Financial bailout and capitalist austerity drive in Ireland

Union leaders sell out as banks are bailed out

JM Thorn

5 April 2010

The public service deal coming on the same day as the commencement of the transfer of loans from the banks to NAMA provided a stark illustration of the way the Irish ruling class is dealing with the county’s economic crisis. On the one hand workers are asked to make to make unprecedented sacrifices, while on the other the people most directly responsible for that crisis, the bankers and developers, are bailed out to the cost of tens of billions of euros. At its most basic this involves a huge transfer of public resources from the one class of people to another, from labour to capital. It has to be emphasised that, despite denials, there is a direct link between the public service deal and the bank bailout. This is because they both draw from the same financial pot of public expenditure. Every euro that goes to the banks is a euro less in the wages of a worker, a euro less in a pension, a euro less in benefits, or more generally a euro sucked away from public services.

The financial bailout is an act of grand larceny. But what is particularly outrageous is that the whole thing is being aided an abetted by the trade union leadership. The deal on public services they negotiated is just a means of facilitating the transfer of public resources to the banks. However, given their record over recent years, this shouldn’t come as a surprise. Indeed, the basic structure of the deal was already in place back in December with the aborted agreement on unpaid leave. That involved the complete overhaul of working conditions for public sector workers in exchange for mataining pay rates. Now we have essentially the same deal with the pay cuts announced in the last budget already in place. Given that ICTU had so recently lunched a campaign with had the stated aim of reversing the pay cuts, the outcome of the negotiations between the trade union leadership and Government officials can only been seen as a complete betrayal.

Under the terms of the agreement the Government has given a commitment that there will be no further cuts in public sector pay until 2014 at least. However, there are no specific guarantees on reversing the pay cuts announced in the budget. There will only be a review of pay in the spring of next year and the following two years. These reviews will take account of any savings made through the implementation of an agreed “reform programme” and determine if there is any scope for reversal of pay cuts. To generate savings that could produce movement on pay trade unions have agreed to a total overhaul of working practices and conditions throughout the public sector. The major elements of this “reform programme” include:

A substantial reduction in the number of people employed in public services, to be achieved through redundancies and the continuation of recruitment freeze.

The ending of demarcation lines between staff in the Civil Service, HSE and local authorities to create a unified public service labour pool. Under this system staff could be forced to accept redeployment even out of their profession.

The introduction of new arrangements for extending the core working day in the health sector that could see certain grades of staff lose out on existing overtime or premium-rate earnings.

The ending of the link between pensions increases and pay rises for staff. This is to be the subject of negotiations next year, though it has already been agreed that existing pension arrangements will not cover new entrants.

The deal also contains an industrial relations peace clause. No cost-increasing claims can be made for improvements in pay or conditions for the duration of the agreement while strikes or other forms of industrial action in respect of matters covered by the deal will be banned. Any disputes that do arise over the implementation of the reform programme will be resolved through binding arbitration.

Despite throwing away the hard won conditions of workers and failing in their stated aim of reversing pay cuts union leaders presented the public service agreement as an advance. According to SIPTU’s Jack O’Connor it was “deal for unprecedented circumstances”. Rather than resisting the deal he urged workers to “adopt a more strategic medium- to longer-term approach”, arguing that it would produce security provide security on jobs, pay and pensions and provide a mechanism for reversing pay cuts. He also employed the phoney patriotic argument that taking industrial action while “still living in a ruined economy” would be “an attack on the citizens of the country”. Given his treachery towards the people he supposedly represents, and his effective collaboration in the bank bailout, this was really scrapping the barrel. Impact’s general secretary Peter McCloone said that public services were facing serious threats “…and the way we have been managing that up until now has brought us into conflict.” For him the agreement represented “an alternative to the industrial conflict”.

The statements from O’Connor and McCloone reveal the mentality of people who are totally immersed in social partnership. They don’t see themselves as representatives of labour, but rather as partners of the Government and employers in pursuit of some national objective. They cannot envision an independent role for trade unions let alone one of opposition. They are horrified by the prospect of industrial action and the breakdown of social partnership. This is reflected in the warning issued by ICTU public services committee secretary Tom Geraghty that the only alternative to acceptance of the new public sector deal is to “engage in a prolonged, sustained and very high level war, industrial relations war.” Of course ICTU has no intention of engaging in such action, it is empty bluster to push its members to wards acceptance - for what trade unionist could believe that action under the current leadership could end in anything but defeat.

However, there is a class war going on in Ireland – it is the one being waged by the Government and employers to force the working class pay for the economic crisis. The response of the trade union leadership is to try and win some peace by surrendering to all their demands. Yet given the depth of Ireland’s economic crisis even surrender won’t be enough. The government is still targeting €2bn of cuts in the current budget in both 2011 and 2012 and a further reduction of €2.5bn in the following two years to bring the deficit back from 11.7 per cent today to below the European Union target of 3 per cent of GDP by 2014. But even these sums pale when but against the escalating cost of the financial bailout. To pay for NAMA and the re-capitalisation of the banks will require even more cuts in the years to come. In these circumstances a reversal of pubic sector pay cuts is unlikely. Indeed, after 2014 the Government will be looking to reduce pay further.

There has been a hostile reaction to the public service deal, and it is not impossible that it could be rejected in the upcoming ballots. This would be a positive development, but it would not be enough in itself to alter the direction of the trade union movement. We know that the current leadership are no respecters of democracy and will resort to threats and coercion if the vote goes the “wrong” way. To make a real change we have to build a movement that can challenge and remove the likes of O’Connor and McCloone and restore the trade unions as independent organisations of the working class. This is a formidable task, but it essential if workers are to defend themselves against the onslaught that has been unleashed.