Page 93 - Urban water supply handbook

IMPROVING URBAN WATER INFRASTRUCTURE THROUGH PUBLIC-PRIVATE PARTNERSHIPS

3.12 HISTORY, PLANNING, OUTSOURCING

management. As a result of the city’s partnership for water treatment, the city’s
rates will rise on a blended scale of only 8 percent over 4 years. 27

3.5 OBSTACLES TO PARTNERSHIPS

In spite of numerous successful public-private partnerships for water and waste-
water services, many cities choose to keep operations in-house. It is often difficult
to implement changes in municipal operations, especially when they affect people’s
livelihoods. As more cities gain positive experiences with public-private partner-
ships, however, many of these apprehensions may be overcome and residents,
elected officials, and employees will become more comfortable with the concept.

3.5.1 Employee Opposition

A major concern facing municipal officials when contracting services is opposi-
tion from public employees who fear loss of employment, lower wages, or
reduced safety standards. Given the labor intensity of many public services, some
cost savings are likely to accrue from reduced personnel costs. Increased produc-
tivity in water and wastewater plants can arise from more efficient use of advanced
technology and computerization that may necessitate fewer employees. While this
ultimately means that more work is accomplished with fewer employees, it does
not mean that current workers are readily dismissed.
Surveys of city officials confirm the existence of employee opposition to pri-
vatization. In a 1997 ICMA survey, opposition from line employees was the lead-
28
ing obstacle to privatization according to 63.5 percent of survey respondents. If
employees are unionized, the opposition to privatization is likely to be even more
intense.
Much research exists to suggest that there is little or no impact on employees
as a result of privatizing government services in general. In many cases, few lay-
offs occur and salaries and benefits are comparable to or better than previous
29
salaries and benefits. That information has not prevented misinformation from
injecting itself into debates over privatization.
There is little data from specific industries on the effects of privatization on
employees. For water and wastewater services, where technical capabilities are
important, keeping some or all of existing staff is often in the best interests of the
private firm. In most recent long-term contracts for water and wastewater services,
the current workforce is retained by the private firm because of the benefits of hav-
ing experienced employees. Also, massive reductions in the workforce can create
hostility and opposition in the community.
If fewer employees are needed to efficiently operate a water or wastewater
facility, many firms opt to reduce the workforce through attrition, which occurs

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