The role of the public sector in combating inequality

an article by Christoph Hermann (FORBA – The Working Life Research Centre, Vienna and ILO) published in International Journal of Labour Research Volume 6 Issue 1 (2014)

Abstract

In the last decades, the merits of the public sector, including public infrastructures and services, have mostly been discussed with respect to their efficiency. Little attention has been paid to the redistributive effects of public services – despite the fact that equal access to essential services such as health care, education, transport and energy benefits low-income earners more than high-income earners and contributes to social equality.

This has several dimensions:
first, the (cash) value of public services as a proportion of income is greater for low-income households; for example, low-income earners use public transport more frequently.
Second, the public sector provides comparably decent jobs for low-skilled and marginalized workers, and wage inequality tends to be lower than in the private sector.
Third, the public sector guarantees of equal treatment of all citizens by providing the same service for everyone.

However, privatization, marketization and, more recently, the public sector cuts imposed in response to the financial crisis have undermined the redistributive effect of public services.

Full text (PDF 16pp)

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World of Work Report 2013: Repairing the economic and social fabric

Published by the International Institute for Labour Studies

Summary

The World of Work Report 2013 provides a comprehensive analysis of the current state of labour markets and social conditions around the world. It also projects employment trends and assesses the risk of social unrest.

The report points to an uneven employment picture, with emerging and developing economies performing better than the majority of advanced economies. Income inequalities continue to widen in advanced economies and although they have stabilised somewhat in large emerging and developing countries, they remain acute and progress in this area is still fragile.

The report analyses these trends and discusses the conditions necessary for putting job creation at the heart of policy making. It addresses the following questions:

• What are the challenges associated with an uneven job recovery from the global financial crisis? How have income inequalities evolved and what impact has this had on the middle class?
• Can minimum wages promote social justice and stimulate aggregate demand without dampening employment in developing countries? What is the scope in these countries for counteracting a double dip in growth and employment in advanced economies?
• How can productive investment be stimulated in order to create more and better jobs? And what are the financial reforms and corporate governance changes that would help to reinvigorate private sector investment?
• What are the trends in executive pay, and how do these compare with the evolution of the average worker’s earnings?
• How to achieve a shift to job-friendly policies and what is the role of the ILO in this endeavour?

This report draws attention to the need to restore the economic and social fabric, thereby laying a foundation for a sustainable recovery from the global crisis.

Full text (PDF 133pp)

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