Economy

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Greece; Deathplace of Democracy

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The word Referendum comes from the Latin referre (to bring back) anddemos is Greek for the people as a political unit; demos is the root of the word Democracy; so a referendum brings a decision back to the people. As representative democracies European States hold elections to choose their governments giving elected representatives a mandate to represent their political choices. The Greek people chose Syriza to represent them in the broken institutions of a European Union in crisis; the Greeks chose to end Austerity. If representatives can’t make a political decision, because it is contrary to their mandate, the decision can be brought back to the demos in a referendum; or at least that is how things used to work.

Welcome to post-crisis EU democracy.

Since 2009 and the financial crisis in the EU, decision-making has been deferred to a financial triumvirate, the Troika, and to the Eurogroup. In latin triuviratus means unofficial coalition of power. Julius Caesar, Pompey and Crassus were the first triumvirate. When the Senate told Julius Caesar to step down as military leader of Rome, he crossed the Rubicon. He proclaimed himself “dictator in perpetuity”. Triumvirates are not known for love of democracy.

The Eurogroup works with the Troika’s mandates (called Memoranda of understanding). The group is democracy light, or rather, it used to be. This flexible ad-hoc ‘group’ has one representative (a finance minister) for each nation in the Euro currency. Neither Denmark nor the UK are members because they don’t use the Euro. As and from Monday the 29th of June, neither is Greece.

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Irish Living Standards Fall Further Behind Europe

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In 2014, GDP increased by 4.8 percent – as often said, the fastest growing economy in Europe.  In 2014, employment increased by 40,000.  In 2014, the recovery started.

In 2014, living standards fell even further behind the EU-15 average.

Eurostat measures living standards through actual individual consumption.  Unlike private consumption, or consumer spending, actual individual consumption

‘ . . . encompasses consumer goods and services purchased directly by households, as well as services provided by non-profit institutions and the government for individual consumption (e.g., health and education services).’

It, therefore, measures consumption not only of goods and services, but public services provided by the government.  As Eurostat states:

‘Although GDP per capita is an important and widely used indicator of countries’ level of economic welfare, (actual individual) consumption per capita may be more useful for comparing the relative welfare of consumers across various countries.’

In short, actual individual consumption can be treated a proxy for living standards.  So what is the relative welfare of consumers (i.e. everyone) across Europe?  The following captures the relationship of real (after inflation) living standards in purchasing power parities between EU-15 countries and the EU-15 average.

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Free Education: A Really Modest Proposal

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Sometimes a proposal comes along that is so sensible and so modest that you wonder why it doesn’t feature high up the public agenda.  Take the proposal made recently by Barnardos:  at a very small cost the state could actually provide what it is constitutionally mandated to do:

‘Article 42.4:  The State shall provide for free primary education  . . . ‘

In its briefing, Providing Free Education for all Schoolchildren, Barnardos proposes that primary and secondary education be made free. They first outline the costs of education that are not covered under the current system, costs that are borne by families.

  • School books:  The cost of schoolbooks is estimated at €60 million.  However, the School Book Scheme only receives a subsidy of €15 million – leaving parents to pay out the rest.
  • Voluntary contributions:  Based on the Barnardos School Cost Survey 2014, parents are paying €89 million in voluntary contributions and €38.5 million for classroom resources.
  • School transport:  For a primary pupil availing of school transport, parents pay €100.  This rises to €350 for secondary pupils.  In total, parents are paying €27 million to transport their children to school.
  • Capitation grants:  these grants paid to schools on a per pupil basis have been cut by 15 percent since 2010 – or €35 million.

So how much would it cost to make education free?  Here are Barnardos’ estimates.

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Providing the resources to ensure free primary education would cost €103 million; for secondary education, €127 million.  The total is €230 million.

Barnardos is proposing that in 2016, the centenary of that document that mentioned something about cherishing the children, the Government make primary education free.  Free secondary education would be phased in over three years.

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Syriza’s Moment of Truth

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Syriza came to power on the back of an impossible pledge – namely, to end austerity whilst keeping Greece within monetary union. The party’s pre-election Thessaloniki Programme promised to write-off most of the country’s €330 billion public debt through a European Conference. They also promised €4 billion in public investment, the creation of 300,000 new jobs and a rebuilding of the welfare state.[1] Politically, Syriza is committed to remaining within European Monetary Union (EMU) in an effort to democratise it. As a heterogeneous organisation with roots in Euro-communism, Syriza wants to move towards socialism through the existing institutions of the European Union. Instead of setting out to smash the capitalist state and exit the euro, they are trying to prise them open from the inside out. This is not an insurrectionary strategy based on mass struggle and workers councils. Rather it is one that emphasises the building of a dominant (hegemonic) block with parliamentarians in the vanguard of the struggle. One of their leading thinkers, Stathis Kouvelakis, recently defined it as “seizing the state from outside and inside, above and below”.[2] Economically, their policies are best described as left-wing Keynesianism. Here the idea is to use the state to engage in public investment projects whilst redistributing resources through progressive taxation. If successful, the results of this process should be twofold. Firstly, the great humanitarian crisis should start to be relieved. Secondly, the economy should be freed from the current spiral of debt and deflation through higher levels of ‘economic demand’. This strategy basically amounts to saving capitalism by ending neoliberalism. In the words of Greek Finance Minister, Yanis Varoufakis, we must remember “capitalism’s inherent failures while trying to save it, for strategic purposes, from itself”.[3]

The problem for Syriza is that none of this is remotely compatible with the intentions of European capitalism. Since the early 1980’s, the European project has been hardwired with neoliberalism to ensure that profits and political power are accumulated by capitalist elites. Syriza may have costed their proposals in line with EU rules, but they are not taking cognisance of the ‘real politik’ of the European project. Even if they wanted to, the European elites could not allow Keynesian expansionary policies. European capital has worked hard to institutionalise neoliberal policy making, with the likelihood of them suddenly changing tack negligible at best. Be-that-as-it-may, the EU elites are actually out to smash their opponents. Syriza’s election represented genuine hope for millions of people across the continent. If they are seen to be successful, the effects on worker’s organisations in other parts of the Eurozone would be transformative. For this reason, the Troika are determined to crush Syriza regardless of the wider effects on Greek society. Focusing on changing the EU from the inside out therefore becomes an extremely dangerous strategy, particularly if Syriza are not mobilising the Greek working classes in sufficient numbers to support them.

What has happened since the election?

From the outset Syriza presupposed that they would be able to negotiate. Specifically, they assumed that support for expansionary policies would be forthcoming in other depressed regions of the Eurozone (France and Italy in particular). Failing this, they believed that the capitalist elite could never afford to let them leave (a so-called Grexit). Unfortunately, the Troika have so far had other ideas. During the first weeks of their tenure, Syriza immediately found themselves on the back foot. First off, the European Central Bank blocked liquidity for the Greek financial system. Thereafter, the Troika strategically withheld €7.2 billion from a previous bailout to force Syriza into another memorandum. Greek capital has also played its part, evacuating billions from the country’s banks, whilst steadfastly refusing to pay their taxes. Safe in the knowledge that the Greek government would soon run out of cash, the Troika have been incredibly aggressive. Meanwhile, Syriza have crossed many of their previously stated ‘red lines’. On February 20 they signed a four month extension of the hated memorandum, effectively relinquishing debt write-down as a policy position. Debt reduction remains an aspiration, but has quietly been dropped as a red line issue. The problem with this is that Greek debt currently stands at a whopping 180% of GDP. Without some way to write this down, Syriza will be forced to implement the austerity they were elected to reverse. Piraeus Port has already been earmarked for privatisation, despite assurances that this would never happen. Syriza have also accepted neoliberal labour market reforms, delayed payments to struggling pensioners and cancelled payments to low paid workers.[4]

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€1 – Because We’re Worth It

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The Low Pay Commission will soon be recommending an increase in the minimum wage.  How much should it recommend?  Let’s start with the conclusion:  the minimum wage should rise by €1 per hour.  Now, let’s go through the arguments.

First, some background:  the minimum wage (NMW) is €8.65 per hour.  This rate was set back in 2007.  In 2011 it was cut to €7.65 but only a few weeks later the current government restored the cut; this would have affected very workers as employers would have been prevented by law from cutting the pay of workers already employed. 

Ireland is the only EU-15 country that has frozen the NMW since 2007 (with the exception of poor Greece where the Institutions demanded a cut).

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The average increase (bar Greece) has been 16 percent in other EU-15 countries with a NMW.  A number of other, poorer EU countries have actually doubled their NMW (Romania, Bulgaria and Latvia) – but these countries were starting off a low-base.

Over that period thee has been an alarming rise in deprivation among those at work. 

  • In 2008, when the recession began, 6.6 percent of people in work suffered deprivation
  • In 2013, this proportion rose to 19.2 percent

Approximately 350,000 in work suffer from multiple deprivation experiences.  This is not necessarily confined to low-paid employees; there will be self-employed in this category while many workers higher up the wage ladder may be suffering from deprivation due to debt issues or rising child costs.  Nonetheless, it is reasonable to assume that a significant proportion are low-paid employees.

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We Are Not a Cost

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If anyone is uncertain about the power relationship between employees and employers, I suggest they look to the Dunnes Stores dispute and the closure of Clerys.  These encapsulate the massive imbalance of power in the workplace. 

I won’t get into the details of these ongoing disputes.  Any rational person hopes the workers succeed – in the case of Dunnes Stores, to win the right to negotiate collectively and reduce the level of precariousness; in the case of the Clerys workers, to be given their fair share of compensation – and dignity – after years of services to the company.

So here, let’s take a step back and look at the presentation of the relationship between employees and employers.  This may seem, at first, abstract but it leads us to something fundamental.

It starts with costs.

Labels are powerful things.  For instance, costs; this is usually not a good thing:  ‘that was a costly venture’, ‘a costly holiday’, a ‘costly day out’.  These are things we usually try to avoid, unless the ‘cost was worth it’

‘Profit’, however, is usually something positive:  that was a ‘profitable experience’, I ‘profited’ from that lecture, we are ‘back in profit’.  Profit equals growth and prosperity.  Further, it is considered a good thing because it’s opposite – loss – is not.  Loss is bad for a household, a company, and a voluntary organisation.  Continued loss may result in bankruptcy or closure or poverty.

So when we discuss labour and capital in the economy or in a business, we are already using labels that colour the debate:  costs and profits.  If costs are something to be avoided or reduced in order to maximise benefit, then we must depress the price of labour (i.e. wages and working conditions), and diminish the agencies that champions this ‘cost’ (e.g. trade unions, the collective bargaining power of workers, legislation that benefits workers). 

Likewise, if profits are an unqualified good – we should support the agencies that maximise profits and gear our legal, labour and tax framework to that end. 

Even before we begin discussing the relationship between wages and profits, the former is considered a cost, a burden while the latter is a sign of prosperity, growth.

The interesting thing about this highly ideological reading, is that it is not vindicated by basic economic accounting (here comes the abstract part).  

An enterprise creates income by creating gross value-added.  We can measure this by the following:

Gross value-added equals sales revenue minus the purchase of goods and services needed to produce the product the enterprise is selling (rent, accountancy services, machinery maintenance, etc.). 

The important point here is that employees’ wages and working conditions is not a cost in the measurement for creating value.

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The EU Fiscal Rules: Not Fit for Purpose

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What would you say about a system for your car that was sold on the basis that it would alert you to an upcoming crash?  A good idea, no?  Except that the system only warns you after the crash.  There you are, in a massive, multi-car pile-up, bleeding all over the M50 – and only then does the system kick in:

‘Warning, warning, you are an imminent danger of having been in a crash – warning, warning.’

You’d be right to sue.

That’s how the EU fiscal rules operate:  it purports to provide an early warning system against economic crash but, in fact, it does no such thing.  We should return it to the manufacturer, unopened, postage due.

Remember the Fiscal Treaty campaign?  It was claimed by the proponents that we needed these rules because it would prevent things like the Great Recession and, in particular, the Irish crash of 2008.  We needed these rules because we Irish are irresponsible – along with the other PIGS states.  If only we had these rules we could have escaped the crash, the debt crisis and the recession – which was, of course, brought on by our fiscal irresponsibility.  That was the narrative. 

But the cold reality is that were these EU fiscal rules in active operation they would not have seen, predicted, never mind warned of the impending crisis.  It would have been as useful as a diviners’ rod.  How can we know this?  Because the EU Commission, the fairground purveyor of these miracle rules, tells us so.

The rules focus on the structural deficit.  This measures the deficit when all the cyclical components are stripped out – that is, all the boom and the bust parts of the economy.  It purports to tell us what the deficit would look like if the economy were on an even keel. 

If so, then the EU rules should have been blaring warning sounds with red lights and sirens in Ireland in the years before the crash.  Everyone knew (if only in private) that during the period of 2000 – 2006 Irish public finances were dangerously over-reliant on revenue from the speculative boom.  Everyone – except the EU Commission and their rules.

 Let’s look at the estimate from the EU Commission itself.  Remember:  if the figure is in plus, that means we were fiscally responsible, our public finances were robust, and we were almost German-like when it came to prudent budgeting. 

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Oh, my:  according the EU rules and methodology we had extremely sound public finances.

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Irish Capital and the Banking Inquiry

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The Banking inquiry is now into its main investigation. It has been hearing evidence from senior bankers and department officials, and over the next couple of months we’ll finally get to hear from the politicians themselves. To date, the focus of the inquiry has been on the night of the guarantee and this is because it is still unclear as to what actually happened that night. Witness by witness, though, we are getting closer to finding out and coming to a conclusion regarding what was by far the biggest, and most disastrous, decision taken by any Southern Irish government since partition.

The guarantee of course is not the full story. National government policy from 1990 to 2007 regardless of the political makeup prioritized commercial and residential property speculation over genuine and cohesive social development. This was coupled with a loosening of financial regulation and the promotion of the south of Ireland as a de facto tax haven.

From 2002 to 2007, Irish banks started to compete with each other for the same small pool of developers. In order to grow quickly and leapfrog each other, Irish banks got involved in widely speculative land and commercial property ventures, using international wholesale funding to do so.

The shaky foundations of the growth was exposed by the 2007-2008 credit crunch. Irish banks couldn’t get access to international loans to pay off their earlier loans and this came to a head in September 2008.

Since then, the real struggle in the crisis has been not so much over its resolution – all crises come to an end sometime – but who pays for the resolution. And in the south of Ireland, those who paid were the ordinary citizens, while those who partied walked away from their obligations. And each day of the bank inquiry this becomes clearer – those who took out mortgages did not ‘party’, but the 29 developers with debts of €32 billion between them certainly did, before using the Government to dump those debts onto our shoulders.

The relationship between these developers and Irish finance is the essential dynamic of Irish capitalism, and the banking inquiry, almost in spite of itself, is looking at this institutional framework and the manner in which it operated.

The focus on individual developers and bankers, and, more recently, Denis O’Brien and Siteserv, has obscured somewhat this structural dynamic. Systems are of course operated by and developed through people, but in order for a system to reproduce itself it needs an institutional framework.

The inquiry allows us to peer under the bonnet of Irish capitalism and get a sense of how the machine works, its internal contradictions and outputs. We are beginning to see that the indigenous troika, the one that really matters, is the Central Bank, the Department of Finance and the Department of the Taoiseach.

The main clients of this apparatus are not the citizens of the State but the indigenous banks and the IFSC. The regulatory rules, tax laws and supposed strictures and censures – all are developed and written with the needs of finance in mind.

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Declining US Profits and Private Investment

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This article was originally published on Socialist Economic Bulletin on Tuesday, 2nd of June. 

US corporate profits fell in the first quarter of 2015. This is the second consecutive fall, technically causing a ‘profits recession’. The nominal level of profits of $2014.8bn in Q1 was lower than in Q2 2012. Profits have fallen to 11.4% of GDP, compared to 12.2% at their pre-crisis peak in Q3 2006. The trend in corporate profits is shown in Fig. 1 below. 

  Fig.1 US Corporate Profits Source: BEA
 
 
The motor force of capitalist economies is the accumulation of capital via profits, as the name suggests. ‘Demand-led’ or ‘wage-led’ economies are a logical impossibility for the simple reason the wages, or demand, or any other comparable variable follow the production process. There can be no wages or demand without prior production.

Falling profits in a recovery is extremely unusual. But this is the third time this has happened during this weak recovery. In effect, because the economy lacks any great momentum, it is easy for external effects to push profits lower. This could be poor weather, a stronger US Dollar, shipping strikes, weak overseas demand, and so on.

But the effect of a sustained fall in profits is simple. Companies exist to realise profits and will stop investing if profits fall. In Fig. 2 below US corporate profits and US private sector fixed investment are shown in nominal terms for the purposes of comparison.

The Great Recession was preceded by a decline in profits and the fall in fixed investment followed with a time lag. This was a classic profits-led recession, which was partly obscured by the speculative frenzy that continued until 2007 (but which is a recurring end-of-cycle phenomenon).  

 Fig.2 Profits & Private Fixed Investment. Source: BEA
 
 
However, until now private sector fixed investment has not suffered a fall in the current expansion despite the preceding short-lived declines in nominal profits. Since the low-point in private investment at the beginning of 2010 there has been an uninterrupted rise in private investment until the final quarter of 2014.

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Principles for a Left Alternative

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Principles for a left alternative. May-June 2015

The following statement, as a contribution to the debate at the conference organised by the R2W unions on June 13, has been agreed between the Anti-Austerity Alliance, the People Before Profit Alliance and some independent left-wing activists including Cllr Brendan Young.

The Mayday Conference initiated by the Right2Water Trade Unions was designed to bring union members, community groups and political representatives into dialogue about an alternative to the political and economic establishment. We welcome the fact that these unions initiated such a meeting to build a political movement based on the anti-water charges struggle of the last eight months. Unfortunately, the meeting was a limited and invite-only event, without sufficient space for discussion.

Open up and democratise the June 13 conference

To best achieve the potential for this movement, we believe that the process needs to be opened up and democratised. Without grassroots participation, any political initiative will lack the energy and vibrancy needed to challenge the political establishment. So we think the follow up conference on June 13 should have delegates invited from all of the community groups campaigning against water charges, selected over the coming weeks at local meetings.

On June 13, the conference must also be designed to allow genuine debate and maximum inclusion. In place of structured inputs from selected speakers, the event should be bottom-up and participatory. It should be designed to allow as many contributions as possible and allow for decisions to be made by those present.

For an anti-austerity, anti-coalition approach – based on struggle

To initiate the debate, the R2W unions have developed a document entitled, Policy Principles for a Progressive Irish Government. The basis of the Principles document is a series of seven economic and social rights. The R2W unions have asked for “further discussion and input”. In responding to this call, we believe that a number of additions and amendments need to be made.

Firstly, any proposed political initiative must not become a replacement for the grassroots struggles that have brought us to this point. In relation to water charges, the document proposes that “Irish Water PLC’ and domestic water charges will be abolished within the first 100 days of a government endorsing this policy”.

We must not wait for a progressive government to abolish water charges. What if such a government is not elected? Abolition can only be won by an organised boycott and continuing the protest movement on the streets. People power and protest is the only way to beat austerity measures and the best way to build support for the actions of any future left government.

We think the 13 June conference should make a public statement calling for mass non-payment of the water charges. This is the crucial stage of the campaign and the crucial question. It would be negligent if a major conference of large sections of the anti-water charges movement takes place and does not issue a call for people not to pay. Instead of giving confidence to the movement and impetus to continue organising and mobilising, it can give the impression that the only focus now is the election.

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Did New Labour Spend Too Much?

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This article originally appeared on the Socialist Economic Bulletin on Tuesday, 19th of May.

It is not sufficient for big business to have secured an election victory and an overall Parliamentary majority for the Tory Party. It is also necessary to intervene in the Labour Party to ensure that its leadership also conforms to big business interests too. This has currently taken the form of candidates in the leadership contest being asked to declare that Labour ‘spent too much’ in the run-up into the Great Recession. Answering Yes to this question is effectively a loyalty oath to big business interests, a renunciation even of the social democratic vestige of economic policy under New Labour.

The question is economically illiterate. It is taken as axiomatic that if there was a deficit that spending must have been too high. But all deficits are composed of two items; spending and income. In the case of government that income arises mainly in the form of taxes. It does not follow from the existence of a deficit that the culprit must be spending.

The reality is that measured as a proportion of GDP New Labour spent less on average than Margaret Thatcher. This is shown in Fig. 1 below. On average New Labour’s spending amounted to 41.5% of GDP. By comparison, under Thatcher government spending was 44.2%. In relation to the deficit, the taxation levels were also very different. Under New Labour taxation revenues were on average 37.5% of GDP. Under Thatcher taxation revenues amounted to 42.0% of GDP.

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Drawing Lessons from the Public Sector Pay Talks

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With the public sector pay negotiations getting underway, it is timely to step back from the details and look at the broader landscape.  For it is clear:  if the wage structure in the overall economy mirrored the wage structure in the public sector, we would have a more prosperous economy and society; the recession wouldn’t have been so hard, the recovery wouldn’t have been so delayed, and the social deficits arising out of inequality would not be so endemic. 

While there is much focus on the private-public wage differential, there is less attention paid to the distribution of wages from the bottom to the top – which is the key to long-term sustainable growth and better social outcomes.  Let’s have a quick look at the former first.

The CSO has done exceptional and detailed work on comparing private and public sector pay.  The lazy comparison is to compare the headline average private and public sector pay.  However, this comes up against the like-for-like dilemma.  For instance, there are no hospitality workers in the public sector; there are no Gardai in the private sector.  Without a like-for-like comparison you get all sorts of numbers that don’t tell you much.

The CSO has compensated for that – comparing professions, age, duration of employment, size of enterprise, educational qualifications.  When they do that, they come to some interesting conclusions.

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Among this grouping – which makes up the overwhelming majority of public sector workers – the ‘premium’ (i.e. the additional amount public sector workers above private sector workers) is a little more than one percent higher.  On a like-for-like basis, public sector workers earn fractionally more than private sector workers. 

What is more interesting is the gender difference.  Men in the public sector actually earn less than males in the private sector – two percent less.  However, women in the public sector earn five percent more than their private sector counterparts on a like-for-like basis.  And this is a good thing when one considers that women still face pay (and other types of) discrimination in the workplace.   If there was less gender discrimination in the private sector, the overall public sector premium would probably turn negative.

Just one more word:  This data comes from the CSO.  Since 2010 there have been small wage movements.  Between 2010 and 2014 (4th quarter):

  • Increase in private sector weekly earnings:  2.3%
  • Increase in public sector weekly earnings: (-0.7%)

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The Minister’s Problems with the Unemployed and Statistics

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We all know there will be people who will never work. They’re allergic to work.  So we’re not including those in the statistics. But everybody who wants a job will have a job in the next couple of years.’

There were a lot of criticisms of the Finance Minister’s comments, rightly describing them as a slur on people who cannot find a job.  What I also find illuminating is the innovative approach to statistical representation.

Imagine saying ‘We all know people who are allergic to obeying the law.  So we’re not including those in the statistics.’ Or ‘We all know people who are allergic to paying taxes.  So we’re not including those in the statistics.’  See – we just eliminated crime and tax evasion.  There’s no end of progress we can make on the outstanding issues of the day if we just employ the ‘Noonan Manoeuvre.’

But there are some statistics that the Minister is not including as well – statistics that his own government gathers and sends on to the EU.  Like this one:

  • There are 20 unemployed for every job vacancy.

This comes from the Eurostat Vacancy Rate as reported by the Nevin Economic Research Institute.  We’re not as bad as Greece where there are 74.3 unemployed for every job vacancy but we have a long ways to before we reach Belgium (5) never mind Germany (2.1).

To put that 20:1 ratio in perspective, imagine someone dropping five €10 notes from the roof of a building on to 100 people in the street.  There’s a mad scramble and eventually five people walk away with the notes.  But 95 people don’t.  What do we say about those empty-handed 95?  They’re allergic to €10 notes?  The mind reels.

But the Minister’s capacity to not include statistics does not end there.  Take this one.

There are, according to the last Quarterly National Household Survey, 2.153 million people in the labour force.  There are 1.939 million in work.  When you subtract those at work from the labour force you come up with 213,000.  That’s the number of unemployed.  The number of unemployed doesn’t determine the number of jobs in the market.  There are still only so many jobs to go around for a larger number of people looking for them (there are niche exceptions where an employer has a vacancy but can’t find someone with the matching skills necessary – a phenomenon in the ICT sector and foreign language skills; maybe we should teach all the unemployed Dutch?).

Of course, there are ways to manipulate this equation which, also, rarely gets included.

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To Those Who Have Made the Biggest Sacrifice – Nothing

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Government Ministers are fond of saying that they want to repay those who made the biggest sacrifices; hence: tax cuts.  They have also stated that they want to target the ‘squeezed middle’ which they define as the income group between €35,000 and €75,000.  This is an interesting figure.  A household with two people working at the upper end of this ‘middle’ could earn nearly €150,000.  This government wants to reward them because it is obvious that their current income level is a terrible sacrifice.

For me, those who have fallen into deprivation – now that’s a sacrifice.  And there are a lot of people who have been sacrificing.

Social Protection Payments 1

In 2013, there were over 800,000 reliant on social protection payments in these three categories, both recipients and beneficiaries.  Deprivation has increased from 45 percent to 76 percent.

However, in the Government’s discourse of sacrifice, these people never feature.  They have been effectively air-brushed from the social debate.  The standard response of Ministers is that they have ‘protected’ basic social protection payments but they have done nothing of the sort.  They have frozen these payments, which means that the value of the payment has fallen due to inflation.  Since the Government took office:

  • A single person has suffered a real cut of 3 percent, or €5.69 per week
  • For a couple, the real cut has been €9.45 per week

So how much have the unemployed, lone parents and the disabled and sick lost out on since the cuts commenced in 2010?  Let’s look at the nominal (i.e. the actual amount in Euros and cents) and the real cuts (factoring in inflation.  We will take this out to 2016, using the Government’s projected growth in inflation, to get a sense of what would have to be spent to compensate people’s sacrifice.

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