Bruxelles 22-23 November 2012

European Commission Conference on Public

Sector Pay and Procurement
Changing public service employment relations in
the era of austerity
Lorenzo Bordogna
Universit degli Studi di Milano
lorenzo.bordogna@unimi.it

Focus and Outline

The focus is on the regulatory framework and institutional
arrangements of Public sector employment relations in the EU27

1. Two main features:

a mosaic of diversity

distinctiveness of PS employment relations

2. Recent trends under the pressure of the economic crisis:

the

how did they affect the diversity across countries and

distinctiveness of PS employment relations?
2

Mosaic of Diversity
Great diversity across EU27 in many features
Size of the public sector employment share
divide Northern and Central European countries
vs
Southern and Eastern European countries
Employment structure/workforce composition

(female, part-time, temporary, youth

employment)

Legal status of public employees (especially civil servants)

Union membership/density and union fragmentation
3

SIZE of THE PUBLIC SECTOR

Public sector employment share on total employment (2008-11 average)
PS share on total
employment

Countries

Over 29%

Norway, Denmark, Sweden, Belgium, Luxembourg, France, UK,

Netherlands.

25% - 28%

Finland, Malta, Germany, Ireland.

20% - 24%

Lithuania, Hungary, Austria, Estonia, Latvia, Greece, Slovakia,

Spain, Portugal, Italy.

Below 20%

Poland, Slovenia, Czech Republic, Cyprus, Bulgaria, Romania.

Source: LFS Eurostat. NACE Rev.2. Sections O, P, Q.

Notice: Sections P and Q include also private sector providers
O: Public Administration, Defence, Compulsory Social Security
P: Education
Q: Health and Social Work Activities
4

Share of public sector employment on total employment: comparison between

different sources
1. LFS-Eurostat
2008-2011 average
(O+P+Q)
EU27
EU15
EU12
NO
DK
SE
BE
LU
FR
UK
NL
FI
MT
DE
IE
LT
HU
AT
EE
LV
GR
SK
ES
PT
IT
PL
SI
CZ
CY
BG
RO

2. OECD
General Govern.
2008 (a, b)
24.4
25.8
25.7
34.7
32.6
32.1
31.5
29.8
29.7
29.7
29.5
27.2
25.4
25.1
25.1
23.1
22.6
22.2
21.7
21.4
21.2
21.1
20.5
20.4
20.2
19.8
19.6
19.1
18.8
18.5
13.6

3. OECD General Gov. +

Public Corporations
2008 (a, b)

4. EIRO
2004 or 2005

29.6
28.7
26.2
17.1
17.6
21.9
17.4
12.6
22.9

34.5
31.5

17.6
24.4
18.6
21.4
22.9

9.6
14.8

13.6
16.7

19.5
11.4
18.7

19.5

7.9
10.7
12.3
12.1
14.3
9.7
14.7
12.8

20.7
19.3
13.0

33.9
30.4
24.9
10
20.3
20.2
11.5
27.5
32.1
12
17.9
27.6
20.8
10.7

22.3

14.3
21.4
22.6
19.4

5 Q; 2 e 3) OECD, Government at a Glance 2011, Fig. 21.1

Sources: 1) Eurostat LFS 2008-09-10-11, sections: O. P.
and 21.2, based on ILO, LABORSTA database; 4) EIRO: Bordogna 2007.

34.7
22.1
22.5
15.2
15
14.5
26.2
23.2
14.7
17.3
26.2
10.4

Mosaic of Diversity
Employment structure/workforce composition

female employment: comparatively low in the Mediterranean countries (Malta,

Greece, Cyprus, Italy, Spain); very high in Baltic
countries, Nordic countries, UK, IR, Slovenia,
Slovakia

differences between PA&Defence, Education, Health

part-time: comparatively low in 3 Mediterranean countries (Spain, Italy and Greece),

Poland, Slovenia, Finland (!); astonishingly high in the NETH, but also high in
the Nordic countries, Belgium, UK, IR, Germany, Austria

temporary: great variation: 7-8% in UK, Lux, Greece; more than 20% SP, PT, FIN;
increasing in some countries (Germany, Austria, PT: search for numerical flex)

youth employment: low young/elder ratio in Italy, Bulg, Est, Lith, FIN, Sweden;
younger and temp6workers harder hit by the crisis
effects on age
structure, skill composition, also quality of services

Mosaic of Diversity
Legal status of public employees
Career civil servants under public law (Beamte style) or with special
employment status (with restrictions in collective bargaining rights and the right to
strike)

vs
Employees with ordinary contracts under private law
In some countries the area of employees under public law or with
special employment status is large (Germany, Austria, other central
European countries, France, but also Greece, Portugal, some Eastern
countries)
in other countries is very low or disappearing as effect of reforms
(Italy, Sweden, DK), or never existed (UK)
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Often this affects the right to collective bargaining

Mosaic of Diversity
Union membership/union density
Usually (much) higher union density than in the private sector,
although to varying degree

but clear divide old EU15 versus Eastern European

countries

(this affects collective bargaining and social dialogue in

general)

Also greater fragmentation than in the private sector

Mosaic of Diversity
Wage setting systems
(influenced also by the legal employment status)
Three models
Unilateral determination by the government or public employers
Free collective bargaining/joint regulation
Hybrid systems, neither unilateral determination nor collective
bargaining (UK pay review bodies system)
A different case is when to be effective collective agreements need to
be transposed into legislative measures (decree law or similars):
if just a procedural formality
de facto collective

bargaining

if agreements not9 binding for the government

unilateral determination
(France, PT, GR, some Eastern
countries)

Mosaic of Diversity
Wage setting systems
Collective bargaining is far from universally widespread in the EU27
the right to collective bargaining, at least for some groups of public
sector workers, is widely restricted or is embedded in specific
structures and procedures that do not allow for the same bargining
rights, coverage and results as in the private sector (Clauwert and
Warneck 2008)

In some cases, even when the right is recognized, collective

bargaining is not practised at all because of the weakness or absence
of the trade unions (many eastern European countries)

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Distinctiveness of public sector employment

relations
Traditionally, distinct/separate regulation from the private sector
Where the legal employment status under public law prevailed,
no bargaining rights + special prerogatives/privileges for public
employees (benign sovereign employer approach)
Where this distinction did not exist, model employer approach

In both cases
- attention to uniform, national standards, and equity issues
- importance of seniority and collective/automatic criteria in
career and remunaration systems
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Distinctiveness of public sector employment

relations
This distinctiveness has been put under pressure by two waves
of reform:
1960s-70s: move from unilateral regulation
joint
regulation/collective
bargaining
1980s-1990s: New Public Management inspired reforms attack
both the
benign sovereign employer and the model
employer
approaches
reduction of special employment status and special prerogatives
attack to uniform, national standards
decentalization of wage setting systems
attack to collective, automatic (universalistic) criteria for pay increases and
career promotions in favour of more discretionary, selective, individualized
systems (PRP, merit pay)
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more confrontational attitude towards trade unions

Distinctiveness of public sector employment

relations
NPM inspired reforms of public sector employment relations
have been adopted to different extent and with varying degree of
intensity in the EU countries
They often produced unintended and even perverse effects
(especially if adopted without appropriate institutional
arrangements)

According to a 2007 Oecd Report:

decentralization of pay bargaining should be pursued only if justified by

corresponding advantages and if accompanied by appropriate financial
arrangements

the potential for individualization has often been overstated. It entails higher
transaction costs than uniform and collective standards and agreements, and
one should assume that a rationally acting manager will use standard contracts,
standard conditions and collective pay structures unless there is a clear added
value to be gained
13 from individualisation

Clusters
Despite the above analysed great variety of employment
relations systems across EU27, some country clusters can be
identified
1. Nordic countries (+, partly, Ireland and the Netherlands)
2. Central European countries with a Rechtstaat tradition of
Prussian or Napoleonic origin (Germany, Austria, France, partly
Belgium, Luxembourg and the Netherlands)
3. Southern European countries (Portugal, Spain, Italy, Greece,
Malta and Cyprus)
4. Former communist Central and Eastern European countries
(with the partial exception of Slovenia)
5. UK
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Clusters

Nordic countries

-very large public setor employment share, with high female presence in connection
with a dense welfare state

-significant harmonization processes between career civil servants and public

employees under ordinary contract

-very hgh union density, although slightly declining in recent years

-wide collective bargaining practices within a rather decentralised two-tier bargaining

system with strong coordination mechaisms

-significant elements of NPM doctrine (including forms of PRP) but incorporated within
administrative systems that maintain some (neo-)weberian characteristics

15

Clusters

Central European countries with Reechtstaat tradition

.public sector employment share high in France, Belgium, the Netherlands, but
comparatively low in Germany and Austria, with a significant component of temporary
workers in France and Germany

-strong component of career civil servants, which are large part of centrl government
employee and in France almost the totality of public employees

-career civil servants do not have the right of collective bargaining (or a very weak
right, as in France), and in some cases restriction of the right to strike

-medium/high trade union density (with the exception of France)

-wage setting systems trditionally very centralised in France and Germany, with some
pressures to decentralisation (and fragmenttion) in Germany in recent years

-limited elements of NPM doctrine (especially in Germany and France)

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Clusters

Southern European countries

.public sector employment share compartively medium-low (with partial exception of

Malta and, to a lesser extent, Greece)

-low female share (with partial exception of Portugl) and low part-time employment;
high incidence of temporary workers in Spain, Portugal and Cyprus; very low
young/elder ratio in Italy

-medium/high union density

-most of these countries used to share a strong component of career civil servants
with special employment status and limited scope for collective bargaining, but since
the 1990s Italy moved along a different trajectory, adopting several NPM precepts,
privatizing the employment relationship of almost the totality of public employees and
decentralizng the bargaining system with weak coordination mechanisms

unintended and perverse effets followed; some NPM inspired reforms also in Spain,
Portugal and Greece, but smaller scope for collective negotiations

17

Clusters

Eastern European countries

.comparatively small public sector employment share (Hungary partial exception), with
high presence of women (especially Baltic countries); Romania exception); usually
high young employees share, but not in Baltic countries and Bulgaria

-unions generally weak or very weak, with partial exception of Hungary and Slovenia

-collective bargaining not permitted or not practised; forms of social dialogue eist, but
rather weak

-where collective negotiations are allowed and practised, often take place only at
individual employer level

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Clusters

UK

-comparatively rather large public sector employment share, with high presence of
women and part-timers, and little temporary workers

-no special status for public employees, civil servants included, no special restriction to
the right of association and to strike, with exception of some groups

-collective bargaining widely practised, but about 35-40% of public employees under
the pay review bodies system

-many NPM precepts adopted, but perhaps the public rhetoric exceeds reality

.the traditional model employer approach has been abandoned, but employment
relations in the public sector still different from the private sector

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Recent trends under the pressure of the economic

crisis

The measures adopted by many EU countries in response to the

economic crisis (but in some cases they pre-dated 2007, due to
different reasons) have not only affected the employment levels,
salaries working conditions and pensions of public employees, but
strained the traditional regulatory system prevailing in each country

Four trends

Revival of unilateralism

Recentralization of wage setting systems, as a consequence of

centrally defined, blind, horizontal measures

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Recent trends under the pressure of the economic

crisis

Four trends

Distinctiveness of public service employment relations: the removal of

this feature, within a program of a leaner and less distinctive public
sector, was a crucial target of the NPM approach. The effect of the
government measures in response to the crisis are ambivalent: return
to unilateralism, also to influence the outcomes reated to public
employees under ordinary contracts (see Germany), but often
instrumenta to the introduction into the public sector of private-sectorstyle HRM practices

Although public sector trade unions remain the stronghold of national

trade union movements in many countries, their role has generally
been weakened by the crisis, in terms of union density and even
more in terms of capacity to infuence governments policies

21