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We must think outside the box to get country working

IN A characteristically vitriolic attack on the trade union movement, laced with sarcasm and personalised abuse as usual, your columnist Shane Ross TD grossly misrepresented my address to the Irish Congress of Trade Unions in last Sunday's edition of the Sunday Independent. Character assassination is no substitute for democratic debate, and it says more about the perpetrator than those against whom it is directed.

Mr Ross suggested that I might be coming around to his view on the question of unilateral default. This is not the case. I do not share his opinion on it anymore than I agreed with him on the 'cracking' figures Michael Fingleton and other paladins of our under-regulated banking sector were producing during the bubble years.

There is no moral justification for the proposition that we should have to pay for the recklessly accumulated debts of those at the top of the banking system. However, unilateral default is not a risk-free 'get out of jail' card.

There is a view that the ECB-EU would respond positively because of the high stakes involved.

While this could be correct, I believe there is a greater likelihood of the opposite reaction. Their objective has been to contain the problem within the current programme countries, which together account for only about six per cent of eurozone GDP. This was clearly evident in the approach adopted towards Greece in June.

The strategy has been pursued ruthlessly. This raised the possibility of the withdrawal of essential ECB support from our covered banks in response to unilateral default. We do not know how things would play out. Neither do we know the implications for the retention of global companies, including those in the financial services sector, upon which so many of our people depend for their livelihood.

We do know that it would most likely result in recourse to balanced budgets overnight. The consequences for working people would render the dreadful experience of the past three years equivalent to the proverbial walk in the park by comparison.

Your columnist can indulge in speculative commentary. He will not be held accountable for the consequences should disaster ensue, anymore than he will be held answerable for the reckless banking policies of Fingleton et al which he once extolled.

We in the trade union movement do not enjoy such luxuries, tens of thousands of members expect us to make the best assessment we can and offer leadership in a responsible way, not play Russian roulette with their livelihoods.

Accordingly, we still believe the best course is to work towards a European solution entailing an agreed restructuring of debt accompanied by growth-promoting policies. This possibility is beginning to appear on the horizon as it becomes clear that the Greeks cannot avoid defaulting. They are not opting to do it; they have no alternative.

Try as they may, those at the top of the European institutions cannot contain the problem within the programme countries. This does not mean we do not have policy options available to us to promote jobs and growth while history unfolds.

Instead of cutting the wages of the lowest paid 20 per cent of the workforce, which will not create any net new jobs, we must think outside the box.

Conventional policies will not work. The bloated savings ratio, the investment deficit and the inequitable distribution of the burden of adjustment can be addressed. People will not spend while they are fearful of the loss of their homes, their pensions or their jobs. The threat of home repossession should be removed for all those making a genuine effort. Measures must also be taken to restore confidence in private pension funds. The remaining €5bn in the National Pension Reserve Fund should be deployed in job-generating projects and enterprises. Parallel with this, the Minister for Finance should approach the private pension funds to develop a scheme based on exemptions from the recently introduced levy to facilitate the investment of five per cent of their assets (approximately €4bn) in the domestic economy, with the expectation of a reasonable return. Based on Construction Industry Federation (builders, not developers) estimates, each €1bn invested would create upwards of 10,000 jobs.

Your columnist describes this as 'lunacy', while he advocates unilateral default, a strategy which could become a one-way ticket to the Stone Age. The full text of my speech is available on the website www.siptu.ie

(Siptu general president Jack O'Connor has just stepped down as president of ICTU)

Sunday Independent