(e.g. British Airways), whilst others (e.g. in water supply) sought to sustain
cooperative relations with unions and the workforce through ‘partnership agree-
ments’ (O’Connell Davidson 1993 ; Pendleton 1997 ).
In the non-trading part of the public sector, the most important component of
privatization has been the contracting out or outsourcing of services; a process that
has left few countries untouched (Domberger 1998 ). In the UK, it was mandatory
in hospitals and local authorities to competitively tender for catering and cleaning
services, a process which placed considerable downward pressure on terms and
conditions of employment with especially detrimental eVects on the employment
conditions of women who tended to predominate in these services (Escott and
WhitWeld 1985 ). The process also encouraged the growth ofWxed-term employ-
ment contracts because of the time-limited nature of service contracts (Corby and
White 1999 : 120 ).
Another way in which governments tried to stimulate competition was via the
creation of internal markets which separated the purchasers of services from the
service providers. This was the approach adopted in the UK where the government
created an internal market for health care in the early 1990 s, a policy emulated by
other health services in countries such as Italy (Anessi-Pessina et al. 2004 ). While
a contrived form of competition, it encouraged managers to uproot traditional
patterns of HRM and experiment with changes in work organization, skill mix, and
working time (Bach 2004 ).
AdiVerent form of structural change occurred when governments created
separate ‘agencies,’ ministerial bodies managed under contractual arrangements,
but with greater autonomy over their Wnancial and HR management. These
arrangements were adopted in civil services in Australia, Denmark, Ireland, the
Netherlands, and Sweden. In the Dutch case, it was anticipated that by 2004
approximately 80 percent of civil servants would be working in departmental
agencies (OECD 1996 : 26 ; 2004 b). The UK government established around 200
civil service agencies in the late 1980 s. They were seen as analogous to private sector
subsidiaries and better able to deliver speciWc services than if they were part of
a larger, more integrated government department.
These new service units typically took on the employer role with a responsibility
for many of the policies and practices required to manage employees. This shift in
the level of responsibility for HRM had a signiWcant impact, but it is equally
apparent that the use made of these HR discretions remained constrained. In the
UK, the creation of agencies and the accompanying pay devolution led to the
break-up of national pay determination in the civil service and the development of
agency-based pay systems. This agency set-up also fragmented career pathways,
preventing the kind of seamless movement within and between departments
possible under a uniWed civil service.
More generally, the development of local HR practices in the public services was
quite limited (Kessler et al. 2000 ). Indeed, any local practices adopted often shared
hrm and the new public management 479