Privatization of Public Services and Consequences For Labour: European Experiences

Funded under the European Commission’s FP6 (CIT5-2006-028478)
PRIVATISATION OF PUBLIC SERVICES

AND CONSEQUENCES FOR LABOUR
European Experiences
19 November 2009
Toronto, Centre for Social Justice
Christoph Hermann, Working Life Research Centre, Vienna
2
CONTENT OF THE PRESENTATION
 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

3
Privatisation of Public Services and the Imapct on

Quality, Employment and Productivity (PIQUE)
 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

4
THE PIQUE CONSORTIUM
Working Lives Research

Institute, London
Forschungs- und Metropolitan University,
Beratungsstelle Arbeitswelt, UK
Vienna, Austria
Instytut Socjologii,
Universytet Warszawski,
Instituut voor de Overheid, Poland
K.U.Leuven, Belgium
Hoger Instituut voor de

Arbeid (HIVA), K.U.
Leuven), Belgium
Wirtschaft- und Sozial-
wissenschaftliches Institut
(WSI) der Hans-Boeckler- Institutionen för
Stiftung, Duesseldorf, Arbetsvetenskap,
Germany Göteborgs Universitet,
Sweden

5
FORMS OF LIBERALISATION, PRIVATISATION AND

MARKETISATION
 Abolishment of monopolies
 Competitive tendering
 Changes in funding
 Conversion into private law companies
 Part and full divestment
 Outsourcing, PPPs and PFI

6
STATE OF LIBERALISATION, PRIVATISATION AND

MARKETISATION
 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

7
OWNERSHIP, MARKETS, REGULATION
Austria Belgium Germany Poland Sweden UK

Postal Liberal. Limited Limited Rather Very limited Moderate Rather
services limited limited
Privat. Substantial Substantial Strong Marginal Limited Limited
increase increase increase increase increase increase
Electricity Liberal. Limited Very limited Limited Strong Moderate Strong
Privat. Substantial Moderate Substantial Substantial Substantial Very strong
Local Liberal. Limited Very limited Rather Limited Strong Strong
public limited
transport
Privat. Limited Very limited Moderate Limited Strong Very strong
Hospitals Liberal. Limited Limited Moderate Limited Very limited Very limited
Privat. Limited Moderate Strong Limited Very limited Limited

8
COMPANY REACTIONS – Major strategies
 Mergers and acquisitions
 Private and foreign ownership
 Internationalisation
 Diversification
 Focus on lucrative market segments
 Profit-oriented price policy
 Cost-cutting

9
COMPANY REACTIONS – Cost cutting
 Reorganisation and introduction of new technology
 Streamlining of supply
 Reduction in employment
 Payment of lower wages
 Casualisation and dequalification
 Intensification of work

10
SUBCONTRACTING AND OUTSOURCING:

German municipal transport provider
Municipality Other interests
City Utilities Holding
Energy and water City Mobil Disposal company

company
Subcontractor City Bus Neighbour city
Regional Bus Urban Bus
Another Another Another

city city company

11
EMPLOYMENT
 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

12
EMPLOYMENT IN GERMAN LETTER MARKET

70
60
50
40
%
30
20
10
German Post AG Competitors Total
Full-time Part-time Marginal part-time

13
WAGE DIFFERENTIALS IN POSTAL SERVICES
Average basic Incumbent old Incumbent new Competitors

wages rates (in
Euros)
Austria 11 9.35 4-6
Germany 17 11,5 5-6
Netherlands 14 9 6-8

14
WAGE DIFFERENTIALS WITHIN FORMER MONPOLISTS
Electricity Postal services

AT Lower wages for employees hired Lower wages for workers hired
after 2001 (minus 13 %) 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 Lower wages for blue-collar
employees employed after 2006 in workers hired after 2001 and
the largest electricity company white-collar workers hired after
2003 (up to minus 30 per cent)
PO Higher wages for new employees

15
WORKING CONDITIONS
 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

16
HUMAN RESOURCE MANAGEMENT
 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

17
INDUSTRIAL RELATIONS
 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

18
THE DISMANTLING OF THE PUBLIC SECTOR LABOUR
RELATIONS REGIME
Labour relations after liberalisation

Public sector labour
relations before New
liberalisation Former Monopolists
Competitors
Union density High High Low

Company bargaining,
Collective bargaining Centralised bargaining Company bargaining
no bargaining
Bargaining coverage High High Low
Decrease in civil servants, in
Civil servants and
Employment status crease in ‚private‘ Private employees
public employees
employees
Relatively homogenous Segmented workforce
Workforce
workforce (Core- versus peripheral staff)
Relatively high for core
Employment security High workers, increase in fixed- Low
term contracts
Competition on wages
Low High
and working conditions

19
TRADE UNION RESPONSES

 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

20
CONCLUSIONS I
 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

21
CONCLUSIONS II
 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

22
FOR DETAILED REPORTS, ARTICELS AND

OTHER PUBLICATIONS
please visit
www.pique.at
or contact
hermann@forba.at

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

PRIVATISATION OF PUBLIC SERVICES

CONTENT OF THE PRESENTATION

 Presentation of the PIQUE project

 Forms of liberalisation, privatisation and marketisation

 State of liberalisation, privatisation and marketisation

 Employment, working conditions, HRM, industrial relations

 Trade unions strategies

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

Privatisation of Public Services and the Imapct on

 Three-year project funded by the European Commission in

 6 countries: Austria, Beligum, Germany, Poland, Sweden,

 4 sectors: Electricity, postal services, local public transport,

 Literature and data analysis

 Company case studies

 Survey on users‘ perspective

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

THE PIQUE CONSORTIUM

Working Lives Research

Hoger Instituut voor de

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

FORMS OF LIBERALISATION, PRIVATISATION AND

 Conversion into private law companies

 Part and full divestment

 Outsourcing, PPPs and PFI

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

STATE OF LIBERALISATION, PRIVATISATION AND

 Electricity: fully liberalised since 2007, oligopolistic

 Postal services: full liberalisation in 2011/13, market

 Local public tranport: largely liberalised in Sweden and UK;

 Hospitals: Conversion into private law companies; changes

 More privatisation than liberalisation

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

OWNERSHIP, MARKETS, REGULATION

Austria Belgium Germany Poland Sweden UK

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

COMPANY REACTIONS – Major strategies

 Mergers and acquisitions

 Private and foreign ownership

 Focus on lucrative market segments

 Profit-oriented price policy

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

COMPANY REACTIONS – Cost cutting

 Reorganisation and introduction of new technology

 Payment of lower wages

 Casualisation and dequalification

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

SUBCONTRACTING AND OUTSOURCING:

City Utilities Holding

Energy and water City Mobil Disposal company

Subcontractor City Bus Neighbour city

Regional Bus Urban Bus

Another Another Another

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

 Substantial reductions in electricity and postal services

 Increase in atypical and precarious employment

 Part-time and marginal part-time

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

EMPLOYMENT IN GERMAN LETTER MARKET

German Post AG Competitors Total

Full-time Part-time Marginal part-time

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