AltAusterity Digest #3: June 28-July 5, 2017

French Prime Minister Edouard Philippe wins a confidence vote in France’s lower house and promises to cut the budget deficit without raising taxes. Philippe pledged to stop increasing the number of state employees and push for labour reform to “boost job creation,” which likely means more precarious work.

Changing understandings of how labour markets function has implications for the recent decision to raise the minimum wage to $15 in Ontario. Over the last 20 years, many highly credible studies have found that the disemployment effect (i.e. lost jobs) of higher minimum wages is very close to zero. In some cases, higher minimum wages were associated with increased employment.

Two recently failed Italian banks – Banca Popolare di Vicenza and Veneto Banca – will cost taxpayers an estimated €17bn in bail-outs, after private investors failed to contribute to recapitalization. These decisions have come under fire – mostly from some German MEPs – who claim that Europe’s banking rules are supposed to discourage this type of public spending.

The UK Tories are split over the future of the public sector pay cap. While some in the minority government want to scrap the cap to demonstrate the electorate’s calls, others are worried that such decisions with tarnish their legacy of fiscal “stewardship”.

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