I left Ireland in 2007 at the height of the economic boom there, the unemployment rate was under 5%1, house prices had gone through the ceiling and the head of state had suggested that anyone who thought there might be an end to the boom should go and kill themselves. I passed through Philly in March 2008 and the news from back home was not so good as the international banking collapse was having its impact. That June I moved back to Ireland, and from then on the economy went into free fall, pushed over the edge by property speculation, which had grown exponentially in the previous decade.
A global crash was always going to hit the Irish economy hard. Government policy was to rely on global corporations moving to set up factories, headquarters and tax shelters in Ireland to create wealth and employment. At the start of the Celtic Tiger Ireland had low wages and a skilled workforce by European standards, and this on top of a criminally low corporate tax base meant international investment poured in. For much of the 1990’s Ireland was attracting ten times more Foreign Direct Investment per capita than the next nearest European country, Spain. During this long boom the Irish unions had become bloated and lazy, there were almost no protests or strikes as everything was sorted out by the trade union leadership in national deals negotiated every three years, and without struggle there was no rank and file organizating. Worse still, these national deals (called social partnership) negotiated tax cuts instead of decent pay increases inevitably storing up trouble for when the boom ended.The tax cuts were made possible because government income from the tax revenue on the sale of houses was going through the roof. An enormous property boom was in progress with the profits made being ploughed right back into the boom, leading to an escalating level of house building. In the last year of the boom as many new houses were built in southern Ireland as were built in the entire of Britain that year, and Britain had ten times the population. Anyone with money was buying to invest, adding further fuel to the boom. This situation could not last, and inevitably the failure of Wall Street triggered the collapse of the Irish economy.
An enormous debt was created by property developers during the boom. In fact, so much was borrowed that Irish bank funds were exhausted and huge amounts of capital flowed into Irish banks from all over the world, particularly Germany and France. When the boom collapsed, the property these loans were secured against plummeted in value meaning that they could not be repaid. With the Irish banks on the verge of ruin the government led by the Fianna Fail party, which is tightly linked to property developers, agreed to guarantee payment of all these loans. As the collapse deepened this meant larger and larger transfers into the banks to stop them collapsing, transfers that became so large that the government was no longer able to borrow internationally to fund them. So in November 2010 the International Monitary Fund (IMF) and European Central Bank intervened in Ireland to supply around €80 billion in loans to enable the bank bailout to continue. As usual with IMF imposed austerity policies, the barrio of the oppressed
Today, Ireland is littered with ‘ghost estates’, half built housing complexes that clutter up the countryside, houses built for a population that either never existed or that has long since emigrated. The huge percent of workers employed in contraction are either unemployed or gone to London and New York. With the property tax gone, public services are collapsing and new taxes on pay are being imposed on workers, many of whom have had large pay cuts. As workers find themselves with less and less to spend the bars, restaurants and hair dressers are shutting down, leading to further unemployment.
So how are ordinary working people taking this in Ireland? The sad truth is that people are mostly seeking individual solutions like switching to thrift stores and emigrating. Alongside this a dog eat dog attitude has been encouraged which results in everyone thinking they should be cut alone but those ‘others’ should be cut. Single mothers are turned against public sector workers, public sector workers against the unemployed and so on. These sorts of attitudes have been strongly encouraged on talk radio, in particular the state owned sector.
In comparison with the US, Ireland is still quite strongly unionized. Around 30% of workers are members of trade unions (aka labor unions), although this percentage is very much higher in the public sector then amongprivate sector workers. As might be expected, the only large scale collective response to austerity measures has been organized by the trade unions; three sizable national demonstrations, each seeing 100,000 + workers taking to the streets, and in November of 2009 a one day strike of the entire public sector, 250,000 workers in total!
Yet the leaders of the trade unions have only seen the purpose of these demonstrations of potential power as strengthening their hand at the negotiating table. The national strike was followed by a work to rule, which led to huge work backlogs in key areas like the Passport Office. But the union leaders called this off in return for what is called the Croke Park Agreement. This promised no further pay cuts or compulsory firings in the public sector in return for a deep destruction of existing working conditions for existing public sector workers and substantial additional pay cuts for any new public sector workers.
Public sector workers voted for this deal in most unions, and the will to resist by strike or other industrial action evaporated. The consequences are that not only were the already existing pay cuts successfully imposed, but a message was sent to the employers and government that workers would probably accept further rounds of cuts. A message confirmed in Ireland’s most recent general election earlier this month, when most people voted for parties that favor implementation of the ECB/IMF deal.
What may put a stop to this is the sheer scale of the bailout. Even many mainstream economists think it will be impossible for Ireland to make the interest payments on the tens of billion borrowed to bail out the banks. Some advocate that Ireland should therefore default on the loans now. But no section of the Irish ruling class support such a move because their interests are completely tied up with the European capitalist class who lent the money in the first place. The far left and anarchist movement in Ireland is very small, but these conditions create a huge vacuum around the issue of default which ideas from the far left may fill.
Written for and published in the Defenestrator issue 51 (Philadelphia newspaper), Feb 2011
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