"This article argues that liberalisation and privatisation of public services in Europe have had a significant impact on employment and working conditions. Our basic hypothesis is that companies affected by growing competitive pressures increase efforts to reduce labour costs. The consequences are, on the one hand, the reduction of public sector employment and, on the other, a transformation of the traditional public sector labour relations regime (LRR). While employees were previously treated as a relatively homogenous workforce, liberalisation and privatisation have fuelled divisions, fragmentation and individualisation. In some sectors and countries this has led not only to a substantial deterioration of employment and working conditions but also to the emergence of a two-tier workforce. From this perspective liberalisation and privatisation represent a considerable threat to workers and therefore the trade unions, which have at their disposal a number of strategies to respond to the new challenges, including fighting privatisation, demanding strong sector-wide regulations and campaigning to strengthen the public sector."

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