Bruxelles 22-23 November 2012

European Commission Conference on Public Sector Pay and Procurement

Changing public service employment relations in the era of austerity

Lorenzo Bordogna

Università degli Studi di Milano

lorenzo.bordogna@unimi.it

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Focus and Outline

The focus is on the regulatory framework and institutional arrangements of Public sector employment relations in the EU27

1. Two main features:

a ‘mosaic of diversity’

‘distinctiveness’ of PS employment relations

2. Recent trends under the pressure of the economic crisis:

how did they affect the diversity across countries and the distinctiveness of PS employment relations?

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Mosaic of Diversity

Great diversity across EU27 in many features

• Size of the public sector employment share

divide Northern and Central European countries vs

Southern and Eastern European countries

• Employment structure/workforce composition

(female, part-time, temporary, youth employment)

• Legal status of public employees (especially civil servants)

• Union membership/density and union fragmentation

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SIZE of THE PUBLIC SECTORPublic sector employment share on total employment (2008-11 average)

PS share on total employment

Countries

Over 29%Norway, Denmark, Sweden, Belgium, Luxembourg, France, UK, Netherlands.

25% - 28% Finland, Malta, Germany, Ireland.

20% - 24%Lithuania, Hungary, Austria, Estonia, Latvia, Greece, Slovakia, Spain, Portugal, Italy.

Below 20% Poland, Slovenia, Czech Republic, Cyprus, Bulgaria, Romania.

Source: LFS Eurostat. NACE Rev.2. Sections O, P, Q.Notice: Sections P and Q include also private sector providersO: Public Administration, Defence, Compulsory Social SecurityP: EducationQ: Health and Social Work Activities

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Share of public sector employment on total employment: comparison between different sources

Sources: 1) Eurostat LFS 2008-09-10-11, sections: O. P. Q; 2 e 3) OECD, Government at a Glance 2011, Fig. 21.1 and 21.2, based on ILO, LABORSTA database; 4) EIRO: Bordogna 2007.

 

1. LFS-Eurostat2008-2011 average

(O+P+Q) 

2. OECDGeneral Govern.

2008 (a, b)

3. OECD General Gov. + Public Corporations

2008 (a, b)

4. EIRO2004 or 2005

EU27 24.4      

EU15 25.8      

EU12 25.7      

NO 34.7 29.6 34.5 33.9

DK 32.6 28.7 31.5 30.4

SE 32.1 26.2    

BE 31.5 17.1   24.9

LU 29.8 17.6 17.6 10

FR 29.7 21.9 24.4 20.3

UK 29.7 17.4 18.6 20.2

NL 29.5 12.6 21.4 11.5

FI 27.2 22.9 22.9 27.5

MT 25.4     32.1

DE 25.1 9.6 13.6 12

IE 25.1 14.8 16.7 17.9

LT 23.1     27.6

HU 22.6 19.5 19.5 20.8

AT 22.2 11.4   10.7

EE 21.7 18.7 22.3  

LV 21.4     34.7

GR 21.2 7.9 20.7 22.1

SK 21.1 10.7 19.3 22.5

ES 20.5 12.3 13.0 15.2

PT 20.4 12.1   15

IT 20.2 14.3 14.3 14.5

PL 19.8 9.7 21.4 26.2

SI 19.6 14.7 22.6 23.2

CZ 19.1 12.8 19.4 14.7

CY 18.8     17.3

BG 18.5     26.2

RO 13.6     10.4

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Mosaic of Diversity

Employment structure/workforce composition

female employment: comparatively low in the Mediterranean countries (Malta, Greece, Cyprus, Italy, Spain); very high in Baltic countries, Nordic countries, UK, IR, Slovenia, Slovakia

differences between PA&Defence, Education, Health

part-time: comparatively low in 3 Mediterranean countries (Spain, Italy and Greece), Poland, Slovenia, Finland (!); astonishingly high in the NETH, but also

high in the Nordic countries, Belgium, UK, IR, Germany, Austria

temporary: great variation: 7-8% in UK, Lux, Greece; more than 20% SP, PT, FIN; increasing in some countries (Germany, Austria, PT: search for numerical flex)

youth employment: low young/elder ratio in Italy, Bulg, Est, Lith, FIN, Sweden; younger and temp workers harder hit by the crisis effects on age structure, skill composition, also quality of services

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Mosaic of Diversity

Legal status of public employees

Career civil servants under public law (Beamte style) or with special employment status (with restrictions in collective bargaining rights and the right to strike)

vs

Employees with ordinary contracts under private law

In some countries the area of employees under public law or with special employment status is large (Germany, Austria, other central European countries, France, but also Greece, Portugal, some Eastern countries)

in other countries is very low or disappearing as effect of reforms (Italy, Sweden, DK), or never existed (UK)

Often this affects the right to collective bargaining

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Mosaic of Diversity

Union membership/union density

• Usually (much) higher union density than in the private sector, although to varying degree

but clear divide old EU15 versus Eastern European countries

(this affects collective bargaining and social dialogue in general)

• Also greater fragmentation than in the private sector

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Mosaic of Diversity

Wage setting systems

(influenced also by the legal employment status)

Three models

• Unilateral determination by the government or public employers

• Free collective bargaining/joint regulation

• Hybrid systems, neither unilateral determination nor collective bargaining (UK pay review bodies system)

A different case is when to be effective collective agreements need to be transposed into legislative measures (decree law or similars):

if just a procedural formality de facto collective bargaining

if agreements not binding for the government unilateral determination (France, PT, GR, some Eastern countries)

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Mosaic of Diversity

Wage setting systems

Collective bargaining is far from universally widespread in the EU27

“the right to collective bargaining, at least for some groups of public sector workers, is widely restricted or is embedded in specific structures and procedures that do not allow for the same bargining rights, coverage and results as in the private sector” (Clauwert and Warneck 2008)

In some cases, even when the right is recognized, collective bargaining is not practised at all because of the weakness or absence of the trade unions

(many eastern European countries)

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Distinctiveness of public sector employment relations

Traditionally, distinct/separate regulation from the private sector

• Where the legal employment status under public law prevailed, no bargaining rights + special prerogatives/privileges for public employees (benign ‘sovereign employer’ approach)

• Where this distinction did not exist, ‘model employer’ approach

In both cases

- attention to uniform, national standards, and equity issues

- importance of seniority and collective/automatic criteria in career and remunaration systems

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Distinctiveness of public sector employment relations

This distinctiveness has been put under pressure by two waves of reform:

1960s-70s: move from unilateral regulation joint regulation/collective bargaining

1980s-1990s: New Public Management inspired reforms attack both the benign ‘sovereign employer’ and the ‘model employer’ approaches

– reduction of special employment status and special prerogatives

– attack to uniform, national standards

– decentalization of wage setting systems

– attack to collective, automatic (universalistic) criteria for pay increases and career promotions in favour of more discretionary, selective, individualized systems (PRP, merit pay)

– more confrontational attitude towards trade unions

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Distinctiveness of public sector employment relations

NPM inspired reforms of public sector employment relations have been adopted to different extent and with varying degree of intensity in the EU countries

They often produced unintended and even perverse effects (especially if adopted without appropriate institutional arrangements)

According to a 2007 Oecd Report:

“decentralization of pay bargaining should be pursued only if justified by corresponding advantages and if accompanied by appropriate financial

arrangements”

“the potential for individualization has often been overstated. It entails higher transaction costs than uniform and collective standards and agreements, and

one should assume that a rationally acting manager will use standard contracts, standard conditions and collective pay structures unless there is a clear added

value to be gained from individualisation”

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Clusters

Despite the above analysed great variety of employment relations systems across EU27, some country clusters can be identified

1. Nordic countries (+, partly, Ireland and the Netherlands)

2. Central European countries with a Rechtstaat tradition of Prussian or Napoleonic origin (Germany, Austria, France, partly Belgium, Luxembourg and the Netherlands)

3. Southern European countries (Portugal, Spain, Italy, Greece, Malta and Cyprus)

4. Former communist Central and Eastern European countries (with the partial exception of Slovenia)

5. UK

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Clusters

Nordic countries

-very large public setor employment share, with high female presence in connection with a dense welfare state

-significant harmonization processes between career civil servants and public employees under ordinary contract

-very hgh union density, although slightly declining in recent years

-wide collective bargaining practices within a rather decentralised two-tier bargaining system with strong coordination mechaisms

-significant elements of NPM doctrine (including forms of PRP) but incorporated within administrative systems that maintain some (neo-)weberian characteristics

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Clusters

Central European countries with Reechtstaat tradition

.public sector employment share high in France, Belgium, the Netherlands, but comparatively low in Germany and Austria, with a significant component of temporary workers in France and Germany

-strong component of career civil servants, which are large part of centrl government employee and in France almost the totality of public employees

-career civil servants do not have the right of collective bargaining (or a very weak right, as in France), and in some cases restriction of the right to strike

-medium/high trade union density (with the exception of France)

-wage setting systems trditionally very centralised in France and Germany, with some pressures to decentralisation (and fragmenttion) in Germany in recent years

-limited elements of NPM doctrine (especially in Germany and France)

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Clusters

Southern European countries

.public sector employment share compartively medium-low (with partial exception of Malta and, to a lesser extent, Greece)

-low female share (with partial exception of Portugl) and low part-time employment; high incidence of temporary workers in Spain, Portugal and Cyprus; very low young/elder ratio in Italy

-medium/high union density

-most of these countries used to share a strong component of career civil servants with special employment status and limited scope for collective bargaining, but since the 1990s Italy moved along a different trajectory, adopting several NPM precepts, privatizing the employment relationship of almost the totality of public employees and decentralizìng the bargaining system with weak coordination mechanisms unintended and perverse effets followed; some NPM inspired reforms also in Spain, Portugal and Greece, but smaller scope for collective negotiations

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Clusters

Eastern European countries

.comparatively small public sector employment share (Hungary partial exception), with high presence of women (especially Baltic countries); Romania exception); usually high young employees share, but not in Baltic countries and Bulgaria

-unions generally weak or very weak, with partial exception of Hungary and Slovenia

-collective bargaining not permitted or not practised; forms of social dialogue eist, but rather weak

-where collective negotiations are allowed and practised, often take place only at individual employer level

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Clusters

UK

-comparatively rather large public sector employment share, with high presence of women and part-timers, and little temporary workers

-no special status for public employees, civil servants included, no special restriction to the right of association and to strike, with exception of some groups

-collective bargaining widely practised, but about 35-40% of public employees under the pay review bodies system

-many NPM precepts adopted, but perhaps the public rhetoric exceeds reality

.the traditional model employer approach has been abandoned, but employment relations in the public sector still different from the private sector

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Recent trends under the pressure of the economic crisis

The measures adopted by many EU countries in response to the economic crisis (but in some cases they pre-dated 2007, due to different reasons) have not

only affected the employment levels, salaries working conditions and pensions of public employees, but strained the traditional regulatory system

prevailing in each country

Four trends

• Revival of unilateralism

• Recentralization of wage setting systems, as a consequence of centrally defined, ‘blind’, horizontal measures

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Recent trends under the pressure of the economic crisis

Four trends

• Distinctiveness of public service employment relations: the removal of this feature, within a program of a leaner and less distinctive public sector, was a crucial target of the NPM approach. The effect of the government measures in response to the crisis are ambivalent: return to unilateralism, also to influence the outcomes reated to public employees under ordinary contracts (see Germany), but often instrumenta to the introduction into the public sector of private-sector-style HRM practices

• Although public sector trade unions remain the stronghold of national trade union movements in many countries, their role has generally been weakened by the crisis, in terms of union density and even more in terms of capacity to infuence governments’ policies