationalist Party (BNP). They follow the orders of their

    parent: and in turn politicians frequently intervene into the management of public enterprises:even labour appointments and promotions are politicized (Murshed, 1989).

    In 1975 a military coup overthrew the Sheikh Mujib government killing Mujib. Three monthslater General Ziaur Rahman came to power through another coup assuming full power in

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    1977. His government initiated liberal economic policies: some Bengali-owned enterpriseswere returned to their former owners and the scope of state intervention was limited.However, these reforms were organised poorly and lacked policy orientation. In 1982 GeneralErshad overthrew the BNP Government and his administration reshaped the post 1973reforms. In 1982 a turning point in the post-independence economy of Bangladesh was

    produced through a new economic policy encouraging the private sector and readjusting the public sector. In 1987, many public sector enterprises were put into a joint stock holdingcompany whereby all industrial units within corporations were treated as subsidiaries. Under the partial privatisation policy, termed the 51-49 plan by government (Humphrey, 1990),subsidiary companies tried to sell shares with 51% of total shares remaining under governmentcontrol.

    After long and turbulent mass movements BNP were elected to power in 1991 but they pursued privatisation consistent with previous industrial policies. In 1991 they liberalisedforeign trade, including considerable relaxation of exchange controls and restructured import

    tariffs. Following the 1996 elections, the Awami League formed the government but they tooremained committed to privatisation policies (The Daily Star, 14 June, 1996) believing that public enterprises in Bangladesh are inefficient and under-utilized (World Bank report, 1993,1995, 1996b).

    The World Bank were influential in shaping opinion: their 1995 report justified privatisationthus: fiscal considerations; impediments to improving efficiency under public ownership; low

    productivity, high costs and poor services of state owned enterprises (SOE's); and superior private performance. As the report admitted, some of these reasons were not empiricallysupported. By 1995, 125 large and medium industries had been privatised leaving 225 SOE'sstill in the public sector. However, privatisation efforts had not run smoothly as is revealed inWorld Bank reports noting delays (World Bank, 1995). The World Bank responded with new

    privatisation ideas in 1995, arguing for an accelerated program of privatisation, the sale of larger state owned enterprises, private participation in infrastructure, public enterprise reform,rationalising labour whilst developing a safety net for displaced labour, reforming key aspectsof the enabling environment, proper regulatory structures, a better approach to preparationsfor sale, a wider range of financing options, mechanisms such as the Poverty Alleviation Trustto allow widespread ownership, and strengthened administrative arrangements (World Bank,1995).

    All these recommendations make one central assumption, namely that ownership changes will

    bring superior management controls, increased efficiency and fiscal benefits. Therecommendations fly in the face of reports that previous policies were unsuccessful (WorldBank Reports, 1993, 1994, 1995, 1996a; 1996b; 1996c). Studies of the performance of post-

    privatisation firms in Bangladesh have been inconclusive on the question of relative efficiency(Lorch , 1990-from World Bank, 1995). Sobhan (1991) evaluated post-privatisation

    performance by a cross-sectional comparison of privatised and public sector reporting that:

    The Board of Investments (BOI) has 497 disinvested enterprises (small, medium andlarge) registered with it. Of these units the BOI managed early in 1991 to survey for the first time 290 or 58% of the registered units. Of these surveyed units only 137 or 47% were found to be in operation. 75 or 26% of the units had ceased production.Another 78 or 27% of the disinvested units had been abandoned altogether and wereusing the premises for other purposes than for running an industry. Whilst this is not

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    reported the impression of the BOI field surveys was that of the 137 units in operationmany were not in good shape. (p.148).

    Monopoly power in several industries, the immobility of labour due to huge unemployment problems, the uneven distribution of income, and low saving rates combine to frustrate suchreforms. Moreover, as Alamgir (1978) pointed out, public sector enterprises operated inimportant socio-economic sectors of infrastructure and basic manufacturing providingessential trade and management within previously abandoned industrial and commercial units.

    3.0 THE RELATION OF ACCOUNTING CONTROLS TO OWNERSHIP ANDDEVELOPMENT

    Whilst privatisation policies in developing countries are framed partly by public sector inefficiencies they are also embedded in ideological pressures emanating from developedcountries through agencies such as the IMF and the World Bank. Internal politics and external

    pressures become interlinked leading to privatisation policies in developing countries (Adam etal., 1992; Hemming and Mansoor, 1988; Cook, 1986; Ramanadhan, 1988). Somegovernments based industrial policies on ideologies from developed countries, especiallyThatcherism and Reaganism, to legitimise non-democratic actions. For example, the ErshadGovernment in Bangladesh formulated industrial restructuring policies in the face of huge

    political outcry against its rule. Given that donor agencies such as the World Bank and theIMF are prime sources of external aid, and their tendency to offer loan facilities conditionalupon privatisation (whether public enterprises are loss-making or not), their policies are oftenadopted in an attempt to shore up domestic support by vulnerable governments. Thedevelopment literature informing aid agencies policies advances privatisation on the basis of two sets of efficiency gains: productive efficiency and allocative efficiency. Productiveefficiency is rationalised by property rights and agency theory (see Adam et al., 1992).

    Property right theory suggests that managers have a direct interest in cost minimisation if rewards are directly related to economic performance (Furubotn and Pejovich, 1972). It isargued that private owners induce more efficient managers by implementing controls andincentives that maximise profits and increase the value of property rights (Hanke, 1986)whereas under public ownership, where net benefits do not accrue to individuals, nobody hasan incentive to do so. Thus in the public sector there is a missing link between ownership andmanagement control. In the private sector owners must produce efficient management controland restructure by buying or selling assets: failure to do so will lead to market failure or take-

    over. However, because public assets are not individually owned they lose transferabilitycharacter and are thus immune from market disciplines (Hanke, 1986 p-16). Many researchers(Commander and Killick, 1988; Adam et al., 1992) have taken issue with claims that thecreation of property rights are a precondition for effective control over management. Adam etal. (1992) argue that depictions of the public sector as a homogeneous social welfaremaximiser and the private sector as a pure profit maximiser are naive or analyticalsimplifications; in reality, neither sector can conform to these types. Carrying such theoreticalassumptions to the practical context of privatisation obscures rather than clarifies the links

    between ownership and efficiency (Adam et al., 1992). Such theorisation may be relevant for classical small firms but in the modern large limited liability corporation the property rights of owners are more diluted, leaving managers with considerable discretionary power to further their own interests (Commander and Killick, 1988; Adam et al., 1992).

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    The basic tenet of agency theory is that agents will act in self-interested ways therefore the principal must structure their incentives to make them act for him. However, relationships in public enterprises are more complex than envisaged in agency theory and almost certainly beyond its scope to model them. The first link in the public sector is between the electorate as principals, and the legislature and executives of enterprise as agents. The public sector conventionally consists of many complex chains and agents are often responsible to more thanone principal. The links between efforts, efficiency and outputs (profitability) are frequentlyvery weak. Lastly, performance-related-pay systems, which are central to agency theory, areoften difficult to derive in public sector organisations (Rees, 1985). The principal-agentrelationship in the private sector is relatively simple: owners or shareholders have access toinformation to monitor management and sanction its actions accordingly (Adam et al, 1992).In an efficient capital market, share prices accurately reflect performance so managementinefficiency results in share values lower than the potential profit maximisation level. Failure to

    perform renders a company liable to hostile take-over bids the threat of which creates aself-regulating incentive scheme (see Jensen and Meckling, 1976). However, this makes two

    major assumptions of dubious empirical validity. The first is access to complete information:information processing is highly complex and conflicts within organizations can createtransmission barriers. The other assumption of perfectly competitive markets is unlikely tooccur in developing countries where imperfect markets and unorganized capital markets tendto prevail.

    Allocative efficiency stresses the macro-economic benefits of privatisation claiming that thesale of public assets generates capital revenue leading to reduced net budgetary transfersfreeing resources for private sector investment. Again, this assumes efficient capital and

    perfect trading markets which rarely exist in developing countries (Commander and Killick,1988; Adam et al., 1992; Cook and Kirkpatrick, 1995).

    Research results on the performance of privatised industries in other developing countries areas inconclusive as those done in Bangladesh. Some studies report that public sector enterprisesin developing countries fail to generate significant contributions to GDP and they are weaker,in terms of profitability, than the private sector (e.g. World Bank, 1981; 1983; IMF, 1986;Ayub and Hegstad, 1986; Killick, 1983; Kim, 1981; Funkhouser and McAvoy, 1976). Othersargue that public sector performance cannot be evaluated by essentially private sector criteria

    because governments have pursued non-commercial objectives in the public sector (Prager,1992; Cook and Kirkpatrick, 1988; 1995). Some researchers even claim that public enterprisesare more or no less efficient than those run by private interests (Millward, 1982; Weiss, 1995,

    Wortzel and Wortzel, 1989).

    The claims that privatisation will induce superior organisational control systems (Vickers andYarrow, 1990) is not conclusively supported in development research (Cook and Kirkpatrick,1995). Potts (1995) found that two states in Tanzania improved effective and innovativemanagement after denationalisation but in many others their effectiveness declined. Macro-economic studies fail to demonstrate how internal organisation responds to ownershipchanges. Despite desired outcomes being contingent upon management control practices intheir underlying theories of privatisation, development economists have little theoretical or

    practical knowledge of such matters. The organisation is seen as a black box with outcomes being tweaked by structural policy changes such as privatisation. The nearest developmenteconomists have come to detailed study of privatisation and organisational changes involvingaccounting, planning and control is Karatas's (1995) comparative evaluation of enterprise

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    performance during pre-privatisation and post-privatisation periods drawing on financial performance measures such as turnover, profit margins and productivity. He concluded that itwas difficult to demonstrate that privatisation had an impact on overall performance. Theempirical evidence that ownership changes affect performance is ambiguous and inconclusive.

    Fortunately, some accounting researchers, more au fait with managerial matters than mosteconomists, have attempted to relate the shape of controls to ownership (see Jones, 1985;Espeland and Hirsch, 1990; Jones, 1992; Wright et al., 1993; Ogden, 1993; Wickramasinghe1996. Espeland and Hirsch (1990) studied the role of accounting in financial transformationsarguing that it played an important role in justifying the change of ownership. Wright et al.(1993) found a privatisation through management buy-out had several positive impactsincluding the introduction of more appropriate financial control systems, employmentcontracts and negotiating machinery, and the release of investment constraints on subsidiaries.Ogden's work (1993, 1994) is the most comprehensive accounting study of privatisation andcontrol. Through a Foucauldian analysis of economic governance he shows how customers

    and markets were constructed by newly privatised UK Water companies. Managementaccounting played a central role in translating political objectives into an apparentlyorganisational performance matter. Only Wickramasinghe studied accounting and privatisationin a developing country (Sri Lanka).

    4.O BURAWOY: CONTROL AND CONSENT

    Given the importance of political and institutional factors on privatisation in under-developedcountries a political economy approach was deemed to be necessary for the research (Burchellet al., 1980; Neimark and Tinker, 1986; Hopper et al., 1986, 1987; Hopwood and Miller,1994). Previous research on controls in Bangladeshi organisations had traced the importanceof shop-floor conflict and the intervention of trade unions and political parties uponmanagement accounting practices (Hoque and Hopper, 1994, 1997) but its theorisationrequired development. Given this preliminary work it was felt that the role of accountingneeded to be understood in the context of conflict and contradictions of labour processes(Hopper et al., 1987, 1986; Armstrong, 1991).

    Burawoy's work in a labour process tradition was chosen as his 1979 study focused onshopfloor consent as well as conflict, trade union behaviour and managerial strategies of control: all of which were known to be key issues in Bangladesh. Also, it was based onresearch methods deemed appropriate to this study - participant observation - which gave

    replication and comparison opportunities. In addition, Burawoy's later (1985) work relates processes of control to a macro socio-economic analysis of states and markets cross-nationallyincluding developing countries 1. As this study sought to extend its analysis beyond intra-organisational processes into external effects of institutions and markets, Burawoy's later work

    provided an attractive framework for doing so. Unfortunately, like so much industrialsociology within a labour process tradition it has been ignored by accounting researchers who,insofar that they address sociology, appear more attracted by discourse and rhetoric rather than the analysis of action. In short, there appears to be more interest in talk than behaviour. 1

    The relation of our empirical findings to broader theorisations involving

    capitalistic development, organisations and the role of states is not presented in this paper which focuses on the case study results and Burawoy's 1979 theorisation of themanufacture of consent.

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    Neglect of the subject is a major criticism of labour process theory (Knights, 1990; Aronowitz,1978; Knights and Collinson, 1985; Elgar, 1979; Cressey and MacInnes, 1980; Littler andSalaman, 1982) though few of the critiques offer a comprehensive alternative theorisation.Despite Marx's insistence that `structural contradictions would result in the overthrow of

    private property only once the proletariat became constituted as a class-for-itself (Knights,1990, p.303), few labour process theorists have examined the constitution of subjectivity. For example, Braverman (1974) quite consciously viewed subjects as determined by the objectiveclass structure leaving the examination of subjectivity to others. Burawoy's work is important

    because incorporates subjective dimensions of class in an attempt to address the economisticand deterministic deficiencies of labour process analyses its basic premise is that capital needsnot only to coerce workers but must also secure their cooperation. Burawoy s observations inAllied revealed that workers were not involved in resistance that questioned basic productionrelations because they were diverted into petty economic struggles and games operating within

    parameters set by management.

    In contrast to the more Foucauldian approaches of his critics (Knights, 1990; Sturdy, 1992) -whose theorisation of power and discourse is markedly different, Burawoy (1979) did not findany saturation of workers consciousness by discourses and practices in his ethnographicalstudy in Allied. Instead, Burawoy (1979, 1984, 1985) saw work contexts within threeinseparable dimensions: economic (production of things), political (production of socialrelations), and ideological (production of an experience of those relations) (Burawoy, 1985, p-25). Given that one of the major empirical papers on the role of accounting within shopfloor control (Knights and Collinson, 1987) is so firmly rooted in a Foucauldian traditionemphasising factors such as masculinity and discourse, in sharp contradistinction to thefindings of Burawoy, this research provided an opportunity to test the claims of both.

    Burawoy s concern is to explain how capitalism has continuously secured increasing volumesof surplus value whilst obscuring the exploitative character of its control over labour

    processes. Burawoy reveals how the 'manufacture of consent from shopfloor workers occursthrough the interplay of internal labour markets, the internal state and the games workers areinduced to play. Workers develop informal responses to systems created by managers directedat relieving boredom and achieving production targets. Their participation in game-playing hasthe consequence of generating consent to the rules, which define the conditions of choice andthe limits of managerial discretion (Burawoy, 1979, p. 199). Thus consent or self-discipline is

    produced not from ideological inculcation or socialisation but, paradoxically, through

    workplace participation (Sturdy, 1992, p.117).

    Figure One shows the basic elements of Burawoy's theory of control and consent based on theinteractions of production politics which include; changes in internal labour markets, theconstruction of games and the internal state. These are extended to include accountinginformation systems in the belief that they are an integral and related feature neglected bywork in this tradition.

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    Figure One: The Model

    4.1 Gaming Behaviour

    Burawoy's identification of gaming behaviour to subjective elements of labour was not new tothe labour process literature (see for example, Hanri De Man, 1958; Baldamus, 1961;Roethlisberger and Dickson, 1939; Crozier, 1976). Baldamus in particular identified therelative satisfactions of shopfloor games which reduce the strain of an endless series of meaningless motions (Whyte, 1955, p.37). Burawoy's contribution was to link this to themanufacture of consent and management control.

    To facilitate shopfloor games and consent (Burawoy, p. 71-2, 1979), management relaxesworkplace rules such as inspection procedures, rate fixing and shopfloor bargaining, andenhances workers' autonomy, for example, by designing machines so workers can put theminto motion singlehandedly, in the knowledge that changes allowing more manipulations

    paradoxically produces greater individual performance and effort, and ultimately helps mask potential sources of conflict. Reward systems based on individual rather than collective effortreinforce this as they generate competition and conflict amongst workers. The constitution of workers as competing and conflicting atoms helps mask any perception of common classmembership with other of agents of production dependent upon selling their labour power for wages distinct from another class of agents who appropriate their unpaid labour (Burawoy,

    p.81, 1979). Labour's participation in capitalist choices within games generates consent tocapitalist rules.

    The obscuration of production relations and the generation of consent is an insufficientexplanation of why workers cooperate in the pursuit of profit for Burawoy. Whereas Taylor and his associates argued that piece rate systems coordinate the interests of management andworker through a mutual interest in financial gain (Taylor, 1947), Burawoy's experience wasthat monetary incentives were an inadequate explanation of cooperation and making outcompared to the organisation of labour processes into a game, the goals of which come todefine shopfloor values and workers' constitution of self (Burawoy, p. 84, 1979).

    4.2 Internal Labour Markets

    Gaming behaviour is not the only factor which produces shopfloor consent. Burawoy notedthat in Allied workers had to be recruited, retained and provided with incentives and internallabour markets were integral to this. He detailed six aspects of internal labour markets: "a

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    differentiated job structure, an institutionalised means of disseminating information aboutsubmitting applications for vacancies, non-arbitrary criteria for selecting employees for vacancies, a system of training on the job, ways of generating a commitment to the firm thatmakes jobs in other firms unattractive, and, finally, maintaining the allegiance of employeesafter they have been laid off." (p-98; 1979).

    Neoclassical economists examine internal labour markets in terms of organisational efficiency(Doeringer and Piore, 1971). However, internal labour markets increase individualism andredistribute conflict thereby obscuring and helping secure surplus value (Doeringer and Piore,1971; Edwards, 1975; Braverman, 1974; Polanyi, 1944). Burawoy (1979) argues that theyreproduce a basic feature of external labour markets - competitive individualism - alongside aninternal labour market characteristic of systematic objective job mobility. The latter helpsresolve worker/management tensions whilst producing competitive tensions between workers.Both promote individualism preventing workers from mobilising collectively as a class.Moreover, internal labour markets help cement workers' commitment to the enterprise by

    rewarding seniority. Thus, whilst internal labour markets expand workers' choices with the prospect of greater reward, it constrains their behaviour within narrower managerial limits.

    4.3 The Internal State

    Burawoy (1979) saw the internal state (normally commensurate with the trade union) as a setof institutions that organise, transform, or repress struggles over production relations at theenterprise level. The union acts as an umpire: protecting the rights of industrial citizens andoverseeing the punishment of offenders against contractual obligations (p-113, Burawoy,1979; see also Weinstein, 1975; Selznick, 1969; Habermas, 1975).It constrains managerial

    prerogatives to fashion and direct labour processes and it endows workers with rights as wellas obligations. Through collective bargaining it dissolves conflict between shopfloor agents of

    production by reconstituting it into a framework of negotiation (see also Reuther, 1958) thatgenerates a common interest between the union and company based on the survival andgrowth of the enterprise (Przeworski, 1978). Thus, the mediating role of collective bargainingagents protects capital-labour relationships and, by negotiating on marginal changes it deflectsattention from more fundamental capitalist relations of ownership and control therebyrendering subjects the object of consent. Burawoy (1979) saw collective bargaining as another game - "this time a game about rules and outcomes of other games, such as making out". (p.115)

    The internal state is relatively autonomous (Burawoy, 1979) and makes management andworkers subject to rules and regulations in labour contracts. This autonomy is crucial for the preservation of production relations so long as it protects management from itself - especiallyarbitrary interventions that would undermine consent at the point of production. Companiesmaintain the relative autonomy of union leadership and legitimise the union as a bargaininginstrument as long as it coordinates union and management interests through grievance

    procedures and collective bargaining to expand profits, which in turn provide materialconcessions in the form of employee benefits and wage increases (ibid, p.119). Burawoy notesthe fragility of the internal state. The interests of capital, labour and managers are not easy tocoordinate as each seeks increased control over the labour process and, unlike the global state,the internal state explicitly recognizes classes thereby potentially renders organisationsvulnerable to class struggle.

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    4.4 Accounting Information Systems

    Burawoy did not explicitly study the role of accounting in controlling labour processes thoughothers have subsequently done so (Hopper et al. 1986, 1987, Armstrong 1985, 1991, Hopper and Armstrong, 1991). Also the importance of game spirit to accounting controls has beennoted within traditional and human relations schools of accounting research. Hofstede's (1968)observations on budgeting behaviour as a game and its consequences for motivation differ little from those of Burawoy. However, their implications for organisational objectives andcontrol systems are markedly different. Hofstede, in a Human Relations tradition argues:

    ....planning and control, essential factors for any organisation, can be seen as a game by managers. The trick, then, is to get managers to approach the budget as if it were agame - in a positive and high-spirited way. A well-played budget game meansinvolvement, co-operation, excitement, and a positive contribution (p.16: illustrationfrom Macintosh, 1985)

    On the other hand, in Burawoy's account, accounting plays no direct role in shopfloor gaming but rather, according to accounting researchers (Knights and Collinson, 1987), it acts as aninvisible hand justifying and shaping controls such as bonus systems.

    The relationship of accounting to internal labour markets is poorly understood. Hopper et al.(1987) argue that accounting provides an ideological reinforcement of labour relations:

    'The manner in which accounting portrays, inter alia, the nature of organisations, their goals, the employment contract and the necessity of hierarchy are all pertinent to theanalysis of how capitalist relationships are reproduced in the work organisation.' (ibid,

    p. 446).

    Accounting shapes and is shaped by internal labour markets: individual bonus systems call for prospective and retrospective calculations of performances; accounting plays a decisive role inshaping organisational boundaries and rendering individual performance visible.

    Previous research noted that industrial relations involving the internal state of was one of themajor management control features within the Bangladeshi public sector (Hoque, 1993; Alam,1990; Uddin, 1987). As a consequence of political interference, often in cahoots with tradeunions, into the management of public enterprises formal accounting planning and control

    systems had come to bear little resemblance to actuality. Not surprisingly, the import of accounting controls had withered. In Burawoy's terminology, the internal state had failed tocoordinate the interests of workers, management and the state under public ownership. As aconsequence, expanding profit and thereby increasing employee fringe benefits had little roleto play in coordinating worker and corporate interests.

    It is reasonable to surmise that under private ownership this would be reversed. Profit would become the major organisational goal; accounting data and controls would become central inthis; and the internal state would revert to coordinating owners' and employees' materialinterests. Accounting has a significant role to play in such a reactivated internal state. For example, it can make visible the scope for material concessions such as employee benefits andwage increases which, as argued previously, individualise workers and give an impression of worker rights and responsibilities within the organisation. On the other hand, the internal state

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    if it uses accounting calculations and logic can, perhaps unwittingly, justify managerial practices that obscure capitalist relations of production.

    4.5 Control Practices

    The Burawoy model perceives control practices as the interaction of the control factorsdescribed above, the configuration of which may lead to control strategies such as coercion or consent. For example, management uses coercion or direct control strategies such as hiringand firing, in the absence of strong worker resistance and/or weak state protection. On theother hand when the latter are present, management may emphasise consent through changesto internal labour markets and the promotion of gaming and the internal state (see also, Littler and Salaman, 1982; Thompson, 1990).

    Armstrong (1996) suggests that the use of budgetary controls in large UK companies isintimately connected to issues of labour control. They are used most when management have

    the freedom to act on the information, normally when the power of workforces are weakest.Put crudely, they may be most prevalent under more coercive strategies of control. However,as Knights and Collinson (1987) argue accounting can also be a means of manufacturingconsent because of its apparent objectivity and imperatives. It was known that in PC pre-full

    privatisation, when labour resistance was considerable and trade union influence high,accounting played no significant role within control. The research sought to test whether accounting played a role in shopfloor control after privatisation, as implied by developmenteconomists, or by supporting managerial efforts to produce subjective consent byunderpinning changes to internal labour markets and the internal state as claimed accountingresearchers, and whether the Burawoy model could be extended to incorporate this.

    Burawoy's arguments regarding the politics of production have been criticised for neglectingthe theorisation of individual subjectivity in the production of consent and gaming behaviour (Sturdy, 1992; Knights and Collinson, 1985); the challenge posed to management control bylabour resistance (Thompson, 1983); and for failing to distinguish between various types of consent (Littler, 1982); and for undermining the significant role of tacit skills in the production

    processes (Manwaring and Wood, 1982). Whilst the study did not expect to resolve theseissues it hoped to inform the debate through a detailed examination of shopfloor controls in animportant phase of transformation by addressing: How do control rationalities emerge over time? How is worker s resistance diverted to petty economic struggles? How are workersindividualised by changes in internal labour markets and the internal state? How are workers

    subjectified by their own gaming behaviour? How is consent is manufactured within PC sshopfloor, if at all? and, How does accounting play a role in shopfloor controls?

    5.0 RESEARCH METHODS

    This research used various methods of collecting data including interviews, participationobservation, analysis of relevant documents and examination of newspaper reports. The datawas gathered over seven months (from February to September 1995). This paper draws mainlyfrom the participant observation phase supplemented by interviews with managers, employeesand bureaucrats. Despite participant observation being a method of social inquiry in culturalanthropology and organisation studies for some time e.g. Dalton (1964), Roethlisberger (1939), and its frequent espousal in accounting circles most accounting case study research

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    rests mainly on interviews. This is surprising given the latter's limitations and the additionalinsights offered by the former. As Friedrichs (1975) argues:

    'Participation observation is suitable for research on processes into complex fields of activity with numerous situations and persons, or as a method of exploration todiscover relevant variables of the behaviour of actors or in their relations to anorganisation; in other words in areas where interview data can be invalid, e.g. becausesubjects are too involved in a context to see the obvious, because of the socialdesirability effects ....., or because of social perception .....' (ibid p.85).

    To obtain a good experiential understanding about the behaviour of managers and workers onthe shopfloor, the researcher worked in the soap division of PC for one month as a casualworker like Burawoy (1979) in Allied. Personal and company anonymity was a condition of research access. As a participant observer it was neither practicable nor desirable to keepnotes during work or in front of fellow workers as it might inhibit them from talking freely.

    Consequently, observation notes on incidents and conversations, including the researchers'feelings and reactions, were taken upon returning home.

    In addition, 55 interviews were conducted with managers (past and present), accounting staff,foremen and local trade union leaders plus seven civil servants (two each from the Ministriesof Industries and Labour, two from the Privatisation Board and one from Ministry of Planning), two Bangladesh Bank officials, one World Bank official and two national tradeunion leaders were interviewed. Questions were asked in an open-ended fashion to helpinterviewees respond freely and to avoid predefinition of issues. Normally, interviews lasted

    between one and two hours and notes were taken during each. Cross-checking and cross-referencing similar points was done manually and notes of the interviewer's reactions weremade immediately after each interview. Reports, many of which were unpublished, werecollected from government offices, the World Bank, trade unions and PC itself in addition tothe normal library and newspaper searches to help validate and supplement the interview andobservational data.

    6.0 THE HISTORY OF PC

    6.1 Products, Production and Performance

    PC is a mix of automated and non-automated production with most products produced

    continuously. The main products are made in two separate production departments: soap andcosmetics. The researcher chose to work in the Soap division as it is the largest productiondepartment in PC. Three kinds of soaps (laundry, toilet and glycerine) are made in separate

    plants. Each processes the raw materials in boiling kettles transferring it to soap storage tanksas processed and liquid soaps. The tanks are directly connected to machines which convertliquid soap into a hard form. Laundry soap dominates the total production of soaps, possibly

    because its production is quicker than other soaps. The soap division has three shifts: morning(6 a.m. to 2 p.m.), evening (2 p.m. to 10 p.m.) and night (10 p.m. to 6 a.m.). Machine set-ups,say to change product lines, are usually made on the night shift.

    6.2 Private Ownership (1959-71)

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    PC was established in 1959 at its present premises by a group (anonymised as X) as a privatecompany to produce a cold cream. After a few years the company started to produce soap

    products becoming the market leader. PC was profitable immediately: it faced littlecompetition from domestic producers and it was protected from multinationals by governmentimport restrictions. Taking advantage of this, PC rapidly expanded and by 1971 it hadincreased its product range and production volume.

    6.3 Public Ownership (1972-1988)

    The Pakistani owners of PC fled after the Great Independence War and the new governmentnationalised the company on 26 March, 1972, placing it within one of the newly formed publicsector corporations anonymised as `Y . The independence war and its aftermath had a greatimpact on the economy and PC was not unaffected. The dearth of managerial expertise wasaddressed by either promoting bottom level managers or hiring inexperienced managers fromoutside. There were no rigid rules for appointing managers or workers and consequently

    politicisation over management became chronic.

    Trade union leaders were highly influential due to their connections with ministers. This wasevident during major industrial relations disputes when politicians intervened intoorganisational affairs at the behest of trades unions. During public ownership there was acontinuous struggle between managers, their systems and trade unions for day-to-day controlof operations in PC. Nevertheless, despite its politicised management and bureaucratic controlsystems, PC made a profit under state ownership. One past manager commented:

    PC s products had a reputation and they were cheaper than other competitors' products. There was a belief that profit was inevitable for PC. PC never faced anylosses during the period of state ownership.

    PC s products were popular during the public sector period despite being severely hampered by the ownership changes. PC had 70% (average) capacity utilisation and it maintainedsatisfactory levels of sales and remained highly profitable. For instance, in 1985-86, PC s saleswere Tk. 466.88 million and it earned Tk.30.75 million profit.

    Bureaucratic management structures for state control over the organisation were instituted butthese were ineffective as in other Bangladeshi public sector organisations (Alam, 1982; Uddin,1987; Hoque, 1993). After nationalisation PC became part of a centralised formal planning

    and control structure running from the Ministry of Industries through Y down to the enterprisewhere the chief executive had very limited power (Hoque, 1993; Murshed, 1989; Uddin,1987). Consistent with public sector practices, the accounting systems in PC were extensive,consistent with then conventional good practice and, on the face of it, rational. In practice theywere highly bureaucratic and rule-bound behaviour abounded. The information produced borelittle relation to day-to-day decisions or operations thus it was largely ignored by managerswho tended to use accounting as a means of legitimation.

    6.4 Partial Privatisation (1988-1993)

    Following the fall of Awami League government in 1975, the public sector faced structuraladjustments involving ownership and redundancies, often at the behest of external aid agencies

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    (Adam et al., 1992; Cook and Kirkpatrick, 1995; Hemming and Mansoor, 1988). PC came onto the privatisation lists of government in the late 1980's and it was partially privatised in1988: officially to try and rectify its inefficiencies and to increase private participation in themanufacturing sector generally. PC was made a public limited company: 34% of its shareswere offered to the public and 15% to employees. As a result of the partial privatisation, PC

    became subject to dual ownership - private and public. This was reflected in the compositionof the nine member board of directors: five nominated by the government; three fromshareholders; and one from employees. Although the direct authority of Y and the Ministry of Industries was officially reduced, Y continued to influence important decisions through theBoard of Directors of PC. This was often unacceptable to directors representing privateshareholders which resulted in delayed decisions due to conflicts amongst directors. Theinfusion of private ownership merely enhanced the already severe conflicts and contradictionswithin the organisation.

    Management structures and control systems, including accounting and budgetary control ones,

    remained unchanged after partial privatisation and they remained ineffective. One accountantremarked with a laugh:

    Accounting and budgeting systems were only changed in terms of its amount of reporting. Now we had to make several reports to governments as well as to privatedirectors which only increased our workload.

    Trade union agitation increased and, through demonstrations and lockouts against partial privatisation, they strengthened their control over labour processes. One trade union leader commented:

    We knew the next step would be full privatisation. We wanted to keep pressureon government to get it back. Workers had full support for us because they werealso afraid of losing their jobs.

    Despite being partially automated, PC maintained a large workforce totalling 1091 employeeswhich seriously affected its productivity. Capacity utilisation dropped to 25%. One manager commented:

    Workers and trade unions were very involved in demonstrations and they werealso less motivated to do work since they were uncertain about their jobs. Under

    these circumstances it was hard for us to control them or make them produce.

    The trade union leaders became even more powerful when the already frequent worker sstrikes and lockouts dovetailed with broader political resistance against the Ershadgovernment. The labour federation (SKOP), of which PC's trade union was a member,mobilised workers against the government raising broader political issues including the partial

    privatisation of PC. PC's elected trade union leaders had to join worker resistance and fightfor worker s welfare even though they were the labour wing of the government party. Ittranspired that this was just a strategic step to maintain their influence over workersdependent upon trade union leaders' political contacts essential to influencing enterprisedecisions. For example, the trade union leaders achieved a production bonus for workersdespite actual production deteriorating. A manager commented:

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    We gave this opportunity to workers in order get their cooperation. Definitely it wasnot allowable in a sense as the company had already incurred huge financial losses.Sometimes we had to consider the political situation within the organisation.

    PC's profitability, sales and productivity deteriorated to a point where it was making major financial losses. In 1990-91 sales were only Tk. 267.88 million and it incurred a loss of Tk.56.46 million. Interviews with managers revealed various reasons, for example one remarked:"Due to the imminent privatisation of PC, workers observed demonstrations, strikes and alockout. Consequently production was seriously hampered". Another commented: "It was anintentional move of policy makers and directors (potential buyers) because this situation laidnecessary grounds for complete privatisation". Paradoxically, partial privatisation merelyexascerbated control system problems by merging external politics with those of PC.

    6.4 Post-Privatisation (1993-95)

    PC was fully privatised in 1993. The government's shares were transferred to one person, who became the managing director of PC. The other two top posts, executive director andmarketing director, were held by his younger brothers. Effectively PC became family-controlled as the family owned 75% of PC's shares. The new managers quickly made almosttwo thirds of the permanent workforce redundant and appointed a large number of casualworkers. By 1995 its workforce (including casual workers) had been reduced to 615.

    Full privatisation brought major changes to the control systems of PC. The new owner-managers (three directors) dominated PC. Middle management was reconstituted as a mixtureof managers who survived the purge of redundancies and imported managers with privateenterprise experience. Almost immediately, they stopped trade union leaders' influence over operations and they reconstituted informal and formal controls over managers and workers. In

    brief, the new senior management secured control over labour through a series of changes tointernal labour markets, trade union activities and shopfloor games. The role of accountingchanged substantially. However, its contribution lay in helping institute other controlmechanisms on the shopfloor rather than playing a direct role over workers. These changes areexamined more fully below.

    7.0 THE CASE STUDY

    7.1 Changes to the Internal State

    Trade union agitation against privatisation extended to the initial privatisation period. Tradeunions occupied the factory and prevented the new private owners entering their offices. Then,after dealings which are not fully revealed, management secured an agreement with a fractionof the trade union leadership. After long negotiations the one month lockout was withdrawn.One worker commented:

    We were stubborn about our steps. But some trade union leaders came up with proposals such as no redundancies will be made and no financial incentives will be cutoff.

    The promises broke down with the help of the aforementioned trade union fraction. The newowner-managers immediately made redundant almost 75% of their work force i.e. 700

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    workers and employees, including the leaders of other trade union fractions. They withdrewsome financial benefits such as provident contributions, bonuses and the workmen

    participation fund. These actions were a body-blow to trade union activities at PC and tradeunion influence evaporated at the shopfloor level. For example, during shift hours trade unionleaders were not allowed to open their trade union offices. When the researcher wanted tointerview them they had to find another location. The new management managed what wasleft of shopfloor trade union leadership through a mix of tangible covert actions - includingexcusing union leaders from working and giving them lump sum payments. This was aconstant cause of complaint by many workers. One trade union leader admitted:

    We have now limited power because of the job insecurity. Workers are not interestedin taking part in any demonstrations although we have been trying to get the financial

    benefits back for workers.

    Trade union activities became limited to formal negotiations with the executive director (ED)

    but to little effect. Management reigned supreme over trade union activities. One productionmanager commented: Now we are worried about the production targets. We can use workers in what wayswe want. Before privatisation, this wasn't possible at all since trade union leaders andworkers had a strong influence over target production and operations.

    The owner-managers took advantage of trade union conflicts, for example, by choosing whichrival fractions they made redundant. Workers repeatedly reported that their leaders worked for the owners and not them. Burawoy (1979) also found continual complaints by workers abouttrade union leaders but he also observed how workers relied on trade unions to solveshopfloor grievances. In PC the researcher found nothing that suggested trade unions wereinvolved with worker affairs. The union was unable to act as an umpire protecting the rights of industrial citizens or overseeing contractual obligations as Burawoy observed in Allied. Tradeunions at PC were far from an internal state, being unable to protect workers interests buttheir symbolic presence protected management from the legal sanctions of industrialordinances. The new management's abandonment of any internal state was crucial to realising

    production targets and hence capital accumulation in a manner different from that elaborated by Burawoy.

    Why are the results in PC different from Burawoy's in Allied? In Allied the internal statereflected a form of western advanced capitalism 2 where trade unions had grown relatively

    independently rather than stemming from the growth of political parties when trade unions hadinfluence over governments regarding workers interests. In contrast, in developing or colonialised countries the trade union structure often became politicised (Murshed, 1989;Hoque, 1993; Wickramasinghe, 1996), with trade union activities primarily shaped by politicalleaders. This was evident in the changes in trade union power at PC. During the pre-

    privatisation period trade unions could protect members' interests through their political linksto the responsible minister. The internal state imposed constraints on managerial discretion butthis was contingent on political parties allowing trade union activity insofar as it met their own 2

    Time and space precludes a consideration of how and whether changes in

    western capitalism subsequent to Burawoy's study in Allied have affected trade unionactivities and the role of internal states within western corporations.

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    political ends. Workers relied on leaders who could bring benefits for them, not on theinstitution itself. This was reflected in trade union elections: government-patronised leadersalways had strong support from workers.

    Burawoy noted the relative autonomy of the internal state whilst emphasising its conditionalityupon capital in cases of crises. In PC, full privatisation came during a profitability crisis andwrested control from trade unions to preserve private accumulation aided by state policies of structural changes. The theoretical model argued that trade unions displace conflicts betweendifferent agents at the point of production thereby preventing work disruption byreconstituting conflict in a framework of negotiation. This was not so at PC: collective

    bargaining failed to generate any common interests between company and union rather it gaveway to private accumulation with little challenge.

    7.2 Changes to Internal Labour Markets

    About 75% of the work in PC is classified as unskilled. A production manager explained:

    The industry has provided easy access for all workers who are physically strong because it needs very few technical people. We train general workers to have technicalknowledge of operations during their works.

    Nevertheless, the scale of job classification at PC is considerable. In terms of functional titles,there are four types of workers: operators; general; service; and maintenance. Operators areskilled workers who operate machine. General workers include store and unskilled productionlabourers. Service workers include mainly clerical workers in factory administration. In skillterms, there two types of workers technical and non-technical. Technical workers includeoperators, some service and maintenance workers. These workers are the life blood of PC asthey possess a broad range of skills. General workers are classified as non-technical workersas they need few skills to perform their activities. Technical workers are supervised byforemen (who also have technical knowledge). On the other hand, non-technical workers aremonitored by supervisors who are not technically skilled and are promoted from generalworkers. Before privatisation almost all workers were permanent. Permanent workers thenhad six grades based on seniority of service. All permanent workers could be promoted, bethey technical or non-technical, to the next grade. Such promotions only affected salary - notauthority, power and responsibility. There were also hierarchical promotional opportunities.For example, workers could be promoted to supervisory posts and operators could be

    promoted as high as superintendent-a managerial post. Initially, after privatisation, casualworkers were appointed in place of permanent workers in non-technical jobs. Later many weretrained by the new management to perform technical jobs such as machine operation but their states remained casual. Some casual workers promoted to permanent posts at the whim of management. In the mill, differentiation within grades was perceived by workers in terms of

    jobs and shifts allocated to a single worker. All workers except some administration, store andday crews had to work shifts but there were different shift cycles which changed over time.

    Nontechnical workers (75% of the workforce) work in very unhealthy dusty areas that arerisky to health. The Soap Processing Department requires hard work in unpleasant conditionsdue to the high temperature needed for mixing soap materials, the dust produced upon mixingand risky plant layout. Workers have to work in these conditions irrespective of their healthconcerns. As one worker complained:

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    They should have paid us more than the other easy works but we are exploited.

    Before complete privatisation, nearly all workers were permanent. New workers wereallocated the hard and risky jobs: after privatisation they were filled exclusively by casualworkers rather than mainly permanent workers as previously. The Deputy Chief Chemist(DCC) told the researcher that allocating hard jobs to new casual workers was part of their training. The same occurred with the appointment of casual workers to nontechnical jobs. For instance, when the researcher was talking to the Executive Vice President (the topadministrative post liable only to the Directors), about working as a casual worker he wasinformed:

    You have to do hard work since we generally allocate hard jobs to casual workers.

    At the beginning of the shift, casual workers assemble in front of the office of a supervisor

    responsible for scheduling general workers. Operators jobs are distributed by foremen,whereas previously they were fixed. Primary task allocations for casual workers are at the beginning of the week but later redistributions are necessary to cover absences or thesupervisor's deals with casual workers. Once tasks are allocated though, it is unusual tochange jobs mid-week and the supervisors' powers to do so are not absolute. For instance, theresearcher failed to go to the factory at the beginning of one week. Next day he bargained withthe supervisor for the same job as in the previous week and managed to convince thesupervisor of his incapacity for other jobs. Then the supervisor tried to put the researcher back on the original job requesting the casual worker affected to do another. However, thesupervisor's attempts were of no avail.

    Before privatisation, wages and promotions were determined by government rules andregulations, including minimum wage policies. The wages structure was based on seniority.This changed due to worker resistance in which trade union leaders were prominent.Subsequently, promotions were influenced by trade union politics and workers needed therecommendation of trade union leaders to gain internal promotions. A manager said:

    Although wage structures are guided by government regulations, those regulationswere being exploited by trade union leaders through their ministerial power.

    Trade union conflicts made things more complicated. PC s trade union politics were divided

    between two or three unions and workers had to support one to secure wage increments or promotions. Past managers described how promotions and appointments had had to be balanced between trade union fractions to prevent major disputes. Thus in the pre-privatisation period labour recruitment and promotion policies were simultaneously highly politicised and bureaucratically regulated.

    After privatisation this changed substantially: power switched to the new owner-managerswho did not follow any institutionalised vacancy filling systems. Instead they immediatelydeclared redundancy programmes. PC's workforce is now 60 per cent that previously of whicha half are now casual workers hired and paid by contractors on a daily basis. Casual workersare cheaper than permanent ones because they have no rights to minimum wage policies or welfare provisions such as medical clothing and leave allowances. They have no right to jointrade unions so they bring less political costs. PC now will normally not hire the same worker

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    for 90 days continuously as he would be deemed permanent in law. Shop managers handle thiscarefully, having informal arrangements with contractors about who to hire and fire when, asinstructed by ED. Before privatisation, appointments were politicised due to the interferenceof trade union leaders whereas after privatisation they became personalised by the familyowners.

    Two worker streams were created - casual and permanent - which resulted in lateral conflicts.Management provide an opportunity for casual workers to be promoted to permanent on the

    basis of ability and loyalty. The promotion system remained the same for permanent workersalthough it is hardly practised - possibly because of the dramatic absence of trade unionleaders. A manager stated:

    After privatisation, it is managers or the owners-managers who take decisions onlabour matters not the trade union leaders.

    When the researcher pursued these matters with the General Secretary of the present tradeunion he replied:

    It is not a good time for a fight but we are trying to implement previous financial benefits for workers. We have nothing to do with casual worker matters.

    Management altered the wage structure following privatisation, withdrawing the collective production bonus and replacing it with ad hoc and arbitrary reward systems ultimately decidedupon by ED. Job allocations within the shopfloor were made in a differentiated fashion

    between casual and permanent workers. Permanent workers got preferential treatment beingemployed in easier jobs. The new management also provided opportunities for casual workersto become operators or technical hands with the possibility of sometime becoming permanent.For casual workers, job allocation, promotion and training are dynamic: as a supervisor toldthe researcher as a casual worker, You have to know everything about the plants. .

    The above shows how the privatised PC established differentiated job structure in terms of promotion, mobility and training on the job and differentiated controls and recruitment for workers: personalised and somewhat coercive for casual labour - potentially bureaucraticthrough the internal state for permanent labour. However, the new management of PC did notfollow any of the institutionalised systems of filling vacancies that Burawoy found in Allied,rather the ED did this personally in an ad hoc and informal manner.

    The internal labour market of PC post-privatisation was marked by the differentiated controlson the shopfloor level which increased the lateral conflict and reduced hierarchical conflict.Thus whilst the structure of internal labour markets in PC and Allied were not similar their consequences were. The nature of internal labour markets may be contingent upon localcircumstances but their role in reproducing external labour markets within organisations towreak uncertainty and competition amongst workers may be universal.

    Whilst the features of internal labour markets at PC is somewhat different from Burawoy smodel their consequences upon controls are similar. In both managers separate andindividualise workers to secure a surplus from labour whilst securing commitment to theenterprise. Moreover, they generate tensions between workers and reduce opposition againstowners. During the pre-privatisation period of PC, state capital failed to internalise the

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    characteristics of external labour markets due to the politicisation of internal labour markets.After privatisation, the new management were able to do so after dominating trade union

    politics. This is in sharp contrast to Burawoy who emphasised that the effective operation of internal labour markets depends on the existence of strong union protection for the labour force and non-arbitrary decisions.

    Neo-Classical economists judge internal labour markets from the criteria of efficiency but thisstudy sought to determine how internal labour markets help promote an ideological basis for masking and securing the extraction of surpluses. PC s management action in the externallabour markets after privatisation were justified by the neoclassical arguments of efficiency.However, the changes to internal labour markets at PC, especially casualisation, had asignificant impact on lateral shopfloor conflicts and controls. The appointment of casualworkers in place of permanent workers and the diminishment of overtime opportunities havemade permanent workers impatient with casual ones. The supervisor s controls added fuel tothis conflict. The supervisor, being a temporary worker, followed a softer approach for

    permanent workers but exercised somewhat coercive controls over casual workers. Themanagement division of the workforce into two groups kept workers in constant tension withone another.

    7.3 Changes in Gaming

    In the pre-privatisation period, the primary role of supervisors was to supervise and monitor production. However, given the unreality of official plans due to the bureaucratic and politicised processes attached to them, these duties were relatively light and not of major import. They had little involvement in allocating tasks as they were pre-fixed in the politicisedwork distribution for permanent workers through trade union officials. Few casual worker stasks needed to be distributed as there were few casual workers. Thus supervisors andforemen were often involved with trade union negotiations: indeed many used to be tradeunion leaders. As an older permanent worker commented:

    Very few supervisors and foremen used to be present during the shift period. Most of the supervisors and foremen were busy with trade union matters though they hadresponsibility for checking up progress.

    Another stated:

    Due to their trade union connections, they never pressed for making out - rather theywere more interested in making space for overtime during holidays for us.

    After privatisation this changed dramatically: supervisors and foremen assumed moreresponsibilities including: distribution of tasks; ensuring production targets were met; anddirectly urging workers to make more effort. Their roles within trade unions and the internalstate withered. Most supervisors were now temporary: permanent supervisors beingtransferred to other jobs or laid off after privatisation. By contrast, foremen were kept on as

    permanent workers as they had technical skills.

    In the pre-privatisation period, shop management had a longer chain of command andmanagers were not prominent on the shopfloor. One manager explained stating that:

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    They had no power on the shopfloor or control over the first line of management. Itwas the area of trade union leaders.

    They had strong incentives to make deals with supervisors and trade unions on behalf of workers. As a past trade union leader, presently a supervisor of the soap division, commented:

    Before privatisation there was a production incentive for managers. If the shop production reached a certain level then they could enjoy the incentives. Therefore, theshop management wanted to maintain good relationships with workers and trade unionleaders for production bonuses. They had no reservations in allocating overtime toworkers for bonus production.'

    Although the production of the soap division is a continuous process it can be subject toconsiderable manipulation. Before privatisation it was a common practice for first linemanagement and operators to reduce or halt the machine speed. Trade union leaders were the

    major instigators though shop management could do so to smooth worker relations bycreating overtime and bonus production opportunities. However, privatisation broughtdramatic changes: following pressure from the empowered owner-managers, shopmanagement started to frequently visit the shopfloor to ensure the continuous speed of machines.

    The relationship of shopfloor managers to supervisors changed after privatisation sincemanagers no longer had a need to maintain good relationships. After privatisation, almost allsupervisors were made redundant except for a few with strong relationships with the currenttrade union leaders. New temporary supervisors were appointed. Now managers had moreauthority and power over them. Supervisors and also foremen (who are mostly permanent)

    became disciplined by the new managerial practices emphasising performance in terms of the productivity of the shift. The perennial question of shop management to the first linemanagement became: "How many packages are finished? How many trolleys are gone?".

    The major responsibility to get jobs finished on time tended to fall on the shoulders of supervisors rather than on foremen or superintendents. Due to their temporary job tenuresupervisors now sought to display good performance to senior management by increasing

    production of their shift. However, it was difficult for them to do so as they could not directlysupervise the whole production process and they lacked authority over operators formallyresponsible to foremen. Supervisors had to be very careful in handling operators. Thus they

    entered 'making out' deals with them to maintain production.

    This was evident from the researcher's experiences when working on the packaging section asa casual worker. The packaging workers started work early before the shift began. All

    packages are numbered to indicate the shift number and date. Supervisors are very carefulabout this because the number of packages (each containing 72 soaps) shows their

    productivity. As supervisors must maximise output, they must get involved in chiselling processes, including getting another shift's output into their shift and stealing time from other shifts by continuing their shift a bit longer. Since workers and operators have less interest in

    production, supervisors must earn their cooperation in chiselling processes to maintain high production. Supervisors try hard to cooperate with operators (having no formal authority over them) and permanent workers (since supervisors are themselves temporary and comparatively

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    new). On the other hand, casual workers are deemed to be unimportant and supervisors tendto control them more coercively.

    This frequently resulted in conflict between workers. An example from the packaging sectionis described below from field notes:

    In some cases I found the sticking material is very thin which makes the job moremessy. The supervisor loves to make me responsible for not doing proper work although it is not my fault. At the end of the day it makes me angry towards the

    permanent worker responsible for the preparations of sticking materials because I mustmake sure that my work has a good standard.

    Since the researcher was a casual worker the supervisor was happy to blame him rather thanthe permanent worker. Such discrimination made casual workers jealous of permanentworkers. This was compounded by supervisors preferring permanent workers when

    distributing tasks. Each shift began with a contingent workforce of general workers, operators,supervisors and foremen. Although permanent workers had fixed tasks, sometimes they soughtto change them. Since supervisors were temporary and in need to show good performance toshop management, they always gave permanent workers' preferences high priority in contrastto the harsher regimes exposed to casual workers.

    Overtime allocations were another source of lateral conflict. Permanent workers were notallowed overtime since it was costly: shop management always tried to appoint casual workersinstead. However, on occasion some permanent workers were given overtime due toshortages of casual workers or technical hands which made other casual workers angry. Whilstlogically their resentment should be directed at the practices of shop management it tended to

    be diverted into lateral conflict. For example, one day a permanent worker was gossiping andlaughing with a supervisor - it seemed the worker had a good relationship with management.A casual worker pointed to him saying to the researcher:

    He is a number one telbaz [someone who always keeps good relationship with their bosses]. That s why that mother fucker sometimes gets overtime opportunities.

    Thus some lateral conflicts arose from the new management practices. During the pre- privatisation period supervisors were not involved in such chiselling processes: securing votesfrom workers and operators was more important. They used a softer approach than now. One

    permanent worker commented:

    In those days we didn t have to work so hard and supervisors always tried to allocateovertime to us rather than urging us to work hard.

    Before privatisation shopfloor conflict was directed at worker and management differencesand trade union matters rather than lateral conflicts exascerbated by managerial actions. Thiswas reflected in an older worker's comment:

    They still believe that managers are mainly responsible for their sufferings. In the olddays they always fought with management for their demands. During the public sector

    period, management seemed to be the enemy of the workers.

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    Burawoy (1979) argued that conflicts between workers and management were diminished bycontrols arguing that where games do take place, they are usually not independent of or inopposition to management:

    '..... the games workers play are not, as a rule, autonomously created in opposition tomanagement, as claimed by Elton Mayo, who views the matter from one perspective,and by Cornelious Castoriadis, who views it from another. Rather they emergehistorically out of struggle and bargaining, they are played within limits defined byminimum wages and acceptable profit margins. Management, at least at the lower levels, actively participates not only in the organisation of games but in theenforcement of its rules.'

    It was evident that workers continued to have a strong belief that line managers wereresponsible for their sufferings. One permanent worker complained:

    Production managers always earn money by using illegal ways. They did it before andnow they are doing it with the collaboration of owners.

    However, though PC workers' perceived conflicts with management did not diminish after privatisation their focus altered significantly. The new management practices often came to beattributed to shop management rather than the new owners despite the changes flowing fromthe ownership changes. They formed major topic of conversations amongst permanentshopfloor workers: What benefits had been taken off? (tiffin breaks had just been withdrawn

    by management) What managers are doing? How they fuck them off? What the new facility istaking off? Casual workers were rarely involved in such conversations, possibly because theywere aspiring to promotions (permanent status) or they were unaware of lost facilities.

    These conversations were dissimilar to those Burawoy found in Allied where they weredominated by the idiom of making out:

    When someone comes over to talk, his first question is, Are you making out?followed by what s the rate if you are not making out, your conversations are likelyto consist of explanations of why you are not: The rate is impossible , I had to wait anhour for the inspector to check the first piece (Burawoy, 1979, p.63).

    In PC these questions were asked by the shop management. In most cases they were answered by workers without any interest. For instance, one day, the DCC came to the shopfloor andasked a permanent package worker how many packages were finished. As the worker hesitated to take time to answer, a casual worker smartly answered the question. Later the

    permanent worker was furious with the casual worker shouting, Bastard, is it your father sfactory? Why did you answer this question? The contrasting observations may be due to thedifferent contexts of each company. PC s shopfloor had faced a dramatic deterioration inconditions following ownership changes whereas Allied Corporation was more stable andenjoyed relatively benign conditions for labour. Nevertheless, the resentment and shopfloor conversations in each were focused on petty economic struggles unquestioning of basic

    production relations.

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    Workers' violations to rules can have consequences for the obscuration of production relationsand the manufacture of consent. Paradoxically, attempts by management to squeeze a littleextra out of workers can enhance shopfloor consent. Burawoy described how the experienceof being screwed by management was expressed in terms of their bosses failure to facilitateopportunities for making out (1979; 66) or in fake allegations against management. Workersin PC complained about managers who violated established shopfloor norms such as givingtiffin breaks within the shift period or the granting of overtime. However, after privatisationdespite junior managers becoming less powerful in many respects, workers tended to holdthem responsible for shopfloor changes, the reduced workforce and tighter controls. Thecontinuous presence and visible demonstrations of apparent power by managers added fuel tosuch beliefs.

    Observations and interviews with managers did not support workers' perceptions. Managersafter privatisation were even more powerless than before (although they seemed to be

    powerful on the shopfloor) as they too were in constant fear of losing their jobs due to the

    owner-managers sole authority. Managers can be both the victim and agent of the capital andconstitute a contradictory labour process in their own right (Hopper et al., 1987).

    However, Burawoy's arguments regarding the collusion of shop management in games aresupported by the observations within PC. As described earlier, managers indulged in chisellingand actively assisted operators in making out, just as in Allied. However, unlike in Allied, task allocation by supervisors and foremen became a shopfloor issue in PC after privatisation andan essential component in many games. The results were sometimes compromising for casualworkers rather than coercive. Casual workers invariably tried to maintain good relationshipwith supervisors to secure favourable allocations for, as one supervisor put it, I will look after you if you look after me. Supervisors and workers were united in casual employment, the

    promise of better status and the need to constantly demonstrate their performance in terms of physical output. Thus, whilst supervisors were involved in making shopfloor games for their own interests, especially with permanent workers, they tolerated some work avoidance by allworkers practiced in PC since nationalisation despite its official restriction, as the followingexample illustrates.

    The layout of the soap department led to each product line having 16-18 machine points plusother support stages such as packaging, cleaning, recycling points for deformed soaps andconveyance by trolleys, all of which required a large number of general workers. In the smallarea for the packaging section on the toilet soap line there were three points where general

    workers were required to stick together the package containing 72 soaps. Soaps came througha wrapping machine and one general worker put those into numbered packages. Another general worker was responsible for putting all the packages behind him so he could handlethose packages easily. Sometimes, the researcher had to fetch and position those packages dueto the absence or non-availability of the worker concerned which made the researcher veryangry. Upon this, the researcher was told that before privatisation, each point of this sectionhad three/four workers whereas now only two people were allocated to the same jobs.

    By the second day the researcher realised that there were informal arrangements amongstworkers for taking rest: one worker worked continuously for the first half of the shift after which another took over. The researcher was told that it was not a new practice but before

    privatisation they had fewer hours to work because there were more workers. Later theresearcher realised that the shop management turned a blind eye to this practice: they were

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    by Baldamus as a response to work tedium (1961; 53). Above all, they share the self-defeatingand paradoxical character of all such practices in that they reproduce the conditions of itsexistence - the pressure of work. Just as Roy (1960) and Burawoy (1979) found, the nature of work avoidance formed the primary basis of a workplace culture.

    7.4 Accounting Information System Changes

    According to the conventional literature, accounting provides management with financialinformation for decision-making and control. Budgetary control is depicted as crucial todelegated management within central control. Budgets are seen as a rational and iterative

    process of forward planning, coordination and setting physical and financial goals for monitoring segmental performance. Such accounting was hardly found in this case study.

    The company s overall planning was determined by HO planning which was in turn heavilyinfluenced by state bodies responsible for national plans. Budgets often paid little regard to

    actual market pressures and production constraints, for example, the sales and production budgets were based on the previous year's figures plus an addition determined by the Ministryof Industries and HO. The influence of line managers upon the budget was slight and,unsurprisingly, they paid little heed to it believing (with justification) that it bore littlecorrespondence to operational circumstances. Thus company budgets became a routinisedrule-bound ritual produced to satisfy state bureaucrats. During this period trade unions were

    powerful in Bangladeshi state enterprises including PC but accounting numbers or budgetaryconsiderations were rarely used in resolving industrial conflicts. However, this changedsubstantially after full privatisation, though not necessarily according to the expectations of

    policy makers or development economists.

    7.4.1 Financial Reporting

    PC retained the external reporting system of the pre-privatisation periods but its internalreporting systems changed enormously. One accountant reported:

    We have to send a daily report regarding cash and other transactions to the owner-managers of the company. The Executive Director (ED) and Managing Director (MD)receive these daily reports for their clear understanding about financial condition of thecompany.

    Accounting information was now used for decisions regarding pricing and the evaluation of product lines though it tended to be the preserve of the three directors. One accountantremarked:

    We record the bills or memo's which are signed by MD or ED. All departmentalexpenditures and income have to be signed by these two directors. Otherwise we refer the bills back.

    The Directors became the repository of all financial information which was processedaccording to their instructions. One senior accountant remarked:

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    We have two systems for accounting information. One is informal which is a restrictedarea only usable with the permission of ED. The other system is external reportingwhich is for other shareholders, the bank, the Tax Authority and the Stock Exchange.

    New computerised systems speeded up the supply of internal information to directors.However, external reports have not been published since 1994 for no discernable valid reason.As a listed company of Dhaka Stock Exchange PC has to submit audited yearly accountingreports to the Stock Exchange office but somehow it has delayed publication for generalshareholders. Since the majority shares are held by present owners-managers, they are able totake unlawful advantages 3 (see company law section 81(1&2). For instance, the presentmanagement delayed the 1993-94 Annual Reports until 1995. One accountant admitted:

    We have to maintain many informal systems. You know, business is competitive. Youcan't maintain all of them in a straightforward way.

    Rather than using accounting information as a cornerstone of rational delegated managementthere were perceptions within the company that the owner-managers used the systems tomask financial irregularities thereby enabling them to show flawless reports to shareholders,creditors and stock exchange officials to maintain the reputation and survival of the company.One individual commented:

    Some informal transactions are kept in the IOU fund account for irregular payments totrade union leaders and bribery of government and tax officials. These transactionswere usually shown under other headings in the annual reports.

    One senior accountant commented:

    I don t know what the real transactions were in the IOU fund. It was alleged by someindividual that sometimes the heads of transactions were changed to evade tax such asincreasing the amount of tax exempted items.

    It is difficult