Introduction

The purpose of this chapter is to explore the impact of the Global Financial Crisis (GFC) and austerity on collective bargaining and wage outcomes internationally. It takes as the starting point for its analysis the argument advanced in Chapter 1 that the current wave of austerity policies stems from a neoliberal economic consensus that has pervaded developed economies and emphasizes free markets, the removal of rigidities to capital and shrinking the state. That is a philosophy that in policy terms is the antithesis of one supportive of trade unions and collective bargaining, which are themselves under this ideology seen as impediments to markets and economic growth (Harvey, 2007). The chapter therefore adopts a perspective that sees the GFC and austerity as providing a convenient point from which to further consolidate neoliberalism's hold on society (McCann, 2013) and simultaneously undermine one of the chief forms of resistance – trade unions and collective bargaining.

The first part of the chapter focuses attention on exploring trends in collective bargaining in the EU and North America (US and Canada) in the post-GFC period. In doing so, it identifies a common trajectory in nation-state policies that encompasses a shift towards identifying the GFC as a public debt crisis; the blaming of trade unions and their members (in particular public sector workers) for the crisis; and the introduction of reforms to collective bargaining and union security designed to reinforce deflationary austerity policies. The chapter's second part then examines trends in wage growth and equality since 2008 and discusses the factors influencing them and the extent to which they can be viewed as a product of the neoliberal-informed economic policies and reforms adopted in response to the crisis.

Changes to collective bargaining in the EU

Institutional context of collective bargaining in the EU under austerity

Since 2000 there have been significant social, economic and political policy shifts that have fundamentally challenged the status of collective bargaining in the EU. Policies associated with a neoliberal agenda that view unions and collective bargaining as sources of rigidities in the market have been central to this change as the EU has focused on the neoliberal free market agenda of labour-market flexibility and downward pressure on terms and conditions to sustain economic growth (Waddington, Muller and Vandaele, 2019). This process of change received support from EU enlargement and the move towards economic and monetary union (EMU).

Introduction

This chapter examines restructuring in the public services as a policy response to fiscal consolidation pressures. More specifically, it describes restructuring efforts aimed at rationalization and efficiency gains at several levels, including national, organizational, workgroup and job. The case study of Fire and Rescue Services in Scotland illustrates the manifestations of work restructuring at different levels of analysis, and potential consequences for individual experiences of work.

As detailed in Chapter 1, the transformation of the global financial crisis (GFC) into a sovereign debt crisis put public budgets under strain and public expenditure in the spotlight in a significant share of Organisation for Economic Co-operation and Development (OECD) nations. Contraction of public expenditure through cuts and restructuring of public services formed part of the main policy response. Considering the labour-intensive nature of service provision, savings in public sector workforce compensation formed one of the main foci (Glassner and Watt, 2010; Grimshaw et al, 2012), either through reductions in workforce size or through direct decreases in remuneration and benefits (OECD, 2012, p 23).

The combined pressures of identifying parts of the public services that could be (further) cut in a context of increased demand for public services in times of recession, such as for social security and education, arguably further fuelled fiscal retrenchment measures that sought efficiency gains under the banner of ‘more with less’ (Vaughan-Whitehead, 2013, pp 8, 36; Eurofound, 2015, pp 5–6, 60). As the OECD (2011a, p 9) put it: ‘To avoid an excessive curtailing of public services, the state needs to be streamlined and made more efficient.’ Consequently, various rationalization efforts involving a restructuring of public services from national level down to the job or workgroup level could be observed as policy responses across Europe. Efficiency gains and cost reductions were key drivers of such restructuring measures.

The focus of this chapter is restructuring as a means of addressing the ‘labour problem’ of how to enhance efficiency in the public sector (Worrall et al, 2010). It begins by identifying multiple levels where restructuring has occurred, and an analytical framework for the case of the Scottish Fire and Rescue Service.

Introduction

A decade after the ‘global’ financial crisis, austerity is still being debated in relation both to post-crisis policy orientations and to longer-term trends since the 1970s (Dunn, 2014; McBride and Baines, 2014; Whiteside, 2018a). It is clear from the significant body of scholarship focusing on Western ‘worlds of welfare capitalism’ (Esping-Andersen, 1990) that austerity – in the sense of policies that constrain or reduce public spending on social welfare; (re)privatize or (re)commodify welfare state functions, public goods and public assets (including infrastructure) and seek to shrink the ‘social state’ (Peck, 2013) – is connected both to state responses to the 2008 financial crisis and to longer-run processes and mechanisms. These include capitalist restructuring associated with neoliberalization and with the rise of New Public Management (NPM) as a vehicle for redrawing the boundaries between state and market. NPM refers to an ideology and policy framework for the management of public finances and the public sector that seeks to embed a managerialist model ‘characterized by competitive tendering, strict adherence to legalistic contracts and performance indicators, private-sector business practices, short-term funding and continued calls for efficiency, “more for less”, value for money and cost savings’ (Cunningham et al, 2017, pp 370–1).

As we argue in this chapter, however, context-specific and relational understandings of austerity and the complex policy mobilities (McCann and Ward, 2012) of NPM require critical attention to how processes play out in particular contexts (Pike et al, 2018). There are common trends, but unevenness also exists at the national and sub-national levels (Baines and Cunningham, 2015). Moreover, the policy diffusion of NPM also goes beyond European and Anglo-American welfare states and – as in countries like Canada and Australia that did not suffer financial crises – has been a convenient driver of reform. This chapter contributes to the literatures on austerity and NPM by comparing two such contexts, focusing on sub-national scales to examine the social care sector in Vancouver, British Columbia (Canada) and Shanghai (China). It does so by using the concept of social infrastructure to connect state-led marketization and outsourcing in the eldercare sector with, on the one hand, the influence of NPM and, on the other, the financialization that has accelerated in the past two decades.

Clarke (2017, p 23) argues that, rather than a wholly new project, austerity is ‘assembled anew in specific times and places, but in ways that draw on or at least try to mobilize – older stocks of knowledge and sentiment’. Privatization is one of these older stocks of knowledge and sentiment that have yet to be wholly actualized in most developed countries (Starr, 1987). Clarke (2017, p 26) argues further that it is helpful to think about the present as ‘the accumulation of failure: failed, stalled, or incomplete hegemonic projects that try to combine economic, social, and political restructuring with the securing of popular consent to that project’. Privatization can be viewed as an incomplete hegemonic project, and a central aspect of neoliberalism that austerity has revisited with enthusiasm, once again trying to win popular consent to reduce and remove public entitlements and services. Although little evidence has been produced to back the claim, neoliberals have long argued that privatization provides cost savings, efficiency and greater accountability through increased competition and consumer choice (Yarrow, 1986; Kamerman and Kahn, 2014). These arguments have resurfaced boldly in the post-2008 global financial crisis (GFC) and current iteration of austerity.

Although privatization is often thought of as a singular phenomenon, this chapter will identify seven forms of overlapping and interwoven privatization. In the current era of austerity, privatization has been able to extend its reach through these integrated processes and, in some cases, operate almost by stealth as an overarching ideological force that legitimizes private market relations in places where it once would have been thought to be contrary to a public sector ethic of entitlement and equity. This is a growing dynamic across many public and non-profit/voluntary services and organizations. Services and assets are privatized in their entirety, as well as piece by piece through the contracting out of various aspects of the organization such as human resources management, cleaning, security, management itself, specialists, consultants and the use of temporary workers hired through for-profit agencies. As Armstrong et al (1997) argued earlier in the era of neoliberalism, among political economists, private and public are increasingly not viewed as ‘dichotomous, readily separable entities.