Privatization of Welfare Services: A Review of the Literature. Flexibility


Another common motivation for contracting out public services is the potential for greater flexibility in private-sector organizations, both nonprofit and for-profit. Civil service regulations and collective bargaining agreements that often apply to government organizations, as well as other rules, are seen as inhibiting the ability of these organizations to provide services efficiently or to address necessary system changes with flexibility (Osborne and Gaebler 1992; Nightingale and Pindus 1997; Cohen 1999). Many opponents of privatization view this flexibility negatively, arguing that it circumvents necessary protections for citizens, public employees, and service recipients.

Government agencies can have difficulty hiring new employees, changing managers or staff, or cutting the workforce when the need for particular services changes suddenly. It also may be harder to reassign employees to new functions or to discipline or fire ineffective workers. The 1996 GAO report on child support enforcement found that state and contractor officials believed that contracting agencies benefited from more freedom in managing staff and gaining resources and from having better access to technology (GAO 1996). According to this perspective, government agencies, in effect, can "farm out" their work to private organizations through contracts and reap the advantages of the greater flexibility.

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