Nurses bear the brunt of Ireland’s economic crisis

The global financial crisis smashed the Irish economy, with nurses and other public sector workers paying the heaviest price.

The Irish Government, faced with one of the most severe economic crises since the 1930s, has slashed the public sector, with Irish nurses, teachers and police taking massive hits in pay and conditions.

This policy approach is the opposite to that taken by countries like Australia, Britain, the United States and China, which opted for government intervention in the economy to maintain employment and living standards.

Irish nurses have had a 20% pay cut, been burdened with a raft of new taxes and seen their personal finances devastated by crumbling house prices.

Laura Strain, now working at Prince of Wales Hospital in Sydney, worked as an ICU nurse in various hospitals around Dublin for eight years from 2002.

She says that when the global financial crisis hit in 2007 public sector pay increases that were negotiated by unions were frozen by the Government in breach of agreements.

‘Then, at the beginning of 2009, the Government started introducing pay cuts across the public sector and placed an embargo on staffing. They weren’t replacing nurses, teachers or police,’ she said.

Laura says all the 2009 nursing graduates went to England after the British Government did a recruitment drive.

‘After investing in four years of university training, the Irish Government let them go,’ she said.

Not only did the Government cut wages but it also introduced an income levy of 2% and a pension levy of 7-9%.

Laura says her take home pay dropped from 600 euros a week to 500 euros or over 5,000 euros per year. In Australian dollars that’s a $7,300 pay cut!

Social security slashed, house prices collapse

The Government also slashed a host of social security benefits.

‘I’m a parent with two kids. The child benefit and another supplementary child benefit were axed as well so there was no help with childcare,’ says Laura.

While things became very grim in the public sector it was even worse in the private sector with industries like construction practically folding overnight.

‘My husband became unemployed in 2008 when the construction industry collapsed. He didn’t work for 12 months,’ says Laura.

‘He earned less than me but we had our own home. It wasn’t a fantastic standard of living but a reasonable standard. When he lost his job and my pay was cut, things changed and we had to look at what was best for our children.’

Laura says the big drop in a joint income was a common problem.

‘There were many families like us. There were a lot of people with big mortgages and other debts who then lost equity in their houses as well as their jobs.

‘We bought our house in 2003 for 215,000 euros. In 2006 it was worth 420,000 euros. Now it would be worth 280,000 euros. Anyone who bought at the height of the market would have been destroyed.’

Forced emigration reappears

David Begg, General Secretary of Ireland’s Congress of Trade Unions, described the policies of Ireland’s conservative Government as ‘a charter for exploitation that puts very deep blue water between this Government and the majority of the Irish people’.

Begg described the options available to a young worker as ‘take a job at any price or emigrate. Once again we will see our youngest and best educated either beaten down by exploitation or forced overseas’.

Over 60,000 Irish citizens have moved to Australia, Canada and New Zealand in the past year. The number of residence visas for Australia increased by 25% last year to 2,501. Another 22,786 people aged under 35 took up working holiday visas.

Slash spending vs stimulus

Ireland took a divergent path from other countries like Australia in dealing with the global financial crisis. While Australia opted for government intervention in the economy with a stimulus package, Ireland slashed public sector wages and social security and raised taxes. The results have been catastrophic.

Unemployment

As at January 2010, Australia’s unemployment rate was 5.3%. Ireland’s was 11% and was disguised by the increasing number of Irish citizens emigrating.

GDP Growth

Australia’s economy grew by 2.7% in 2009 and is estimated to grow by a further 2% in 2010. Ireland’s economy shrunk by 7.3% in 2009 and is estimated to shrink by another 2% this year.

House prices

House prices in Ireland fell by 26.7% between February 2007 and December 2009. International researchers Capital Economics say a further 25% drop is still likely. Australian house prices increased by 12.3% in the year to December 2007, dropped by 3.3% the following year and increased by 13.6% in the year ending December 2009 (ABS).

Government debt

Ireland’s Government debt rose to 63.7% of GDP in 2009 and is expected to rise to 70% in 2010. Australia’s government debt stands at around 18.6% and is projected to fall to 2.2% of GDP ($45.4 billion) by 2019-20.

A tale of two economies

For centuries Ireland was one of the poorest countries in Europe with a population hard-wired to emigration.

This all changed from the mid-1990s when its economy often grew by 10% or more per year until it was one of the wealthiest European nations.

Ireland was widely lauded by economists and financial commentators as the ‘Celtic Tiger’.

The global financial crisis and the Irish Government’s response have virtually annihilated these gains.

While Australia has managed to avoid recession following the global financial crisis, Ireland has experienced a near depression.

During 2009 Ireland’s GDP fell by 7.5% and it is expected to fall by another 2% in 2010. It is the biggest economic contraction in an industrialised nation since the 1930s.

Government debt rose to 63.7% of GDP in 2009 and is expected to rise to 70% in 2010.

By comparison, during 2009 Australia’s economy grew by 2.7% and is projected to grow by a further 2% in 2010.

Despite large-scale spending to stimulate the economy, Australian Government debt as a percentage of GDP remains low at 18.6%.

Reckless banks and poor government

The root cause of Ireland’s economic woes was an out-of-control property market that has now imploded. Property has nosedived in value over the past two years.

The country’s banks are in a catastrophic state with ‘toxic loans’ estimated to be half as big as the entire Irish economy. Irish taxpayers have had to shell out 8.5 billion euros (12 billion Australian dollars) to bail out its banks after years of reckless lending that has brought the economy to its knees.

Ireland took the opposite path to Australia in response to the global financial crisis.

Rather than inject money into a stalling economy via a stimulus package it raised taxes and cut spending that reduced demand in the economy. The Finance Minister Brian Lenihane, in a draconian Budget late last year, cut public sector pay by up to 20% – including that of nurses – and raised prescription charges by 50%. The dole was slashed by up to 50%. These policies deepened the slump.

In contrast, Australia’s expansion is being boosted by spending by the Federal Government, which is outlaying $22 billion on roads, railways, ports and schools.

Following the stimulus, 194,600 more jobs were added in the five months through to January this year, cutting the unemployment rate to 5.3%.