By Ann Katrin Orr
Although not the underlying cause, Covid-19 has been the trigger for a global economic downturn. The UK economy has now officially entered the deepest recession on record. Northern Ireland’s economy has proven to be particularly vulnerable to this and young workers are disproportionately impacted. The current situation further underlines that capitalism cannot provide for ordinary people and is incapable of offering young people a decent future. The need for socialist policies and a socialist transformation of society are more urgent than ever.
Unfolding economic meltdown
The International Monetary Fund (IMF) has predicted a global economic contraction of 3% in 2020, far more significant than the Great Recession following the 2008 / 2009 stock market crisis. In April, the GDP UK-wide fell by a staggering 20.4%. Increasingly, commentators are talking about how expectations of a V-shaped recovery, where a sharp economic decline is quickly followed by rapid growth, were too optimistic and instead a U-shape or W-shaped recovery is more likely. This suggests either a period of stagnation before growth re-starts at a slower level or a further dip after a period of initial growth. Economist Nouriel Roubini has gone as far as to speak of a decade-long depression and an L-shaped recovery, which means a sharp collapse followed by a period of stagnation with no clear indication of even modest growth.
The economic outlook for the UK is bleak. Even more concerning is that Northern Ireland, out of all the regions of the UK, took the longest to recover from the last economic crisis. In addition, economic growth here was already slowing towards the end of 2019. Two sectoral examples from Northern Ireland illustrate how much more severe this crisis is compared to the aftermath of the 2008 crisis:
|January 2009||April 2020|
|Manufacturers reporting a fall in economic activity:||44%||87%|
|Service providers reporting a fall in economic activity:||48%||90%|
It is estimated that, overall, the economic shock in Northern Ireland in a single economic quarter in 2020 will be roughly the same as the region experienced over 7 years following the 2008 crash.
Northern Ireland’s economy particularly vulnerable and young workers most affected:
Lockdowns that were implemented in countries around the globe led to widespread halts in economic activity across sectors. Longer-term implications of Covid-19 are likely to hit sectors such as tourism, with the OECD predicting a collapse of 60 – 80% in the global tourism economy in 2020. It is estimated that, in Northern Ireland, 30% of the workforce, or 258,000 people, were put on furlough. The top 5 job categories that utilised the furlough scheme were sales and retail; other services; construction; cleaning services; food preparation and hospitality. Those jobs are also considered most at risk of being permanently cut, partly due to the significant implications of social distancing measures for sectors such as retail and hospitality.
Significantly, the University of Ulster points out that young workers (aged under 25) are disproportionately affected. This is because those sectors such as hospitality and retail with high numbers on furlough and greater risk of permanent job losses employ a high proportion of under 25s when taken as part of the total workforce in those sectors. On the other hand, public administration has a relatively low furlough rate of 5% and under 25’s account for only 3% of the workforce in this sector. This means that, across the board, young workers are hit harder by the economic consequences of Covid-19.
The low proportion of young workers in the public sector is the result of recruitment freezes introduced following the 2008 / 2009 crash. The public sector is larger in Northern Ireland than in other parts of the UK and also high by comparison to other countries. This is linked to the historical development of industry here, the collapse of formerly significant industries such as linen and the decline in manufacturing, such as ship-building. Furthermore, the impact of the Troubles and conflict was a brake on investment and development. Even today, Northern Ireland ranks poorly in categories such as investment in research and development, and many young people who get qualifications here leave the North to work elsewhere. There are, however, some important manufacturing bases, including Harland & Wolff, Wrightbus and aerospace manufacturers. The workforce in these industries are highly skilled.
The precariousness of the economic situation here is further highlighted by the hospitality sector, which has been held up by politicians and industry bosses as a success and major economic driver up until the start of the pandemic. As we discuss in detail here, the industry’s significant growth in recent years has been mostly due to the notorious exploitation of the sector’s workforce with “median average wages well below a living wage, the majority of workers on precarious zero-hour contracts and sexual harassment rampant”. Furlough schemes for workers in the industry at best meant a 20% wage cut and, at worst, were unobtainable for the most precarious and low-paid workers in the sector.
Commentators are now beginning to compare the economic situation in Northern Ireland to the 1980s and 1990s, which were decades marked by chronic unemployment. In those decades, students did not have to pay exorbitant fees to attend university and many left; throughout the 1980s, it is estimated that between 10,000 and 15,000 emigrated every year. Now, university fees start at £4,000 annually and – with the global economic crisis, as well as uncertainty about Covid-19 and travel – emigration is a far less viable option. Capitalism in 2020 is therefore offering nothing but extremely uncertain futures for young people.
This challenge can only be overcome through a democratically planned economy in which decisions about production and service provision would be made collectively with the full, democratic involvement of workers. Alongside this, public investment is needed, which should be funded by seizing the hoarded wealth of the billionaires, who amassed an extra £25 billion in the UK alone over the course of this crisis. Such a public investment programme could involve massive home-insulation programmes and green energy production. The manufacturing sector currently employs 11% of the workforce here. If this sector was planned based on need, this could be greatly expanded while also ensuring we have the ability to produce goods needed to support the NHS, such as personal protective equipment (PPE) and medical equipment, for example.
During their successful struggle to defend their jobs, workers in Harland and Wollf last year called for the company to be nationalised. They pointed out that their skills and equipment could also be used to produce wind turbines and they called for the creation of apprenticeships to ensure their skills can be passed to new generations of workers. This gives a glimpse of what is possible and necessary to ensure a viable economic future for working-class people in the North. The Socialist Party calls for a programme of paid apprenticeships,as well as an increase in the minimum wage to £12/hour. Crucially, we can no longer rely on the private sector to create jobs.
Capitalist crisis v. socialist planning
Stormont, Westminster and governments around the world attempt to encourage and financially entice companies to invest and hire staff. Of course, the rich benefit from this. They also benefit from massive crises such as the one we are experiencing now. Forbes reports that “the richest 20% in the U.K., have saved a total of £23 billion during lockdown”. For comparison: the block grant received by Northern Ireland is £10 billion annually; £5.6 billion was spent on health in the 2018/2019 Northern Ireland budget and the special Covid measures announced by Chancellor Rishi Sunak in March 2020 amounted to £30 billion. Of course, the Forbes article goes on to argue that we need the rich to start spending money again on luxury items in order to have their wealth trickle down to retail and manufacturing workers. Socialists say the wealth that is controlled and hoarded by the rich should be taken out of their hands and used to fund our health service, fund research and development into vaccines, for example, and to create environmentally sustainable jobs that meet social needs.
The failures of an economy held in private hands are highlighted again by the Covid-19 crisis, which impacted on supply chains, led to shortages in PPE and reactive agents needed for medical tests. Long before this crisis, the Socialist Party has pointed to the failures of capitalism, which is aimed at maximising profits for a tiny minority, not planning for the needs of the majority of people on this planet. The shambolic response to the Covid-19 outbreak does not bode well for capitalism’s ability to overcome more fundamental challenges, including climate change, which poses an existential threat to humanity and other life on this planet.
Those in power want to ensure that it is working-class people who will pay for this crisis – through wage stagnation or outright wage cuts, as is happening in British Airways, Aer Lingus and across the travel industry. That we are facing yet again into a period of mass youth unemployment, while there is simultaneous speculation of further increases in the pension age, illustrates the defective nature of the system. Socialists say we should be reducing the working week without any loss of pay for workers. This would immediately create more jobs as well as assist in implementing social distancing measures to reduce the spread of covid-19. When companies claim that they cannot afford this, workers should call for companies to “open their books” meaning that the companies should show trade union and workers representatives their full financial situation. Companies that are not financially viable but perform socially useful functions, or could be repurposed to do so, should be nationalised and run democratically by workers.
The example of O’Neills sportswear, whose headquarters are in Strabane, illustrates this point. In March, the company announced their workforce was being temporarily laid off and production stopped. Following immediate pressure, the company began producing scrubs for frontline NHS staff, with O’Neills’ workers quickly developing samples. Some small distilleries also shifted quickly to producing hand sanitiser which was in short supply. These individual examples show that ordinary people demonstrated flexibility and creativity in responding to the Covid-19 pandemic. However, the impact of capitalism on limiting the effective response to the virus is striking. On a global scale, research into treatments and possible vaccines is happening, but on the basis of isolation and competition in the pursuit of profit from patents, rather than in a rational and coordinated way. Socialists call for full and open international co-operation in research and development of treatments and possible vaccines, which should then be produced freely and without patent restrictions.
The same issues that limit the private sector’s ability to deal with Covid-19 also apply to other aspects. It is a myth that the private sector drives innovation and efficiencies. The above examples illustrate that it is workers who know their jobs best and can see how their skills can best be used to provide necessary goods and services. In the North, the aerospace industry is a significant component of manufacturing here, with over 60 companies employing more than 8,500 workers. Even before Covid-19, the aviation sector was in trouble, as illustrated by the collapse of Flybe. In recent weeks, Bombardier and Thompson Aero Seating announced hundreds of job losses each. The global manufacturing set-up in aviation, where component parts of aircrafts are made in different parts of the world, in itself illustrates that there is a need to build an alternative on an international scale. This highlights the importance of workers, through their trade unions,linking up and organising with those in other countries. It also shows that it is important for socialists to organise on an international scale, which we do as part of International Socialist Alternative. In addition, the skills in the aerospace sector here, such as in seating and safety aspects, could be adapted to support other industries, such as public transport. These are aspects that should be considered by workers and factored into a democratically controlled and centrally planned manufacturing programme.
What socialists say
The Socialist Party wants to see a socialist society in which the massive resources that exist on this planet are democratically controlled by working-class people and used in their interest. Removing the constraints placed on us, on society and the economy by capitalism would create the circumstances in which we could successfully tackle the major issues we are faced with today, including the emergence of pandemics and climate change.
As explained above, we call for immediate reforms, such as a shorter working week with no loss of pay, investment in projects to create jobs and improve infrastructure, a £12/hour minimum wage and that the super-rich, through progressive taxation, not the working class should pay for this. It is possible that politicians, even very right-wing ones, will be forced to adopt measures that they would otherwise not consider. But this will only happen if they feel they have no alternative, particularly if faced with significant pressure from the working class.
At the beginning of the Covid-19 crisis, the Tories announced measures to the tune of £123 billion which, among other things, covered 80% of wages of workers being furloughed. Boris Johnson was also forced into a u-turn over free school meals over the summer by the outcry excellently expressed by footballer Marcus Rashford. In the USA, our sister organisation in Seattle led the successful “Tax Amazon” campaign which in recent weeks won a tax on big business in the city. This tax will raise an estimated $210–240 million a year. This money is earmarked for use for green, trade union jobs and permanently affordable social housing. This incredible victory underlines the point that it is possible to achieve massive concessions in this period when workers stand together and get organised. In a report on this victory our sister organisation writes:
“It’s no accident this victory comes in the midst of the historic Black Lives Matter rebellion. The legitimacy of the status quo has been utterly smashed by the protest movement, the pandemic, and the deepening crisis of capitalism. In Seattle, Tax Amazon was widely taken up at the Justice for George Floyd protests where we gathered 20,000 signatures in 20 days.”
They are absolutely correct to point to the increased questioning of the legitimacy of the status quo in the USA, and this is also happening here. Capitalism is eroding our future and more people are realising this system’s limitations. While concessions can be won through struggle, the capitalist class will always seek to wrench these back when possible, sometimes with force. Ultimately, we need to take the control of our economy and our world out of the hands of the super-rich elite and place it in the hands of those who create society’s wealth – the working class. This is the time to get organised and get active in the Socialist Party to fight for a future free of capitalism. Join us today!
The Socialist Party calls for:
- Make the billionaires pay for the crisis, not workers and young people!
- £12 minimum wage with no youth exemptions
- Free education for all who wish to study
- Share out the work – a shorter working week without loss of pay to create jobs
- Nationalise companies which threaten mass redundancies and place them under democratic workers’ control
- Mass public investment to create secure, well-paid and socially useful jobs and apprenticeships
- A democratic, socialist economic plan, with the key sectors of the economy brought into public ownership