Competitive tendering on the political agenda

Privatisation and the competitive tendering of municipal services was on the agenda during the Norwegian general election campaign in spring 1999 and again in the municipal elections in September 1999. The political parties of the right want an increased use of competitive tendering, while trade unions and the Labour Party want to see a more restrictive policy.

Privatisation and the competitive tendering of municipal services have been important issues on the political agenda during the general election campaign in spring 1999, and especially in the municipal government election campaign in September 1999. The political parties of the right have stressed increased use of competitive tendering, and a handbook on the issue was published by the Conservative Party (Høyre) prior to the elections.

Competitive tendering has also been debated among the social partners. A joint committee comprising representatives from the Norwegian Confederation of Trade Unions (Landsorganisasjonene i Norge, LO) and the Norwegian Labour Party (Det Norske Arbeiderparti, DNA) has deliberated, and agreed on, principles for the modernisation of the municipal sector in Norway. The committee, however, does not regard privatisation and competitive tendering as proper means by which to achieve this objective, especially in areas such as health, social care and education. Moreover, several large trade unions in the public sector have joined forces with a view to preventing the use of competitive tendering. The Confederation of Norwegian Business and Industry (Næringslivets Hovedorganisasjon, NHO), on the other hand, has called for increased use of competitive tendering, arguing that it will help to increase efficiency in the municipal sector. NHO is worried about the rapid employment growth in this sector in recent years, and the fact that the number of municipal employees is expected to continue to increase in the years to come.

The Labour Party-LO committee

In Norway, municipalities and county-municipalities are responsible for providing a wide range of public services in areas such as health, social care and education. The municipal sector is also a significant employer, employing approximately one quarter of all wage earners. Thus, the issue of competitive tendering has in many municipalities generated vigorous political debates and conflicts between employees and the political leadership. This is one of the reasons why the Labour Party and LO established a joint committee to consider and work out approaches for "renewal and restructuring in the municipal sector". The committee argues that the municipal sector is facing great challenges, and that a process of modernisation is necessary in many areas. The goal of modernisation, however, is best achieved by utilising the municipal employees themselves and by delegating responsibility to the service-providing units. The committee further stresses the importance of taking advantage of user surveys in order to assure the quality of service provision, and the need for a broad evaluation of the present administrative structure with the aim of determing its efficiency.

The committee is sceptical, however, as to the use of competitive tendering as means to modernise the municipal sector in Norway. In relation to services such as pre-schooling, health, social care for children and older people, and education, it is argued that the municipalities themselves should be the main actors, both in relation to responsibility and management of services. Beyond these requirements, the committee also proposes certain directives for the use of competitive tendering. Competitive tendering should be used only under conditions of open competition, in which municipal enterprises are able to participate on an equal basis with private service providers. The committee stipulates that municipal authorities, in the case of competitive tendering, must place demands on providers of services with regard to collective agreement-based pay and working conditions, the submission of tax certificates, and guarantees that enterprises utilise their own personnel resources.

Trade union initiative against privatisation

In September 1999, six of the largest trade unions in the public sector joined forces under the slogan In support of the welfare state. The six unions are affiliated to different confederations and represent approximately 500,000 members, almost a third of all trade union members in Norway. They want a strong public sector in Norway, and no privatisation and competitive tendering. The initiative involves first and foremost information exchange and the initiation of debate on privatisation of public services. Another objective is to strengthen cooperation between the six unions, and as such strengthen the initiative against privatisation. The unions involved hope that other unions, including those from the private sector, will join the campaign.

Commentary

Municipally financed services in Norway have always had an element of private management, although municipal management is still the most predominant form of management. However, competitive tendering has in recent years become more important on the municipal political agenda. A strained economic situation in many municipalities is one of the reasons why politicians and administrative management are considering such solutions. So far this has involved mainly public utilities such as transport, renovation, cleaning and other technical services, although there are a few examples of competitive tendering in relation to nursing home management.

It is especially the two parties to the right of the Norwegian political continuum, the Conservative Party and the Progress Party (Fremskrittspartiet), that have called for increased use of competitive tendering, and that have initiated competitive tendering processes in municipalities were they form the majority on councils. The processes have to a great extent been controversial, but so far the trade unions have not been able to prevent employment contracts being transferred to new employers. The unions' argument that municipal tenderers are not able to compete on an equal basis has also very much been ignored. The political parties of the right strengthened their position in the 1999 municipal elections, which seems to indicate that increased competitive tendering will continue despite opposition from public sector unions. There is thus reason to expect further political battles over the use of competitive tendering. (Kristine Nergaard, FAFO Institute for Applied Social Science)

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