Budget 2010
Macdara Doyle, of the Irish Congress of Trade Unions (ICTU), analyses Budget 2010 and argues that it is a “charter for exploitation that will put downward pressure on wages”.
The Irish economy is currently the subject of a rather dangerous experiment, the sort of experiment that is routinely dreamt up in dysfunctional think-tanks or carefully nurtured in the minds of obsessive ideologues.
As the rest of world combats the downturn through stimulus and state support, Ireland alone will bizarrely attempt to deflate our way out of the crisis. Only one country in the modern era has tried this – Japan – and it sank into a 10-year depression.
Ireland is on the cusp of doing something similar and recent figures that appeared to show we had technically exited the recession are illusory. The measures announced in Budget 2010 will serve only to deflate the economy further and guarantee further job losses. Even government figures concede that some 75,000 extra jobs will be lost next year.
Yet the Budget contained nothing of substance on job creation or protection.
Instead, we got cuts in unemployment benefit and wider welfare rates, cuts in public service provision and a tiered 5 to 15 per cent cut in public sector pay.
Budget 2010 seriously risks turning a recession into a depression. Some 50 per cent of our gross domestic product results from domestic consumption and lowered demand has already led to job losses. From January, 330,000 public sector workers will have some €1 billion less to spend. More jobs are certain to go.
But it would be wrong to characterise Budget 2010 as a panicked reaction to the crisis on the part of government. The closer you examine the entire package the easier it is to discern the ideological thrust that gives it shape and coherence. And this is where the dangerous experimentation comes in.
Budget 2010 is a profoundly ideological exercise. With membership of the Eurozone eliminating the currency devaluation option, the Government has instead embarked on a policy of ‘competitive devaluation of wages’ in order, it claims, to restore lost competitiveness. Ironically, figures just released show Ireland’s exports are unchanged from 2008 and holding up well in a global recession; hardly a sign of ‘lost competitiveness’.
This Government wants to drive down wages across the entire economy. To do so it attacks those wage rates over which it has direct control – the public sector – in order to maximise that downward pressure. Indeed, just five days before the Budget the Government walked away from a deal with public sector unions that would have seen (temporary) short-time working introduced instead of permanent pay cuts.
This ideological drive explains why Budget 2010 contained no job creation or protection package – any such measures might support and protect existing wage rates. Equally, it helps explain why the young unemployed have seen their dole cut by 50 per cent. Their options now are to take a job at any price or emigrate. Once again, we will see our youngest and best educated either beaten down by exploitation or forced overseas.
And if the message has still not gotten through, there is the €54 per week cut for any unemployed person who refuses to take a job offer, any job offer. Unscrupulous employers will have pricked up their ears at the mention of that measure.
It is a charter for exploitation that will further intensify the downward pressure on wages. But with no similar action on costs and prices contained in Budget 2010, many people will find themselves in real trouble next year, particularly those who bought property during the boom.
Meanwhile, Irish banks are expected to request and get an injection of up to
€10 billion this coming year, without any obligation on their part to restructure troubled mortgages, let alone a full investigation into wrongdoing across the sector.
One statistic that proves there was an ideological drive behind Budget 2010 was the introduction of taxes for the wealthy that will raise €70 million in contrast to welfare cuts totalling €760 million.
It is no exaggeration to say that the real debate on this Budget has only begun.
