We produced these five briefs in partnership with the United Nations Conference on Trade and Development (UNCTAD), just before the COVID-19 pandemic, because unions and workers must understand the issues and be prepared if we are to ensure the risks and costs of debt crisis are not pushed onto workers and public services. We have added an extra "Special Brief" putting debt issues in the context of the current crisis.
The Coronavirus pandemic is demonstrating the vital importance of government spending - in both saving lives and responding to market failures. In many countries, public budgets have been extended to support a wide range of industries, renationalize failing privatized services and subsidize wages across the private sector. After decades of tax-cuts for mega rich corporations, many of whom are now relying on public funding, a large proportion of this spending will come from public borrowing.
Already, the World Bank is attempting to use emergency loan packages to advance even more Structural Adjustment Programs - which rarely prove effective and can lead to austerity and wage-losses.
In the coming months and years, the debate over how to bare the costs of the Coronavirus response will be of vital importance to us all. We must learn from the mistakes of 2008, which saw the bailout of failing financial institutions - the very perpetrators of the crisis - rather than struggling households.
These PSI Debt Briefs are here to help unions quickly get up to speed on the arguments surrounding sovereign debt, learn from case-studies from across the world and fight to protect workers and public services in these trying times.
This will be one of the most important debates of our generation.
Daniel Bertossa, PSI's Assistant General Secretary, deconstructs debt, outlining the importance for unions to understand these issues and fight to ensure workers and public services aren't undermined when crises occur.
Debt and Workers
When countries face debt crisis, public services are pushed into the firing line. Budgets are slashed, utilities privatised,`workers fired. Meanwhile, democratically elected governments are undermined by international creditors who often impose brutal - and illogical - provisions to ensure repayment.
Sovereign debt issues will likely affect the vast majority of workers in the world at some point in their life.
When these crises hit, public debt is often presented by journalists, politicians and business as the result of wasteful government spending, overpaid workers and welfare recipients like pensioners bleeding the country dry.
Each year since 1970 an average of 8 countries have faced a sovereign debt crisis, with each one affecting neighbouring countries and trading partners.
In reality it is usually workers, pensioners and users of public services who bear the brunt of debt restructuring through austerity, labour market deregulation and privatisation, even when it is not them who created the problem.
Most importantly workers and their unions need to understand when they are being lied to or mislead so they can engage in real social dialogue and defend our interests.
To help do this, this special series on debt examines what happens when public spending leads to indebtedness, why indebtedness of the state is perceived to be a problem, what debt means for the sovereignty of the state and how this all impacts workers.
In addition to our Debt Series, check out UNCTAD's new report - From the Great Lockdown to the Great Meltdown: Developing Country Debt in the Time of Covid-19.
This series was produced as part of the Citizens for Finanial Justice Project. The publications received financial support from the European Union. The contents are the sole responsibility of Citizens for Financial Justice and Public Services International and do not necessarily reflect the views of the European Union.
Radio Labour Interview
Sovereign debt levels around the world have dramatically risen, partly because of corporate lobbying. This is dangerous for working people. An interview with Daniel Bertossa, Assistant General Secretary of Public Services International. Duration: 8'15"
Debt Briefs - PDFs
Brief 1 - Rentier Capitalism and Debt
Brief 2 - The Business of Debt: What Workers and Unions Should Look Out For
Brief 3 - Sovereign Debt and Default: Why It Matters for Workers
Brief 4 - Debt Distress and Crisis: What Happens When it Hits?
Brief 5 - Fixing a Rigged System: Fairer Global Debt Rules