In the intricate web of global economic policies, the International Monetary Fund (IMF) plays a pivotal role as a financial lifeline for nations facing economic turbulence. Austerity measures, a common prescription offered by the IMF to stabilize economies, have been a subject of extensive debate and analysis for their far-reaching consequences. While austerity policies are intended to restore fiscal balance, their impact is far from uniform, often exacerbating existing inequalities. This article delves into the intersection of economic policy and gender dynamics, exploring how IMF austerity measures can reverberate through societies in ways that disproportionately affect women. From the erosion of social safety nets to the undermining of women’s access to essential services, we navigate the intricate landscape of austerity and its intricate implications for women’s rights.
Introduction to IMF Austerity
The IMF engages in regular economic monitoring of nearly all nations through its Article IV consultations, frequently providing policy recommendations. These suggestions might be disregarded by more affluent nations but wield significant influence over the policy decisions of less economically developed countries. In instances where countries face a debt crisis and require financial assistance from the IMF, which acts as a lender of last resort, the IMF imposed even more forceful policy advice and requirements. Over the past four decades, the essence of IMF guidance has remained largely unchanged, starting from the introduction of Structural Adjustment Programmes (SAPs). However, this guidance is presented, characterized, and marketed in novel ways.
The prevailing model followed by the IMF has been rooted in neoliberal ideology for many years. This ideology advocates for a specific set of policies, including austerity, the liberalization of markets, the removal of capital and exchange controls, the privatization of public services and government-owned enterprises, as well as a decrease in direct tax rates alongside an increased reliance on broad consumption taxes, all justified under the banner of economic ‘development’. The IMF’s definition of ‘development’ is narrowly confined to economic growth, despite these policies consistently facing criticism for eroding human rights and livelihoods, as well as regularly falling short of achieving the elevated growth rates promised.
The concept of structural adjustment places emphasis on prioritizing ‘fiscal fundamentalism’ rather than focusing on achieving economic and social equity and ensuring the realization of human rights. Governments primarily target the reduction of their fiscal deficits as a primary objective. A significant portion of the critique directed at IMF policy recommendations stems from this conventional macroeconomic perspective. This approach advocates for a shrinking government budget allocation for services while giving precedence to fiscal responsibility, even if it comes at the expense of other factors such as social, economic, and gender parity.
Gender Lens on Austerity
These measures of austerity, also known as ‘fiscal consolidation,’ have the potential to influence women’s rights through diverse channels. Nevertheless, it is the combined effect of these policies that is exceptionally destructive. The reduction of publicly provided childcare services in nations intensifies the impact of higher consumption taxes and weakened enforcement of labor regulations against discrimination. This combination adversely affects women’s ability to secure equitable wages and satisfactory employment opportunities. Reductions in critical public sector positions, where women constitute a significant proportion, such as in healthcare and education, are experienced acutely.
Austerity measures entail various ways through which women’s economic security is directly and unfairly jeopardized. Austerity packages frequently involve wage freezes and significant reductions in the public sector workforce. Given societal norms and workplace segregation, women predominantly occupy sectors in the public realm, often targeted for cutbacks. This includes vital frontline roles such as nursing, teaching, and social work, along with lower-level administrative and part-time positions. Consequently, these measures push a considerable number of women into unemployment, precarious employment, or informal labor markets. This transition leads to enduring financial and asset losses, potentially exacerbating gender-based wage disparities while undermining women’s overall economic well-being.
Regressive Fiscal Consolidation: A Threat to Women’s Rights
Sufficient funding for the public sector and investments in social programs and public services have been crucial for women’s economic rights in recent decades, ensuring access to quality employment. In contrast, reductions in public spending linked to austerity have resulted in cutbacks to essential social and physical infrastructure, including education, healthcare, and transportation services. These actions distinctly affect women more than men and hinder advancements in gender equality. This is compounded by the historical context of gender inequality and bias, structural disadvantages, biological distinctions, societal norms, and disparities in the practical application of laws and policies.
i). Budget cuts directly impact women’s income and economic security
Reductions in public expenditure have an uneven and severe impact on women, manifesting through distinct pathways. Broadly, the consequences for women’s rights due to budgetary cutbacks occur through three primary mechanisms: i) direct income losses, ii) curtailed access to crucial services, and iii) heightened burdens of unpaid labor and time scarcity. These factors are interdependent, exacerbating the overall negative effects on women. The repercussions of budget reductions on women’s income and economic stability are extensive and multifaceted
ii) Diminishing Public spending impedes women’s access to crucial services
Among the most insidious consequences of reduced public spending, marked by enduring and disproportionate impacts, lies in how these reductions amplify the obstacles often faced by women when accessing vital public services of high quality. On occasions, budget cuts are directed straight at programs and services primarily benefiting women. Frequently, these cuts extend to services that cater to the wider populace, such as healthcare or vocational training, yet are of particular significance to women due to their economic disadvantages or specific needs (e.g., heightened reliance on healthcare services for pregnancy and maternity needs). An additional measure under austerity is the introduction of fees for essential services, purportedly as a ‘cost-saving’ strategy, which unfortunately escalates disparities in access to care. This disproportionately affects women due to the gender pay gap and limited control they may exert over household finances.
iii) Austerity-driven fiscal restraint intensifies women’s unpaid care work and deprivation
A third vital aspect is the profound significance of austerity measures in exacerbating women’s unpaid care responsibilities and their ensuing time scarcity. Unpaid care labor across the globe is overwhelmingly carried out by women, with one estimate suggesting that women contribute three times as much unpaid care work as men on a global scale (UN High Level Panel, 2016). Particularly for women and girls grappling with poverty in regions marked by inadequate infrastructure and under-resourced public services (such as limited or absent access to piped water, affordable childcare, or eldercare), this translates into a considerable depletion of their time, energy, and prospects, often commencing from an early age. This unequal and burdensome distribution of unpaid care labor has been acknowledged as a substantial impediment to women’s exercise of their human rights, encompassing political engagement, healthcare, employment, and education opportunities.
Labor Market Impact: Road to Women’s Unemployment
The IMF has unequivocally advocated for and endorsed essential measures aimed at elevating female labor force participation rates in developing nations. However, the IMF’s professed objective of promoting women’s employment is undermined by a pivotal element within its supported policies across all three countries: the reduction of the public sector’s scope, which primarily employs women, achieved by constraining public sector job opportunities and curtailing wages. The Fund contends that “elevated public employment has been a deterrent to labor force participation. Notably, higher levels of public employment have correlated with reduced labor force participation, both globally and regionally, particularly among women.”
According to the IMF’s perspective, this phenomenon arises from the presence of higher-paying and secure positions in the public sector that extend benefits to the entire household. This, in turn, might discourage other family members, particularly women, from seeking additional paid employment. Consequently, the assertion is that diminishing public sector employment and diminishing the protection (alongside rights) it provides could motivate women to enter the labor market, as they would be compelled to do so in order to compensate for the reduction.
Gender-Based Violence and Vulnerabilities
An analysis of austerity’s impact on women’s rights must encompass the intricate interplay between economic policies, social services, and the intricate fabric of gender-based vulnerabilities as it extends beyond economic realms, intertwining with increased vulnerabilities to gender-based violence. The reduction in public services and social safety nets often forces women to navigate precarious circumstances, amplifying their exposure to various forms of violence and exploitation. Austerity-driven cuts to essential services like healthcare and education can create conditions where women’s physical and psychological well-being are compromised. Moreover, economic strain resulting from austerity policies can escalate tensions within households, contributing to an elevated risk of domestic violence. The erosion of social support systems, coupled with limited access to resources, can heighten women’s vulnerabilities, further undermining their safety and impeding their ability to exercise their rights fully.
The persistent unwavering trust of policymakers in the ‘austerity-for-growth’ fiscal misconception carries genuine economic, political, and human rights consequences, which cannot be mitigated solely through band-aid social safety nets and targeted gender equality initiatives. To uphold the commitments of governments to human rights principles, ensuring human rights and advancing gender equality during times of fiscal hardship necessitates a broader approach than short-sighted financial restraint. It requires adopting a progressive strategy centered on redistributive measures that shift the burden of adjustments onto those with greater financial capacity, rather than penalizing low-income women and their families, who often lack representation in mainstream political spaces. More specifically, the IMF should:
1. Acknowledge within an officially sanctioned policy stance that achieving gender equality, encompassing the comprehensive realization of women’s human rights and the eradication of gender-based discrimination, demands substantial and continuous public investments. This includes investments in social and caregiving infrastructure, emphasizing that advocating for a reduction in state financial commitment might impede progress in attaining gender equality and fulfilling women’s human rights.
2. Persist in endorsing benchmarks for social expenditure, while guaranteeing that these benchmarks are adequately substantial to drive meaningful advancements in upholding women’s rights. These benchmarks should also be in line with the minimum essential public spending required to achieve pertinent Sustainable Development Goals. For example, allocate around 5 percent of GDP for healthcare (in accordance with WHO recommendations) and approximately 6 percent of GDP for education (aligned with the Education for All initiative’s recommendations).
3. Acknowledge that conventional macroeconomic strategies and loan programs possess inherent gender biases, affecting women’s roles in both productive and reproductive spheres. Incorporate a gender lens in the formulation of policies and programs, integrating it as a core aspect rather than an incidental addition.
4. Encourage governments to adopt legislation that is attuned to gender considerations, safeguarding women’s interests within the workforce. Ensure equitable working conditions in the private sector for both women and men. Engage women’s groups, workers’ unions, and other civil society organizations in shaping social and macroeconomic policies. In order to facilitate this and ensure the inclusion of women’s voices, it is essential for the IMF to confirm that its programs do not inadvertently contribute to constraining civic engagement.
5. Advocate for gender-responsive budgeting, facilitated through the participation of women-led civil society organizations. This approach empowers governments to allocate adequate resources for the effective implementation of laws, policies, and initiatives that promote gender equality.
In conclusion, the repercussions of IMF-led austerity measures on women’s rights are both profound and complex. The fiscal policies, often underpinned by the ‘cut-to-grow’ approach, inadvertently exacerbate gender disparities and hinder progress toward gender equality. While the IMF has acknowledged the importance of women’s empowerment, its policies, particularly those targeting public sector employment and social spending, can have adverse effects on women’s economic prospects, access to services, and vulnerability to gender-based violence. To truly advance gender equality and uphold human rights, a transformative shift is needed. This entails adopting a more holistic and gender-responsive approach to policy-making, focusing on robust social investment, inclusivity, and equitable distribution of economic burdens. By prioritizing women’s voices and needs, the IMF can play a pivotal role in not only mitigating the negative impact of austerity but also fostering sustainable development that benefits all members of society, irrespective of gender.
Why BRICS matters for Pakistan
BRICS represents Brazil, Russia, India, China and South Africa, encompassing 41% of the global population and 24% of the global GDP. The 15th BRICS Summit being held from August 22 to 24 in Johannesburg, South Africa. About 40 countries participated in this year’s BRICS summit where some key decisions were made adding six new members namely Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the UAE. The new membership will be effective from January 1, 2024.
In a historic first, Pakistan’s participation in the BRICS’s seminar, ahead of the summit, was encouraged by Beijing, which wants to integrate Pakistan into the alliance. However, Pakistan surprised the international community for not being the part of BRICS’s summit in Johannesburg. By joining BRICS, Pakistan could potentially benefit in multiple ways.
First, BRICS is the emerging power Centre of the world. Joining BRICS could open up economic opportunities for Pakistan. The country could engage in trade with other member states, benefiting from their growing economies. Pakistan’s exports could find new markets within the framework of BRICS. Muhammad Karim Ahmed analysed, “These BRICS countries are emerging economies and they have improved their country, their economic conditions, manufacturing, and found markets for themselves through joining the bloc”. Certainly, the economic prosperity will minimize unemployment, poverty and illiteracy in Pakistan.
Moreover, developing nations are dissatisfied with the stringent conditions imposed by western-dominated financial institutions like International Monetary Fund (IMF). BRICS has also created two new financial institutions, the New Development Bank (NDB), also known as the BRICS Bank and the Contingent Reserve Arrangement (CRA). CRA, which has a capital of more than USD 100 billion, can help member states withstand any short-term balance of payment crises. Pakistan if allowed in BRICS, can easily access the USD 100 billion CRA as well as the comparatively lenient loan conditions of NDB, without improving the functioning of the Pakistani state.
Second, BRICS membership could boost Pakistan’s geopolitical leverage by providing a platform to collaborate with other emerging powers on global issues. Pakistan has always been blackmailed by its traditional allies. Becoming a BRICS member could offer Pakistan an opportunity to diversify its diplomatic relationships. As a BRICS member, Pakistan could potentially demand for reforms in global governance structure. This could lead to a more equitable international order.
Third, some political analysts suspected that Pakistan’s inclusion in BRICS may generate disturbances with India, leading to a defunct group. However, it appears that India’s opposition to Pakistan joining the bloc is dying down. Recently, Indian Prime Minister Modi has supported BRICS expansion. South African president also welcomed Modi’s remarks, who remarked, “delighted to hear India supporting expansion of the BRICS”. Senator Mushahid Hussain Syed told Arab News that “First of all, Pakistan should apply for membership in BRICS, where the lead role is with China and where India is the weakest link due to its proclivity to be part of the West’s new Cold War against Beijing.” So, BRICS membership will certainly increase Pakistan’s diplomatic leverage with regard to India in the region.
Fourth, BRICS membership could also alleviate Pakistan stature in other regions of the world. For example, in East Asia there’s Regional Comprehensive Economic Partnership (RCEP), again China is in the lead there, but Pakistan isn’t ‘Looking East’! Why? Somewhat inexplicable, not seizing opportunities when these arise.
Fifth, BRICS membership will also introduce correctness in Pakistan’s foreign policy objectives. International community brands Pakistan as a terror sponsor state. Through joining BRICS, Pakistan could divert its security-oriented approach in foreign policy in line with BRICS manifesto. Even India used BRICS forum in Xiamen to condemn Pakistan-based militant groups like Lashkari Tayyaba. So, Pakistan could also use BRICS forum to project its soft image in the world.
In the past, Pakistan has suffered immensely by aligning itself with one group against other. There appear clear indications that Russia and China have shown clear intent to use BRICS to counter G-7, the grouping of powerful wealthy western nations. By orienting its foreign policy away from block politics, Pakistan could potentially get more economic benefits.
The Concept of Sustainability for the World’s Cotton Industry Amidst Geopolitical Challenges
The textile industry is one of the industries that contributes to the largest air pollution in the world. Responsible for 10% of global carbon emissions and 20% of global water waste, the fast-fashion phenomenon also contributes to this problem. If this is allowed to continue, the effects of global warming will get worse. The concept of sustainability itself can also be a polemic for the textile industry because they are experiencing global fluctuations caused by high inflation, weakening demands, and large inventory amounts.However, high global warming will also backfire on them and weaken this industry. Cotton, which is the raw material for making textile fabrics, deeply requires water and fertile soil. With the upcoming heatwaves that will occur, many dry lands will cause difficulties in world cotton production. The United States, as one of the largest cotton producers in the world, is starting to worry about this issue. Moreover, the energy crisis adds further complexity to this problem.
The textile industry itself is trying to revive itself due to many geopolitical problems such as the trade war between China and the United States, the post-Covid-19 situation, and the war between Russia and Ukraine. Even though the Government has been aggressive in advancing green transformation, many customers’ behavior places their spending on assets, automotive, housing, and so on. The problem of inventory buildup is due to textile production continuing to run and increasing but customer enthusiasm is always decreasing, coupled with the thrifting phenomenon which is currently rising.
To focus on green sustainability is a long homework for the textile industry. Although the textile business remains slightly positive in general in the first half of 2023, there are still fears of a global recession as the Federal Bank continues to raise interest rates. However, concerns about the issue of inventory buildup have begun to be resolved. In Cotton Day 2023 held by the United States non-profit organization Cotton Council International in Jakarta, Indonesia, one of the speakers, namely Bruce Atherley (Executive Director of CCI), stated that textile business actors have begun to be careful and control the turnover of textile commodity inventories, and this has resulted in decline in world cotton demand. However, he also stated that this effort could be a good thing and there is optimism about the stability of the textile industry ecosystem. With inventory being depleted across the supply chain, it can be expected that the cotton and textile industry will return to normal and positive demand.
Referring to sustainability and green transformation programs, many textile industry business players have made a commitment to only use sustainably grown cotton by 2025. They have also made a commitment to carbon reduction. This is contained in the regulations of the European Union and the United States, Investment Groups, as well as Focus Media and Non-Governmental Organizations. CCI also stated that the trust protocol will drive continuous improvement in key sustainability metrics by leveraging quantifiable data and variable data while delivering unparalleled visibility into supply chains for brands and retail members.
The concept of circularity must also be considered in green transformation efforts in the world textile industry. Circularity is the concept of minimizing waste and reusing resources. The circular model aims to create production and consumption that can be recycled (closed loop). Circularity is the solution for sustainability. Circular strategies include eco-friendly recycling, easy-to-reset designs, products as a service (PaaS), and increased producer responsibility. The benefits we will get from this concept are reducing the amount of waste, maximizing resource conversion, increasing investment, reducing carbon emissions, increasing economic opportunities, and improving brand reputation. However, this concept can also give rise to challenges such as technological limitations in developing recycling technology, supply chain complexity in traceability and transparency, complicated regulatory framework which includes supporting policies and regulations, and unpredictable consumer behavior. Hopefully more textile and cotton commodity industry players will pay more attention to the importance of the concept of sustainability in their production processes so that carbon emissions and pollution can be reduced which then prevent the worsening condition of global warming.
Marrakech IMF/World Bank meetings, a barometer of Moroccan development and resilience
The recent, devastating earthquake in Morocco’s Atlas Mountains has claimed more than 2,900 lives, injured at least 5,500 people, and left thousands more homeless. Despite this tragedy, Morocco is showing to the world its resolve in the face of hardship and proceeding with its commitment to host the IMF and World Bank Annual Meetings in Marrakech between the 9th and 15th of October.
While normally held in Washington, this year Morocco will host central bankers, ministers of finance and development, private sector executives, civil society, media and academics to discuss leading global issues including world economic outlook, global financial stability, poverty eradication, inclusive economic growth, job creation, and climate change.
While it’s been a disaster that has directed the eyes of the world to Morocco, the country is nonetheless poised to show the world its capacity for global leadership, a strength ever more impressive as they do so while still clearing away the rubble. The country’s determination to proceed as host of the meetings is reflective of Morocco’s recent and broad overhaul of its international engagement vis-à-vis both multilateral organisations and its bilateral relations as the country seeks to solidify its place as a regional economic and technological leader in North Africa.
The meetings are particularly an opportunity for Morocco to demonstrate its leadership in key global industries. Morocco’s aviation and aerospace sectors have increasingly become key to the country’s economic growth, with one of the fastest growth rates globally. The Covid-19 pandemic highlighted the durability of Morocco’s aviation and aerospace industries- while demand for aviation globally dropped 49%, Morocco’s activity declined only 29%. Moreover, the Moroccan aviation sector only saw a 10% job-loss rate during the pandemic, compared to a world-wide figure of around 40%. With more than 140 companies providing 20,000 direct jobs, of which 40% are women – a high statistic when compared to international competitors – the sector is thus a key engine of Morocco’s economic trajectory, its commitment to workforce equality, and a strength in the face of challenges.
Aerospace and aviation have greater impact than simply economic return, also serving to contribute to Morocco’s influence in international security. With Morocco’s defence forces operating a wide variety of internationally developed aircraft, Morocco has recently signed a number of agreements with businesses and international actors in the sector. Notably, these agreements have included the near-shoring of production and maintenance facilities in the country, including a 2022 deal with US-based Lockheed Martin to open a state-of-the-art maintenance and repair centre. With local integration into aerospace products hitting 40% in Morocco, the sector clearly supports wider government aims of technological development and enables closer ties with many major Western powers.
In keeping with recent developmental goals, Morocco’s burgeoning tourism industry is also of note. Moroccan tourism is equally vital to international perceptions of the country, contributing more than $9 billion to the country’s GDP in 2021, even at the height of the pandemic. With a record 6.5 million visitors to the country in the first half of 2023, the sector is undoubtedly going to continue seeing massive growth. With almost 5% of total employment coming from the sector, revenues are expected grow in the region of 60-70% by 2028. Capitalising on its rich history and geographic beauty, Morocco has taken advantage of this dimension of its soft power and positioned itself as a cosmopolitan tourist hotspot.
Morocco is also positioning itself as a leader in the renewable energy sector, with the country’s solar energy sector now set to account for 20% of its total energy use by the end of the year and progress-focussed policy reforms have tackled fossil fuel subsidies, renewable energy development, and gender equality in the workplace. Further recent initiatives have included Africa’s first hydrogen-powered vehicle, its first high-speed rail network.
Internationally, a joint Morocco-UK energy project will provide 8-10% of the UK’s total electricity consumption. A 10.5 GW solar and wind farm as well as a 20GWh battery site will be constructed in the Guelmim-Oued Noun region of Morocco and linked directly to the UK via the world’s longest twin 1.8 GW high-voltage direct current (HVDC) cables that will run nearly 3,800km from Morocco to North Devon. This collaboration between Morocco and the UK is an ideal example of cross-border initiatives that properly address climate change through fostering international partnerships, and again highlights strands of Morocco’s longer-term push to deepen international engagement.
Morocco moving forward
Despite hardship, in hosting the Annual Meetings Morocco is displaying its resilience, signalling that the country remains open to both visitors and development, and making the most of the opportunity to show the world how the country is leading the way across a swathe of key international sectors. Engaging with international governance institutions has been central to Morocco’s development strategy for many years, and this opportunity to host the meetings strongly signals Morocco’s continued resolve to make its mark on the world’s stage.
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