Austerity may be the new reality for public employees in the developed world, whether in Greece, Germany or Britain.
But the International Monetary Fund and the World Bank have pushed ahead with pay raises above the rate of inflation for thousands of workers despite opposition from major funders in the US and Europe.
US representatives on the IMF and World Bank boards abstained in the recent votes that approved raises of 4.9 per cent and 3.7 per cent respectively. They were joined by European nations who felt the increases set the wrong tone when governments are being pushed to retrench. The IMF released its “Ten Commandments for Fiscal Adjustment in Advanced Economies.”
Raises at the World Bank were approved at a Wednesday board meeting, just a day after Britain released an austerity package featuring new taxes and spending cuts.
“When governments worldwide are cutting public spending, increasing taxes and reducing or freezing public sector pay, to award an above-inflation pay rise risks making the bank appear out of touch,” said Rob Kelly, a spokesman for the Britain’s Department for International Development.
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