May 2013        

The capitalist crisis and the demolition of workers’ rights


■ This article presents a short overview firstly of the capitalist crisis as it relates to Ireland and then of the effect of the crisis on the Irish working class.

The capitalist crisis in Ireland

In responding to the capitalist crisis, the chosen strategy of the ruling political class, assisted by the EU, ECB, and IMF, is “austerity”: lowering the cost of production to the point where profitability begins to increase, and re-establishing economic growth. This strategy manifests itself in the cutting of jobs, the freezing (or cutting) of wages, the closing of businesses, and the ending of investment to reduce the cost of capital. In this regard, the ruling political class are having some success.
     A useful proxy for competitiveness is an economy’s current account—the broadest measure of trade with the rest of the world. After significant deficits in the early years of the recession, Ireland now has a current-account surplus of €2,851 million. It recorded a current-account surplus of 2.1 per cent of the country’s gross domestic product in 2012.
     While austerity has weakened household demand, it has turned around profitability, through weakening social-welfare payments, paring public-sector wages, raising the retirement age, adding additional tax burdens on labour, selling state assets, and so on.
     A study published in November by Berenberg, a research group in Brussels, found that unit labour costs fell by 10.3 per cent in Ireland. In comparison, in the entire euro area they increased by 1½ per cent. Again this has all helped to raise profitability in 2012.
     Alongside Estonia, Ireland has seen one of the biggest recoveries in profitability. It has achieved this for two reasons.
     Firstly, reducing unit labour costs in production has a much greater effect on growth and profits in an economy like Ireland’s in which annual exports are equal to 100 per cent of GDP.
     Secondly, unit labour costs were cut more easily because of emigration. Many Irish workers, particularly the young and the skilled, left for Britain, Canada, or Australia. Indeed there has been a significant turnaround from net immigration (with Irish people returning home to a fast-growing “Celtic tiger” economy before the crisis) to net emigration.
     It should be noted that some of our comrades on the left believe that the continuing crisis is a result of the policies of austerity being pursued. In this context, alternative Keynesian policies of fiscal stimulus are preferred.
     Communists, however, are of the view that neither of these is particularly favourable for Irish workers. Austerity means a loss of jobs and services and therefore of income; Keynesian policies would mean expanding the money supply, a loss of real income through higher prices, a falling currency (if the option of devaluation was possible), and eventually rising interest rates.

Demolition of workers’ rights

The position of the Irish working class has undergone a fairly marked and progressive decline over the past thirty years. Unlike most European countries, there is no statutory right to trade union recognition, and, again unlike the Continent, there are no statutory works councils.
     The absence of such institutional support in the first case is partly reflected in the significant decline in the level of union membership throughout the private-sector economy since the 1980s. Taken in conjunction with the tendency within the trade union movement from the late 1980s onwards to direct resources into national corporatist arrangements, local-level union organisation has been significantly eroded.
     This has left many workers without a basic organisational capacity to resist the strategy of private-sector employers during the present recessionary period. Since the onset of the economic crisis in 2008, pay freezes have been the norm in the private sector.
     A noteworthy feature of the present crisis is the encroachment on public-sector workers’ rights through the so-called Croke Park Agreements between the state, acting as employer, and the public-sector unions. These agreements have meant significant cuts in workers’ terms and conditions of employment in various streams of the public sector, in turn having a knock-on effect on the public services being provided to workers in the country as a whole.
     The new agreement, if accepted, would facilitate the replacement, to start with, of secure, permanent jobs with outsourcing, short-term contracts and part-time work in the public sector. Precarious low-paid employment will become the norm for the Irish working class.
     It is also desired to have a knock-on effect in the private sector, to facilitate further wage stagnation, increased hours, increased use of short-term contracts, and the maintenance of high unemployment.
     The government’s aim is to make the country more attractive to monopoly capital, especially American capital, which can then use Ireland as a base for exports into the euro zone. They are attempting to make permanent full-time work a thing of the past, to be replaced by a precarious “flexible” work force, where the working week can be whatever the employers need it to be.
     The CPI has characterised this agreement between the government and public-sector unions as a dead end, as handcuffs and leg-irons for public-sector workers. There is nothing in this agreement for workers other than longer working hours, pay cuts, and a worsening of their terms and conditions.
[NC]

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