The public versus austerity: Why public sector wage bill constraints must end

ActionAid, Education International, Public Services International

published 12 October 2021 updated 12 October 2021

The world faces a series of interconnecting crises and responding to them will demand a complete disruption of business as usual. In the light of Covid-19, 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 reimagine the public sector.

Over the past forty years, austerity policies have led to cuts in the public sector workforce that have undermined the ability of governments to deliver quality public services. One of the austerity policies that most acutely impacts public services is the imposition of public sector wage bill constraints harming the delivery of gender-responsive public services. There are two direct consequences:

  1. Blocks to the recruitment of new teachers, nurses and other essential workers,
  2. Strict limits to the already low pay of existing health, education and other workers.

In the past year, we have undertaken intensive research across three continents, reviewed 69 International Monetary Fund (IMF) documents from 15 countries, held discussions with IMF economists, and undertaken a literature review on public sector wage bills.

Our findings reveal a deeply embedded mind-set that is irrationally anti-public sector. Implementation of these public sector wage bill cuts is both blunt and directionless. It betrays a bias against the public sector and connects with wider anti-labour policies and trade union busting. These measures undermine the fulfilment of human rights and achievement of the SDGs, and block climate action.