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Ireland rising

The Irish trade union movement has missed a chance to defeat government plans to make ordinary people pay for an economic crash they didn't cause, writes Socialist Party MEP Joe Higgins

March 11, 2010
4 min read

The new budget agreed in Ireland last autumn highlighted the manner in which working people, the unemployed and those who depend on public services are being crucified by the Fianna Fáil/Green Party coalition government for an economic crash they did not cause. The successful national day of strike action of Irish public service unions on 24 November, which 250,000 workers took part in, could have marked the beginning of a serious fightback.

If it had been further escalated and broadened out into a protest movement involving all working people and the unemployed, the revolt could have forced a serious retreat by this hated government or even have brought it down in advance of the budget.

Instead, before the day of strike action had even ended, Peter McLoone, general secretary of the Impact public service union and chair of the public services committee of the Irish Congress of Trade Unions (ICTU), conceded that cuts of EUR1.3billion in the public service pay bill were necessary – and so did the ‘opposition’ Labour Party. Having given this massive ground, McLoone et al thought they could mitigate the anger of rank-and-file union members by offering up these cuts in the form of unpaid leave.

I, and the Socialist Party, do not accept the premise of the cuts, and unlike the ICTU leadership and the Labour Party we are prepared to argue for an economic and political alternative. A quick examination of the gross domestic product figures, freely available from the Central Statistics Office, makes clear that the when the political establishment, right-wing economists and media say that there are ‘no pots of gold’ to tax, it is far from the reality.

In 2008, the effective rate of tax on profits in Ireland (including those declared by the self-employed) amounted to a miniscule 10.3 per cent – approximately EUR6 billion tax out of EUR58 billion profits. The corresponding figure for wages is 28 per cent – EUR22 billion tax out of EUR79 billion in pay-as-you-earn wages. If profits in 2008 had been taxed at the same effective rate as wages – a rate that would still have been lower than elsewhere in the EU and, incredibly, lower than in the US – an extra EUR10 billion would have been available to the exchequer.

Ireland’s economy as a whole is taxed at 34 per cent of GDP when one factors in all sources of revenue, including VAT and so on. The corresponding figure for other developed economies is typically 45 per cent. The discrepancy between Ireland and the other countries can in the main be attributed to the tax cuts in the areas of profits, rent, dividends, capital gains and inheritance. Compare how these sources of unearned wealth were left virtually untouched to what was done to social welfare and child benefit, which was mercilessly cut.

None of these facts ever feature in the big business-owned media. Instead, we have had a 15-month campaign of vilification against public sector workers, culminating in savage cuts. This is designed to steer the focus away from the cabal of speculators, developers, big bankers and establishment politicians who are responsible for the crash, and to sort out the exchequer’s crisis by making workers pay.

The policy of ‘slash and burn’ will cause thousands more job losses in the economy. The government doesn’t care about this because its perspective is that the recovery of capitalism in Ireland will come largely from exports. Its objective, therefore, is to further prostrate Irish society at the feet of the multinationals via low pay and low tax on profits, and hope for a rerun of the ‘Celtic Tiger’ boom.

Trade union leaders, meanwhile, have long since lost sight of their core role: defending members’ pay and conditions. They had no mandate to propose pay cuts of 4.6 per cent in the form of unpaid leave. It was shameful that they called off a second day of strike action scheduled for 3 December in return for another fruitless discussion with the government.

ICTU leaders have demonstrated themselves utterly incapable of arguing a radical alternative that would give confidence to workers in the public and private sectors, and to the unemployed, to fight for a decent society to replace this failing capitalist system.

A determined 48-hour strike in the public sector, linked to an appeal to all workers and community groups to support the principle that working people must not pay for the crisis, would be the beginning of a real fightback to stop the cuts and force a change in policy. That this could bring down the government would be an extra gain, as it would finally make possible a serious discussion of the need for an economic and political alternative for ordinary people.

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