Public services should not be the victims of inflation, By Irene Ovonji-Odida

With the inflation crisis, it is impossible to continue to evade the debate: will the States continue to finance themselves through austerity programs, cuts in public services, raising the retirement age and the increase in the contribution of the poorest through consumption taxes inflated by inflation? It’s a recipe for chaos. The only way to escape it is to restore the confidence of citizens, by rebuilding more resilient, inclusive and egalitarian societies…

Rampant inflation reminds us that there are more and more working poor in public services around the world. However, governments have the means to finance quality public services: the richest and the multinationals must contribute.

The phrase “Summer of Discontent” began to appear in the British press, a direct reference to the “Winter of Discontent” and the social unrest that rocked the country in 1978 and 1979. More than 40,000 railway workers and workers London Underground went on a series of 24-hour strikes to denounce their deteriorating purchasing power in the face of 10 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 should follow suit since schools, libraries and municipal swimming pools deal with budget cuts.

Brittany is no exception. In France, nursing staff are angry, with dozens of emergency services filing strike notices. Zimbabwean health workers have just gone on strike to force the government to pay salaries in US dollars as spiraling inflation has eroded purchasing power. In Latin America, Peruvians were the first to voice an outcry against inflation, but the sharp rise in food and energy prices portends renewed social unrest across the region. In Puerto Rico and Minnesota, teachers took to the streets. In Sri Lanka, the government has just adopted a four-day working week for civil servants, so that they have time to farm at home to support themselves. Everywhere, runaway inflation is another blow after more than two years of the COVID-19 pandemic that has tested frontline workers.

After decades of austerity, precarious contracts and privatization, health workers are on their knees, in poor and rich countries alike. Many have paid with their lives for the fight against the virus. All work endless days without any pay rise or social recognition. And it is women who suffer the most, as they represent 70% of health workers worldwide. This situation is all the more unbearable since it is they who, at home, take care of the essential unpaid domestic work, which increases as public services on the verge of collapse prove incapable of fulfill their missions.

As the world commemorated International Public Service Day this week, the images of hundreds of thousands of 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.

Inflation is back, worldwide, triggered by the pandemic, exacerbated by the war in Ukraine, and it’s proving more persistent than major central banks thought. But we are not all equal when it comes to inflation. In the poorest countries, it is already causing an increase in hunger and food insecurity. In rich countries, low-income households are the first to suffer, with rising food prices weighing more heavily on their food basket than on that of the wealthiest.

As the world commemorated this week the International Public Service Day, the images of hundreds of thousands of 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 most powerful countries in the world. It is not surprising, in this context, that it becomes impossible to find candidates for positions as nurses, truck drivers or teachers in many countries.

Precarious working conditions, budget cuts in the civil service, transfer of control to the private sector: none of this is inevitable. The resources to increase salaries and hire more people exist. They must be taken where they are: in the accounts of multinationals and the richest housed discreetly in tax havens. Since the start of the pandemic, the fortunes of the ten richest in the world have doubled, while the incomes of 99% of the world’s population have decreased. The health crisis has only deepened a basic trend: since 1995, the richest 1% have captured nearly 20 times more wealth than the poorest half of humanity. As for multinationals, most of them have taken advantage of 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 federal corporate income taxes in 2021. The company posted record profits of more than $35 billion -75 percent higher than its 2020 record – and paid just 6 percent of these profits in federal corporate income tax.

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

Therefore, it is urgent to rethink international taxation so that multinationals finally pay their fair share.. Even the G20, which brings together the 20 richest countries in the world, last year championed an agreement to introduce a global minimum tax of 15% on the profits of multinationals. It is a step in the right direction, but the agreement is not ambitious enough, because it will only generate 150 billion dollars in additional tax revenue, which, according to the distribution criteria adopted, will go mainly to rich countries. This would reach $500 billion, with a rate of 25%, as recommended by ICRICT, the Independent Commission for the Reform of International Corporate Taxation, of which I am a member.

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Governments also have the option of making the super-rich contribute more. A handful of them, the “patriot millionaires”, are aware of the urgency of doing so. “Tax us, the rich, and tax us now,” they recently said in an open letter, calling for the introduction of “a permanent wealth tax on the wealthiest to help reduce extreme inequality and to raise incomes for sustainable and long-term increases in income”. public services such as health care”. And when the political will exists, it is quite easy to identify where the wealth is hiding, as the Russian invasion of Ukraine showed. It only took a few days for the world to find out all about the yachts and luxury apartments of these Russian oligarchs close to Vladimir Putin. A similar effort must be made to uncover all the hidden wealth held by multi-billionaires of all kinds.

With the inflation crisis, it is impossible to continue to evade the debate: will the States continue to finance themselves through austerity programs, cuts in public services, raising the retirement age, and the increase in the contribution of the poorest by consumption taxes inflated by inflation? It’s a recipe for chaos. The only way to escape it is to restore the confidence of citizens, by rebuilding more resilient, inclusive and egalitarian societies, able to face the existential threat of climate change. And for that, it is necessary to radically change course and to make contribute more all those which have the means and which manage today to escape their obligations. Otherwise, prepare for discontent to last far longer than a summer – globally.

Irene Ovonji-Odida is a lawyer and member of ICRICT (Independent Commission for the Reform of International Corporate Taxation). She was also a member of the High Level Panel on International Financial Accountability, Transparency and Integrity for the Achievement of the 2030 Agenda (FACTI).


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