Ireland: Draconian government budget savages workers’ living standards

Workers’ action needed to defeat cuts and attacks

The Fianna Fail [the main pro-market party) and Green Party coalition government would like working people to believe that the emergency budget announced on 7 April has hit everyone equally, but this is a bared-faced lie.

The two budgets we have had so far in 2009 have cost the "average family" approximately €7,000 a year. Every section of the working class and middle class were hit by the budget.

The 1.3 million receiving social welfare, who are already struggling to survive have had their income cut by 2% with the scrooge-like scrapping of the Christmas bonus. The unemployed were also hit by a reduction in rent allowance, with newly unemployed under 20 years old being told they must survive on €100 a week!

All workers, from the working poor up to those on decent wages, have been hit by a doubling of the income and health levies on their incomes, some facing the extra burden of increased PRSI (social security) payments as well.

The limiting of mortgage interest relief (which will eventually be scrapped) will cost people with modest mortgages between €100 – €200 a month. The halving and scrapping of the childcare supplement will hurt many low-income families who have come to depend on this money.

For public sector workers, the budget was a double whammy, piling more tax hikes on top of the recent pension levy/pay cut.

Yet the multinationals who exported nearly €60 billion in profits in 2007 were not asked for a single extra cent! Big business got off scott-free.

To add insult to the injury of the dramatic cut in all of our living standards, the government have decided to give the banks and the super-rich speculators a potential bail out of up to €90 billion of our money!

€90 billion bailout for the super rich

The decision of the government to buy the bad debts from Irish banks for up to €90 billion, while making cuts to the poorest sections of society is a scandal.

The billions in bad debts in the banks are owed by some of the wealthiest people in Ireland. Amongst them are the property developers and speculators who used their borrowings to massively inflate the property market, which in turn saddled people with 40 year mortgages.

Whereas the billionaires and multimillionaire tax dodgers have yet to be touched, the working class face the implementation of the budget’s attacks from 1 May.

Deflationary budget will cost jobs and fuel recession

A the start of his budget speech Brian Lenihan (Finance Minister) talked about taking from each according to their means. It sounded as if he was just to about to quote Karl Marx. Alas, very quickly it became clear that he was once again putting his hands deep into the pockets of the working class. His imposition of huge tax increases represents a savage cut in wages.

Fundamentally, the economic crisis here and internationally is based on a lack of demand for commodities. The wage cuts in this budget, 7 – 8% for many workers, will only serve to cut spending and consumption dramatically and make unemployment much worse.

The actions of the government are likely to turn the recession into a depression and an economic collapse of 20% in GDP could be on the cards.

As the international crisis worsens, Irish exports will shrink. The euro is relatively highly valued and given that more than 60% of Irish exports go to non-eurozone countries, particularly the US and Britain, that sector will continue to haemorrhage jobs.

The government’s central policy to become more competitive is not based on investment in research and development, but further draconian attacks on wage levels in the public and private sector. This is a deflationary strategy that will cost jobs and fuel economic decline. Thus, it is vital for the future of the economy and workers living standards that these policies are fought.

Action needed to defeat attacks

Commenting on the aftermath of the budget, Stephen Collins Political Editor of The Irish Times said: “This year the silence has been eerie, mainly because the large body of PAYE workers who are being hammered by the budget have no one to directly represent their interests.”

Six hundred thousand of those PAYE workers are members of trade unions and yes, they aren’t being represented by their "leaders". Aside from a few comments bemoaning aspects of the budget there was an "eerie silence" from the so-called leaders of the trade union movement.

The union leaders are committed to doing all that they can to help the government and big business "manage" the recession, even if that means 500,000 unemployed and major cuts in living standards.

The Irish Congress of Trade Union leaders betrayal of working class people is being done in the name of "social solidarity". The budget was "social solidarity" capitalist style – the working class taking all of the pain.

ICTU’s call for a national strike on the 30 March was a cynical ploy aimed at restarting the social partnership talks. Yet despite weeks of propaganda from all the main parties opposing the strike, including Labour, a majority of trade unionists voted to go on strike, only for the action to be cancelled.

Socialist alternative

Fine Gael [main capitalist ’opposition’ party] protested that the government haven’t cut spending enough! Labour have criticised the budget but in reality are only squabbling over the scale of the cuts and the tax increases – they too argue that working class and middle class people must pay for the crisis.

The unions should walk away from "social partnership" and harness the opposition and anger against the government into a major campaign of industrial action and protest to defeat this budget and stop the jobs slaughter and widespread pay cuts.

The crisis in Ireland is far deeper than in many other countries, reflecting the damage done to the economy by the craven greed of the property developers and speculators who were fully facilitated in their speculative debauchery by Fianna Fail and the banks.

In Ireland, as in the rest of the world, this recession represents the failure of the market. Capitalism isn’t working and the Socialist Party believes that the only way to guarantee decent jobs for all in a society with first class health and education systems is to get rid of capitalism. We must replace this failed system which puts the profits of the rich before everything with a social system that puts the needs of people first.

On 5 June, where you can you should reject the parties responsible for the recession and also those who think we should pay for the crisis and vote for Socialist Party candidates in the Local and European elections.