This study aimed at explaining the impact of privatization on the, productivity of labor, in the Arab Potash Company during the period (1980-2011). This study used unrestricted Vector Autoregressive (VAR) to estimate the model. Analysis of variance decomposition test, and the impulse response function test were also applied to achieve the desired goals of this study. The results of these tests demonstrate that privatization positively affected the productivity of labor, in the Arab Potash Company. The results also show that capital had the greater ability to explain the errors of the variation in the both models, the first and the second , whereas the variant of privatization. The study recommended the use of modern machinery to save the company’s investment of salt and bromine is urgent, The study’s main recommendation is to establish a system of solar evaporation to face salt conglomerates, which has caused huge losses to the company camera potash. The study also recommended that the process of privatization should be applied by the public institutions that suffer from weakness in productivity and profits to improve the functioning of these institutions