|
The
Needs and Wants in a Reunited Ireland
Introduction
Ireland is
not alone in its inability to find a sustainable balance between the
needs and wants of its people or, in other words, how to provide for
a just and equitable society. Granted, it’s not an easy task in
democracies with loosely regulated capitalist systems that allow for
the unfettered private ownership of wealth and at the same time
tolerate homelessness, hunger and enforced depravation.
Providing for the needs of people in distress in a
democratic setting is an intricate balancing act with many pitfalls
to navigate, nonetheless there is one overriding factor that must
prevail, an individual’s human right to shelter, food and clothing
and in today’s modern societies, education and healthcare. The
question is --- how much of this burden must be borne by the
individual and conversely how much by the state.
On the other hand, controlling the wants of people
in a democratic setting is fraught with contradictions including the
economic freedom to prosper and accumulate wealth and at the same
time the responsibility to ensure that the national wealth is not
too heavily skewed to the top tiers of society. The upshot of
economic freedom should not be a society of haves and have nots.
That being the case, how much of the national wealth should any
individual control and when is it time to say to the hoarders of
wealth, enough is enough?
These are the issues that must be dealt with if
social cohesion and economic equity is to be achieved and sustained
going forward, be it in a divided or a reunited Ireland.
Living Wage
Nowadays
there is much emphases placed on a living wage as the answer to many
of society’s ills and shortcomings. So far, no country has enacted
meaningful living wage legislation. Some countries have toyed with
the idea while others have discussed it. Those countries that have
narrowed the gap between a minimum wage and a living wage generally
do provide for a better quality of life for its citizens and suffer
fewer social ills and discontent.
In Ireland, the living wage is a cost of living
calculation based on a 39-hour work week for a given location that
provides workers and their families with a decent standard of living
and a pathway to economic security. The calculated living wage for
2024 was €14,80/hr. The calculation included the cost of food,
housing, healthcare, education, transport and clothing.
Chick here to view the official living wage
calculation
The reluctance of government to legislate for a
living wage is due to the fact that it comes with caveats including
stress on small businesses, outsourcing by large companies,
increases in the cost of goods and services, reduced employment,
increases in the underground economy and reduced tax revenue.
Still, in a well-managed economy, governments can mitigate many of
these negative aspects with tax and other financial incentives.
Minimum Wage
In
Ireland, the minimum wage is a government imposed mandate that is
adjusted annually according to
Purchasing Power Standards. The mandated rate for 2024 was
€12.70. The rate is reduced for those under 20 years by 10% for
every age bracket down to seventeen. Approximately 190,000 workers
out of a total workforce of 4.72 million work for the minimum wage.
When first introduced in 2000, the rate was set at €5,85/hr.
After accounting for inflation and changes to the cost of
living, the actual increase in real terms from 2000 t0 2024 was only
31% or €1,75.
The minimum wage is not a mandate to reduce
poverty although it mitigates its effects. It’s a mandate that
applies to all employers and workers across all sectors of the
economy. Its purpose is to prevent the exploitation of workers by
unscrupulous employers who, given the opportunity, would withhold
wages or require employees to work extra time for free or engage in
some other nefarious scheme to cheat workers.
Although the minimum wage is not specific to low
pay workers, they are the demographic that benefit the most from its
implementation. They are also the demographic most likely to be
included in one of the following poverty categories 1) the
899,000 who experience enforced deprivation, 2) the 700,000 who are
at risk of poverty and 3) the 185,000 who are living in consistent
poverty.
Enforced depravation and its spreading ramifications.
According to the
Central Statistics Office “People are defined as experiencing
enforced deprivation if they live in a household that could not
afford two or more of the 11 basic deprivation items that are
considered to be the norm for other households in society”.
Poverty in all its forms including enforced
depravation is not limited to poorer neighborhoods or remote rural
areas. It has crept into middle class neighborhoods due to the high
cost of living compounded by the need to maintain a decent quality
of life. As a result, many middle class families are experiencing
some form of enforced depravation as defined above. If decisive
government action is not taken to tackle the causes, the economic
mobility curve for the middle class will reverse course and begin to
trend downwards.
Wealth and income inequity.
As has
been discussed in a number of other articles on this website, the
tax code needs to be revamped to address inequities in the tax
system. The tax burden levied on the middle class appears to be out
of kilter with that levied on wealthy individuals who seem to evade
a tax burden commiserate to their income and wealth. The reason for
that is attributable to tax loopholes available only to the wealthy
that allow for the unfettered accumulation of wealth.
One would imagine that in a country where poverty
exists at a much higher level that it should, a limit would be
placed on the accumulation of wealth by individuals so as to set the
stage for a more equitable distribution of the national wealth.
There must be a point in time when to squeeze the wealth curve at
the top end and force more of the national wealth downwards to the
working and lower classes, many of whom are struggling to eke out a
living.
If placing a limit on the accumulation of wealth
is the only way to achieve a more equitable society it must be made
thoughtfully and responsibly to ensure that it does not hinder
entrepreneurship or the right to just rewards for hard work,
innovation or smart investing.
Over-dependency on multinational corporations
The
oversized impact multinational enterprises (MNEs) have on the Irish
economy is worrisome and poses a hidden threat to the viability of
the overall economy. According to the Central Statistics Office “only
about 3% of enterprises in Ireland were owned by foreign MNEs in
2022, these enterprises accounted for 71% of the total turnover
(€921 billion) and Gross Value Added (GVA) (€301 billion), and 27%
of employment (623,128 people) in the Irish business economy. The
impact of enterprises owned by foreign MNEs was particularly notable
in the Industry sector, where they made up 88% of turnover, 87% of
GVA, and 48% of employment despite comprising only 5% of enterprises
in the sector”.
In the past, successive government had convinced
themselves that attracting MNEs to Ireland was all it took to build
a robust and resilient economy. They should have figured out a long
time ago that MNEs are the proverbial icing
on the cake, not the cake. A pullout of MNEs due to export
tariffs or other reasons beyond the governments control would be a
disaster for the Irish economy and for the individuals impacted.
Such an eventuality would surely increase the poverty rates and, if
severe enough, lead to social unrest.
In an era of uncertainty when the world order is
changing rapidly due to the rise of homophobic populism and
anti-globalization that stress economic and military alliances,
Ireland could very easily find itself in the crosshairs of unwanted
global trade realignment and protectionism. Irelands over-dependence
on MNEs to fuel its economy is due to the lack of vision, misplaced
political hubris and economic ignorance on the part of government
planners.
What needs to be done now.
What
should have been done and needs to be done now, is one and the same.
Successive governments, in their haste to bring MNEs to Ireland,
were blinded to the need for a substantial broad based domestic
economy to guard against the sudden pullout of MNEs due to external
economic forces. The lack of good economic planning is a serious
vulnerability that Ireland must now deal with if it is to survive
the consequences of economic events beyond its control, otherwise it
may find itself back in an economic morass similar to that that
existed before the era of the European Union.
There is no easy or short term fix to the
oversized role MNEs play in the Irish economy. The best that can be
done at this time is to provide the MNEs with a safe, accommodating
and business friendly environment and a highly educated and skilled
workforce to draw on.
To ensure long-term sustainability, the government
must develop a new plan that preserves the existing economic system
while building a solid, self-sustaining domestic economy that
remains viable without reliance on MNEs. To do so, the government
must establish an agency similar to the IDA, or else redirect the
IDA’s mission to spearhead the expansion of existing domestic
enterprises and to identify and fund the development of new high
tech enterprises geared to the 21st century. Going forward MNEs
must play second fiddle to domestic enterprises.
In addition to that crucial mission, the
government must also update its agricultural policy to increase
exports and reduce imports in a way that is less damaging to the
environment than the existing system. It also must ensure
self-sufficiency in food production as a hedge against climate
change or supply chain disruptions. All said, Ireland must move
towards a foundational economy.
Conclusion
In a
reunited Ireland described on this website, wealth and income
inequality would be one of the priorities put on one of the front
burners for immediate attention. The solution pursued to fix that
problem would be a revision of the tax code to include a wealth tax
and a more equitable distribution of the tax burden particularly for
middle class families.
The enactment of a living wage legislation to
replace the minimum wage would also be on the fast track agenda. The
extra cost to employers as a result if the ensuing legislation would
be partially compensated for by government tax incentives funded by
tax revenue from the implementation of a wealth tax and savings
realized from a reduction in the number of individual requiring
supplemental social assistance to make ends meet.
The overreliance on MNEs to fund the government
and provide high paying jobs is both a blessing and an unwanted
vulnerability at the same time. The blessing must be preserved but
the vulnerability must be mitigated, a task that would be a high
priority in a reunited Ireland setting.
These issues need not nor should wait for a
reunited Ireland. They are pressing issues that need immediate
attention and resolution before they lead to social unrest or worst
still social conflict.
Contributed by TMMTP |
