Privatization of Welfare Services: A Review of the Literature. Addressing Political Opposition


Some state and local governments wishing to privatize services have faced considerable political opposition from unions and advocacy groups. Public sector unions such as the American Federation of State, County, and Municipal Employees have been among the most determined foes of privatization. Concerns over job security have led these groups to publicize scandals and poor performance among contractors or to file suits challenging the authority of government agencies to contract out specific services (SEIU 1997). Meanwhile, organizations such as the Applied Research Center voice skepticism over the ability of private-sector firms to maximize value for shareholders and safeguard the public interest simultaneously (Berkowitz 2001).

To address this opposition, governments have implemented strategies for "workforce transition," including involving public employees in privatization planning, offering training in skills necessary for implementing privatization, and providing special benefits for workers displaced due to the privatization of services (GAO 1997c). In some localities, public employees have themselves been invited to vie for contracts against private companies (Sclar 2000).

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