‘Cynical unions’ are exploiting weak Government, economist says

If pay gets ‘out of control’ again the country will face ‘serious difficulties’, Jim Power says

Economist Jim Power said the economy was recovering, but there was still a level of fragility.  File photograph: Eric Luke / The Irish Times

Economist Jim Power said the economy was recovering, but there was still a level of fragility. File photograph: Eric Luke / The Irish Times

 

Unions are “very cynically exploiting a very weak political situation to their own advantage”, economist Jim Power has said.

Speaking at a Renua conference on attracting Irish emigrants home, he said he would “really worry the current Government does not have the political strength to actually stand up to the source of militant pay pressures that are building”.

“The next time I hear a union leader talking on radio about the greed that brought the economy down back in 2007/2008 … well this is greed,” he said.

Mr Power said the economy was recovering, but there was still a level of fragility.

“If we start to let pay get out of control again we are going to create serious difficulties for ourselves,” he said.

He highlighted the tax burden currently on workers. In 2006, when there were just over two million people employed, the income tax paid by them was €12.4 billion, he said, and accounted for just over 27 per cent of the tax take.

“In 2017, just over two million people working will pay €20.2 billion in income tax, accounting for 40 per cent of the total tax take.”

He said no other category of taxation has experienced that sort of trend.

“The burden of fiscal adjustment since 2007/2008 has fallen very heavily on the shoulders of those people who work and pay income tax,” Mr Power said.

He said that was a massive disincentive for getting ambitious people to come back to Ireland and he could “see where the workers themselves are coming from”.

“I think there is a requirement to put money back into people’s pockets, I feel the most positive way of doing it is through the tax system,” he said.

“You end up with the same result without raising the cost of running the country, without damaging our external competitiveness.”

Mr Power suggested the tax system should move toward people earning €80,000 “before hitting the top rate of tax”.

The conference in Dublin, attended by less than 40 delegates, aimed to examine the context of emigration and how emigrants might be attracted home.

Renua Party leader John Leahy said throughout Ireland, towns and villages had been “all but emptied of all life”, as the young were forced to emigrate by economic circumstances.

“We, in Renua, believe that attracting these people back to Ireland is not only economically necessary, but also necessary to ensure that our rural communities are able to survive and flourish,” he said.

Other speakers included Bernadette McKevitt, a social carer from the Irish Centre in Queens, New York, Adrian Cummins of the Restaurant Association of Ireland, and Éamon Delaney of the Hibernia Forum.

Mark Fielding of Irish Small and Medium Enterprises questioned why people who wanted to start a small business would return to Ireland.

He highlighted the differences in how self-employed people are treated within the social welfare and tax system. If an employee earned €15,000 a year, they would pay €210 in tax, he said, while a self-employed person would pay €1,610. There was also no immediate entitlement to social welfare for the self-employed.

“Our current system treats the self-employed as second class citizens; instead of rewarding them we are punishing them,” he said.

“There has to be a change at official level and a recognition of the vital role paid by self-employed people in the economy.”