By Brian O’ Boyle
Over the last few weeks the establishment spin machine has cranked into action. With a national election less than 12 months away, government lackeys are busy constructing a message to secure their re-election. With seven years of brutal austerity behind them, talk of recovery is hardly surprising. But where is the recovery for working people? Speaking on the Week in Politics, Minister for Jobs, Richard Bruton boasted that the government had secured its promised 100,000 new jobs 21 months ahead of schedule. The context for his interview was the confirmed reduction in Irish unemployment figures below the magic 10% threshold. According to the minister, this proves that the government’s austerity drive is paying dividends, as growth and employment rates are amongst the highest in the OECD. Anxious to get in on the action, IBEC have also been talking up our economic fortunes. According to their latest forecasts, the Irish economy will grow by as much a 5.4% this year alone. Coming on the back of 4.8% growth last year this may seem like progress, but there are at least three reasons to be suspicious.
Massaging the figures
First up, there is blatant massaging of the unemployment figures. During the worst phase of the Irish crisis a whopping 330,000 people lost their jobs. The government claims that it has secured employment for over 100,000 of these, yet nearly 89,000 people have merely been moved onto labour activation programmes. These schemes, which include JobsBridge, are designed to give workers a nominal increase in their social welfare payment in return for what used to be paid employment. Meanwhile, the labour force participation rate has also fallen thanks to the emigration of almost 10% of Ireland’s youth. According to figures published by the IMF, Ireland’s unemployment rate would be at least 19% if so-called ‘discouraged workers’, the involuntarily underemployed and those forced to emigrate are taken into consideration. When one considers that almost 300,000 have left the country, and that nearly one fifth of the workforce are underemployed, the government’s employment figures look decidedly less rosy.
Recovery on workers backs
Next up, is the class dimension of the economic recovery. According to the National Competitiveness Council, Ireland’s recovery is being powered by an 18.5% increase in international competitiveness. What they fail to reveal however, is that this ‘newfound competitiveness’ has come on the backs of Irish workers. Speaking to an employer’s convention, IBEC director, Danny McCoy, admitted that Irish workers had increased their productivity by 12% in 2009 and 10% in 2010. Despite this, their pay had actually deteriorated, as unit wage costs fell by 7%. Meanwhile, in the public sector the combined effects of Croke Park and Haddington Road have seen wages eroded by between 15-25%. Cumulatively, the results of this process have been all too predictable. Research by Unite the trade union, indicates that Irish wages are now around 14 per cent below the EU average, and that in the last two years, wage increases have been minimal compared to other European countries. Yet how have employers achieve this wage repression? During the crisis, the Irish government worked hand in glove with the bosses to make Irish labour markets more precarious. This, in turn, helped employers to achieve their so-called ‘cost saving measures’ by making workers increasingly insecure. Boasting the success of this policy, IBEC currently advertise Ireland as “1st globally for flexibility and adaptability of the workforce”. But this is merely code to prospective investors that Irish workers have been squeezed so badly that they will accept precarious employment and lower wages just to get a job. Meanwhile, the ‘social wage’ has been obliterated as welfare payments and vital services have been slashed and burned by successive governments. After seven years of punishing austerity, the very least that Irish workers should expect is a share of any economic recovery. Yet this is already sending warning signals to the Irish establishment. Speaking in the Irish Examiner, neoliberal economist, Jim Power, argued that “any rush to pay increases could damage the long-term health of what is still a very fragile economy”. Richard Bruton made similar remarks in connection with the resumption of public sector pay talks, whilst IBEC are consistently pouring cold water on the pay demands of Irish workers. The implications of all of this should be patently obvious. Although any recovery will have been paid for by the sacrifices of working people they should not expect to share in the benefits.
A class recovery that is shaky
Finally we look at the sustainability of the current upturn. One of the decisions made to achieve recovery for the Irish rich was to accept a disproportionate amount of the EU banking debt. By Eurostat estimates, Ireland makes up around 1% of the EU population but was made to shoulder 43% of the total bank debt. The decision to accept this burden was made by Irish elites anxious to protect their place within European capitalism. However the knock on effects will constitute a major drag on any nascent recovery. The Irish state collected around €42 billion in 2014, only to hand over €8.75 billion in interest payments. This is around 1/5 of the overall tax take, representing dead-money handed over to the richest Irish and European citizens. To put this in context, the Irish water network will only need around 20% of this to improve the infrastructure (€1.75 billion) over the next two years. The National Children’s Hospital will cost somewhere in the region of €500 million, meaning that we are being deprived of around 17 such hospitals every year. This level of state hand-outs is not only extremely unjust - it will mean that any fanfare around Irish growth rates could well prove short lived. With debts of €203 billion and a Debt to GDP ratio of 110%, interest payments of 4 or 5% annually will quickly wipe away all the gains associated with the supposed recovery. Once payments to foreign multinationals are brought into the picture the figures look even worse, as Ireland’s Debt to Gross National Product is 135%. This is the figure that economists track as the state cannot pay its debts with money owed to foreign companies. Behind all the talk of economic recovery, the Irish debt burden therefore remains unsustainable. Moreover, the fact that European capitalism is still struggling to escape its own difficulties means that any export led recovery is highly unlikely. The Irish establishment currently want to throw a few crumbs at workers to buy the election –but a shallow recovery on the backs of workers is not the same as a sustainable recovery in wage and conditions.