Over the last few decades, the United States and other European economies have advanced economic approaches to solving the problem of unemployment through creation of more employment opportunities in the leading industries in order to absorb the unemployed. The United States in particular has opted for economic liberalization through privatization of leading public services, whose performances are below the expectation. While the process of evaluating the success or failures of public institutions has over-time focused on efficiency and prices, little attention has been given to the effects and impact of privatization and liberalization on employment, working condition, and labor market relations. This paper aims at addressing the gap by focusing on how privatization of public services has resulted into labor decentralization, reduced pressure on industrial wages, increased workload, improve labor productivity, and decrease in the employment levels.
Although privatization of public institutions is effective in increasing the level of production and the competitiveness of the firm, government statistics show privatizing public institutions and services adversely affect other leading sectors of the economic. For instance, the most affected sector is the employment and labor department. After privatization of public services, the entire labor industry suffers from limited powers of the labor unions, exploitation, and less creation of employment opportunities. This explained by the fact that private ownership of firms, unlike public owned resources, are profit driven. Therefore, with the change of ownership and legislations, private service sector often suffer from resource maximization at the expense of the labor force welfare.