While I do not have hard facts to back me up I used to work in the industry so feel somewhat qualified to comment. The permanent employees were replaced by legions of contractors in the companies you mention. Naturally the contractors will not show up in the post-privatisation figures quoted in your blog article.

Posted by: Chris L at March 22, 2007 09:36 PM

Supplementary information below regarding current employment levels (21500 combined for National Power and PowerGen).

The electricity industry was initially split into 4 companies at privatisation - including National Grid and British Power (the nuclear company that the City didn't want to fund).
I couldn't find up to date figures for employment levels at British Energy. National Grid subsequently merged with British Gas, so current employment levels for that company would be misleading.

PowerGen:

http://www.powergencareers.co.uk/aboutus.aspx

"Based at locations across the UK, we’re a big business with some 13,000 employees in all kinds of part and full time roles."

National power:

http://www.npower.com/about_npower/company_facts.html

"npower employs around 8,500 people."

Posted by: Chris L at March 22, 2007 09:57 PM

"Ah yes, governments may well waste money. But so does the private sector"

To which the correct answer is, so what?

If a private sector organisation wastes money, there is room for another competitor to come in and undercut its prices.

No such mechanism exists in any form at all in the Public Sector because it operates as a monopoly.

Posted by: Cleanthes at March 22, 2007 10:16 PM

I work in a library. With some decent management, we could cut back to a fourth of our work force easily. The only uncertainty is having enough people on hand for customer service, and that can be easily solved by getting those doing jobs that aren't time sensitive to go help Circulation and Reference when things get busy.

By the way, I never really hear about customer service. It's more about being "sensitive" to the patrons needs. And I have learned departments are a convenient way to avoid responsibility for outcomes. It is always some other department's responsibility.

Posted by: August at March 24, 2007 05:01 AM

The economic incentives are such that the state will always increase the number it employs.

As David D Friedman has commented, the Soviet Union produced trucks that were heavier than the capitalist West - and considerably inferior. The reason behind this is simple: Soviet plant managers were rewarded based on annual tonnage. It was in their interests to manufacture heavier trucks.

So it is with bureaucrats, who are rewarded - through higher status and pecuniary benefits - by increasing the resources under their control. Without prices, no cost-benefit analysis is possible and increasing the size of a department is crucial in getting ahead. Thus, every bureaucrat will seize every opportunity to increase his workforce and fiercely resist any attempt to reduce it.

Posted by: Alex Owen at April 4, 2007 12:30 AM