Public Service Employment Relations in Europe

Transformation, Modernization or Inertia?

Stephen Bach, Lorenzo Bordogna, Giuseppe Della Rocca, David Winchester, Stephen Bach, Lorenzo Bordogna, Giuseppe Della Rocca, David Winchester

• Publisher: Routledge
• Year: 2005
• ISBN:
  9781134630035
• Edition: 1
• Topic: Betriebswirtschaft
• Subtopic: Business allgemein

The book provides an up-to-date analysis of the restructuring of public service employment relations in six European countries: Germany, France, Italy, Spain, Denmark and the UK. Each of the chapters on national systems isorganized around a set of themes and policy issuesincluding:

* the impact of fiscal crises, and increasing macro-economic integration within the European Union, on the scope and organization of public services
* changes in the patterns and status of public service employment
* the shift from centralized administration to new models of devolved management
* changes in the organization and policies of public service trade unions
* reforms in the structure, process and outcome of collective bargaining
* patterns of conflict and cooperation between unions, managers and the state.

Written and edited by some of thecountry's primary authorities on public sector industrial relations, this outstanding book on this high profile field is sure to be a valuable resource for those studying this important topic.

1
Europe
Changing public service employment relations

Stephen Bach

Since the 1980s there has been sustained interest in reforming public service employment relations across Europe. The pressure for reform has arisen from concerns about high levels of public expenditure and their potentially detrimental effects on national competitiveness in a more global economy. These macro-economic constraints were reinforced by the Maastricht convergence criteria for membership of Economic and Monetary Union (EMU) and the provisions of the 1997 growth and stability pact, maintaining the pressure on national governments’ fiscal policies. To these macro-economic pressures can be added the micro-economic scepticism that traditional patterns of public service employment relations can ensure the recruitment, retention and satisfactory performance of public service workers in responding to increased citizen expectations about service quality and efficiency. In most countries the characteristic features of public service employment relations, including intricate systems of administrative and legal regulation, centralized systems of pay determination, rudimentary forms of human resource management, and entrenched union influence, have all been subject to increasing critical scrutiny.

There is much at stake for governments, employers and trade unions. Governments remain directly or indirectly the employers of public service workers (accounting for 20–30 per cent of the work force) and control of the public sector paybill is central to effective economic policy. Moreover, the political sensitivity of many public services ensures that all governments continue to monitor closely the behaviour of producers and consumers. For public service employers, many of the proposed structural and employment reforms bolster their authority, but also hold them more to account for organizational performance. Whilst for trade unions, faced with the prospect of membership decline and continuing pressures to accept employers’ demands for flexibility, the public services remain a crucial arena of economic and political influence.

This introduction addresses several issues. It first considers whether the comparative analysis of public service employment relations is distinctive. It goes on to explore the challenges facing the public sector and whether macro-economic integration within the European Union, and other pressures for reform, are producing greater similarity in the structure and outcome of public employment regulation. It next outlines the analytical framework of the national chapters and explores the main developments in terms of state, employer and trade union policy and of collective bargaining practice which inform each contribution. The scope and direction of reform in each country are then assessed and variations in terms of transformation, modernization or inertia are explored. Different outcomes reflect variation in the objectives and extent of reform and the obstacles to these policy initiatives. It concludes by assessing how far macro-economic constraints and the process of restructuring have led to convergence between countries. In addition, the degree to which there has been erosion of the separtion between public and private sector employment relations within each country is considered.

The characteristics of public service employment relations

There has been detailed consideration of changing industrial relations in Europe based mainly on experience in the private sector (Bamber and Lansbury, 1998; Ferner and Hyman, 1998; Van Ruysseveldt and Visser, 1996). These and other studies examine whether distinctive national systems of employment regulation can survive the pressures arising from globalization and European integration. They invariably emphasize the persistence of national diversity and reject the strong version of the ‘convergence’ thesis. In contrast, the question of convergence has traditionally been less relevant to public services because they have been shaped so strongly by distinctive national state traditions. Whilst this has discouraged interest in systematic comparison, it might be expected that the common pressures to reform the public services would have spawned an interest in cross-national comparative research.

Public sector comparative research has emerged strongly at the sub-sectoral level. Differences between countries in structure, financing and proposals for welfare reform have stimulated interest in international experience, with some consideration of employment practices in health services (Altenstetter and Björkman, 1997; Bach, 1998) local government (Naschold, 1996) and the civil service (Bekke et al., 1996; Hood and Guy Peters, 1994). Does the increased attention to sub-sectoral developments, alongside increased European integration, imply that national comparisons of public services are no longer of academic or policy interest?

The nation state, with unique legal and administrative characteristics, remains pivotal in explaining trends in the public sector. A blend of the specific features of individual state traditions with their unique administrative cultures; the historical development of the welfare state, incorporating a particular post-war settlement between capital and labour; and the economic and political characteristics of each country have borne strongly on the evolution of public sector employment relations. In the language of political scientists there is strong evidence of path dependence. These influences can be contrasted with comparative studies of private sector industrial relations. They are increasingly alert to the influence of product market competition in diluting specific patterns of national industrial relations, hence the vigorous debate about the implications of ‘globalization’ (see Ferner and Hyman, 1998:xix). In particular the actions of transnational companies and their interest in ‘regime shopping’ has been highlighted (Streeck, 1992).

Until recently there was scarcely any equivalent pressure in the public services, with the important exception of the impact on public utilities and public enterprises of the twin processes of deregulation and privatization (see Lane, 1997). Transnational companies operate in the public sector, but public services remain firmly in the control of national governments and have been protected from the chill winds of international competition, being a core component of each country’s social protection system. Self-evidently, public services cannot be relocated from one country to another, preventing the type of concession bargaining engaged in by transnational companies in their negotiations with the work force and trade unions.

Trends in national patterns of public sector employment relations none the less are of interest to policy makers and the social partners (Hegewisch et al., 1998; OEGD, 1995; Olsen, 1996; Treu, 1987). The OECD Public Management Service has been the primary source of information about employment relations trends. Focusing on management practice, it has developed a strong critique of the current public sector employment model. Its publications advocate a model of human resource management which borrows heavily from existing private sector ‘best practice’. How far these prescriptions are appropriate, and the extent to which national practice follows this policy agenda, are not fully addressed in the OECD studies. There is little other information available, especially in comparison with studies covering the private sector. This may arise, in part, from difficulties in gaining funding for public sector research, but what is clear is that public sector employment relations are ripe for reappraisal.

Challenges to the public sector

A major challenge to existing patterns of public service employment relations arises from the belief that the growth of public expenditure is unsustainable, and that the size and scope of the public sector require reappraisal. Public expenditure trends have been viewed as providing important pointers to illuminate national experience, although comparisons are not straightforward (see Adema, 1998; Foster and Plowden, 1996).

Table 1.1 reports public expenditure trends/GDP ratios on a standardized basis for OECD countries, and shows that there are considerable variations in the experience of countries. Britain has historically had relatively low levels of E/GDP, as has Spain, although Spain’s has accelerated sharply since 1980. France, Italy, Germany and Denmark have much higher levels of E/GDP growth, but it is only in Denmark that expenditure growth seems to have slowed significantly. These figures indicate that, despite the long-standing debate about fiscal crisis, few countries appear to have had much success in reining in public expenditure.

This limited success reflects primarily the growth in transfer payments (social security benefits and pensions) rather than expenditure on services, such as education and health care. These trends reflect political difficulties in reducing social security benefits; a combination of sluggish growth and record levels of unemployment across the European Union and, throughout most of die 1990s, unfavourable demographic trends. Whether these trends amount to a fiscal crisis remains an open question, but the important point is that policy makers have acted as if a fiscal crisis existed. The difficulties in stemming transfer payments have led national governments to place some of the burden of adjustment on public services and their work force. This has extended beyond attempts to control the public sector paybill and the reform of collective bargaining institutions to a more concerted attempt to raise efficiency within public services, without necessarily addressing fundamental problems of reforming the welfare state (Ferner, 1994).

Table 1.1 Public expenditure/GDP ratios on a standardized basis for selected OECD member countries 1950–95(%)

In addition to concerns about the cost of public services, there has been more persistent criticism of the quality of public service provision and the failure to meet citizens’expectations in terms of access, equity, speed of service and effectiveness. In education, anxieties about the extent to which the education system contributes to economic performance, limiting social exclusion and producing responsible citizens is widespread. A variety of shortcomings in terms of access, equity, professional accountability and effectiveness bedevil systems of health care (Bach, 1998), whilst central government civil servants have been characterized as remote élites ill-adapted to respond to citizens’ concerns. Overall increasing levels of prosperity, and improvements in customer service and convenience in private sector services, have encouraged citizens to make unfavourable comparisons with patterns of service delivery in the public service sector (Flynn and Strehl, 1996). The widespread introduction of public service charters is testament to the pressure to improve the reliability of public services and to make them more sensitive to the needs of their users.

Public services have been criticized for their relatively low levels of productivity. There has traditionally been recognition that the scope for productivity improvements in the public sector is lower than the private sector because of the labour-intensive character of public services, the so-called relative price effect, which has limited the scope for dramatic increases in productivity associated with technological innovation. None the less this recognition has not blunted the desire for reform and it is widely believed that inflexible employment practices and limited opportunities for career progression have contributed to poor performance and staff demotivation (OECD, 1995). Many of the chapters echo these concerns in their assessment of national experience.

A final stimulus to the reform of public service employment practices may have arisen from the process of economic and political integration in Europe. The convergence criteria for participation in membership of EMU specified that each member state’s deficit should not exceed 3 per cent of GDP and that total government debt should not exceed 60 per cent of GDP. These were viewed as blunt, but highly visible, policy goals which forced many governments to contain public expenditure and put public sector jobs in jeopardy.

The Maastricht convergence criteria have undoubtedly been an important influence on recent changes in public service expenditure in many countries, but its significance should not be accepted uncritically. As noted above, it has been rising levels of unemployment in particular and the associated transfer payments which have driven pressure to curb public expenditure—although it has clearly been convenient for politicians to blame sensitive tax increases, or plans to restrict public expenditure, on the EMU process. With the political complexion of European governments shifting towards the centre-left in recent years, the appetite for further politically contentious austerity measures may have been blunted. Finally, as the capacity of national governments to shape economic policy has been reduced, their reliance on public sector pay and employment policies becomes a more significant component of macro-economic policy. The combined influence of more global and integrated financial markets and the monetary constraints associated with the single currency regime has eroded many of the economic policy instruments traditionally available to member states. Consequendy governments are clinging more tenaciously to those aspects of economic policy which remain in their grasp, not least the cost and efficiency of public services.

The framework

Comparative analysis between countries requires that similar phenomena should be examined in each country. There are significant differences in the size, scope and role of the public services between European countries. None the less each chapter follows broadly the same lines and is organized around a core set of themes and issues. This study defines the public services as employment in public administration and publicly funded and managed services. A defining feature of these services is that in most countries, they have been subject to specific forms of employment regulation, frequently distinguished from the private sector by a separate employment statute. Each country study focuses on the core public services; central and local government, health and education, although the degree to which sub-sectoral variations are central to the analysis differs between countries. In some countries railway or postal workers retain their public employment status and these instances are noted, but not explored in detail. Public enterprises and public utilities fall outside this categorization and are excluded, although as public service reforms are often linked with broader processes of privatization, where relevant these developments are noted.

State policies

Many of the characteristics of public service employment which traditionally differentiated it from the private sector derived from the unique role of the state as employer. The ‘political contingency’ (Ferner, 1988)— the need for governments to be sensitive to their electoral constituency—are to the fore in the government’s role, directly or indirectly, as public service employer. These considerations encourage governments to promote stability and order in the conduct of public service industrial relations through elaborate systems of administrative and legal rules. In many instances, especially in Southern Europe, the state has been a source of patronage and acted as ‘employer of last resort’, cushioning many citizens from unemployment, but with detrimental consequences for managerial accountability and efficiency. Public services have developed along centralized, hierarchical and technocratic lines with a framework of administrative rules, often determined unilaterally by government on the basis of administrative law, rather than industrial relations considerations of joint regulation.

By the 1990s the economic and political context had altered, placing strains on the prevailing pattern of public service employment. A key question is whether these macro-economic constraints are leading to a greater similarity of public sector restructuring within Europe as Massey (1997), among others, suggests. A first consideration is the variability in state structures. In some countries there is a legacy of a strong state with a formidable capacity to initiate far-reaching reforms which permeate the whole public sector. In other countries, power is dispersed, reflecting the devolution of power from the central state, or an historical orientation to a federal system of governance. Overlying these differences are distinct public service traditions which impact on the influence wielded by élite civil servants and the degree to which they have discretion or are tightly constrained by elaborate administrative or legal regulation.

A second consideration is the link between state structures and political power. The political complexion of a government may have a bearing on public service reform, but it is a rather crude indicator of state policies. Related considerations include the need to be sensitive to the stability or fragility of governments and the links with broader coalition politics, as well as the phase of the electoral cycle. These features illuminate the political culture—whether authoritarian and adversarial, or inclusive and consensual—which may impinge on the capacity, direction and pace of reform.

These differences can be illustrated by consideration of a dominant aspect of debate about recent state policy, namely privatization. From its original association with the sale of public enterprises the term often has been ...