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The anti-austerity march on Saturday will give people the chance to tell the Government that it’s time to change economic direction. By Michael O’Reilly.
Austerity is costing jobs.
When the Government published their Medium Term Fiscal Statement last week, they all but admitted that their employment policy will fail. When they took office the unemployment rate was 14.2%. Now they accept that the unemployment rate by 2015 will be 13%. In other words, the Government admits that the unemployment rate will hardly change while they are in office. This is a devastating admission.
Since the crisis began, Ireland has suffered one of the worst collapses in employment of any EU-15 country. We are up there with Spain and Greece. While the numbers at work in Ireland have fallen by over 15%, the Eurozone average is less than 2%.
Much of this job loss is due to the collapse in the property market. From the peak, the numbers at work have fallen by 350,000 – the construction sector has made up 45% of this job loss. However, in the last year, 80% of job losses have come from non-construction sectors. What was initially a crisis in the construction sector has now spread throughout the economy.
Austerity measures are continuing to drive down employment. When the Government cuts investment, it cuts the number of people at work on capital projects; when it cuts spending on public services, it cuts the number of people employed directly by the public sector and people in the private sector who got work through procurement contracts; when the Government cuts social protection, it cuts demand in the economy, putting further pressure on domestic businesses and their employees.
In short, when the Government cuts spending (or increases taxation on low-average income groups), it drives down economic activity. Why should anyone be surprised that the numbers at work are continuing to fall?
The Government‘s jobs policy ignores what’s happening in the labour market. There are about 30 unemployed people for every job vacancy. Increasing the skills of our workforce (both employers and employees), retraining people, getting young people back into education – all these are necessary to increase our capacity to grow. But these will come to nothing as long as there is no demand for labour – as long as 300,000 people are competing with each other for a relative handful of jobs.
According to the Government, the prognosis is not good. They expect there will still be fewer people at work in 2014 than when they took office. How can we begin to turn this around?
First, we can begin to drive investment. Investment not only has the capacity to put people back to work in the short-term, it increases the capacity of the economy to grow in the future. This will continue to increase employment in the medium-term. Investment in next generation broadband, a modern water and waste system and energy-efficient buildings (we have one million buildings in need of retro-fitting) could directly employ tens of thousands of people, with more jobs created downstream. Most important is investment in education – from early childhood all the way through to life-long learning; this is the single most important long-term investment.
Second, we can stop digging ourselves into a bigger hole. While we have to repair our public finances (and investment will help by driving up tax revenue and reducing unemployment costs), we should ensure that budgetary measures are ‘growth-friendly’. This means taxation measures on high-income groups and their unproductive capital and property. This will have less impact on domestic demand than cutting spending on public services and social protection, or hitting low-average income earners through taxation.
Third, we must start driving up wages – in particular, those of the low-paid. Corporate profitability has returned over the last two years. Many businesses are struggling – not because wages or taxes are too high but because not enough people are employed and have too little money in their pockets to spend. Increasing wages in enterprises that can afford it will increase tax revenue for the Government and increase spending in the economy.
This is not the complete solution to unemployment. But it is a start. It is the programme that the Dublin Council of Trade Unions is calling for. And it is one of the reasons that we are asking people to come out on Saturday, 24 November.
We can defeat austerity. We have a programme that will grow jobs and living standards. And if we have the people, the Government will have to listen to us.
Michael O’Reilly is president of the Dublin Council of Trade Unions.