Brexit and a Global Slowdown Could Throw Ireland in to Recession

A no deal Brexit could cost 100,000 jobs  Source

From Joan Collins
Dublin

A storm cloud called Brexit hangs over the island of Ireland. The Irish government estimates that a hard Brexit could cost 50,000 jobs here in the south and another 40,000 north of the border. A so called ‘soft ‘ Brexit, while less damaging, would also have serious consequences. The tendency towards an integrated all-island economy would be cut across with one part of the island in the EU and the other not. 

Brexit will also have consequences for the Good Friday Agreement. The GFA was never any sort of a settlement of the national question in Ireland. It merely stuck a sticking plaster on a very divided society in the North. The divisions have not gone away. The Agreement was based on a continuation of the sectarian divide as is devolved government. The Brexiteers never gave, and still have not, any consideration to these issues.

Brexit, or indeed a combination of Brexit with a developing downturn in the world economy could well mean a recession in the economy of southern Ireland. The economy began to recover in 2014 after the disastrous crash in 2008. Ireland was able to exit the Troika bailout not because of the brutal austerity imposed from 2010 onwards, which actually deepened the crisis, but because of the policy of buying government debt (OMT) introduced by the ECB to prevent a possible default by Italy  or Spain.

This enabled the Irish government to re-enter the international bond market, borrow cheaply and pay off its bailout loans. The economy has been growing at a rate of about 4% a year, the highest in the EU. An accurate figure for GDP growth in Ireland is difficult due to profit shifting by major multi-nationals based here. However, all the economic stats point to a growing economy.

Unemployment is down to almost 4%. Wages have begun to rise in certain sectors, now 10% above 2007 levels. However one in five workers are officially below the living wage, and more workers today say they need more hours than in 2007. Particularly affected by low pay, low hours and precarious work are women, young workers and migrant workers.

There is a continuing legacy of austerity. One in three children live in consistent poverty or at risk of poverty. There is a massive housing and homelessness crisis and a healthcare system that is in permanent crisis.

There are 100,000 on waiting lists for public housing that doesn’t exist. Funding for public housing was cut by 78%between 2008 and 2012. In reality, public housing was abandoned as a policy in the 1980s. There has been a 200% increase in the number of homeless families since 2015. There are 10,000 people in emergency accommodation, one in three are children. The housing crisis is not unique to Ireland. International capital has identified the private rental market and sky high rents as a quick and easy way to make massive profits.

There are 556,000 on waiting lists for the public health service. The population of our so-called republic is under five million. There are less beds in the system now than in 1980 despite a one-third growth in the population since then. You can of course jump the queue and get immediate access to a consultation or bed if you can afford it. A new plan for universal free healthcare, called Slaintecare, has been agreed by the Dail but it will be opposed by the vested for profit interests which blocked such proposals in the past.

Another legacy of austerity is the struggle for pay restoration in the public sector. During the bailout, public sector workers had a pay freeze, cuts in or abolition of allowances, increases in their pension levy, and lower pay for new entrants imposed on them. Among the worst affected are rank and file members of the defence forces who relied on on-duty and overseas service allowance to make up for low pay. There has been an exodus of soldiers, sailors and air crew to such an extent that two major naval vessels are now tied up in port because there isn’t the crew to sail them.

The public service unions and the government have done a deal for pay restoration over time, but there have been strikes or threatened strikes by the police, teachers, nurses, ambulance crews and hospital support staff. These have been mainly one-day affairs followed by negotiations. Union density in the private sector has fallen to below 10% and strikes are non-existent as yet.

On the political front there has been a certain stability. Obviously, exiting the bailout and a growing economy have been important factors but so has in a  contradictory way, Brexit. The current government is a minority government led by Fine Gael, one of the main right-wing parties, supported in a ‘supply and confidence’ arrangement with the other right-wing party, Fianna Fail. It has lasted now for three years and the key factor preventing an election has been Brexit uncertainty. Once this is removed there will be an election, likely in the spring of next year.

An election will not change the basic arithmetic of the Dail. It may be a Fianna Fail minority coalition with Labour and the Greens, supported by a new supply and confidence deal with Fine Gael. Whatever the shape of a new government it will be unstable and very likely short lived. At some point the bourgeois are going to have to bite the bullet and force a coalition of the two right wing parties to form a majority government.

This opens up the question of perspectives for the left. Since the foundation of the state, politics and government have been dominated by Fianna Fail and Fine Gael; often receiving in excess of 80% of the vote. The Labour Party, dominated by a conservative and opportunistic leadership has never been able to challenge this duopoly. However, today the right have just 50% or so of the popular vote, with the balance going in all directions as people looked for some sort of an alternative. 

This has seen the rise of Sinn Fein, to about 15%, independents, both right and left, 15 to 20%, Labour 5%, and then small left parties, Solidarity (SP), PBP (SWP), Independents4Change and the Social Democrats. The existing left is highly fragmented and even the inclusion of Sinn Fein and Labour is problematic. Sinn Fein is actually a petti-bourgeois nationalist party, similar to the SNP and has gained a certain working class base by adopting a left posture. While there are some good left activists in its ranks, the leadership strategy is to be in government north and south and they are prepared to enter as junior partners to the right parties to achieve this.

Labour is toxic to the average working class person given its role in government from 2011 to 2016, the worst years of austerity to pay for a bailout of the banks. The recent local elections were a disaster for Sinn Fein who lost half their council seats. Solidarity/ PBP fared even worse losing three- quarters of theirs.

A significant, broad based left capable of challenging the right will have to come from elsewhere. I believe it will come from developments in the unions and a new wave of class struggle. To this end I am involved with a layer of activists looking to those unions who broke with Labour and the social partnership consensus in ICTU, and in particular, Unite. We have formed a political branch of Unite the Community with a view to preparing the ground for a new movement of the working class, both industrial and political with strong community links.