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Depriving needy kids won't save eurozone

THE politicians returned to Leinster House last week. That is all I intend to say about that. By and large, they are irrelevant. The real action was elsewhere -- throughout Europe, in the US and China.

Ireland is a bit-player in events unfolding on the international stage, events so fundamental that they have prompted the finance minister of Poland to raise the possibility of a continent returning to war. I kid you not.

The European project arose in the aftermath of the Second World War. In this current crisis, the finance minister of Poland has detected the re-emergence of a malign form of nationalism. He had Germany in mind. And Poland should know.

"Europe is in danger," he said. "If the eurozone breaks up, the European Union will not be able to survive."

You may think that the finance minister of Poland is crazy. But he is no crazier than our own lot. Europe is changing before our eyes. We cannot know the outcome.

Right now it is almost certain that Greece will be forced to leave the eurozone. The odds, therefore, are also shortening that Germany will leave of its own accord.

Either way, the repercussions would be enormous.

It would, of course, be interesting to know what our Minister for Foreign Affairs has to say about all of this. He is, after all, our pointman in Europe and on the world stage.

You remember Eamon Gilmore, who came to office on the back of a solemn pledge: Labour's way, not Frankfurt's way. (Oh, how they quaked in Frankfurt.)

Gilmore has been quiet since he assumed office, not power; so quiet, in fact, that his colleagues in Government are prone to wonder what is up with him.

So Eamon arose last week and appeared to many to let us know that he had not gone away; and he declared himself to be "annoyed". What could it have been, you may wonder, that annoyed him so? Let us count the ways...

He is the Minister for Foreign Affairs, so perhaps it was some event in the international stage that raised his ire.

Was it that China has signalled a shift in its strategic objective; that it intends to stop investing in Western debt (sorry, Bunga Bunga) and to switch instead, this communist oppressor of free speech and movement, to invest in the likes of Boeing, Intel and Apple?

Perhaps not; that may have been too big an issue to grapple with.

Was it, then, a declaration of Jose Manuel Barroso, the president of the EC, that Europe -- in a fight for its economic and political future, he said, the most serious crisis of a generation -- must move towards a "new federal movement"?

Perhaps neither was it that which so annoyed our Minister for Foreign Affairs, whose mandarins in Iveagh House quite like the idea of, shall we say, a United States of Europe.

Was it, maybe, the latest attempt by Sarkozy and Merkel to fool the incredulous markets, to wit, a meaningless 25-minute conference call with George Papandreou, the hapless Prime Minister of Greece?

No, it wasn't that either: like the rest of us, Gilmore has become quite accustomed to the Dance of the Seven Veils.

If it wasn't that, then the answer could be closer to home: the loss of 1,000 jobs in three headline closures; the offer by Nama to allow a property developer wife to keep €7m; the proposed sell-off of the ESB and Aer Lingus; or maybe this, the decimation of the Special Needs Assistant programme to assist in the care of schoolchildren with disabilities.

The special needs protesters were outside Leinster House on Wednesday led by a well-spoken school principal whose heart is in the right place. As they protested, the OECD disclosed that teachers' salaries here are among the highest in the world; in fact, 71 per cent of education spending here is absorbed by teachers' salaries (2008/09).

In Ireland, primary and second-level teachers earn, on average, €60,355 a year. For comparison's sake, the OECD average is between €39,914 and €43,711; and the EU average is €39,735 to €45,442.

But, unlike our European colleagues, we have the Croke Park Agreement. The agreement is to protect teachers' salaries, among the highest in the world, to buy industrial peace; an agreement that most accept is not sustainable, but which almost everybody is afraid to publicly state.

After three years of picking low-lying fruit, we still have a massive budget deficit (about €18bn), which needs to be brought into line, urgently.

So now we have this reaching further up the tree, this austerity, taxes and cuts of the like which deprive school kids in special need of assistance.

The public sector pay and pensions bill -- just over €18bn -- is the second largest expenditure item after social welfare. In the Celtic Tiger decade that bill expanded hugely, relative to other selected spending items, thanks mainly to the property boom.

For example, in the 2000-08 period, the total public pay and pensions bill rose by 141 per cent, well above the increase in total government spending over the same period (135 per cent) and almost twice nominal GDP growth (79 per cent). This was mostly accounted for by pay increases -- not additional hiring; in fact, the number of full time-equivalent jobs in the public sector grew by less than 20 per cent in the same period.

Since the property bubble burst, public sector workers have taken a relative hit to their incomes; numbers employed in the sector have also decreased. As a result, the total pay and pensions bill fell by 10 per cent between 2008 and 2010.

But the State's total income has fallen by 20 per cent from peak. Therefore, the public sector wage bill has actually continued to rise as a percentage of government revenues.

It is unarguable, then, that the public sector pay and pensions bill needs to be cut further if we are to make an impression on the budget deficit.

The point was most recently made by Germany's man on the ECB, Jurgen Stark, who has announced his intention to resign, perhaps as a precursor to a withdrawal from the eurozone by Germany. Mr Stark says that public sector pay in Ireland is too high by eurozone standards and should be cut to help restore order to the country's finances.

Which takes us back to Eamon Gilmore, who rose up last week to finally say something, that he was "annoyed", in fact; for it was this, a statement of the bleedin' obvious by Jurgen Stark, which so annoyed the Labour leader.

It follows then, surely, that to reduce the budget deficit Gilmore would prefer to cut support for, say, Down Syndrome kids, or youngsters with Asperger's, than he would to cut the salaries of teachers who are among the best paid in the world.

Sunday Independent