Calls For End To Austerity As Ireland Plunges Back Into Recession

Those commentators who have been critical of the overuse of austerity policies in Ireland are claiming that Ireland’s plunge back into recession is proof of their views.

A 'People Before Profit' March Protesting Irish Government Policies

Since 2008 the Irish economy has been battered by international forces beyond its control in addition to massive self-inflicted damage caused by a property market bubble and the near collapse of the Irish banking system.

The effects were far-reaching. Unemployment stands at 13.7%, public services have been slashed, bitter wrangling continues between the Government and its own employees in the Civil and Public services. Emigration has soared to Famine-era levels while those left behind have been burdened with extra taxes and levels of debt that will take decades to pay off.

Ireland re-entered recession in the final quarter of last year and with ‘negative growth’ prevailing it seems that the austerity and tax increases have dampened any possibility of a domestic recovery. The Property Tax did not help either. Demanded as a condition of loans granted to Ireland by the EU/IMF/ECB the Property Tax was almost gleefully imposed by the Fine Gael Government who clearly see it as an easy way to bring in finance. Political cover was provided by the European ‘troika’ who could be blamed for demanding its imposition – ‘it wasn’t us – its them!’ Job done.

Chart showing the financial effect on Ireland of the economic crash

The uncertainty caused by the Property Tax, the fear of its impact and the never-ending burden of yet more taxation certainly played a huge part in dragging the country down again.

Ireland is also more exposed to events outside its borders than most other countries. As an island nation the most basic raw materials must be imported, raising costs. Exports to Britain, Europe and beyond have to be expensively transported, raising costs. Any change in the value of the Sterling and US Dollar currencies can lay waste to the best laid of export plans in the space of a few hours, again raising costs.

Even bad weather can effect the Irish economy, especially domestic spending, further depressing a beaten-down population who retreat to their ‘mortgaged to the hilt’ apartments in semi-derelict half-built housing estates to ponder the future – ‘I wonder if Australia is still looking for electricians?’.

Maybe this is the bottom of the trough?

Domestic spending looks to be improving now that the Property Tax shock is pretty much out of the way. Anecdotal evidence of a recovery in both the construction market and the property market have been borne out by recent numbers. Major road projects are being undertaken for the first time since the economic crash in 2008, a sure sign that things are about to improve. The South County Dublin section of the Dublin property market has actually seen a 12% increase in prices in the first 6 months of 2013 according to Irish property website Daft.ie, with an overall rise of 5.3% in Dublin prices over the last year.

Hot stuff. And even the weather has improved!

So despite the economic woes there does appear to be grounds for optimism. This is year five of the greatest economic crash in the history of the country. Being well positioned to catch a ride on the global economic upturn that will inevitably come must surely be the current Government’s major priority, as well as its best bet for being re-elected.

by Michael Green
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UNICEF Ranks Ireland Tenth Best For Kids

A report by UNICEF has provided mixed news for Irish parents with its findings ranging from very good to seriously bad. The report listed an average rank in the four elements of child well-being: material well-being, health, education, and behaviours and risks.


The report examined data from 2001 to 2010 for 29 developed OECD countries and ranked The Netherlands, Norway, Iceland, Finland and Sweden at the top of the list with the UK in 16th place and the US in 21st place. The listing of Ireland in 10th place is relatively good but does however mask some shortcomings in the Irish treatment of its younger citizens.

Ireland ranked tenth overall with the report finding:

  • The Irish Child poverty rate of 8.5% is below the OECD average
  • Alcohol use among 11 to 15 year old children sees Ireland in 14th place with the US in 1st place (least number of children who reported being drunk at least twice) and the UK in 23rd place. Cannabis use by the same age group saw Ireland in 13th place, the UK in 21st place and the US in 25th place.
  • There has been a large decline in child and teenage smoking with Ireland ranked in 6th place, the US in 4th place and the UK in 7th place.
  • Ireland ranks 20th in number of births to teenage girls (15 to 19 years) with the UK in 27th place and the US in 29th place (most births)
  • The number of children overweight is increasing and Ireland is behind the UK, Germany and France in this regard. 15% are rated as overweight using the BMI scale. In the UK the rate is 12% while in the US it is 28%
  • Ireland has the highest rate of child exercise with the US in 2nd place and the UK tenth place.
  • In the 15 to 19 year old bracket Ireland is at the bottom of the list with regard to unemployment (includes not being in school or training)
  • Participation in third level education (15 to 19 years old) sees Ireland in third place (92% participation) with the US in 25th place (82%), and the UK in 29th (73%).
  • In terms of health and safety Ireland ranked 15th of the 29 countries.
  • In education terms Ireland ranked 17th
  • In housing and environment Ireland ranked 2nd
  • Homicide rates in the 29 countries sees the US in 27th place with just under 5 deaths per 100,000 citizens. Ireland is in 24th place (just over 2 deaths per 100,000 citizens) and the UK in 14th place.

The full report can be accessed here:
http://www.unicef-irc.org/Report-Card-11/

by Michael Green
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Government ‘Divide & Conqueror’ Strategy to Test the Resolve of Public Sector Unions

A successor to the ‘Croke Park Agreement’ has been finalized that will see cuts of 1 Billion Euro from the Government pay bill. The deal includes pay cuts for all staff, and up to 10% for top-earners, additional hours of work at no extra pay, and reductions in allowances and premium payments.

As many as nine Unions have already indicated that they will not support the new deal and are recommending that their membership reject it. The consequences of being outside of the new arrangements are likely to make for a very difficult situation for the Unions. It is very likely that the Government will unilaterally reduce the pay of those staff who do sign up to the deal, a step that will almost certainly cause strikes.

The Government seems to be playing hardball this time around. The new proposals actually provide for some compensation to public servants in two years time in certain situations, but only to those Unions that sign up to the deal. Those staff who opt out will not receive the agreed compensation. Divide and conqueror seems to be the tactic.

Similarly the deal provides for zero compulsory redundancies for those Unions that sign up – a huge concession given the current unemployment rate of over 14%. Those left outside the umbrella of the agreement however will have no such comfort and may see compulsory redundancies implemented, on top of compulsory pay cuts.

The divisions in the Unions are becoming apparent. The huge Impact Union that represents over 63,000 public servants has recommended that the deal be accepted. The Irish Nurses and Midwives Organisation however is to recommend rejection of the deal to its 40,000 members. Similarly Teachers Unions have rejected the deal. Already a group representing Gardai, Nurses, Paramedics and Fire-Fighters, some 70,00 public servants, has been formed to co-ordinate its opposition to the deal.

The problem with the deal from a Union perspective is that it requires every public servant to take a pay cut. While this may seem reasonable in the case of a person earning over 65,000 euro per year it is a lot harder on lower paid civil and public servants, nurses and front-line staff, many of whom earn less than 30,000 euro annually.

Taoiseach Enda Kenny is determined that the cuts to pay and conditions have to me made:

“Implementing these savings by agreement with public service staff would be another big step on the road to economic recovery, and would send out a signal to the world that the Irish people are determined to fix our economic problems and restore the country to prosperity and full employment.”

It is ‘Game On’ with division, public protest and strikes inevitable.

by Michael Green
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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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Further Crackdown on Welfare on the Way

It is a sign of the economic times that social welfare is again being targeted by a broke Irish government. Years of austerity, cutbacks and tax hikes have not yet been enough to balance the books in Ireland so the next target is those people who have already lost their jobs.

The ‘Jobseekers Allowance’ is usually paid for 12 months after unemployment begins but it is likely this will be cut to 9 months after which time the allowance will become subject to a ‘means test’. Such an individual examination of a persons income is likely to result in the amount paid being reduced. There are also a percentage of people who would be more encouraged to seek out work rather than endure a means test and a likely welfare cut.

This so called ‘labour activation measure’ could affect as many as 40,000 people in Ireland and is certain to be greeted with hostility by sections of the Labour Party who are currently in coalition with Fine Gael. The measure is likely to be yet another wedge to be driven between the two government parties in what is becoming a regular occurrence. The chances of Labour actually leaving Government though are pretty remote. Their public support has plummeted in recent months if the opinion polls are to be believed and any short-term election would see the party severely punished.

More likely Labour will try to water-down or even prevent the new measures from being implemented. With other big issues such as the abortion legislation and the ‘Croke Park Agreement’ also on the horizon it looks like the differences between Fine Gael and Labour are once again about to be brought into stark relief. Much to the delight of the opposition parties.