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The Impact on Jobs and Communities

Private operators taking over public services bring with them an arsenal of cost-cutting measures that includes slashing jobs. In four short years between 1992 and 1996, 121,000 public sector jobs vanished, many due to privatization.

Good jobs are being replaced with privatized or contracted out jobs that pay less, dont have union protection, offer fewer benefits and are often part-time, temporary or casual. Eliminating good jobs limits workers ability to contribute to the economy, and means communities lose valuable services. Ripples caused by disappearing services and downgraded jobs rapidly gain momentum, becoming waves that destabilize communities and economies.

Good jobs carry significant weight when it comes to public opinion. A 1997 Vector poll found that “good jobs in the local community” are what the public values most about public services, with half of all respondents making this their top priority. Accountability and quality followed closely as important benefits of publicly provided services.

Disappearing public sector jobs take with them no small measure of security for families and individuals. The vast majority of public sector workers are unionized and so benefit from decent wages, job security and paid sick leave as well as pension, medical and dental plans won through collective bargaining. And the public sector remains far more dedicated to occupational health and safety, employment equity and pay equity than private sector employers.

Workers eliminated in the handover of a public service face the prospect of far lower standards in the private sector, where only about 28 per cent of workers are unionized. In those instances where successor rights dictate that privatized jobs remain unionized, protection and benefits can be short-lived as corporations target collective agreements in subsequent rounds of bargaining. Introducing competitive bidding is another tactic to drive down unionized wages, as workers are forced to undercut their own collective agreements in destructive bidding wars. When they make their takeover pitch, privateers may appear open to keeping a union contract to quell worker opposition. Ratcheting down workers wages and benefits doesnt begin until the corporation owns the service lock, stock and barrel.

Losing good public sector jobs spells disaster for families trying to stay afloat. Average hourly wages are far lower in the private sector $13.85 an hour compared to $19.38 for public sector workers. In contrast, compensation for private sector managers, (not to mention presidents and CEOs) far outstrips public sector management wages.

Insecurity, growing inequality and rising poverty are replacing the economic and social stability that comes with good jobs. Privatization of public services means communities are losing the services that sustain them. Shelters, hospitals, group homes, long term care facilities, public child care and education, affordable housing and transportation systems are all being eroded at a time when demand from communities in crisis is on the rise.

Staff members who are kept when a service is privatized have a difficult task. Already stretched to the limit they work under increasing stress as they attempt to hold together services with shorter hours, fewer funds and growing need. Their working conditions can change drastically, with cuts in pay, hours and benefits. These factors contribute to increased work-related injuries and tension-fuelled violence on the job.

Jobs that arent eliminated up front when a service is privatized may be allowed to dwindle away through attrition. While a far easier sell than taking jobs from the workers that hold them, attrition robs an entire generation, leaving young people with little hope for future employment. Young people can no longer look to the public sector for jobs as older workers retire. Job-seeking youth must now compete against displaced older workers with far more experience for jobs once considered entry level positions.

With a youth unemployment rate consistently above the national average and the vast majority already working in the private sector, losing access to public sector jobs doesnt bode well for young people. Post-secondary graduates leaving school with ever-higher debt loads are facing shrinking earnings. Statistics Canada reports that 1997 median earnings for university bachelor graduates working full-time two years after graduation were $32,000, down from $48,000 in 1995. College graduates earnings were $26,000 in 1997, down from $30,000 in 1995. And a growing number of graduates can only find part-time work. Communities will wither as jobless young people and families leave in search of work.

When public services are sold, multinationals often buy, resulting in purchases of supplies and services outside a community. Switching Winnipegs hospital food services to the Aramark-managed Urban Shared Services Corporation brought with it plans to purchase and prepare food outside the province. Statistics Canada analysis of the plan predicted that outsourcing just half of the buying and cooking would cost the province more than 350 jobs by the year 2000, and would reduce the provinces GDP by $4.55 million. Researchers also projected layoffs resulting from centralization and outsourcing would mean $4.66 million in payroll gone from Manitobas economy. The resulting spin-off would eliminate more jobs, many in the private sector.

Outsourcing always results in cuts to jobs and wages that affect the whole community. Unemployment increases (directly in the public sector and indirectly in the private sector), increasing the cost of social services. Lost wages mean less money for people to spend in local stores, on housing or recreational activities. When the contractor is based out of town, out of the province or in another country altogether, money is siphoned off from the local economy.

Despite the dismal predictions, the USSC facility went ahead last summer. And while it is too early to see the economic results play out, the impact on food quality was immediate. Despite workers best efforts to maintain high meal standards, the new reheating system inevitably leads to lower quality food. Media reports indicate widespread patient dissatisfaction since the new facility began operating. The USSC president told the Winnipeg Sun a company complaint line had received between 650 and 700 calls lamenting the poor food quality. And a survey of patients in one area hospital found the majority had lost between one and 23 kg in the month following the switch to reheated food.

Private economic imperatives often demand the arbitrary restructuring of public services that have developed and evolved over decades. Depending on the circumstances, services are either regionalized to facilitate corporate takeovers or carved into bite-sized chunks for easy corporate digestion a move intended to circumvent public aversion to private monopolies. In either instance, restructuring linked to a private takeover is not undertaken to serve the public interest or improve a public service.

The reorganization that accompanies privatized services can further isolate rural communities already struggling to maintain a support network, depriving residents of the community hub integral to well-functioning towns and villages. Everything from the location of lease-back schools to welfare access is subject to the dictates of private owners, who favor the efficiencies of streamlined services over principles of equitable access. And these owners arent the next-door neighbour home-grown variety, but transnational transients with no roots in the community. Whether its schools located near the developers real estate ventures, ice rinks offering fewer open skates or lessons, community centres canceling after-school programs or a multinational running the local group home, decisions are being made by corporate owners with little knowledge of or concern for local issues and community needs.

Privatization means residents lose the right to participate in shaping the network of services that make up a vibrant community. For public libraries like the one in Richmond BC it means a private book selling company controlling book purchasing and processing. The scheme leaves librarians and library users with little power over what ends up on the shelves. The company purchases books based on circulation profiles that only paint a partial picture of how library visitors use materials. Pre-purchased and processed books mean librarians dont know whats in their collection anymore, making it hard for them to serve readers.

Loss of local control extends far beyond libraries. Community governance and local democracy are being wrested from citizens hands, replacing responsive services with unaccountable ventures run by corporations headquartered out of the communitys reach. Accountability becomes a question of satisfying shareholder requirements, not community needs. Lines of responsibility become 1-800 lines thousands of miles away. Reactions to citizens complaints or safety concerns are delayed, deflected or denied.

Studies such as the Winnipeg outsourcing analysis arent the type of numbers that typically get crunched in the services sell-off. Yet these numbers should be sounding alarm bells across the country, alerting citizens to the dismantling of their communities and local economies in favour of global economies and record profits. Predatory privateers swoop in to devour valuable community services and discard the rest, leaving behind the shells of once-vibrant towns, economies and workers.