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  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

3  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)

4 T HE PIQUE C ONSORTIUM 4 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

5  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

6  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

7 OWNERSHIP, MARKETS, REGULATION AustriaBelgiumGermanyPolandSwedenUK Postal services Liberal.Limited Rather limited Very limitedModerateRather limited Privat.Substantial increase Strong increase Marginal increase Limited increase ElectricityLiberal.LimitedVery limitedLimitedStrongModerateStrong Privat.Substantial increase Moderate increase Substantial increase Very strong increase Local public transport Liberal.LimitedVery limitedRather limited LimitedStrong Privat.Limited increase Very limited increase Moderate increase Limited increase Strong increase Very strong increase HospitalsLiberal.Limited ModerateLimitedVery limited Privat.Limited increase Moderate increase Strong increase Limited increase Very limited increase Limited increase

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

9  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

10 SUBCONTRACTING AND OUTSOURCING: German municipal transport provider

11  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

12 EMPLOYMENT IN GERMAN LETTER MARKET

13 WAGE DIFFERENTIALS IN POSTAL SERVICES Average basic wages rates (in Euros) Incumbent oldIncumbent newCompetitors Austria Germany1711,55-6 Netherlands1496-8

14 WAGE DIFFERENTIALS WITHIN FORMER MONPOLISTS ElectricityPostal services ATLower wages for employees hired after 2001 (minus 13 %) Lower wages for workers hired after 1. August 2009 (up to minus 25 per cent BELower wages for employees hired after 2002 (between 22 and 34% less GEAbout 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) POHigher wages for new employees

15  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

16  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

17  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

18 Public sector labour relations before liberalisation Labour relations after liberalisation Former Monopolists New Competitors Union densityHigh Low Collective bargainingCentralised bargainingCompany bargaining Company bargaining, no bargaining Bargaining coverageHigh Low Employment status Civil servants and public employees Decrease in civil servants, in crease in ‚private‘ employees Private employees Workforce Relatively homogenous workforce Segmented workforce (Core- versus peripheral staff) Employment securityHigh Relatively high for core workers, increase in fixed- term contracts Low Competition on wages and working conditions LowHigh THE DISMANTLING OF THE PUBLIC SECTOR LABOUR RELATIONS REGIME

19  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

20  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

21  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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