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Blogs, Crisis response (stimulus and austerity measures), Macroeconomic policies

Social deficits in 2015: Another year of living dangerously?

As 2015 begins, an elusive global recovery and inequalities becoming more and more apparent make the fight for social justice more needed than ever.

In 2014, the UN Open Working Group proposed a set of 17 sustainable development goals (SDGs), including social protection floors for all. But the question remains: will these goals and targets be meaningful and adequately financed to redress inequalities and transform societies?

2015 promises to be another roaring year with the finalization of the post-2015 development agenda at the UN Summits in Addis Ababa (July) and in New York (September), as well as the continuing policy debate (struggle!) to promote global socio-economic recovery. Key international gatherings to watch include the IMF and Bank Meetings in Washington (April) and Lima (October), and the G20 now under Turkish presidency.

Countering these meetings, civil society will fight for alternative policy agendas at the World Social Forum in Tunis (March), and other parallel events to official international gatherings. At the country level, social dialogue remains the main avenue to ensure national recovery and inclusive development, and when policy-makers do not listen, citizens will likely continue the increasing trend in protests and demonstrations.

The inequality and recovery debates have positioned social protection, decent work and progressive taxation at the forefront of the development agenda.  Raising household income is essential to reduce inequality and to promote demand/economic recovery. However, in 2014 we saw worrisome trends in the two main factors affecting household income, wages and social protection. Wage growth has been falling over the last decades, combined with low employment as a result of “jobless growth.” And, while narrowly-targeted safety nets have been expanding, overall social protection and household welfare have not, due to recent reforms to social security and health systems, elimination of subsidies, cuts/caps on the number of health and social workers, fees for social services, and increases in indirect taxation, among other adjustment or fiscal consolidation measures, now affecting 120 nations, including 86 developing countries in 2015.

Three Nobel Laureates have started the year with strong op-eds on inequality, Joseph Stiglitz, Amartya Sen and Paul Krugman – the latter wrote “the wealthy exert a vastly disproportionate effect on policy. And elite priorities — obsessive concern with budget deficits, with the supposed need to slash social programs — have done a lot to deepen the valley of despond.” Krugman is concerned with the stagnation of the working and middle classes, and the rise of radical parties/groups; he blames politicians who seem unable “to challenge elite priorities, in particular the obsession with budget deficits, for fear of being considered irresponsible. And that leaves the field open for unconventional leaders… who are willing to address the anger and despair of ordinary citizens.

Global recovery and inclusive development require a policy shift to increase public investments, to have expansionary macroeconomic policies, to generate jobs and to raise household income – with adequate wages and universal social protection systems (not charitable safety nets  – but for health for all, pensions for all, support for all unemployed, and so forth). Some countries are considering monetary and fiscal stimulus policies (e.g. Japan announced a $29 billion package, welfare and wage increases), some are disputing debt (e.g. Argentina, Greece), some countries are expanding social protection to achieve universal coverage (e.g. China, India, Mexico). Will other governments follow in 2015? Or will policy-makers continue to deepen orthodox fiscal, labour reforms and other “jobless growth” policies, accompanied by a few targeted safety-nets?

2015 promises to be another year of living dangerously. We cannot delay any more: It is time to act on the social deficits. We must address the disturbing inequalities of our world – a world where the top 1% of the population has the same as the poorest 3.5 billion. Policy-makers must tackle this unfair and dysfunctional trend, and realize that a real world recovery means a recovery for all, not simply the recovery of a few economic indicators, wealthy persons and stock markets.

Isabel Ortiz is the Director of the Social Protection Department at the International Labour Organization. This piece was written acting on her individual capacity and should not be construed in any way as necessarily representing official views of the International Labour Organization. She is (also in her individual capacity) a member of the Advisory Board of RightingFinance.

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