Friday 21 November 2014

The Punt: Howlin's promise smacks of clientelism

Published 14/08/2014 | 02:30

Minister Brendan Howlin
Minister Brendan Howlin

Every good politician should look after his or her constitutency if they want to get re-elected.

But is Minister for Public Expenditure and Reform Brendan Howlin guilty of trying to look after a certain group to the exclusion of the rest of the population?

The minister gave an interveiw to this newspaper and proposed reversing pay rises for public servants. His argument is that the cuts were introduced as part of emergency legislation, known as FEMPI. This stands for Financial Emergency Measures in the Public Interest.

Public servants are known to be more inclined to vote for Labour than the other parties.

But singling out public servants for pay rises - who, after all, have secure jobs, are paid 43pc more than those in the private sector and have gold-plated pensions - is hardly acting in the public interest.

It could be a vote-getter but it smacks of the worst kind on clientelism that was brilliantly captured in the late John B Keane's Letters of A Successful TD.

Surely, we have moved on from that kind of nonesense.

Five reasons to be cheerful

1 Employment. Jobs growth has continued with full time employment up 3.3pc in the year to the first quarter of 2014. Among 50 economies only Ireland saw its unemployment rate fall by 1.5 percentage points over the twelve months to July.

2 Economic indicators. The PMI surveys are closely watched in global markets - giving a timely leading indicator of where GDP growth is going to go for a range of countries. Ireland's composite PMI reading has averaged close to 60 in recent months.

3 Tax Revenues. Tax revenue growth is the acid test that the economy is truly recovering. Tax revenues grew by 6.4pc in the first seven months of 2014, 2.5pc ahead of budget targets and with income taxes up 7.6pc, VAT up 7.2pc and excise duties up 5.6pc.

4 The UK. Weighted by employment, 50pc of our manufacturing jobs are still probably directly exposed to the UK economy. The strength of UK economic growth has clearly caught most commentators by surprise with GDP expected to grow by 3pc in 2014.

5 Room to bounce-back. Irish GDP is still close to 5pc below its pre-recession peak and unemployment is still high at 11.5pc. This suggests there is still a lot of spare capacity in the economy.

A longer version of this guest Punt by Conall MacCoille, chief economist at Davy Stockbrokers, is available online at www.independent.ie/business

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