The 'swindle' of welfare privatisation in Europe
by Mikael Gustafsson
10 September 2012
Swedish MEP argues that Europe's welfare state faces disintegration as the economic crisis reinvigorates a neo-liberal zeal for privatisations – and it is time to stop the madness
Despite a raft of evidence and experience counting against them, privatisation, liberalisation and outsourcing still threaten welfare states across Europe. Last Wednesday, the issue came up for discussion at a seminar organised by the European United Left/Nordic Green Left group in the European Parliament, under the slogan: 'No to privatisations and profit making in the welfare sector'. The event brought together experts in the field from across the continent and included specific panel discussions on the financial crisis and its impact on welfare sectors. We also heard analysis of the latest waves of privatisations hitting welfare systems since the current economic crisis began.
Bewildering fragmentation, unreliability and inflated costs seem to characterise the experience of privatisation in health, education and care across Europe. It is therefore not an exaggeration to speak of the policy as a mere swindle for transferring public money onto the books of private companies. Most experience shows that in the aftermath of privatisation, costs increase, services are downgraded, and employees face worse conditions – all while taxpayers continue to subsidise services contracted out to companies whose top executives go on paying themselves excessive salaries.
The threat posed by such trends has intensified in recent years. With the ongoing crisis, we are witnessing how various welfare sectors are facing the dismal scenario of extreme cuts, sell-offs, and disintegration. The buzz words we hear about the apparent benefits of competition and innovation in the sector are nothing new to anyone used to the tired old neo-liberal clichés. Politicians argue that outsourcing social services would lead to a "better user orientation" despite the fact that experience shows that it has done the opposite. Services suffer, jobs suffer, fragmentation and duplication increase wastage, contractors' profit imperatives to shareholders mean their focus will always remain on their profit margins, not on the people who are supposed to benefit from social welfare.
For the left, the well-being of the most vulnerable citizens is too important to be handed over to the private sector. All of us who care about welfare provision and public services must be alert to privatisation, whether it happens by stealth or via stated policy, otherwise those at risk will be left even more vulnerable to the injustices and inadequacies of the market. From a gender perspective, the way venture capitalists invade the core sector of social welfare is problematic to say the least. Women constitute the majority of workers in the welfare sector. So it is the economic independence and social security of women that is threatened when pressures to downsize or impose precarious working conditions pile on.
In recent decades, the Swedish welfare system underwent a restructuring. By using words such as "freedom of choice" and claiming that cooperatives and small value-driven companies would be the major players, Sweden has opened up to a huge wave of privatisation. Day care centres, schools, homes for the elderly and health clinics have been allowed to become privatised and the results have been that big international companies are buying up, downscaling and making huge profits. Meanwhile scandal after scandal is revealed showing insecure work conditions for staff, huge groups of children or neglect as a result of more stress where there is less focus on care and more on profit making. In the health sector alone, last year's private profit was €200m.
Competition and private investment were presented as a panacea in the 1980s for public services in Europe. As foreseen by many on the left, privatisation policies pursued by governments informed by neo-liberal economic theory – as part of a nasty right-wing campaign to "roll back the frontiers of the welfare state" – have failed.
Our conference heard alternatives from the political left, from civil society representatives, from employees in the sector, end users, and trade unions. The way out could not be more obvious. The message we heard loud and clear is that we must rebuild democratically-controlled, publicly-owned, welfare sectors and wholly challenge the underlying principles of the privatisation agenda, with its misplaced faith in the logic of the market. Public employees doing their best under difficult circumstances to provide quality public services to those dependent on these services are bearing the brunt of terrible political decision-making. We must stop the madness of welfare privatisation. Democratic and social rights are not for sale.
Mikael Gustafsson MEP represents the Swedish Left Party, which is a member of the European United Left/Nordic Green Left group in the European Parliament. He is chairman of the parliament's Women's Rights and Gender Equality committee
Despite a raft of evidence and experience counting against them, privatisation, liberalisation and outsourcing still threaten welfare states across Europe. Last Wednesday, the issue came up for discussion at a seminar organised by the European United Left/Nordic Green Left group in the European Parliament, under the slogan: 'No to privatisations and profit making in the welfare sector'. The event brought together experts in the field from across the continent and included specific panel discussions on the financial crisis and its impact on welfare sectors. We also heard analysis of the latest waves of privatisations hitting welfare systems since the current economic crisis began.
Bewildering fragmentation, unreliability and inflated costs seem to characterise the experience of privatisation in health, education and care across Europe. It is therefore not an exaggeration to speak of the policy as a mere swindle for transferring public money onto the books of private companies. Most experience shows that in the aftermath of privatisation, costs increase, services are downgraded, and employees face worse conditions – all while taxpayers continue to subsidise services contracted out to companies whose top executives go on paying themselves excessive salaries.
The threat posed by such trends has intensified in recent years. With the ongoing crisis, we are witnessing how various welfare sectors are facing the dismal scenario of extreme cuts, sell-offs, and disintegration. The buzz words we hear about the apparent benefits of competition and innovation in the sector are nothing new to anyone used to the tired old neo-liberal clichés. Politicians argue that outsourcing social services would lead to a "better user orientation" despite the fact that experience shows that it has done the opposite. Services suffer, jobs suffer, fragmentation and duplication increase wastage, contractors' profit imperatives to shareholders mean their focus will always remain on their profit margins, not on the people who are supposed to benefit from social welfare.
For the left, the well-being of the most vulnerable citizens is too important to be handed over to the private sector. All of us who care about welfare provision and public services must be alert to privatisation, whether it happens by stealth or via stated policy, otherwise those at risk will be left even more vulnerable to the injustices and inadequacies of the market. From a gender perspective, the way venture capitalists invade the core sector of social welfare is problematic to say the least. Women constitute the majority of workers in the welfare sector. So it is the economic independence and social security of women that is threatened when pressures to downsize or impose precarious working conditions pile on.
In recent decades, the Swedish welfare system underwent a restructuring. By using words such as "freedom of choice" and claiming that cooperatives and small value-driven companies would be the major players, Sweden has opened up to a huge wave of privatisation. Day care centres, schools, homes for the elderly and health clinics have been allowed to become privatised and the results have been that big international companies are buying up, downscaling and making huge profits. Meanwhile scandal after scandal is revealed showing insecure work conditions for staff, huge groups of children or neglect as a result of more stress where there is less focus on care and more on profit making. In the health sector alone, last year's private profit was €200m.
Competition and private investment were presented as a panacea in the 1980s for public services in Europe. As foreseen by many on the left, privatisation policies pursued by governments informed by neo-liberal economic theory – as part of a nasty right-wing campaign to "roll back the frontiers of the welfare state" – have failed.
Our conference heard alternatives from the political left, from civil society representatives, from employees in the sector, end users, and trade unions. The way out could not be more obvious. The message we heard loud and clear is that we must rebuild democratically-controlled, publicly-owned, welfare sectors and wholly challenge the underlying principles of the privatisation agenda, with its misplaced faith in the logic of the market. Public employees doing their best under difficult circumstances to provide quality public services to those dependent on these services are bearing the brunt of terrible political decision-making. We must stop the madness of welfare privatisation. Democratic and social rights are not for sale.
Mikael Gustafsson MEP represents the Swedish Left Party, which is a member of the European United Left/Nordic Green Left group in the European Parliament. He is chairman of the parliament's Women's Rights and Gender Equality committee
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