Public sector under fire in 2010 - 9 Dec. 2009

Old and poor - woman
Waiting for a cold winter

Ireland announced on Wednesday an exit of its stimulus strategy by presenting a budget that foresees € 4 billion of cost reductions. 

Earlier this week the ILO warned against an early exit of stimulus measures. The UN organization estimated that the crisis had already cost 20 million jobs, and figures that would increase to possibly 43 million, if governments would not invest more in saving jobs as economic recovery is considered too weak at this stage. 

Especially the public sector is in danger, as governments face huge deficits. But the appeal by the ILO might have been in vain, not only in Ireland, but also in many US states and other localities, where governments have been forced to cut their staff or reduce salaries of their people. Budget cuts were most severe in California with US$ 24 billion deficit, but few states are not cutting their expenses for 2010. Similar measures are, according to the BBC, also planned in Greece and Spain, and perhaps the UK might follow too. 

On a federal level the US are continuing their stimulus packages till Fall 2010, Secretary Tim Geitner announced on Wednesday.

Not everywhere, cuts in the public sector are on the agenda already. Japan is the only straight forward exception with a stimulus plan of US$ 81 billion, and China is still sticking to its financial stimulus (total package US$586 billion), but otherwise governments are planning to adjust their financial future to match the growing budget deficits. 

The situation in Ireland was problematic enough, so tough that even the Irish trade unions came with their own budget reduction plans. But the Irish government thought those proposals were too little and not effective to match its debts, that amounts to 800 percent of its GDP. Ireland is heading for a 2010 of discontent, and in other countries citizens might not quietly agree with slashing the public sector. In Ireland, even the police is up for strike, a move that has shocked many. Also in the Czech Republic police and firemen were protesting a four percent wage cut. They might be getting company.

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