PSIRU

AFRICA NEWSLETTER 4

Contents

1.      Sector – Health.. 1

1.1.        Health sector reforms in Nigeria.. 1

1.2.        PSI Health Network.. 3

2.      Sector – Local Government.. 5

2.1.        Regional body established.. 5

2.2.        PSI Local Government Network (AMALGUN) 5

3.      Labour Issues. 6

3.1.        Health sector: 6

3.2.        Local government: 8

1.1.Health sector reforms in Nigeria 

Health indicators for Nigeria highlight a country with many health problems. Life expectancy is 53 years of age for males and 54 for females; maternal mortality is 840 per 100 000 live births; and the mortality rate for children younger than 5 is 138 per 1000 live births (the global average is 60). More than 1 million children die each year from preventable diseases, and it is the only country in Africa not to have eradicated poliomyelitis, with a vaccination programme that only covers about 70% of those it is intended for. Not only is the proportion of the GDP spent on health only 5.8%, but there are enormous inequalities in the amount spent on health services between different parts of the country. There are also differences in the capacity of local governments across the country to provide primary health care – which is meant to be the cornerstone of the health system.

Only about a quarter of health spending in Nigeria is through the public sector – so it is not surprising that the poor suffer the most from lack of access to health services. They cannot afford the costs of direct payments – not only must people pay for health services in the private sector, but many public health services charge a fee as well. A high proportion of the total spending on health is done by households – between 1998 and 2002, an average of 64.5% of the total health expenditure on health came from households. This is a very high amount – effectively, in over a quarter households, about 12% of total household expenditure is spent on health. A particular problem facing Nigeria is the number of health workers who have left the country to work elsewhere.

It is not surprising that Nigeria is not on track towards achieving all of the health-related Millennium Development Goals.

There have been various attempts to reform the health system over the years. In 1988 a National Health Policy was developed, but was not turned into legislation. One of the elements of this policy was to make clear the different responsibilities of the three tiers of government. In 1996, the policy was updated, but again, nothing further happened. Then in 2004 a new National Health Bill was proposed. The Bill:

• Provides a framework for the development and management of a national health system.
• Sets out guidelines for the formulation of a national health policy, with an emphasis on the provision of essential drugs and a comprehensive vaccination programme for pregnant women and children under the age of 5.
• Stipulates that all Nigerians are entitled to a guaranteed minimum package of services. However, this minimum package is not defined – but will be prescribed by the Minister in consultation with the National Council on Health. It is however noted that this basic package of services will be provided “within available resources”. Beyond this minimum package, whatever it is, there is a provision for categories of persons to be exempt from paying for health care services at public health institutions. Again, who exactly would be eligible is not defined.
• Reaffirms the importance of Primary Health Care by setting up a National Primary Health Care Development Fund, which will be financed by not less than 2% of the consolidated fund of the Federation, as well as by funding from other sources such as grants from international donor partners.
• Defines the rights of health workers and users. It attempts to deal with the problem of the brain drain by providing for ongoing education and training of health workers.
• Establishes the National Tertiary Hospital Commission, which is meant to regulate specialist care.

While the Bill was first passed in May 2009, it was then withdrawn for bureaucratic reasons. Finally in June 2011, it was revived and passed by the two Houses of the National Assembly. However, the Bill has still not become law. It was not signed by the President within the legally-required 30-day period, which means that it has lapsed. A copy of the Bill can be found at http://www.herfon.org/docs/Harmonised-NATIONAL-HEALTH-BILL-2011%20doc.pdf

According to the Minister of Health, Professor Onyebuchi Chukwu, the reason the President did not sign the Bill was that a number of different groups and organisations wrote to the President, protesting about different aspects of the Bill. Some organisations, such as UNICEF, are arguing that the Bill should be passed as soon as possible because it will assist the poor and marginalised get access to health care through provisions such as the fund for primary health care, which allows for all Nigerians to access, free of charge, a basic package of health services. UNICEF argues that the Bill will help reduce infant and maternal mortality.

However, other organisations, such as the PSI affiliate, the Medical and Health Workers Union of Nigeria (MHWUN) argue that, while they recognise the importance of national health legislation to systematise and provide a framework for the health system in the country, the problems of the Bill must first be sorted out before it is passed.

The key concerns raised by MHWUN are:

• The Bill attempts to take away the power of existing regulatory bodies for different groups of health professionals.
• The Bill specifies that various head administrative positions, such as the chair of the National Tertiary Hospitals Commission, must be filled by medical doctors. MHWUN argues that these positions should be open to any health professionals.
• MHWUN, despite organizing at least 60% of the entire workforce in the health sector has been excluded from membership of the National Council on Health, established by the Bill.

For a more detailed statement see http://allafrica.com/stories/201110041180.html.

Another area of concern would be the limited amount of funding made available for the basic package of services through the National Primary Health Care Development Fund; and the fact that beyond this basic package fees will continue to be charged for health services in the public sector. Charging for health services, as well as increasing the involvement of the private sector, are strategies promoted by the World Bank and the International Finance Corporation (IFC). Currently in Nigeria it is estimated that about 70% of healthcare services are being provided by private hospitals, with many people not able to afford to pay for these services.

Health sector workers face numerous problems – these include under-staffing (not least because of the brain drain), low pay, wages not always being paid on time, and so on. The result is that there have been numerous strikes and labour disputes over the years. See the section on “labour issues” in this newsletter for news of two recent worker actions.

The lack of clear policy direction, legislation, sufficient funding for public sector delivery and a reliance on the privatisation and commercialisation of healthcare in the country has led to a situation in Nigeria where the health sector is unable to effectively meet the vast needs of the country.

See: The Lancet “Hope for health in Nigeria” vol 377, Issue 9781, 4 June 2011 http://www.thelancet.com/journals/lancet/article/PIIS0140-6736(11)60791-5/fulltext

Daily Trust “Nigeria: Country’s Public Health Law and the Lancet” 16 June 2011 http://allafrica.com/stories/201106240500.html

Leadership “Health playing second fiddle to security, infrastructure – Chukwu” 27 February 2012  http://www.leadership.ng/nga/articles/17468/2012/02/27/health_playing_second_fiddle_security_infrastructure_%E2%80%93_chukwu.html

Daily Trust “Nigeria: Journalists assess options to push health bill” 9 May 2012 http://allafrica.com/stories/201205100249.html

Leadership “Experts score healthcare system low on World Health Day” 7 April 2012 http://allafrica.com/stories/201204080162.html

1.2.PSI Health Network 

PSI affiliates who organise health workers in West Africa have formed a network, the West African Health Sector Unions Network (WAHSUN), to share experience, learn from each other and co-ordinate their work across affiliates. The aim is for the network to contribute towards better health services in the sub-continent. The following key issues emerged out of the last meeting of WAHSUN, who took place in November 2011:

• WAHSUN condemns recovery policies and programmes for the global economy that do not put jobs and the defence of public services at their core and calls for the adoption of a new pro-people development paradigm and the abandoning of neo-liberalism.
• WAHSUN noted efforts of the West African Health Organisation towards improving health indices within the sub-region through collaboration with the ministries of health of ECOWAS member-states and the civil society and resolved to deepen relations with the organisation. However, despite these efforts, ECOWAS countries will not be able to meet the health specific targets of the MDGs due to inadequate funding and the furtherance of a neoliberal strategy which stunts public healthcare delivery. 15% of all national budgets should be allocated for public healthcare services as recommended in the Abuja declaration of African ministers of health to ensure significant improvement in healthcare.
• The state of Occupational Health and Safety in workplaces across West Africa leaves a lot to be desired, particularly in the health sector. WAHSUN reiterates its call for the institutionalisation of OHSE policies and programmes in the workplace across the countries in the region. WAHSUN stresses the need for trade unions to be very much part of the policy-formulation and implementation processes for this through the formation of bi-partite OHS committees.

On the situation in specific countries, WAHSUN said the following:

• Liberia: The passage of the Decent Work bill by the Liberian parliament is a step in the right direction towards establishing a robust industrial relations system in the country, although the delay in the President assenting to the bill is a worry.
• Ghana: Despite the picture of relative macroeconomic stability in the country, the state of the living conditions of working people in Ghana has not improved - unemployment remains high and wages low. WAHSUN thus calls for the immediate commencement of negotiation between the social partners in the country towards establishing a living wage for workers and for instituting pro-people policies that would foster increased employment.
• Sierra Leone: The terms and conditions of work in Sierra Leone’s public sector is appalling, with Sierra Leonean public sector workers about the least paid in the world. Gross under-staffing of the public health facilities, which is worsened by a very high rate of migration due to poor wages and terrible working conditions have resulted in serious overworking of health workers. WAHSUN demands the urgent upward review of wages in the Sierra Leonean public sector; a mass employment scheme, particularly within the health sector and; enthronement of Occupational Health and Safety procedures in the workplace.
• Nigeria: While WAHSUN recognises that National Health Acts are important in harnessing the resources of countries for improved healthcare delivery, WAHSUN considers the National Health Bill in Nigeria to be retrogressive as it fosters schisms instead of promoting unity within the human resource for health in the country. It does this by promoting the professional chauvinism of medical practitioners, even in fields of other health workers’ expertise.

If you would like more information on this meeting/network, or are a PSI affiliate in the health sector but not yet a member of this network, please contact the Sub-Regional Secretary for English-speaking (East and West) Africa, Sani Baba at sani.baba@world-psi.org.

2.1.Regional body established 

A new regional local government body has been established in West Africa. The Council of Local Governments (CCT), established on April 11 2012, falls under UEMOA, the West African Economic and Monetary Union. It brings together the national local government associations of Benin, Burkina Faso, Cote D’Ivoire, Guinea Bissau, Mali, Niger, Senegal, and Togo.

The establishment of the CCT was supported by the United Cities and Local Government (UCLG), and by the European Union project on “Support to decentralization in the developing countries”. UCLG is an international organisation linking local authorities. It has a regional affiliate in Africa – UCLGA. See the PSIRU document “Municipal services: organisations, companies and alternatives” at http://www.psiru.org/publications for more information on UCLG and UCLGA.

See: http://www.cities-localgovernments.org/news.asp?IdNews=504990002c0e13c5ba3b7fe2da46292760b095807ebb2e783aab27d92dcaebde#UCLG%20notes%20the%20installation%20of%20the%20UEMOA%20Council%20of%20the%20Local%20Governments

2.2.PSI Local Government Network (AMALGUN) 

PSI affiliates organising in local government, specifically Sierra Leone Local Government Workers Union, Ghana Local Government Workers Union, South Africa Municipal Workers Union, Nigeria Union of Local Government Employees, Kenya Local Government Workers Union, Tanzania Local Government Workers Union and Ivory Coast Local Government Workers Union agreed to form a municipal and local government network.

The theme of this network is “Promoting Quality Municipal and Local Government Services in Africa”.

One of the key motivations for forming the network was the recognition by the affiliates that they are faced with serious challenges in the name of reforms which if not checked, will destroy the very existence of municipal and local government service. Other challenges identified by the network include:

• An over-reliance of local governments/municipalities on external funding;
• The growth of unnecessary bureaucracy, fragmentation and division in leadership struggles caused by external pressures;
• Inadequate funding and difficulties in revenue collection accruing to local government/municipalities;
• Conflicting legislations and undue political interference facing local government.

The objectives of the network were outlined as follows:

• All municipal/local government unions shall ensure compliance to fair trade union practices.
• Build partnership and unity amongst unions and workers in municipalities/local governments.
• Lobby for improved funding and autonomy of municipalities/local government through democratic process.
• Advocacy for conflicting laws in the municipal/local government to be streamlined.
• Engage in policy intervention and reform process.
• Ensure transparency and accountability.
• Build strong, viable and democratic trade union movement.

If you would like more information on this meeting/network, or are a PSI affiliate in local government but not yet a member of this network, please contact the Sub-Regional Secretary for English speaking (East and West) Africa, Sani Baba at sani.baba@world-psi.org.

3.1.Health sector: 

There have been numerous strikes and other actions by workers in the health sector in Nigeria over the last few years. In the last two months alone there have been two major strikes.

In April, doctors in Lagos went on a two-week pay strike. The strike started on Monday 24 April, soon after they had concluded a three day warning strike earlier in April, and sometime after a three month strike in September 2010 on the same issues. After the three day warning strike, doctors were summoned to appear before a disciplinary panel – a move that only escalated tensions between the government and the doctors.

The main demand of the doctors was the full implementation of the agreed-to Consolidated Medical Salary Structure (CONMESS). After the three month strike in 2010, the Lagos State Governor agreed to implement 75% of the salary increase demanded. Now the doctors were demanding the full implementation.

On May 7 2012, the Lagos State Government embarked on a mass dismissal of 788 of the striking doctors. The government immediately started recruited 373 doctors to fill the gap. They also issued an eviction order to remove the doctors from their quarters, but this was immediately overturned by the Governor of Lagos. The dismissed doctors are now taking the government to court over their dismissals.

The strike, and subsequent dismissal of the doctors has caused an uproar in Nigeria. The NLC has come out in support of the doctors, saying ``We strongly condemn the purported sack as the action is reminiscent of the military era in which rules and laws were violated with impunity.We call on Gov. Babatunde Fashola to retrace his steps and go into negotiation and meaningful discussion with the doctors.'' (Mr Chris Uyot, Head, Information and Public Relations of the NLC).

The Joint Health Sector Unions (JOHESU), which includes the Medical and Health Workers’ Union of Nigeria (MHWU) and National Association of Nigeria Nurses and Midwives, both PSI affiliates, embarked on a national strike from 7 – 14 May 2012. Some of the issues that the health workers went on strike over are the same as those of the Lagos doctors. In particular, workers are dismayed at the ongoing non-implementation of the Consolidated Medical Salary Scale (CONMESS) 10 salary scale. Other demands include:

• The implementation of the presidential committee report on Harmonious Work Relationship among Health Professional and Workers;
• The promotion of health professionals from CONHESS 14 – 15;
• Issues around the National Health Bill to be sorted out;
• Payment of consultancy/specialist allowances;
• Allowances for shift workers;
• A shift away from only appointing medical doctors as Ministers of Health.

According to JOHESU, these are issues they have been raising with the government since 1980, but particularly in the last three years, without achieving anything. According to the National Coordinator of JOHESU, Comrade Faniran Felix Olukayode, "we are hereby informing the good people of Nigeria that having presented our demands to the Federal Government through various Health Ministers since 1980 and especially the past three years without any serious commitment to meet them, we have no other option other than to embark on an indefinite strike to press home our demands as a last resort.”

JOHESU suspended the strike on Monday May 14 2012, until July 31. During this period, JOHESU will continue to negotiate with the government in an attempt to reach an agreement.

See: This Day “Lagos fires 788 doctors over strike, recruits 373” 8 May 2012 http://www.thisdaylive.com/articles/lagos-fires-788-doctors-over-strike-recruits-373/115371/ 

Leadership “NLC calls on Lagos govt., doctors to resume negotiation’ 10 May 2012 http://leadership.ng/nga/articles/24276/2012/05/10/nlc_calls_lagos_govt_doctors_resume_negotiation.html

Daily Trust “Health workers embark on national strike as Lagos sacks striking doctors” 7 May 2012 http://allafrica.com/stories/201205080160.html

Vanguard “Health workers begin strike nationwide” 8 May 2012 http://allafrica.com/stories/201205090019.html

The Nation “Health Workers suspend strike” 15 May 2012 http://www.thenationonlineng.net/2011/index.php/news/46665-health-workers-suspend-strike.html

As reported in the previous newsletter (newsletter 3 http://www.psiru.org/node/16098 ), nurses and other health professionals in Kenya were threatening to go on strike over the government’s failure to implement a wage agreement, and the conditions in the public-sector hospitals. The strike, called by the Union of Kenya Civil Servants (UKCS) and the Kenya Health Professionals Society (KHPS) started on March 1, and had a major effect on the health services in the country. When the unions called off the strike on Sunday 4 March 2012, after having negotiated an agreement with the government, many of the striking workers were reluctant to return to work and carried on striking. The agreement was that a 12 member team would be set up to begin negotiations on the demands of the workers. One of the concerns of the workers was that the government has, in the past, failed to honour agreements it has made. On Thursday 8 March, 25 000 nurses who were still on strike were dismissed. However, a week later the government rescinded this decision, and these nurses, together with the rest of the 40 000 health workers who were on strike returned to work on Friday 16 March 2011 after finally reaching agreement with the government. This agreement makes provision for the workers’ extraneous allowances to be increased 100%; and for a task force to be set up which will develop a plan on increasing other allowances and employing more workers to reduce a shortfall of 30 000 health workers.

See: http://www.telegraph.co.uk/news/worldnews/africaandindianocean/kenya/9132753/Kenyan-nurses-vow-to-continue-strike-despite-job-threats.html

http://www.aljazeera.com/news/africa/2012/03/2012316143320804455.html

Health workers in Uganda were meant to have their salaries increased by 100% - but the implementation of this has been delayed because the Ministry of Finance has not provided the necessary funds. The Health Minister, Christine Ondoa, told the Social Service Parliamentary Committee on Monday 7 May 2012 that her department could not even afford to increase the salaries by 50% at this stage. The committee insisted that the wages must be increased, at least by 15%, in order to ensure a motivated and effective workforce.

See New Vision “No money for health workers’ salary rise – minister” 8 May 2012 http://www.newvision.co.ug/news/630886-No-money-for-health-workers--salary-rise-minister.html

3.2.Local government: 

The South African Municipal Workers’ Union (SAMWU), together with the Independent Municipal and Allied Trade Union (IMATU), are starting wage negotiations in May with the employer body, the South African Local Government Association (SALGA). SAMWU and IMATU are demanding an across the board increase of 15% or R 2000, whichever is the greater; a minimum wage of R 6000; the filling of all vacant posts on all Municipal Council approved organograms on a permanent and full-time basis; and a one-year agreement only. A detailed statement from SAMWU in support of their demands can be found on the PSI website at http://www.world-psi.org/en/samwu-preparing-huge-battle .

Meanwhile, in Zimbabwe, Bulawayo Council workers went on strike for a week in April demanding that their salaries, which hadn’t been paid since January 2012, be paid. The strike ended without an agreement being reached, and the issue will now to for arbitration to the Ministry of Labour. The Council claims it cannot pay the salaries as it has no money – it has a huge debt of over $3 million, and is owed about $1.5 million by ratepayers in the City.

See
http://allafrica.com/stories/201204300346.html

In Zambia, council workers are unhappy about the disparities in salaries across the country. The union submitted a document to the government in December 2011 on the harmonisation of the salaries and conditions of service across the country. According to Noel Kalangu, the General Secretary of the Zambia United Local Authorities Workers’ Union (ZULAWU), the harmonisation process should bring up the wages of the lowest paid workers, some of whom were receiving wages as low as K250, 000.00. Wages for most council workers had remained stagnant since 1996. The union is waiting on the government to study the document so that they can begin negotiations.

See: Times of Zambia “ZULAWU urges calm among members” April 16 2012 http://www.times.co.zm/?p=5081

Cuts Watch brief

Last updated: 23 November 2011

Author: David Hall

 Download PDF version of this brief here: http://www.psiru.org/sites/default/files/Australia-cwbrief-Oct2011.pdf  

Australia

 The Australian government has a very low level of debt, representing only 20% of GDP, and a deficit in 2011 of less than 3%. The government is expecting the deficit to fall as economic recovery leads to higher tax revenues, and is allowing public spending overall to continue growing by up to 2% in real terms  per year – but this is slower than the growth of the economy, which is expected to expand at about 4% per year, with unemployment falling below 5%.  As in other countries, state and municipal levels of government suffered a loss of  tax revenues as a result of the recession, but they have also maintained spending on services by running budget deficits.

The 2009 stimulus package of extra spending to counter the recession is being allowed to expire, but in 2011 there was another major spending programme to repair the extensive damage of floods and cyclones, which is being financed by a special tax.  In 2011 the budget included plans to increase spending on education and mental health and reduce defence spending. In July 2010 the government introduced a new tax on iron and coal mining companies – a “mineral resource rent tax (MRRT)”, partly offset by a reduction in general corporation tax. In 2011 it introduced a ‘carbon tax’.

 So although Australia is reducing its government deficit, it is doing so by allowing economic growth to reduce it, not by making cuts in spending on public services.

•  
  
  • Jobs and pay 

There is no policy to reduce the number of public sector employees. There is no expectation that the policies on spending will reduce the overall number of public sector employees.  In June 2010 there were about 1.8m. public sector employees, about one-sixth of all employees.

 Healthcare

The government is reforming the Australian healthcare system, but this is intended to result in higher levels of expenditure and in particular higher levels of employment and training of doctors and nurses.

 Pensions

In 2009 cuts were made to the state pension system. The retirement age for state pensions is being raised from 65 to 67, and conditions for eligibility  have been made more restrictive.

 Sources:

• Australian Government National Health Reform
• Australian government May 2011 Budget Overview 2011-2012
• IMF  2010 A Status Update on Fiscal Exit Strategies

Cuts Watch brief

Last updated: 23 November 2011

Author: David Hall

  Download PDF version of this brief here: http://www.psiru.org/sites/default/files/Bulgaria-cwbrief-Nov2011.pdf  

 Bulgaria

 Bulgaria wanted to join the Euro in 2010, but the EU said it needed to demonstrate more ‘fiscal prudence’ and reduce the rate of inflation. So the Bulgarian government set a new target year of 2013, and wanted to impress the EU “by garnishing the application with a targeted  balanced 2010 budget, and the smallest 2009 deficit in the EU”.   In 2008 it introduced a ‘flat tax’ of 10% for incomers and company profits – the lowest tax rate in the EU; and in December 2009 it cut VAT rate from 20% to 17%. It announced special drives against tax evasion by musicians and footballers.

 In 2009 the newly elected rightwing government decided not to seek an IMF loan, although GDP fell by 6.5%, but adopted  its own ‘austerity’ budget for 2010,  including:

-          No change to the flatrate 10% tax on incomes and profits, or taxes on alcohol

-          An increase of 43% in tax on cigarettes, and a new 15% gambling tax

-          Social security payments cut by 2% from January 2010

-          A freeze on the minimum wage and pensions

-          cuts in funding for education, science and universities

-          healthcare and social security reforms  (see below)

-          Privatisation of 29 companies to raise 80 billion lev (€40 billion),

 During 2010 unemployment rose by 31% (EAPN), and the forecast government deficits for 2010 and 2011 had to be revised upwards, due to lower tax revenues and higher social security payments a- the effects of continued recession. The privatisation programme delivered very little: the government managed to sell only 9 companies, for a total of 2.9 billion lev.  The budget for 2011 introduced further austerity to try and meet the EU target: social security contributions were raised by 1.8% points, in a meeting boycotted by trade unions, and the Christmas bonuses of government staff  were cancelled in 2011.

 The effects of the cuts have led to demonstrations and protests by unions, students, teachers, police, musicians, filmmakers, librarians and many other groups. A coalition was formed to ensure that different groups did not simply fight each other for limited spending, but instead demanded that 5% of GDP should be spent on healthcare, instead of the planned 3.8%; 5% on education, instead of the envisioned 3.3%, 1% of GDP for science, and 1% for culture.

1.1.        Healthcare

As in other countries in central Europe, there is a great battle over healthcare ‘reforms’, which include cuts, closures, patient charges and privatisations. The government plans since 2009 have included:

-          Reduced rights:  380 000 Bulgarians lost their rights to free healthcare

-          cuts in healthcare spending: the state budget for hospitals was cut by 24% in 2009 alone, and the overall budget for 2010 was cut by 16%. Total healthcare spending fell to 4.2% of GDP, far lower than other European countries.

-          closing 21 large hospitals, and closing or reducing 130 other centres – out of a total of 350 hospitals.

-          Privatisation of hospitals and services: the health minister stated in 2010 that “Privatisation is the way to go. There must be privatisation of both hospitals and the services provided by hospitals”. 

-          imposing ‘co-payments’ of 20% by patients for hospital treatment – but there would no longer be a requirement to be referred by a GP.

 There has been massive opposition from the public, doctors and nurses, and health providers. Two health ministers were forced to resign during 2010 because of this public opposition, and accusations of misuse of national Health fund. By the end of 2010 the government had been forced to restore many of the budget cuts.

1.2.        Pensions

In addition to freezing the level of pensions in 2011, the government is increasing the retirement age and the years of service required

 -          Retirement age: in November 2011 the government announced that the retirement age would be raised with immediate effect, in 2012, from 63 to 64 for men, and from 60 to 61 for women. (The previous ‘reform’ plans included an increase in retirement age, but not until 2021, followed by further gradual increases until it reached 65 for men in 2024 and 63 for women in 2026). 

-          Years of service: in 2010 the government decided to increase the years of service required from 37 to 40 for men, and from 34 to 37 for women. This would be phased in by adding an extra four months each year from 2012 to 2020.

 Sources:

 Novinite   www.novinite.com : various reports, including The Bulgaria 2010 Review: Health ; The Bulgaria 2010 Review: Education ; The Bulgaria 2010 Review: Society  ; Bulgaria Ups Retirement Age in 2012 in U-Turn Change ; Bulgarian Cabinet Passes Latest Retirement Reform Plan

 Reuters Feb 4, 2010 Bulgaria looks to privatise hospitals after reform

Cuts Watch brief

Last updated: 23 November 2011

Author: David Hall

 Download PDF version of this brief here: http://www.psiru.org/sites/default/files/Denmark-cwbrief-Oct2011.pdf 

 Denmark

 In October 2011 the newly elected social democratic government of Denmark decided to deal with the recession by increasing public spending and investment – the opposite of the austerity policies adopted in other countries.  The new policies aim to create 135,000 new jobs by 2020 – a 5% rise in the total number of jobs.

 The measures include:

-          Investing an extra €1.3bn. Euros in roads, railways, cycle paths, and improving insulation of public and private housing

-          Temporary tax credits for companies investing in new technology

-          Income tax reductions, the details of which will be negotiated with unions and employers

 The government will not however restore an early retirement scheme which was cut by the previous government.

 The new government will also reverse the anti-immigration policies of its predecessor, restoring immigrants’ rights to equal benefits and removing border controls.

 The government is a coalition led by the Social Democrats in coalition with a centrist party (the Social Liberals) and the Socialist people’s party, and with the support of the left Red-Green Alliance. 

 Source:   Financial Times October 3, 2011 Denmark to spend way out of economic crisis

Download PDF version of this brief here: http://www.psiru.org/sites/default/files/Germany-cwbrief-Oct2011.pdf 

 Cuts Watch brief

Last updated: 23 November 2011

Author: David Hall

 Germany

1.   Policy

The recession originally hit Germany hard, and the German government responded with a massive stimulus programme in 2009, which included €5billion of public spending to support short-time working (‘Kurzarbeit’) by paying workers 2/3 of their lost wages and half or more of employers’ social security contributions. Over 1.5 million workers were supported by this scheme, and unemployment levels in Germany remained lower than before the crisis. 

This enabled the German economy to recover quicker than others. The response of the government in 2010 was to prioritise cutting public spending. A constitutional amendment was introduced in May 2010 which limits the deficit of the federal (central) government to 0.35% of GDP, with effect from 2016, and prohibits the lander (regional governments) from having any deficit at all from 2020.  These constraints are even more severe than the EU limit of 3% of GDP

The government then introduced in June 2010 one of the biggest packages of cuts in public spending in the last 60 years (known as the Zukunftspaket -  “Package for the Future” -through the Supplementary Budget Act (2011) and the medium-term Financial Plan (2010–2014)). It provides for cuts of €80billion euros by 2014, equivalent to about 0.8% of GDP, and expected further cuts will be needed to reduce the deficit to 0.35% in 2016.

More than one-third of the package consists of cuts in social security benefits. There are also cuts in the defence budget and cuts in public service employment. There was also an increase in some taxes, such as a levy on airlines, a tax on nuclear energy, and a proposed financial transactions tax.  

The government has refused to alter the planned cuts despite tax revenues being higher than expected in 2010 and 2011. In one year, the government budget deficit fell from -4.3% in 2010 to -0.8% in 2011 – the target for 2014. Continuing with the cuts package means further reduction in demand. In  October 2011, economists sharply reduced their growth forecasts for Germany for 2011 from 2.9% TO 0.8%.

2.   Jobs and pay

About 15,000 public sector jobs will be lost as a result of the cut of 10,000 posts by 2014, and ‘efficiency gains’ in public administration and public healthcare. There is also a freeze on the Christmas bonus of public employees from 2011 onwards.

Yet many argue that the pay of German workers need to rise in order to increase demand and help stave off recession. Since the year 2000, despite relative economic prosperity, wages and salaries in Germany as a whole have not risen at all in real terms, unlike those in other European countries.

Source: Spiegel Online 09/08/2010 Despite Boom, Little Hope of Big Pay Hikes in Germany

3.   Effects of austerity

The main elements of the package are cuts in public employment and cuts in social security benefits. It is deliberately aimed at the unemployed, supposedly to create stronger incentives to work. The cuts include:

-       abolishing state contributions towards pension rights for the unemployed

-       abolishing heating subsidies for the unemployed

-       reductions in parental benefits, with the greatest reductions for the unemployed

-       flat-rate increases in health insurance

4.   Healthcare

The health budget deficit of €11 billion is being cut as part of the package. The German government proposed to impose a flatrate increase in health insurance contributions of €30 per capita, but was forced to change this to an increase of  0.3% of salary by both employers and employees. In addition,the cost of drugs is being reduced by freezing prices at 2009 levels and requiring drug companies to give discounts of 16% to insurerance funds, instead of 6%.

5.   Pensions

Pension reforms, including a gradual increase in the retirement age from 65 to 67 years by 2029, had already been adopted pre-crisis. The value and coverage of state pensions has also fallen as a result of these reforms.

Sources:

·         Spiegel Online 30/12/2009 Germany's Massive Job-Saving Program Could Still Fail

·         FES 2011 Arne Heise and Hanna Lierse March 2011 Budget Consolidation and the European Social Model - The Effects of European Austerity Programmes on Social Security Systems. FES http://library.fes.de/pdf-files/id/ipa/07891.pdf  .

·         IMF 2010:  A Status Update on Fiscal Exit Strategies 2010 http://www.imf.org/external/pubs/ft/wp/2010/wp10272.pdf

·         FT June 7 2010 Merkel spells out €80bn spending cuts; FT August 16 2010 Merkel to stick with cuts despite growth; FT October 13, 2011 German economists halve GDP growth forecasts

·         IMK Report no. 65 Oktober 2011 German economy in downward spiral

·         The Lancet 4 September 2010, German health reform compromise under attack

Download PDF version of this brief here: http://www.psiru.org/sites/default/files/India-cwbrief-Oct2011.pdf

Cuts Watch brief

Last updated: 25 November 2011

Author: David Hall

India

India is not introducing ‘austerity’ cuts in public spending.  It introduced a stimulus package in 2009, which increased the government deficit to 6.8% of GDP, to boost the economy; and committed to continued public ownership of banks and financial institutions.  The government was confident it could borrow enough to finance this deficit: half of India’s savings in the banking system “is channeled to the government through mandatory lending or through treasury bill sales”.

The budget included long term plans for taxes. Central government revenue is now 12% of GDP, with over 50% coming from direct taxes, which is more progressive. The government plans to continue increasing the proportion of direct taxes, including corporate taxes. It is also continuing to improve tax administration, the importance of which was recognised by the finance minister: “Our tax collectors are like honey bees collecting nectar from the flowers without disturbing them, but spreading their pollen so that all flowers can thrive and bear fruit.”

Spending on urban infrastructure is being rapidly increased, including a policy for replacing slums, and  investment in infrastructure is intended to reach more than 9% of GDP per year by 2014

The 2009 budget aimed for  growth of 9% in 2010, and actually achieved growth of 10.1% in that year. This growth generates higher tax revenues which automatically reduce government deficits, which is expected to fall to 5.1% of GDP in 2011, and government debt is expected to fall gradually to about 68% of GDP in 2015.

The 2011 budget stated that:

-          In 2010 tax revenues grew by 25% as a result of economic growth and stronger tax collection

-          Public spending on education would rise by 24% in 2011

-          Public spending on healthcare would rise by 20%  in 2011

 Sources:

 IMF  Fiscal Monitor April 2011

Livemint/WSJ  India Budget 2011

Government of India: Union Budget of 2011

·         UN ESCAP 2011 The Promise of Protection

·         PSIRU 2010 Why we need public spending    

Download PDF version of this brief here: http://www.psiru.org/sites/default/files/NZ-cwbrief-Sept2011.pdf  

Cuts Watch brief

Last updated: 30 September 2011

Author: David Hall

New Zealand

1.   Summary

Links:

• NZ Treasury 2011 Budget Minister's Executive Summary 2011   http://www.treasury.govt.nz/budget/2011/execsumm/b11-execsumm.pdf
• The Dominion Post (Wellington, New Zealand)  September 10, 2011 'Timebomb' set as public service jobs are slashed http://www.stuff.co.nz/dominion-post/news/politics/5598198/Timebomb-set-as-public-service-jobs-are-slashed
• The Dominion Post (Wellington, New Zealand) August 20, 2011 Legacy of Rogernomics: less red tape but.. by John McCrone  http://www.eastonbh.ac.nz/?p=1522
• New Zealand Public Services Association www.psa.org.nz/

2.   Austerity package

The 2011 budget of the conservative government of New Zealand made cuts in public spending of $5.2 billion over 5 years, and announced plans to sell state shares in energy companies and the airline to try and raise $5-7 billion. [i]

This is despite the fact that government debt, deficit and spending figures are already very low by international standards. New Zealand’s public debt was 32% of GDP in 2010 – third lowest of all advanced economies, and far below the average of 98%. The government deficit was 6% of GDP – again below the average for advanced economies. And the level of public spending is lower than any other advanced economies except Hong Kong and Singapore. [ii]  

3.   Jobs and pay

The NZ government is cutting nearly 3,500 jobs from public services – a total cut of nearly 10%. The number of jobs fell by 2,400 between December 2008 and June 2011, and a further 1,087 jobs will be cut by June 2013. Most are in the Foreign Affairs and Trade Ministry, which will cut 200 positions; Inland Revenue, which will see a reduction of 346; and Work and Income, which will lose more than 100.

It has set a maximum limit of 38,859 on the numbers that can be employed.[iii]

There are already 3,543 unfilled vacancies. Research in June 2011 showed that women workers in public services in NZ “gift nearly two-and-a-half million hours of work annually. The monetary value of this unremunerated work, based on the average wage for PSA women members, is around $54.5 million – that’s the equivalent of 1360 full-time jobs....If based on the public sector average hourly overtime rate the gift would amount to $90.3 million.” [iv]

As part of this process, the government is restructuring and centralising departments such as Inland Revenue and department of Conservancy. This centralisation of work means the   decentralisation of cuts . PSA national secretary Richard Wagstaff said the policy was “ripping badly-needed work out of the regions......the scarcity of work in provincial New Zealand makes them particularly difficult for those communities. Good jobs in the provinces bring benefits for the whole community, so local businesses feel the impact when jobs go."[v]     Mergers are also part of the process: the Fisheries Ministry was merged with the Agriculture and Forestry Ministry, eliminating 241 jobs; local councils are also merging – in the proposed merger of Nelson Vity and Tasman District councils, for example, 68 jobs are due to be lost..[vi]

4.   Impacts on community, women, homes

4.1.        Community and women’s groups, family benefits

The cuts include an 11% cut in a $14m. fund , the Communities Organisations Grants Scheme, which is distributed to grassroots and voluntary organisations. Anti-poverty groups, rape crisis groups, and women’s resource centres have expressed concern about the effects of having to cut back on staff and other resources.[vii]

The government is also preparing to implement a major policy review of benefits, one of whose aims is to reduce the number of people receiving benefits in New Zealand by over two-thirds, from 360,000 to 100,000. It is also planning to privatise the long-established ‘no-fault’ accident compensation scheme by allowing private insurers into the market. [viii]

4.2.        Removing red tape: deaths, bankruptcies, and leaking roofs

Some of these cuts are justified by the government as ‘removing red tape’ from businesses. But previous de-regulation by governments to remove ‘red tape’ has proved very expensive for people in terms of money and lives, as summarised in an article by John McCrone.[ix]

An explosion at the Pike River mine in 2010 killed 29 miners: the official  enquiry has found that, after health and safety rules were relaxed in 1992, government inspectors were told that  “it's the employer's responsibility, not yours, to identify their own hazards. You just go and audit them."

“reforms to the Health and Safety in Employment Act 1992 resulted in the disappearance of specialist mine inspectors and mining- specific safety laws as New Zealand switched almost overnight to generic performance-based standards. The result was that in mining, New Zealand went from a seven- strong inspectorate of well-paid specialists to just a pair of Department of Labour inspectors having to deal with the whole country, gold mines and quarries included. The DOL's head of health and safety policy, James Murphy, agreed the department had taken a hands-off attitude to the detail of mine safety - "and we're now thinking that actually we were too hands-off".

People’s savings were jeopardised, too:

“The same story with finance companies. Around $8.6 billion of life savings of 200,000 Kiwi investors frozen, and potential losses of perhaps $3b even with Government bail-outs and guarantees, following the domino collapse of some 60 weakly-regulated deposit-takers and investment trusts.....

.... The industry was largely self-regulated, relying heavily on the oversight of trustees and auditors the finance companies chose and paid for themselves. Their investment products were sold by financial advisors who needed no qualifications and worked on commission. It was all a cosy arrangement that for a few years generated spectacular growth until, from Bridgecorp to South Canterbury, they fell with a loud bang. When former chair of the Securities Commission Jane Diplock was asked why the agency had been so inactive, she replied: ‘The commission’s role is not and never has been to approve prospectuses or investment statements. The responsibility for the correctness of information contained in prospectuses lies with the promoters and directors themselves.’

Over 100,000 homes in New Zealand suffer from ‘leaky building syndrome, because of shoddy construction work in the last 20 years. This is a result of cutting regulation of the building industry in 1991, making it easier for firms to operate to lower standards without serious risk of inspection, and to use untreated timber, and a new kind of ‘monolithic cladding’ for roofs, both of which proved to be unsound and leaky.

“the 1991 Building Act was another case of an industry’s accumulated wisdom in the form of experienced inspectors and regulatory safeguards being stripped away so as supposedly to fast-track the economy. There was a shift to performance-based regulation where producer statements – paper promises that new building methods would work were allowed to replace detailed requirements on fixings and flashings. Even compliance became out-sourced to the market with private building inspectors starting to do the work certifications normally done by council housing departments.

..... Even the Governments Building Industry Authority, the supposed regulator that oversaw the use of untreated timber framing and plaster cladding without an internal ventilation gap, was hastily closed down and folded into the Department of Building and Housing as the writs began to fly....” [x]

“The eventual price tag for rebuilding soggy houses and rotten apartment complexes is going to be anywhere between $11b and $33billion”: that is between 6% and 18% of annual GDP for New Zealand – on the same scale as the expected cost of rebuilding Christchurch after the devastating earthquake in February 2011. [xi]

5.   Privatisation

In the 1980s and 1990s New Zealand embarked on a large-scale privatisation programme. This has since been partly reversed, with both the airline and the railways renationalised in order to save the industries from collapse.[xii]  The government nevertheless proposes to privatise four state-owned energy companies and sell shares in Air New Zealand, to try and raise $5-7 billion. [xiii]

Download PDF version of this brief here

 Cuts Watch brief

Last updated: 15 August 2011

Author: David Hall

Overview: military spending

World military spending rose by 1.3% in real terms in 2010 to a total of  $1.6 trillion, about 2.6% of the world economy. This is 50% higher than in 2000: military expenditure has risen in real terms in every year since then.

The USA is responsible for nearly 43% of this spending, accounting for 4.8% of its economy. Russia, India, the UK, France and China all spend over 2% of GDP on military spending, and Saudi Arabia spends over 10% of its GDP on military spending. 

In the last 10 years spending by the USA has risen fastest, by 81%, over twice as fast as the rest of the world, and its share of GDP rose from 3.1% to 4.8%. Military spending by the UK rose by 22% in real terms, and France by 3%, but military spending by other European countries including Russia, Germany and Italy fell.

In 2010 spending by the USA grew by nearly 3% over the level in 2009, and China by  nearly 4%: spending by India fell by nearly 3%. Nearly all countries in Europe reduced military spending, but military spending rose by 6% in Latin America and by 5% in Africa.

The IMF does not call for a general reduction in military spending.

 Stockholm International Peace Research Institute (SIPRI) Military Expenditure Database  http://www.sipri.org/media/pressreleases/milex

Download PDF version of this brief here

Cuts Watch brief

Last updated: 15 August 2011

Author: David Hall

 Overview: social impact of cuts

 All austerity packages involve cuts in public services and public spending.  This impacts hardest on the poor and vulnerable, according to the evidence collected by NGOs and others concerned with poverty and social impacts. These include in Europe the European Anti-Poverty Network (EAPN), and Eurochild, an European NGO concerned with child welfare; in the USA, the Centre for Budget and Policy Priorities  (CBPP); and globally, the United Nations Department of Economic and Social Affairs (UNDESA).   

This evidence is especially important because most governments are not making any assessment of the social impact of their policies. The UN report warns that “growing pressure for austerity measures, ostensibly for reasons of  fiscal consolidation, is putting at risk social protection, public health and education programmes, as well as the economic recovery measures.” It warned that "economic policies considered in isolation from their social outcomes can have dire consequences for poverty, employment, nutrition, health and education, which, in turn, adversely affect long-term sustainable development" and stated that “it is essential that governments take into account the likely social implications of their economic policies”.   (UN 2011)  

In Europe, a survey across 17 countries by the EAPN found that the biggest impact of the crisis and the austerity measures is on young people, the poor, and vulnerable groups including those with little education, migrants, and ethnic minorities. Government cuts in benefits hit those who are already most affected by the economic crisis, by changing the rules to reduce the number of people eligible and/or the level of benefits - for example, tightening conditions to qualify for unemployment or social assistance, stricter ‘targeting’ of housing and child benefits.  

Deliberate cuts in government jobs and raising retirement age, worsen the prospects for young people seeking work. The youth unemployment rate across the EU  in September 2010 was over 20%, double the overall rate of unemployment.  In some countries it was much higher, over 37 % in Estonia and 42 % in Spain. Sectors that  employ a large proportion of  less educated people, such as construction and services, have contracted sharply because of the crisis and the cuts.

There is growing unemployment, indebtedness, poverty and inequality, as well as a negative psychological impact, pressure on working conditions, housing and discrimination. In Spain: 19.5 % of the population is under the poverty line. There are more than 1.5 million households with no working adult, where children face restrictions in food, clothing and leisure.”  In Hungary: “There are approximately 100.000 people considered as ‘unsafe’ clients which means that they can not pay back their loans to the banks.” “In Romania the new austerity package includes a 25 percent cut to child care benefits, the elimination of benefits for young families, and a freezing of benefits for single parents.”. Children are adversely affected because universal child benefits are being restricted or cut, and some services supporting families are  being cut: “in Northern Ireland-UK a unique and much praised integrated system of health and social care is likely to be dismantled. Current proposals promise to retain the health element, but cut the personal social services component that funds many critical services for vulnerable children and families.” NGOs cannot fill the gap left by cuts in public services, and the cuts worsen the prospects of economic recovery. (EAPN 2011, Eurochild 2011)

There are similar effects as a result of budget cuts by states in the USA. A survey by CBPP found that a majority of states have reduced healthcare, services to the elderly and disabled, and education. “Washington state will reduce assistance for 28,000 people who are physically or mentally incapacitated and unable to work in early 2011”.The cuts would have been much greater without support from the federal government. (CBPP 2011)

Table 1.               Groups most affected by crisis and austerity cuts in Europe, 2010

Source: EAPN survey

Sources:

• UNDESA The Global Social Crisis 2011 http://social.un.org/index/LinkClick.aspx?fileticket=v0LQqd2FT3k%3d&tabid=1561
• European Anti-Poverty Network (EAPN) The Social Impact of the Crisis and of the Recovery Policies 2011  http://www.eapn.eu/images/stories/docs/EAPN-position-papers-and-reports/crisis-report-2011-en.pdf

• Eurochild Report27.01.11: How the economic and financial crisis is affecting children & young people in Europe  http://www.eurochild.org/fileadmin/ThematicPriorities/Crisis/Eurochild updates/Eurochild crisis paper - How the economic and financial crisis is affection children and young people.pdf
• CBPP: An Update on State Budget Cuts 2011   http://www.cbpp.org/files/3-13-08sfp.pdf

Contents

1.      Privatisation - Tanzania

2.      Corruption – Tanzania

3.      Sector – Kenya: water sector

4.      Labour disputes

4.1.        Pay cuts and job losses in the public sector: Swaziland and Zambia

4.2.        Zimbabwe: Civil servants strike

4.3.        Strikes in the Health Sector: South Sudan, Tanzania, Kenya

4.4.        Tunisia: attack on municipal workers

4.5.        Senegal: transport strike

In January 2012, a committee consisting of officials from the Treasury and Consolidated Holdings Corporation (CHC) (the state body responsible for seeing through the privatisation process) released its report investigating what went wrong with the privatisation of 74 state owned companies.  The committee found that of the 74 companies privatised, 17 have shut down completely, 15 are performing badly, and 42 are performing well.

The companies had been privatised in the early 1990s in an attempt to improve production. In many cases the private sector did not make the investments it was expected to, and did not bring the efficiency and other gains that it was presumed it would. Indeed, it seems that some of the companies shut down as soon as they were privatised. The committee found that in many cases the private companies that took over had failed to meet the terms and conditions of the contract signed with the government.

The Parliamentary Public Organizations Accounts Committee (POAC) will be looking at the possibility of restoring these companies in the interests of creating jobs. According to the chairman of the committee, Mr Zitto, “The restoration of industries that were privatized but remained dormant will enable the country to generate jobs”. (http://allafrica.com/stories/201201170169.html  See also http://www.thecitizen.co.tz/news/4-national-news/18947-how-17-industries-were-privatised-only-to-die.html  and http://www.thecitizen.co.tz/news/4-national-news/18643-non-ticking-firms-pose-big-headache.html)

This investigation echoes a similar investigation undertaken in Nigeria in 2011 and which was reported on in a previous newsletter. See http://www.psiru.org/publications?type=brief

Tanzania has been facing ongoing power shortages, partly due to the drought and the impact this has on hydroelectric power. As a result, Tanesco, the state energy utility, has entered into a number of short-term agreements (Emergency Power Purchase Agreements) with various companies to supply energy. One of these agreements was signed in 2006 with a company called Richmond Development Corporation. Because of Richmond’s failure to supply the electricity it was contracted to supply, a parliamentary committee was set up to investigate the agreement and the company’s failure to implement it. The committee found that Richmond had neither the experience, nor the expertise, to deliver on the short-term agreement, and was in addition, financially incapacitated. It was argued that there was political interference from the government to make Tanesco sign the agreement with Richmond rather than any other company.

As a result of the political fallout from this investigation, Edward Lowassa, the Prime Minister of Tanzania, as well as Cabinet ministers Nazir Karamagi (Energy and Minerals Minister) and Dr Ibrahim Msabaha (East Africa Cooperation Minister, who was the Energy and Minerals Minister at the time when the contract was signed), resigned from government in 2008. This forced the President, Jakaya Kikwete, to dissolve the cabinet and form a new government.

Towards the end of 2008 the government, partly responding to public pressure, announced that it was cancelling the contract . By now Richmond had passed the contract on to another company, Dowans Holdings. Dowans then took Tanesco to the International Chamber of Commerce (ICC) for breach of contract. In its 15 November 2010 ruling the ICC co-arbitrators found in Dowans favour. The ruling states that “It is declared that Tanzania Electric Supply Company Limited was in repudiatory breach of the POA and that Dowans Tanzania Limited was entitled to and did validly terminate it”. The ICC arbitration tribunal ordered Tanesco to pay $123.6 (about Sh185.5 billion) to Dowans in settlement of its claim.

It is ironic that Tanesco, in attempting to deal with the alleged corruption in the first place, lands up in the ICC, and is penalised with a hefty fine. There has been strong opposition to Tanesco paying the fine in Tanzania from trade unions and other civil society organisations. Tanesco has attempted to challenge the ruling in the Tanzanian Hight Court but has not been successful so far.

Meanwhile, the Dowans plant in Tanzania has been sold to a USA-registered company, Symbion Power. Symbion Power now have an agreement with Tanesco to supply short-term emergency power.

A full report on this case will be available within the next month on the PSIRU webpage.

Kenya recently adopted a new constitution in 2010, which enshrines the right to water. This is a big challenge in a water-scarce country, where per capita water availability is below 600 cubic meters. An International Conference on the Future Management and Development of the Water Sector under the new Constitution, was held in December 2011 to discuss the challenges in ensuring water for all.

Problems facing the water sector include:

• Drought – currently there are severe water shortages in many parts of the country because of drought. While water shortages affect all communities, pastoralists are particularly vulnerable.  The government has announced that it will send an additional 18 water bowsers to particularly hard hit areas by the end of February. This will bring the number of tankers in these areas to 90 by the end of February – 53 government owned and 37 hired.
• Even without the problems of drought, there are low levels of access (only 41%) to a reliable water supply – particularly in rural areas and informal settlements in the urban areas. Because of this lack of access, many residents in urban areas (about 56% of water users) have to buy water from informal sources, relying on water kiosks, local boreholes, well owners and water vendors. They pay up to 8 times more for this water than is paid for water obtained through household connections.

• There are ongoing allegations of corruption. Kewasnet, the Kenya Water and Sanitation Civil Society Network noted problems with corruption in the water sector and has said “we also hope that the Kenya Anti-Corruption Commission (KACC) will pitch tent at the Ministry of Water and Irrigation and its parastatals to ensure that the suspicious deals in the sector are uncovered.”

• The aging water supply network, environmental degradation and the impact of climate change all contribute to water shortages in the country.

At the December conference the government announced a number of interventions it is planning to make. These include:

• The building of 30 dams over the next decade. For this, it needs $1 billion. The government hopes that by increasing the water storage capacity, Kenya won’t be so affected by drought in future years, and the government will no longer be required to deliver water by water trucks to particularly hard hit areas.
• Improved water provision in rural areas and informal settlements.
• Implementing renewable energy in the sector. The government It was recently announced that it plans to install 2 000 solar powered pumps in low rainfall areas. This will increase access to water, but avoid the use of diesel powered pumps which cause pollution. It will also be cheaper to operate as no fuel has to be bought. The government has entered into a partnership with Bola Associates (a Kenyan firm) and DACC Global (a US-based firm) to supply and install the systems.
• Increasing irrigation in the rural areas.

These interventions, however, are made within a neo-liberal framework. As far back as in 1988, a centralised state body, the National Water Conservation and Pipeling Corporation (NWCPC) was established to operate the water supply systems. It was run along commercial lines. But this did not solve the water problems. In 2002, a new Water Act was promulgated which reformed the distribution system, again along neo-liberal lines – separating water providers from water authorities; separating policy making from day to day administration and regulation; and bringing in external bodies to provide water services. According to the water ministry only 22 out of the 120 water service providers make sufficient money to cover their expenditure. And yet the tariffs currently being charged are already high – among the highest in the region.

Recently, the government has announced plans to develop a new billing system which will increase water prices by allowing for monthly variations in inflation, the exchange rate, and the cost of energy. These adjustments can be made without having to go through the Water Services Regulatory Board (WRSB). Government’s intention in making the change is to allow for greater cost recovery. According to David Stower, the permanent secretary in the water ministry, "This will be with a view to improve the cost recovery performance of water service providers and promote sustainable use of water."  

For more information see:

• Nairobi Star (January 18 2012) “Ngilu Promises clean water for all by the end of February”
• Transparency International Press statement December 7 2011 http://www.transparency.org/news_room/latest_news/press_releases_nc/2011/2011_12_7_keep_the_tap_flowing_strengthen_transparency_accountability_and_participation_mechanisms_to_improve_access_to_water
• See Kenya country background on the WASH website. http://www.wash-united.org/countries/kenya.html?no_cache=1
• 1 October 2010 “Kewasnet: Why Kenya water minister Ngilu is not honest on anti-corruption” http://kara.or.ke/index.php?option=com_content&view=article&id=213%3Akewasnet-why-kenya-water-minister-ngilu-is-not-honest-on-anti-corruption&catid=34%3Aupdate&Itemid=120
• See http://www.water.go.ke/index.php?option=com_content&view=article&id=137:opening-remarks-hon-minister-conference-on-future-management&catid=34:ministerspeeches&Itemid=2
• Xinhua General News service (December 6 2011) “Kenya seeks 1 bln USD to build dams to fight climate change”
• AlertNet (London) 23 January 2012 “Solar Pump Projects Aims to Ease Local Water Shortages”
• Business Daily (Nairobi) January 15 2012. State locks horns with regulator over water billing

4.1.            Pay cuts and job losses in the public sector: Swaziland and Zambia 

In a number of countries civil servants are facing pay cuts and job losses.

In Swaziland, the Swaziland National Association of Teachers (SNAT) announced on 10 February 2012 that 1 200 teachers had been dismissed because of the country’s financial crisis. 3 000 teachers were employed on a one-year contract in 2011, with the promise of permanent jobs in the future. This promise has not materialised. Instead 1 200 teachers now find themselves without jobs.

In the Kitwe City Council in Zambia, municipal workers have not been paid for the last three months (since November 2011). Employees embarked on a go-slow in protest, and eventually on Thursday February 2 2012 they “evicted” the municipal management from their offices. The Zambia United Local Authorities Workers Union (ZALUWU) have finally reached agreement with management on a process for paying workers their arrears, with November salaries having now been paid to almost all the workers. Part of the problem facing the municipality is the failure by companies to pay the property rates they owe the municipality.

See: Swazi Media Commentary (11 February 2012) “Nation sacks 1 200 teachers”

Times of Zambia (7 February 2012) “KCC workers troop back to work”

4.2.            Zimbabwe: Civil servants strike 

The economic situation Zimbabwe is in has been made worse by the global financial crisis. Public sector workers have been struggling since 2007 around wages and working conditions.

Civil servants belonging to the union, Apex Council, went on a one day strike on January 19 2012 over wages and working conditions, followed by a five day strike from Monday 23 January. Support for the strike was patchy, varying from day to day as well as from service to service. In general, it was well supported in the education sector.

Workers were demanding a minimum salary of $538, up from the current salary of $250; medical insurance; improved pensions; and a special allowance for workers in rural areas. Government’s offer, which they have now implemented from February, backdated to January, is a $240million package to increase basic salary, housing and transport allowances. This falls far short of what workers were demanding, representing an average increase of $7 per month for the lowest paid worker.

While government argues that it does not have the money to pay the demanded wage increase, it was able to pay out $3 million in outstanding allowances to Members of Parliament at the end of 2011. For workers, the struggle to improve wages and working conditions has been going on for years.

Not only did workers not win their initial demands, but in February, the government announced that in future all civil servants will be paid wages and pension money about five days later than they are currently being paid. According to the government the reason for this was liquidity problems. The additional five days will allow it to mobilise funds, and prevent liquidity constraints developing in the market.

See: Institute for Security Studies (26 January 2012) “Zimbabwe: civil servants strike continues as swage talks reach an impasse”  and The Herald (9 February 2012) “Zimbabwe: New pay dates for civil service”

4.3.            Strikes in the Health Sector: South Sudan, Tanzania, Kenya 

Numerous strikes and worker actions have been taking place in the health sector of a number of countries in East Africa.

In South Sudan, doctors, registrars and house officers at the Juba Teaching Hospital went on strike for five days in February. The strike was in protest over the lack of a water supply in the doctors’ guest house for the last month, lack of electricity in the mess, and the lack of basic facilities in the hospital which would allow health workers to deliver a decent service to patients. A government spokesperson indicated that they were going to attempt to deal with all the doctors’ grievances, but it would take time. (See The Citizen (Juba) (23 February 2012) “South Sudan: doctors lift strike in Juba teaching hospital”)

At the beginning of  the year doctors in Tanzania went on a three week strike demanding their risk and on-call allowances, per diem and increment of eligibile payments – all of which the government has not paid since 2008. (See The East African (18 February 2012) “East Africa: Doctors in another round of strikes”)

In Kenya doctors went on strike in November 2011, but returned to work after agreeing with the government that they would receive a 30% increase on their allowance. However, when the state did not include senior medical offices in the raise, and gave nurses only a Sh7 000 increase in their extraneous allowances, compared to the Sh40 000 that doctors received, doctors, nurses and health officers  indicated in February that they were preparing to go on strike again. As the secretary-general of the union, KHPS, Wycliff Tomno, says “how does the government hope to create a conducive work environment when some health professionals are discriminated against?. (See Daily Nation on the Web (9 February 2012) “Nurses threaten fresh strikes over allowances”)

The Kenyatta Hospital in Kenya, in an attempt to cut costs and reduce its wage bill, announced in February that it was intending to lay off hundreds of workers. Many of these will be clerical workers at the hospital. According to the CEO of the hospital, the government is increasingly pressurising hospitals to be self-reliant. The hospital’s move to cut its wage bill must be seen in this light. (See Business Day Nairobi (14 February 2012) “KNH announces layoffs in plans to cut budget deficit”)

Clearly the health sector in East African countries is facing severe challenges. There are too few doctors, the health sector is not sufficiently funded by the government, and facilities need more money spent on them. In addition, patients pay a large portion of health costs from their own pockets, meaning that many poor people do not receive the healthcare that they need.

4.4.            Tunisia: attack on municipal workers 

The municipal workers’ union in Tunisia, Union Generale de Travailleurs Tunisiens (UGTT) , with a membership of over 500 000 workers, went on strike in February over working conditions. Among their demands are the payment of a bonus that workers say the government had promised them but had not paid out; improving working conditions; making temporary workers permanent; and the way promotions are implemented.

Municipal services, such as waste removal have been affected.

On Tuesday, February 21 2012, UGTT offices around the country were attacked, with the branch office in Feriana, in the governate of Kasserine, being ransacked and then set on fire.

See http://www.ghanamma.com/2012/02/tunisia-union-targeted-in-coordinated-attacks/

4.5.            Senegal: transport strike 

Senegal transport workers, members of the National Union of Senegalese Road Transporters, went on strike on January 24 in protest against high fuel prices and police harassment. This was a follow up to an earlier strike in January which was suspended after two days.

See: Radio Netherlands Worlwide (25 January 2012) “Locals stranded by fresh public transport strike” http://allafrica.com/stories/201201251136.html

Contents

1.      Privatisation - Tanzania

2.      Corruption – Tanzania

3.      Sector – Kenya: water sector

4.      Labour disputes

4.1.        Pay cuts and job losses in the public sector: Swaziland and Zambia

4.2.        Zimbabwe: Civil servants strike

4.3.        Strikes in the Health Sector: South Sudan, Tanzania, Kenya

4.4.        Tunisia: attack on municipal workers

4.5.        Senegal: transport strike

In January 2012, a committee consisting of officials from the Treasury and Consolidated Holdings Corporation (CHC) (the state body responsible for seeing through the privatisation process) released its report investigating what went wrong with the privatisation of 74 state owned companies.  The committee found that of the 74 companies privatised, 17 have shut down completely, 15 are performing badly, and 42 are performing well.

The companies had been privatised in the early 1990s in an attempt to improve production. In many cases the private sector did not make the investments it was expected to, and did not bring the efficiency and other gains that it was presumed it would. Indeed, it seems that some of the companies shut down as soon as they were privatised. The committee found that in many cases the private companies that took over had failed to meet the terms and conditions of the contract signed with the government.

The Parliamentary Public Organizations Accounts Committee (POAC) will be looking at the possibility of restoring these companies in the interests of creating jobs. According to the chairman of the committee, Mr Zitto, “The restoration of industries that were privatized but remained dormant will enable the country to generate jobs”. (http://allafrica.com/stories/201201170169.html  See also http://www.thecitizen.co.tz/news/4-national-news/18947-how-17-industries-were-privatised-only-to-die.html  and http://www.thecitizen.co.tz/news/4-national-news/18643-non-ticking-firms-pose-big-headache.html)

This investigation echoes a similar investigation undertaken in Nigeria in 2011 and which was reported on in a previous newsletter. See http://www.psiru.org/publications?type=brief

Tanzania has been facing ongoing power shortages, partly due to the drought and the impact this has on hydroelectric power. As a result, Tanesco, the state energy utility, has entered into a number of short-term agreements (Emergency Power Purchase Agreements) with various companies to supply energy. One of these agreements was signed in 2006 with a company called Richmond Development Corporation. Because of Richmond’s failure to supply the electricity it was contracted to supply, a parliamentary committee was set up to investigate the agreement and the company’s failure to implement it. The committee found that Richmond had neither the experience, nor the expertise, to deliver on the short-term agreement, and was in addition, financially incapacitated. It was argued that there was political interference from the government to make Tanesco sign the agreement with Richmond rather than any other company.

As a result of the political fallout from this investigation, Edward Lowassa, the Prime Minister of Tanzania, as well as Cabinet ministers Nazir Karamagi (Energy and Minerals Minister) and Dr Ibrahim Msabaha (East Africa Cooperation Minister, who was the Energy and Minerals Minister at the time when the contract was signed), resigned from government in 2008. This forced the President, Jakaya Kikwete, to dissolve the cabinet and form a new government.

Towards the end of 2008 the government, partly responding to public pressure, announced that it was cancelling the contract . By now Richmond had passed the contract on to another company, Dowans Holdings. Dowans then took Tanesco to the International Chamber of Commerce (ICC) for breach of contract. In its 15 November 2010 ruling the ICC co-arbitrators found in Dowans favour. The ruling states that “It is declared that Tanzania Electric Supply Company Limited was in repudiatory breach of the POA and that Dowans Tanzania Limited was entitled to and did validly terminate it”. The ICC arbitration tribunal ordered Tanesco to pay $123.6 (about Sh185.5 billion) to Dowans in settlement of its claim.

It is ironic that Tanesco, in attempting to deal with the alleged corruption in the first place, lands up in the ICC, and is penalised with a hefty fine. There has been strong opposition to Tanesco paying the fine in Tanzania from trade unions and other civil society organisations. Tanesco has attempted to challenge the ruling in the Tanzanian Hight Court but has not been successful so far.

Meanwhile, the Dowans plant in Tanzania has been sold to a USA-registered company, Symbion Power. Symbion Power now have an agreement with Tanesco to supply short-term emergency power.

A full report on this case will be available within the next month on the PSIRU webpage.

Kenya recently adopted a new constitution in 2010, which enshrines the right to water. This is a big challenge in a water-scarce country, where per capita water availability is below 600 cubic meters. An International Conference on the Future Management and Development of the Water Sector under the new Constitution, was held in December 2011 to discuss the challenges in ensuring water for all.

Problems facing the water sector include:

• Drought – currently there are severe water shortages in many parts of the country because of drought. While water shortages affect all communities, pastoralists are particularly vulnerable.  The government has announced that it will send an additional 18 water bowsers to particularly hard hit areas by the end of February. This will bring the number of tankers in these areas to 90 by the end of February – 53 government owned and 37 hired.
• Even without the problems of drought, there are low levels of access (only 41%) to a reliable water supply – particularly in rural areas and informal settlements in the urban areas. Because of this lack of access, many residents in urban areas (about 56% of water users) have to buy water from informal sources, relying on water kiosks, local boreholes, well owners and water vendors. They pay up to 8 times more for this water than is paid for water obtained through household connections.

• There are ongoing allegations of corruption. Kewasnet, the Kenya Water and Sanitation Civil Society Network noted problems with corruption in the water sector and has said “we also hope that the Kenya Anti-Corruption Commission (KACC) will pitch tent at the Ministry of Water and Irrigation and its parastatals to ensure that the suspicious deals in the sector are uncovered.”

• The aging water supply network, environmental degradation and the impact of climate change all contribute to water shortages in the country.

At the December conference the government announced a number of interventions it is planning to make. These include:

• The building of 30 dams over the next decade. For this, it needs $1 billion. The government hopes that by increasing the water storage capacity, Kenya won’t be so affected by drought in future years, and the government will no longer be required to deliver water by water trucks to particularly hard hit areas.
• Improved water provision in rural areas and informal settlements.
• Implementing renewable energy in the sector. The government It was recently announced that it plans to install 2 000 solar powered pumps in low rainfall areas. This will increase access to water, but avoid the use of diesel powered pumps which cause pollution. It will also be cheaper to operate as no fuel has to be bought. The government has entered into a partnership with Bola Associates (a Kenyan firm) and DACC Global (a US-based firm) to supply and install the systems.
• Increasing irrigation in the rural areas.

These interventions, however, are made within a neo-liberal framework. As far back as in 1988, a centralised state body, the National Water Conservation and Pipeling Corporation (NWCPC) was established to operate the water supply systems. It was run along commercial lines. But this did not solve the water problems. In 2002, a new Water Act was promulgated which reformed the distribution system, again along neo-liberal lines – separating water providers from water authorities; separating policy making from day to day administration and regulation; and bringing in external bodies to provide water services. According to the water ministry only 22 out of the 120 water service providers make sufficient money to cover their expenditure. And yet the tariffs currently being charged are already high – among the highest in the region.

Recently, the government has announced plans to develop a new billing system which will increase water prices by allowing for monthly variations in inflation, the exchange rate, and the cost of energy. These adjustments can be made without having to go through the Water Services Regulatory Board (WRSB). Government’s intention in making the change is to allow for greater cost recovery. According to David Stower, the permanent secretary in the water ministry, "This will be with a view to improve the cost recovery performance of water service providers and promote sustainable use of water."  

For more information see:

• Nairobi Star (January 18 2012) “Ngilu Promises clean water for all by the end of February”
• Transparency International Press statement December 7 2011 http://www.transparency.org/news_room/latest_news/press_releases_nc/2011/2011_12_7_keep_the_tap_flowing_strengthen_transparency_accountability_and_participation_mechanisms_to_improve_access_to_water
• See Kenya country background on the WASH website. http://www.wash-united.org/countries/kenya.html?no_cache=1
• 1 October 2010 “Kewasnet: Why Kenya water minister Ngilu is not honest on anti-corruption” http://kara.or.ke/index.php?option=com_content&view=article&id=213%3Akewasnet-why-kenya-water-minister-ngilu-is-not-honest-on-anti-corruption&catid=34%3Aupdate&Itemid=120
• See http://www.water.go.ke/index.php?option=com_content&view=article&id=137:opening-remarks-hon-minister-conference-on-future-management&catid=34:ministerspeeches&Itemid=2
• Xinhua General News service (December 6 2011) “Kenya seeks 1 bln USD to build dams to fight climate change”
• AlertNet (London) 23 January 2012 “Solar Pump Projects Aims to Ease Local Water Shortages”
• Business Daily (Nairobi) January 15 2012. State locks horns with regulator over water billing

4.1.            Pay cuts and job losses in the public sector: Swaziland and Zambia 

In a number of countries civil servants are facing pay cuts and job losses.

In Swaziland, the Swaziland National Association of Teachers (SNAT) announced on 10 February 2012 that 1 200 teachers had been dismissed because of the country’s financial crisis. 3 000 teachers were employed on a one-year contract in 2011, with the promise of permanent jobs in the future. This promise has not materialised. Instead 1 200 teachers now find themselves without jobs.

In the Kitwe City Council in Zambia, municipal workers have not been paid for the last three months (since November 2011). Employees embarked on a go-slow in protest, and eventually on Thursday February 2 2012 they “evicted” the municipal management from their offices. The Zambia United Local Authorities Workers Union (ZALUWU) have finally reached agreement with management on a process for paying workers their arrears, with November salaries having now been paid to almost all the workers. Part of the problem facing the municipality is the failure by companies to pay the property rates they owe the municipality.

See: Swazi Media Commentary (11 February 2012) “Nation sacks 1 200 teachers”

Times of Zambia (7 February 2012) “KCC workers troop back to work”

4.2.            Zimbabwe: Civil servants strike 

The economic situation Zimbabwe is in has been made worse by the global financial crisis. Public sector workers have been struggling since 2007 around wages and working conditions.

Civil servants belonging to the union, Apex Council, went on a one day strike on January 19 2012 over wages and working conditions, followed by a five day strike from Monday 23 January. Support for the strike was patchy, varying from day to day as well as from service to service. In general, it was well supported in the education sector.

Workers were demanding a minimum salary of $538, up from the current salary of $250; medical insurance; improved pensions; and a special allowance for workers in rural areas. Government’s offer, which they have now implemented from February, backdated to January, is a $240million package to increase basic salary, housing and transport allowances. This falls far short of what workers were demanding, representing an average increase of $7 per month for the lowest paid worker.

While government argues that it does not have the money to pay the demanded wage increase, it was able to pay out $3 million in outstanding allowances to Members of Parliament at the end of 2011. For workers, the struggle to improve wages and working conditions has been going on for years.

Not only did workers not win their initial demands, but in February, the government announced that in future all civil servants will be paid wages and pension money about five days later than they are currently being paid. According to the government the reason for this was liquidity problems. The additional five days will allow it to mobilise funds, and prevent liquidity constraints developing in the market.

See: Institute for Security Studies (26 January 2012) “Zimbabwe: civil servants strike continues as swage talks reach an impasse”  and The Herald (9 February 2012) “Zimbabwe: New pay dates for civil service”

4.3.            Strikes in the Health Sector: South Sudan, Tanzania, Kenya 

Numerous strikes and worker actions have been taking place in the health sector of a number of countries in East Africa.

In South Sudan, doctors, registrars and house officers at the Juba Teaching Hospital went on strike for five days in February. The strike was in protest over the lack of a water supply in the doctors’ guest house for the last month, lack of electricity in the mess, and the lack of basic facilities in the hospital which would allow health workers to deliver a decent service to patients. A government spokesperson indicated that they were going to attempt to deal with all the doctors’ grievances, but it would take time. (See The Citizen (Juba) (23 February 2012) “South Sudan: doctors lift strike in Juba teaching hospital”)

At the beginning of  the year doctors in Tanzania went on a three week strike demanding their risk and on-call allowances, per diem and increment of eligibile payments – all of which the government has not paid since 2008. (See The East African (18 February 2012) “East Africa: Doctors in another round of strikes”)

In Kenya doctors went on strike in November 2011, but returned to work after agreeing with the government that they would receive a 30% increase on their allowance. However, when the state did not include senior medical offices in the raise, and gave nurses only a Sh7 000 increase in their extraneous allowances, compared to the Sh40 000 that doctors received, doctors, nurses and health officers  indicated in February that they were preparing to go on strike again. As the secretary-general of the union, KHPS, Wycliff Tomno, says “how does the government hope to create a conducive work environment when some health professionals are discriminated against?. (See Daily Nation on the Web (9 February 2012) “Nurses threaten fresh strikes over allowances”)

The Kenyatta Hospital in Kenya, in an attempt to cut costs and reduce its wage bill, announced in February that it was intending to lay off hundreds of workers. Many of these will be clerical workers at the hospital. According to the CEO of the hospital, the government is increasingly pressurising hospitals to be self-reliant. The hospital’s move to cut its wage bill must be seen in this light. (See Business Day Nairobi (14 February 2012) “KNH announces layoffs in plans to cut budget deficit”)

Clearly the health sector in East African countries is facing severe challenges. There are too few doctors, the health sector is not sufficiently funded by the government, and facilities need more money spent on them. In addition, patients pay a large portion of health costs from their own pockets, meaning that many poor people do not receive the healthcare that they need.

4.4.            Tunisia: attack on municipal workers 

The municipal workers’ union in Tunisia, Union Generale de Travailleurs Tunisiens (UGTT) , with a membership of over 500 000 workers, went on strike in February over working conditions. Among their demands are the payment of a bonus that workers say the government had promised them but had not paid out; improving working conditions; making temporary workers permanent; and the way promotions are implemented.

Municipal services, such as waste removal have been affected.

On Tuesday, February 21 2012, UGTT offices around the country were attacked, with the branch office in Feriana, in the governate of Kasserine, being ransacked and then set on fire.

See http://www.ghanamma.com/2012/02/tunisia-union-targeted-in-coordinated-attacks/

4.5.            Senegal: transport strike 

Senegal transport workers, members of the National Union of Senegalese Road Transporters, went on strike on January 24 in protest against high fuel prices and police harassment. This was a follow up to an earlier strike in January which was suspended after two days.

See: Radio Netherlands Worlwide (25 January 2012) “Locals stranded by fresh public transport strike” http://allafrica.com/stories/201201251136.html