Business-Managed Democracy

Business-Managed Government

Impacts on Employment

Cost savings in privatised utilities are often made by lowering rates of pay and conditions for workers or cutting the full-time workforce. Thousands of jobs are normally shed ahead of, and just after, privatisation of government enterprises and services. Full-time permanent employment in privatised enterprises is increasingly replaced by part-time and temporary work. Direct employment is steadily replaced by contract employment and contract workers tend to be non-unionised, poorly paid, with little employment security and no access to benefits such as sick leave, holidays and pension contributions. There is even a trend to employ contract workers on a self-employed basis, to avoid having to pay any statutory benefits.

Electricity

In the US electricity deregulation has led to 150,000 people losing their jobs, including those who were responsible for safety and reliability of electricity supplies, as private deregulated utilities shed staff so as to cut costs. The Utility Workers Union of America (UWUA) and the US Department of Energy’s Energy Information Administration (DOE EIA) estimate that utilities now employ less than two thirds of the workers they did in the early 1990s. The UWUA claims that cost-cutting has led to the less frequent inspections, deferred repairs and less training, which threaten worker and public safety as well as system reliability.

In Australia employment in the electricity sector fell from about 83,000 in the mid-1990s to 33,000 workers in 2003. The State Eelctricity Commission of Victoria (SECV) shed 11,000 jobs before privatisation but the government still felt the need to put the retail price up ten percent to make its enterprises attractive to buyers (and perhaps to give the impression that privatisation caused prices to fall). Another 2,200 jobs were subsequently shed by the privatised companies in their efforts to become more efficient. In all, thousands of jobs were lost but electricity prices were no lower than in neighbouring NSW where electricity was not privatised.

Some 66,000 jobs were lost in the UK electricity industry and pay and conditions were undermined. In Europe, as profits of the large multinational energy companies have increased (see graph below), wages declined and 300,000 jobs were lost in the gas and electricity sector over ten years.

Graph: Trend in wages and profits as a share of GDP – 1995-2007
for European energy sector

Water

In the US, privatisation of existing water and sewerage systems have resulted in the loss of about one third the jobs (see figure below). Those keeping their jobs have seen their workloads increase and more experienced staff are often replaced by staff with less qualifications and experience on lower pay. As with electricity, this can lead to a lowering of service quality as the downsized workforces are less able to make speedy repairs and keep up with backlogs of work.