Don’t expect the private sector to build a more inclusive society

The key question after the pandemic is whether governments continue to work with the private sector in the same way and to the same extent as they did before

An inclusive society depends on recognising the multiple pressures that face low-paid workers and the unemployed.

An inclusive society depends on recognising the multiple pressures that face low-paid workers and the unemployed.

 

The Government’s focus on stopping investor funds from buying up housing estates could be viewed as simply a knee -jerk political response to fierce criticism from the public.

A more constructive way to look at the move is to ask if it signals a shift in Government thinking about the merits of relying on the private sector to fund and provide public goods – from basic services to essential infrastructure projects.

Government intervention in economies and public health systems has escalated worldwide during the pandemic, with the United States under President Joe Biden currently leading the way with a $1.9 trillion stimulus package.

This global trend has, in turn, raised critical questions about how public services can best be designed and delivered in the future. The key question is whether – after a period when the public good has been of paramount concern – should governments continue to work with the private sector in the same way and to the same extent as they did before the pandemic?

In other words, will they continue to subcontract the delivery of public services to the private sector and employ consulting firms, especially the well-known international ones, for strategic analysis and the development of government programmes and policies?

Reliance on the private sector reflects an ideological approach by the Government to both the execution by the State of its obligations to its citizens and also the question of who is best-placed to counsel the State about the substance of these obligations.

Criticism of subcontracting the provision of State services and the influence of consulting firms is nothing new, but it has come into sharper focus due to both the economic fallout from the pandemic and the extent to which the pandemic highlighted the State’s reliance on low-paid workers.

The Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar, has acknowledged as much. He has requested a study on the living wage from the Low Pay Commission and recently remarked: “One of the legacies of the pandemic must be a more inclusive society that rewards work and enterprise better. That means better terms and conditions for lower-paid workers. Moving to a living wage is an important part of this.”

Inclusive society

It is reasonable to assume that private sector firms working for the State are motivated by profit and not necessarily concerned about an inclusive society of sort Varadkar seeks, whether in relation to their service users or to their employees.

Instead, they are focused on achieving the terms of their contract with the State in order to be paid.

The evidence for questioning the efficacy of using the private sector is plentiful, from the disaster of security at the 2012 London Olympics (the military had to step in) to the delays and pile-up of new invoices from contractors involved in the construction of the children’s hospital. The current controversy over the awarding of the contract to provide local employment services also highlights the tension between the aspiration for a more inclusive society and relying on private companies to deliver public services.

The current contracts for delivering the service will all expire at the end of the year. Minister for Employment Affairs and Social Protection Heather Humphreys has cited legal advice that the existing arrangement breaches EU procurement rules, which necessitate a competitive tendering process.

She has also argued for a new funding approach that is less burdensome for her department and the service provider. The recommended alternative is a payment for each person referred to the service – a pay-per-placement model that seems more akin to sales-oriented targets.

At present, many services are delivered by local development companies, known as local employment services, community partnerships or rural social schemes.

Humphreys has tried to allay anxiety among these existing community-based service providers, praising their work and telling them they need not fear competition.

‘Cost-met’ vs ‘cost-bid’

On the other hand, the new procurement and funding rules seem to favour private companies experienced in delivering large-scale, rather than localised, job-placement services, as has been the practice in the UK, for example.

Siptu has called on the Government to stick to its current model, which allows for localised delivery of services and prioritises a “cost-met” model rather than a “cost-bid” approach that prioritises saving money.

The challenge for community-based providers is to frame their contribution to supporting labour force participation in a language the procurement process recognises – measures like price, cost, price/quality ratio, or quality only when the cost is fixed.

But how do you justify service quality when much of your “value” as an organisation relates to local resident trust in your services and the relationships cultivated as part of service delivery?

I have witnessed first-hand in the UK how private operators, fixated on cost/reward, drive targets in service delivery, ignoring valid reasons (eg hospital visits or even job interviews) for missing appointments with their staff, much less individual aspirations and concerns.

The objective is to place the jobless in a job, regardless of quality and feasibility for the individual – who may lack options for transport, childcare and hours and may also be facing multiple challenges, including adequate housing and mental health issues.

An inclusive society depends on recognising the multiple pressures that face low-paid workers and the unemployed. If the Government is serious about this aim, then it has to consider who will help alleviate these pressures and more specifically, how the motives, local networks and reputation of service providers help achieve the desired targets.

Shana Cohen is director of Tasc, the think tank for social change

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