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Sunday, August 14, 2022

Public services should not fall victim to inflation

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The phrase “The Summer of Discontent” has been appearing in the British press for some time. A direct reference to the so-called ‘Winter of Discontent’ and the social movements that rocked the UK in 1978 and 1979 to demand annual inflation of 10% and wage increases. Today, nurses, telecom and airport workers, garbage collectors and postal workers have announced their intention to do the same. The education sector is expected to follow, with local schools, libraries and swimming pools faced with budget cuts.

Great Britain is no exception. In Spain, the education sector in Catalonia has been staging total and partial strikes since March, and postal workers are demanding that cuts in public services be reversed. Zimbabwean toilets have shut down to force the government to pay wages in US dollars as rising inflation has reduced purchasing power. In Latin America, Peruvians are the first to take to the streets, but soaring food and energy prices suggest social unrest could spread across the region. In Sri Lanka, your government just introduced a four-day work week for civil servants to give them time to grow food at home to support themselves. Everywhere, runaway inflation is the camel’s last straw after more than two years of the Covid-19 pandemic has tested frontline workers.

Hospital workers are in poor countries but also in richer ones after decades of austerity, precarious contracts and on their knees privatizations. Many have paid for the fight against the new corona virus with their lives, most of them work endless hours without a salary increase or social recognition. And it is women who have paid the ultimate price ever since make up 70% of the health workforce in the world. In addition, they are the ones doing most of the unpaid care work in their own homes, which is increasing sharply as public services, which are on the verge of collapse, are unable to carry out their duties.

Inflation is back across the planet, caused by the pandemic, exacerbated by the war in Ukraine, and proving more persistent than the major central banks anticipated. But we’re not all the same when it comes to inflation. It is already causing increased hunger and food insecurity in the poorest countries. Even among the wealthy, low-income households are the first to suffer, as rising food prices weigh on their consumption baskets more than those of the better-off.

While the world was just thinking the International Day of Public Administration, images of hundreds of thousands of civil servants taking to the streets to protest the ravages of inflation are a reminder that even the world’s most powerful nations have growing numbers of poor and vulnerable workers in their ranks. Not surprisingly, in many countries it is impossible to find candidates for jobs as nurses, truck drivers or teachers.

To restore citizens’ trust and rebuild more resilient, inclusive and equitable societies, we must radically change course

However, deteriorating working conditions, cutting public service budgets and transferring control to the private sector are not inevitable. The resources to raise wages, hire more people and restore dignity to public administration are there, and they must be found where they are: in the accounts of multinationals and the wealthy, tucked away discreetly in tax havens. Since the beginning of the pandemic, the wealth of the ten richest men in the world has counted it was duplicated, while the income of 99% of the world’s population has declined. The health crisis has only deepened a fundamental trend: Since 1995, the richest 1% have hoarded nearly 20 times more wealth than the poorest half of humanity.

Therefore, there is an urgent need to rethink international taxation so that multinationals finally pay what suits them. Even the G20, which brings together the 20 richest countries in the world, is convinced of this and last year defended an agreement to introduce a minimum tax of 15% on the profits of multinational corporations. The agreement is a step in the right direction, albeit not very ambitious, as it will generate just over 140,000 million euros in additional tax revenue, which according to the adopted distribution criteria will mainly go to rich countries. This number would increase to over 475,000 million euros at a rate of 25%, as recommended by IRICTthe Independent Commission for Reform of International Corporate Taxation, of which I am a member.

States also have the option of allowing the super-rich to contribute more. A handful of them, the so-called “patriotic millionaires,” are aware of the urgency. “Put taxes on us, the rich, and stop now,” they say in an open letter, calling for the introduction of a “permanent wealth tax on the wealthiest” to help reduce extreme inequality and generate revenue for long-term sustainable increases in public services such as health care. And it can no longer be said that his fortune is untraceable. It only took a few days for the world to learn about the Russian oligarchs’ luxury yachts and apartments near Vladimir Putin. A similar effort can be made for all the hidden riches of billionaires from all over the world.

In view of the inflation crisis, the debate can no longer be avoided: will states continue to finance themselves with austerity programmes, cuts in public services, raising the retirement age and increasing the contribution of the poorest through inflation-related consumption taxes? This is a recipe for chaos. To restore citizen trust and rebuild more resilient, inclusive and equitable societies, capable of dealing with the existential threat of climate change, we must radically change course and all who have the means and are currently doing it manage to avoid their tax obligations, contribute more. Otherwise, it is to be expected that the dissatisfaction worldwide will last significantly longer than one season.

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Source elpais.com

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