In the context of the modern economic environment, the privatization of the public sector and its services is rather questionable. While some people are concerned that contracting out services is less safe for unionized public sector employees, from the economic point of view, it becomes a tangible solution. Arguably the most important advantage of contracting our services is the cost-efficiency (Bosanquet, 2018). Indeed, when hiring a new employee from a public sector, the process itself requires much effort and finance, as the stages of employment include recruitment, selection, and training of the potential employees. Meanwhile, non-public service contractors are more likely to enter the labor market with good qualifications, as the competition in the private sector is considerably higher. Hence, by saving money on employment, recruitment, and taxes, the public sector obtains an opportunity to save money in order to allocate it to more fundamental general needs such as education or infrastructure.
Saving money leads to another benefit of contracting out services, and it is the quality of work performed. It has long been known that healthy competition in the market contributes to increased product quality and innovation (Hatch, 2019). The budget allocated for public services, in most cases, cannot secure quality and efficiency for the community. The dilemma is that the improvement in the public sector can only be addressed through increasing tax rates, undermining the overall concept of the community’s well-being. Contracting out, on the other hand, contributes to producing quality products and services without altering taxation rates. Hence, taking the aspects of privatization into consideration, it may be concluded that contracting out has become not a choice but rather a necessity in the economic era of budget cuts and public service funding shortages.
References
Bosanquet, N. (2018). Is privatisation inevitable? In Privatisation and the welfare state (pp. 58-69). Routledge.
Hatch, J. (2019). Privatisation and the consumer. In Privatisation in the UK (pp. 59-72). Routledge.