Wednesday, 21 March 2012

Private sector efficiencies

A lot of public sector work is labour intensive. In many cases it involves better terms and conditions than you find in the private sector. Public sector trade union bargaining power is in a different league to what you find in the private sector, which makes it harder to cut public sector costs by hacking back public sector Ts&Cs. TUPE aside, when the provision of services is put out to tender its typically easier for a private sector firm to out-compete its public sector equivalent on cost grounds because, as its labour is cheaper, it usually has a lower cost base. And that’s kind of it really.

To give a practical example, public sector social care providers who help people in their homes are often paid for the time spent travelling between clients whereas private sector care providers providing the same service often aren’t. Instead, the latter frequently spend less time with their clients to meet targets, work free over-time, stress out as they skitter across their patch etc.,

None of the above has anything to do with “private sector efficiencies”. Instead it’s simply the private sector provision of public services and privatisation (and/or the tendering out of services previously provided by public sector bodies) as means of accessing cheaper labour i.e. getting people employed on private sector terms and conditions to do public sector work.

Practically, privatisation now involves a piecemeal, cherry-picking approach that affects one national service here and a range of regional activities there, all the while avoiding any head on political conflict. A recent example of this is the chat about farming some police activities out to the private sector. And again it’s worth reiterating, this is hee haw to do with “private sector efficiencies”, rather it is simply about cheap labour.

Nope I don’t think that was clear enough. Privatising services is nothing, NOTHING whatsoever to do with “private sector efficiencies”. What it is about is getting people to do the same jobs you might find public sector bods doing, but for less money.

Now let’s put that in some kind of context; as I understand it every time someone challenges executive pay or investment banker bonuses, the stock response is if you don’t pay top dollar (emphasis on “dollar” given Britain appears the furthest along the US route when it comes to mad pay for the ruling class in a its not so much a global labour market as it is an Anglo-Saxon model of capitalism with all that says about nation specific labour market outcomes) you don’t get the right calibre of labour.

Cool. So lets apply that same logic to public sector privatisation – if you farm out public sector work to the private sector you’ll be farming it out to employers who don’t pay the top dollar needed to recruit the kind of staff that will provide the best social care for the elderly, checks to ensure illegal migrants don’t get into Britain and so on. Cool(?).

For those winning the tenders the rewards can be incredibly sweet as Emma Harrison’s £8.6m dividend proved. Now for starters she got herself that money helping/exploiting the unemployed through a company being investigated for fraud (how terribly private-sector efficient). But, hey ho. For seconders, though, some hypothetical numbers illustrate how she may well have “earned” it; so assuming labour costs account for say 50% of her former company’s staff base, if she ensured they cost say 20% less than their public sector equivalents (by only providing shit pensions, using contract labour wherever possible, avoiding automatic pay increments and recruiting relatively younger staff, etc.,), then she’d have been able to undercut a rival public sector tender by 10% without breaking sweat or wind.

Except, 10% is a bit much, rather I’m guessing a 5% advantage would be enough cos then she could win the contract AND pocket the difference. Or perhaps the actual figure was 5.7% given her £8.6m appears to have largely derived from the £200m worth of government contracts her company was awarded i.e. in a Superman 3-Richard Pryor type scam 4.3p in every taxpayers pound paid to her company went straight into her pocket. And for what? Am guessing for screwing employees and not much else. Clearly, some of us are in this together more than others.

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