‘A CALLOUS, UNJUST AND UNCARING BUDGET’ says Irish TUC President Jack O’Connor

Section of the 100,000-strong march in Dublin on November 6th against the Irish government’s attacks on jobs and wages
Section of the 100,000-strong march in Dublin on November 6th against the Irish government’s attacks on jobs and wages

THE President of the Irish Congress of Trade Unions and General President of SIPTU, Jack O’Connor, has attacked Budget 2010 as ‘callous, unjust and uncaring’.

In his response to the budget speech he said, ‘Budget 2010 must rank as the most callous, unjust and uncaring budget introduced by any Minister for Finance since the 1930s in this country.

It represents a merciless attack on working people and on the most vulnerable in our community while the wealthy in our society escape virtually untouched. The only substantive tax measure introduced is a carbon tax, which is another unfair indirect tax which will unjustly penalise working people.

‘The sheer cynicism of this budget and the thinking behind it is evident in the reduction in unemployment assistance to people under 24 years of age. This is clearly designed to encourage our young people to leave the country.

‘We are once again exporting a generation of our youth – our hope for the future – while other countries are doing their best to keep them at home through employment protection, training and back to education schemes.

‘At the very least the Minister could have brought forward some innovative proposals to facilitate commercial State investment in the economy which would not have exacerbated the financial deficit.

‘The remarkable aspect of this budget is its absolute and complete reliance on the free market and pandering to the wealthy in this society. This approach reflects precisely the outlook that wrecked our economy in the first place.’

Finance Minister Brian Lenihan told the Dail earlier in the day: ‘Given that Public Service Pay and Social Welfare each account for about one third of all day-to-day spending, reductions in these two areas are unavoidable.

‘The measures I am announcing today amount to savings of over 1 billion euros on the pay bill, about 760 million euros on Social Welfare, about 980 million euros on day-to-day spending programmes and about 960 million euros in savings on investment projects. Combined with other adjustments, this amounts to over 4 billion euros expenditure savings compared with the pre-Budget estimates.

He added: ‘The government has considered the recommendations of the Review Body and intends to apply reductions to all public servants in the higher pay bands including hospital consultants.

Based on the Review Body’s recommendations I propose to apply a reduction in pay of:

– 8 per cent for those with salaries from 125,000 euros to 165,000 euros

– 12 per cent for those earning between 165,000 euros to 200,000 euros; and

– 15 per cent for those earning 200,000 euros or more.

‘These are permanent reductions which will be reflected in future pension entitlements.

Lenihan continued: ‘It must be acknowledged that public servants have already made a substantial contribution to the necessary reduction in public expenditure.

– The pension levy has reduced their pay by an average of nearly 7 per cent.

– Their numbers have been reduced by the moratorium and the incentivised early retirement scheme and career breaks.

– Like many workers they have forgone pay increases.

‘Unfortunately, more is required. The country can no longer afford a pay and pensions bill that accounts for more than a third of all current spending. Any reduction in the pay bill must be sustainable, must be applied in a progressive manner and must address the position beyond 2010.

‘As the House knows, there were lengthy negotiations with the public service unions in recent weeks. The government wanted to achieve the necessary reductions by agreement and the unions earnestly sought to conclude a deal. I want to thank public service unions for accepting the need to reduce the public service pay bill and their constructive and strenuous efforts to reach an agreement on how this would be done. Regrettably, a deal was not possible.

‘The reductions we must now make do not reflect any lack of recognition of public servants or of the quality of the work they do for all of us. They are simply a matter of budgetary necessity in these extraordinarily difficult times.

‘Accordingly, the pay of public servants will be reduced with effect from January 1st 2010 as follows:

– a reduction of 5 per cent on the first 30,000 euros of salary;

– a reduction of 7 per cent on the next 40,000 euros of salary; and

– a reduction of 10 per cent on the next 55,000 euros of salary.

‘The reductions range from 5 per cent to 8 per cent in the case of salaries of public servants of up to 125,000 euros.’

Lenihan continued: ‘The government has decided to introduce a new single pension scheme for all new entrants to the public service. The legislation will be introduced in 2010 and the scheme will be in place by the end of the year. . .

‘This will be more equitable than the present system which favours those with higher earnings later in their careers. The minimum pension age for new public servants will also be increased from 65 to 66 and then linked to increases in the state pension age.’

He continued: ‘For new applicants, the rate of Job-seekers Allowance and Supplementary Welfare Allowance for persons aged 20 and 21 years of age, who have no dependent children, is being reduced to 100 euros per week and for those aged between 22 and 24 to 150 euros per week; and

‘– for all other cases, the rate will be reduced to 150 euros per week where job offers or activation measures have been refused.

‘In making adjustments to Social Welfare rates, we recognised that consumer prices have not declined at the same rate for all groups. Older people have experienced by far the smallest reduction in living costs. For that reason and in recognition of the contribution they have made to the State the government has decided to leave the State pension unchanged.’

On Child Benefit. Lenihan said: ‘In the Supplementary Budget, I raised the issue of the unfairness of paying the same level of benefit irrespective of the level of income of the recipient. Not only is this unfair but it is also unaffordable in current circumstances. Child Benefit this year will cost 2.5 billion euros or 12 per cent of Social Welfare spending. . .

‘Accordingly, the lower and higher rate of Child Benefit will be reduced by 16 euros per month, bringing these rates to 150 euros and 187 euros per month respectively. . .

‘Social Welfare spending rose in 2009 to 20.4 billion euros. The measures announced today will reduce Social Welfare spending by 760 million euros in 2010.’

Main Points of Lenihan’s Budget 2010 are:

• Social welfare payments will be reduced by 4.1 per cent

• Child benefit reduced by 16 euros per month

• Jobseekers’ Allowance reduced to 100 euros a week for those aged 20 and 21 with no children, and to 150 euros for those aged between 22 and 24 and in cases where job offers have been refused.

• Tiered pay cuts for public servants – 5 per cent on the first 30,000 euros of salary, 7.5 per cent reduction on the next 40,000 euros and 10per cent on the next 55,000 euros of salary

• Public servants’ pensions to be linked to average salary across career, rather than final salary

• Excise duty on alcohol reduced – 12 cents cut on beer and cider, 14c cut on a measure of spirits, 60c cut on a bottle of wine

• 50c charge for every medical card prescription from April

• Carbon tax of 15 euros per tonne – petrol to go up by 4.2c from midnight, and diesel up by 4.9c. This will mean a big increase in all heating costs

•Hospital consultants will see their pay cut by up to 15 per cent

• People with a certain level of assets at home and abroad will have to pay 200,000 euros per year to maintain their Irish passport

• New ‘universal social contribution’, which will replace employee PRSI, the Health Levy and the Income Levy

• The minimum pension age for new public servants will be increased from 65 to 66 – then linked to increases in the State pension age.

The Irish TUC is expected to call strike action, including general strike action against the Irish government’s savage cuts, the price for propping up the Irish banks.

The Irish budget is also a warning to British workers about what they are about to receive after next May’s general election, or even before if the world crisis of capitalism worsens.