Economic solutions must be socially and politically credible - Eamon Gilmore TD, Leader of the Labour Party
7 Jul 2009
Eamon Gilmore TD, Leader of the Labour Party - Credit: Kevin Cooper, PhotolineSpeech by Eamon Gilmore TD,
Leader of the Labour Party
to the ICTU Confefrence, Tralee, Co. Kerry
Colleagues and Friends
Thank you for your invitation to be here today. It is a great pleasure to be asked to address the Irish Congress Of Trade Unions. But I particularly value the opportunity to speak with you today, given the times we live in, and the difficulties we face.
I don’t need to tell the people in this room, of the scale of the challenges that confront us. This is the worst economic crisis of our lifetimes. How we deal with it could determine the shape of our economy and complexion of our society for a decade or more. The decisions that are made now, will influence the opportunities and life-chances of a generation. The crisis is deep, and it is complex. It has, in effect, three dimensions
There is the banking crisis, the fiscal crisis, and the jobs crisis.
Each of them is linked. How each is dealt with, affects the others. Mishandling of any will, make the others even more difficult to address. So they must be dealt with simultaneously. And they must be dealt with fairly. For a solution to be economically, socially or politically credible, then the burden cannot be inflicted on any one group, at the expense of others. In particular, we cannot allow those who created the problem, to impose the burden on those who can least afford to bear it. Yet, already, those mistakes are being made. To date, the problems in the banks and the public finances have been the main concern of Government.
Not enough attention has been given to the crisis in the real economy - of jobs lost and businesses closing. And already, we see attempts being made to impose the burden where it should not be laid. Those whose devotion to unregulated markets and neo-liberal economic thinking caused this problem, are already telling us that the people least able to afford it, should pay the price of their failures.
From the outset, the Labour Party, and the trade union movement, have taken a different view. From the outset, our every instinct, backed up by concrete policy proposals, has been to make jobs the central priority. From the outset, we have sought to protect the vulnerable in society, and to insist that social solidarity must be built into the solution. Not as an optional extra, but as an essential ingredient of success. We have shared the analysis – the common sense – that if we are to deal with the banking crisis and the fiscal crisis, we must also deal with the jobs crisis.
Because, every person who signs on the live register costs the state at least €20,000 in social welfare payments and taxes lost. And because every person who losses their job is potentially another mortgage that could go into arrears. So, we have put the retention and creation of jobs at the centre of our efforts. This recession is different to anything we have experienced before. Certainly, it is deeper – no country has experienced such a loss in national output since the 1930s. It is also coinciding with a deep international downturn, and it is accompanied by a crisis in banking that is cutting off the normal flow of credit to the economy.
As a trade union official in the 1980s, many of the companies I saw wound up didn’t really have a long-term future. Many were companies for whom recession was the final straw. But this time, we are seeing businesses going to the wall, which are essentially viable. Businesses that have a long-term future, if they can get through this period. That is why, I made the argument at a Labour Party seminar last February, that more should be done to retain existing jobs. Because I believed we were throwing in the towel too early on job retention. And that is why I support the negotiations with Government to put in place a jobs retention scheme. To use the money that would otherwise be spent on social welfare and taxes lost, to keep existing jobs. To preserve the fabric of the economy. To keep jobs alive, which do have a viable future.
And I want to see support being provided where employers create new jobs. Which is why Labour has proposed a time-limited PRSI exemption where a firm creates a new job, that is filled by someone on the live register. Labour has also been arguing for a new approach to public investment, in infrastructure, but also in people. We know that there are any number of infrastructural projects that could be carried out, which would yield a positive long-term return to our economy. There are hundreds of schools with poor quality buildings. There are urban regeneration projects that are ready to go, but unfunded. There are areas where water is not drinkable. There is an opportunity to make those investments now, when there is spare capacity in the building sector, and tender prices are at an historic low. Investments with a social, but also an economic return, that will support economic recovery.
Given that the construction sector is operating below its sustainable level, valuable jobs and incomes can be saved, and valuable infrastructure put in place, with a determined approach by Government. To drive this process, Labour has been calling for a new National Development Plan to be drawn up. And we have proposed a State Investment Bank, that would play a key role in delivering on the plan by funding infrastructure development, in new and innovative ways. We believe, for example, that the Congress proposal of a National Recovery Bond, could be delivered through the State Investment Bank. We must invest in bricks and mortar, but also in people and their skills.
For more than a year now, I have been arguing for a determined effort to be made in providing new opportunities for people who have lost their jobs. It is simply not economically, socially or morally sustainable for the state to sit back and ignore half a million people on the live register. We must learn the lessons of the 1980s, and do everything possible to avoid the build up of a new generation of long-term unemployment. We must develop new programmes to provide training, education and work experience to people who are unemployed. To invest now, in the skills and know-how, that will allow us to avail of opportunities as the world economy recovers. And we need to be more inventive about designing programmes that better meet the needs of the individual.
That is why Labour has consciously proposed a number of different ideas in this area. One such idea is what we call the ‘bridge the gap programme’, which is intended to provide work experience for young people qualifying from education or training. The UK economist David Blanchflower has pointed out that a period of unemployment at the start of a young person’s career can have a lifelong effect on their career and earnings. So, Labour is proposing that a scheme that would provide work experience placements, subject to appropriate conditions about displacement. We know too, that there is an urgent need for Irish workers to acquire new skills and qualification, a need which existed before the recession. So, we have called for major expansion in the places available in further education.
Alongside Congress, we have pushed the idea of flexicurity, seeking a more flexible welfare system that can support people in training and employment. We also need a determined effort to deal with the problem of literacy. One in four Irish adults have difficulty in this area, and are particularly vulnerable when it comes to finding new employment. So, we have proposed a major new effort in adult literacy supports. As the live register approaches half a million, this is not a moment for ‘business as usual’. This is a moment for a determined drive to put every resource at the states disposal to use.
In my view, we should have a target of at least 100,000 additional training and work experience places. As I said, at the outset, there are three crisis, and each must be tackled, but they must be tackled fairly. Unfortunately, the line I increasingly hear from Fianna Fáil is that the solution to the fiscal crisis is to cut public expenditure. Every time I pick up a newspaper, I read another leak about what is supposed to be in the McCarthy report, in what is shaping up to be the longest ‘softening-up’ exercise in the history of the State.
We must challenge that analysis. Firstly, I do not understand why Fianna Fail have had to out-source the work of reviewing expenditure to an outside group of consultants. Unlike the opposition, Government Ministers are part of the apparatus of Government. They have available to them the management information of Government departments. Are they not able to reach their own conclusions on what expenditure can be cut?
Nor, do I see why the report has to be kept secret. Lets see it! Publish the report, and lets debate it. And lets debate too, the notion that we can only deal with the public finances by cutting social spending. Even in the worst days the late 1980s, social welfare rates were not cut. They were indexed in line with inflation, as part of the first social partnership agreement.
No one doubts that difficult decisions will be required to deal with the fiscal crisis. But lets get real about this. For any solution to the crisis in the public finances to succeed, it must be credible. Not just economically, but socially and politically. The argument that you can make the full adjustment on the expenditure side is simply not credible. I have made it amply clear, speaking in the Dáil and with colleagues in the trade union movement, that we are going to have to see reform in the public service. I have made it clear that we have no option but to find ways to deliver more with less. I say that precisely because Labour is committed to high quality public services and has respect for public servants.
We refuse to sign on to the campaign of vulgar abuse that has been waged against public servants in particular. The Government line seems to be that they did tax in April, they will do spending in December. Well, we know they did tax in April – working people and their families know all about that. What they didn’t do, was deal with the need for fundamental tax reform. It is still the case, that high earners in Ireland can avail of a range of loopholes to cut their tax bill. It is still the case that, that small pension schemes can be used to reduce avoid paying tax. The irony of that will not be lost on the many thousands of workers confronted with underfunding in their pension schemes. Indeed, the whole area of pensions is one that congress has been highlighting for years.
The issue of tax reform will have to be addressed. Just as we have to deal with the issue of tax exiles. Yet, we have some commentators telling us that we have to cut social welfare rates, while tax exiles can’t be touched. We know also, that when unemployment increases, some people will take the opportunity to roll back the clock on employment rights. There are at least eight commitments on employment rights, made in the social partnership agreement, Towards 2016, and in the subsequent transitional document, which are yet to be passed into law. These include the Temporary Agency Workers Directive, the Industrial Relations Bill, the Employment Agency Regulation Bill. and Anti-victimisation legislation, which is to protect those workers who choose to join a trade union, and which was promised for March 2009. I am calling on the Government to demonstrate that it is genuinely committed to strong and fair employment rights by enacting the outstanding legislation promised under Towards 2016.
If this administration fails to do so, then when it is returned to government, the Labour Party will, as a matter of priority:
• Legislate to protect the rights of temporary agency workers
• Ensure that the Posting of Workers Directive does not undermine existing workers’ rights in Ireland
• Ensure the legal right to adequate representation of employees in their place of work
• Make it illegal to discriminate against an employee because they are a member of a trade union
• And pass the Industrial Relations Bill to protect vulnerable workers in the hotel, catering and construction industries.
The Labour Party in government will also commit to giving domestic effect to the principles, including collective bargaining, enshrined in the Charter of Fundamental Rights, which will become European law if the Lisbon Treaty is passed. As I said, at the outset, the crisis has three dimensions, one of which is the banking crisis. Labour has been clear from the outset, that action must be taken to ensure a secure and functioning banking system.
Where we have differed from Government has been on the risk to which the taxpayer should be exposed. The blanket guarantee for the banks, which Labour opposed, exposed the State to enormous risks. It also severely limited the State’s negotiating position. The establishment of NAMA – or An Bord Bailout – will transfer the Banks’ property loans to state, at a price yet to be determined. Once again, the taxpayer is being exposed to huge risks – a bill that may have to be paid by our children and grandchildren. In the meanwhile, as the legislation for NAMA is being drawn up, further damage is being done in the banking system. Because NAMA will take over both good and bad loans, the delay in introducing the legislation is causing banks to restrict credit to viable businesses where there is some holding of development land or property.
Meanwhile, those who owe the banks a fortune for development loans have no incentive to pay the banks, in the hope that they will get a better deal from NAMA. The delay is also providing an opportunity for some to hide good assets. Labour’s in contrast, has favored an approach based on temporary nationalization, which is quicker and less costly. While there would still be a requirement for large investment into the banks, the state would stand to profit when the banks are re-sold. Above all, it removes the requirement to put a value on property loans at a time when the property market is in crisis, and when getting it wrong imposes a huge cost on the State.
Colleagues, Last week, I had the honour of launching a new book about the history of the Labour movement in Ireland from the lockout to the late 1960s. Written by Barry Desmond, former Deputy Leader of the Labour Party. Reading a book like that, you see the great strengths of this movement. Strengths that reside in the people who devote themselves to it. The great traditions of solidarity and service to the cause. The same traditions that our colleagues in SIPTU have been celebrating in this, their centenary year - I want to, once again, congratulate them and wish them well on this occasion. I don’t need to tell you that the Labour Party originally grew out of the trade union movement, indeed was founded at a Conference of the TUC in 1912. That for the first 18 years of its life, the Party and the ICTU were the same organisation – the Irish Labour Party and Trade Union Congress. And even though we, quite rightly, went our separate ways, we continue to have many important links.
Last Spring, the Labour Party put in place a range of reforms to the way the Party is organised. As part of that process, we renewed and refreshed the formal link between the party and the affiliated trade unions. But our most important bond is not what is written in the rulebook. It is the common ideals and principles that we share. The linkage I want to build now, is to gain the support of trade union members – of working people and their families – for a Labour led Government. Of course, there would be areas of tension between Labour and the trade unions in Government.
That is inevitable. But only a Government with Labour at its heart can drive the kind of reforms that Ireland needs.
The kind of reforms to tackle the three dimension crisis in a way which is economically and socially sustainable. In a way that is fair. There are some, who think we are still one and the same organization. Indeed one of the great misunderstandings of Irish political life is about how little formal relationship there is between the trade unions and the Labour Party. In fact only 6 of the 55 unions which are part of the ICTU have any formal affiliation to the Labour Party. In my view, our most important bond is not to be found in any rule book. It is in the common ideals and principles we share – for economic recovery and for a fair society.
To advance those objectives I have committed the Labour Party to contesting the next election on our own distinct policies, to offer voters a 3 way contest between Labour, Fianna Fail and Fine Gael. And specifically to offer the prospect of a Labour led government. Thank You.