The purpose of this blog is to provide analytical commentary on formal and informal labour organisations and their attempts to resist ever more brutal forms of exploitation in today’s neo-liberal, global capitalism.

Friday, 15 March 2013

The Privatisation and Internationalisation of Public Services in a Time of Austerity

Why is austerity the dominant response to the global financial crisis and how can it be resisted? How is privatisation affecting sectors such as health services and education? These and related questions were discussed at the workshop A Political Economy of the Privatisation and Internationalisation of Public Services in a Time of Austerity, held in the Business School of the University of Hertfordshire on 1 and 2 March 2013. In this post, I will draw on some of the themes discussed at this workshop.

Photo by tomroper
In her opening statement ‘Crisis as an Opportunity’ Ursula Huws outlined how capital has used the crisis as an opportunity to open up the public sector and push for privatisation. 2007 had constituted a global peak in Mergers & Acquisitions by transnational corporations (TNCs), indicating an enormous concentration of capital, while the investment in greenfield sites had declined. This development coincided with the saturation of outsourced services such as IT services and the related rise of TNCs in the service sector. The main question for capital was then where to expand into next? Austerity was the opportunity as it justified the oursourcing of public sector services as a way of cutting back state expenditure. It represented a new gold rush for service TNCs, in search for new investment opportunities. Austerity allowed the EU and IMF to impose privatisation on Greece and, at the same time, as Marica Frangakis made clear, demand that parliament should not have a say in relation to already agreed privatisation deals. Austerity imposed from outside often also involves an undermining of democratic procedures.

Nevertheless, as the related discussions at the workshop made clear, the UK too is characterised by processes of opening up the national health service (NHS) and education to the market, although the UK is not subject to the same outside pressure as Greece. The main discourse about the private sector being able to offer services more efficiently and at higher quality must have become dominant earlier. The workshop participants pointed to the period of New Labour in government from 1997 to 2010 and the way monitoring and performance schemes had been introduced in the NHS and education, preparing the services for private participation. Moreover, it was New Labour, which had introduced tuition fees in Higher Education and be it only at £3000 per year. The current government increased the fees of up to £9000 per year, but the key step was to break with the idea of education as a public good in the first place. The dominant discourse now regards higher education as a private benefit to boost one’s earnings rather than a public good. In relation to education, Andrew McGettigan outlined how privatisation is mainly driven by joint ventures with private financial capital and the increasing reliance of universities on private money. In health, discussions at the workshop revealed how cross-border mobility of patients can result in specialist services being reserved for foreigners, who can pay, while mobility of health care workers may imply a brain drain for those countries, which cannot compete with the salaries paid in other countries.

Photo by cpsucsa
It is, however, not all doom and gloom. As DavidHall indicated, there is a geography of austerity with Asian and Latin American countries rejecting successfully IMF programmes. Moreover, there are some examples of re-municipalisation of services across Europe such as water in the city of Paris, making clear that privatisation processes can be reversed. Only the fact that some banks had been nationalised, should be treated with caution. As long as the state did not intervene into the way these banks were run, there was no real difference to private banks noticeable.

Who are the key agents of these movements of resistance? Disappointingly, trade unions are often not at the forefront of struggles. As Judith Clifton mentioned in the case of Spain, the social movement response to austerity in the form of the occupation movement 15 May or the Indignados, the peaceful occupation of major squares was not organised by trade unions. In the Spanish dual labour market, trade unions have mainly concentrated on defending the rights of those in full and secure employment. A wider societal dimension was not developed.

Nevertheless, as Christoph Herrmann discussed, this does not mean that trade unions could not be involved in progressive forms of resistance. Clearly, the effects of privatisation in the form of job losses and a deterioration of working and employment conditions has led to tensions between workers and between public and private sector unions. The general commodification and marketization in these privatisation processes tends to erode worker and trade union solidarity. Traditional strategies seem no longer to work. Strikes often affect service users negatively, without putting pressure on employers. Concession bargaining can protect established workers at best, successful struggles at the local level often do not challenge the wider restructuring policies. While general strikes may paralyse Athens or Madrid, they have little impact on policy-making in Brussels or Berlin.

And yet, there have been examples of new, innovative strategies by trade unions against austerity. New forms of service disruption, for example, in the form of ‘free clinics’ rather than ‘occupied clinics’ could ensure that there is no division between unions and service users. As always, trade unions are neither by default the defenders of privileged conditions of insiders, nor automatically in the vanguard of resistance. Concrete trade union strategies of resistance only emerge in processes of class struggle. Considering the current onslaught on services across the world, these strategies of resistance are more necessary than ever. This workshop provided an excellent starting-point for reflections on these strategies.

Prof. Andreas Bieler
Professor of Political Economy
University of Nottingham/UK

Personal website:

15 March 2013

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