85% of the world's population will live in the grip of stringent austerity measures by next year

Despite millions of people being pushed into hunger and poverty, 143 countries — including 94 developing nations — are implementing policy measures that undermine governments’ capacity to provide healthcare, education and social protection. 

A new report titled “End Austerity: A global report on budget cuts and harmful social reforms” shows that 85 percent of the world’s population will live in the grip of austerity measures by 2023. This trend is likely to continue until at least 2025, when 75 percent of the global population (129 countries) could still be living under these conditions.  

Austerity measures include scaling down social protection programs for women, children, the elderly and other vulnerable people, leaving only a small safety net for a fraction of the poorest.  They also include cutting or capping the wages and number of teachers and healthcare workers, eliminating subsidies, privatizing or commercializing public services such as energy, water and public transportation, and reducing pensions and workers’ rights.  

Civil society organizations from across the world are launching the #EndAusterity campaign today to fight back against the wave of austerity that is sweeping across the world, supercharging inequality and compounding the effects of the cost-of-living crisis and climate breakdown.

Isabel Ortiz, Director of the Global Social Justice Program at the Initiative for Policy Dialogue, said: “Decisions on budget cuts affect the lives of millions of people and should not be taken behind closed doors by a few technocrats at a Ministry of Finance, with the support of the IMF. Policies must instead be agreed transparently in a national social dialogue, negotiating with trade unions, employer federations and civil society organizations. Austerity cuts are not inevitable; in fact our report presents nine financing alternatives that are available, even to the poorest countries.”

Additional analysis published today by the Financial Transparency Coalition and its partners shows that one-third less COVID-19 recovery money was spent last year compared to 2020, falling from 3.9 percent of GDP to 2.5 percent of GDP.

The report “Recovery at a Crossroads: How Countries Spent COVID-19 Funds” also found that only 37 percent of COVID-19 recovery funds in 21 developing countries were invested in social protection. Meanwhile, 38 percent of these funds went to big corporations — this does not take into account tax waivers, corporate loans, and credit lines where they are not accounted for in the budgets. Smaller businesses got 20 percent of recovery funds, and informal workers 4 percent. Women have been particularly affected, since despite being hard hit by the pandemic, they only received half as much support as men.

Matti Kohonen, director of the Financial Transparency Coalition, said: “Despite the cost-of-living crisis, governments in developing countries, often with their hands tied by international financial institutions, are putting big corporations ahead of the people. Nearly 40 percent of COVID-19 recovery funds went to big companies, meaning that those most impacted by the pandemic have been left behind. We should promote a people-centered recovery with progressive tax policies instead of cutting social protection and support for the most vulnerable.” 

Civil society organizations will kick off the #EndAusterity campaign on 28 September with a series of virtual events that will run through 30 September. These events will bring together high-profile academics and civil society activists to discuss alternatives to austerity. Alternatives include taxing corporate excess profits, eliminating illicit financial flows, canceling and restructuring sovereign debt, and increasing coverage of social security and employer’s contributions, as well as issuing new IMF Special Drawing Rights targeted to developing countries.

“In the worst of times, austerity is the worst possible choice. It should not even be on the agenda. Austerity is designed to dismantle public healthcare and education and labor regulations. It enriches the wealthy and big corporations at the expense of the rest of us. Choosing austerity over many other ways to reduce deficits or even boost budget revenues, like taxing wealth and windfall profits, is not only economically disastrous — it’s deadly,” said Nabil Abdo, Oxfam International’s Senior Policy Advisor.