Rate of Unemployment In Ireland Remains High At 14.6%

The rate of unemployment in Ireland remains stubbornly high within the 14% to 15% range. This bad news has in part been reduced by an increase in the rate of emigration.

The Central Statistics Office has announced that the number of people ‘signing on’ is just under 430,000, down just over 10,000 since the start of 2012. The figures could not mask the increase in the number of those considered to be ‘long-term’ unemployed. Nearly 190,000 of the total unemployed have been claiming benefits for over a year – a 3.3% increase over the year.

The Irish Central Bank estimates domestic growth of only 0.5% in 2013 with GDP growth of 1.3%, a reduction in previous estimates. These numbers do not encourage any belief that the rate of Irish unemployment will decrease any time soon, putting further strain on an Irish economy already struggling with a huge social welfare bill.

European unemployment continues to be a big issue with Spain at a massive 26%, Portugal at 16%, Italy at 11%, France at over 10%, the UK at under 8% and Germany at just under 7%.

source: http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/3-08012013-BP/EN/3-08012013-BP-EN.PDF>

by Michael Green
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Potential Disaster for Ireland if UK Opts Out of European Union

The amount of genuine ‘Euro-skepticism’ that really exists in the United Kingdom is about to be put to the test.

The UK has always had a vocal faction who are very unhappy with the EU. This skepticism ranges from those who want to have their London parliament retain more of its power rather than ceding ever-more to Brussels, to those who want the UK out of the European Union altogether.

British Prime Minister David Cameron has announced that, should his Conservative party be re-elected, a referendum will be held in the UK by 2017. The vote will likely include a number of options and will include an option for the country to completely leave the Union. Britain previously decided to remain outside the Eurozone and retain its own Sterling currency. This proved to be a very wise decision in retrospect, given the financial devastation that the single currency has left in its wake.

Had Ireland retained its own ‘Irish Punt’ currency and thus control of its own Central Bank then there is no way the property bubble that has wrecked the Irish economy would ever have been allowed to grow to the proportions it did. Since interest rates were set by the European Central Bank Ireland was lumbered with low interest rates, cheap loans and a voracious appetite for buying property at precisely the moment it needed it least. Ireland had 1 and 2% interest rates when it should have had 5, 6, and 7% to cool the property market.

While these events are history now, it is with a sense of foreboding that the Irish public and politicians view the vista of our nearest neighbour and largest trading partner actually leaving the European Union completely.

The effects of such a move for Ireland would be wide-reaching. Britain is the export economy upon which Ireland relies most. If trade becomes more difficult or is taxed at a higher rate then the effect on the Irish economy would be severe.

It remains to be seen what the overall response will be from the British public. As David Cameron himself put it:

“The biggest danger to the European Union comes not from those who advocate change, but from those who denounce new thinking as heresy. In its long history Europe has experience of heretics who turned out to have a point.”

Ireland is certainly feeling the pain for having ignored its own heretics who predicted doom when the country joined the Euro currency.

by Michael Green
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Irish Government Finally Gets Tough on Public Service Pay

Irish Government Finally Gets Tough on Public Service Pay

The ‘Croke Park Agreement’ is a deal between Public Service Unions and the Irish Government. It broadly states that there the Government will not implement any further cuts in pay for Public Servants in exchange for an increase in productivity and greater flexibility in respect of work practices.

The rates of pay and conditions enjoyed by Irish public servants have been the subject of severe criticism in Ireland in the last few years, especially given the appalling state of the public finances.

A successor to the Cork Park Agreement is being negotiated between the Government and Union officials with both sides taking pot-shots at each other using the media as their weapon. The latest example of such public negotiating was by the Irish Taoiseach (leader, Prime Minister) Enda Kenny. His Fine Gael Party has been criticized for allowing the continuation of the Croke Park Agreement despite the fact that the country is effectively bankrupt. Fine Gael are to a certain extent hamstrung by the fact that they are in coalition with the Labour Party who are adamantly opposed to their core membership enduring any further pay cuts.

Enda Kenny has made it clear that if no agreement is forthcoming then the Irish Government will introduce legislation to enable it to reduce wages and automatic annual increments (pay rises), and to introduce a compulsory redundancy program.

Such a unilateral action would cause difficulties for the Labour Party leader Eamon Gilmore who is already reeling from the criticism his Party has endured after the introduction of the annual Property Tax. He will be hoping that his Trade Union colleagues can strike a deal with his Government that will prevent such a necessity.

Both Fine Gael and Labour have suffered badly in recent Irish opinion polls and it is vital that they are seen to strike a deal that is good for the country.

Edited by Michael Green
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Irish Water Tax to be introduced in 2014

A new tax on the private use of tap water is to be introduced in Ireland in 2014. This is despite the fact that most Irish homes will not have an actual water meter installed until 2016 at the earliest. A flat-rate fee will be introduced initially and will be based on the size of a property as well as the number of occupants.

Irish businesses already pay for their water usage but private homes do not, the funding for which comes from general taxation revenue. The new plans to install a water meter in every house in the country have, like the property tax, been greeted with dismay by a population that is already groaning under the weight of a huge and increasing tax burden. It is expected that average annual usage per home would cost approximately 400 euro (approx US$530), with heavier users paying more.

It is broadly accepted that there is a case for charging for water usage. Estimates put the wastage of usable water at over 50% from the country’s creaking and in many cases Victorian water pipes network. Owners of rural houses usually have to sink their own well or else join a water scheme while urban houses do not have any such expense so there is a real urban/rural divide on the issue.

On the other hand Taxpayers can reasonably argue that they already pay for water in their income and sales taxes and are entitled to ask just why they are being told to pay again.

Edited by Michael Green
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Unexpected Chinese Boost for Irish Tourism

In the wake of the unexpected blossoming of the Irish whale-watching business the Irish tourist industry is today celebrating another notable boost.

In a surprising boost for Irish tourism the Chinese ‘Oriental Morning Post’ newspaper has declared that Ireland is the world’s best travel destination. A poll conducted by the newspaper was announced at the ‘World Travel Awards’ in Shanghai. The vote of confidence for the Irish tourist experience follows on from the 2012 ‘most charming destination’ award from the Beijing ‘Life Style’ magazine.

As many as two million Chinese tourists visit Europe every year but clearly Irish Tourist businesses want to attract more than the 10,000 Chinese visitors that arrived in 2011. Perhaps the fact that Ireland is located at the very edge of the continent has played some part in the relatively few Chinese visitors over the years. It is hoped that a new visa waiver scheme that has been introduced for Chinese visitors will greatly boost the numbers that visit the shores of the Emerald Isle.

Late last year the Chinese celebrity couple Zhao Ruo Hong and Zhao Yan from Shanghai made the headlines in their native land when they visited Ireland on their honeymoon. Zhao Ruo Hong is vice-president of China’s first wedding website. Zhao Yan is a famous detective writer. Their tour of the Guinness Storehouse, Trinity College, The Book of Kells and then the Cliffs of Moher and the Ring of Kerry read like a travel brochure for Irish tourist chiefs who were clearly delighted to welcome such a high-profile celebrity endorsement.

By Michael Green
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Irish Property Market May Rebound

The part that the collapse in the Irish property market played in destroying the Irish economy has been well documented. The 2007 height of the market now seems like an eternity ago with prices falling by as much as 47% according to the Irish Central Statistics Office (CSO).

The market collapsed, the banks collapsed, the economy collapsed. The EU, IMF and ECB provided loans to Ireland to keep the country running on condition that part of these loans was used to pay back bondholders in Europe, many of whom were based in Germany and France. The punitive rate of interest being charged for these loans is also the subject of ongoing negotiations between the Irish government and the European ‘troika’.

Nevertheless there are signs that 2012 may have marked the actual bottom of the property market. Figures from the CSO have revealed that house prices actually rose in November by 1.1%, despite showing an overall annual decline of just under 10%.

The news that US bank Wells Fargo has located four senior bank officials in London for the express purpose of examining the Irish property market is a further sign that there may still be some life in the housing market in Ireland. Irish banks are very reluctant to lend at the moment to anyone other than the most financially secure. Despite their protestations it has become nearly impossible for young first-time buyers to get a mortgage and buy a property.

A scenario whereby the economy recovers somewhat in tandem with the arrival of a new banking force could cause a significant upwards bounce for the ailing Irish construction industry that has always been one of the country’s biggest employers.

Sixth Successive Austerity Budget May Be The Final Straw

The annual budget announced by the Irish Government has been received with a greater degree of anger and protest than previous announcements. This is the sixth successive austerity budget that Irish Governments have enacted. All have been unpopular but this latest budget may represent a tipping point.

Already reeling from years of tax hikes and cuts in services the Irish public had elected Fine Gael and the Labour Party on the basis that a new direction would be taken. A very different direction from that followed by the previous Fianna Fail administration.

It is not that the Irish people expected a sudden end to the financial pain that the country has endured – far from it. But they were entitled to expect that Fine Gael and Labour would not simply continue to enact Fianna Fail’s policies. These were the very policies that caused Fianna Fail to be trounced so convincingly at the last general election.

Fine Gael promised a new direction while Labour promised to protect the less well-off and vulnerable. These latest budget announcements have clearly made a lie of those promises.

Cuts to child benefit, a new property tax, increases in social insurance payments, cuts to services to pensioners! 3.5 Billion euro in cuts and tax hikes were announced which will result in just about every family being hit by an average of at least an extra 1000 euro annually. The important word in that last sentence is ‘extra’. The property tax alone will take hundreds from every household on top of the other taxes.

‘You cannot tax your way out of a recession’ is a tenet that clearly the current Government does not agree with. It is just impossible to quantify the amount of cash that is being taken out of the Irish economy, both in terms of actual currency and in terms of consumer and investor confidence, at precisely the time when that economy needs to be stimulated.

It seems that Fine Gael are playing a long game. Get the pain over with now. Take the hit and hope things turn around in the next couple of years before the next election. If all fails then blame the last Fianna Fail Government for getting us into this mess. If the economy turns the corner and things improve then they can claim the credit. Pretty cynical stuff.

And what of the Labour Party – the protector of the vulnerable. By introducing a property tax in Ireland they have likely provided Sinn Fein with the final nail to pound into their coffin. The property tax will be an annual tax and it is almost certain to be one of the big issues that may even decide the next general election. Labour look certain to be decimated. Fianna Fail and Sinn Fein can offer to scrap the tax if they are installed in power – that would be a sure vote-grabber. Pretty cynical stuff.

The next few days and weeks will show if the Irish people still have some fight left. Is this really a tipping point or have the Irish simply given up and succumbed to the weight of recession and austerity? And cynicism.

Ireland Ranked 25th Most Corrupt Country in 2012

The Berlin based watchdog ‘Transparency International’ has released its latest report regarding national public sector corruption.

The new study uses metrics such as the independence and efficiency of the state judicial system as well as the effectiveness of oversight of public spending to compile the list. According to the latest results Ireland has fallen from 19th place last year to 25th place in 2012. The study measures the perception of corruption, given that most corrupt dealings are secret or never detected.

Of the 176 countries that were analyzed Greece ranked in 94th place, the worst of any EU country. Widescale corruption and tax evasion continue to compound the problems of this bankrupt country, already reeling from years of austerity and facing into perhaps decades more.

New Zealand, Denmark and Finland were ranked as the least corrupt countries. It is perhaps no coincidence that these three countries are also among the top countries to be born in according to a recent study by the Economist Intelligence Unit. Somalia, North Korea and Afghanistan were listed as the most corrupt countries.

The US was ranked in 19th place with Germany in 13th, Britain and Japan in 17th place, and France in 22nd. With China in 80th place and Russia in 133rd place the report clearly cites the need for sustained political action in order for a country to improve its perception of corruptness.

Italy in 72nd place, Bulgaria in 75th, and Romania in 66th place demonstrates the problems facing those EU countries and especially so in the light of the current plans to install a new European-wide banking supervisor.

Ireland is Tenth Best Educated Country in OECD

One of the many consequences of the ‘Celtic Tiger’ economic boom in Ireland during the late nineties and early part of the new century was that there was a lot of investment in education. A recent report by the Organization for Economic Cooperation and Development (OECD) measured the extent to which the population of a country held a college or college equivalent degree.

Between the years 2000 and 2010 the percentage of people with a higher level qualification in Ireland almost doubled, increasing at an annualized average rate of 7.3% – an amazing increase by any standard and this is despite recent cut-backs in the education sector.

By 2010 Over 37% of the population had a higher level qualification, compared to 51% in Canada, 46% in Israel, 42% in the USA and 38% in the UK. Ireland ranked in tenth place in the list of OECD countries, with the USA fourth and the UK in seventh placed.

Unfinished ‘Ghost Estates’ a Huge Problem in Ireland

The property boom that gripped Ireland during the 1990′s and the early part of the new century had a dreadful far-reaching effect when property prices crashed. The leading banks in Ireland had to go cap-in-hand to the Government for a bail-out which in turn bankrupted the economy and resulted in extensive loans being required from the EU/IMF ECB troika.

On a wider perspective the property crash decimated the economy but also caused a lot of problems on a micro level too. Many Irish couples bought starter apartments in the hope that they could move to a bigger house when their family grew. Now stuck in negative equity there are thousands of families who simply cannot afford to move from their unsuitable apartments and are trapped, waiting on the property market to improve before they can sell up and move on.

Worse again is the situation of those families who bought houses and apartments in building schemes and housing estates only for the builder to go bust half way through the build. Now they are surrounded by dozens of unfinished properties and are living in virtual building sites which attract vandalism and anti-social behaviour.

A new report from the Irish Government Department of the Environment has revealed that there are now 1770 unfinished housing developments dotted around the country. Of these 1100 are in a very bad state and are even commercially unviable. While the larger cities have their share of such property developments it is in the midlands and border Counties where the problem is even more obvious. Once quaint towns and villages are now blighted by the remnants of the ‘Celtic Tiger’ era of building mania.

It is clear that several of the 1770 housing schemes will have to be completely demolished and returned to a ‘green field’ state, perhaps providing some employment for the now unemployed construction staff who helped to build them in the first place.