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00 SP Prelims Ver 4 ETUI A5 Privatisation and liberalisation of public services in Europe An analysis of economic and labour market impacts Privatisation and liberalisation edited by Maarten Keune, Janine Leschke and Andrew Watt of public services in Europe The liberalisation and privatisation of public sector activities have been An analysis of economic the subject of heated debate since the 1970s. The chapters in this volume contribute to this debate by analysing the effects of liberalisation and and labour market impacts privatisation on productivity and service provision, employment, wages and working conditions in a number of European countries. As far as the ‘economic’ effects of privatisation and liberalisation are concerned, the case studies demonstrate that these are anything but clear-cut. The same goes for the effect on consumers, as choice often improves, whereas the privatisation impact on prices and quality can go either way, depending on the sector and the specific policies adopted. The case studies suggest increased productivity for all industries under scrutiny, but the extent to which this is due to greater investment and better work organisation, or rather to a worsening of working liberalisation conditions and/or job losses, varies and overall remains unclear. In terms of employment, liberalisation and privatisation clearly lead to job losses in the companies concerned. Wages, too, are negatively affected, in particular where newly-hired workers are concerned. Overall, workers in the sectors affected appear to ‘pay the price’ for privatisation and liberalisation public services through increased pressure on wages, and this affects most of all the lower edited by Maarten Keune, Janine Leschke and Andrew Watt and Andrew Maarten by Janine Leschke edited Keune, qualified and women. Where working conditions are concerned, the effects of public services in Europe and liberalisation Privatisation are somewhat less clear, although on balance privatisation and liberalisation seem to be associated with a worsening of conditions. Importantly, the labour market effects of privatisation and liberalisation are mediated by national and Europe sectoral institutional factors, such as differences in labour market regulations or in the strength of trade unions, which may magnify or dampen the severity of their effects on employment, wages and working conditions. European Trade Union Institute labour market for Research, Education and Health and Safety ISBN : 978-2-87452-135-5 Bld du Roi Albert II, 5 - box 4 B-1210 Brussels Tel.: 00 32 (0)2 224 04 70 Fax: 00 32 (0)2 224 05 02 edited by Maarten Keune, Janine Leschke and Andrew Watt http://www.etui-rehs.org Price: 25 EUR 9 782874 521355 email: [email protected] D-2008-10574-23 Book Privatisation-EN.indd 1 3/11/08 12:02:04 Privatisation and liberalisation of public services in Europe edited by Maarten Keune, Janine Leschke and Andrew Watt Privatisation and liberalisation of public services in Europe An analysis of economic and labour market impacts edited by Maarten Keune, Janine Leschke and Andrew Watt European Trade Union Institute for Research, Education and Health and Safety (ETUI-REHS) Brussels, 2008 © Publisher: ETUI-REHS, Brussels All rights reserved Print: ETUI-REHS Printshop, Brussels D/2008/10.574/23 ISBN: 978-2-87452-135-5 The ETUI-REHS is financially supported by the European Community. The European Community is not responsible for any use made of the information contained in this publication. Table of contents List of tables and figures . .7 Maarten Keune, Janine Leschke and Andrew Watt Introduction: Liberalisation, privatisation and the labour market . .13 I. Effects of privatisation and liberalisation on efficiency, productivity and employment Torsten Brandt and Thorsten Schulten Privatisation and liberalisation of public services in Germany: the postal and hospital sectors . .37 Christer Thörnqvist Marketisation in Swedish electricity and postal services . .67 David Hall Privatisation in water and health services in the UK . .91 Valdone Darškuviene Implications of privatisation and marketisation in Lithuania – telecommunications and transport . .119 Marc van der Meer Liberalisation, privatisation and employment conditions – the evidence of public utilities, public transport and home care in the Netherlands . .149 Christoph Hermann and Roland Atzmüller Liberalisation and privatisation of public services and the impact on employment, working conditions and labour relations . .175 Privatisation and liberalisation of public services in Europe 5 Table of contents II. Effects of privatisation and liberalisation on wages, working conditions and work–life balance Janine Leschke and Maarten Keune Precarious employment in the public and private service sector: comparing developments in the UK and Germany . .197 Paolo Ghinetti and Claudio Lucifora Public sector pay gaps and skill levels: a cross-country comparison . .233 Dominique Meurs and Sophie Ponthieux Public and private employment and the gender wage gap in eight European countries . .261 Heejung Chung Provision of work–life balance arrangements in European companies: public vs private . .285 List of contributors . .321 6 Privatisation and liberalisation of public services in Europe List of tables and figures Torsten Brandt and Thorsten Schulten Table 1: Reorganisation phases of the public sector, Federal Republic of Germany . .38 Table 2: Number of new letter companies and turnover, 1998–2007 . .44 Table 3: Changes in employment at Deutsche Post World Net (DPWN) . .45 Table 4: Employees in the letter market, Germany (annual average 2006) . .46 Table 5: Pay and working conditions of a German delivery worker 2006 . .47 Table 6: Trends in hospital services, Germany . .52 Table 7: Important private hospital corporations, Germany, 2006 . .56 Table 8: Collective bargaining coverage in German hospitals, 2007 (%) . .57 Figure 1: Privatisations in Germany; value (USD million) and number of transactions . .40 Figure 2: Privatisations by German municipalities (%) . .42 Figure 3: Ownership of hospitals, Germany, 1991 and 2006 (%) . .54 Figure 4: Proportion of hospitals, beds and employees by ownership, Germany, 2006 . .55 Figure 5: Average costs per employee in private hospitals as a percentage of costs in public hospitals . .58 Figure 6: Number of patients per full-time hospital employee, Germany, 2006 . .59 Christer Thörnqvist Table 1: Developments in six major industries after liberalisation, Sweden . .72 Table 2: The Swedish electricity market before 1 January 1996 and in 2004 . .78 Privatisation and liberalisation of public services in Europe 7 List of tables and figures David Hall Table 1: Features of the water and health sectors in the UK . .93 Table 2: Investment levels and growth rates before and after privatisation (£billion, 2003–2004 prices) . .94 Table 3: Operating expenditure of water companies, 1990–91 to 2004–2005 . .100 Table 4: Productivity growth before and after privatisation . .101 Table 5: Overall fall in employment in core water and sewerage companies, 1990–99 . .104 Table 6: Employment growth in groups owning water companies, 1990–99 . .104 Table 7: Reduction in jobs of NHS ancillary workers, England and Wales, 1983–91 . .106 Table 8: Savings from NHS trend, competitive tendering and contractors . .108 Figure 1: Average annual cost of water, 1989–2004 . .102 Figure 2: Employees in water and sewerage companies, 1990, 1996 and 1999 . .105 Figure 3: Expenditure on PFI schemes in the NHS . .111 Valdone Darškuviene Table 1: Privatisation results in Lithuania, 1991–95 . .121 Table 2: Privatisation results in Lithuania in 1996–2003 . .123 Table 3: Overview of privatisation stages in Lithuania . .125 Table 4: Lietuvos Telekomas – financial indicators, 1997–2006 . .129 Table 5: Lietuvos Telekomas – debt and investment indicators, 1997–2006 . .130 Table 6: Lietuvos Telekomas – productivity and employment indicators, 1997–2006 . .130 Table 7: Dynamics of public fixed-line and mobile telephone networks, 1997–2006 . .133 Table 8: Telecommunications market structure, 2006 . .134 Table 9: FDI development in the telecommunications sector, 1998–2006 . .136 Table 10: Share of the transport sector in the economy as a whole, 1997–2005 . .143 Table 11: Financial ratios of transport subsectors, 2006 . .143 Figure 1: Distribution of privatisation revenues by sector, Lithuania . .124 8 Privatisation and liberalisation of public services in Europe List of tables and figures Marc van der Meer Scheme 1: The impact of liberalisation and privatisation on product markets and labour markets . .168 Christoph Hermann and Roland Atzmüller Table 1: Impact on the level of employment . .184 Janine Leschke and Maarten Keune Table 1: General structure of the public and private service sectors in 1997 and 2005, UK.................................................................204 Table 2: Working conditions in the public and private service sectors in 1997 and 2005, UK.................................................................208 Table 3: General structure of the public and private service sectors in 1997 and 2005, Germany........................................................212 Table 4: Working conditions in the public and the private service sector in 1997 and 2005, Germany.............................................214 Table 5: Difference between public and private sectors in precariousness indicators in the UK, 2005 (%) ..........................218 Table 6: Working time among workers with permanent and with temporary contracts in the UK, 2005(
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