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JUHANI ARTTO
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Trade Union News from Finland
A new study questions benefits of outsourcing of public services

Helsinki (17.12.2012 – Juhani Artto) In the 2000s, the debate on the role of public services in social and health care has been continuous. During the months preceding the municipal elections, held at the end of October, this issue was at the fore of public debate.

Those who favour outsourcing have proceeded gradually but in recent years there has also been numerous instances of a reversal of this policy. In 2010 less than a quarter of all social and health care services were provided by private providers.

Around 15 per cent of the Finnish workforce i.e. more than 430,000 people work in social and health care jobs. Some 330,000 of these are employed by public sector employers, and over 100,000 by private organizations. Social services have been outsourced somewhat more than health care services. By 2020, the number of social and health care employees is expected to increase by 50,000, according to one forecast.

There are no explicit findings on questions concerning cost benefits or deficits as a result of outsourcing. The same generalization may be made concerning how the quality of services has changed when outsourcing is introduced. These conclusions are once again confirmed in a comprehensive study, published in October by the common body Fipsu, made up of nine public sector unions
.

“Often savings and increased productivity have been reached at the expense of the personnel”, says Päivikki Kumpulainen, one of the study’s two authors, in Motiivi, the magazine of the largest public sector union JHL. Nowadays employers in Finland (like elsewhere) in connection with outsourcing, make use of the so called “collective agreement shopping” approach, whereby the collective agreement of the new service provider is not as good for employees as the old one.

The study indicates that in many cases the decision to outsource public services has been motivated, at least partly, by political or ideological factors. This also makes it more difficult to compare the benefits and drawbacks of alternative solutions (public versus private provision of services).

“We were surprised when making the study that employer representatives who had made outsourcing decisions were reluctant to tell us what kind of savings or quality changes the outsourcing had brought”, Kumpulainen says in Motiivi.

The English language summary of the study can be found here
 (a 4-page docx-file).