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Why we need public spending - 2009

1 October, 2010
The analysis presented here is a powerful reminder that public investment in public services and social benefits is central to social and economic development, and is more efficient than leaving such services to be supplied by the market. It shows the economic efficiency of using taxation to finance public spending on infrastructure and services which enable and support all other economic activity. It shows that higher taxation is affordable, and that corporations in particular are paying far too little tax.

Our global union federation, Public Services International, commissioned this report by the independent Public Services International Research Unit at the University of Greenwich to help our unions counter the society-destroying ideology that is driving cuts in public services and privatisation of key services such as healthcare.

Unions should use this publication as one tool in the fight to prevent further destruction of jobs by across-the-board cuts of public services during recovery from the global recession.

This publication is not a plea for the special interests of public service workers. Public spending supports half of all jobs in the world. Further, quality public services are vital supports for democratic and sustainable societies.

The massive world-wide stimulus packages of 2009 increased public borrowing to rescue the world economy, which had been undermined by the excesses of the private banks – a result of government, deregulation and liberalisation of the financial sector, and not a result of excessive government spending and borrowing. 

 In the north, a combination of market speculation and regressive conditions imposed by the International Monetary Fund have forced countries such as Latvia and Greece to make drastic cuts which damage the entire economy, as well as public services. In some countries, such as the United Kingdom and Canada, governments will cut deficits by cutting spending on public services and benefits, although unemployment remains high and there is no prospect of a private sector led recovery.

In the south, the World Bank and the IMF continue to discourage public spending on vital infrastructure such as water and energy, and still promote privatisation in these sectors although it is known to be a failed strategy.

Everywhere, we are facing a persistent attack on public healthcare and public pensions, led by the IMF and supported by the World Bank, the Organisation for Economic Co-operation and Development and the European Commission. The increasing number of elders in the populations of northern countries is used as an excuse to cut public spending on social benefits and replace it with less-effective private healthcare and private pensions.

Unions must mobilise our members to build and strengthen coalitions with civil society organisations and to carry out advocacy campaigns aimed at countering the assumption that "there is no alternative".  The economic alternative exists: it is based on equitable taxation, appropriate financing for key public services, greater job creation and across-the-board improvements in the terms and conditions of work.  Social and economic progress must include the appropriate public policies which ensure a life of dignity for all, not just for a tiny elite which is taking an increasing share of the global wealth.

Download the full report in English (1.2MB) - Français (1.7MB) - Español (1.6MB) - Arabic (1.8MB) - Bahasa Indonesian


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