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Tripartite Meeting on Managing the Privatization and Restructuring of Public UtilitiesReport for discussion at the Tripartite Meeting on
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Cover photograph: Milton Becerra: |
6. The role
of the ILO and other
international organizations in
privatization and restructuring
The ILO shares the concerns of other international organizations that restructuring, privatization and transition achieve their economic, social and political objectives. However, the unique structure and mandate of the ILO give it a special responsibility to focus on the social and employment dimensions of these processes, through the strengthening of institutional capacities to implement and manage the necessary changes in ways which bring benefits to both stakeholders and society as a whole.
As for other sectors, the ILO monitors trends in the three utilities, complementing the general information collected with policy-oriented research on specific subjects. International sectoral meetings are also held at regular intervals, which discuss topical issues and adopt conclusions and recommendations dealing with desirable policies, behaviour and activities. Finally, the ILO provides advisory services to its constituents arising out of the first two activities.
The 1987 Joint Meeting on Employment and Conditions of Work in Water, Gas and Electricity Supply Services had already noted that:
Experience with changes in ownership (including privatization and/or nationalization) varies among countries; while in some cases employment and working conditions have been maintained, or improved, in others they have been adversely affected. When changes in ownership are contemplated, every effort should be made to protect the rights and interests of workers and of employers ... through negotiation, consultation and collective bargaining.(1)
Similar views were also expressed by other ILO sectoral meetings, including the Fifth Session of the Joint Committee on the Public Service (1994), the Joint Meeting on the Impact of Structural Adjustment in the Public Services (1995), the Tripartite Meeting on the Human Resources Dimension of Structural and Regulatory Changes and Globalization in Postal and Telecommunications Services (1998) and the Joint Meeting on Human Resources Development in the Public Service in the Context of Structural Adjustment and Transition (1998).
A major research project on the restructuring and privatization of the public utilities was launched in 1996, as an input into a wider ILO action programme on privatization, restructuring and economic democracy (1996-97). The objective of the programme was to improve the capacity of ILO constituents both to adopt a participatory approach to privatization and restructuring and to better grasp and address the social and labour consequences of those processes. The research included in particular the publication of a monograph on Labour and social dimensions of privatization and restructuring (public utilities: water, gas, electricity), which reviews the experience with privatization and restructuring at the regional level (Africa, Asia, Europe, Latin America and the United States and Canada), with particular reference to the impact of these processes on employment levels and working conditions, retraining, redeployment, industrial relations and the quality of the services provided by privatized enterprises.(2) The project reviews experience in the utilities sector worldwide to identify good practice and potential pitfalls, the ultimate goal being to provide guidance in ensuring that structural change takes into account both social considerations and the need for enterprises to be competitive. Within the framework of the same action programme on privatization, restructuring and economic democracy, a synthetic working paper on services of public interest, including water, gas and electricity, was also published.(3)
The attention now being focused on the social dimensions of the privatization and restructuring processes -- what the Prince of Wales Business Leaders Forum has called the "societal value added", which is increasingly being recognized as enhancing "shareholder value added" -- has resulted in action on two specific fronts: the development of "activist" human resource-led strategies; and the establishment of codes of investment and practice, including regulations and policies to combat the potential hazard of corruption in the wake of privatization.
The World Employment Report 1998-99, which focuses on employability in the global economy and how training matters, highlights the growing importance of demand-led training systems and the co-determination of the latter by all interested parties.(4) But as a report to the recent Joint Meeting on Human Resource Development in the Public Service in the Context of Structural Adjustment and Transition points out, "human resource development goes beyond education and training ... (and) involves such issues as ... recruitment, staffing, performance and career development, pay, working conditions, the environment and terms of employment", as well as "the interdependency between individuals and an institution's policies and structures, which may be related to issues such as information, awareness, ethics, motivation and behaviour and the strategic capacity for developing and linking these issues".(5)
It is now generally accepted that the globalization process -- of which privatization and restructuring in the utilities are essential components -- requires some kind of governance, primarily by national governments but also at the international level, to ensure a fair distribution of profits and benefits and reduce the risk of undesirable labour market practices -- a philosophy which in its essence was already implicit in the ILO's Constitution. As the Report of the Director-General to the 85th Session of the International Labour Conference in 1997 pointed out,(6) the emergence of the global economy has opened up a new vista for the ILO's standard-setting action, through a more judicious and selective approach to the means at its disposal and the promotion of a series of core international labour Conventions.
The Declaration on Fundamental Principles and Rights at Work and its Follow-up, adopted at the 86th Session of the Conference in 1998, can be seen as a further stage in the ILO's response to the challenges of globalization. However, there are a number of important standards which would seem to be particularly relevant to the processes of privatization and restructuring, including the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), the Right to Organise and Collective Bargaining Convention, 1949 (No. 98), the Labour Relations (Public Services) Convention, 1978 (No. 151), the Collective Bargaining Convention, 1981 (No. 154) and Recommendation, 1981 (No. 163) and the Workers' Representatives Convention, 1971 (No. 135) and Recommendation, 1971 (No. 143). Further international instruments could be of special relevance in the context of the liberalization of the utilities: the Termination of Employment Convention, 1982 (No. 158) and Recommendation, 1982 (No. 166) are particularly applicable to the case of privatization and restructuring (rights to severance pay, retirement and social security, consultation of workers in the event of dismissal for economic, technological or structural reasons). The Labour Clauses (Public Contracts) Convention, 1949 (No. 94), and its accompanying Recommendation are relevant to public-private partnerships in the development of utility services when they concern contracts involving expenditure by a public authority and the employment of workers by the other party to the contract. The Convention provides that such contracts include clauses ensuring workers concerned wages (including allowances), hours of work and other conditions of labour which are not less favourable than those established by laws, collective agreements or arbitration awards for similar work. Where these do not exist, adequate measures must be taken to ensure fair and reasonable conditions of health, safety and welfare for the workers concerned. Measures must be taken to ensure that those tendering for contracts are aware of these clauses, and sanctions are to be applied by withholding contracts or otherwise for failure to observe the labour clauses in public contracts. Payments under the contract may be withheld to enable workers to obtain the wages to which they are entitled. The Recommendation provides that in cases where private enterprises are granted subsidies or are licensed to operate a public utility, provisions substantially similar to those of the labour clauses in public contracts should be applied.
6.2. The ILO and multinational enterprises
The concerns of governments to encourage industrial development and further economic progress as a means of combating unemployment and minimizing social unrest have led to a reversal in many countries of earlier reluctance and hesitation about foreign direct investment and multinational enterprises, including through the establishment of codes of investment containing incentives and concessions to attract investment.
Multinational enterprises, which account for a large share of activities in the utilities sector, in particular as regards energy and water (see Chapter l), now play a significant role in the global economy, but there is a risk here of situations arising which could compromise the interests and rights of workers. Programmes of privatization of state functions have allowed multinational enterprises to penetrate into areas of activity usually regarded as close to the national interest and identity of individual countries, often to the detriment of considerations of the "geographical logic" of the nation State.(7) Hence the importance of promoting the widespread acceptance of consensus-based voluntary agreements which can bridge the gap between national laws and practice (which may not be fully capable of addressing situations arising from multinational activities) and international labour Conventions (which may not have been ratified or properly implemented).
Two international Declarations have been adopted which directly address the regulation of multinational enterprises: the OECD's Declaration on International Investment and Multinational Enterprises (1976), which takes the form of a recommendation accompanied by a set of guidelines, and the ILO's Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (1977), which specifically addresses such aspects as employment creation in the developing countries.
In general, the ILO code is more detailed and in some respects calls for higher standards than the OECD text. For example, it requires multinational enterprises to adopt higher standards in relation to wages, and includes provisions on safety and health and training, all of which are absent or mentioned only in passing in the OECD Declaration. The Tripartite Declaration, which contains a useful set of guidelines for the policies and practices of the ILO's constituents, is monitored on the basis of surveys sent out on a periodical basis. The Governing Body's Subcommittee on Multinational Enterprises also reviews reports on the promotional activities, technical cooperation as well as advisory services and research carried out in this field by other organizations with similar interests, including regional economic commissions and groups (EU, ASEAN, APEC, MERCOSUR, etc.).
The importance of the ILO's Tripartite Declaration was highlighted by the recent Tripartite Meeting on the Human Resources Dimension of Structural and Regulatory Changes and Globalization in Postal and Telecommunications Services (1998), which adopted a resolution that invited the Governing Body to renew its appeal for the promotion of the Tripartite Declaration and to encourage the promotion of agreements between multinational enterprises and workers' organizations on workers' rights in multinational enterprises.
Such agreements necessarily involve the full participation of the workers. The Joint Meeting on the Impact of Structural Adjustment in the Public Services (Efficiency, Quality Improvement and Working Conditions), held in 1995, emphasized in its conclusions that "public sector reforms are most likely to achieve their objectives of delivering efficient, effective and high-quality services when planned and implemented with the full participation of public sector workers and their unions and consumers of public services at all stages of the decision-making process".(8) The evidence from several ILO studies confirms that such involvement by all stakeholders in the privatization and restructuring processes is essential to lasting success. There has also been a clear recognition of the valuable source of knowledge and ideas which the trade movement can provide. A recent example of the potential trade union input in the utilities sector includes the PSI Water Programme and Water Code of Conduct drawn up by the PSI Executive Committee, which addresses such issues as public service obligations, democratic regulation, environmental standards and fair labour practices on the basis of several key international labour Conventions. One of the underlying goals of this Code is to ensure a level playing field of competition among water companies seeking investment which will not prove detrimental to workers, their families and the communities in which they live.
6.3. Workers' and consumers' protection
at the global level
One of the striking consequences of restructuring and privatization has been the growing attention paid to the greater transparency of the behaviour and performance of privatized enterprises(9) and in particular, measures to counter the risk of corruption and under-the-table payments in multinational activities, with a number of measures being taken to render the globalization process more transparent. Already in response to the 1977 Lockheed bribery scandal the United States Congress had adopted the Foreign Corrupt Practices Act, which prohibits the payment of commissions to foreign officials. More recently, the United States also played a significant role in the adoption in 1998 of an agreement by the 29 Members of the OECD to make the illicit payment of commissions to foreign officials subject to up to ten years' imprisonment.(10) Similarly, the Member States of the Organization of American States adopted in March 1996 an Inter-American Convention against Corruption, which makes transnational bribery a punishable offence (article Vlll).
Transparency International is a non-governmental organization based in Berlin that is dedicated to increasing accountability and curbing both national and international corruption by lobbying governments, donors and enterprises. In a working paper presented at a National Conference on Human Rights in Sofia, Bulgaria, the Executive Director of the association emphasized that corruption was a violation of human rights, in that it perpetuates discrimination, prevents the full realization of economic, social and cultural rights and leads to an infringement of several civil and political rights. It was following collaboration with Transparency International that the World Bank denounced the "cancer of corruption" and modified its financing procedures, resulting in the establishment of a "blacklist" of enterprises that have engaged in corruption practices.
Several consultancy firms also provide governments of developing countries with anti-corruption expertise, including SGS, Kroll, Crown Agency and Swipco. However, a number of multinationals have reacted to the risk of finding themselves included on international blacklists which tarnish their image by voluntarily establishing their own rules of conduct: thus Shell published in April l998 a report on its code of practice and its application in the field (23 persons were dismissed from the enterprise in 1977 for corruption). Action was also recently taken against high-ranking staff at the Suez-Lyonnaise des Eaux, which led to the subsequent preparation of its own code of practice. Similarly, the French multinational Vivendi, whose president has declared that "between losing a market and illegal financing, our choice is clear: we prefer to lose a market", also adopted on 21 November 1996 a Charter of Fundamental Social Rights, which reflects the fundamental principles of the ILO as regards child labour, the prohibition of forced labour and freedom of association. The obligation to be vigilant in these spheres, as established by the Charter, applies to both employees of the multinational company and its suppliers and subcontractors. An annual report must also be submitted each year to the company's European works council.
Similarly, consumer organizations have also been active in the campaign for greater transparency, in particular as regards cross-border business activities. Consumers International has drawn up a Consumers' Charter for Global Business and has made a number of recommendations concerning the revision of United Nations guidelines for consumer protection.
6.4. Work by other international organizations
and bodies
The World Bank is actively engaged in the financing of a number of utility privatization and restructuring projects throughout the world. There has, however, been criticism by trade unions over failure to consult labour and NGO's regarding privatization projects such as the Manila water concessions in the Philippines. The World Bank's approach in financing restructuring and privatization of utilities may well change in the future as recent statements by the Bank suggest increased concern for social issues and the employment impact of the policies pursued by the institution;(11) similar views have been expressed by the IMF. In 1997, the Bank set up a Task Force on Social Development to examine how social concerns could be more effectively absorbed into the development paradigm and used for policy-making purposes.
In fiscal year 1997 the World Bank approved loans and credits for 43 projects, totalling $3.7 billion, in sectors with the most potential for private sector involvement, including power (17 projects), oil, gas and coal (four projects) and water/sanitation (13 projects).(12) A recent example is the $185 million loan granted to Mexico for a $300 million project in the water sector, comprising the establishment of 13 new "catchment agencies" and the overall reform of its water administration, including in particular the reorganization of data processing systems.
The World Bank/UNDP Water and Sanitation Programme provides urban and rural water supply services increasingly oriented towards community-based and private sector-led solutions. The Joint UNDP-World Bank Energy Sector Management Assistance Programme (ESMAP) gives technical assistance to help countries privatize and restructure their power sectors, develop oil and gas trade, promote private sector development in rural energy, develop renewables such as solar and wind energy options and support environmentally sustainable energy solutions. The Environmental Management for Power Development (EM Power) Programme, a collaborative project coordinated by the World Bank, focuses on the integration of environmental concerns into project and power system planning in the developing countries. Regional projects also include the Asia Alternative Energy Programme (ASTAE), established in 1992 to mainstream alternative energy into the Bank's power sector lending operations in Asia, and the Regional Programme for the Traditional Energy Sector in Africa (RPTES). At the same time the Bank has established the International Forum for Utility Regulation (IFUR), a worldwide learning forum enabling utility regulators to exchange cross-country information and experience on best practices and to improve their regulatory regimes.
6.4.2. European Bank for Reconstruction
and Development (EBRD)
The European Bank for Reconstruction and Development (EBRD) was established in 1991 to foster the transition towards market-oriented economies and to promote private and entrepreneurial initiative in the countries of Central and Eastern Europe and the former Soviet Union. Many of the projects approved have been in the energy sector (generation, distribution and transmission), with state-owned enterprises undergoing privatization being one of the primary beneficiaries of EBRD financing. The EBRD emphasis on the promotion of the private sector is complemented by its support for decentralized and efficient municipal services as a key ingredient of the transition process. Since existing power generating plants can produce more power than the region currently needs, less emphasis is placed on participation in greenfield power generation projects and more on efforts to improve the efficiency of existing plants and on ways to enhance the cash flow situation of recently privatized plants. The Bank promotes the effective adaptation of existing technologies to take account of specific conditions and their relationship to environmental factors, for example as regards the use of high sulphur content coal to generate power. As the European Union places increasing pressure on environmental issues, it is likely to encourage the World Bank and the EBRD, as well as other financial bodies, to fund more projects of this kind.
In 1997 the EBRD signed a $l00 million multi-project facility (MPF) with the Générale des Eaux, under which existing or new special purpose subsidiaries of the latter will operate and invest in municipal service and infrastructure systems under public-private management partnerships.
6.4.3. Food and Agricultural Organization
of the United Nations (FAO)
The Food and Agriculture Organization of the United Nations (FAO) has since l983 been active in the field of alternative and decentralized energy sources and in the promotion of environmentally friendly and sustainable agricultural practices. Its spheres of interest include the stimulation of reliable markets for renewable energy technologies, such as the non fossil fuel obligation (NFFO) programme in the United Kingdom, under which utility companies are obliged to purchase power from independent producers and to pay higher rates per KW if that power is produced with renewable energy sources. FAO's networks such as the Latin American and Caribbean Group for Rural Energization (GLAERS), the Regional Wood Energy Development Programme for Asia (RWEDP) and the European Research Network for Environment and Energy (SREN) could serve as useful contact points for implementation agreements with the International Energy Agency (IEA).
6.4.4. Energy Charter Treaty (ECT)
The Energy Charter Treaty (ECT), which has been signed since December 1994 by 49 States and the European Communities, entered into force on l6 April 1998.(13) The Charter is intended to promote long-term cooperation in the energy sector, including as regards exploration, production, transit and trade. The Charter itself contains no social provisions, and calls have been made, in particular from ICEM and its affiliated unions, for a social protocol to be added to the text which would establish social rules for multinational investment in the energy industries. The social protocol would oblige the signatory countries to ratify and apply the core Conventions of the ILO, including standards on freedom of association and the right to collective bargaining, health and safety, minimum age for employment, discrimination, equal remuneration and forced labour. As a recent ICEM conference pointed out,(14) wages are being paid several months late in the electricity industries in some Central and Eastern European countries, but electric power workers still do not have the right to strike in many of these countries. Similarly, an energy meeting of PSI in Slovenia from 5 to 6 May 1997 called for a social clause in the European Energy Treaty. The European Parliament prescribed that companies operating in CEEC and the former Soviet states are to respect ILO standards in its report on East-West cooperation in the energy sector in Europe.
Although the European Energy Charter contains no social provisions, the Recommendation of the Committee of Ministers of the Council of Europe on privatization of public undertakings and activities, adopted on l8 October l993, includes sections on the protection of employment rights ("employees' representatives should be provided with full information concerning the conditions of the privatization which are relevant to the employees' interests") and the protection of users' and consumers' rights:
In the case of privatization concerning:
6.4.6. European Works Councils Directive
The European Works Councils Directive,(16) which came into force on 22 September 1996, obliges large enterprises operating across the European Union to establish groups and forums for the purposes of informing and consulting employees. Article l defines its goal as "to improve the right to information and consultation of employees in Community-scale undertakings and Community-scale groups of undertakings", with a "Community-scale undertaking" being defined (article 2) as one with at least l,000 employees in the States covered by the Directive and at least l50 employees in two or more of the countries. The Directive provides the legislative backing for the right to establish dialogue not only with European multinationals but with global companies, which have a significant European element in their operations, and thus offers a real opportunity for workers and their unions to gain greater influence over the international activities of multinational enterprises. Several major transnational companies operating in water and energy services have established a European Works Council. These companies include Vivendi, Suez-Lyonnaise des Eaux, Bouygues and Tractebel. Others are discussing with the trade unions. PSI also coordinate networks of trade unions in these companies outside of Europe. Vivendi and its European Works Council organized an international health and safety seminar on 15 and 16 October 1998. Vivendi intends to consider health and safety issues with all its unions. Suez-Lyonnaise des Eaux has established an informal human resource group with trade union representatives that could be seen as the forerunner of an international trade union-management forum.
6.4.7. "Acquired Rights" Directive
A European Council Directive of 1977 on employees' rights in the event of transfers(17) contains provisions on the so-called "acquired rights" of employees and the obligations incumbent on undertakings in respect of providing information and holding consultations "in good time before the change in the business ... is effected" (article 6(3)). In a case brought before the European Court of Justice on the interpretation of the concept of transfer as used in the directive,(18) the Court ruled that it relates to cases "in which an economic entity -- that is to say an organized grouping of persons and assets facilitating the exercise of an economic activity which pursues an objective specific to it -- retains its identity following the transaction in question". The mere loss of a service contract to a competitor cannot in itself indicate the existence of such a transfer (and, by extension, the safeguarding of rights). The Court ruled that the aim of the directive is to ensure continuity of employment relationships within a stable economic entity whose activity is not limited to performing one specific works contract, irrespective of any change in ownership. Privatization is clearly an example of "transfer" as used in the directive.
6.4.8. Multilateral Agreement on Investment (MAI)
The negotiations on a Multilateral Agreement on Investment (MAI) were launched at the OECD Ministerial Meeting of May 1995. The agreement is intended to be a comprehensive instrument covering all forms of investment from MAI investors, including the establishment of enterprises and the activities of established foreign-owned enterprises, with a view to creating a more favourable investment for enterprises confronted with the challenge of globalization. Texts are currently under discussion concerning the participation of foreign investors in privatization activities and how to treat such issues as monopolies, concessions and state enterprises, as well as the protection and conservation of the environment and sustainable development.
6.4.9. Asia-Pacific Economic Cooperation (APEC) forum
In its 1996 report, the APEC Business Advisory Council (ABAC) emphasized that expanded public-private sector cooperation is needed to meet the region's urgent need to expand, coordinate and rationalize investment in infrastructure projects. In particular, it recommended that a series of infrastructure round tables should be held in interested APEC economies to examine the infrastructure needs of the host country, identify and recommend corrections to remove impediments to private-sector participation in developing new infrastructure, disseminate regional best practices and establish productive linkages between entities from both sectors that are able to meet particular infrastructure needs. Electricity demand in the APEC region is expected to increase by between 50 and 80 per cent over the period up to 20l0 and will require some $l.6 trillion in investment capital. The Second Meeting of APEC Energy Ministers, held in Edmonton, Canada, in August 1997 agreed that this capital could not be provided by APEC governments and multilateral financial institutions alone and that business sector participation was essential. The ministers emphasized that this required the establishment of a predictable and transparent institutional and regulatory framework.
6.5. The challenge of governance
Although the various declarations, directives and codes mentioned in the preceding paragraphs do not refer directly to privatization and restructuring in the utilities (with the exception of the Recommendation adopted by the Council of Europe), their provisions -- as regards workers' rights, the protection of investments, the need for transparency and accountability, as well as the emphasis placed on consultation of and participation by all stakeholders -- are clearly relevant to the concerns and interests of the social partners, as well as of consumers. Privatization and restructuring in the utilities sector are, in the final analysis, an expression of the increasing internationalization and globalization of the world economy, the governance of which transcends the sectoral level and requires a substantial degree of voluntary agreement. Hence the emphasis, reflected in the previous paragraphs, on the need for negotiation and participation, coupled with the adoption of certain "core" principles and texts.
Summary and suggested points for discussion
This report has identified a variety of forms of privatization and restructuring of the water, electricity and gas utilities and their impact on employment, working conditions and labour relations. One problem which has emerged from ILO research is the lack of a clear assessment worldwide of the benefits and costs of the various approaches. In addition, the budgetary implications of privatization do not seem to have taken into full consideration a variety of costs arising from, for example, the transition and monitoring process, negative environmental and health effects, unemployment, training and other compensatory measures, and losses for assets sold below market value. From the empirical evidence available on effectiveness and cost-efficiency it is still too early to draw firm conclusions as to whether public or private firms are more advantageous. Moreover, preferred options have often been for partnerships between the public and private sectors, rather than fully public or fully private utility enterprises. What does seem clear is that both private and public management models can be efficient and effective. There are examples of both privatized companies and traditional public companies which today are successfully competing internationally and expanding worldwide. A human resource management approach which attaches priority to employees achieving high levels of job satisfaction and realizing their full potential increasingly appears to be a key factor for enterprise modernization and successful restructuring, whether public or private.
As the report has shown, employment losses almost always accompany adjustment in the public utilities, under both privatization and restructuring schemes. In some instances, workforce reductions have been quite drastic and have consequently enlarged the existing pool of unemployed. To offset these effects, considerable efforts have been made to ease widespread redundancy with financial packages, early retirement, training and redeployment. These have often been the subject of negotiations and agreements with trade unions which, in many cases, have been involved in consultations when privatization and restructuring have had substantial labour implications.
A major issue is the transfer of former public employees to private sector utility companies. In some cases, agreements have provided for such workers to retain certain benefits. In other situations, the workers are virtually re-hired under private sector employment contracts. Modernization and restructuring of the utility companies have in many cases resulted in improved wage rates, working conditions and safety and health in exchange for more flexible work arrangements. However, certain forms of privatization, such as the contracting out of services, appear to engender more precarious employment conditions with lower wages and benefits, especially if there is an overall context of deregulation. Well-developed collective bargaining and mediation mechanisms have undoubtedly facilitated optimal "win-win" outcomes in the privatization process for both employers and workers. Yet there are reports that, in some instances, unionization and industrial relations have been weakened as a result of privatization and restructuring processes.
It is clear that workers, for the most part, have been informed about the privatization and restructuring processes and consulted on their labour and social effects. But a major question that has been raised is to what extent workers and the general public should be involved in consultations at the earliest stage on the ways of managing these processes. Trade unions have quite often resisted privatization in principle, but have later agreed to negotiate and even accept or buy shares in utility companies, once privatization has become inevitable. Certainly, public concern is being voiced on such issues as prices, quality of service and universal access following the privatization of utility operations. While downsizing may be accepted as inevitable for boosting productivity, the health and safety of workers may be at risk and the delivery of utility services jeopardized if the workforce becomes too "lean". At this point, trade-offs involving workforce reductions in return for efficient and affordable utilities could become untenable.
ILO research has pointed, firstly, to the importance of establishing a moderate pace of change in the privatization and restructuring process. This allows for consideration of all possible options by the actors concerned, for employment reductions to be more gradual, for measures to be put in place to mitigate possible negative effects and for monitoring and regulatory bodies to be established. Secondly, there does seem to be a considerable need to build avenues for social dialogue, at both the enterprise and more macro-levels, so that the stakeholders can debate and negotiate the development, implementation and monitoring of privatization and restructuring schemes. More particularly, dialogue between the social partners can contribute greatly to the success of privatization and restructuring processes, as workers and trade unions are also a source of knowledge and ideas on minimizing employment and social costs, improving quality of services, and increasing enterprise competitiveness. With the global expansion of multinational utility and multi-utility companies, developing social dialogue mechanisms in response to these developments seems to call for special attention, in so far as the utilities are matters of general interest.
This report and recent ILO research have affirmed the central role of the labour dimension and societal concerns in the privatization and restructuring of the water, electricity and gas public services. Whatever form privatization or restructuring takes, to be successful it must positively manage human resource development and ensure service delivery at levels which are affordable and as universal as possible, so as to ensure the health and well-being of domestic users and stimulate job creation through economic growth.
Suggested points for discussion
In the light of the foregoing report, the following points are proposed as a basis for discussion to enable the Meeting to develop and adopt conclusions on matters it considers important. The Meeting is free to modify the list as it sees fit.
1. ILO: Report of the Joint Meeting on Employment and Conditions of Work in Water, Gas and Electricity Supply Services, Geneva, 1987, para. 5, p. 26.
2. L. de Luca (ed.): Labour and social dimensions of privatization and restructuring (public utilities: water, gas, electricity), ILO, Geneva, 1998.
3. C. Duchemin: Aspects sociaux des privatisations et restructurations: le cas des services d'intérêt général, ILO, Geneva, 1998 (French only).
4. ILO: World Employment Report 1998-99, Geneva, 1998, in particular Chapters 2 and 4.
5. Human resource development in the public service in the context of structural adjustment and transition, Geneva, 1998, Introduction, p. l.
6. The ILO, standard setting and globalization, p. 65.
7. ILO: Mastering the challenge of globalization: Towards a trade union agenda, Bureau for Workers' Activities, 1998, p. 56.
8. Final report of the Joint Meeting on the Impact of Structural Adjustment in the Public Services (Efficiency, Quality Improvement and Working Conditions), Geneva, 24-30 May 1995, p. 20.
9. M. Bishop et al. (ed.): Privatization and economic performance, Oxford University Press, 1994, p. 8.
10. T. Fabre: "Chasseurs de corruption", in L'Expansion (Paris), No. 576, 25 June-8 July 1998, p. 106.
11. The World Bank Annual Report 1997 (The World Bank, Washington, DC, 1997) points out (p. 22): "While considerable progress was made over the past decade to incorporate the environmental dimensions of development into Bank work, less was done to incorporate the social dimension. This began to change in the early 1990s with the introduction of poverty assessments and with the development of methods and tools both to understand the needs of poor people and to spread the benefits of development more broadly."
12. op. cit., p. 30.
13. Text published in Official Journal (Luxembourg), No. L69, 9 Mar. 1998.
14. "Restructuring and the new role of trade unions in Central and Eastern European electric power industries", Haltern, Germany, 1-2 June 1996, ICEM Update (Brussels), No. 27, 4 June 1996.
15. Sections 2 (Protection of users' and consumers' rights) and 3 (Protection of employees' rights).
16. Council Directive 94/45/EC, 22 Sep. 1994, published in Official Journal (Luxembourg) No. L 254/64, 30 Sep. 1994.
17. Council Directive 77/187/EEC of 14 Feb. 1977 on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of businesses, published in Official Journal (Luxembourg), No. L61/26, 5 Mar. 1977.
18. Judgement of the Court of ll Mar. 1997 in Case C-13/95, in Official Journal (Luxembourg), No. C 131/1, 26 Apr. 1997 and Reports of cases before the Court of Justice and the Court of First Instance (Luxembourg), 1997-3, pp. 1-1260.
