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Public spending, the economic crisis, privatisation, efficiency, and remunicipalisation. by David Hall firstname.lastname@example.org Public Services International Research Unit (PSIRU) University of Greenwich, UK www.psiru.org March 2012. Summary. The economic crisis Austerity and the IMF and EU
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by David Hall
Public Services International Research Unit (PSIRU)
University of Greenwich, UK www.psiru.org
Source: European Commission
Sources: The Jobs Crisis: Household and Government Responses to the Great Recession in Eastern Europe and Central Asia. World Bank 2011 http://go.worldbank.org/ZWFZ7IGHJ0; IMF WEO September 2011
e.g. Ukraine – like Germany – “provided subsidies to companies that agreed to retain workers, leading to less unemployment”
Sources: IMF 2009 The State of Public Finances: a Cross-country Fiscal Monitor SPN/09/21 http://www.imf.org/external/pubs/ft/spn/2009/spn0921.pdf ; World Bank 2011 The Jobs Crisis: Household and Government Responses to the Great Recession in Eastern Europe and Central Asia. http://go.worldbank.org/ZWFZ7IGHJ0
The Jobs Crisis: Household and Government Responses to the Great Recession in Eastern Europe and Central Asia. World Bank 2011 http://go.worldbank.org/ZWFZ7IGHJ0
Cuts in public sector pay and jobs
Pension age for women raised 55>60, required contributions increased by 10 years
Reduction in minimum wage from Hr 1,180 UAH ($148) in 2011 to Hr 1,073 ($134) in 2012
IMF now (March 2012) refuses to pay further money unless the government increases energy prices to consumers
In early July 2011, thousands of protesters took to the streets in the Ukrainian capital Kiev to try to block pension reforms promised as part of the country's IMF loan. The protest involved both Ukraine's trade unions and the political opposition. The law was approved anyway, raising the retirement age for women from 55 to 60, though the country has relatively low life expectancy.
IMF policies not working
“the programmes sponsored by the IMF – in Ukraine, in Latvia, in Hungary, in Romania, in Greece, in Ireland, in Portugal – are not yielding the benefits which were initially claimed for them by the advocates of the “structural reform path”, in particular in the growth area. In addition, years of fiscal austerity are now starting to take their toll on the populations concerned. Expectations are not being fulfilled, and a backlash is underway.”
(Edward Hugh Staring Into the Ukrainian Economic and Political Abyss http://www.economonitor.com/blog/2012/02/staring-into-the-ukrainian-economic-and-political-abyss/)Ukraine: IMF conditions and conflicts
Governs EU relations with neighbouring countries
Implemented through series of bilateral agreements
EU-Ukraine Association Agreement
Negotiations finalised December 2011
Not yet initialled (as at 19 March 2012)
Includes: “Ukraine's gradual integration in the EU Internal Market including by setting up a deep and comprehensive free trade area”
Includes: “a reform agenda for Ukraine.. Comprehensive Institutional Building Programme (CIB) particularly important”
(Association Agreement in a nut-shell http://ec.europa.eu/commission_2010-2014/fule/docs/news/20111221_more_information_fule_visit_to_ukraine.pdf )
negotiations on association agreements are also going on with Armenia, Azerbaijan, Georgia and Moldova.
(LaimaAndrikiene 15 March 2012 Europe's relations with its eastern neighbours, work in progress http://www.publicserviceeurope.com/article/1651/europes-relations-with-its-eastern-neighbours-work-in-progressUkraine: EU Association Agreement
A Status Update on Fiscal Exit Strategies” IMF Working Paper WP/10/272 http://www.imf.org/external/pubs/ft/wp/2010/wp10272.pdf
Sources: IMF WP/11/261 The Economic Crisis: Did Financial Supervision Matter? November 2011 http://www.imf.org/external/pubs/ft/wp/2011/wp11261.pdf; Worldwide Governance Indicators Ukraine (March 2012) http://info.worldbank.org/governance/wgi/sc_chart.asp#
Sources: Eurostat database Employment (lfsq_egan2, lfsq_egana) downloaded 08/07/2011 http://epp.eurostat.ec.europa.eu/portal/page/portal/employment_unemployment_lfs/data/database
EU: public and private change in real wages during recession are closely linked, except for 4 countries with IMF programmes: Greece, Latvia, Hungary and Romania (Eurostat, 2008Q1-2011Q1, data for 20 EU countries)
Links are even closer if IMF countries are excluded. It is the IMF policies which distort the relationship by suppressing public sector pay rises below the norm
“the top priority is to contain the high rates of spending growth that have led to marked increases in spending-to-GDP ratios over the past 50 years” (IMF 2010)
“our tax collectors are like honey bees, collecting nectar from the flowers without disturbing them, but spreading their pollen so that all flowers can thrive and bear fruit”
Pranab Mukherjee India’s finance minister, budget speech, July 2009
(UK House of Commons Transport Committee January 2008)
David Hall is director of the Public Services International Research Unit (PSIRU– see www.psiru.org) in the Business School, University of Greenwich, London. He researches and teaches the politics and economics of public services and privatisation, with special expertise in the sectors of water, energy, waste management and healthcare. His publications include articles in academic journals, book chapters, many reports published by PSIRU and others, and two books. He was the coordinator of the Watertime project, an EC-funded 3-year research project on decision-making on water in 29 cities in Europe, involving a group of five universities and research institutes, from 2002-2005. He was guest editor of a special issue of Utilities Policy in 2007. He led a 2-year research project on corruption, funded by the Wallace Global Foundation, from 2001-2003.He had a leading role in the EC-funded CIRIEC report on cohesion and SGEI for DG Regio in 2004. He has contributed to the EC-funded SWITCH project, a major 5-year study of water governance and finance across the world, and the EC-funded PRESOM project, a 3-year project studying privatisation and the European social model.He has been invited to address meetings organised by the World Bank infrastructure division, the United Nations department of economic and social affairs (UNDESA), the OECD, UNCTAD, the ILO, the European Parliament, the EU Social and Economic Committee, the Belgian parliament, and the UK Department for International Development (DFID), and has been an expert witness at the constitutional court of Indonesia. He has been an invited speaker at seminars and conferences at universities and research institutes in many countries, including the universities of Athens, Bandung, Berlin, California, Cambridge, Harvard, Lima, London (UCL), Madrid, Milan, New York (Cornell), Oxford, Paris 8, and St Petersburg. He has spoken to meetings of trade unions and civil society groups in over 40 countries.Acknowledgements and disclaimerThis presentation is based on research carried out by the PSIRU over many years. This research has been financed by various bodies including the European Federation of Public Service Unions (EPSU www.epsu.org), Public Services International (PSI www.world-psi.org ), the European Commission the PRESOM network http://www.presom.eu ); the International Labour Organisation (ILO www.ilo.org); the United Nations Research Institute for Social Development (UNRISD www.unrisd.org ); and others.
2. Positive campaigning, social dialogue, and politics :
3. Somestrategic issues