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Wednesday, April 13, 2011

Ireland's unfair society of insiders and outsiders

Ireland is no longer a society mainly marked by the division between rich and poor but it is an unjust society of insiders and outsiders.

The insiders can be multimillionaire lawyers and public staff with premium pay, pensions and job security, while the outsiders, without the support of powerful vested interests, are on their own.

In Ireland today, the vested interests are part of the machine politics system; from traditional trade unions on the Left to their counterparts on the Right representing wealthy medical consultants and lawyers, they make common conservative cause in opposing reform and change.

The main culprits of the cataclysmic dénouement have got gilt-edged meal-tickets for life and David Begg, the general secretary of the Irish Congress of Trade Unions, who was a director of the Central Bank from 1995 to 2010, like the bankers, rejects any personal responsibility for the banking crash.

As for the employers' body IBEC, we said last February that it may seem strange that given the ostensibly pious aspirations for reform of both the "the country and the economy," that IBEC director general, Danny McCoy, would avoid the issues of reform of the protected private sector which imposes more cost burdens on business than for example commercial rates.

What is striking is that some people are outraged by perceived unfairness when it's seen from afar but not so when it's close by.

In the Financial Times today, Lorenzo Bini Smaghi, executive board member of the European Central Bank argues that Ireland should share the pain of the banking crash.

This has prompted a thread on the Irish Economy blog, which I have responded to.

I would agree that Bini Smaghi's general tone is akin to a red rag to a bull but I return to an old refrain on we seeing what suits us.

The Irish Examiner in an editorial today hits out at the Allied Irish Banks' signal that it would be “reasonably generous” on severance packages. The newspaper says figures based on up to eight weeks pay per year’s service, plus statutory redundancy, were bandied about yesterday:

“One of the most provocative things about our economic collapse is the inequity of it all. Some people seem unaffected yet others struggle to survive.

Figures like those suggested at AIB are unheard of in most of the economy. They are even more bizarre when you consider that the bank depends on taxpayer bailouts for funding. Payments on this level would add to the sense of injustice simmering right across this society as they are the exception rather that the rule. A similar argument can be made about semi-state staff expecting windfalls if those companies are privatised.

AIB staff from the boardroom to the cash counter may not like to hear it but sooner or later the Government is going to have to take a stand on creating a more equitable society and this is as good an issue as any. It is not about punishing bank employees but about redressing some of the terrible wrongs in this country.”

In contrast with the United States, the largely invisible unemployed in conservative Ireland  and the issue of the development of a credible jobs strategy, evoke tepid reaction compared with the heat generated on burning bondholders.