Is the Private Sector Really More Efficient than the Public? We Look at the Facts

Friday, May 16, 2014
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More myth-busting, and today it’s a big one: like it or not, private sector management of services is more efficient and less expensive than the public sector. This assumption is so widespread that even many critics of privatisation take it as given. But, a bit like with austerity, you need to look at the evidence, and that’s precisely what this briefing for EPSU, written by the Public Services International Research Unit, has set out to do.

Summarising the main findings from international studies across nine different sectors, the briefing argues that there is no empirical evidence that the private sector is intrinsically more efficient. The same results emerge consistently from sectors and services which are subject to outsourcing, such as waste management, and in sectors privatised by sale, such as telecoms.

After decades of rampant privatisations, there is now the data to compare efficiency, sector by sector, between the private and the public. The briefing is a convincing synthesis of a large number of academic studies, spanning nine sectors,  and concludes that most studies either show the public sector matching private sector efficiency or fail to deliver conclusive evidence that the private sector is more efficient.

Added to this, it points out how many balance sheets of privatisation use measures like costs cut or company profitability by which to judge  success, without taking into account the quality of services. Congress will be debating on Wednesday morning a resolution on quality public services in Europe, for which this briefing provides really excellent background.

You can read the full report on public vs private sector efficiency here, on the EPSU website.