Ireland: economic crisis deepens

FRFI 213 February / March 2010

The economic crisis has continued to deepen in Ireland. As we reported in FRFI 211, in October 2008 Ireland became the first eurozone country to enter recession, and the IMF acknowledged that the Republic faced the deepest crisis of any advanced economy in the world. In December 2009, the Irish government announced yet another budget in an attempt to stem the crisis. Living standards are now under serious attack, and the Irish people are having to face up to a reality that the ‘Celtic Tiger’ economic boom is over. More unrest lies ahead.

 

On 10 December 2009, Ireland’s Fianna Fail government, in office for the past 12 years, proposed a budget intended to rebalance the Irish economy over the next three years. Finance minister Brian Lenihan announced a package of €4bn state spending cuts aimed primarily at public sector workers and the poor. The next day, the Irish parliament passed the Social Welfare Bill which cuts benefits by 4.1% on average, with child benefit being reduced by € 16 a month, the weekly carer’s benefit by €8.20, and big cuts in unemployment benefit for those under 25. Widows and blind people were also targeted for benefit cuts following the removal of the annual Christmas Bonus. Jack O’Connor, the president of the largest trade union SIPTU, said he genuinely feared the government was pushing the country into a severe depression. The charity Social Justice Ireland stated that the budget was ‘anti-family, anti-poor and anti-children’, and that it placed faith in the neo-liberal economic system which had caused the crisis in the first place.

On 15 December, as the Irish parliament voted on measures which would reduce public sector pay by between 5% and 15%, thousands of public sector workers held a rally. Analysing the budget, ‘The Poor Can’t Pay’ group, a coalition of charities, unions and community groups, stated that one euro in every five cut by the government came from the pockets of the poor. Spokesperson Dr Murphy said: ‘Many households will suffer multiple cuts. For those in receipt of social welfare, and low paid workers, this comes on top of job losses and reduced hours. The sick and the elderly will also face new prescription charges.’

For over 20 years trade unions in Ireland pursued a ‘social partnership’ approach with government, curbing union militancy to facilitate the inward investment which underlay the Celtic Tiger boom. In 1980 union membership reached a peak when 62% of employees were members, but has been falling steadily ever since. The latest figures available from the Central Statistics Office in Dublin show that in 2007 union membership had continued to fall to around 840,000, or 31% of employees. Latest estimates suggest that membership levels are highest in the public sector at about 70%, and lowest in the private sector at approximately 25%. While large-scale opposition to the budget cuts was expected to begin in the New Year, union leaders openly stated that all-out strike action would not be deployed and instead, on 25 January, workers began work-to-rule action. On 26 January, low paid workers from the Civil Public Service Union agreed to escalate industrial action from 1 February.

The most recent unemployment figures reveal the extent of the crisis. According to the Central Statistics Office, unemployment remains at a 14-year high. The Live Register of Jobseeker’s Benefit claimants stood at 426,700, up 133,700 on the previous December. 423,595 people are now unemployed. In the year to December 2009, the unadjusted Live Register increased by 133,577, a rise of 46.1%. Estimated unemployment for December remained at 12.5%, the same as in October and November. Further increases are being curbed by the contraction of the labour force, partly as a result of emigration. The Economic and Social Research Institute predicts net outward migration to be 40,000 people in the year ending April 2010, up from 7,800 in the previous 12 months.

The crisis in Ireland still has a long way to go. Part of the agreement which saw the establishment of the National Asset Management Agency in November 2009 (see FRFI 211), the so-called ‘bad bank’ which socialises the toxic debts of six of Ireland’s major banks, was to delay foreclosures until summer 2010. With house prices collapsing, the worst of the crisis still lies ahead. New calls for a public tribunal to investigate the ‘wrongdoings’ and ‘corruption’ which led to the crash abound. It is not a mismanagement of capitalism which is at fault for the crisis; but capitalism itself. There will be no quick fixes.

Paul Mallon

 

Ireland: the key to the British revolution by David Reed

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