The average person usually associates privatization with job loss, increased workload, lower salaries and overall poor working conditions. We cite the privatization of the banana industry. This contributed to a considerable decline in banana production and revenues. A poverty assessment in 2005/ 2006 indicated that the fall in banana earnings was the main cause and sustaining factor of poverty in Saint Lucia. The report went on to say that the falling (by almost half) banana earnings affected the farming sector, smaller farmers in particular. Furthermore, given the relationship between the industry and other sectors, the decline had a ripple effect on other areas of the economy, inducing poverty beyond the agricultural sector.
However, while the small farmers did not realize the proposed benefits of less government influence in the industry’s affairs, the marketing agency and its subsidiaries (shareholders include the government of the Windward Islands) reported profits in the available data for 2011 to 2015, though an overall decline was noted. Also of note, one of the subsidiaries produces bottled water and the financial gains by the government of Saint Lucia in this venture may provide the much-needed funds to operate the Water and Sewage Company, a statutory body, that provides pipe-borne water for private and commercial use.
Consider next, the St. Lucia Electricity Services Limited (LUCELEC). While it is true that there has been a considerable improvement in the quality of services, the company will waste no time in disconnecting delinquent customers. A 2017 World Bank document noted that “high electricity costs weaken growth in business and services, create hardship and burden private consumers, especially the poor, while price volatility discourages local investments”. The document further stated that “a 2010 survey of businesses indicates that over 55 per cent of the firms identified the high cost of electricity as a major constraint to doing business in Saint Lucia”.
While, some customers claim the company is heartless, others will cite this kind of behaviour as what the public sector lacks, that warrants the need for the privatization of public goods and services. Regrettably, customers will forgo other essential needs in order to pay their electricity bills and this may be one of the rare occasions where family members and others are able to cooperate and pool their financial resources to stay connected to the grid to power their electronic devices, among other things.
We can consider yet another practice: the outsourcing of services that many highlight to show the potential negative effects of privatization. This is becoming common practice in the hotel industry and other sectors of the economy. Outsourced services include security, maintenance and janitorial services. Those employed in the provision of these services complain of poor working conditions, substandard wages, high demands and high job insecurity.
Finally, consider the case with private health care services. This has created a two-tier healthcare system locking low-income earners out of essential services, especially when these are only available at the sole private hospital on the island. This brings us to the speculations that have surfaced regarding the privatization of the Owen King-EU hospital. This seems to have caused a wave of panic on the island, especially among the less fortunate without health insurance to cushion the increasing cost of health care services. But there are some considerations that both those for and against should ponder.
Supporters of the privatization of public goods indicate that it will boost efficiency, improve quality, reduce taxes, and shrink the size of governments. In fact, in the 1998/99 budget address, the government of Saint Lucia published the three priorities that guided its privatization agenda as follows: To withdraw from areas of commercial activity in which its presence is no longer needed, and which are better managed by private sector interests; to minimize the drain on the public purse created by inefficient state-owned enterprises; to allow for broad-based private investment and ownership in the financially viable assets of the state.
A research paper in the Harvard Business Review considered several perspectives on privatization of public goods and services and noted that “the issue is not simply whether ownership is private or public. Rather, the key question is, under what conditions will managers be more likely to act in the public’s interest.” It was further highlighted that a “profit seeking operation” may not cater for the disadvantaged populations and this would require the “reintroduction of government intervention”. The paper concluded with the following three salient points: Neither public nor private managers will always act in the best interests of their shareholders; privatization will be effective only if private managers have incentives to act in the public interest, which includes, but is not limited to, efficiency; profits and the public interest overlap best when the privatized service or asset is in a competitive market. It takes competition from other companies to discipline managerial behaviour.
When these conditions are not met, continued governmental involvement will likely be necessary. The simple transfer of ownership from public to private hands will not necessarily reduce the cost or enhance the quality of services. It is believed that these observations deserve the consideration of any well-intended person who wishes to explore the privatization of public goods and services as a means to better serve the general public.