Industrial relations in the public sector
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Defining the sector
Comparing employment and labour relations in the public sector, and more specifically in central government, is not an easy task. Compared with the private sector, employment relations in the public sector are deeply rooted in country-specific legal, normative and institutional traditions, which make comparisons difficult. Moreover, problems emerge in the conceptual definition and statistical identification of central government and the public sector. For instance, their boundaries and size can vary significantly depending on the analytical perspective from which they are classified.
A study, coordinated by the Public Governance and Territorial Development Directorate of the Organisation for Economic Cooperation and Development (OECD) and concerned with the development of comparative country data and indicators for good governance and efficient public services, emphasises that: ‘Government is a particularly slippery term presenting many difficulties in classification’, where the common assumption that ‘it comprises all the agencies that provide public services’ involves several complexities (OECD, 2005a, p. 7). Such complexities are, among other things, related to the fact that many services can be ‘publicly funded but provided by private agencies’ and that local governments can be major providers of public services. These two features point to difficulties in drawing precise boundaries between the public and private sectors on the one hand, and between central government and other levels of government within the public sector on the other. Such difficulties are not entirely overcome by the classification put forward by the System of National Accounts, which distinguishes public activities in two ways: that is, by institutional unit or by function.
In relation to the first option – classifying public activities by institutional unit – problems arise about whether or not to include in the definition non-governmental organisations (NGOs) with dominant or relevant public funding, or even private enterprises with a distinctive and statutorily privileged market position. The inclusion of these organisations within the boundaries of government, or of the wider public sector, may be justified from the point of view of national accounting – such a position is often adopted by economists and public finance researchers interested in public expenditure – but its efficacy is debatable from an industrial relations perspective. For example, it would mean including in the public sector the employees of those public enterprises which have been legally transformed into joint stock companies and ‘privatised’, thus operating under market conditions and subject to private and commercial laws, although the state or local government remain the exclusive or main shareholder. Such a scenario is quite common for postal services, railways, certain banks, public utilities and national or local public transport. Moreover, non-profit organisations indirectly financed by public funds, as well as concessions and legal monopolies, would also have to be included (OECD, 2005a, Annex 3; OECD, 2005b). Although the involvement of public funding is certainly a relevant factor for the functioning of employment relationships, this criterion would be too wide for the purposes of this report, as the resulting boundaries of both central government and the public sector would be too large. Similar problems would arise from adopting the criterion often applied by public policy researchers, which suggests the inclusion of all organisations managed by personnel appointed by central or local government. Although the fact that the public employer has a political legitimation – and is therefore sensitive to considerations of political consensus – is by no means irrelevant for the concrete functioning of labour relations, this criterion would once again be too inclusive in this context.
The second option – that is, classifying public or publicly funded activities by function – would also raise some problems for the purposes of this comparative report: namely, in relation to the distribution of sectoral functions across levels of government, which often depends on the constitutional structure (unitary versus federal structure) and the administrative tradition of each country. As another, less recent OECD survey on public sector pay and employment trends underlined, countries differ widely in how these functions are organised (OECD, 2002). While the defence and police forces, with few exceptions, typically constitute elements of central or federal government functions, education, health and social services are often assigned to regional or local administrations, or both, particularly in federal countries. For example, according to the 2002 OECD survey, in the late 1990s and early 2000s responsibility for education was assigned to the regional or local level administration in Germany, Spain, Ireland, Finland, Greece, Hungary and the Czech Republic (the United Kingdom was not included in this study). The same was true of public health services in Germany, Spain, Ireland, Finland, the Czech Republic, Greece, Hungary and, in part, France (Table 1). However, this picture may have changed slightly as a result of political or administrative decentralisation processes in several countries in recent years, with more functions being moved from central to lower levels of government.
| Sector | Central or federal administration | Regional administration (regions, provinces, states, Länder) | Local administration |
|---|---|---|---|
| Defence force | CZ, FR, FI, EL, HU, IT, LU, NL, ES, SE | ||
| Police force | CZ, FI, FR, HU, IT, LU, NL, ES, SE | IE | FR, EL |
| Education | FR, HU, IT, LU, NL, ES, SE | DE, IE, ES | CZ, FI, EL, HU |
| Health services | FR, HU, ES | FR, DE, IE, ES | CZ, FI, FR, DE, EL, HU |
| Social services | HU, ES, SE | FR, DE, IE | FI, FR, DE, EL |
Source: OECD, 2002, p. 4
The aforementioned differences in how central government and the public sector are defined clearly also affect the distribution of employees and consequently the proportion of the working population employed in central government and the public sector in each country (Hemerijck et al, 2002). On the other hand, trying to control for all of these idiosyncratic differences is extremely difficult and could actually distort the country-specific institutional reality, not to mention the fact that the data needed to ‘equalise’ national aggregates are often unavailable. In any case, this is precisely one of the goals of the broader OECD project, which was recently launched under the working title of ‘Management in government: Comparative country data’. This report cannot, therefore, be expected to fulfil such a task accurately. Nonetheless, it is important to emphasise the need for caution when comparing central government employment data and its relative weight across EU countries.
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