Thursday 18 July 2019

A dangerous game of denial

The Irish Congress of Trade Unions is playing a very dangerous game, one that risks driving a wedge between workers in the public and private sectors and which peddles false hope like a snake-oil salesman.

Yesterday's trade union march on the streets of Dublin was an exercise in futility. David Begg and ICTU cannot believe that protesting against a recession will help economic recovery, or that strikes in the public sector this week will play some positive role in enhancing this economy's competitiveness, yet they rattle their sabres and pretend that they are acting in the national interest.

They are in denial. The Irish economy continues to implode at a rate that is frightening. Jobs are being lost in their thousands as unemployment spirals relentlessly towards 500,000.

The public finances are in disarray, with the Government borrowing money at high interest rates just to pay for its day-to-day running costs. The case for radical action is unanswerable: Government spending has to be cut, and public sector wages have to fall. No amount of strikes or protest marches can change the arithmetic: Ireland's economy is overpriced and under-competitive.

Wages and prices must fall in all sectors, and there is no way that the public sector can be cocooned from that process.

By refusing to accept that simple reality, ICTU engages in self-delusion on a grand scale. It is joined, unfortunately, by Eamonn Gilmore, the leader of the Labour Party, who is cresting a wave of popularity.

Mr Gilmore, who now presents himself as an alternative taoiseach, seems to believe that his popularity will be further enhanced if he, too, runs from reality. He will not accept that the public sector wage bill must fall and on a day when he should have been in Dublin to talk some much-needed sense to the crowds on the streets, his main business of the day was down the country at another protest, this time against the closure of a local hospital in Tipperary.

Mr Gilmore wants his cake, and he wants to eat it too -- which is normal practice for an opposition politician, but these are not normal times.

Leadership is not just a prerequisite of government. All political parties, and all trade unions, need to show leadership to their own followers, and that does not mean raising false hopes or indulging in fantasies.

Mr Begg makes much of the 'Swedish Model' -- the plan followed by Sweden as it recovered from a banking crisis and crippling recession -- yet he skirts over the difficult bits of that plan and highlights the bits that he likes. No mention of Sweden's 30 per cent currency devaluation -- an option denied this Government, but which was critical to Sweden's recovery -- and no mention, either, of Sweden's cuts in social welfare benefits.

There is no perfect model that Ireland can copy, and there is no painless way of fighting recession. Government spending must fall, wages must fall and competitiveness must recover. Prices across the economy have to come down: there have been encouraging signs of movement on electricity prices, but it is just a small step.

The Government must push far harder: the ESB must be broken up and sold to the private sector to help drive prices lower and other privatisations must follow. It must avoid rushing into tax increases, because this economy could be tipped into an abyss if heavy increases were loaded onto a recession.

There is room for hefty tax reform -- tax shelters should be eradicated, tax incentives scrapped unless they meet rigorous criteria and tax evaders should be pursued even more aggressively -- but new taxes should be resisted.

The Government must now stand fast against ICTU and cannot contemplate giving ground on the public sector pensions levy. It must add, with urgency, to its plans for economic recovery, but it cannot back down on public sector pay.

The unions must shake free of their denial and recognise that maintaining Ireland's uncompetitive rates of pay will condemn this country to years of unnecessary hardship. There has to be a new beginning, based on reality not populist delusion. It is a lesson that Mr Gilmore should heed or his bubble, too, will burst.

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