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Effect of Managerialism and Marketization in Australian Public Sector

Updated on October 9, 2014


In accordance to the Astralian National Commission on Labor, (ANCL) industrial relations influences not just the interests of two main participants, that is, management and workforce but also social, and economic objectives of which a particular state addresses itself. Regulation of these relations is a role that the state is better placed to perform. In essence, Industrial relations incorporates all such aspects that affect the behavior of employees in workplaces. It purposes to study the function of employers and worker’s union, shop stewards, federation officials, mediators, industrial relation officers, judges of labor officials, tribunal and so on.

Since the Australian federal election was conducted in 2004, new policies related to industrial relations have been incorporated. This can be depicted by the government of Howard in being involved in the states industrial relations in its public sector. In essence there has been a clear portrayal of paradoxes and essential shifts in the aspect of industrial relations in Australia at present.

The Work Choices Act, which was designed by the Howard government, was meant to improve employment levels and national economic development by devising new policies. These new policies were meant to curb unfair dismissal of workers for organisations under particular size, doing away with the “no disadvantage test” which ensured that employees were not disadvantaged by alteration in the legislation and enhancing individual efficiency. It also required employees to surrender their endorsed agreements with the workplace authority instead of first passing through the Australian Commission of industrial relations. This act also apparently compromised the ability of employees to organising strike, requiring employees instead to bargain for the conditions that were previously guaranteed in the collectivised representation and also radically restricting the activities of trade unions and worksite recruitment (Arthur et al, 2005, 787).

The transition of industrial practices and ideals have transformed from conventional liberalism where employee and employer’s competing goals portrayed in trade unions and other agencies are incorporated to the aspect of neo-liberalism. This is where institutions are focused on achieving marketing efficiency (marketization) and where managerialism has been the focus with little space for other objectives. This has further led to the emergency of such factors as the “free market” and where the activities of tribunals and unions are increasingly being curtailed by the government with regard to regulation of the worker’s wages and the working conditions. The governments of Australia in particular have been active in promoting the aspect of “free market” and managerialism policies in public instutions (Head and Bell, 1994, p. 21).

There has also a situation where the common Australian government as tended to centralize power in orders to curb the states authority on management of industrial relations. The federal government intends to do so by incorporating unfriendly corporate laws, which in essence were extracted from conventional laws. Another shift that can be seen in the present industrial relations in Australia is the national conciliation system that is meant to increase the working efficiency in the public sector. Since Australia has all along been considered as a social laboratory, the enacting of arbitrary laws that subjugates the rights f workers does not align with similar policies in other countries. The purpose of this paper is to analyze how the new work policies have affected employees and the state in general. The first part of the paper is the background of these workplace changes while the second part details the impact of these to employees and the state as an employer.

Background to changes in Workplace policies

In recent times, the approach in managerialism and marketization has been introduced in public institutions in Australia. These approaches are now dominant in public work demonstration and management systems. At a macro level, the managerialist approach has comprised seven main changes in the way the public sector operates (Hood, 1991:4-5). In addition to becoming performance focused, managers are now given more powers to perform their work, determine proper quality standards for services and to come up with appropriate performance assessment tools to control the performance and workers. Privatization and corporatization has also been identified as a trend that has come along with the desegregation of departments in the public sector. The government has seemed to lean towards tendering and contracts in offering public services for increasing competition and cost reduction. The most conspicuous of these is the requirement of accountability on the part of employees (Hood, 1991, 169).

Marketization and managerialism has instilled new values and expectations on management of public administration that drifts widely from the traditional administration system. For instance, though managers in public institutions had a mandate to undertake internal controls, there were some aspects, which could they could not be undertaken. A good case is about controlling the worker’s performance. The extent of such monitoring stipulated at present was not the same during earlier times (Hughes, 1992:292).

With regard to marketization, Australia has since 1980 instituted public policies which have caused some irreversible changes in an attempt to align themselves with the changing market structure. The assumption in marketization and managerialism policies is to raise performance and efficiency in public institutions by using the same instruments employed by private organizations in creating a competitive market environment. Marketization and managerialism in Australia’s public sector can be manifested through outsourcing, using contractors, the principal of user pay, corporatization and so on. They are also depicted through market mechanisms, and increased advocacy, reforming and restructuring of public corporations including statutory resource management and use of utilities. It has also related to application of managerial practices in organizations of the public sector in relation to resource and environment utilization (Bell, 1997, 234).

Effect of Managerialism and Marketization

Various Studies have vividly indicated that the new work regulations have had a negative impact on employees (Ashburner, Ferlie, Fitzgerald & Pettigrew, 1996). Managerialism is particularly a situation where the public sector employs the management instruments from the private sector in its operation and management systems. This aspect can be depicted in various federal and state public services. As Kluvers, (2000) notes, Managerialism and marketization have resulted into the introduction of performance appraisals and indicators in many public service institutions. In a study to find out the benefit of managerialism and marketization in local governments, the author noted that the new policies and instruments had minimal success with regard to decision-making and allocation of resources. This was more of attributed to the fact that the institutional management had to dominate the inception, implementation and development of these policies and technologies (P27). The incorporation of managerialism and marketization in the public service sector was chiefly to raise managerial control in public institutions and also to realize government objectives which is to reduce operation cost as well as improving efficiency (Kluvers, 2000, 45).

Ball and Gewirtz (2000) observes that the market revolution have introduced reforms that have brought with it negative ramification to workers, organizations and the state as an employer (253). More spectacular is the change in work discourses from the aspect of “welfarism” with the ethos of the public service and which were centered on collectivism and commitment to social justice, equity and care to novel managerial systems that are focused on client ethos, emphasis in competition, efficiency, individual as opposed to collective relations and cost effectiveness (256).

This notion is supported by Robertson (2000) who also argues that there has been a significant impact on work values owing to the shift of cultural values from procedural to market establishment and from collectivism to individual relations. The new policies have ultimately brought with it new objectives and expected outcomes and new organizational culture including: performance evaluations, organizational planning as well as new systems of fiscal accountability. Apparently, specific corporate trends can be identified in this new system. These include the right and choice of workers, effectiveness of an organization, employee accountability and competencies and raised performance standards (Humes, 2000, 37).

Ball and Gewirtz articulates that the implication of policy changes as in the form of managerialism and marketizaion has had an effect not only to employees but also to the management. Under managerialism system, the managers have been given more authority of control and evaluate the worker’s performance to ensure that they adhere to the regulations and improve on their productivity. This means that employees are barely involved in management and decision making processes. Under this system, it has become harder to realize cooperation between the workers and the managers. If employees are involved in decision-making processes, then they will feel more valued even if their contribution is not implemented (266).

According to Solondz (1995), managerialism and marketization has caused psychological effects to many employees including but not limited to job security, reduced morale and effect on their career and professional development (219). Robertson (1991) affirms that, owing to introduction of managerialism and marketization in public institutions, there had been an increased competitiveness in recognition and resources in various institutions and work departments where employees are concerned on politicking and career advancement (129). In support of this assumption, Mentor and Woods (1997) (136) postulate that many employees have been burdened with massive workload, owing to more demand in work performance, ambivalence, high stress level, and little or no time for their own reflection. Employees in the public sector are surely reeling from the impact of reform policies that were according to Smyth, (2001) poorly conceptualized and which have actually effected on how they work. Smyth goes on to say that managerialism and marketization have led to culture corrosion, especially with the change of collectivism to individualism in work places. Another area on how employees have been affected is in the sense that the management have put more emphasis on pursuing corporate visions at the expense of professional and social values (32). This according to Smyth has led to the drifting of trust between employees and managers (2000). In support of these sentiments, Girouz (2000) explains that the new corporate policies have in many instances worked against social values, and development of democratic identities, public spheres and relations (85). This has subsequently resulted into decrease of critical sensibility (127).

According to Ferlie et al, (1996) the impact of managerialism and marketization in public institutions could be felt in agendas such as quality initiatives as well as other HR programs in these institutions. The requirement of new quality initiatives according to some researchers was a political ploy to reduce the cost of goods and service production in the public institutions. This has ultimately resulted into employees having to do much work with less reward (Pollitt and Bouckaert, 1995, 381). As can be depicted in Australian higher learning institutions and health institutions. The new policies (such as quality initiatives) and programs such as job rotation were introduced with different agendas on mind. One of these agenda was to reduce production and operation cost and to realize changes with regard to employee performance. The new policies have resulted into the requirement of more employee accountability to facilitate the realization of these agendas, that is: Cost reduction and controlling employee flexibility (Hood, 1991, 181).

The managerialism and marketization as the new management policies have further resulted into changes in workplace structure and practices. According to Hughes, (1994) the former workplace policies and regulations did not adequately make employees to be accountable on their performance. For instance, new work policies have led to the introduction of performance reviews to ensure that those working meet the stipulated performance and quality standards. This has had as significant impact on the management of human resources in the public sector (286).

A study done by Fitzgerald and Pettigrew (1996) found out that increased pressure from clients has affected the capability of professional workers in the public sector (174). This is has been with regard to their work autonomy in their various work places. The stipulation of new work expectations by the Australian government has adversely affected the employees’ practices. A study conducted by Harris, (1999) in some of the Australian institutions of higher learning and public hospitals indicated that, employees were subjected to increased measures of control for the purpose of cost reduction and increasing efficiency. Zhang et al (1999) (174) also noted that in Australia and New Zealand, employees in public health institutions were subjected to accountability arrangements that were negotiated and which were based on professional measures of accountability. However, the study also indicated that the experience, skills and knowledge of medical employees and the established culture and values made the power of the hospital leaders to be limited on such professionals.

Soucek and Robertson (1991) opine that managerialism and marketization have led to increased workload to both employees and the managers of pubic organizations. The negative effect to workers is in their not only workplaces but also goes beyond their workstations (276). For instance, outside their work, employees report high level of stress, decreased motivation and job satisfaction as well as the desire to abandon their jobs in search of another, where they would feel comfortable.

The increased workload on the part of the management such as the requirement to increase the monitoring of their employee performance, regular meetings, issues of accountability and scarce resources have a negative impact on professionals. If employees and managers are perceived negatively from the performance reviews, then organizations may need other qualified or high performing individuals, which may jeopardize the efficiency of the production or service provision in the organization. This is due to the fact that newly brought in workers may require time to acquire work experience in line with their roles. Moreover, portraying to employees that they are not performing expectedly will ultimately demoralize them. A factor which would also affect the overall performance of an organization (Soucek and Robertson,1991, 345). With regard to the effect of marketization on firms, Power, (350) postulates that these policies have created a gap between organizational leaders (managers) and employees. According to him, the reinforced function of organizational leaders, increasing emphasis on the now wider institutional policies, have ultimately created a gap between managers and employees. This gap has been related to the difference in priorities between corporate leaders and staff. While the main concern for managers is to consider the organizations as a whole and ensure that the expectations are adhered to, employees are chiefly concerned on accomplishing their tasks and meeting their expectations.

According to Power (1997), the ever increasing gap between the managers and employees in public institutions have resulted into vertical consolidation of management structures which in turn has led to exaggeration of hierarchical controls in these institutions (350). The new policy changes as Power observes, has further caused drastic changes in the cultures of these public institutions. This impact is in relation to planning, setting, internal control systems and meaures and so on. This has subsequently resulted into many cultures of public institutions to be featured as hierarchical, high work oriented individualism and competition (Power, 350). The decrease in collegiality has been one of the main issues in the new organizational culture.


From the studies in this discussion, it is evident that managerialism and marketization culture has affected negatively on employees and the state as an employer. It is clear that many employees are not contented on the new values and work demand brought about by the new policies. The reforms in managerialism and marketization are focused on cost reduction, work efficiency and performance improvement and other political ideologies. Because of this, employees have encountered increased level of stress and uncertainty regarding their careers. In addition, employees are now not involved in decision-making processes, a factor which have demoralized them.

As revealed in this study, managerialism and marketization were introduced chiefly to achieve a specific hidden government agendas such as quality initiatives and employee accountability and performance. Further, the requirement of quality initiatives and performance measures was a political ploy to reduce the cost of goods and service production in public institutions. This has ultimately resulted into employees having to do a lot of work with less reward. Additionally, employees in the public sector are now less homogenous with decreased flexibility in their workplaces. The state as an employer may gain in this new initiatives and policies through increased efficiency of her employees and cost reduction but subsequently experience a “brain drain” from the dissatisfied and demoralized workers. This factor will also led to increased job turnover in specific professions of the public sector.


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