February 21st 2013

Strengthening Public Services Social Dialogue in an era of

austerity Stephen Bach

Department of Management

King’s College, London Stephen.bach@kcl.ac.uk

Presentation structure

• Aims of EC funded research project

• Research approach and model

• Social dialogue

• Themes:- restriction, resilience & reconfiguration - UK, Czech Republic, Netherlands

Research Questions 1. What have been the main drivers and

measures of austerity adopted in each country?

2. How have these changes been implemented and to what extent has social dialogue contributed to the change process at national, sectoral and decentralised level?

3. How have institutions of social dialogue influenced industrial relations processes and outcomes in the public services?

Research Approach

• Czech Republic; Denmark, France, Italy, Netherlands, UK

• Phase 1: meeting with social partners

• Phase 2: analysis of national experience - drivers, measures,

outcomes

• Phase 3: case studies of local government

Austerity Outcomes•Employment reductions•Wage cuts•Pay freezes•Pension reform•Work intensification

Austerity Measures• Budgetary cuts • Staffing policies (e.g. replacement ratios)• Alterations in wage fixing

Drivers of Austerity • External/ Internal•High/ Low pressure

Social Dialogue• Tripartism

• Collective bargaining•Joint consultation

•Cross-border

Social Dialogue• Tripartism

• Collective bargaining•Joint consultation

•Cross-border

ReconfigurationResilience Restriction

EU 27 CZ DK FR IT NL UK25.0

35.0

45.0

55.0

65.0

75.0

85.0

95.0

105.0

115.0

Drivers: General Government Consol-idated Gross Debt

2007

2008

2009

2010

2011

% GDP

Source: Eurostat

EU27 CZ DK FR IT NL UK-11.5

-9.5

-7.5

-5.5

-3.5

-1.5

0.5

2.5

4.5

Drivers: General Government Deficit/ Surplus

20072008200920102011

% GDP

Source: Eurostat

Market Reaction

Italy

Market Reaction

Italy

Coalition for change

Czech Republic Netherlands

UK

Coalition for change

Czech Republic Netherlands

UK

Lagged Response

France

Lagged Response

France

Robust Health

Denmark

Robust Health

Denmark

Source of pressure

Degree of pressure

Low High

External

Internal

Drivers of Austerity : retrenchment pressures

Outcomes

Pay Freeze

France (2010-2012 index point value)

Netherlands (2011-13 central govt; education)

UK (2011-2013)

Pay Cuts

Czech Republic 10%Italy 5-10% (linked

to earnings)

Pension Reform

Czech Republic DenmarkFrance

ItalyNetherlands

UK

Employment reductions

Czech Republic (5.5% 2009-12)

Denmark (2%: 2010-12)France (5% state

administration 2008-10)Italy (10% 2008-14)Netherlands (cuts

planned up to 2014)UK (12% 2008-12)

Social dialogue

‘All types of negotiation, consultation or simply exchange of information between or among, representatives of governments, employers and workers, on issues of common interest relating to economic and social policy’ ILO

Tripartism Collective bargaining Joint consultation Cross-border – sectoral social dialogue

committees

Social Dialogue: 3 scenarios

• Restriction – interruption & shift to unilateralism

• Resilience – institutional maintenance of dialogue - process often more closed/conflictual

• Reconfiguration – reform of institutional practice - renewal or erosion

• Variation: between and within national cases

Restriction

• National level: austerity programmes and pay - central government

- ‘hollowing out’ of national IR

• Czech Republic• Italy • UK

• Severity of cuts: less willingness to engage in social dialogue

UK Restriction

• Austerity measures 2010- - 2010-15/16 £95 billion expenditure reductions - sectoral variation: local government 27% cut

• Coalition government policy:- 2 year wage freeze (2011-13); 1% (2013-14) - restrictions on trade union facility time- marketisation/fragmentation

• Outcomes – main adjustment employment

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q2

2340

2440

2540

2640

2740

2840

2940

Hea

dcou

nt, s

easo

nally

adj

uste

d

Central Govt (includes NHS)

Local Gov

UK Public Sector Employment – Central & Local Government

Source: Office for Na-tional Statistics

Consequences: Disputes

2000 AVERAGE

2001 AVERAGE

2002 AVERAGE

2003 AVERAGE

2004 AVERAGE

2005 AVERAGE

2006 AVERAGE

2007 AVERAGE

2008 AVERAGE

2009 AVERAGE

2010 AVERAGE

2011 AVERAGE

2012 AVERAGE0

20

40

60

80

100

Working days lost in the Public Sector Working days lost in the Private Sector Number of stop-pages in the Public SectorNumber of stop-pages in the Private Sector

thou

sand

s

Source: ONS

Resilience and Reconfiguration

• Denmark • France • Netherlands

• Influences on findings: - employer and union strategy- differences model employer (joint regulation) v. sovereign employer (legal regulation) traditions

Main Findings – Czech Republic

Zuzana Dvorakova

Alexandra Stroleny

Introduction

• Extensive reform since the 1990

• 2010: fiscal consolidation & austerity VS. structural reforms

• Social dialogue = fragile

Social Dialogue• National:

- 2006-9 govt :Topolánek- 2009-10 ‘caretaker govt’: Fischer- 2010 - current govt: Necas

• Sectoral-level: no collective agreements(CA) •  Enterprise-level: CA possible

Scope same as before crisis (law almost unchanged)

Main Measures

• Pension Reform: Public Pillar

• 10 percent cut in the budget for public-sector wages – excluding teachers

• public sector pay frozen until 2014 shift from automatic progression to pay system based on merit/ performance appraisal

Agreed level of wage increases (%)

Conclusion

• Austerity –Cuts: Employment & wages

• Social Dialogue –Restriction – small size of municipalities

Public services in the aftermath of the economic crisis: how social dialogue influences changes in public sector employment relations in the Netherlands

Peter LeisinkUlrike WeskeEva Knies

Overview of austerity measures

Year Cabinet Cuts* Cuts on public sector organization

2010 Balkenende 3.2 • 600 million public sector wage restraint• 231 million efficiency cuts on government

2010 Rutte I 18 • 870 million public sector wage restraint• 1.5 billion cut back on government

2012 Rutte I + other parties

12 • 1.6 billion cut back on government, including public sector wage restraint

• rise in the pension age (67 in 2024)

2012 Rutte II 16 • 1 billion efficiency cuts on government• rise in the pension age (67 in 2021)

* Budget cuts in billion of Euro’s

Consequences of quantitative and structural measures

Quantitative measures: • wage restraint/freeze: central government, primary education• employment cuts through efficiency targets instead of nr. of jobs

– estimated effect: 26.000 jobs until 2015 (almost 10% of total government jobs)

Mix of structural and quantitative measures• decentralization of responsibility for specific public services

(provision of sheltered workplaces, youthcare) to local government but with less budget (10-20% efficiency cut)

Structural reform of employment relations:• From traditional employment security to “from job to job” support• measures supporting employees’ employability

Differences between sectorsDifferences between sectors in the degree of direct influence by central government• Central government: Minister of the Interior is also employer• Primary Education: Minister of Education determines wages and

primary employment conditions• Hospitals: employers and unions are relatively autonomous• Local government: employers and unions are formally

autonomous; but interference from central government

Differences in consequences: • wage freeze in central government and primary education but not

in local government and healthcare

Differences in leeway for social dialogue

Role of central government (2)

Central government

Primaryeducation

Localgovernment

Hospitals

Very strong central government influence

Very weak central government

influence

Role of social dialogueOverall: resilience of social dialogue institutions and practices•Industrial relations actors: no efforts to marginalize the social dialogue; ‘normal’ employment relationships

Restriction tendencies in central government and education•Unilaterally imposed wage restraint/freeze

Reconfiguration tendencies in local government•Sectoral level: collective labour agreement of the future; new substantive arrangements, ideas about rearranging negotiation authority between sectoral and local level•Local level: works council Zwolle pro-active participation in plans for job mobility platforms, public-private partnerships

Questions

• Are challenges to social dialogue by shift to unilateralism temporary or more long-term?

• To what extent is restriction, resilience or reconfiguration dominant....at national, sectoral, enterprise level?

• How can social dialogue be reformed and strengthened to meet new challenges?