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International Labour Organisation on Austerity

Written By: - Date published: 8:38 am, November 21st, 2015 - 10 comments
Categories: capitalism, class war, economy - Tags: ,

The Tertiary Education Union has an interesting piece on an ILO report. It’s a short post with a lot of information in it, I hope they don’t mind if we reproduce the whole post here:

ILO WARNS AGAINST NEW AGE OF AUSTERITY

Brace for more austerity in 2016, warns the International Labour Organisation (ILO).

A new report by the ILO that looks at financial trends of 187 countries from 2010 to 2020 argues the world could face a second ‘adjustment shock’ next year and ensuing austerity measures. The study says 132 countries, mostly in the developing world, could suffer.

International Monetary Fund (IMF) projections show that a second major period of governments cutting their spending. Overall, the IMF expects 132 countries to cut budgets in terms of gross domestic product (GDP), including New Zealand.

Spending cuts will affect more than two-thirds of all countries annually, affecting more than six billion people or nearly 80 percent of the global population by 2020.

Recent IMF country reports indicates that governments are considering a range of austerity measures, such as wage cuts and/or caps, including the salaries of education, health and other public sector workers (in 130 countries); pension reforms (in 105 countries); and healthcare reforms (in 56 countries). The report names New Zealand engaging in many of these measures.

A United Nations Global Policy Model indicates that the expected spending cuts will harm GDP and employment in all regions. Compared to a scenario without spending contraction, global GDP is set to be 5.5 percent lower by 2020 further resulting in a net loss of 12 million jobs.

The original is by the Tertiary Education Union.

10 comments on “International Labour Organisation on Austerity ”

  1. ropata 1

    Austerity is oppression of the people under another name. Rolling back government services so that the 1% can transfer more of the nation’s wealth to themselves

  2. Draco T Bastard 2

    A United Nations Global Policy Model indicates that the expected spending cuts will harm GDP and employment in all regions.

    And the rich will become even wealthier while everybody else is pushed further into poverty. Just as been happening over the last 30+ years.

  3. Great topic.

    The austerity being forced on NZ is I believe more extreme than in any other OECD country – but try looking for austerity as a theme in the NZ mainstream media. There are stories about Spain and Greece and the UK to be sure but in each of these countries government spending as a percentage of GDP is way higher than in New Zealand despite the benefits of scale in those countries.

    A cursory look at the Stuff and NZ Herald websites shows that using the term ‘austerity’ to describe the government’s approach to public spending seems to have fallen out of favour even as the levels of public spending have fallen more rapidly.

    However IMF derived data shows the general falling trend and NZ is an outlier even amongst countries regarded as “in austerity” https://datamarket.com/data/set/1h79/general-government-total-expenditure-percent-of-gdp#!ds=1h79!1ewr=1h.50.z.3p.3y.4x&display=line

    The Finance Minister is on record as wanting to reduce public spending as a % of GDP to 25-26% over 6 years from 2014 so the graph for outyears underestimates the government’s intention. http://www.publicgood.org.nz/2014/05/15/spending-to-gdp-ratio/

  4. John Schmidt 4

    The problem with not living within your means is eventually you run out of spending other people’s money. In this regard running a country is not much different to running your own finances.

    • Draco T Bastard 4.1

      Nation-states aren’t households: debating their economies as if they are is stupid
      The Economy is Not Like a Household

      A country cannot spend other people’s money as all the money in circulation belongs to the government. People have it only temporarily and savings cause the economy to grind to a halt.

      The big problem we have is that the capitalists have persuaded us that all wealth comes from the private sector when the reverse is true – all wealth comes from the community.

    • Lloyd 4.2

      John you are living in fantasy land.
      Running a country’s economy is vastly different from running your own finances, Your argument is a right-wing meme that has been swallowed as a truth by a large part of the New Zealand electorate.
      Governments can print money. Sure it will cause inflation but you can’t do that with your own finances!
      All government spending comes down to spending other people’s money. The more the government redistributes this money from the richest people to the poorest, the better the economy runs. Austerity is a policy to produce a sick economy

  5. ropata 5

    Forgotten History: the Theft of the Commons https://t.co/YWIatcj7ae via @stuartbramhall— Deirdre Kent (@deirdrekent) November 21, 2015

  6. Murray Simmonds 7

    Thanks for the link, Draco T.

    That is one of the most perceptive and intelligent analyses of the idiocy that underlies Neoliberal economic policy that I have read.

    This quote from the article summed it up nicely and I think is worth pasting here:

    “But all this [Neolib economic policy as pushed by the Nats for example] is economic bunk. Government spending is not a zero sum game in which individual policy costs must be matched by corresponding ‘savings’ elsewhere. Governments can raise money not only through taxation but also by borrowing, creating money, and investing for growth. ”

    I have never been convinced that nation-state economic policy is a zero sum game. I’m delighted to see that there might be a few others out there who think likewise.

  7. John Schmidt 8

    I totally agree that a countries wealth is determined by its citizens not the private sector. The private sectors role is to provide us with goods and services that we want and we pay through prices they charge as part of the money go around. I also agree that borrowing to invest has its advantages provided the returns on that investment equals or exceeds the amount borrowed. Governments have been doing this for years. I have also borrowed to make my life more convenient so I understand fully the rationale for borrowing. However the question arises how much to borrow and exactly where to invest that borrowing given at some point it has to be paid back. That is a basic financial rule whether it’s your own home or whether you are the Government.

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