What impact has privatization had on pay and employment?: A review of the UK experience

The features and objectives of privatization in the UK are examined. The centrality of labor management and industrial relations objectives to the program are outlined, with particular attention to the capacity of privatization to reduce political influences on pay determination and to encourage labor-shedding improvements in efficiency. The paper than considers the available evidence of the effects of privatization on pay and employment. It is found that pay levels have registered above-average increases since privatization. The evidence on employment reductions is more mixed. It is argued that greater product and labor market competition are necessary if the predicted effects of privatization are to be fully realized.