The undermining of union power was one of the unstated motives of privatisation of electricity in the UK and in Australia. In Victoria, strikes were frequent in the electricity industry and demarcation disputes and overmanning had become a problem with up to 24 unions covering each power station. However these problems were addressed prior to privatisation when unions were rationalised with the help of the Australian Council of Trade Unions (ACTU) and employee numbers were reduced from 20,000 to 12,000 and then to 8000 after the change of government in 1992, but prior to privatisation.
A primary motive of the Thatcher government was to curb trade union power, particularly the power and political influence of the public sector unions that were "symbolic of the political strength of organised labour in the post-war years".
The nationalised industries were strongly unionised by powerful centralised unions and because of this they had the power to disrupt a whole industry through strike activity. Employees of private companies, especially if they were in a competitive market, had to worry about strike activity affecting their job prospects and this deterred strike action. Also coordination in a fragmented industry would be more difficult.
Privatisation was thought to be a way of breaking the hold by the National Union of Mineworkers (NUM) over electricity supply. This power over electricity supply arose because 80 percent of generation was from coal power stations supplied by British coal. Without the protection of guaranteed supply to the electricity industry, British coal would have to compete with coal imports in terms of price and reliability (as well as with alternative fuel sources), meaning that industrial action would damage the prospects of British coal and cost future jobs.
Indeed, after privatisation of electricity, the system of national wage bargaining disappeared and trade unions took on an advisory role, while managers were “put on individual contracts and formally excluded from collective agreements” and companies “communicated directly with employees, not through unions.” Privatisation also reduced union power through downsizing workforces and contracting out of services in the privatised companies. Some 66,000 jobs were lost in the industry and pay and conditions were undermined. Privatisation also conveniently removed the government from the actual act of firing workers.