Abstract
This paper examines the interpretation of the geographic context in which outsourcing of public service is undertaken in a peripheral region. In Japan, peripheral municipalities often have difficulties in introducing outsourcing schemes because there are few local independent revenue sources and welfare service industries are lacking. Sannohe town which has consigned services to a private company outside the region was examined as a case.
Judging from the long-term contract with a large professional service enterprise outside the region and cumulative negotiations with the enterprise, the “cooperative contracting” form has been followed by Sannohe. At the same time, Sannohe town has a fiduciary obligation to owe recruit residents in the ancillary sector, while maintaining the wage level that received by temporary workers. Sannohe town retains the authority to determine the content of service. As a result, the service contents have not changed even though the provider was replaced, with the exception that the number of employees in the consigned business has increased. On the other hand, fiscal expenses for the management of the services have risen although cost reductions with outsourcing were expected.
This service management system has significantly influenced the strategy of the Sannohe municipal administration. At first, the aim of outsourcing was labor cost reduction. However, the civil service has played an important role in local employment. Therefore, cutbacks of staffs engaged in the service sector gave rise to anxiety about service deterioration and of rising unemployment in the region. In consideration of such regional conditions, the administration shifted its primary aim of privatization from cost reduction to “expanding employment opportunities in the town” and “long-term continuation of service provision.” In this processes, two geographic factors specific to peripheral regions, i.e., scarcity of employment opportunities and lack of professional service enterprises that can manage various sectors, have influenced the scheme and management of privatization in Sannohe.
Based on the conditions of outsourcing in Sannohe, it is difficult for peripheral municipalities to use outsourcing or competitive tendering scheme to reduce fiscal costs. In such municipalities, there are many constraints to overcome at the local labor market or service level.
