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Privatising our future: an overview of privatisation, marketisation and commercialisation of social services in Europe

Privatising our future: an overview of privatisation, marketisation and commercialisation of social services in Europe

Lethbridge, Jane ORCID: 0000-0002-0094-9967 (2022) Privatising our future: an overview of privatisation, marketisation and commercialisation of social services in Europe. Technical Report. Public Services International Research Unit (PSIRU), London. (In Press)

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Executive summary
This report was commissioned to inform the future work of the EPSU Social Services Committee. The research objectives were:
1. To develop an overview of the extent of privatisation of social services across Europe on the basis of available studies at national and European level;
2. To review existing studies that compare public and private provision in relation quality accessibility and affordability of services and;
3. To provide an overview of existing reports and surveys that reveal the impact of privatisation of social services on the pay and conditions of workers.

Social services have evolved in different ways in each European country partly determined by existing social welfare systems. This has influenced the role that the public, for-profit and not-for-profit sectors play in social services provision. Although there have been different legislative changes, in European countries the responsibility for delivery of social services is now shared by public, private for-profit and private not-for-profit sectors. In Germany and the Netherlands almost all long-term care services are provided by the for-profit and not-for-profit sector. In the Czech Republic, Finland, Greece, Norway, Romania, Slovenia and Sweden less than 20% of residential care places are provided by the private, for-profit sector. Norway, Sweden and Slovenia have less than 20% of domiciliary care provided by the private, for-profit sector (Eurofound, 2017).

Although there are signs of a growing consensus on the need for governments to play a key role in funding or facilitating the funding of long-term care, which is often decentralised to local government, this is usually to a range of different providers (public, for-profit and not-for-profit and occasionally cooperatives). However, this rarely includes an expansion of provision by the public sector. The not-for-profit sector has a long history of providing social services in many countries, especially home and residential services. This is continuing, with not-for-profit organisations often contracted directly by government to provide social services. The implications of not-for-profit organisations entering contractual relationships to deliver care are that the same pressure to measure the care being delivered can result in the loss of a more holistic approach to care provision.
The term privatisation is defined as the change of ownership from public to private but during the last twenty years of extensive public management reforms the complexity of the privatisation process has become clearer. Mercille and Murphy (2017) define privatisation as a multi-dimensional process which takes place through changes in:
(1) Ownership: when public assets (including public companies, buildings, services, land) are
sold or transferred to private interests;
(2) Financing: when funding sources of public assets and service providers become private,
for example, raising private capital instead of relying on public funding;
(3) Management: when private companies/ entities become responsible for managing and operating public assets and service providers;
(4) Production and provision: when private firms become responsible for the production or
provision of a good or service, often via outsourcing by the public sector.
During the last twenty years there has been an expansion of multinational care companies in some countries, which are the result of for-profit companies expanding outside their domestic market. Although this has, until recently, been limited to regional groups of countries, for example, the Nordic region and continental Europe, but there are signs that this is expanding either through multinational company expansion or through increased investments by private equity companies in companies working in the social services sector (Lethbridge, 2019).
Existing multi-national companies (MNC) have become involved in social services in several ways. Many multinational social care companies own a mix of care homes as well as some clinical services, usually mental health services. Facilities management MNCs have become involved in the delivery of homecare services, for example, ISS, Sodexho. Some companies, not always involved directly in care, provide luxury retirement apartments with a range of services. The services may cover care but also include recreational activities for people on higher incomes (ESN, 2019).
Even through there is a wide variation between countries in terms of public and private for-profit provision, most countries are experiencing an expansion of for-profit care homes. A Eurofound (2017) report found that private care homes were less likely to provide specialist medical access although this can also be influenced by legislation. For childcare and early childhood education and care (ECEC) there is a much stronger public provision with over 50% provided directly by the public sector (EC, 2011).
The introduction of care allowance schemes can be seen as part of a privatisation of care provision to the household level which has been met either by members of the household being paid an allowance for care work or the recruitment of low paid, precarious workers who are often migrant workers. The majority of paid and informal carers are women. The introduction of care allowances has formalised a system of informal household care, although informal care is still predominantly the main form of long-term care in many countries.
One of the results of corporatisation and marketisation is a loss of control by social services workers over the labour process. The pressure to reduce costs is felt most intensively by social services workers, resulting in reduced pay, longer working hours and increased occupational safety and health risks. This can be seen in the way in which work is organised in care homes and in the use of electronic monitoring in home care.
One impact of privatisation has been an increased use of migrant labour. Workers leave their own countries, which then experience a loss of care workers, creating further problems of recruitment and retention. The increase in personal care workers, paid for by care allowances has facilitated low paid and insecure care work in households (Spasova et al, 2018).
The impact of privatisation on collective bargaining and social dialogue has been a reduction in national, sectoral level collective bargaining and an increase in company/firm level bargaining, for example, in Central and Eastern Europe, Spain, England (Lethbridge, 2019). Privatisation tends to fragment collective bargaining systems down to individual companies. The drive to increase profits is driven through a reduction in labour costs.
Poor quality of social services provided by companies has led to several municipalities returning to in-house management of social services. Norlandia Care was involved in nursing overtime and staffing issues in Norwegian care homes in 2011. In Sweden, scandals about understaffing and poor care provided by Ambea in 2011 led to the company being rebranded as Vardaga (eldercare) and Nytida (disability services). In 2015, the city governments of Oslo and Bergen decided not to renew management contracts with these for-profit companies.
In almost every European country, the social services sector has problems in recruiting and retaining workers because of the growing demand for services, the lack of status of care work pay and poor terms and conditions as well as lack of training and continuous professional development.
Social services are a labour-intensive sector with care homes as the main form of infrastructure. Many social services are delivered in the home or household. Marketization and the corporatisation of the health and social services sector have played a key role in preparing social services for privatisation. The decentralisation of services to municipalities and the rhetoric of choice in social services prepared countries for a new way of delivering social services. The impact of these changes is still being felt in many countries. In addition, there is a growing demand for social services which places pressure on existing budgets in a time of austerity.
As a labour-intensive sector, the main source of profit is generated by reducing labour costs. This has been done through the commodification of care services and their transformation into a series of tasks without any relational exchanges. This takes away what is important in the quality delivery of social services, the relationship between client and care worker. The use of digital technology has given the employer or commissioner more control over the worker by timing the delivery of care.
The introduction of care allowances to clients or households has created a demand for low paid care workers, based in households with little control over their work or the wider labour process. Although the demand for personal, home care workers has been met in many countries by migrant workers, working on short term or commuting arrangements, migrant workers are also employed by public sector agencies and private companies.
There is a need for more research into what public and private provision in relation to quality accessibility and affordability of social services. There is growing evidence that the claims of privatisation and ability of the private sector to be more efficient have not been met. Instead, there are a growing number of indicators, for example, worker-client/resident ratios, sickness rates and turnover rates that are better in the public sector and contribute to quality services. The effects of austerity are being felt by service users who find it increasingly difficult to access services because they are either unable to pay for user fees or are excluded from the services.
The labour-intensive nature of social services dictates that if private companies are to generate regular dividends and high returns for investors then this can only take place with reduced labour costs. As the quality of social services depends on workers who are well-paid, trained, supported and able to work in a safe environment, the profit motive undermines the basis of high-quality social services.

Item Type: Monograph (Technical Report)
Uncontrolled Keywords: privatisation, social services, labour, multinational companies
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HJ Public Finance
H Social Sciences > HN Social history and conditions. Social problems. Social reform
Faculty / School / Research Centre / Research Group: Faculty of Business
Faculty of Business > Centre for Work and Employment Research (CREW)
Faculty of Business > Centre for Work and Employment Research (CREW) > Public Services International Research Unit (PSIRU)
Faculty of Business > Department of International Business & Economics
Related URLs:
Last Modified: 14 Jan 2022 10:28

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