A Castle Built on Sand

Six months ago I wrote in this column about the very generous welfare payments being paid in the Republic of Ireland, sometimes two or nearly three times the equivalent levels paid in the North(1). As the Republic now plumbs new depths of national indebtedness and near-bankruptcy, it is clear that this attempt at a welfare state was constructed on the flimsiest of foundations, a real castle built on sand.

During the weeks of Ireland’s financial ‘bail-out’ crisis this month, the Northern papers have featured amazed articles about the huge differences between Irish and Northern Irish social welfare and public sector pay levels: the contributory pension £195 per week in the South, £97 in the North; the jobseekers allowance for those over 25, £166 per week in the South, £65 in the North; child benefit for a first child £127 in the South, £88 in the North; a first year hospital consultant’s pay, £156-163,000 in the South, £74,000 in the North; a secondary school principal’s pay £80,500-89,000 in the South, £55,800 in the North; and so on(2).

The outspoken former president of University of Limerick, Dr Ed Walsh, has even suggested the Republic could solve most of its financial problems at a stroke by reducing such payments to Northern levels: “If we were to benchmark public servants’ pay to those in Northern Ireland, we could save €15 billion, and if we were to bring key social welfare benefits down to those in Northern Ireland, we would save a further €8 billion a year.”(3)

In a letter to the Irish Times in late November, University of Ulster economics professor Dr Vani Borooah wrote: “A single person in Ireland pays tax after €18,300; in the UK this is closer to £9,000. In my own profession, a full professor at a university earns on average £60,000 annually; in Ireland this figure is at least €100,000. So get real: you’ve overpaid and under-taxed yourselves too long.”

It is clear that the Republic of Ireland, with a sovereign and bank debt that some economists estimate could reach an astonishing €220 billion by 2014(4) (nearly €55,000 for every man, woman and child in the state) is facing a prolonged period of economic stagnation. The attitude of the ordinary Irish citizen to this appalling situation was summed up by economic commentator, David McWilliams(5), when he said that this was “morally a bill we shouldn’t pay, and financially a bill we can’t pay.”

In these dire circumstances it is hardly controversial to suggest that any moves towards a united Ireland, or even a more economically integrated ‘island of Ireland’, are off the table for the foreseeable future.  North-South cooperation at present and maybe slightly expanded levels is probably as much as we can reasonably expect.

In mid-November I chaired a session at a superb conference at University College Dublin entitled ‘The Agreement Generation; an Opportunity for Change?’ at which a wide range of young people in their twenties and thirties from both parts of Ireland gave their views on  political, economic and cultural ways forward for the island. It was striking how little animosity was expressed by the DUP and Ulster Unionist speakers, Richard Bullick and Kenny Donaldson, towards the Republic of Ireland. “There’s a new equilibrium and maturity in our relationship with the South, while mutually recognising the separation of the two jurisdictions,” said Bullick, who is an advisor to First Minister Peter Robinson. “The real success story of recent years is that the North-South relationship has been taken off the political agenda, and no doubt it will continue to grow in the years ahead.”

Donaldson, whose home is in South Armagh, said North-South cooperation would happen “if it is seen to be to the mutual benefit of both jurisdictions” and stressed that it was in Northern Ireland’s interest that there should be a strong economy in the Republic – “for so many reasons we are reliant on each other.”

Maybe it is now time, given that the Republic of Ireland is fighting a rearguard action to maintain its status as a sovereign nation, for Northern nationalists also to start reconsidering their position. Nobody wants them to abandon their long-term aspiration of a united Ireland. However in the shorter term perhaps they should resign themselves pragmatically and thankfully to living in a United Kingdom which is also facing very large public finance cuts, but whose banks are at least functioning and whose economy is beginning to emerge from recession (to the extent that the British government can offer an unpopular loan of nearly €8 billion to its Irish “friend in need”, in George Osborne’s words). At the same time they should content themselves with the levels of North-South cooperation that the Irish and British governments are willing to engage in and capable of sustaining. I won’t be holding my breath.

Andy Pollak

1 ‘Does the South now have a better welfare state than the North?’ A Note from the Next Door Neighbours (45), May 2010
2 Belfast Telegraph, 24 November 2010, p.9
3 Mapping a slump…Dr Ed Walsh urges radical action. Irish Independent, 16 October 2010
4 For example, Dr Constantin Gurdgiev, Sunday Independent, 28 November 2010
5 The Pat Kenny Show, RTE, 29 November 2010

  • John East Belfast

    Some of those numbers do a lot of damage to the “we have no other option but to default” argument.

    Cut the Public service wage bill along with the cost of Welfare and the Debt mountain will fall.

  • Skintown Lad

    All of which assumes the nationalist head rules the heart, which it does not.

  • JaneJeffers

    “perhaps they should resign themselves pragmatically and thankfully to living in a United Kingdom which is also facing very large public finance cuts, but whose banks are at least functioning and whose economy is beginning to emerge from recession”

    the uk economy is built on sand to an even more significant degree than the RoI – the banks have even huger debts. The IMF will be at the UK’s door within 18 months, however, at that point the IMF will have nothing to offer.

    Your comparison fails to take into account the cost of living and the cost of public services which are significantly lower in the north. This makes your argument slightly disingenuous and superficial and selective at best.

    Plus the RoI is, even now, much more productive economy the North’s when measured in exports, adjusted to size.

    (A side example, I lived in Scandinavia where I paid the highest rate of tax in the world, but as university, school, health, dental services and many other services were free, I had a much higher amount of disposable income that I do in the UK — even though I am *paid* a lot more here. )

    Your article is not rigorous enough to warrant the pseudo-academic
    footnotes.

  • Neil

    Maybe it is now time, given that the Republic of Ireland is fighting a rearguard action to maintain its status as a sovereign nation, for Northern nationalists also to start reconsidering their position.

    Ok, I get the idea of equivalence between Unionists having reassessed their position so, goes the idea, Nationalists/Republicans should do the same. But, um, I thought we’d already done that? Principle of consent, powersharing, stopped the violence etc.

    So what you’re saying is as Unionists have decided to treat the Republic and people from the Republic with manners (unlike for instance, Big Ian taking the piss out of the girl from RTE because she was speaking a different language – actually English with an Irish accent). Pardon me but so fuck. Unionists and Nationalists have moved their positions suitably, most people would agree, so no-one owes anyone any further shifts in ideological position, all that shit was done long ago.

    As a PS on this statement, I would have thought the sovereign aspect of Ireland’s problems opens an opportunity for Nationalism. Certainly during the Celtic tiger years Ireland’s place in Europe and their financial strenth was being touted as a reason Irish folk didn’t want re-unification. Now the opposite situation is in place, but surprisingly the supposed outcome remains exactly the same?

    However in the shorter term perhaps they should resign themselves pragmatically and thankfully to living in a United Kingdom which is also facing very large public finance cuts, but whose banks are at least functioning and whose economy is beginning to emerge from recession

    Yes, probably right. After all you’ve underlined that people in the South earn fantastic sums of money for doing anything up to and including nothing. That really doesn’t endear me to the NI project, the fact that people are payed too poorly (which they are, given the average earner would probably not clear 1k per month after tax, yet homes cost approx. 150). Yes, being a Northern Nationalist, the idea of a higher ‘living’ wage doesn’t repel me for some reason. I would have thought that were normal.

    As for the UK ‘situation’ two things strike home. One is, we don’t yet know what that situation is. We’re slowly embarking on the same course of action the Irish embarked on some time ago, only difference being the Irish were quick about it, we weren’t.

    Second, let’s look at our employment figures. Certainly the 8% unemployment figure is much lower than the Republic’s 13.8%, so that must be good right? Not so impressive when you consider that economic inactivity in NI stands at 27%, that would be people not in work, and not looking for work. Bit less impressive when you consider 1 in 10 people in NI is on DLA, 1 in 5 in deprived areas. When the figures are worked out they damn near balance up, and that’s before the public sector cuts making up as it does a very large portion of our economy. Then we have to worry about all the shops who won’t be making cash cause the public sector folk can’t afford to spend it any more.

    to the extent that the British government can offer an unpopular loan of nearly €8 billion to its Irish “friend in need”, in George Osborne’s words

    For totally selfish reasons clearly, and at a tasty interest rate to boot. At that rate Posh George can borrow the money at a cheap rate and lend it to Ireland at an expensive one. It’s good business, no more, and is done due to the overexposure of the UK’s economy to Irish banks (stick that on top of the 1 trillion pounds of debt and counting).

    At the same time they should content themselves with the levels of North-South cooperation that the Irish and British governments are willing to engage in and capable of sustaining. I won’t be holding my breath.

    Very sensible that, not holding your breath. Aside from telling us that those of us in gainful employment in NI would be creaming it in, never mind how well those on unemployment would be doing and underlinging the fact that our basket case economy requires hundreds of thousands of jobs from Westminster just to keep us afloat (along with our 8 billion annual subvention). You’ve presented as good an argument for unification from a Northern point of view as you could.

    As I pointed out the other day, ideology doesn’t get bought and sold. I couldn’t pay Unionism to kill the union, and financial matters won’t convince a Northern Nationalist to do away with their ideological position either. I’d rather be penniless in a Unified Ireland in the same way many Unionists would rather be penniless in the Union. We aren’t that shallow, greedy or whorish to have our deepest heart’s desire to be bought or ruled out on ‘pragmatic’ financial grounds. It’s offensive to suggest otherwise.

  • Turgon

    Andy Pollark,
    I think you are naive if you are surprised about the lack of animosity from Richard Bullick or Kenny Donaldson. I know Richard fairly well from university and he is a very pleasant and talented bloke, with no hint of bigotry. I do not know Donaldson but suspect he is much the same.

    What both are saying is actually not surprising. Very few unionists hate the RoI. Very few want to attack or destroy it. Mutual cooperation as long as unionists (along with nationalists and the RoI government) can control it is a good thing.

    During the troubles the major issue was the percieved (and at times genunine) lack of security cooperation, extradition of terrorists from the RoI etc. At some level this always confused unionists as they knew (maybe better than many in the RoI) that the IRA was interested in the totalitarian take over of the RoI as well as NI. Now that that issue has largely gone and there is very good cooperation on security the reason for animosity has gone.

    At times there is a bit of wry amusement about the financial collapse but that is amusement at Sinn Fein suggesting that we would all be richer in the RoI: I detect absolutely no “ha, ha the Irish are suffering poverty”. As well as childish it would be stupid as it would stop them spending money in shops in Enniskillen. I do admit there were times on Saturday afternoons last year that I did find the traffic jams created by RoI shoppers a little wearing but I genuninely think there is no real animosity to citizens of the RoI. I do not think there is even the sort of football nonsense typed animosity which the Scottish hold at times for the English (again almost certainly overplayed).

  • slug

    I think that as long as ROI is not predatory or arrogant to NI then there would not be animosity back.

    Whereas Scots feel threatened by the English, because of the relative sizes of the two countries, the disparity between NI and ROI is more evenly balanced and ROI does not have any sovereignty over NI (other than in the NS bodies but in those cases NI has as much sovereignty over ROI as ROI over NI as they are symmetric).

  • Brian Walker

    Andy, You write “Maybe it is now time.. for Northern nationalists also to start reconsidering their position. . However in the shorter term perhaps they should resign themselves pragmatically and thankfully to living in a United Kingdom which is also facing very large public finance cuts, but whose banks are at least functioning..”

    But this surely is what they are doing – in the case of the SF more by default, more overtly in the case of the SDLP.

    What piece of rhetoric are SF in particular expected to abandon? We all need to work at specifics in two main areas, language and policy

    “Resigning themselves” to the status quo is surely also surely unattractive although I appreciate that in your role you must use diplomatic language..

    The Republic’s economic crisis is not a fundamental reason for supporting either the Union or Unity. Positive reasons for working within NI are needed, regardless of how long southern problems last.

    A similar lesson applies to the DUP. Both sides need to adopt a language of the common interest. There are some signs that this is evolving but not yet much beyond the level of lip service. The Cohesion document was plainly an inadequate compromise.

    It would help if both sides scaled down their cultural battles and obsession with “parity of esteem” in exchange for a more explicit welcome to diversity. We all could make lists and maybe we should. Mine would include reflective rather than defiant commemorations of the 1912 Covenant and the 1916 Rising. My test would be – would reasonable people from the other side feel welcome at this event?

    The biggest gain would be to acquire greater economic literacy and agree a viable growth strategy rather than endlessly stressing redistribution.

    The most niggly would be to stop winding the other side up and calling it politics.

  • Anon

    Nationalists shiould asses their long term desires based on short term trends. This is precisely the logic that busted the banks.

    The RoI’s has a higher cost of living at the moment, and the welfare payments looked affordable in the context of the very, very low debt to GDP ratio it had a few years ago. the revenue has collapsed. In a sane world the Republic could devalue and that would bring things more into line, along with wages. As it is, they have to go through a grinding internal adjustment, where the weakest will be hit hardest.

    The assumption that the UK’s fairly crappy social safety net is the right one is also faulty.

    Brian
    My test would be – would reasonable people from the other side feel welcome at this event?

    I am not toning down my political beliefs or pride in previous generations of Irishmen and women to keep you haoppy. Neither do I suspect dotUnionists fancy doing it. What you are saying is the previse opposite of what needs done. People should be free to express themselves to their fullest and others should deal with it, even if they disagree.

    There are timrs for reflection and change – based on your own assesment and timescale – and this isn’t it.

  • Séamus Rua

    If only nationalist werent nationalist then there would be no problem.

    Perfectly logically.

    Perfectly preposterious.

  • Until January 2007, 1 pound sterling bobbled around 1.50 Euro. Even at Jan 2008 it was 1.35. I am obliged to Google Finance which tells me that having hit 1.04 it has stagged back to 1.19.

    Obviously if you compare currencies when one is at or near a historic low to the other, comparative rates of pay seem preposterous. Rather than take such a lazy approach, it is better to examine critically within the remuneration system what it is that workers expect to pay for from their compensation – before it was the ability to own a home, now the ability to keep the baliffs from the door. Even the “rich” in Ireland are leveraged and taking an axe to their compensation without ensuring an orderly scheme for restructuring bank debts is likely to spawn another series of collapses.

  • a new emergent maturity that will work to cut self-interested north/south quangos perhaps?

  • smellybigoxteronye

    Time for a United Ireland! (with NI absorbing the Republic and not vice-versa as common convention dictates :P)

  • D

    ‘Maybe it is now time, given that the Republic of Ireland is fighting a rearguard action to maintain its status as a sovereign nation, for Northern nationalists also to start reconsidering their position.’

    I seem to remember Ireland having an economy so bad in the 1970s and 80s that the country was described as ‘the sick man of Europe’ and ‘the only third-world country in Europe’. At no point did that lessen the resolve of nationalists / republicans to seek unity. I doubt current events will change that in anyway. Similarly if the UK was struggling and Ireland was doing well Unionists would never consider leaving the union.

    In exchange for unity, the Republic could offer to give everyone here a million pounds, line the streets of NI with gold, provide a cure for cancer and aids, as well as bring back King Billy from the grave, and unionism would still balk at the suggestion!