Thousands of Irish public sector workers marched in Dublin and other cities on Friday to protest at government plans to cut pay and employment in next month’s budget.
The Irish Congress of Trade Unions, which organised the so-called day of action, called on Brian Cowen’s centre-right government to abandon threats to hit public sector workers as it seeks €4bn in savings to hold the ballooning budget deficit in check.
Government officials say even with the savings it will still have to borrow 12 per cent of national output next year, which is four times the limit set by the European Union’s stability and growth pact for countries joining the euro.
Ireland, the first eurozone country in recession, is facing the biggest economic contraction of any advanced economy, according to the International Monetary Fund.
But the ICTU warns the cuts will deepen the economic slowdown, and wants the planned fiscal adjustment extended over a longer period.
David Begg, ICTU general secretary, said: “By deflating the economy so quickly and strongly, they will push it towards a prolonged slump.”
Police estimated the Dublin protest was supported by 20,000 marchers. Several voiced anger that Irish banks had been bailed out yet ordinary workers, many facing negative equity where the value of their homes was less than their mortgages, were being asked to take pay cuts.
“This policy of cutting back, and robbing ordinary people to suit German bondholders is not working and we should stop it,” said one man.
Another marcher said: “Let’s be honest about it. We had a pyramid selling scheme here, where the last suckers in, are now up to their necks in debt after buying houses, where the developers, the politicians and the bankers seem to have a free run.”
Mary Coughlan, enterprise trade and employment minister, said: “Everyone is having to take a cut in their standard of living.” She suggested savings could be achieved through workers agreeing a temporary wage freeze, and more flexible work practices. But she said that would require “a seismic change” in attitudes. She said: “If people are not prepared to do that, then at the end of the day the government is going to have to make a decision.”
The Organisation for Economic Co-operation and Development warned this week Ireland had to stick to its plan to bring the deficit below 3 per cent of gross domestic product by 2013, rather than 2017 as the ICTU was urging.
Angel Gurría, OECD secretary general, told Brian Lenihan, the Irish finance minister: “The problem is you may not have that time, Mr Minister. The markets are zeroing in on countries.”
Ireland’s public sector is not large by EU comparisons. But because of the collapse of tax receipts following the property crash, the cost of salaries and pensions for the 300,000 public sector employees is projected to consume half the country’s tax revenues. Public employees were hit with a levy on pension contributions in February, which amounted to a 7.5 per cent cut in take home pay. The government is now understood to be looking for a further €1.3bn ($1.9bn, £1.2bn) cut in the public sector pay bill. Bill Roche, professor of industrial relations at University College Dublin, calculates this will mean either a 5-7 per cent pay cut or 30,000 job losses.
But Sean Murphy, a spokesman for Chambers Ireland, echoed many in private sector businesses who believed the public sector could not be immune from the current downturn.
“What the public sector employees need to realise, is they’re not on danger money, they’re in secure jobs, the 7 per cent pension levy was a relatively fair contribution to sustain their pensions when all private sector pensions have been in the toilet in the last few years,” he said.