ICTU draws back… the government chucks a pound or two of flesh into the water…
In a way I’m surprised that ICTU eventually said no. And here’s the thing. I don’t know why. Maybe they don’t either. But the mood music was such that even Stephen Collins in the Irish Times on Saturday was complimenting the ‘constructive’ role the unions had played. How nice. How good. How patriotic. And this mornings editorial in the IT in between hand-wringing, blaming Brian Cowen and dark mutterings about what ‘It could have been different’ (I can’t see how, the Government proposed, the unions demurred, the Government now imposes - oh, ah, they’re talking about ’sentiment’… about the sort of thing that will impress the great and the good in financial circles outside this state… realism, hard-headedness, and so on) noted that the blame game had begun. The IT also suggests that ‘The fair sharing of pain is the barometer by which any recovery plan will be judged’, but I wonder do they mean quite what most of us do when fairness and sharing comes to be passed around.
Of course the unions may have decided that this was a no-win situation and that the government was going to impose it one way or another, as the government had already indicated.
And it’s telling that the figures released by the Unions earlier yesterday morning were instructive. We were told that:
The proposals would have involved a levy ranging from 3 per cent to just under 10 per cent, averaging around seven per cent. The levy would have come into effect for persons earning above €15,000 per year.
…and…
According to the Irish Congress of Trade Unions (Ictu), public sector staff in the mid-salary ranges of €40,000 to €60,000 would have to pay between 6.9 per cent and 7.9 per cent more in pension contributions. This would have involved deductions of between €2,250 for staff on €40,000 to €4,750 for those on €60,000.
In actuality they were as follows:
Later in the Dáil he gave more details of the package. Those earning €40,000 per annum would pay €2,750 or 6.9 per cent; those on €50,000 would pay 3,750 or 7.5 per cent; and those on 100,000 would pay 8,750 or 8.8 per cent. At the highest scale of pay in the public service, those earning €300,000 will pay €28,780 or 9.6 per cent. However, the contributions will be calculated on gross income and not on taxable income.
And a full description is available at RTÉ…
A person earning €15,000 gross would pay a pension levy of 3% and the levy rises gradually thereafter.
* 5% on a salary of €25,000
* 6.4% on €35,000
* 7.2% on €45,000
* 7.7% on €55,000
* 8.1% on €65,000
* 8.5% on €85,000
* 8.8% on €100,000
* 9.2% on €150,000
* 9.4% on €200,000
* 9.6% on €300,000.
Note that these come on top of the levy introduced at the Budget and are on gross income, not net. Nor does the news stop there…
Pay increases agreed under the partnership process last year,and due for public servants in September this year, with a second phase in 2010, will not now be paid on the dates planned.
Mr Cowen also outlined a list of other reductions in spending.
There is to be a cut of €95m in overseas aid, and €80m is to be saved by a reduction in all professional fees.
Mr Cowen said there would also be a reduction in the early childcare supplement, from €1,100 to €1,000 a year and by restricting it to children under five, saving the State €75m.
He said there would be a saving of €140m in general administration and in savings on defence equipment.
And there is to be a €300m saving in the €8.2bn capital programme, as the State is getting better prices on some projects.
And he said there was to be a reprioritisation of €150m, on school buildings and energy efficiency improvements.
But look, hard to disagree with Enda Kenny when he argued that this was a ’sticking plaster’ although, like the Irish Times and its notion of ’sharing’, his meaning of the term would hardly be identical to the analysis being promoted here and elsewhere on left Irish blogs. Because seriously, in the context of the financial situation the savings are fractional in the overall problem. And therein lies part of the problem. Talk to people close to this government and they will opine at length about how such measures are necessary to produce calm on international financial markets and to underpin future borrowings. Which sort of makes sense, and yet, and yet… it also indicates the fact that they remain in thrall to a reductionist view of such matters. Michael Taft has indicated that our situation is neither utterly extreme nor in any real sense unusual in the European context, or at least as that context is understood today.
But there is a sacrificial element to all this, a sense that the talk of ‘pain’ in the media is a sort of displacement therapy writ large. Others must experience, in a sense all must, but in varying measure. There was grim entertainment to be had in the sight of Pat Kenny beating his breast as he took a 10% wage cut yesterday. Fair dues ’sor’, no doubt the pain of an €85,000 drop from €850,000 will be grim. But he’ll live. And I can’t quite decide whether this gets to the heart of certain problematic aspects of this society or whether it is mere sideshow. Or perhaps both.
Anyhow, so much then for ‘partnership’, but one cannot blame the unions for passing on being the stamp on the document that will see their members wages cut by… ah, pick a figure, any figure. What was in it for them but a membership that was potentially going to revolt. But more likely wouldn’t. That, no doubt, is the calculation the government has made.
Best question of the day? Eamon Gilmore, who does tend to shine in these set-pieces…
He … criticised Mr Cowen for not spelling out his plans in detail. “What are you going to do in 2010, if you have to double the act in 2010 as your own figures suggest you have to do, how are you going to do it?”
He said if Mr Cowen’s only way was to address the expenditure side, it would lead to serious consequences. He said the Government needed to come up with real measures to generate employment and get the economy moving again.
It’s a fair question.
The Taoiseach noted yesterday that:
…a total of €16.5 billion in savings would have to be achieved between now and the end of 2013: €4 billion in 2010; €4 billion in 2011; €3.5 billion in 2012; and €3 billion in 2013.
I think it is fair at this point to enquire as to what sort of society, what sort of public sector and public services, are expected to be extant at the end of this period. So far there has been no answer. One suspects that - in truth - the government has absolutely no idea and is merely chucking the rich-ish read meat of the public sector into the water.
There seems to be no serious attempt by the government to address the employment generation side of the equation. That lack of vision may prove to be the undoing of this supposed ’strategy’ long after the media’s calls for ‘pain’ are long-forgotten or over-taken by other even more drastic events.
Incidentally, I admire Gilmore’s latest thoughts on a straightforward way to raise revenue. And after all €500m isn’t small change, or so our deepest economic thinkers keep telling us.
Property tax exemptions, including those granted to investors in recent years, should “be looked at first”, he declared, “Some of those exemptions never made sense. It is difficult when you look back on them to see what these tax exemptions were about when there was a huge lot of investment.”
Another crucial point was the following, and this is something that has been aired in the United States as well…
The Labour leader also demanded State protections for people struggling to hold on to their family homes, along with measures to retrain workers.
“We have a situation where the Government has kept this under a wrap of secrecy,” he said, expressing disappointment that the talks have collapsed.
“The Taoiseach has told us over the last few weeks that he was going to do it his way, that we were going to have this done by social partnership.
And see where that got us.
Good and necessary words. More please.
Finally, am I alone in finding it somewhat paradoxical that those who shouted loudest, and lobbied most determinedly, for lower taxes… to increase consumption of course… should now have turned 180º and are now arguing for pay cuts. But then intellectual coherency was never their strong suit, more a narrow dedication to a parsimonious and limited vision of matters economic and financial (not to mention political and cultural) that runs like an unbroken thread from the first Cumann na Gaedhael government. And no more convincing today than ten, fifteen, twenty or indeed eighty odd years ago.
And an irony too in the news yesterday that the costs of recapitalising Bank of Ireland and Allied Irish Bank will be in or about €8billion. Which is 2/3rds of the figure that the current savings are being instituted to deal with.
Of course logic would lead one to believe that the confidence of our government that things will return to ‘normal’ might allow for that figure to be covered by increased borrowings. Indeed, one might wonder what all the fuss and palaver is about? Surely - if the assurances of the great and the good are correct - the economy will forge ahead in… oh, 2011, or 2012. Just in time for an election as it happens. Which should mean that economic growth will cover this slight hiccup and also that we should be able to tide ourselves over the current spot of bother. Shouldn’t it?
But their concern would seem to indicate a certain lack of confidence on that score.
Interesting.
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