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Government On Holiday As Economy Crashes...

TDs 'cut and run' as 3,000 jobs a week lost

Action on Bord Snip to be delayed as public sector gears for the fight...


The silent destruction of the real economy will continue virtually unchecked for a further six months, during which time TDs will enjoy a three-month summer holiday and the Government will prepare to re-run the Lisbon Treaty referendum.

In that six months, a further 100,000 jobs will be lost, bringing to an unprecedented 500,000 the number of private sector workers now out of work -- a staggering 90 per cent increase in just a single year of an unrelenting economic crisis.

The report of the Expenditure Review Committee, also known as An Bord Snip Nua, has now been submitted in draft form to various Government departments.

It makes recommendations in relation to cuts of up to €5bn in current spending to eliminate a deficit of €15bn, of which €6bn relates to bailing out the banks.

The report will be officially presented to Finance Minister Brian Lenihan on Wednesday, but will not go to Government for a further week, or possibly a fortnight.

The report may be published before the end of summer. However, a Government decision on what action it will take on foot of the report's recommendations will not be implemented for six months, during which time private sector job losses are expected to soar past half a million.

Without publicly admitting it, the Government has embarked on a strategy of allowing up to 3,000 private sector job losses a week -- with its attendant devastating social consequences -- as part of a long-term aspiration to increase competitiveness and return public finances to a sustainable position.

Last Friday, Taoiseach Brian Cowen effectively admitted that Government policy was to accept surging unemployment when he said: "There is no avoiding the difficult adjustment that needs to take place in the labour market. Costs have to fall and the level of employment in certain sectors -- in particular the construction sector -- was not sustainable."

The Expenditure Review Committee has examined the current expenditure programmes in each department and has made recommendations for "reducing public sector numbers".

It has also made recommendations on the "re-allocation of staffing or expenditure resources between public service organisations, as well as further rationalisation of State agencies".

It is expected the report will be published before the second Lisbon referendum in the autumn, despite the objection of some in Cabinet, notably Foreign Affairs Minister Micheal Martin, who fears that the proposals might cause protest to such an extent that the referendum could be defeated a second time.

Currently 350,000 people are employed in the public sector at a cost of over €20bn a year; this translates into a million votes when family members are factored in.

As such, the public sector represents the largest single lobby group in the country, wielding what many observers believe to have a disproportionate influence over decisions taken by the Government, which is itself largely dependent on the civil service, in particular, to function.

To meet its stated objective, the elimination of a €15bn deficit, the committee, which also comprises high-ranking civil servants, is thought to have made far-reaching recommendations which, if implemented, are certain to be met with resistance within the public sector.

The chairman of the committee, UCD economist Colm McCarthy, is known to be a strong critic of the operation of sections of the public sector, describing it six years ago as a "parallel universe, suspended in space somewhere".

Publication of the report will reveal whether he holds the same view having examined the public sector for nine months, in the company of senior civil servants either on or advising his committee.

Mr McCarthy is on record as stating his belief that a "peculiar feature" of the public pay review process is that no notice is taken of pay relativities with other countries, and the resulting anomalies. He feels there is "no justification" in many senior public officials now receiving pay well in excess of their counterparts in other jurisdictions.

He has said that there is "something redolent of Soviet-era central planning about Irish procedures for determining public pay." Pay rates and conditions, he believes, are highly centralised. "Bolshevik-style central bodies determine the minutiae of pay and conditions for 350,000 employees nationwide."

"If the private sector were run this way, it would seize up." he says. "No reliance is placed on the normal workings of supply and demand in the market -- the ultimate arbiter of pay in the [largely non-union] private sector.

"There is no reason, though, why a less Bolshevised system of pay determination in the public services could not be introduced. State agencies, including Government depts, local authorities, schools and hospitals could be allocated annual budgets and left free to negotiate their own pay deals -- reflecting supply and demand conditions in their own regions and in the specialised labour markets in which they operate."

Mr McCarthy also believes it is time to encourage greater mobility between the two sectors, a process which would help to ensure that public and private pay stayed in line, without the benefit of benchmarking bodies and the like.

Mr McCarthy believes an increase in competitiveness in the public sector could be achieved by trimming back on what he has called an "explosion in headcount".

The Government's first priority is to reduce the deficit back below three per cent of GDP by 2013, striking a balance between what it calls "sustaining economic activity" in the short-term and making a credible start on the "difficult adjustment required".

The Taoiseach has said: "We have taken some difficult decisions on both public spending and taxation, and more difficult choices lie ahead over the next few years."

The second part of the Government strategy is to restore stability to the banking and financial systems: the third, to restore competitiveness and return to sustainable economic growth. The Government says the final part of its strategy is to maximise employment in the short-term and help those who lose their jobs.

Last Friday, the Taoiseach said: "This week's Live Register figures show the scale of the challenge, and the best pathway to sustained job creation and economic growth is to regain competitive advantage in the market place by doing whatever is necessary to retain and regain market share in an environment of depleted demand."

Mr Cowen believes that creating job opportunities for the unemployed will only happen when the country's finances have stabilised, the banking system has become more sound and sustainable growth has been achieved "based on a competitive and innovative economy".

He said: "Despite what some people claim, there is no short-cut or easy solution. The adjustment is, and will continue to be, difficult. The Government is working with the social partners to try to manage that adjustment... but we will not try to fool people into believing that difficult decisions can be avoided."



Report by JODY CORCORAN - Sunday Independent

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