The IMF is 75 years old but still has a lot to learn. They need a well trained professional teacher to explain some basic truths. You can’t commit to ambitious development goals and then impose austerity. You can’t constrain public sector wage bills and then worry that countries have shortages of teachers, doctors and nurses.
For the past forty years the IMF have used loan conditions and coercive policy advice to drive down public spending in developing countries. In the light of Covid they are offering tens of billions of dollars in emergency loans, including to expand spending on health, but in the small print there is a clear expectation that countries will rapidly return to fiscal consolidation (the IMF’s preferred term for austerity). There is no similar priority for education – yet we know that most schools (especially those with large class sizes) will not be able to open with safe social distancing – unless more teachers are urgently recruited.
In April ActionAid published Who Cares for the Future: finance gender responsive public services! which reviewed IMF programmes across 56 countries and found that, for low income countries with available data, 78% were advised by the IMF to cut or freeze public sector wage bills. Whilst in some case national efforts were made to protect health and education from cut, in practice this led to freezes. The truth is that health and education workers are the largest group on the public sector wage bill so if you have to contain the overall amount on the wage bill you cannot pay teachers more or employ more teachers.
UNESCO regularly reminds the world about the desperate need to recruit more teachers and the World Health Organisation reminds the world about the desperate shortages of nurses and doctors. But when it comes to the hard truth of economic decision making by Ministries of Finance these voices carry little weight. It is the IMF macro-economic dogma and market fundamentalism that holds sway over Ministries of Finance when they are considering spending on public services.
For three years, from 2005 to 2007, ActionAid challenged the IMF on its use of public sector wage bill caps and we worked with Education International to show the damage these did to governments wanting to achieve development goals. And we won the argument. The IMF backed down and said they would not longer use caps as loan conditions worldwide. It was a great victory – and it enabled some governments to recruit thousands, even tens of thousands more teachers. At that time the IMF was disempowered, unsure of its roles.
But as we know, the financial crisis came along and one of the unexpected side effects was to re-embolden the IMF. Slowly they reverted to type. Although explicit caps as conditions on loans were removed, the IMF gave a very strong policy steer to Ministries of Finance that public sector workers were part of the problem, not part of the solution.
In recent months we have held discussions with senior IMF officials, and we have identified a worrying level of group-think or unconscious bias. Though it may be an extreme example, one very senior official affirmed that: “the public sector should only be doing things where the private sector cannot make a profit”.
On the basis of our findings we have called for the IMF’s Independent Evaluation Office to do a comprehensive review. We want them to answer questions like:
- To what extent did public sector wage bill constraints in pre-Covid years leave health systems and other public services prepared to respond to the pandemic and subsequent economic crisis?
- In those countries where there has been greater investment in public services, have governments responded more effectively to the health crisis and the subsequent economic crisis than countries where investment has been constrained?
- Has the public health crisis triggered by Covid led IMF staff to reconsider the role of the public sector in the provision of public health and other services?
- Are there lessons that can be learned from the pandemic about the value of a public sector ethos?
- Have privatised health services been able to respond to Covid in a sufficiently coordinated and effective way?
- Is there an unconscious bias or group-think in the IMF around the public sector workforce in general and public sector wages in particular?
- Can investment in expanding decent work in the public sector be both crucial to delivering SDGs and human rights obligations and also for stimulating economic growth and stability?
We will continue to try to teach some basic lessons to the IMF, but they seem to be rather forgetful and have a worrying reluctance to learn.
On 5 October, Education International marks World Teachers’ Day with a 24-hour virtual broadcast spanning the globe. Teachers everywhere will come together to share what they have learned as a profession and how we can ensure inclusive equitable quality education for all moving forward.
The full programme, featuring teachers from across the globe, as well as Presidents, Prime Ministers, Ministers of Education, heads of international organisations, famous journalists and scientists, a Nobel Peace Prize Laureate, and many more, is available at >www.5oct.org/programme/>. <>
The event will be livestreamed across all Education International platforms and you can register here.
All streaming links will be available on the day at >www.5oct.org/watch/>, with interpretation to English, French, Spanish, Arabic, Portuguese, Russian and Japanese. <>
Join the global conversation on October 5!
A global webinar on public sector wage bills is organised by ActionAid, Education International and Public Services International on 13th October - with Haldis Holst, EI Deputy General Secretary and Rosa Pavanelli, the General Secretary of PSI.