Portugal: unions convince Lisbon city council to reject outsourcing

(June 2011) In 2010 Lisbon city council decided to restructure its services to try to reduce its levels of spending. It published plans which included proposals for reducing the number of departments, transferring some work to the smaller district councils in the city and for contracting-out some services.

The trade unions representing the workforce – STAL and STML (the trade union of Lisbon municipal workers) – were invited to comment on the proposals. The unions protested that they were given too little time. However, they did submit a response that criticised the proposals for being based on a ‘new public management’ approach, which thinks that municipal services should be run like a business, including outsourcing services to private companies.

The city council set up a specific review of refuse collection and waste management. This focused on one main question: should the city continue to employ workers in-house to provide the service, or could it reduce the costs by outsourcing the work to private companies, using Public-Private Partnerships and other forms of privatisation.

STAL again submitted evidence, arguing strongly against outsourcing because of its damaging effects on employees' pay and conditions and on the quality of service. In particular, STAL argued that contracting-out was not more efficient than using direct labour, so that there would not be any savings.

STAL used the reports prepared for EPSU by PSIRU, which include a lot of data and examples of problems with privatisation and outsourcing, and set out comparative studies from across Europe and the rest of the world showing that private companies are not more efficient than public sector operators.

The review concluded that there was no advantage in contracting-out, and potentially many problems. As a result, the city council agreed to keep the service in-house. The impact of STAL’s evidence was clear in the final report, which made a number of references to the EPSU/PSIRU research, as well as to other reports and literature. Other services, including street lighting, have also been kept in-house.

The union is still contesting other aspects of the council’s plans, including a proposal to decentralise street cleaning to district councils within Lisbon. This would increase the likelihood of contracting-out, because the district councils have less capacity to operate services. It is the subject of a continuing public debate.

Key points:
• Research can be a valuable weapon for fighting cuts and contracting-out
• EPSU and PSIRU reports can be used at national and local level to challenge outsourcing

• Report from Jorge Fael, STAL
• Union websites: STAL http://www.stal.pt/; STML (Lisbon municipal workers union) http://www.stml.pt/

Other PSIRU reports are also available at the website www.psiru.org