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Watch Out for These Austerity Measures

Today, austerity affects the lives of 5.7 billion people. Policy-makers in Ministries of Finance and International Financial Institutions across the world are implementing the set of economic policies described below that are targeted at slashing public spending, privatizing, and deregulating (see the End Austerity report), while ordinary people suffer from the results: broken public services, shrinking social protection and pensions, and a cost of living crisis.

All this human suffering from austerity is unnecessary: there are alternatives. Decisions about economic policy cannot be taken behind closed doors at the Ministries of Finance. It’s time to raise our voices!

Watch out for these austerity reforms:

Public services expenditure cuts and reforms

Slashing important social services such as education, health, social protection, water, public transport and housing. These must be increased; if cuts must be made, reduce military spending, payouts to corporations and other expenditures that benefit powerful interest groups and not people. Instead of austerity cuts, governments must identify alternative financing options to enable a people’s recovery, the achievement of human rights and the sustainable development goals.

Targeting and rationalizing social protection

Reducing coverage and benefits, leaving only a small safety net for a fraction of the poor to achieve cost-savings, excluding many vulnerable populations by slashing programs for children and families, women, the unemployed, the elderly and persons with disabilities. Rather than scaling down social assistance to achieve cost savings, countries should be scaling up and building social protection systems and floors for all, as agreed at the UN (see HRW)

Cuts to the number and salaries of civil servants (so called “wage bill cuts/caps”)

Reducing or freezing the salaries and number of public-sector workers who provide essential services to the population, such as teachers, health and social workers. These must be increased, not decreased, to achieve human rights and development goals (see ActionAid)

Reducing subsidies

(Such as fuel, food, agriculture) making food and transport unaffordable for many households at a time when prices are at a record high (see OXFAM report). Instead, support sustainable agriculture and energy alternatives, including adequate subsidies, price controls and social protection support to all (not just a small safety net targeted to a fraction of the poor), to ensure that food, transport and energy remain affordable for poor people.

Privatization of pubic services and reform of State-Owned Enterprises (SOEs)

Result in layoffs, fees or tariff increases, and unaffordable or low-quality basic goods and services (see PSI and BWP). Instead, invest in affordable quality public services, from education and health to water supply and sanitation to achieve human rights.

Pension and social security reforms

Leaving pensioners with lower benefits and increasing old-age poverty and inequality (see ITUC’s report). Cutting unemployment, disability and other social insurance benefits, or tightening who can receive them, weakening income security when people need it most. Instead, extend social security to all with adequate benefits (see CESR).

Labor “flexibilization” reforms

Such as reducing wages and salary adjustments, decentralizing collective bargaining, and increasing the ability of enterprises to fire employees, lead to precarious jobs and lower workers’ incomes (see ITUC). Instead, countries must increase wages and decent jobs for people.

Cutting health expenditures

Containing health spending through hospital rationalization, pharmaceutical
controls and others, often framed as efficiency gains. Instead, populations need sustained investments to implement universal access to quality healthcare (see TWN and Wemos).

Reducing employers’ social security contributions (“tax wedge”)

Reducing employers’ contributions to social security, despite these are deferred wages of workers, not a tax. They must be restored and all arrears paid back, to protect the sustainability of hard-earned pensions.

Education cuts

Reducing support to education, replacing student grants with loans and relying more on private provision. Instead, governments must invest in free, quality public education (see ActionAid and Education International ).

Increasing consumption taxes or VAT

On basic goods and services, making them more expensive, lowering household income and contracting economic activity. Instead, governments must tax wealthy individuals and corporations, including the financial sector (see OXFAM).

Increasing personal income tax

Raising taxes on wages, burdening workers and the middle class while the income and wealth of the richest remain lightly taxed. Instead, tax wealth and the richest (see Oxfam and the Fight Inequality Alliance) .

Increasing fees and tariffs for public services

Rate hikes may make services unaffordable for populations, critical in the case of water, education, health, energy, transport and other essential services, all of which underlie the realization of human rights (see UNICEF)

Strengthening public-private partnerships (PPPs)

Contracts in which private companies finance, build or run public infrastructure and services, repaid by the government or through user fees. They are often costly for the public purse, with higher user fees and guaranteed profits for private partners (see EURODAD) .

Today, austerity cuts affect the lives of

5.7 BILLION PEOPLE