Saturday, July 04, 2009

The Spending cuts recommended by An Bord Snip Nua reveal once again the class nature of the state: it is time to fight back:

The Spending cuts recommended by
An Bord Snip Nua ( colloquial tag for The Special Group on Public Service Numbers and Expenditure Programmes) will this time be extended to the unemployed and to child benefits. They reveal once more the class nature of the state and the FF/Green government. They will provoke a general reduction in living standards of workers. To reverse these attacks, unions must stop wasting precious time in useless negotiations with the government and start mobilising.

Taoiseach Brian Cowen keeps predicting further hardships to workers. He has said that the number of the unemployed will rise to over half a million (over 15 percent) before the year is over. That, however, won’t be the peak of it; unemployment will keep rising in 2010. At the moment it stands at 413,500, with an increase of nearly 200,000 in the last twelve months. According to the Labour Party, the loss of tax revenue due to that increase and the additional social welfare expenditure carries over an extra annual cost of €4bn for the state. That is close to the €5bn spending cuts that the report of An Bord Snip Nua is expected to recommend to the government next week. The recommendations will include €1.5bn cuts in welfare and child benefit payments. At the same time, the government bailout to the banks has increased the exchequer deficit to €14.7bn.

The class nature of the state is revealed in the allocation of both state funds and spending cuts. The Taoiseach has said, “there should be no sacred cows [ie. The welfare state] when it comes to cutting public expenditure” (Irish Examiner, 2 July). Clearly there are sacred cows – the banks and the corporations – but while some get a bailout the workers must pay for the crisis. Corporation taxes on profits, on the other hand, at 12.5 per cent remain as the lowest in the EU (around 40 percent in most countries). Capital gains are not to be touched.

The cuts in benefits, for example, would imply that unemployed workers on €11,000 a year would see their incomes cut by 7 percent (Irish Independent, 1 July). An Bord Snip Nua report also advocates for a reduction of 30,000 public sector workers jobs (Irish Examiner, 30 June).

Employers consider the Public sector and benefits as the main obstacle to the recovery of their former profits. The years of economic growth between the mid 1990s and 2007 saw a huge creation of material wealth that allowed for an increase in absolute wealth for the workers. Yet, the gap between the capitalists and the working class, an indicator of class power, increased considerably. During those years there was a huge transfer of wealth to the elites. The wage share of national income went down from 71.2 to 54 per cent between the periods 1980-1990 and 2001-2007[2].

Now the economic and political elites are trying to use this crisis as an excuse to further consolidate their class power and extend labour market flexibility, job insecurity, and non-unionised workplaces to the public sector. Article after article appears in the media on a daily basis about the “high wages” of public workers, their “low productivity”, their “job security”, etc. It is part of a coordinated offensive against all the gains that workers achieved in previous struggles, and aims at a further lowering down of wages and standards in the private sector too. But ,they need above all to appeal to the unions to help them restrain social and industrial unrest. Jim Power, Friends First Chief Economist, has put it in very clear words (Irish times, 29th June):

In the private sector there is no possibility of strikes ... In the public sector there is every possibility of strike because it’s a sheltered part of the economy ... But going on strike in the current environment would be economic and financial suicide.
Although it is true that strikes are more difficult to organise in the private sector, it doesn’t mean that they can’t be organised. The main obstacle to workers fighting back in the private sector, apart from the demoralisation of massive job losses, is the attitude of the leaders of the labour movement. As we pointed out in previous articles, the 30th March one-day national strike didn’t take place because of the opposition of the leaders of ICTU and the Labour Party.

What did the labour movement achieve by calling off the national strike and by engaging in negotiations with the government? Nothing. It has only benefited the strategy of the government of gaining time to prepare the introduction of major attacks to the workers. It was a big mistake to pull the bracket when workers were ready to go ahead. That has only added more demoralisation. ICTU is still engaged in partnership negotiations and asking for a “national solidarity pact”. David Begg, ICTU general secretary, has said recently that these ongoing negotiations will likely lead to a new, moderated deal compared with that which was hammered out in September: “Overall the increases would be fairly moderate and they won’t apply to all companies”, he said (Irish Examiner, 30th June).

One of the main points for ICTU was to get the government to implement its 10 points recovery plan, which has become another failure. To start with, the government is not going include ICTU in its taskforce for economic recovery. As ICTU's David Begg has said (Irish Examiner, 30th June):

"We are taken aback, surprised and not a little disappointed that after six months working with the Government on an economic recovery plan, the one major initiative emerging from that excludes us… By excluding unions, they are carrying on the old employer mindset of business above all else that got us into the economic state we face"
Even worse, Brian Cowen has appointed two university presidents and the chiefs of pharmaceutical companies and business leaders. Still, unions are likely to propose to their members to accept that the very small wages increases brought about by the last national wage agreement, September 2008, must be revised and reduced. Further, companies that say they cannot afford to pay will be exempted. That means that companies will be able to delay any wage increase indefinitely since those kinds of negotiations between unions and companies can drag on for years. In fact, there have been no increases since September, rather wages were frozen in both the private and the public sector[3]. On top of that the government imposed a pension levy on public sector workers last February.

The reduction of welfare benefits and the “equalization” between the private and the public sector, plus the high level of unemployment, will force workers to accept lower wages and labour standards unless they react to these attacks. This has been a constant in the history of capitalism. The strategy of the capitalist class is clear, but it can work only if they keep unions at bay.

Day in day out the elites keep repeating the same song, as the Friends First Chief Economist indicates above, “going on strike in the current environment would be economic and financial suicide.” Tom Parlon, former IFA president and PD leader and now director general of the Construction Industry Federation, has said about the strike action that TEEU electrician have announced for this Monday, “The threatened strike action on Monday by the TEEU, and the targeting of such sites as Terminal 2 at Dublin Airport, the new Intel development in Co Kildare and the Corrib Gas Project, is hugely damaging for our industry and for Ireland’s economic reputation. Strike action on Monday will do untold damage to our industry, our economy and the perception of Ireland’s attractiveness as a place in which to invest and work.” (Irish Examiner, 4th July).

The problem is that union and labour leaders are buying into ideas and interests that are merely the ideas and interests of the capitalists and their political cronies. “Economic and financial suicide”? “Untold damage”? Rather, it is the market economy, the capitalists and their political allies who have been “committing suicide” and “untold damage” for quite a while, but it is workers that are paying instead of them. If union and labour leaders keep opposing strikes, what they are going to achieve is to disarm the labour movement and destroy any change of changing course, because the strike is what employers and government fear, and what can stop them and reverse cutbacks and unemployment. It is not “untold damage” to the “economy” that they fear but to their profits and interests. Enough is enough. The unions must break negotiations with the government and start mobilizing at a national level to oppose cutbacks.

[2] Kieran Allen, 2009, Ireland’s Economic Crash, The Liffey Press, p. 26

[3] Recently, the government has disclosed data that seems to reveal that wages for public sector workers have actually increased 3.5 percent since September in spite of being frozen! (Irish times, 29th June). No broken down figures have been given, nor information about the sectors and categories

1 comment:

FearFeasaMacLéinn said...

Thanks, FPB for that excellent and detailed article. Agree 100%.