New research: IMF imposed austerity slashes three million frontline workers from world’s most fragile education and health systems

New research by ActionAid, Public Services International, and Education International warns that the International Monetary Fund’s demands to cut public sector employee costs undermine progress on health and education.

The International Monetary Fund’s advice to cut government spending in the global south has wiped nearly $10 billion from public sector wage budgets in 15 countries: Bangladesh, Brazil, Ghana, Kenya, Liberia, Malawi, Nepal, Nigeria, Senegal, Sierra Leone, Tanzania, Uganda, Vietnam, Zambia, and Zimbabwe. This is the equivalent of cutting more than three million essential jobs, such as teachers, nurses, and doctors, despite the growing need for such professionals during the pandemic.

David Edwards, General Secretary at Education International stated: “Public sector wage bill constraints have a devastating effect in the education sector. When the teacher wage bill is cut, students’ right to quality education is threatened by a lack of qualified teachers and unacceptably large class sizes. Given the global teacher shortage and rising attrition levels due to the pandemic, the IMF should be supporting low and lower-middle income countries to recruit and retain more well trained and highly qualified teachers rather than pushing for countries to reduce their spending on these workers that are so crucial for countries’ post-pandemic recovery. Teachers are key for quality education and are crucial for achieving the global goal to ensure inclusive education for all.”

The public versus austerity

As G20 finance ministers meet for the IMF annual meetings today (12 October), the research reveals that despite IMF claims that wage bill containment is a temporary measure, all the 15 countries studied have been advised to cut or freeze public sector wage bills for three or more years and most for at least five years.

The report, The Public Versus Austerity, shows how cutting budgets used to pay public sector workers is undermining progress on health, education and gender equality while blocking Covid-19 responses and the transformations needed to address the climate crisis.

"Public sector wage bill constraints have a devastating effect in the education sector. When the teacher wage bill is cut, students’ right to quality education is threatened by a lack of qualified teachers and unacceptably large class sizes."

David Edwards, Education International General Secretary

Analysis of IMF documents, including Article IV reports that provide policy advice which shape countries’ economies for years, also reveals how data is being misused at country level to drive down public employment funding. It finds that countries with wildly different spending on public sector wages as a percentage of GDP were all advised to make cuts, from Zimbabwe with 17% of GDP to Nigeria with just 1.8% of GDP. Despite these huge variations, the IMF’s advice is consistently to cut spending.

Out of 69 IMF documents examined, only Liberia’s included calculations on existing staffing shortfalls in the education and health sectors – despite such information being of vital importance in determining public employment funding levels.

Liberia’s Article IV report showed the country’s ratio of health professionals per 10,000 people is only five, compared to the World Health Organisation target of 41. Yet despite the clear need for more public service workers across a range of sectors, Liberia was still advised to make a 1.1 percentage point cut to the public sector wage bill.

The report comes just weeks after the World Bank ditched its annual Doing Business report following calls from civil society for change and a damning investigation, which revealed significant internal bias and data manipulation.

The new research further highlights the need for reform at both the International Monetary Fund and the World Bank, towards a new policy direction which revalues the role of public employment and services in fostering development and growth.

Accounts from the frontline

Teachers, doctors, and nurses from the countries involved in the study, shared shocking accounts of fragile health and education systems brought to their knees during the height of Covid-19 due to shortages of key workers.

In Zimbabwe, teachers’ salaries (around ZWL$28,666, or US$335 per month) are less than the total consumption poverty line, the amount needed to buy enough food and non-food items to support a family of five each month.

Farai*, a teacher from Zimbabwe says: “Our wages feel like slave wages, teachers are facing so many challenges. We are suffering from stress and surviving teachers feel as if they have become beggars. Morale is at its lowest."

“We have become a laughingstock in society, living from hand to mouth. We go to work in tattered clothes, and we are living in squalid conditions. I have heard of marriages breaking down. But through this all we are still reporting for duty.”

Broken austerity policies such as wage bill containment, highlight how the IMF has undermined public services and prevented countries responding to multiple crises, such as the climate crisis and the Covid-19 pandemic.

Across the 15 countries studied, if governments were to raise the amount of GDP spent on public sector wage bills by just one percentage point this would allow for the recruitment of eight million extra teachers, doctors, nurses, and other key workers.

*The names of doctors, nurses, teachers, and other public sector workers quoted in the research have been changed to protect their identities.