By: Felicity Allen
Deputy Editor, Tintean
Finance Minister Michael Noonan presented the eighth austerity budget to the Dáil on October 15. His awarenessof growing ‘austerity fatigue’ among the general public and tense relationships between the coalition partners led him to quote Yeats approvingly on the bad effects of ‘Too long a sacrifice’. While Noonan’s budget has eased the austerity measures as a political lifeline to Labour – Fine Gael’s junior partner – the relief is very mild and certainly doesn’t counteract the swingeing measures taken in previous budgets.
The Irish public showed that they were no fans of austerity at the last election, a fact which may be focussing Mr Noonan’s mind at the moment. And what austerity it was! Since 2008, successive Irish governments have taken €28 billion (17% of Ireland’s GDP) out of the budget, unemployment peaked at 15% in 2012 (now 13.3%) and public sector salaries have fallen by 20%. Wages have generally fallen but costs have not so that, unsurprisingly, Ireland is one of the most indebted countries in the developed world, with a quarter of all mortgages over three months in arrears (just under 2% of Australia’s mortgages are in arrears).
Big business now loves coming to Ireland with its docile, well-educated, English speaking workforce, its low wages and very low company taxes (12.5%). The recent austerity situation made the country attractive for several tech sector giants like Facebook, Google and Twitter. While the salaries paid to the highly skilled workforce of the tech giants are markedly less than those available in Irish semi-government bodies like the Irish Aviation Authority (IAA), Google employees at least have jobs and speak highly of conditions. Those who don’t work in the tech sector, but in the health and education sectors may still be grateful to have jobs but describe themselves as ‘the working poor’. Their salaries have been severely cut to the point where there is little that they can cover after the mortgage is paid. Mandy Freeman, a specialist theatre nurse, told BBC News
We used to go to the cinema once a month as a family and try and go out for a meal, but they aren’t really options any more. It’s just too expensive.
Those who cannot get jobs are, as always, emigrating. Ominously, it is no longer the uneducated but university graduates – healthy, intelligent young people who have had thousands of euros spent on their education, who are leaving the country in droves. In fact, in the midst of all this virtuous austerity, it is emigration that has kept the official Irish unemployment rate down to 13.3%, but losing its youth is an appalling long term solution for any country. Those who stayed, though unemployed, have been identified by the International Monetary Fund as Ireland’s biggest challenge in leaving the bailout. They have lost skills, physical fitness and self confidence and will be difficult to motivate back into the workforce. But if they cannot be returned to work, their unemployment pay and lack of productivity will be a continued drag on the economy. Unemployment is well known to impair health in many ways – Irish male suicide rates have recently risen – unsurprisingly the rise is greatest among the unemployed. It’s also well to remember that the true unemployment figures are more like 23% when involuntary part-time workers and marginally attached workers are included in the figures.
After all these sacrifices of human and financial capital, Ireland’s economy is now growing, although very slowly with 2% GDP growth forecast for 2014. Was all that suffering, physical and financial, really necessary? Could the country’s fortunes only be turned about by taking stern austerity measures to balance the budget? Not according to Joseph Stiglitz, a Nobel prize winning economist. Speaking on RTÉ he commented that
We know that austerity has essentially never worked and why that was not understood by the European leaders is beyond me.
Dr Stiglitz believes that saving the banks was a mistake. The European Central Bank was determined to do so and decided to trade off the citizens of Ireland against the interests of the banks who were largely responsible for the economic morass in the first place. His prediction for the economy’s recovery prospects are distinctly downbeat. Rather than returning the pre-crash growth levels, he believes that Ireland’s outlook is for a ‘.. lost decade.’
Other commentators agree with Stiglitz. Dr Sean Healey, Director of Social Justice Ireland has called for more investment so that jobs will be created and the unemployment rates will go down. His argument is that without investment there will be no jobs and without jobs there will be no recovery. Ireland will remain mired in austerity – not an argument that appears to hold much sway with Michael Noonan. So why was it all done and accepted with so little protest? Dr Stiglitz commented that he had been astonished that the economic measures were accepted so stoically in Ireland and still wonders why that happened. Other observers believe that the answer lies in the largely Catholic influenced spiritual values of the Irish people. Sir Gerry Robertson, chief executive of Granada TV, suggested that the Celtic Tiger years were not a good fit with Irish values. He commented:
There was a brashness and preoccupation with wealth that rested uncomfortably with the Irish psyche.
He believed that the years of easy money eroded some of the fundamental things that mattered in life and that Ireland was driven by the quick buck during that time. The sense that something of value was missing meant that people accepted that they would have to pay for the good times sooner or later. But did they really have to pay that much? Another ever more pressing question is: did the right people pay?