According to current mainstream policy prescriptions for government efficiency and debt “stabilization,” public officials are to tackle their problems by departing from older Keynesian models as well as the social compromises of embedded liberalism and re-establish proper free market economies. This means governments ought to renounce any distinctive role for equitably delivering high standard public services to citizens. Instead, public officials should introduce basic market principles for the delivery of public services and programs, requiring the public sector to act as firms, “doing more with less” through waves of layoffs and retirement or privatizing services outright.
Few social scientists in Canada or elsewhere have studied the consequences of such “modernization” of government services. Has privatization improved equality? Is public sector restructuring delivering better program efficiency? Have major changes to public sector collective bargaining improved jobs or employment growth? Do citizens even want such reforms? Christoph Hermann and Jorg Flecker's new edited collection, Privatizing Public Services, begins to answer these fundamental questions for Western Europe.
The volume includes chapters from international contributors examining the impacts of privatization and liberalization across a range of institutionally varied political economies, Austria, Belgium, Germany, Poland, Sweden and Britain, over the course of the 1990s and 2000s. In their broad-ranging analysis, Hermann and Flecker make a unique contribution to the standard literature on public sector reform (typically conducted by economists or business consultancies using broad macroeconomic data), by drawing on hundreds of in-depth company case studies, extensive interviews of employers and experts, as well as citizen surveys and secondary data sets. The result is a comparative analysis rich in detail and convincing in its explanation of public sector change in its many variations over time.
The authors show how privatization and liberalization have often been promoted by cash-strapped, tax-cutting governments as a panacea to budget deficits. EU directives to governments to introduce market reforms to foster competitiveness have sped the process along. Liberalization has entailed the end of public sector provision and the creation of “service markets” with at least two providers competing for customers, most notably in hospitals, public transport and postal services. Privatization has also meant the sale of state utilities, infrastructures and services such as electricity and telecommunications to private owners and enterprises.
But, as Hermann and Flecker demonstrate, there is a deep divide between who benefits and who bears the costs of these changes. In electricity and postal services, for example, many countries have seen costs rise and multinational corporations consolidate, further limiting options for citizens or governments. Similarly, in health care privatization and liberalization have not been able to cut rising expenditures. Instead, companies have charged more for building and operating hospitals, while the costs and expenses of diagnostic services and basic maintenance have continued to increase.
Workers have felt the greatest impacts of this public sector modernization. Throughout much of the post-war era, governments used public services and industries alongside regulatory polices to promote income equality and job security, and unions were able to improve the nature of jobs and the level of wages through collective bargaining. But as the many case studies in this volume demonstrate, these trends have gone in reverse. Instead, governments routinely emphasize cutting labour costs to mirror private service industries.
The result has been rising levels of inequality in earnings, increased part-time and temporary employment and more low-wage work. This has been especially true in postal services, where atypical and precarious forms of employment are now common. But many workers have also been relegated to low-wage work by employers who have fragmented bargaining or by two-tiered agreements for new workers—developments common to labour relations in health and the electricity sector. Only in Sweden and Belgium, where unions have much wider coverage and more co-ordinated bargaining structures, have workers retained better jobs and working conditions.
The authors' superb country and comparative case studies are also very useful in understanding the role of public sector restructuring in undermining the democratic control of corporations and markets. As detailed by Christoph Hermann, Julia Kubsia and Thorsten Schulten, a number of unions and citizen coalitions have worked across Europe to resist marketization and privatization initiatives in everything from postal services to water. But—with a few notable municipal exceptions—they have had little success. Governments at all levels have continued to introduce sweeping public service reforms even amidst significant union and citizen protests calling for a return to basic public service models.
In contrast to the consensus in academic literature that corporatist models limit liberalization policies in much of Western Europe, Privatizing Public Services finds that public officials in these countries, from the left and right alike, have turned away from the concerns of organized interests and a wider public and instead sought to meet the interests of investors, corporations and affluent voters. Giving private firms ever more control over public business has been central in this effort.
Privatizing Public Services is a leading critical contribution to the debate on the impact of public sector modernization and it will be of interest to policy researchers, West European specialists, labour relations scholars and comparative political economists alike. Its conclusions are sobering: the results of public sector modernization are not only disappointing but also deeply troubling for democracy. Such findings are especially worrisome given the current policy models of “austerity” and “reform” used to address the long-term debt problems created by neoliberalism in the wake of the financial crisis.
