Privatization of Public Services and Consequences for Labour

Funded under the European Commission’s FP6 (CIT5-2006-028478)

PRIVATISATION OF PUBLIC SERVICESAND CONSEQUENCES FOR LABOUR European Experiences

19 November 2009Toronto, Centre for Social JusticeChristoph Hermann, Working Life Research Centre, Vienna


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Presentation of the PIQUE project

Forms of liberalisation, privatisation and marketisation

State of liberalisation, privatisation and marketisation

Company reactions

Employment, working conditions, HRM, industrial relations

Trade unions strategies

Conclusions

CONTENT OF THE PRESENTATION


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Three-year project funded by the European Commission in the 6th framework programme

6 countries: Austria, Beligum, Germany, Poland, Sweden, United Kingdom

4 sectors: Electricity, postal services, local public transport, health services/hospitals

Literature and data analysis

Company case studies

Survey on users‘ perspective

Privatisation of Public Services and the Imapct on Quality, Employment and

Productivity (PIQUE)


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THE PIQUE CONSORTIUM

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Forschungs- und Beratungsstelle Arbeitswelt,Vienna, Austria

Instituut voor de Overheid, K.U.Leuven, Belgium

Wirtschaft- und Sozial-wissenschaftliches Institut (WSI) der Hans-Boeckler-Stiftung, Duesseldorf, Germany

Working Lives Research Institute, London Metropolitan University, UK

Instytut Socjologii, Universytet Warszawski, Poland

Hoger Instituut voor de Arbeid (HIVA), K.U. Leuven), Belgium

Institutionen för Arbetsvetenskap, Göteborgs Universitet, Sweden


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Abolishment of monopolies

Competitive tendering

Changes in funding

Conversion into private law companies

Part and full divestment

Outsourcing, PPPs and PFI

FORMS OF LIBERALISATION, PRIVATISATION AND MARKETISATION


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Electricity: fully liberalised since 2007, oligopolistic markets, strong increase in private ownership

Postal services: full liberalisation in 2011/13, market dominance of incumbents; substantial increase in private ownership

Local public tranport: largely liberalised in Sweden and UK; concentration; international providers

Hospitals: Conversion into private law companies; changes in funding; privatisation in Germany, PFI in the UK

More privatisation than liberalisation

STATE OF LIBERALISATION, PRIVATISATION AND MARKETISATION


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OWNERSHIP, MARKETS, REGULATION

Austria Belgium Germany

Poland Sweden UK

Postal services

Liberal. Limited Limited Rather limited

Very limited

Moderate Rather limited

Privat. Substantial increase

Substantial increase

Strong increase

Marginal increase

Limited increase

Limited increase

Electricity

Liberal. Limited Very limited Limited Strong Moderate Strong

Privat. Substantial increase

Moderate increase




Very strong increase

Local public transport

Liberal. Limited Very limited Rather limited

Limited Strong Strong

Privat. Limited increase

Very limited increase

Moderate increase

Limited increase

Strong increase

Very strong increase

Hospitals

Liberal. Limited Limited Moderate Limited Very limited

Very limited

Privat. Limited increase

Moderate increase

Strong increase

Limited increase

Very limited increase

Limited increase


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Mergers and acquisitions

Private and foreign ownership

Internationalisation

Diversification

Focus on lucrative market segments

Profit-oriented price policy

Cost-cutting

COMPANY REACTIONS – Major strategies


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Reorganisation and introduction of new technology

Streamlining of supply

Reduction in employment

Payment of lower wages

Casualisation and dequalification

Intensification of work

COMPANY REACTIONS – Cost cutting


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SUBCONTRACTING AND OUTSOURCING: German municipal transport provider

Municipality

City Utilities Holding

City Bus

Urban Bus Regional Bus

Neighbour city

Another city

Another city

Another company

Other interests

City Mobil Disposal company Energy and water company

Subcontractor


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Substantial reductions in electricity and postal services

Increase in atypical and precarious employment

Part-time and marginal part-time

Temporary jobs

Fixed-term contracts

Self-employment

EMPLOYMENT


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EMPLOYMENT IN GERMAN LETTER MARKET

0

10

20

30

40

50

60

70

German Post AG Competitors Total

Full-time Part-time Marginal part-time

%


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WAGE DIFFERENTIALS IN POSTAL SERVICES

Average basic wages rates (in Euros)

Incumbent old Incumbent new Competitors

Austria 11 9.35 4-6

Germany 17 11,5 5-6

Netherlands 14 9 6-8


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WAGE DIFFERENTIALS WITHIN FORMER MONPOLISTS

Electricity Postal services

AT

Lower wages for employees hired after 2001 (minus 13 %)

Lower wages for workers hired after 1. August 2009 (up to minus 25 per cent

BE Lower wages for employees hired after 2002 (between 22 and 34% less

GE

About 30% lower wages for employees employed after 2006 in the largest electricity company

Lower wages for blue-collar workers hired after 2001 and white-collar workers hired after 2003 (up to minus 30 per cent)

PO

Higher wages for new employees


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Increase in work intensity and work pressures

Increase in weekly working hours

Increase in part-time hours

Increase in overtime

Increase in split work-days

WORKING CONDITIONS


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Temporary job instead of life-long employment career

Introduction of performance-related wage components

Weakening of seniority and performance-based promotion

Differential access to training

Dequalification

HUMAN RESOURCE MANAGEMENT


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Growing fragmentation and emergence of two- and multiple-tier labour relations systems

Differences between ‘old’ and ‘new’ employees

Differences between incumbents and new competitors

Differences between parent companies, subsidiaries and outsourced services

INDUSTRIAL RELATIONS


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Public sector labour relations

before liberalisation

Labour relations after liberalisation

Former MonopolistsNew

Competitors

Union density High High Low

Collective bargaining

Centralised bargaining

Company bargainingCompany

bargaining, no bargaining

Bargaining coverage High High Low

Employment statusCivil servants and public employees

Decrease in civil servants, in crease in ‚private‘ employees

Private employees

WorkforceRelatively

homogenous workforce

Segmented workforce (Core- versus peripheral staff)

Employment security HighRelatively high for core

workers, increase in fixed-term contracts

Low

Competition on wages and working conditions

Low High

THE DISMANTLING OF THE PUBLIC SECTOR LABOUR RELATIONS REGIME


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Initial phase of rejection and opposition

Second phase: concession bargaining (early retirement, golden handshakes); protection of rights for established workers, concessions for new entrants

Third phase: building broader anti-privatisation alliances with social movements; anti-privatisation referenda

At the same time: resisting further restructuring; bargaining and lobbying for social regulation (e.g. minimum wages)

Fourth phase: promoting alternatives (re-municipalisation); public service directive; rebuilding the public sector

TRADE UNION RESPONSES


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The commodification of public services demands for the commodification of public sector employment (use value is subordinated to exchange value)

Commodification of public sector employment = wage cuts, casualization, intensification

Growing inequality among workers as well as service users: Privatisation as class project!

Deteriorating service quality especially where quality depends on labour inputs and working conditions

CONCLUSIONS I


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Commodification of public services is an ongoing process with no end in sight

The financial crisis will cause additional budget cuts and likely result in more outsourcing, PPPs and PFI

Pressure on public sector trade unions and workers will further increase

Services will further deteriorate

Coalitions between trade unions and social movements must be intensified and expanded

New competitors and contractors must be organised

CONCLUSIONS II


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Privatization of Public Services and Consequences for Labour