Liberalisation and Privatisation in the EU – Services of general interest and the roles of the public sector

Elke Loeffler, Dominik Sobczak and Frankie Hine-Hughes
Publication date: October 2012 • 978-1-907132384 • iv+50 pp • ££16.95

 

This monograph gives an overview of the privatisation process in services of general interest in Europe and its outcomes, elaborating in particular on its consequences for the European social model. In the first parts, the history of privatisation is discussed, including its timing, rationale and drivers. An overview of different types of privatisation is also given as well as of the accompanying processes. Then the publication looks in detail into the economic outcomes, especially in the context of the underlying assumptions which justified decisions to launch the privatisation processes. It finds that most of the positive effects expected did not materialise at all or were very minor. As regards the creation of competitive markets, for example, increased competition was only achieved in countries and sectors that had a state monopoly at the outset. On the other hand, when a number of regional or local monopolies existed, market concentration increased as larger companies bought up their smaller competitors. Liberalisation and privatisation of public services also fundamentally challenged the traditional labour relations regime in the public sector, resulting in a two-tier system of stable bargaining structures within the incumbent firms, and decentralised and fragmented bargaining structures among new competitors, leading to lower employment standards. The advocates of shifting from public monopoly promised cheaper and better services, and that reduced prices would boost demand and create more jobs. However, the reality proved different, with rising atypical forms of employment and only minor productivity gains, driven mainly by lower labour input combined with other cost cutting strategies that led to a deterioration of employment and working conditions. Liberalisation and privatisation have also had some positive, as well as negative, effects on service quality. Furthermore, the publication argues that these processes have had adverse effects on the European Social Model as they resulted in lower social cohesion in access to good-quality public services. The publication draws implications for public policy, focusing in particular on the key phases of the privatisation process, the market regulation processes which need to be in place and the impact of privatisation on employment, industrial relations, productivity and profitability, and service quality.

 

About the authors

Elke Loeffler is an economist and political scientist, with a political science degree from the University of Tübingen in Germany and a Masters in Economics from Washington University, St. Louis, USA. She also holds a Ph.D. in Public Management from the Civil Service College in Speyer, Germany. She has been leading Governance International as Chief Executive since 2002. Her expertise is in service improvement, quality and performance management, citizen involvement in the commissioning, design, delivery and evaluation of public services, personalisation of public services, outcome assessment, partnership working and local governance.

Dominik Sobczak holds a degree in Finance and Banking as well as a degree in European Studies, from Warsaw School of Economics, Poland. Working as an academic for two years he has published works on financial markets and on monetary and fiscal integration in the EU. Since 2005 he has been working at the European Commission in the Directorate-General for Research and Innovation as a scientific officer, where he is primarily responsible for research in economics, finance, demography and corporate social responsibility.

Frankie Hine-Hughes is a graduate of the University of Hull, where he completed a Degree in Political Science and a Masters in Global Political Economy. Since 2011 he has been Project Manager for Governance International, where he specialises in privatisation and liberalisation of public services, public service co-production with citizens and communities, use of social media in the public sector and open government.

 

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