Commodification of public services, productivity and employment

Abstract

This paper analyses the evolution of labour productivity and employment in Electricity and Gas, Post and Telecommunication and Inland Transport sectors of Austria, Belgium, Germany, Sweden and the UK in the presence of commodification process from 1970 to 2004. The results showed that although some degree of labour productivity growth achieved in all sectors and countries, there has also been significant employment decreases. Productivity increase/employment decrease trend is even stronger in the privatisation and liberalisation era for most countries. Decomposition of labour productivity shows that higher productivity, to some extent, was gained at the expense of employment decrease. Although there have been productivity increases in both pre- and post-commodification periods, the contribution of employment decrease to productivity growth turned out to be quite significant in the post-commodification period. This brings about the necessity to question the presumption that commodification of public services brings about higher productivity