Strikes in the Public Service

by | September 19, 2011

Collective bargaining is one of those topics that seems to divide the left and the right. However, while collective bargaining in the private sector is a political issue, collective bargaining in the public service should be apolitical.

To make clear the difference between unionization in the private and public sectors, consider what recently happened in the United States where General Motors and Chrysler went bankrupt in part because of the costs imposed by the unionized workforce. These two bankruptcies were tragedies but highlight how eventually excess labor costs can push a private sector company out of business. Governments, however, are not like companies and cannot therefore deal with employees in exactly the same way. It is much, much more difficult for countries to go bankrupt (as the current situation in Greece highlights).

Let’s consider how we ended up with unions and collective bargaining. Unions were originally formed in order to protect workers from abuse by employers. In the first half of the 20th century many large companies put profit before working conditions, fair pay and safety. Workers therefore formed unions in order to protect themselves from this abuse.

Today it is debatable whether unions have a role to play in Western societies because most countries have labor laws which give workers significant legal rights. In the public service, the case against unionization is even more dramatic since employees work, in effect, for the government; ie. the people. Strikes in the public sector are used like blackmail in order to force governments to increase pay or benefits without good economic reason. And because politicians worry more about getting re-elected rather than the long term fiscal health of their jurisdiction, they often give into the union demands. Furthermore, those who are hurt most by strikes, the voters, are not managers. And since public service workers work for the people, it can be argued that the public service workers need no protection against the usual issues (working conditions, fair pay and safety) since it is the government itself that determines minimum standards.

Let’s also consider another downside to having unions in the public sector, something that has become all to clear with the economic crisis in Greece: the high cost to the country. In Greece, the cost of the public sector was wholly unrelated the work performed and so drained the economy of resources that were needed in the private sector. Public sector wages and benefits pushed the country to the point of economic catastrophe. It is therefore clear that we need to keep public service costs in check and to make the public sector as efficient as the private sector. No one would argue against public sector workers being fairly remunerated but that remuneration must be determined on a competitive basis and not through blackmail.

Other countries in Europe are not far behind Greece. And other socialist countries outside Europe, like Canada and Australia, also need to consider carefully how much longer they are willing to risk economic failure because of costs which are too high in the public sector.

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