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Wednesday, Jan 7th 2009


November 3rd Afternoon: The Recession Diaries

Everybody altogether - let’s help Shane Coleman. In his opinion piece in the Sunday Tribune yesterday Shane took us all to task for being selfish, greedy and indifferent to the economic crisis upon us. So far, not very insightful. But it’s when he attempted to justify his opinion with ‘facts’ that he floundered completely. We could give out about his darkness but a better course for all of us would be to a light a candle for him.

Shane claimed that Minister Lenihan ‘miscalculated’ when he made a “call to patriotic action“, urging everybody to “pull together and play our part according to our means“. That’s because, according to Shane, we are a small, grasping people who don’t care about society or helping out each other. What’s the proof of this?

‘We expect, sorry we demand, free education, free healthcare, universal childcare payments, subsidised childcare, top rates of pay for public servants, the highest pensions in Europe etc, but don’t for a second consider how it might be paid for.’

That is some charge sheet. Let’s go through each of them to see if they hold up in the Court of Facts:

Free education: if only it were so. So many debt-ridden national schools have to levy ‘voluntary’ fees just to pay for essentials. We have one of the worst resourced educational sectors in the industrialised world, according to the OECD. We have fees for higher education - registration fees - and high fees for part-timers. Shane thinks education beyond second level is ‘elite’ (just as in the 1950s secondary education was considered ‘elite’ and, so, levied fees); but he needn’t worry. There’s nothing free about our system, from the bottom to the top, and this is likely to worsen in the near future

Free healthcare: oh, I wasn’t aware that we had free GP care and free (or nominally priced) prescription medicine. I must have been mistaken thinking that admission to A&E was free, or that all the tests I might need are free. Or that there was even a hospital waiting list based on need rather than insurance or income. Must look into that.

Universal childcare payments and subsidised childcare: Subsidised childcare? C’mon. The OECD measured childcare costs. They found that for a lone parent on average earnings, Irish childcare costs would equal 45 percent of net income. The OECD average is 14 percent. In Belgium it’s 4 percent. If we have any subsidies, it’s pennies, fractions of pennies, compared to other industrialised nations.

Yes, we have a payment called ‘Early Childcare Supplement’. It’s worth about €92 a month. Of course, it has nothing to do with ‘childcare’. It is paid in respect of all children, regardless of whether crèche costs have been incurred. It makes up a small percentage of commercial crèche charges and when it was introduced many crèches increased their fees to exploit the extra cash available. Some subsidy.

Top rates of pay for public servants: No list of the grasping and mean-minded is complete without an entry for public servants. I’ll just take one small statistic here: starting teachers’ salaries in primary schools. Our ‘top-paid public servants’, in this one category anyway, earn below the EU-15 average - some 6 percent below. Does this equate throughout all the public sector? Probably not. But it would be helpful to look up even a few facts.

Pensions: This is where it gets truly interesting. Shane seems to think that our pensioners are ‘rolling in it’ compared to other countries:

‘ . . .not once was it pointed out that compared to all other EU countries, pensioners are very well looked after in this state.’

Again, Shane calls no witnesses to justify this absolutely erroneous claim. However, we can offer some facts into evidence:

Irish pensioners have the lowest ‘replacement ratio’ in the EU-15. The replacement ratio is the income from pensions to income from work just prior to retirement. Ireland has a ratio of about a third (35 percent). The EU-15 average is over 50 percent. We’d have to increase pensions by 42 percent just to reach the EU-15 average (in Austria the ratio is 65 percent - now that’s ‘well looked after’). The reason for this is because we spend so little on old age income supports.

Eurostat’s latest report on social protection shows that while all EU countries spend 12 percent of their GDP on old age supports, Ireland spends 5.3 percent of its GNP. Of course, the proportion of elderly is smaller here. But if the proportion were the same how much would we be spending on current trends? 8.5 percent. In other words, we would still have to increase our spending by half just to reach the EU average. So much for being ‘well looked after’.

Shane does call up the UK pension rate, one of the worst in the EU, and, yes, we do compare favourably (though after accounting for living standards and historical currency exchange, it’s nothing like ‘twice’). But this reminds me of the ‘little world mentality’, when politicians and analysts never looked beyond our larger island neighbour, when making comparisons. There’s a larger world out there we can look to.

Shane’s arguments are all of a piece - misinformed and misleading. If he’s claiming that we have all these things (free education and healthcare, top rates of everything) he’s simply wrong. If he’s suggesting these things are costing money, he’s wrong because we don’t have them. If he’s claiming these aspirations are wholly unrealistic, he’s merely setting up a straw man argument - the democratic protests against cuts in living standards, health care and educational investment are not a demand for best European practices (which we are far, far from); it is a protest against making our current poor situation even poorer. These are modest demands.

But let’s not pillory Shane for coming up short in the Court of Facts. Let’s help him. If you have any facts regarding these or other aspects of our under-achieving economic and social conditions, forward them on to Shane at scoleman@tribune.ie

A more informed commentary will help all of us.

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