Public services should not be the victims of inflation

On UN Public Service Day, many public-service workers and the services they provide remain needlessly impoverished.

The phrase ‘the summer of discontent’ has begun to appear in the British press, a direct reference to the ‘winter of discontent’ and the social movements which shook the country in 1978 and 1979. More than 40,000 rail and London Underground workers have gone on a series of 24-hour strikes, to denounce the deterioration of their purchasing power in the face of 9 per cent inflation and demand wage increases.

In the wake of this movement, nurses, as well as telecommunications, postal and airport workers have announced their intention to do the same. The education sector is expected to follow suit as schools, libraries, and municipal swimming pools face budget cuts.

Britain is no exception. In France, healthcare workers are angry, with dozens of emergency services filing strike notices. In Tunisia, the main public-service union is calling for a walkout in pursuit of higher salaries. Zimbabwean healthcare workers have just gone on strike to compel the government to pay salaries in United States dollars, as spiralling inflation has eroded their purchasing power.

In Latin America, Peruvians have been first to express an outcry against inflation, but the sharp increase in food and energy prices suggests renewed social unrest throughout the region. In Puerto Rico and Minnesota, teachers have taken to the streets. In Sri Lanka, the government has just adopted a four-day working week for civil servants, so they have time to grow food at home to support themselves.

Everywhere, runaway inflation is yet another hard blow after more than two years of a pandemic which has tested those selfsame workers on the front lines.

On their knees

After decades of austerity, precarious contracts and privatisation, healthcare workers are on their knees, in poor countries as well as richer ones. Many have paid with their lives in the struggle against the virus. Others have worked endless days without a pay increase or social recognition.

It is women who are bearing the brunt, representing 70 per cent of health workers worldwide. This is made even more unbearable by being the ones who, at home, take care of most of the unpaid domestic work—a burden increasing as public services on the verge of collapse prove incapable of carrying out their missions.

Inflation is back, worldwide, triggered by the pandemic, exacerbated by the war in Ukraine and proving to be more persistent than the major central banks envisaged. But we are not all equal when it comes to inflation. In the poorest countries, it is already causing increased hunger and food insecurity. In wealthy countries, low-income households are the first to suffer, with higher food prices weighing more heavily on their food baskets than on those of the better-off.

As the world marks United Nations Public  Service Day, images of myriad civil servants protesting against the ravages of inflation are a reminder that there are more and more poor and precarious workers in their ranks, even in the world’s most powerful countries. It is not surprising that it is becoming so difficult to find candidates in many for positions as nurses or teachers.

Resources exist

Precarious working conditions, budget cuts, transfer of control to the private sector—none of these is inevitable. The resources to raise salaries and hire more people exist. They must be drawn from where they are—in the accounts of the multinationals and of the richest people discreetly lodged in tax havens.

Since the beginning of the pandemic, the fortunes of the ten most affluent individuals in the world have doubled, while the income of 99 per cent of the world’s population has decreased. The health crisis has only deepened an underlying trend: since 1995, the wealthiest 1 per cent have captured nearly 20 times as much wealth as the poorest half of humanity.

As for the multinationals, most of them have benefited from the pandemic, but they continue to take advantage of the system to pay almost no taxes. Amazon, for example, avoided about $5.2 billion in US federal taxation in 2021. The company reported record profits of more than $35 billion—75  per cent higher than its 2020 haul, itself a record—but it only paid corporate income tax on them at an effective rate of 6  per cent (the official rate is 21).

Paying a fair share

It is urgent to rethink international taxation to make multinationals finally pay their fair share. Even the G20, which brings together the 20 richest countries in the world, last year defended a deal to implement a global minimum tax of 15 per cent on multinationals’ profits.

It is a step in the right direction but the agreement is not ambitious enough: it will only generate $150 billion in additional tax revenue, which, according to the distribution criteria adopted, will go primarily to rich countries. This would however reach $500 billion with a rate of 25 per cent, as recommended by the Independent Commission for the Reform of International Corporate Taxation (of which I am a member). 

Governments also have the option of making the super-rich contribute more. A handful of them, the ‘patriotic millionaires’, are aware of the urgency to do so. ‘Tax us, the rich, and tax us now,’ they said recently in an open letter, calling for the introduction of ‘a permanent wealth tax on the wealthiest to help reduce extreme inequality and raise revenue for long-term, sustainable increases in public services such as health care’.

Political will

When the political will exists, it is quite easy to identify where the wealth is hidden, as the Russian invasion of Ukraine has shown. It took little time for the world to learn all about the yachts and luxury apartments of those Russian oligarchs close to Vladimir Putin. A similar effort must be made to uncover the hidden wealth owned by multi-billionaires of all kinds.

With the inflation crisis, it is impossible to keep avoiding the challenge: will states continue to finance themselves through austerity programmes, cuts in public services, raising the retirement age and increasing the contribution of the poorest through inflation-enhanced consumption taxes? This is a recipe for chaos.

The only way to escape it is to restore citizens’ confidence, rebuilding more resilient, inclusive and egalitarian societies, capable of facing the existential threat of climate change.  For that, we must radically change course and make all those who have the means to do so—yet today manage to escape their obligations—contribute more.

Otherwise, the discontent will last much longer than a summer—and on a global scale.