It emerged recently that it is not just Irish people who are unhappy with the snail paced reform seen since 2008, when recession first set in; the International Monetary Fund (IMF) and the European Commission have also expressed concern. According to a leaked draft of the IMF’s quarterly report and the European Commission’s recently published quarterly report, there are more issues to be tackled if Ireland is ever to recover.
They were particularly critical of how slowly the government have dealt with problem mortgages and their progress with dealing with non-performing loans. They also criticise the approach to unemployment, with particular emphasis on the system that can leave people claiming benefits for years without meeting a case officer who could offer help. These observations of the troika are alarming, and show little positive indications for Ireland’s recovery. Ultimately, this asks the question: is austerity working?
Since 2008 there have been six austerity budgets and €28.5 billion in spending cuts and taxes. One would question why it is, that after five years of stringent conditions that have pushed many to breaking point, and many more out of this country, that little has changed. While the country was in a better state at the end of 2012 than it had been at the end of the previous year, growth remains slow. The point of these cuts and extra taxes was to pull Ireland out of recession, yet it seems that the money evaporates almost instantaneously into Ireland’s debt. All the while the cuts become increasingly invasive.
And while austerity is supposed to bring this country’s economic situation back to its former glory, is it possible that the government are ignoring the social implications? A 2012 survey by the Irish League of Credit Unions said that 20 per cent of adults have no cash left after paying bills at the end of the month, and more than half have less than €100. Almost a quarter of those surveyed said it was unlikely that they would be able to afford the new property tax. Perhaps more worryingly for the government, 43 per cent of those with little or no income left at the end of the month said they saw no future for themselves or their families in this country.
And despite a clear pattern emerging, austerity continues, most notably with the aforementioned property tax. Leo Varadkar’s remarks in March of this year that the property tax is ‘easy to pay and hard to evade’ show in crystalline clarity just how detached the government has become from its people.
Essentially, what increased austerity has done is pushed people to the edge. They can no longer afford luxuries – in fact, some can barely afford the necessities. And when people have little money, they make less purchases – resulting in businesses having to shut their doors for good. Ironically, this results in more people turning to social welfare to get by. It seems that austerity serves only to make people more reliant on the State, which is precisely what the government claim to want to avoid.
Irish business owners seem to be split down the middle regarding whether or not a corner has finally been turned in the Irish economy. Almost half said in a recent poll that they did not intend to take on staff in 2013, and is this any wonder? Why would they be optimistic when they too have been pushed to the edge by harsh budget cuts and increased taxes? The recent closure of HMV shows just how serious Ireland’s tentative situation remains.
The rate of emigration in Ireland further shows how austerity is not working. By the end of 2012, it was estimated that emigration had reached heights not seen since the Great Famine of the 1840s, a period now deeply entrenched in Irish history for the untold death and suffering it brought about. While it is obvious that Irelands’ situation is in no way as bad as the Great Famine, the government must realise that emigration rates as high as these point towards a major issue; namely, that Irish people no longer feel satisfied with this country.
The high rate of emigration coupled with the remarks of the IMF and the European Commission all point towards the same fact: something must change. Rather than dealing with the real issues, such as unemployment, they consistently strip funding from various parts of Irish life. Their approach seems to revolve around the belief that once the money is obtained and debts paid off, the other issues can be dealt with. This line of thought is flawed in its assumption that it was lack of money that got Ireland into the situation it is in today. All one has to do is look at the Celtic Tiger to discover that this was not the case at all.
If Ireland is ever to recover, the government must look at the Irish situation differently. Five years into a recession, it is evident that austerity has very simply not worked. To see real change, the government must focus on the real social issues that plague the Irish people. Unemployment must be dealt with; businesses and entrepreneurship must be encouraged, and most of all, education must be invested in, in an attempt to create strong future leaders, who can try to prevent a recession as great as the one we find ourselves in today from ever happening again.