Austerity and industrial relations in the public services

(26 April 2013) Earlier this month the European Commission published its biennial Industrial Relations in Europe report. This includes three major chapters that examine trends in the public services and providing further evidence of the erosion of social dialogue and attacks on workers' pay and conditions.

Endorsing austerity


Although produced by DG Employment and Social Affairs the report's perspective doesn't appear to deviate from the narrow focus on austerity promoted by the Commission itself and DG Economic and Financial Affairs in particular. Noting the initial impact of the economic and financial crisis on the private sector, the report goes on:

Since then, the crisis has deepened and spread to further sectors of the economy, including the public sector, as the financial crisis turned into a sovereign debt crisis, making fiscal consolidation a key objective of macroeconomic adjustment policies.

This makes the shift to austerity sound almost automatic or inevitable rather than being the conscious and disastrous policy decisions of national governments supported by or under pressure from the European institutions.

Despite the growing evidence of the failure of coordinated austerity, the report not only maintains the line that fiscal consolidation is needed to restore confidence but argues that the public sector has to suffer even greater cutbacks than the private sector.

For countries hit by the debt crisis, fiscal consolidation, financial stability and structural reforms are conditions to restore confidence, re-establish fiscal solvency and foster economic growth over the medium term. In these countries the measures are necessarily more severe than those taken by private companies during the 2008-2010 recession. (Our emphasis)

Watching the attacks on collective bargaining



Despite voicing support for social dialogue and, certainly in the early days of the crisis highlighting the important role social dialogue could play in tackling the effects of recession, the Commission seems to be standing back and watching as national governments undermine collective bargaining processes. It says that it "is engaged to promote and support social dialogue throughout the EU" but merely comments that: "reforms were not always accompanied by a fully effective social dialogue."

Fundamental change and reversing progress on social dialogue


The Industrial Relations in Europe provides more detailed evidence of the scale of the attack on social dialogue, collective bargaining and public service trade unions:

The impact of the crisis on industrial relations in the public sector is severe, particularly for the trade unions...the combination of austerity policies leading to a shrinking public sector and demographic trends is likely to further reduce trade union density in services overall in the coming years. As a result of the reforms in the public sector and the current conflictual environment, industrial relations in the public sector have almost certainly changed fundamentally.

The reports warns of backward steps in relation to the social dialogue with a "return to unilateralism on the part of governments and public employers to the detriment of forms of social dialogue... top-down determination of wages and a reduced role of trade unions...."

Long-term impact on services


While it is possible to see the short-term impact on social dialogue, pay and jobs, it is less easy to appreciate the potential long-term effects. This report raises serious concerns:

The role of public sector trade unions has been seriously weakened and there have been limited attempts to encourage employee voice. The risk is that when economic growth returns the public sector in many countries might no longer be viewed as an employer of choice and this could seriously jeopardise efforts to recruit and retain a talented workforce that will help deliver high quality public services that maintain competitiveness and social cohesion.

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