Questions on the �Celtic Tiger�
I WAS very interested in Kevin McLoughlin�s article
in Socialism Today No.98 on the Irish economy. �Celtic Tiger� economic
development has long been the �Holy Grail� for the Welsh Labour Party
(and just as mythical). Kevin�s article provided a detailed analysis
that I haven�t been able to find anywhere else. But there were two
points that I was not happy about.
Firstly, what was the springboard for the �Tiger�s�
leap? Kevin says that the mainspring was, "the capitulation of the trade
union leadership through social partnership� the growth in strategic
foreign direct investment (FDI) taking advantage of Ireland�s membership
of the European Union (EU) and the existence of a plentiful supply of
cheap labour".
I think he has under-emphasised a vital point. The
inflow of FDI was the driving force for growth. But why did Ireland beat
other EU states in the �beauty contest� to persuade multinationals to
invest in their countries?
Economists from the Cardiff Business School
highlight the low rate of corporation tax (tax on companies� profits) in
Ireland compared with other EU countries.1 In Britain, the
corporation tax rate was around 35% in the 1980s, cut by Gordon Brown in
1999 to around 30%. But the equivalent Irish rate was less than half of
that of Britain, Netherlands, Spain or France and a third of that of
Germany. The effective tax rate on US companies� profits was around a
third of Britain�s. Surely this massive incentive to US and Japanese
capitalist firms to build factories in Ireland was a major springboard
for the Celtic Tiger?
Second, and more important, what has been the result
of the �Tiger� as far as Irish workers are concerned? Kevin mentions the
collaboration of the trade union leadership with the bosses but
does not go into the results of this collaboration. In fact, read in
isolation, his comments on the increase in take-home pay and decrease in
unemployment in the 1990s might be taken by some readers as an
endorsement of the capitalists� strategy. A more complete picture can be
given by some (edited) quotes from The Socialist (paper of the Socialist
Party Ireland).
The 2002 election manifesto asked, �What did ten
years of the �Celtic Tiger� deliver?� and answered: "A housing crisis. A
health service in tatters that even today is not brought up to the
standard of the 1980s. Lack of funding in education. Traffic jams in
every town in the country and the most underfunded public transport
system in Europe.
"At the end of the biggest economic boom in Irish
history, ordinary people are still facing the same problems. And for a
section of the population, the �Celtic Tiger� never even existed: the
15,000 victims of the heroin crisis in Dublin, the hundreds of people
who have no home to go to at the end of the day� The bosses squeezed
more out of us, which meant that their profits went up, and then
squandered the money".
The March 2005 edition of The Socialist detailed
three reports showing high levels of poverty. A UNICEF report showed the
Republic of Ireland with the fifth highest child poverty rates in the
26-member OECD. It pointedly noted that Ireland had reduced its share of
social spending by 5% in the period 1990-2000. Dublin city council
reported that the proportion of the capital�s population living in
conditions of the highest level of relative deprivation increased by
2.4% in the period 1991-2002. Cork city council�s Poverty Profile of the
city in 2002 showed a similar picture. I have been unable to find the
statistics but I am sure that, as in the UK and USA, neo-liberal
economic policies and passive trade unions have meant that the gap
between rich and poor has widened in the past decade.
And in the past few years cheap labour from Eastern
Europe has been used to undercut wages, highlighted by the recent GAMA
scandal and Irish Ferries dispute. Apparently, immigrant labour now
comprises 10% of the Irish workforce � a bitter irony for us in Wales
where Irish workers were used in an identical role in the 19th century.
The Irish capitalist class cannot look forward to
the future with any confidence. The massive growth of the Chinese and
Indian economies is sucking in investment, and what FDI there is in the
EU is likely to go east. Kevin�s article describes the story of the
�best possible case� for the capitalist class of a small country. But
the special circumstances which made that case possible have now
evaporated and the working class still finds itself confronted with the
job of building a force to deal with capitalism.
Geoff Jones,
Socialist Party Wales
1 Irish Luck, J Foreman-Peck and L Lungu,
Agenda (Journal of the Institute of Welsh Affairs), Winter 2005,
pp16-18.
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