Political and academic discussion on the impact of liberalisation or privatisation of public services has primarily focused on quality and accessibility for different groups of citizens. Little attention has been paid, so far, to the impact on employment.
A study commissioned by the Austrian Chamber of Labour (in German) and carried out by the Working Life Research Centre (in German) (FORBA ) assesses the impact of liberalisation and privatisation of public services on employment, working conditions and labour relations. These effects include substantial job cuts, a significant reduction in pay, deterioration of working conditions, and greater flexibility in working-time and employee relations.
Methodology
The following sectors were included in the study: railways, local public transport, postal services, electricity, natural gas and water utilities. The study combines first-hand empirical research in Austria (data collection, interviews, analyses of company reports and other documents) with a synthesis and evaluation of existing studies, reports (for example: Ecotec Research and Consulting Ltd, 2001 (587 Kb pdf), TN9912201S (EIRO, 1999), de Luca, 1998), and additional information (from national experts, trade union representatives, etc) from Germany, Sweden and the UK.
Job cuts
Detailed statistics from Statistik Austria and the Federation of Austrian Social Insurance Institutions show a 5% reduction of employment in the sectors included in the study during the years for which adequate data are available (1997-2001 and 2000-2003). This is despite the fact that total employment increased over both periods. At company level, job cuts were even more dramatic in some organisations: one of the main Austrian electricity providers (Verbundgesellschaft ) reduced employment by 29% between 1996 and 2002, while the Austrian railways reduced their numbers by 20%, and postal services by 18%.
However, compared with the other countries included in the study, job cuts in Austria were relatively moderate. Perhaps this is mainly due to the later start of the liberalisation and privatisation process. Figures from the UK (-41% in the energy industry, Hall, 1999, p.10 (Word doc) and Germany (-52.7% at German railways) show that employment was cut by as much as 50% in the first 10 years of restructuring; in Sweden, employment was reduced by up to 30%.
Implementing the cuts
In Austria, employment cuts were generally managed in ‘socially acceptable’ ways, such as offering early retirement, redundancy payments above the legal requirement (golden handshakes), and training for a new job. Yet, according to the authors, the voluntary nature of these measures must partly be questioned, as internal restructuring often forces employees to leave the company due to a lack of mobility or problems in coping with rising insecurity and stress levels. The lack of mobility is a particular problem for women without individual means of transport who, at the same time, have to bear considerable family responsibilities.
In Germany and Sweden, employment figures were also reduced through ‘socially acceptable’ means but, in the UK, the authors found cases of forced layoffs. Indeed, forced layoffs were not excluded in the bargaining process on restructuring in Austria.
Reducing labour costs
In a similar way, income reductions rarely stem from direct cuts in basic wages. Instead, wages are reduced through changes in seniority-based raises (e.g. abolishing biennial increases) as well as more general reforms of wage categories. In some cases, new employees are paid less than the existing workforce. Since July 2000, the main community service provider in Vienna (Wiener Stadtwerke ), for example, pays new employees 13% less than their colleagues had received as a starting wage.
Further measures include the termination of agreements granting company-specific supplements and bonuses as well as social provisions (sickness pay, family allowances) and company pensions. The local public transport company in Innsbruck (Innsbrucker Verkehrsbetriebe ), for example, has terminated all company agreements for new employees, which, according to the company’s work council, amounts to a loss in income of about 30%.
Incomes also suffer from indirect measures such as the outsourcing of certain functions and departments, and cutbacks in overtime due to the requirement of greater flexibility in working time. For example, external cleaning personnel employed by private companies earn about 25% less than the Austrian railway’s own cleaning staff, according to their collective agreed wage schemes.
Labour costs are further reduced through the use of atypical forms of employment, such as part-time employment and agency work. In the case of the Austrian postal service, for example, the percentage of part-time employment increased by 41% between 1996 and 2002. Temporary agency work is mainly used in mail sorting centres. When the new mail sorting centre in Vienna opened, the proportion of agency workers amounted to as much as half (500) of the workforce. Several months later, the percentage was still about one quarter (250) of total staff.
Further information
The study can be downloaded in German. An English translation should be online in the near future. Further EU level research is available on the Foundation’s website concerning income and payment systems and employment status.