AltAusterity Digest #17 October 5-11, 2017

An IMFBlog post is making the case for fiscal policy in the battle against inequality. According to authors Gaspar and Garcia-Escribano, fiscal policy offsets about a third of income inequality before taxes and transfers. The main driver of this equalizing force is transfers. According to the authors, progressive taxation, universal basic incomes (UBIs) and public spending on health and education can achieve the desired results, but only if they’re done in an “efficient” way.

Austerity could be hampering racial diversity in local government. A study conducted by the Colour of Power and its partners has found that there isn’t a single black or minority ethnic (BME) chief executive in England’s 50 unitary local authorities. As cost-cutting measures have been undertaken at the local level, recruitment and promotion systems have suffered. Additionally, reductions in staff have impacted middle-management positions – reducing the already thin numbers of BMEs in those positions.

Recent projections for Saudi Arabia’s economy show it shrinking in 2017 by 0.5%. A privatization scheme and reforms to reduce reliance on oil have been proposed to cut the state budget deficit of 8.1% of GDP. The Saudi economy is suffering from a drag in oil prices and a slowdown in the non-oil sectors.

French public-sector workers including teachers, nurses and air traffic controllers joined a civil service strike on Tuesday over job cuts and a pay freeze. Macron wants to slash 120,000 civil service jobs in five years to help cut public spending of about 57% of GDP. Support for the Macron government has eroded since his election with a majority of French citizens supporting the strikes. 

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