newgoldrushCombining national case studies and comparative work, “The New Gold Rush: the new multinationals and the commodification of public sector work” examines the transformations involved for capital, labour, trade unions and service delivery in the drive towards public sector privatisation.

Editor Ursula Huws, in her introduction to the book, points out that the new public services industry comprises: “the very operations of our own government – the inner workings of the democratic machine and the services that citizens expect to receive” (p2);  ie health care, education, social security, and environmental protection, as well as all the associated information, communication and facilities support. This has all become a gold mine for capital, open to penetration by multinationals and powerful new corporations. Central to the shift is the transformation of public services into standard replicable commodities, with their labour power effectively ‘recommodified’.

Analysts on the left typically consider privatisation in all its various forms – commercialisation of public organisations, joint ventures, full private ownership – as capital’s gain and labour’s loss. This collection provides plenty of evidence to support that understanding.

Let’s start with the commodification process itself. Colin Leys, a leading analyst of the conversion to market-led models of public service provision, illustrates some of the prerequisites for this in a discussion of the creation of ‘independent specialist treatment centres’ in the UK health service. (These ISTCs are set up to perform simple elective surgery and run by private firms). The introduction of such bodies depended upon a prior standardisation of clinical services (their structures and processes becoming discrete, measurable entities) underwritten by government investment and shielded from risk (here in the forms of payment of guaranteed volumes of procedures and immunity from clinical negligence). Demand for the new services was stimulated by extensive ideological campaigns against existing waiting times and in the name of patient choice. Finally, the UK’s National Health Service (NHS) workforce was itself cajoled into staffing the private facilities through a clamp down on existing NHS working practices and autonomy and the inducements of private sector style incentives and structures within ISTC employment.

Huws suggests this model is applicable to other privatisations, and thus analytically valuable to us. The drive towards privatisation is often seen as prompted by the desire of trans-national corporations (TNCs) to open up new markets for profit-seeking – and many of these case studies show this to be a relevant factor. Leys notes, in addition, that the TNCs active in New Labour circles have not only market power but an increasing say in policy making too.

The role of capital in transforming public services is not confined to initial access, however. Having gained a foothold, a wide-ranging restructuring of public organisations soon follows, one covered in this collection in the fields of healthcare, telecoms, postal services and the rise of the call centre. A list of these organisational changes would include: unbundling of service processes, with non- core business procedures sold off (e.g. telecoms operations in postal service operators); ancillary functions such as cleaning, catering and transportation ‘outsourced’ to other private firms; centralisation of core functions in new, large sites (post distribution centres, megaclinics); and a reduced number of outlets open to the public (the call centre phenomenon).

More surprising has been the aggressive expansionism of ex-monopoly public service organisations, growing rapidly into multinational operators: the trajectory of Deutsche Post, E.on, Deutsche Telekom, Vodafone, RWE etc. This has developed so far that a significant number of the Europe’s largest TNCs are now ex-public sector organs, as the research of Clifton and Diaz-Fuentes illustrates.

The overall shape of these public services alters too. In place of the old universal provider, a new market structure has emerged where the ex-monopoly retains a dominant position (whether fully privatised or not), though facing increased competition from private sector rivals attempting to ‘cherry pick’ the most profitable parts of the service. Hermann, Brandt and Schulten’s examination of postal service provision in Continental Europe draws particular attention to this dynamic.

This whole raft of organisational changes has dramatic consequences for labour forces which once enjoyed a high level of job security, remuneration and benefits. The commercial imperative has both reduced the number of jobs available (though not immediately) and fragmented employment patterns amongst its workforce. Many of the articles refer to the resulting ‘dual labour regime’ evident across call centres, postal services, telecoms and healthcare. Here, existing staff face a marked intensification in their workloads and a loss of autonomy / variety in their daily routines (one especially evident in the medical and IT professions). They do though usually retain a permanent, full-time contract. Newcomers in the ex-monopolies are even less fortunate, often finding insecure employment (temporary and part-time work), lower pay and fewer benefits.

These trends are multiplied in the new private competitors who are following a low-cost strategy to gain a foothold in the emerging market structures. The catalogue of labour conditions here includes: hiring agency workers, acceptance of ‘self-employed’ status (preventing any collective organisation), increased performance monitoring, unsociable working patterns and substantially poorer pay and benefits.

One extra factor certainly worth noting is the impact of privatisation processes upon gender workplace relations. Melanie Samson’s piece shows us that there can be dramatic consequences for women public sector workers when profit-seeking takes centre stage. In Johannesburg, the selling-off of waste management services left its predominantly female street cleaning workforce exposed to severe labour shortages and outflows of labour to more profitable aspects of waste servicing (collections dominated by male workers). This shift effectively turned existing street cleaning working routines upside down: – fewer women employed per street (increasing the danger of attack), intensified labour, a supplementary gang-sweeping system that increased management surveillance over the workforce and restricted autonomy. The result – an entrenched gender division and inequality in the service, alongside deteriorating working conditions for the street cleaners.

Trade union responses to this general restructuring process have varied in the face of a diverse range of labour regimes and precarious employment patterns, new power relations and a marked turn away from a consensual industrial framework. Barton and Fairbrother explore some of these new power networks in relation to the restructuring of public transport in two Australian states. The RBTU union lost its traditional channels of political influence when operational control moved to new managerial structures operating on private sector lines, away from state politicians. However, with this more adversarial context came an unexpected boost, insofar as the union fundamentally shifted its operations into a new organising framework – encouraging greater grassroots participation and rebuilding its industrial strength to confront its new opponents: “It has democratised and recollectivised its base” (p43), with membership growing by one third from 2000 to 2004.

This shift to a more combative industrial relations regime is also evident in Nils Bohlke’s analysis of the privatisation of the Hamburg city hospital group. The new owners (Asklepios) quickly withdrew from the state employers’ association and set up an alternative that immediately sought to cut pay and conditions for medical staff, a move the German union ver.di successfully resisted. For non-clinical ancillary staff, Asklepios established a new service company, outside any agreement with ver.di, leaving these staff vulnerable to attack in respect of their pay and conditions.

There are a number of strategic options available to public sector unions facing this ‘commodification’ of public services. Hermann, Brandt and Schulten contrast the most popular two – outright opposition and social regulation of privatised services – with the need to develop alternative models of public service delivery and the growing appreciation of the potential for coordinated international action. Ver.di have been especially active in the main two areas: conducting a high profile public campaign and city referendum against hospital privatisation in Hamburg; and challenging the poor working conditions for private sector postal staff in Germany via a minimum wage campaign.

Other continental unions have also addressed the precarious employment status of new entrant workforces, especially their designation as ’self employed’. Ultimately, it is this transformation of public sector employment into contingent and insecure forms that is the greatest challenge for the unions, forcing them to defend workers rights not only within restructured public bodies but, ever more, “in the heterogeneous organisational and employment configurations that lie beyond the public sector” (Annika Schonauer p145). This dual labor regime is no accident: as Schonauer notes, many organisations rely on ‘outsourcing’ to escape collective agreements, leaving workforces vulnerable to exploitation and unions facing greater organising challenges, especially in call centre environments.

The dual labor regime is therefore also a division of workers between still heavily unionised workplaces and unregulated, unprotected centres of precarious employment. So, as well as negotiation and regulation, today’s public sector unions are now forced to turn their attention ever more towards organising to deal with the harsh new realities of the ‘public services industry’ and its recommodified, casualised labour.

Like their private sector counterparts, the big issue is organise or decline. That is the stark political message of this book.


Reviewed by network member Richard Leitch, April 2009.

The New Gold Rush: the new multinationals and the commodification of public sector work.
Edited by Ursula Huws and Christoph Herrman (2008).
London: Work Organisation, Labour and Globalisation, 2008, vol. 2, n°2.