The Public Versus Austerity: Why public sector wage bill constraints must end
The world faces a series of inter-connecting crises. Responding to them will demand a complete disruption of business as usual. In the light of Covid, the growing debt crisis, rising inequality, gender injustice and the climate crisis, there is an urgent need to revisit the fundamental redistributive role of states and to reimagine the public sector.
Over the past forty years austerity policies have led to cuts in the public sector workforce that have undermined the governments’ ability to deliver quality public services. Whether imposed from outside by the International Monetary Fund (IMF), or from inside by ministries of finance, one of the central austerity policies that has the most impact on public services is the imposition of public sector wage bill constraints.
There are two direct consequences of these policies:
- Blocks to the recruitment of new teachers, nurses and other essential workers, even where there are severe shortages;
- Strict limits to the already low pay of existing health, education and other public sector workers that undermine recruitment and retention of qualified staff.
Based on ground-breaking research, ActionAid's new report, published with Public Services International and Education International, exposes how IMF austerity cuts in just 15 countries have blocked the recruitment of over 3 million nurses, teachers and other essential public sector workers. Implementation of public sector wage bill cuts undermines progress on health, education and gender equality while blocking climate action in some of the world’s poorest countries. No consistent advice was given to countries about how to increase fiscal space, for example by raising tax revenues through progressive reforms.
Building on our major report The Public Versus Austerity (see below), Education Versus Austerity (also below) provides a synthesis of the key finds as applied to education. The briefing challenges the IMF’s routine recommendation of public sector wage bill constraints which have a disproportionate impact on teachers who are the largest group of public sector workers in most countries. The briefing draws evidence from 15 countries and shows that there is no clear logic or rationale for the use of wage bill constraints – and yet they have a devastating imp[act on progress towards globally agreed education goals.
To ensure a more caring, feminist, green and just future, it is time for system change focused on economic justice with public services at its core.