Tuesday 12 December 2017

Rich have taken the biggest hit in Ireland's recession -- Szekely

EC boss says more needs to be done to spread the blow evenly among low earners

Istvan Szekely (left), mission chief for Ireland from the European Commission, and IBEC director of industrial relations Brendan McGinty at the business lobby group’s HR leadership summit yesterday in the Convention Centre, Dublin
Istvan Szekely (left), mission chief for Ireland from the European Commission, and IBEC director of industrial relations Brendan McGinty at the business lobby group’s HR leadership summit yesterday in the Convention Centre, Dublin
Peter Flanagan

Peter Flanagan

THE rich have taken by far the biggest hit when it has come to the fiscal adjustment and more needs to be done to spread the hit more evenly, according to the head of the European Commission's team in Ireland.



Speaking at an IBEC event in Dublin yesterday, Istvan Szekely said he would like to see a more even distribution of the blow that has been inflicted on the population as a whole.

Mr Szekely quoted statistics which showed the highest earners have lost far more in Ireland through the fiscal consolidation than lower earners. According to the economist, who leads the EC's mission in Ireland as part of the state bailout, average income among the richest 10pc has fallen by about 11pc, while the lower half of earners have seen their wealth curbed by between 4pc and 6pc.

Decline

"We need to ensure the burden- sharing is fair," he said.

In Portugal, Estonia and Spain, the adjustment has been much more evenly spread, while Ireland has taken by far the biggest hit. No other country has taken a decline of more than 6pc.

While Ireland has regained most of its competitiveness and with unit labour costs now back at about the same level as they were in 2001, the Hungarian warned there were more challenges ahead.

"The export sector has performed very well and is fundamentally healthy but we have seen a need for fundamental measures other than support in other areas such as retail, hospitality and legal services (to make them cheaper).

"Other parts of the economy still have to adjust, including the public sector, to ensure that costs are further brought down and if this happens I have no doubt that Ireland will be back to the kind of growth rates it experienced before," he added.

Despite the depth of the downturn, Mr Szekely acknowledged what he called the depth of the problems being caused by long-term unemployment.

"I think we should all bear in mind the social consequences of a programme and I'm personally deeply committed to this coming from a family that was actually not very well off," he said.

However, in what may have been a reference to the ongoing dispute over whether the country should get a deal on its bank debt or not, he said Ireland had already performed "beyond" expectations since the bailout.

"Already, Ireland has raised nine times more money on the international markets than had been envisioned at this stage in the programme, and twice as much as we had forecast during the full life of it."

Mr Szekely earned notoriety in Ireland last January when he referred to the knowledge of Irish taxi drivers at what became a stormy troika press conference in Dublin.

Irish Independent

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