This article has been adapted from the report by the PSPRU.
|
The Privatisation Network - The Multinationals bid for public services |
| By: Public
Services Privatisation Research Unit (PSPRU) This article has been adapted from the report by the PSPRU. |
[Pilot 2 homepage] [Discussion] [Study Circles] [Help]
[Prepatory meeting] [Session1]
[Session 2] [Session 3] [Session 4] [Session 5] [Session 6]
Multinationals have for a long time dominated manufacturing and production industries. Now as a direct consequence of privatisation policies, a small group of multinationals are beginning to dominate public services in a number of countries in all continents.
This development casts serious doubts on the arguments often used to support privatisation. The theory is that there will be:
The practice is:
Multinationals in public services around the world The same companies recur on a world scale. The French, and to a lesser extent the UK, water companies are to be found in all continents where privatisation of water or public services is taking place. The same catering and cleaning companies recur in the contact services sector - as do the computer companies. In energy, there is a wider range of companies from the USA, France, Germany, Spain and the UK: most of which are active across the continents. These companies frequently work together in these world markets.
Multinationals - multi-service These multinationals cover a wide range of public services. There are three main categories:
Some companies specialise in one particular sector - for example, the computer companies fall into this category at present. Other have covered a range of services for many years - the French water companies have always owned subsidiaries in construction and environmental services, for example, and the German utilities in environmental services and production industries.
These multinationals are now prepared to take over virtually any part of public services. General des Eaux (French) is the most dramatic example of this. In the UK, it operates water companies; hospitals; refuse collection services; housing management; financial administration; road and bridge building; car parks; cable television; mobile phones and is bidding for a railway franchise.
Combines and Cartels One of the common arguments for privatisation is that it introduces the stimulus of competition. But it is misleading to describe the companies involved in privatisation as competitors. In fact, they frequently act jointly, in a number of ways. They regularly act jointly through combines and consortia - and take-overs. Cartels are common. Privatised companies often retain and protect their monopoly position. They benefit from the frequent exclusion of their most feared competitor - an alternative bid from an in-house team from the public sector.
Water: there’s only room in the world for five There are about nine internationally active water companies in the world market. They include the three French groups - Lyonnaise des Eaux, Generale des Eaux, and SAUR/Bouygues - one Spanish company, Aguas de Barcelona - and five of the UK companies: Northumbrian, North West, Severn-Trent, Thames and Welsh Water. There are none from Japan, Germany or the USA.
Yet these nine companies have ensured that there is nothing like open competition between them, and effectively reduced the number to four or five. Northumbrian has been taken over by Lyonnaise des Eaux, which is already owned 25% by Aguas de Barcelona, who never bid against Lyonnaise.
The companies also form combinations with each other when bidding. In Argentina in 1993, the winning consortium was formed by Lyonnaise des Eaux and General des Eaux and Aguas de Barcelona and Anglian Water; the opposition was Thames Water. By 1994 Thames had learnt their lesson; the formed a consortium with Generale des Eaux to for the South Australian contract which they won in 1995.
The leading energy companies also combine regularly on international projects. And a number of international alliances have been formed between telecoms companies and others to exploit the opening up of telecoms systems to private bids.
The economics of privatisation The economic benefits of private companies taking over public services are supposed to be that they are more efficient managers; and they are technically more advanced; and that they bring capital investment.
However:
This pattern of cuts in labour costs, and price rises can bee seen in water privatisation around the world. In Brazil, labour costs were cut by 40%. Only 60% of the existing 430 staff were transferred from the former water company. The combined private utilities in the UK have sacked nearly 25% of its workforce, some 100 thousand workers, since privatisation. In Rostock in eastern Germany, water charges were increased by 24% when income was lower than expected.
 |
Send mail to all
participants [isc@tsl.fi] For problems or questions regarding this site contact [Alana Dave] Technical problems and ideas contact [Technical staff] |