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Employment in the utilities sector continues to decline

Mergers and acquisitions in the water, electricity and gas services have resulted in a continuous employment decline in most countries since 1985, according to a new report by the International Labour Office (ILO) to be discussed at a "Tripartite Meeting on Challenges and Opportunities Facing Public Utilities" here on 19-23 May 2003.

Article | 23 May 2003

GENEVA (ILO Online) - The meeting will consider relevant developments in water, gas and electricity services, and the need for social dialogue between governments, employers' and workers' organizations. The meeting will also adopt conclusions that will identify areas for follow-up action in terms of research and regional activities and provide policy guidelines for constituents.

In particular the privatization of state-owned enterprises around the world inevitably create redundancies, says the report. Contracting out for information technology (IT) services, maintenance, meter reading, bill collections and the introduction of new technologies have also resulted in reduced employment levels in the sector.

State-owned electric and gas companies - including four of the top 15 global electric and gas companies, State Power of China, Korea Electric Power, Electricité de France and Gaz de France - are facing the pressures of privatization and liberalization. State Power of China, with more than 1.2 million workers and US $145 billion in assets has split into 11 smaller private companies to encourage greater competition; Korea Electric Power, with more than 16,634 workers is in the process of privatizing; and the two French companies, which have tremendous investments abroad and about 200,000 workers, are earmarked for privatization.

The process of liberalization in Europe since 1996, when the European Union enacted the Electricity Directive phasing in competition in electricity markets, has also had an impact on jobs. While more than 250,000 jobs were lost between 1990 and 1998, according to some estimates, privatization, mergers and acquisitions may axe another 25 per cent in the industry by 2006.

The social dialogue process in the European Union has been able to help limit the negative social implications of redundancies, but much more needs to be done around the world since social dialogue mechanisms in some regions are deficient, says the ILO report. It therefore insists, in particular, on the need to enhance the social dialogue process to address the social implications of globalization in the sector.

The US Department of Labor reports that approximately 13,000 of the 49,000 meter readers in the United States will lose their jobs by 2010. It also projects that the electric services industry in that country will experience a 9.2 per cent decline in employment over the same period from the estimated workforce of 356,700 in 2000.

According to the report, the main challenge for water, gas and electricity providers is to maintain a balance between social, environmental and business concerns, calling for cost-efficient, profitable operations and broader public service values that emphasize the provision of cheap, reliable and widely accessible services, whether the ownership is public or private.

The smooth supply of all services, and also the level of employment opportunities in all other sectors, depends on an ample supply of water and electricity. However, more than 1.6 billion people lack access to electricity, at least 1.1 billion people do not have safe drinking water, no fewer than 5 million people die each year from water-related diseases, and it is likely that by 2025, two-thirds of the world's population will live in countries with moderate or severe water shortages.

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