Privatisation of public facilities, services and corporations is widely implemented as a sound and efficient economic management approach. Privatisation can take many forms including ownership, financing, management, and service delivery, and can be achieved through, for instance, public-private partnerships, divestiture or outsourcing of public service delivery. According to the Privatisation Barometer’s 2015/16 Report, governments around the world raised almost 1 trillion USD in 48 months during 2013-2016 through privatisations, surpassing any comparable period before. On the basis of literature review, a 2018 article on the lessons from privatisation in developing countries, suggests that privatisation considerably increased financial performance and economic efficiency in sectors such as banking and energy.
However, the UN Special Rapporteur on extreme poverty and human rights’ 2018 report on privatisation and human rights emphasises the human rights impacts of privatisation in the areas of criminal justice, social protection and security, infrastructures of water, sanitation, electricity, transport, education, health care, social and financial services. Privatisation was found to result in the introduction and/ or increase of charges and fees to access essential goods and services, negatively affecting the ability of low-income earners and those living in poverty to access these. In contrast with a private, profit-centred approach, services and goods that traditionally belong to public sphere, such as the delivery of water and electricity, public transportation or healthcare, primarily aim to address public needs and necessities. They are often linked with a state’s obligation to protect, respect and fulfil human rights. This includes, among others, the right to education, the right to water, the right to health and the right to adequate standard of living. General Comment No. 24 on State obligations under the International Covenant on Economic, Social and Cultural Rights (CESCR) indicates the concern that “goods and services that are necessary for the enjoyment of basic economic, social and cultural rights may become less affordable as a result of such goods and services being provided by the private sector, or that quality may be sacrificed for the sake of increasing profits.” (para. 22)+ Read more
Public Services International reports that prices increased by 125% from 2008 to 2015 after water privatisation in Romania, and, according to a journalist investigation, water privatisation resulted in millions of cases of cut-offs since 1998, and a deadly outbreak of Cholera in South Africa in 2001. Additionally, privatisation of essential services can exacerbate discrimination towards vulnerable groups. A 2014 submission of thirteen organisation to the UN Committee on the Elimination of Discrimination against Women claims that privatising primary education services leads to increased discrimination against women as private entities are less likely to stand against existing stereotypes and stigmas.
The CESCR General Comment No. 24 explains that privatisation is not prohibited by international human rights law even in areas of essential public service. However, private entities providing such services should be subject to strict regulations that impose “public service obligations” of accessibility and adequacy. This might include requirements of universality of coverage, pricing policies, quality requirements, prohibitions to deny access to affordable and adequate services, regular assessments of performance, etc. (para. 21). In the absence of such regulations, standards and oversight, the overall impact of privatisation can become burdensome for individuals and states alike. The International Labour Organization (ILO) published a report in 2018 that notes that out of 30 Eastern European and Latin American countries that had privatised their mandatory pension system between 1981 and 2014, 18 countries reversed their decision. This ILO report identifies the rationales behind these reversals as deterioration of pension benefits, increase in gender and income inequality, limited effects on capital markets, and high administrative costs, amongst others.
The UN Guiding Principles on Business and Human Rights (UNGPs) were endorsed by the UN Human Rights Council in June 2011 and are the first widely accepted international framework articulating the respective duties and responsibilities of states and businesses in relation to human rights. The UNGPs Principle 5 provides that states cannot abandon their human rights obligations after privatisation, and they are bound to “exercise adequate oversight” over the activities of the business entities providing services with implications for human rights. Beyond state obligations, the UNGPs stipulate that businesses have the responsibility to respect human rights. The UN Secretary General’s 2017 report on the Right to Development promotes human rights impact assessment, the instrument derived from the UNGPs, to ensure that privatisation does not take place at the expense of equitable access to essential services and human rights. (para. 55)
The Public Interest’s 2016 report on the effect of privatisation on inequality details the impacts of privatisation on the economically disadvantaged and the people of colour in the US.
Privatisation of deprivation of liberty and use of force
The outsourcing of state functions related to deprivation of liberty (in criminal justice or migration control) and the use of force (in external conflicts or internal security) has been considered as exacerbating human rights abuses linked to these fields. In Resolution 33/4, the UN Human Rights Council (HRC) expressed concerns about the impact of the activities of private security and military companies on the enjoyment of human rights, with specific emphasis on armed conflicts, prisons and migrant detention facilities. The Resolution noted that private entities operating in these areas are rarely held accountable for human rights abuses.
States around the world actively use companies from private military and security sectors in external or internal conflicts. According to a recent study, in 2019 there were 53 000 US contractors in the Middle East, compared to 35 000 US troops, and the US spent over 370 billion USD on contracting. The study claims that dependence on contractors is caused by the aim of concealing the true economic and human cost of the war. Although there is a considerable gap in data regarding private military companies and their employees, the human rights impacts of privatising war are shown through stories such as the Nisour Square massacre perpetrated by the employees of Blackwater Security Consulting (now Academi) in 2007, or the chain of human rights abuses linked to another major US contractor in Iraq and Afghanistan, such as trafficking and sexual abuse of minors. Private military companies have also been accused of hiring former child soldiers and perpetrating gender-based and sexual violence. To address the issues with private military companies, the UN mandated the Working Group on the Use of Mercenaries in 2005 to study and monitor private actors and activities, as well as strengthen the international legal framework related to privatisation of war.
The 2017 Report of the UN Working Group on the Use of Mercenaries describes the global trend of privatisation in prisons and immigration detention facilities as a threat to human rights, including violations related to due process, economic exploitation, physical, mental and sexual abuse. The Working Group names the profit motive as the main issue behind such abuses. According to the Sentencing Project, 120 000 people in the US are incarcerated in for-profit facilities, representing 9% of total prison population. The American Bar Association’s 2020 report tracks the sequence of a typical accused individual’s experiences in the criminal justice system following arrest, and reveals that outsourcing government functions often results in the cycle of exacerbated mandatory fees that are higher than actual costs, non-payment and additional consequential fees. The report further indicates that private companies often have an economic incentive to engage in practices that extend individuals’ involvement in the system and that extract as much money as possible. Regardless of whether or not doing so serves the purposes of the criminal justice system or comports with due process, such practices lead to ensnaring economically disadvantaged individuals in the criminal system, or criminalization of poverty.
Private facilities and service are often employed in immigration control across the world. In Australia, G4S was contracted to provided security services to the Manus Regional Processing Centre, one of Australia’s offshore detention facilities for refugees and asylum seekers. In 2014, G4S staff were involved in violence at the Centre which saw one person killed and 77 injured. A G4S security guard was later convicted of murder. The incident was also the subject of a class action which resulted in Australia’s largest human rights settlement and the defendants, including the Australian state and G4S, were forced to pay AUS$70m in compensation. In 2018, staff at the facility began legal action claiming they suffered physical and psychological harm during riots and that the contractor and the Australian government did not provide a safe workplace and failed in their duty of care. According to a 2016 research from the Australia Institute, these human rights abuses, would not happen without the involvement of companies operating these facilities. According to the Human Rights Watch, 81% of the immigrant detainees in the US by 2020 are held in privately run detention centres which, according to a 2020 report, have often been associated with inhumane living conditions, physical violence, mental distress, lack of access to hygiene products, poor quality of nutrition and forced labour, among other abuses. COVID-19 pandemic brought company-run detention facilities under spotlight, as poor conditions, negligent treatment and the lack of resources resulted in a health crisis within the facilities.
However, there have also been developments against the privatisation of criminal justice and immigration systems. In 2009 the Israeli Supreme Court declared that a privately managed prison inherently violated human dignity and, therefore, was unconstitutional. The primary reason behind the decision was that an economic motive stands against the public purpose of criminal punishment. Under Assembly Bill 32, signed and adopted in 2019, California will phase out private, for-profit criminal justice and immigration facilities by 2028. California has adopted a law in late 2020 which the Los Angeles Times reports “allows people to sue private detention facility operators for failing to comply with the standards of care outlined in the facility’s contract and to collect “reasonable” costs and attorney’s fees.”
Privatisation of education
A 2016 Report by the Global Campaign for Education defines privatisation of education as “the process by which a growing proportion of the education system is owned, funded, or operated by non-state actors.” This includes for-profit or non-profit institutions operated by non-state actors (businesses, charities, religious organizations, etc), and implies different levels and degrees of private involvement, varying from institutions with private finance and provision to public-private partnerships. According to the UNESCO data, 18.6% students in primary education in the world were enrolled in private institutions, whereas the number was 26.9% for secondary education. As private education institutions have been observed to have positive impact on educational choice, quality, parental involvement, unchecked privatisation has also been criticised for its impacts on the right to education.
The right to education is a universally recognised human right and states are not exempt from their obligations to protect, respect and fulfil even in cases of delegating their functions to private actors (CRC General Comment No. 16). Human rights bodies have raised concerns on the growth of privatisation impacting on the right to education, in particular regarding gender and socio-economic equality, high fees, the lack of regulations for and oversight of private provision of education. According to a 2014 Report by the UN Special Rapporteur on the right to education, “Privatization in education cripples the universality of the right to education as well as the fundamental principles of human rights law by aggravating marginalization and exclusion in education and creating inequities in society.”
A 2015 UNESCO publication concluded that, although learning outcomes could be considered of higher quality in privatized education systems, privatisation reinforced existing inequalities and segregation in educational opportunities as it complicated the access to education for the poor. A 2014 Report by Right to Education Project, based on 18 social research papers from Sub-Saharan Africa and South Asia, explains that privatisation negatively impacts gender equality as, considering high fees, parents are more likely to prioritise the education of boys than girls. At the same time, according to the Report, private institutions enhance stratification and perpetuate socio-economic differences and class barriers. A 2016 Report by the Global Campaign for Education considers the trend of low-fee private schools and argues that, on top of concerns about the impact of private education on equality, there is no support for claims that learning outcomes and education quality are better in such institutions.
These effects are exacerbated in countries with extremely high level of privatisation. For instance, Chile, where 62.6% of students in primary education in 2018 were enrolled in private institutions, was found in 2014 to have the most segregated education system by socio-economic status within the 65 PISA-tested (the Program for International Student Assessment) countries.
In 2019 the group of international experts adopted the Abidjan Guiding Principles on the human rights obligations of States to provide public education and to regulate private involvement in education. These Principles reflect on the tensions between the privatisation trend and the right to education, and reiterate, among other principles, the importance of equality, accessibility, quality of education.
Privatisation of health care
Private healthcare is a rapidly growing industry and is projected to reach US$7.4 trillion by 2027. Whereas business enterprises are leading actors in producing pharmaceutical supplies and medical equipment, they are also competing with public actors in the provision of healthcare services and facilities and medical insurance markets. According to the WHO, the growth of private health industry can be explained by the solutions private actors offer for the challenges of health systems, such as health fiscal space constraints, increases in disease burden, particularly in relation to noncommunicable diseases, demographic shifts including ageing, population displacement and political and economic instability.
All major healthcare models involve private actors in financing, provision, or supply of healthcare. However, state systems vary in terms of the proportions of public-private mix. According to the OECD’s Health at a Glance 2019, average public spending of OECD countries on health was 71% of total health expenditure, with Norway leading by 85% and Switzerland at 30%. According to a 2019 Report by the World Health Organization, almost 13% of the world population were spending 10% of their household budget as out-of-pocket funds on healthcare in 2015, and the percentage of population impoverished by out-of-pocket spending was 2.5% in the same year. In this light, privatisation of health care elements can pose additional economic and social threats for the population.
Privatisation of certain aspects of health care can ease fiscal burden of the state. A 2013 empirical study of OECD countries suggests that states experiencing severe economic crisis are more likely to privatise different aspects of health care. Private entities occupy different aspects of the healthcare sector: they can be financers (as health insurance companies), provide health care through private clinics and hospitals, or supply pharmaceutical products or medical equipment. Private actors contribute to the health care sector, in particular, by research and development, provision of supplies and innovation.
However, privatisation of certain aspects of healthcare can also undermine the right to health and its elements, such as availability, accessibility, quality, equality and equity of health facilities, goods and services. A 2014 article identifies these impacts of privatisation and links them to the level of commitment to protecting the right to health, type of health system, degree of privatisation, capacity and willingness to set regulations for private actors and cost of private services and goods. According to the WHO, through impacts to equity and accessibility private sector involvement in healthcare can pose a challenge to achieving Universal Healthcare Coverage. At the same time, private provision or financing of healthcare does not necessarily entail improved efficiency, accountability, or medical effectivity, according to a 2012 article.
Human rights bodies have emphasised as problematic the lack of regulations and oversight of private actors in the sector, high costs and fees, increased disparities and inequalities, and access to essential medicines in the countries over the globe. The COVID-19 pandemic has made these issues more pressing and extreme. Based on the preliminary data from Asian countries, a 2020 article claims that countries with more privatised health care systems have had more COVID-19 cases and mortalities, whereas countries with universal healthcare coverage or public healthcare fared better. A 2020 article links the increased privatisation in the healthcare sector to negative health outcomes and responses to COVID-19 in India. To address the issues of privatisation, a report from 2019 analyses the issue of privatised health care, applicable legal framework, including the AAAQ framework, non-discrimination and accountability, and offers a human rights impact assessment framework to determine the human rights impact of the increasing activity by private actors in the health care sector.