Finding a way forward on the economy
Deaglán de Bréadún
This week, decisions are being taken that will have a huge impact on all our lives. Government, employers and unions have been dancing around one another for some time but now the music is about to stop.
If I were a betting man, I would say that some kind of deal or arrangement will probably be reached in the end. But this would only be after fairly protracted negotiations: there is no room for complacency.
Talking to some of the participants yesterday, there was an undoubted acceptance that the situation we’re in is a very serious one. There is also a realisation that a cooperative arrangement is infinitely better than confrontation.
We don’t want to end up with general strikes, marches on the streets and maybe cars being overturned and set on fire. This is 2009, not 1913 (year of the Great Dublin Lockout).
The key point seems to be this: what can the Government and employers give the public sector unions in return for accepting, say, a pension levy that would mean a significant reduction in take-home pay for their members?
The phrase ”equality of pain” comes to mind. When I put this line of thinking to a senior politician, he responded that the business community knew all about pain at the moment with factory closures, credit crunch and all the other elements that go with being in recession.
But the fact is that some people in this society did very well out of the Celtic Tiger years and now it’s time to put something back. An increase in the levy on second homes sounds like a good idea. The current charge is only €200 and an increase in that does not seem unreasonable. Mind you, it won’t make life any easier for developers who may have rows of holiday holiday homes lying idle in our seaside resorts.
The increased second-home charge could perhaps be a preliminary move towards the re-introduction of domestic rates, probably under another name. That would be very controversial as many people, particularly older folk, are living in valuable houses but on a very low income. Perhaps going back to Land League days, there is a deep pyschological resistance among Irish people to this type of charge.
On the other hand, the amount of money raised from Stamp Duty must be virtually nil these days. That form of taxation depends on a high volume of transactions and the houses simply aren’t selling these days.
The Irish Congress of Trade Unions has come up with the idea of a National Recovery Bond. This would be sold to the public and, no doubt, there would be a return for investors. It might prove popular, particularly if the terms were attractive: one thinks of the SSIA. The Government side is quite interested in this idea.
An issue that has not been exercising the public mind as much as it should is that of private sector pensions. There are real problems there and it’s very worrying. Something needs to be done about it and I know the issue is central to the current talks.
In any negotiation, everyone has to get up from the table with something to bring back to their constituency. They need be able to say, “Well, we had to concede this and that but we got the following in return.”
We could be in a situation by Friday where the news is that a public sector pension levy is agreed with the social partners but as part of a long-term and fairly wide-ranging package of measures including raised taxes on second homes, a national recovery bond and moves to shore up private sector pensions. I’m not sure how that latter would be brought about, perhaps a state guarantee similar to what the banks got.
One aspect of the debate over the last few months that has no bearing on reality is the call for the Goverment to kick ass, impose a substantial pay-cut on the unions without consultation. they’re lucky to have a job, country must be saved, etc. That’s not the way things are done in this country. It is also a recipe for disaster.