We must come out fighting, not fighting each other
An uneasy and growing divide is threatening to open up these past few weeks between those working in the public sector and those working in private industry and services over who should be making the biggest sacrifices to save the nation. As Government officials sit down this week with trade union leaders to try and hammer out a deal on cost savings in the €1.3 billion public sector pay bill, it should be a time for unity, not dissension, in the face of the gravest crisis to hit the country in decades.
Attempting to blame one sector or another will not serve any meaningful purpose as Ireland faces its most severe fiscal crisis ever, just as last week's marches on the streets of Dublin and several regional centres have achieved nothing. Unity of purpose between public and private sector workers is what the country needs, not division, bile and bitterness, no matter how easy it is to succumb to at this juncture. Threatening strike action and civil disruption at this time is neither helpful nor tolerable, either, as Ireland sinks deeper into debt with each passing week.
Ireland is in the grips of a very severe recession - some economists now term it a depression - nursing an economy that has contracted by up to 10 per cent since the top of the boom just two years ago. There has been huge mismanagement of the public finances and unconscionable complacency over the behaviour of the banking sector and the massive property bubble that was becoming glaringly obvious for the previous two years. The result is that Government spending is now outstripping its income by a staggering €22 billion per annum as a result of the collapse of the economy and the ruinous effects of an over-dependence on the construction sector to prop up everything else. This type of yawning deficit is not sustainable. If it were to continue, Ireland would, without doubt, be heading into the arms of the International Monetary Fund (IMF).
Indeed, some people seem to believe it would be no bad thing if the IMF was to come in now and clean up the mess. The reality, however, is that the medicine the IMF would prescribe would be so unpalatable, the surgery so painful, that the Government's forthcoming budget would, when measured against the IMF's plans, be like a stroll in the park. The option of last resort should be the IMF, but it will happen unless this virtually bankrupt country gets its spending under control quickly.
The Government that has got us into this mess needs to get us out of it. But it has to find the political courage to make the type of decisions the IMF would make. The European Union and the international markets, upon which we depend to raise capital, will only take Ireland seriously again if the Government delivers on its promises to cut its spending. We all face years of pain if Ireland is to stave off being declared bankrupt and it's time everyone got used to the idea.
The public sector pay bill remains the elephant in the room as it represents €20 billion of current spending every year. It simply has to be cut; there is no way around it. How that can be done is being discussed between Government and unions this week but progress, if any, is likely to be slow. Public sector workers argue that they have already had a pension levy imposed upon them but private sector workers have had to endure far greater pain in terms of 100,000 job losses, short-time, pay cuts in some cases of 20 or 30 per cent and the daily uncertainty of not knowing whether they will have a job tomorrow.
The Government must face down union demands for further tax increases as raising income tax will only depress what fragile spending there is even further and hamper any growth prospects that are there. Certainly, all tax loopholes and shelters availed of by the wealthy to reduce their tax bill should be closed off. Everyone should be prepared to make their contribution to helping dig the country out of this hole - and those that can afford to pay more should pay more.
But every citizen, whether in the public or private sector, has a duty to do what is right in the midst of this national economic crisis. However, it should not only be about cuts; there also has to be some hope given to people. The number one priority needs to be getting people back to work as record unemployment continues to be a massive drag on the exchequer, not to mention a soul-destroying existence for hundreds of thousands of people without work.
Complacency and inaction has been a hallmark of this Government in the past in allowing the property bubble to inflate to dangerous levels and permitting imprudent practices in the banks. The violent crash-landing of the economy now demands that decisive action be taken by Government, not just in relation to the spending cuts that are required, but also in devising a viable plan that will generate sustainable jobs. If we don't see that soon, the country may well be condemned to another lost decade just like we had in the 1980s.
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