Public and social services provision in European countries From...
Transcript of Public and social services provision in European countries From...
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Public and social services provision in European countries
From public/ municipal sector to market liberalisation – and then what?
Hellmut Wollmann
(tentative) draft paper
to be presented to the EGPA workshop
to be held in Speyer on September 10-12, 2014
Berlin August 2014
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1. The issue: The “external” reorganisation of the public sector in European
countries: Whence to where?
During the 1980s and 1990s neo-liberal policy concepts, New Public
Management maxims and the European Union’s market liberalisation drive have
profoundly shaped and promoted the discourse and practice of public sector
modernisation throughout European countries. This applies, on the one side, to
the “West European” countries (in the following: WE countries) where, unto
the 1970s, the “advanced” welfare state was characterised by the predominance
of the public sector in the conduct of public functions, and, on the other sides, to
the Central Eastern European (in the following CEE countries) countries which,
until the collapse of the communist regimes, were marked by the omnipresence
of centralist Socialist State and administration in the exercise of all public
functions. Hence, the “starting conditions” from which the public sector
modernisation took off differed fundamentally when the WE countries since the
1980s and the CEE countries since the 1990s were exposed to largely similar
modernisation-geared factors and forces, that is neo-liberal and NPM-fed
modernisation discourses and impulses as well as the EU market liberalisation
drive.
Within the scope of the public sector and its modernisation an analytically useful
distinction can be made between “internal” and “external” re-organisation (in
line with the COST Action guidance paper). While regarding the WE countries
the former is directed at remoulding the traditional (“Max Weberian”)
administrative fabric of public administration by introducing “managerialist”
(New Public Management) principles (and regarding the CEE countries at
dismantling the centralist administrative apparatus), in its “external” dimension
public sector modernisation is targeted at reorganising the implementation and
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delivery of public functions, particularly the provision of public and social
services, by transferring and “outsourcing” them to external agents, be they
public, private, “mixed” or non-profit, essentially by way of market
competition.
The following paper will focus on the “external” re-organisation of the public
sector by singling out and addressing the provision of public utilities (to wit,
energy, water and waste) and (personal) social services (such as elder care). In
doing so, it is assumed that these service sector and their conduct constitute such
crucial components and segments of the overall profile of public functions and
activities that their analysis will render significant insights in the development
and changes of the public sector altogether1,2.
Our discussion will come in three phases (on the concept of different historical
phases see Millward 2005, Röber 2009, Wollmann/Marcou 2010b, Clifton et al.
2011, Wollmann 2014: 49 ff.).
At first, in order to identify the changes that have occurred since the 1980s and
1990s, the “starting conditions” whence the subsequent development has taken
off will be sketched, that is, the “advanced welfare” in WE countries and the
“Socialist State” in CEE countries.
Second, the impact will be addressed which the neo-liberal policy shift, New
Public Management and EU market liberalisation has wielded on the
(“external”) public sector re-organisation (since the 1980s in WE countries and
since the 1990 transformation in CEE countries.
1 The paper draws on Wollmann 2014 as well as on papers (as quoted) that were presented,
within the COST Action program, at sessions of the COST Working Group I held in Potsdam
in May 2014.. 2 Furthermore, the paper draws on recent reports and analyses on service delivery in EU
member countries, see ESPU 2010, Wollmann/Marcou 2010a, Hall 2012, Bauby/Simitie
2014: 94 ff., Kuhlmann/Wollmann 2014: 172 ff..
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Third, the paper shall briefly explore whether there have been follow-up
developments (since the early 2000s), be it in mirroring a downturn and
reappraisal of the neo-liberal/NPM message or in reaction to the deepening
fiscal (“sovereign debt”) crisis.
2 Selection of services under consideration
“Public services” generally encompass energy supply, water supply, sewage,
waste management, public transport and energy provision. In Anglo-Saxon
terminology they are usually called “public utilities” while they are labelled
services publics industriels in French, servizi pubblici or servizi di pubblica
utilità in Italian and Daseinsvorsorge (literally translated: “provision for
subsistence”) in German. In European Union (EU) policy the term services of
general economic interest has been introduced. By contrast, “social services”
comprise the provision of personal social services, such as child care and elder
care.
The following comparative analysis will largely dwell on the provision of
energy, water and waste treatment (as public utilities) and on elder care (as
personal social service), while referring to other services, albeit only in passing,
where appropriate.
3.Country selection
In the country sample the UK, Germany, France, Sweden, Spain, and Greece
will be picked as WE countries, while Poland, Hungary and Croatia will be
drawn on as CEE countries (possibly with former communist East Germany
being taken up as a “special case”)
.
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4. Analytical framework
While the development of the organisational form and operational logic of
service delivery will be regarded, methodologically speaking, as dependent
variables, the explanatory scheme will be significantly inspired by the “(neo-
)institutionalist debate” (see Peters 1999, Kuhlmann/Wollmann 2014: 44 ff. with
references).
The historical variant of institutionalism highlights the “structural”
impact that institutional, political as well as, cultural traditions, through
ensuing “path-dependencies”(see Pierson 2000), may have on the further
course of “institution building” and “institutional choice”.
By contrast the actor- centred variant (see Scharpf 1997) emphasises the
“voluntarist” influence which the decisions and interests, political “will
and skill” of the relevant political and economic actors may exercise on
the future institutional course. Under certain conditions (particularly in
the case of regime shifts or government shifts), this can amount to a
deviation and rupture from a “path-dependently” staked out trajectory.
Moreover, discursive institutionalism (see V. Schmidt 2008) accentuates
the (political, ideological etc.) discourses whose constitutive beliefs and
concepts set the stage for shaping and legitimising decision-making in the
national as well as international policy arenas..
5. Guiding question: convergence or divergence?
The guiding question of the following comparative account and analysis will be
whether (and why) the development of the organisational and the operational
logic of public and social services delivery has shown convergence or
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divergence. Because of wide scope of countries, service sectors and phases
which shall be addressed in the paper the arguments are bound to be brief, if not
cursory.
6. “Starting conditions” until the 1980s respectively 1990s
As highlighted earlier, the “starting conditions” from which public sector
modernization has taken off during the 1980s and 1990s differed fundamentally
between “West European” and Central Eastern European (CEE) countries as
will be briefly recalled in the following.
1.1.“West European” countries
Historically in most “West European” countries the provision of public utilities
and social services was largely under the responsibility of the local authorities in
what historically came to be called “municipal socialism” (see Kühn 1991,
Wollmann 2014: 52 ). For the provision of public utilities municipal companies
were established of which in Germany the Stadtwerke were exemplary.
With the expansion of the national welfare state which unfolded in the early 20th
century and climaxed during the 1960s and early 1970s the provision of public
utilities and social services was largely regarded a key responsibility of the
public sector. This development was rooted in the (as it were “social
democratic”) belief that the conduct of the public services in the “best interest”
of the citizens was most adequately ensured by having them rendered by the
public sector, be it state or municipal and its public personnel either directly (“in
house”) or indirectly in organisational forms that remained closely integrated in
the public administration proper giving it a somewhat organisationally
“monolithic” stance.
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In the following this development shall be illustrated by calling up the service
fields and countries under consideration.
Energy. In some key countries it was politically decided (in UK in 1946, in
France in 1947 and Italy somewhat later in 1962) to “nationalise”, that is to
bring under state control the energy provision which until then was largely in the
hands of the local authorities. Due to the reforms effected since 1945 by the
incoming Labour government the U.K. came to epitomise the (post-war) public
sector-centred (centralized) wselfare state in Europe.. In France and Italy the
energy market arrived at being dominated by the State-owned energy company
(EdF respectively ENEL). In Sweden energy provision came to be divided
between the State-owned company (Vattenfal) and smaller, largely municipal
companies. In post-war West Germany where any nationalisation was a far cry
for the ruling bourgeois conservative federal government the energy market
continued to be dominated by private energy companies while municipal
companies (Stadtwerke) kept playing a significant role.
Water In line with the historical development in most countries water provision
continued to be managed by the local authorities “in house” or through
municipal companies. France deviated in that, in a practice that emerged during
the 19th
century, many (of the in the majority very small) municipalities
“outsource” or “delegate” (gestion déléguée) the operation of water provision to
outside private companies in what has been termed the “French style
privatisation” (see Citroni 2003). In Spain most of the (also quite small)
municipalities have follow the French model of “delegation” (see Bauby/Similie
2014: 106). A conspicuous exception was the UK where the Labour government
in 1973 extended its nationalisation drive also to the water sector .
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Waste
Unto the 1980s the collection and management of waste remained a
responsibility of the municipalities in most European countries.
Social personal services
In the U.K., exemplifying the belief that public personnel would be best
qualified and motivated to perform these services (“self-sufficiency”, see
Stewart 2000: 51) “social services for the elderly emerged as the largest of the
activities of local authority social services departments” (Bönker et al.
2010:100) which expanded to become, as was critically observed, “municipal
empires” (Norton 1994: 378). Similarly in Sweden social service provision was
seen a vital task of local government (see Montin 2014). In France, in the
context of the decentralization reform of 1982, the responsibility for social
service provision was (somewhat contradictorily) transferred from the
municipalities (as it were “de-municipalised”) to the departments (in their State
administrative dimension). In the U.K., in Sweden and France the non-profit
sector was largely sidelined in social service provision for country-specific
political and institutional reasons.3
By contrast, in Germany, following from the “subsidiarity principle” that is
rooted in the 19th
century “social doctrine” of the Catholic Church and has been
explicitly recognised by federal legislation in 1961, the personal social services
have been rendered predominantly by (non profit) voluntary (see Bönker et al.
2014). In Italy, in a similar subsidiarity tradition and because of the persistent
lack a pertinent country-wide legal framework the provision of personal social
services has been largely left to local governments and, from the 1970s, to the
3 In France the seclusion of the voluntary sector dates back to an anti-clerical doctrine guiding
the French Revolution, while in Sweden it goes back to a “hidden contract” (see Wiksström
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regions as the services are rendered to large extent by non-profit organisations
and in the family context (see Bönker et al. 2010: 104 f.,)
6.2. CEE countries
In their pre-Communist history the CEE countries largely shared the trends of
European local government systems, including the role which the local
authorities played in the provision of public utilities and social services.
However, these institutional trajectories of decentralised operational patterns
were broken off after 1945 when communist regimes were established and
(Stalinist) State model was imposed in which the public utilities came to owned
and operated by the central State while social services were in part delivered by
State enterprises. In Hungary, under the communist regime the public utilities
(water, sewerage, waste, public transport etc.) were in state ownership, but
formally in the responsibility of the local councils (see Kuhlmann/Wollmann
2014: 188)
7. Shift to neo-liberal policies and NPM towards marketisation and
privatisation of service provision since the 1980s respectively 1990s
7.1. WE countries
The neo-liberal criticism of and attack against the (advanced) welfare state and
its public sector – centred model of service provision came particularly on two
scores (see Kuhlmann/Wollmann 2014: 172 ff. with references).
2000) concluded between the then ascendant Social Democrats and the “voluntary” sector
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For one, the tasks of the advanced welfare state were seen excessive and needing
to be cut back to the format of a “lean state” which, insofar as tasks were
retained, should not carry them out itself, but just “enable” their conduct.
Second, the hitherto all but monolithic structure of the public sector should be
fundamentally remoulded by, in the internal structures, shifting from “Max
Weberian” hierarchical rigidity to private sector derived managerialism and,
externally, by replacing the “in house” and administratively integrated provision
of services with “outsourcing” them to organisationally distinct providers
through the introduction of the “purchaser-provider” split and of competitive
tendering (see Grossi et al. 2010, Grossi/Reichard 2014).
The neo-liberal policy shift got its initial powerful political and discursive thrust
in the U.K after 1979 under Margaret Thatcher’s conservative regime whence it
spread first to other Anglo-Saxon and subsequently also to other European
countries.
Since the mid-1980s, following the adoption of the Single European Act of
1986, the European Union embarked upon its market liberalisation drive to
create a single European market by 1992 geared to the “four fundamental
freedoms” of movement of persons, goods, services and capital. With regard to
the provision of services the EU was eager to achieve this through directives that
are to be transposed into national legislation by the member States. Such EU
directives aimed at introducing competition in the energy sector (see Wollmann,
Baldersheim et al, 2010:176), set quality standards for drinking water in the
water sector (see Citroni 2010) and effecting the waste sector by stipulating a
“waste hierarchy” (including recycling, the re-use and use of waste for energy
production) (see Dreyfus et al. 2010: 146 ff.).
)..
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Energy sector. In the U.K., in anticipating (and in fact serving as a model and
stimulus for) the EU’s subsequent market liberalisation intervention the
Conservative government under Margaret Thatcher proceeded in 1989 to
privatise the country’s (since 1949 State-owned) electricity sector. International
energy companies, such as France’s EdF and Germany’s RWE and E.on became
minority shareholders of the newly created private companies (see Drews 2008:
51). In Italy in 1999 the State-owned energy giant ENEL was, at first, turned
into a private law stock market listed company and subsequently sold a
significant share of its stocks to institutional and private investors, reducing the
share of the Italian State to 30 percent. By contrast, throughout the 1990s, the
French government appeared reluctant to comply with the EU’s market
liberalisation drive, probably in order not to impair the EdF’s position as a key
player and champion on the national and international energy markets. Finally,
in 2004, in responding to the EU’s Acceleration Directive of 2003, France
moved to transform EdF into a private law stock market listed company, but
made sure that the French State retained 84 percent of the stocks. In
Germany’s energy sector which was since long dominated by regional (largely
private sector owned) energy companies while the municipal companies
(Stadtwerke) still held a noticeable share of the local markets the federal
legislation meant to liberalise the energy market had a somewhat ironic effect: It
triggered a wave of company mergers which resulted in the emergence of the
“Big Four” (RWE, E.on, EnBW and Sweden’s State owned Vattenfal), whereas
the municipal energy companies (Stadtwerke), faced with the “Big ones”, lost
ground to the point of foreboding a “demise of the Stadtwerke”
(“Stadtwerkesterben”).
Water provision. In the wake of the neo-liberal policy shift in the U.K. the water
sector that had come under state control in 1973 was entirely privatised in
England and Wales while remaining in public ownership and operation in
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Scotland (for a comparative overview see Lieberherr et al. 2014). In France
where, dating back to the 19th
century, the municipalities have “outsourced”
(“delegated”, gestion déléguée) the water management to private providers this
practice ( labelled “French style privatisation”) has been further expanded
during the 1980s, as cities like Paris and Grenoble that until then retained
municipal operation decided, under right wing and neo-liberal minded council
majorities, to equally “outsource” their operations (see Hall/Lobina 2001).. As a
result the “big three” water companies (Veolia, Suez and SAUR) further
enlarged their dominance in the national (and international) markets (see
Bordonneau et al.2010: 134). While in Germany the water services continued to
be operated mostly by the municipalities “in house” or through their (about
7.000) Stadtwerke (see Citroni 20010, VKU 2010: 13), private water companies,
first of all the French “heavy weights” Veolia and Suez and the German “big
shots” RWE and E.on advanced in the country’s water market by acquiring
(minority) shares in municipal companies, most conspicuously in Berlin and
Stuttgart (see Libbe et al. 2011).
In Italy, in 2009, under the right-wing Berlusconi a legislative provision (so
called Ronchi Decree) was introduced that was designed to promote
privatization in the water sector, including the entry of international water
companies. However, this process was halted by the national referendum held
on June 8 2011 that ruled out the privatisation of water. In Greece the water
provision lies with two large State owned companies in Athens and Thessaloniki
(such as the Thessaloniki State Water Utility, EYATH) and (180) small
municipal companies with (until recently, see however below 8.2.1 ) only
marginal private sector involvement (such as a 5 percent share of Suez in
EYATH) (see Tsekos/Triantofyllopoulou 2014)
Solid waste In the waste sector significant changes have been effected by EU
directives which stipulated market opening particularly for the (economically
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profitable) industrial waste. In most countries a delivery model emerged which
include public and delegated management, with public, mixed or private
operators, From amidst the private sector companies which are particularly
eager to get hold of the management of the lucrative industrial waste
increasingly large internationally operating companies (such as the French
companies Véolia and Suez but also their Spanish and German likes) stand out.
With regard to municipal (“household”) waste, in France, Germany and the U.K.
public and private operators “have a roughly equal role in municipal waste
collection and processing” (Bauby/Similie 2014: 209).
Personal social services Well unto the 1980s in the delivery of personal social
services, such as elder care, essentially two different institutional patterns were
pursued in WE countries, that is, a local government-centred pattern (with
traditionally little voluntary sector involvement), for instance in the UK and in
Sweden, on the one hand, and a “subsidiarity”-based primacy of voluntary/non-
profit sector involved, such as in Germany and also in Italy, on the other. These
path-dependently persistent different patterns, each fixing a kind of monopoly in
service provision, gave way, during the 1980s and 1990s, under the onslaught of
the neo-liberal market-liberalisation discourse and imperative, to the convergent
market opening for the provision of personal social services by all providers, be
they public, private-commercial or non-profit. Notwithstanding such convergent
trend, country-specific features have persisted, such as in Sweden the still
prevalent position of local level personnel (see Montin 2014) and in Italy the
web of charity associations and cooperatives as well “arguably the most
important engine of change in Italy… the spread of ‘grey’ care by migrants”
(Bönker et al. 2010: 114).
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7.2. CEE countries
Following the collapse of the Communist regimes the entire politico-
administrative structure underwent a complete institutional transformation. As a
basic feature of the centralist Socialist State, the public utilities (energy, water
etc.) were in State ownership and were carried out by public units under central
government control while personal social services, such as kindergartens, homes
for the elderly were provided, in part, by State enterprises.
After 1990, the secular institutional transformation of the entire politico-
administrative fabric has been driven, for one, by the adoption of the European
“classical” politico-administrative model, including decentralized local
government which, to some degree, also meant linking up with the pre-
communist institutional past. Moreover the institutional transformation was
strongly influenced by the “neo-liberal” and “New Public Management”-guided
modernisation concepts and imperatives which at that time ran rampant in their
“West European” counterparts and were “imported” by Western consultants.
Finally, EU policies, including its market liberalisation drive have increasingly
impacted on the institutional transformation in CEE countries as since the mid-
1990s eight CEE countries, also comprising Poland and Hungary, entered in
negotiations with the EU about their accessions under the so-called Copenhagen
criteria before their accession was finalised in 2004.
Energy. Following the system change in CEE countries the energy sector at first
remained in State ownership and operation. Subsequently the State companies
were transformed (“organisationally privatised) into private law companies and,
in line with the EU’s “unbundling” principle, organisationally separated in
generation, transmission and distribution/supply functions. In Hungary in 1995 a
large-scale privatisation measure has resulted in most of the transmission and
distribution/supply companies being taken over by private investors (see EPSU
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2010: 243), By contrast, in Poland the largest energy company is still owned 85
percent by the State (see EPSU 2010: 359).
Regarding the reorganisation of the other public utilities (water, waste etc.) in
CEE countries similar institutional and sequential patterns have been pursued as
in their “Western” counterparts. Following the massive transfer
(“municipalisation”) of State owned assets to the local authorities the latter have
often, in a first step, transformed (“corporatised”) the municipal (“in house”)
units into organisationally self-standing, but still municipally owned municipal
organisations/companies which in CEE countries are called “budgetary
institutions”. In a subsequent step private law companies (such as limited
companies) have been established that provided the institutional access for
private investors to become shareholders and for the formation of mixed
(public/municipal-private) companies (see Kuhlmann/Wollmann 2014: 188, see
Horvath 2014 Hungary and Mikula 2014 on Poland). At the same time, under
growing financial pressure and prompted by NPM –inspired outsourcing and
marketisation concepts, the municipalities have increasingly proceeded to
outsource (functionally privatise) public services to private providers through
concessions and contracts.
A prime example of the progressing functional privatisation can be found in
Hungary’s water sector (see Tittor 2008: 296). Until 1990, there were 33 state-
operated regional water companies which after 1990 were turned over to the
local authorities. Today exist a total of 377 municipally-owned (highly
fragmented) water companies which have outsourced water provision to private
and in particular foreign companies (Veolia, Suez, RWE, E.on etc.) (see
Kuhlmann/Wollmann 2014: 198, Horvath 2014).
Social services
In line with the pronounced decentralisation of public functions which, in the
course of the transformation of 1990, was pursued by most CEE countries
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comprehensive responsibilities for the provision of social services have been
ascribed to the local authorities.
In the case of Hungary, the local government legislation of 1990 which probably
was the most decentralised among CEE countries laid down the responsibility of
the municipalities for the provision of compulsory social services.
About 40% of the services are provided by local authorities directly, 15 % by
public benefit companies, 5% by churches and 15% by NGO’s (see EPSU 2010:
246)
8. Development since the early 2000s
Several trajectories of institutional development can be distinguished and
identified
8.1 Downturn of the neo-liberal beliefs in the private sector and re-assertion of
the public/municipal sector
Since the early 2000’s neo-liberal belief in the superiority of the private sector
over the public sector in the operation of public functions has been shattered on
various scores.
On a global scale the world-wide financial and economic crisis which was
triggered by the bankruptcy of the Lehman Brothers bank group in September
2008 has evoked widely shared doubts in the private sector and its “free”
market” mechanisms while the merits of the public sector have been
“rediscovered”, thus “bringing the state back in”.
.
On local practical level, the local authorities and their enterprises, after having,
under the competitive pressure from private sector companies, improved their
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operational capacity in service delivery (by recruiting better, also
entrepreneurially qualified personnel, by stepping up intermunicipal cooperation
etc.), have often arrived at economically equalling, if not doing better than their
private sector competitors. Furthermore, the municipalities have been eager to
regain control over local level service provision also the pursuit of (social,
ecological etc.) interests of the “local community”. Last not least the
municipalities have “rediscovered” the chance to profits in engaging themselves
in the production of public services (particularly in the energy and waste sectors)
and to thus achieve additional budgetary revenues (see Wollmann 2014: 58 ff.
with further references) to be used to “cross-subsidise” loss-making public
service fields (such as public transport).
The disenchantment and discrediting of the neo-liberal beliefs and promises
have been also echoed and amplified by a politico-cultural value change in
favour of public/municipal service delivery. This has become manifest in
thematically related surveys and (for instance in Germany) in a array of local
referendums in which the privatisation of public/municipal assets has been
rejected in favour of retaining them (see Kuhlmann/Wollmann 2014: 200 ff.)
Finally, with regard to the intergovernmental setting in which the local
authorities operate mention should be made of the Treaty of Lisbon of
December 13, 2008 through which a “wide discretion” (sic!) has been accorded
to the local authorities “in providing, commissioning and organizing services of
general economic interest as closely as possible to the needs of the users” (see
Wollmann 2014: 60). Thus, the originally binding character of the EU’s market
liberalization drive has been conspicuously mitigated.
However, in attempting to “re-municipalise” (“insource”) the previously
“outsourced” or (asset) privatised services and related assets and in entering in
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negotiations with the private investors concerned the municipalities have often
to do with economically and financially powerful companies that are national
and international leaders and “champions” in the respective energy, waste, water
sectors (such as the French Véolia and Suez and the German RWE and E.on).
As these companies are, in most cases, keenly interested to hold on to their
position in the local markets, the municipalities are often bound to enter into
difficult struggles in which the powerful private companies have strong cards.
In internationally comparative perspective the most conspicuous example of a
“comeback” of the municipal sector in the provision of public utilities is the
energy sector in Germany where the municipal companies (Stadtwerke) which
had lost ground to the private sector energy companies have regained
operational strength and have succeeded to win back market shares (see
Wolmann/Baldersheim et al. 2010, Wollmann 2014: 60, Kuhlmann/Wollmann
2014: 201 ff.). Also in other countries (such as in Italy and France) where in the
past the municipal energy companies retained an albeit minor position vis-à-vis
market-dominating companies (in France the energy giant EdF still 80 percent in
State ownership) the municipal companies have recently made (moderate)
advances particularly in renewable energy generation (for details see Wollmann
2014:. 61 ff.)
In the water sector “remunicipalization” can be observed as well. (for an
international overview see Lieberherr et al. 2014). This is exemplified by
France where, after the time-honoured practice of the municipalities to
“outsource” (gestion déléguée) water provision to the “big three” water
companies (Véolia, Suez and SAUR) kept being expanded, recently a
development is gaining momentum in which municipalities decide to take water
provision back under their own management.imilarly in Germany some cities
proceeded to “remunicipalize” water provision after they sold their water works
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(Stadtwerke) either partially or entirely to international water companies. Both
in France and Germany such decisions to “remunicipalize” water provision
occurred largely under local political pressure, in German cities in response to
related local referendums (for details see Wollmann 2014: 64 ff.).
In Hungary, where Budapest’s Water Work had been (partially) sold (“asset
privatised”) to private investors (comprising RWE), the City’s municiipal
council decided (with a conservative – sic! – majority) to repurchase the assets
on the ground that “the private companies had abused their dominant position”
(see Horvath 2014: 12).
In Poland, responding to what was perceived as deficient performance of private
sector waste companies recently national legislation has been passed that put the
entire waste management system back under municipal responsibility and
control by July< 1, 2013 which has been termed a “waste management
revolution” (Mikula 2014).
Personal social services
Contrary to the provision of public utilities which has recently shown moves
towards “remunicipalisation” in the provision of personal social services, such
as elder care, the process of marketisation and pluralisation of services provision
has continued unabatedly with progressive advances of private sector providers
while the public authorities have shown no interest to take the (costly) provision
of social services (for instance in institutional elder care) back under their
conduct.
8.2. Budgetary crisis.
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Some countries have been beset by a mounting budgetary crisis which has
impinged on the further course of public sector modernisation, not least on the
delivery of public and social services. This applies particularly to South
European EU member states, such as Greece, Spain, Portugal and Italy, whose
budgets have been haunted by oversized public (“sovereign”) debts. They have
come under growing pressure from the European Union demanding them to
undertake severe budget cuts and cost reductions. The so called Troika made up
of representatives of the European Commission, the International Monetary
Fund and European Central Bank has been put in place as a watchdog of the
retrenchment process. The budgetary crisis has afflicted the CEE countries as
well (see Wollmann 2014: 65).
8.2.1. New thrust to privatise public/municipal assets
Prompted by the “Troika” the countries concerned have embarked upon a new
round of privatisation. Thus. in Greece’s water sector which has so far been in
public, particularly State ownership particularly the State-owned regional water
utilities in Thessaloniki and in Athens have been singled out to be sold to private
sector (primarily foreign) investors (see Tsekos/Triantofyllopoulou 2014).
Typically these plans have ignited public protest and have - in the case of
Thessaloniki – evoked the formation of a citizen initiative braced to buy the
utility and to operate it under its responsibility4.
In Spain the comprehensive local government reform which, under the
programmatic label “rationalisation and financial sustainability of local
entities”5, entered into force on December 27, 2013 declared as a prime
objective of the reform “to promote private economic initiatives in order to
4 See The World Post, 02/01/ 2013, Greeks Stand up to Protest their water from privatization,
http://www.huffingtonpost.com/daniel-moss/greeks-stand-up-water_b_2592277.html 5 „Racionalización y Sostenibiitad Financiera de las Entidades Locales“
21
avoid ‘disproportionate’ public intervention” and to abolish “municipal
monopolies ... which have been inherited from the past”6. It remains to be seen
whether and to which degree these “privatisation” plans will be realised.
8.22. Measures meant to economise and cut back public spending.
Strategies and measures designed to achieve a reduction of public spending in
the delivery of public and social services hinge on the idea of achieving such
“rationalising” and “economies of scale” effects either by “de-municipalising”
service delivery, that is, by transferring the responsibility to an upper
(supposedly more “rationally” operating) government level or by creating larger
(“economies of scale”-prone) municipal entities through amalgamation.
De-municipalisation.
In Hungary which by virtue of the Local Government Act of 1990 originally
excelled, among CEE countries, as an unusually decentralised one the new
Constitution which has been adopted under the conservative Orban government
and entered into force on January 1, 2011 has effected a large-scale re-
centralisation of the entire politico-administrative system. This shows, for one,
in the transfer (“de-municipalisation”) of important responsibilities, such as
schools and services, from the local authorities to the State and, second, in the
tightening of central government control and oversight over local authorities and
their conduct of local services (see Kovacs 2012, Horvath 2014).
Recently the „de-municipalisation“) of the delivery of public services has been
dramatically taken place in Spain when in December 2013, under the shibboleth
of “rationalisation and financial sustainability of local entities”, a law was
6 „Asimismo se suprimen monopolios muncipales que venían heredados del pasado“
22
adopted through which the responsibility for basic services (to wit, waste
collection/treatment, water supply, sewage) is transferred from the
municipalities with less than 20.000 inhabitants (these are more than 90% of all
municipalities) to the upper local government level (Diputaciones), unless the
individual municipality can prove (in the Spanish legal text:: “justifique” ) that
it is carrying out the service more efficiently (“con un coste effectivo menor”)
(see Magre Ferran/Pano Puey 2014). While this radical reform still needs to be
implemented, (critical) observers agree that it would amount to depriving most
municipalities of a core of their local government functions (see Bosch/Solé-Olé
2014).
Territorial reforms
In some countries recently moves have been adopted, responding to mounting
budgetary problems, that aim at territorial reforms of the municipalities with the
declared prime purpose to enhance, by way of amalgamation, the “economies of
scale” and thus the efficiency of local level service provision.
This is exemplified by Greece, where, in the woes of a deep financial crisis, the
then socialist government in 2000 embarked on a radical territorial reform of the
municipalities (the so called “Kallikrates” reform) which, through compulsory
legislation, reduced the number of municipalities from 1.034 to 325 – with the
declared primary goal to increase the efficiency and economies of scale in the
service provision (see Hlepas 2012: 258 ff.)
In Spain the recently adopted local government reform which entered in force in
December 2013 was targeted, as one of its primary objectives, at promoting a
territorial reform of the local authorities in order “to rationalise their structures
23
and overcome the atomisation of the municipal map”7 . However, the new
legislation still adheres to the traditional principle of “voluntary mergers”
(“fusión voluntaria”) depending on the consent of the municipalities concerned
and thus refrains from achieving amalgamation, in the last resort, by way of
binding legislation. (Critics agree that the decision to do without binding
amalgamation will probably doom the local government reform to failure (see
Bosch/Solé-Ollé 2013).
8.2.3 (Re-)ascendency of “civil society” actors and self-help groups
The recent tightening of fiscal austerity and retrenchment measures have
impacted on the involvement of the voluntary and “civil society” sector
particularly on two scores.
For one, in order to cut public expenditures governments have made a point of
trying to shift the responsibility (and costs) for the provision of personal social
services (back) to the charitable and “societal” realm and, not least, to the family
context..
Second, in a „bottom up“ reaction to the financial and operational erosion and
thinning of personal social services protest movements, for instance the
“Indignados” (“The Outraged”) in Spain, have sprung up calling for “direct
action” to ensure social protection. Moreover, societal (“civil society”) groups
and movements have entered the local scene that intend to establish a kind of
social net work of last resort in providing emergency measures for the needy,
for instance by providing soup kitchens, free breakfasts, night shelters and the
like (see Warner/ Clifton 2013:11 with references). The “Athenistas” in Athens
and similar groups in other Greet larger cities are exemplary of this new social
7 „... racionlizar sus estructuras y superar la atomización del mapa municipal“ (Preámbulo de la Ley)
24
movement. This development may be interpreted as a “bottom up” “counter
movement” (Warner/Clifton 20139) to the “excesses” of (neo-liberal) austerity
policies.
Also in the field of the provision of public services local level citizen (self-help)
initiatives have emerged beyond the traditional voluntary that engaged
themselves in taking the handling of certain public services and related facilities
in their own hands. Examples for this are the “cooperatives” or
“associations”(Genossenschaften) in Germany that operate wind turbines (see
Bauer 2014 with references). Similarly in Thessaloniki, Greece, a citizen group
that, in opposing the impending privatization of the local water works, is braced
to acquire shares of the company and to assume an operational role. Such
moves may be interpreted as the practical side and continuation of the otherwise
extended popular opposition against the privatization of public utilities as
evidenced in numerous local referendums.
9. Summary
9,1, Convergence or divergence?
Since the 1980s and 1990s, notwithstanding fundamental differences in the
“starting conditions”, the politico-administrative systems in “West European”
and Central Eastern European have shown remarkably convergent institutional
changes in that the predominance of the public sector in the delivery of public
and social services (which in the “Western European countries” was an essential
feature of the “advanced welfare state” while in the CCE countries it wss part
and parcel of the centralist Socialist State) has been replaced with an
organisational model in which the quasi-monolithic internal structure of the
public sector in the provision of services has given way, propelled by market
25
liberalisation and competition, to an “externalisation” and “pluralisation” of
institutions and actors. This “pluralisaton” comprises public/municipal, private,
public-private (“mixed”) as well as non-profit (NGO’s). actors and agents
whereby to due “outsourcing” (“functional privatisation”) and “asset
privatization” the repertoire and role of private sector actors has expanded (see
Grossi et al. 2010, Grossi/Reichard 2014).. While since the early 1980s in “West
European” countries this development has been promoted largely by neo-liberal
policy and New Public Management concepts as well as by the EU’s market
liberalisation drive, the CEE countries have, in entering their secular post-1990
“transformation”, subsequently followed suit by also employing neo-liberal and
NPM concepts as well as, in the pursuit of their accession to the EU, by
anticipating respectively adopting the EU’s conceptual and institutional
framework (“acquis communaitaire”).
Notwithstanding country-specific and sector-specific variance in details, the
“externalisation” of the providers of public utilities shows a broad commonality
in the sequence and organisational patterns . Departing from the municipalities’
ownership and their (or their companies’) operation of public utilities (which
was characteristic of “West European” local government in a practice that
historically dated back to 19th century’s “municipal socialism”, while it came
into existence in CEE countries as a result of post 1990 wholesale
“municipalisation” of State ownership and operation) the institutional
“externalisation”, in first step, took the form of “corporatisation” (see Grossi et
al. 2010, Grossi/Reichard 2014) by the establishment of companies which
continued to be owned by the municipalities but were given organisational and
in part financial autonomy. (In CEE countries they came to be termed
“budgetary institutions”). In a further step such “corporatized” municipal
organisations were given a self-standing legal status, for instance as private law
limited (stock) companies. This form allowed private investors to financially
26
and operationally engage themselves in such municipal companies by acquiring
shares thereof which ushered in the formation of “mixed” (public/municipal –
private) or, at last, to fully privatised companies.
Notwithstanding the different “starting conditions” (in “West European”
countries such organisational differentiation in local level service provision has
been in practice, to a certain degree, since long, while in CEE countries it
emerged anew after the 1990 transformation) the developmental patterns show
significant similarities in that for one the “corporatisation” of local government
activities has significantly advanced and that, second, the formation of legally
self-standing corporations (mostly in the form of private law limited companies)
has facilitated the entry of private investors into the previously “closed” local
markets. As the municipalities and their companies have stepped up their efforts
to hold their ground vis-a-vis the growing competition by private providers they
have increasingly resorted to intermunicipal cooperation, also in the form of
intermunicipally owned and jointly operated companies (see Bauby/Similie
2014: 106 f.).
In a similar vein, the provision of personal social services which in the previous
phase in “West European” countries was characterised by a country-specific
quasi monopoly (of the municipal sector for instance in the UK and Sweden and
of the non –profit sector in “subsidiarity”-related countries such as Germany and
Italy) and in CEE countries by a State monopoly has undergone an opening of
the service market, under the impact of market liberalisation, to private
commercial and non profit besides public/municipal providers.
In sum, in a convergent development, the previous public sector centred
(internally quasi-“monolithic”) profile of public service provision as well as the
monopoly-type structure of social service provision has been superseded by
27
“externalised” and pluralised actor systems in which private actors have
increasingly advanced.
In the conceptualization and terminology of the recently dominant debate in
which “government” and “governance” are distinguished (and juxtaposed), the
previous public sector-centred (internally quasi-monolithic) profile of service
provisions may be identified as “government”, while the existence (and
predominance) of “externalised” networks of actors and providers may be
recognised and interpreted as “governance” (see, first of all, Rhodes 257, see
Jann 2002 for further references).
Since the early 2000s this developmental pattern of the provision of public and
social services has seen contradictory changes.
On the one side, as normative and operational superiority which, after the 1980s,
the neo-liberal and NPM advocacy ascribed to the private sector as being
economically more efficient than the public sector has been shattered (not least
because of practical experience and evidence belying this normative assumption
and promise) in some countries and under certain conditions a process of
“remunicipalisation” of public service provision has gained momentum as
municipalities and their companies have begun to resume operations and
facilities previously “outsourced” or sold to private sector providers. The
“comeback” of Germany’s municipal companies (Stadtwerke) in the energy
sector is exemplary of this trend..
On the other side, in the pursuit of fiscal austerity policies and under the
“Troika”-type budgetary demands in some countries (such as in Greece)) the
pressure has mounted to (further) privatise public/municipal assets. Similarly, in
the case of Spain, in order to achieve cost cuts by way of “economies of scale”
28
the responsibility for basic public utilities is to be transferred (“de-
municipalised”) from the municipalities to the upper local government level.
At the same time, as a kind of “counter movement” “from bottom up” against
the austerity-related erosion of social services local protest and self-help
movements have emerged as a possible alternative providers of social services.
Hence the developmental trends that have taken shape since the early 2000s
appear contradictory depending on countries, sectors and circumstances.
10. Service provision by public or private providers?
In view of the “comeback” of public/municipal sector in public service
provision it has been argued that the latter is, as a rule, on a par with private
sector providers regarding the (economic) efficiency of their operation. This
assessment appears to follow from a goodly number of recent empirical studies
(for a broad research overview see Mühlenkamp 2013: 18)8. The balance sheet
becomes even more favourable for public/municipal provision if the “transaction
costs” of the “outsourcing” of services (costs of monitoring, contract
management etc.) are taken into account, not to speak of the negative “welfare
effects” of “privatized” service provision and the positive ones (social,
ecological etc.) ones of public/municipal provision (see Florio2004: 3419,
Mühlenkamp 2012:42. 2013:18).
However notice should be taken also of the argument that the operational
performance in service provision may depend less on the formal ownership
8 See Mühlenkamp 2013: 18 “Research does not support the conclusion that privately owned firms are more
efficient than otherwise-comparble state-owned firms”. See also Bel et al. 2010, who, on the basis of numerous
studies on water and waste services, summarize, that “our analysis provides empirical evidence that private
production of local serices is not systematically less costly than that of public”. See also Bel/Warner 2008: 1341 9 Florio 2004;341: “The main conclusion of my study is that privatization had more modest effects on efficiency
thanthe theory or property rights and other orthodox privatization theories may have expected. On the other
hand, privatization did have substantive regressive effects on the distribution of incomes and wealth in the
United Kingdom”.
29
(public or private), but on the operational context of the actor and provider
concerned (whether public or private), that is, on the degree of competition and
of external accountability and performance control (see Bauby/Similie 2014:
110)10
12. “Pendulum swinging back”?
Finally the question shall be taken up which by some has been caged in the
“pendulum” image (see Röber 2009, Wollmann Marcou 2010b, Wollmann
2014), to wit, as to whether the observed moves of a “remunicipalization” of
service delivery can be interpreted as the “swinging back of the pendulum” from
private sector to municipal sector delivery, or, differently put, from a “neo-
liberal” to a “post-neo-liberal”, if not “anti-neo-liberal” state of affairs. Leaving
aside problem whether such imagery is well chosen, the question as to whether
such “reverse” movement has taken and is still taking place can, in our view,
still not be answered in a conclusive manner. For one, the countries and service
sectors inspected in this account are not comprehensive enough nor are the
empirical findings robust enough to be able to speak of a confirmed general
trend. Second, as our account indicated, the recent developments appear
somewhat contradictory. While on the one hand a “comeback” of municipal
ownership and operation in service provision and hence some “re-
municipalisation” can be noted, on the other hand moves towards further
privatisation and also “de-municipalisation” of service delivery come into view..
10
“The research shows that no single universally superior management model among the diversity of models is
in use... Many examples show that the performance of service operators under both delegation and direct
management depends on the capacity of public authorities to control the accomplishment of public service
missions and obligations whether the operator is private or public” (Bauby/Similie 2014:110
30
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