As OECD economies struggle to emerge from the crisis of 2008/09, governments have to wrestle with difficult dilemmas. On the one hand, they face increasing pressure to wind back the large deficits they ran up to bail out the financial sector and restart economies. We see the nature of those pressures most dramatically in the current run on the Euro, which governments are trying to stem with new packages entailing dramatic budgets cuts in Greece, Spain, Portugal and Ireland. On the other hand, they must know that dramatic cutting of public sector budgets threatens recovery. The risk of a “double-dip” crisis has become real.
We see the dilemma reflected in the OECD Ministerial meeting agenda this week “Fiscal Consolidation and Employment”. And the OECD Forum debate “How to avoid a jobless recovery”. Framing the debate in economic terms is to be expected at the OECD, or at institutions like the IMF. But there is another dimension to the debate – and the policy dilemmas facing governments – that has not been given enough attention.
Funding of public services is not just about “pump-priming” to restart economies, with the implication that the tap can be turned off once the economy gets going again. Public services are essential to the very fabric of democratic societies. The public sector provides essential services for citizens – education, health, water and sanitation, transport, communications, public safety, emergency and fire services, local community services … Sure, there has been a three decades-long movement to hand over many of these essential services to the private sector, and that movement continues. But herein lie questions of equity, justice and values which are fundamental to democratic societies.
Saving the financial sector from meltdown has already resulted in a massive transfer of public resources to private interests. Now those same private interests are mounting a formidable assault on public finances that are needed to maintain services essential to citizens in democracies.
Finance Minister Giulio Tremonti, of Italy, chairing this year’s Ministerial Council and OECD Forum, stated again today that fundamental change is underway – and proceeding at a rate probably unprecedented in human history. Over two recent weekends, he met with other EU Finance Ministers to get announcements out before the markets opened on the Monday. Then market actors said it wasn’t enough anyway. In other words, governments no longer control the situation. Fundamental rethinking is required. A new paradigm for equitable and sustainable growth is required. And that can only be achieved by breaking out from the mental straight jacket of “business as usual”. And by engaging citizens through organized civil society, and working families, through the organized labour movement.
Senior Consultant, Education International
Chair, TUAC Working Group on Education, Training & Employment