A new wave of economic crisis is sweeping Ireland. The European Union and the International Monetary Fund were forced to announced a $150 billion bailout in late November—most of which will be handed to the Irish banks. The price for Ireland’s workers is a further round of savage cutbacks.
Up to 100,000 people marched through the streets of Dublin on November 27 to protest mass sackings and cutbacks under their government’s crippling austerity program. Prime Minister Brian Cowan has announced major cuts to welfare as well as tax hikes on workers and the poor, declaring “no one could be sheltered” from his debt repayment plan.
Once described as Europe’s “Celtic Tiger” economy, Ireland’s imploding banking system is now in danger of dragging other Eurozone nations into the debt crisis. As the country’s three largest banks look set to be nationalised, the cost of repaying the loans, along with 6.7 per cent interest payments, has been heaped on those who can least afford it. A recent poll showed the majority of Irish people believed the country should simply default on its debts.
As Cowan’s unpopular Fianna Fail party prepares to hand down even harsher cuts with its upcoming December 7 budget, Solidarity spoke to Peadar O’Grady from the Socialist Workers Party in Ireland.
Can you outline the major austerity measures and how they have driven the Irish economy deeper into recession?
The major line of attack has been against wages and services. A public service pay cut and increase in pension contributions in 2008 amounted to a 14 per cent pay cut for public service workers. It was accompanied by a sustained ideological attack on a “lazy” and “bloated” public service.
However, as well as cutting public sector wages and funding for services, employers also used these public cuts to spearhead a campaign of wage slashing in the private sector. Net income has fallen by around 25 per cent for most workers.
Redundancy payments also fell from 7-8 weeks per year to a situation where two to three weeks became the norm. Unemployment welfare payments were cut by 25 per cent for younger workers under 21. The minimum wage is to be cut by 12 per cent and welfare payments to be cut even further.
What has been the impact of the cuts on Irish workers, in terms of people losing their homes and jobs?
Altogether $19 billion has been taken out of the economy. Unemployment rose from 2.9 per cent in 2001 to almost 14 per cent in 2010 with over 100,000 emigrating, a probable job loss of over 400,000 workers out of a population of 4.5 million. GDP fell by 17 per cent in 2009 and house prices fell by 40 per cent. Fear of poverty, homelessness and unemployment are pervasive.
Of course the IMF’s only interest lies in saving the European bankers who lent out a staggering $500 billion to Irish banks. But the IMF knows that if Irish banks collapse, their Euro banking system will come crashing down with it.
We, the people, will be left with unsustainable debts that will cripple our society for years. Even before the latest round of IMF inspired “loans”, interest payments on previous bank bail outs amounted to $2 billion a year, rising to $2.3 billion in 2020. If we assume that the current IMF loan will come to $109 billion and the interest rate is 5 per cent that will add a further $5.4 billion in required payments. In other words, for the next ten years the Irish state will be required to levy an annual charge of $8.2 billion its population.
How did the unions, particularly in the public sector, respond to the cuts in 2009 and why did the union leaders allow the cuts to go through?
Two particular features of the Irish crash were the prominence of the property bubble and the related low-tax economy. Corporation tax is 12.5 per cent versus an EU average of 25 per cent and the overall tax-take at 28 per cent of GDP is one of the lowest in the EU. This race to the bottom was implemented with the active participation of the trade unions.
This meant a corrupted leadership giving away tax-funded services and pensions in return for modest pay rises. It also meant an inactive and inexperienced [union] membership.
When the cuts came, led by an attack on public sector workers the public sector union membership voted for and took strike action in a huge one-day national strike.
Unfortunately the leadership grovelled to the government and called off the strike for a deal which imposed a pay freeze, voluntary redundancies, redeployment and outsourcing if the economy did not fall further. Not surprisingly it did fall further and the Irish Congress of Trade Union’s response has been muted but demonstration for 27th November has been called to protest the IMF/EU/Government budget.
Has there been a revival of resistance as the scale of the bank bailouts grows and further cuts have been announced?
There have been strikes in the private and public sector and anti-cuts campaigns, notably in health and community services, but they have remained isolated. The new United Left Alliance which includes Committee for a Workers’ International’s Socialist Party and the International Socialist Tendency’s Socialist Workers Party have a tremendous opportunity to build a mass organisation to the left of Labour and lead a grassroots resistance against the disgraced remnants of neoliberalism in Ireland.
The SWP has put forward the following Action Plan to mobilise for an alternative to austerity:
- End the bank bailouts. Allow the existing private banks go bankrupt and tell their creditors that Irish society has no responsibility for their debts.
- Pass legislation to create one good bank and transfer all accounts and staff to this new public bank.
- Turn all vacant NAMA properties into social housing.
- Introduce a wealth tax on combined asset values exceeding €500,000 ($686,000).
- Tax all income over €100,000 ($137,000) at 70 per cent.
- Nationalise Ireland’s natural resources.
- Private capital investment has fallen by over 50 per cent in the past two years. The state must step in to provide jobs on necessary social projects.
As the revolutionary socialist James Connolly put it: the great only appear great because we are on our knees. We should arise.
