“Basic needs are increasingly becoming business affairs”

“Basic needs are increasingly becoming business affairs”

Interview taken from www.nachdenkseiten.de with Norbert Wohlfahrt*

The fact that neoliberalism is a perfidious societal ideology has long been proven by its practice. Not only did it persuade the poor and unemployed that they alone were to blame for their misery. It also succeeded in safeguarding that the true extent of social poverty has hardly ever become known to the public; that despite ever-rising expenses, the health system served fewer and fewer people and is more and more oriented towards yielding profits for a few. The fact that social work has eroded and hardly anybody does anything to stop it. It means that fundations have triggered off a veritable “re-feudalising boom” in our country and in the meantime investors have been targeting public education. Jens Wernicke, who has long since recognised the privatisation of basic needs, spoke with Norbert Wohlfahrt about the effects of the neoliberal social cuts.

Jens Berger

“Nachdenkseiten”: Mr Wohlfahrt, you have been investigating and publishing for years about Hartz IV, privatisation, the economisation of social work and other topics. You have criticised, among other things, that basic needs have increasingly become a commodity, with which people do business and seek to make a profit. What does that mean? What do you mean by that?

Norbert Wohlfahrt: Whether nursing, parenting or health care by doctors and hospitals: In most cases, the state or the social security system are responsible for the financing and comprehensive provision of these services. They, therefore, belong to services of general interest. As with medical care, in which the entrepreneurially active doctors want to make profit with the treatment of patients, there are now more and more private providers in the fields of nursing, hospitals and other social services – and the number of private providers is increasing – who aim at making a profit on these fields.
This development which can only be characterised as privatisation leads to the fact that the state or other funding authorities put great pressure on the providers of the service – i.e. charities and private service providers, which operate in favour of the common good and not for profit – to lower the costs of their performance and make it more efficient. They do that by making these operators compete with each other for services and costs, resulting, inter alia, in wage dumpings and successive drops in performance quality. If you like, a quasi-market is generated here on which the current providers must reorient their entire performance structure. Thus the associational welfare institutions become social enterprises that in competition with others must make their prices, provide quality and reduce costs. Therefore, in recent years the social sphere has become one of the key battle grounds resulting in the deterioration of employment conditions.

In the field of public services the state thus requires more and more ‘competition’, which leads to the disadvantage of existing quality standards and employment, do I understand this correctly? But why does the state act like that, what would  be the politicians’ interest in this kind of development?

First of all, we have to look at the service strategy of the European Commission. This provides social services as a business like any other and, therefore, as an area in which the growth of economies, measured in money, is promoted. The essential services of general interest are, however, financed by the cities and municipalities that are chronically underfunded due to the fiscal policy. At the same time growing social expenditure is putting local budgets increasingly under pressure. And they react – not only in the social sphere – with outsourcing and privatisation, but also by attempting to cut costs wherever possible. The deterioration of the quality and labour standards must also be understood as a consequence of tax policy, which on the one hand discharges companies and increasingly dries out municipal budgets on the other.

And the impact of this development in concrete terms? What do you observe about day care centres, care for the elderly, health care, youth welfare, work in prisons and in community work?

The entire social sector is now dominated by the fact that more flexibility in employment must be produced in order to limit costs. This means first of all, that in the past the more or less applicable uniform tariff in this area – the federal employees’ tariff – has been replaced by a variety of tariff deteriorations. Currently, there are about 1,400 such tariffs in the social field, which do not result in paying higher wages and salaries. At the same time, a large part of the workforce is working in jobs without wage agreement. The temporary work contracts for new hires is no longer an exception but long established practice by now. Part-time work, which is not wanted but enforced, applies to a large part of the workforce. And subcontracted work is now already used in social services. In addition, the staffing levels in nursing homes, day care centres and other areas of social services are now so low that more and more employees complain about burnout syndromes and do not know how to cope with the amount of their everyday tasks. A significant proportion of employees in the social sector is now in working conditions that do neither guarantee an income above the basic security benefit, nor can a pension system be funded that would allow a retirement without government support.

Could you please specify one of these examples? What effects do increasing competition and quasi-market concretely have or change in practice?

In the day-care centres, 47 per cent of employees work with a stint of less than 32 hours per week, in nursing homes a little more staff work 40 per cent with a stint of more than 50 per cent of regular working hours, an additional 16 per cent with less than 50 per cent of regular working hours. A quarter of the nursery teachers is employed in a non-tariff-bound employment. Special arrangements allow responsible authorities to ensure the operational efficiency and competitiveness with interventions in the total volume of payment of up to 6 per cent. To ward off temporary emergencies, personnel costs may therefore, for example, be lowered and the payment of parts of the wages up to a maximum of 10 per cent of annual salary be suspended for up to 12 months.
Charities who traditionally see themselves as non-profit providers, have now founded subsidiaries in the field of elderly care, in which the staff is paid less than in-house. The transfer of services and facilities in so-called non-profit limited liability companies is now comprehensively enforced for all charities, because the typical element of non-profit organisations, i.e. volunteering heads in associations, can no longer oversee the business policy of enterprises, let alone can control it. This competition leads to an increased weakening of volunteering in non-profit associations by making former parts of the institutions independent and equipping them with their own professional management. The volunteers acting in the boards of non-profit organisations are thus increasingly becoming a nuisance and the conflicts between volunteers and professionals in the non-profit organisations have taken on a new quality.
Moreover, forms of payment are increasing that can only be described as precarious, i.e. making life impossible without state support. An example of this are the so-called “Plus-X”-contracts. The employees are guaranteed  security only on a base salary with a minimum number of working hours. A widespread model are 20 hours “Plus X”. The employees do no longer know at the beginning of the month, what they will get as a salary by the end. And the salary depends on factors that cannot be influenced by the employees. These include the fluctuating workload of the institution, but also the volume of work that is assigned to the individual employees. By making payments that significantly distinguish in their sum, the employee cannot rely on anything, which affects their life situation and life planning massively. Hence some employees – depending on what they earn “Plus X” – may go home with a secured income of only 500 euro.
By way of this payment system, they are susceptible to any kind of blackmail by the enterprise, without obtaining any social protection at the same time. If that goes together with the fact that they have to pay their social security  themselves, as is the case in solo self-employment, biographies are created, which can only be described as a difficult and unsafe in all respects.

And all this, these serious mistakes – i.e. all that is simply “overlooked” by politics? How is that possible?

These developments are not a slip, they are politically desired and indeed commonly known in their impact. They are part of a social policy that focuses primarily on the integration into the labour market and for this purpose the – as the saying goes – “empowerment by self-responsibility” is propagated. On the one hand politics want more jobs for women, as well, which is why the expansion of child care is being enforced; but at the same time they want to rope in the family and volunteers – such as in nursing, in the integration assistance for people with disabilities and so on – for social tasks. The result of this is that there are fewer and fewer safe and adequately paid jobs and precarious employment is on the rise.
In this way, a new poverty policy, which can only be described as perverse, has developed: On the one hand, there is a rise in the number of those who come to the so-called food banks as persons seeking help, on the other side volunteers are enlisted who then have to organise the supply of the needy. In some areas of social services, the transition between paid work and voluntary work has already become fluent.
With the just ended pay round talks for the day care centres and social workers we could clearly observe how consistently politicians at the level of German “Länder” and communes define an increase of personnel expenses in this area as an “unbearable burden” and drive this development even further. The fact that there is no money for the so-called “social affairs” has not grown on trees but is a result of political decisions that have brought the public sector diminishing budgets and are now confronting our politicians with constraints and the alleged resulting lack of alternatives.

And if this trend continues: Where does it take us? Will the so-called charities of the future probably be commercial providers all of them, with only outwardly different company signs? Will the previous facilities soon perhaps be simply bought up by profiteers, as has already been the case with hospitals and in the housing sector for some time?

The differences between non-profit and profit-oriented providers have already been watered down for some time and this trend will continue. At the same time, more and more private providers discover the health and social market as a business area in which they can make money. In many areas, the non-profit providers are already  the minority. Social business groups with economic orientation are emerging wanting to make money.
This is first and foremost done in the field of insurance-funded services, where the rising costs are presently borne by the workers alone. The nursing care insurance, for example, has been designed from the outset so that it will be paid exclusively by the workers – quite contrary to the talk of the so-called insurance based on the principle of solidarity. And rising insurance premiums of insurance companies must now be compensated for by the workers alone. But the range of municipally-funded services, i.e. primarily the youth and social welfare, is characterised by growing underfunding, and the elements of competition in this area will increase in the future. The European public procurement law is preparing the corresponding development, as it does in other areas as well.
Finally, it is also to be feared that with the enforcement of more market, the client or customer as an otherwise solvent consumer will increasingly be targeted by the service provider. In health care co-payments and so-called individual health services, which the patients pay out of their own pockets, have already become part of the business policy. And also in the fields of care and pensions, the quality of performance is determined by what I can afford on private co-payments at all. In other words, the gap between good-quality care services and primary health care on the basis of minimum standards continues to widen and expand the differences between rich and poor in society into the area of social services.
Another observable trend is that private capital replaces government funding to finance social services. This investment must of course shed a return payment which ultimately the state must bear. In order to make it attractive, private capital investments are linked with total returns, which must be achieved in the projects that are financed in this way. This development originating in America and England is also being discussed in Germany under the name “social impact bond” and is already observed attentively by politics.

“Social impact bond”? Is this a kind of public-private partnership? What do we have to expect if this kind of development is enforced – and why do you consider this development a problem?

Indeed, we can call it a kind of public-private partnership. A funder expects a return on his investment – which in view of the risks fluctuates between 5 and 12 per cent in the cases observed by me. The state, that  funds the entire thing, will pay this return if pre-scheduled effects occur, so for example, a predetermined rate of offenders were sent to labour or children were spared home care. The effects to be achieved are determined in advance and reviewed externally. That way the state uses private capital to finance services and is thus – the more extensive this capital is involved in the social sector –  more and more dependent on these loans and therefore on the favour and the interests of investors.
The entire system of publicly funded general interest is becoming a field of social investment, in which social action is understood as something that provides a financial gain, which can be determined and measured in monetary terms. The social impact bond is a good example of the triumph of economists; their principle of efficiency penetrates even into areas that actually completely evade economic assessment procedures. The credo of the founder of the Bertelsmann Foundation that everything is measurable and can be measured, will now also apply to those areas that do not carry out productive work. A development that other areas including education will soon experience.

How can we fight against this? What can employees do? And what would be the role of trade unions in this case?

The vast proportion of workers in the social sector are women, who so far have a very low level of unionising. This is also related to the charitable tradition of social services in Germany, where with the “Bundesangestelltentarifvertrag” (Federal Employees’ Collective Agreement) as a collective tariff, which all branches of the charities have more or less accepted, little reason was given for workers to unionise. However, this has proven to be a disaster of employment policy in the current situation: a fragmented employers’ side is confronted with an only slightly unionised and not uniformly acting employees’ side.
Therefore, defensive measures must currently be directed toward containing the regulatory chaos in this sector. For this purpose, for example, sectoral agreements with a generally binding declaration can contribute, which apply to all workers in an industry and help to restrict competition in order to lower personnel costs. At the same time union strategies must be aimed at actively organising more members. It is, therefore, of particular disadvantage that the churches and ecclesial associations which are still employing the overwhelming number of staff in the social sector, may nullify the right to strike with the ecclesiastical labour law, because they hold tight to the concept of an alleged “service community” which has long been outdated by competition. Unfortunately, the legislature does not intend to take into account contemporary requirements. All the more important is the increase in union density in church and non-church staff to exert more pressure in this area.

Thank you for this interview.     •

*    Norbert Wohlfahrt, born in 1952, is a professor for administration and organisation at the protestant university of Applied Sciences Rhineland-Westphalia-Lippe in Bochum, Germany. He is co-editor of a compendium “Kommunale Sozialpolitik” (Municipal Social Policy) and co-author of some treatises on critique of modern theories of justice, on critique of social policy on services and on the end of local autonomy.

Source: www.nachdenkseiten.de of 21/12/2015

(Translation Current Concerns)

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