Opinion divided over effect on jobs

Date: 31/10/1996

By Michael Mann

MOST people associate the opening up of monolithic industrial sectors to the vagaries of the market-place with massive job losses.

But European policy-makers refute such ideas, pointing to the positive effects of liberalisation on new market entrants and downstream industries currently held back by the inflexibility of the established monopolies.

Even those who believe that the headlong rush towards liberalisation flies in the face of the priority the EU is giving to job creation cannot put their finger on any irrefutable statistical evidence to prove this.

Aware of the way the wind is blowing, the European Trade Union Confederation (ETUC) takes a pragmatic view of the future.

“We have never tried to run away from the notion of change. We are not into preserving jobs for jobs' sake. Workers obviously face change, but their interests must be taken into account, whether it be through redund-ancy, retraining or counselling, and policies must help people into new jobs,” said an ETUC official.

Trade unionists stress that if the impetus for such change is coming from the Union, it must also shoulder some of the responsibility for helping workers cope with potentially negative effects.

A number of relevant Union programmes are in place, but these are limited in scope compared with the potential extent of upheaval in the job market. A new report on the operation of Objective 4 of the structural funds (which provides for aid to help workers adapt to industrial change), due for adoption soon, will point to serious shortcomings in the system.

Those unhappy with the rush towards liberalisation point to the changes in the British telecommunications sector since arch-liberaliser Margaret Thatcher removed the state provider's monopoly privileges in the mid-Eighties.

In the five years to 1995, British Telecom staffing levels fell from 231,523 to 132,351. Its major competitor Mercury made a third of its staff redundant in 1995 as it assigned its non-core business to foreign operators.

BT believes a large proportion of the staff it shed have found jobs elsewhere in an expanding telecoms sector and related industries. But the UK's Communication Workers' Union claims just 30,000 alternative jobs have been created.

Hugues de Villèle, general secretary of the EU's Federation of Transport Workers Unions (FST), fears the Commission's recent White Paper on revitalising the Union's railways could have similar consequences for that sector.

He criticises Transport Commissioner Neil Kinnock and Social Affairs Commissioner Pádraig Flynn for allegedly failing to study closely the social consequences of this strategy.

Commission officials reject such accusations. “We held up an early draft of the telecoms liberalisation package for the very reason that we felt it did not address this issue sufficiently,” claimed one, adding that Flynn had persuaded his Commission colleagues to agree that future liberalisation papers would include provision for an economic and employment assessment of any proposed deregulation.

Commission officials believe the issue is not as black and white as it appears, insisting the introduction of greater competition does not simply result in job losses as firms shed excess fat.

They also stress that it is simplistic merely to count short-term job losses in the sector undergoing liberalisation. “The telecoms sector used to be very flabby, which made it expensive for other firms and probably stopped the creation of jobs downstream,” said a Commission official.

Europe's employers are in no doubt about the way policy should be moving. “To be efficient and competitive, companies need public services, such as transport, energy, postal and communications services, that are also efficient and competitive,” says François Perigot, president of the employers' federation UNICE.

But others take a decidely more pessimistic view of the possible social consequences of liberalisation. The European Centre for Enterprises with Public Participation (CEEP) stresses the importance of maintaining the “European social model”, and claims the Commission's “liberalisation and competition policy has sometimes seemed like a privatisation mission”.