Assembly parties united on making working class pay for crisis

From Socialist View, Spring 2009 The economic recession has already led to social explosions and political crisis in many countries. Gary Mulcahy looks at the consequences for Northern Ireland and what impact the dowturn will have on the power-sharing Executive and the peace process.

2008 saw the biggest annual increase in unemployment in the North in 37 years. 12,000 extra people signing on brought the total number of officially unemployed to 36,000 in December. 80% of all job losses for last year occurred since July, indicating the scale and speed of the crisis. In January 8,000 more joined the dole queues bring the figure up to 42,000. That represents a huge increase in official unemployment of 62% in one year! This figure though does not accurately represent the true extent of job losses. It disguises the fact that many more jobs have been lost. The slump in construction accounts for 44% of jobs lost last year. This does not include a sizeable number of construction workers who were working in the black economy or classified as being self-employed. Also, it is estimated thousands of migrant labourers have left Northern Ireland as a result of the collapse in construction rather than staying and signing on.

It is important to note that the recession in Northern Ireland was not solely a result of the international economic downturn, but was firstly triggered by the bursting of the housing bubble in mid-2007. Between 1995 and 2007, average house prices rose from £42,619 to £250,000 – a rise of almost 600%! Enormous speculative activity in the property market, especially from speculators based in the South after house prices reached their peak, caused prices to mushroom.

During this period, construction was key to job growth. Unlike Southern Ireland, where because of the tightness of the labour market and impressive economic growth workers were able to secure real wage increases during the boom, wages in the North were either stagnant or were falling in real terms. The speculative bubble in prices which was encouraged by the banks and the political establishment was completely unsustainable. The parties in the Executive were banking on the continuation of the housing bubble as a source of raising additional revenue via rates, the sale of Housing Executive homes and public land. They had a vested interest in keeping property prices inflated and hence share responsibility along with the banks and property speculators for the destruction of thousands of jobs as a result of the bursting of the bubble. Because of the dependency on construction, Northern Ireland has seen the biggest rise in unemployment in the UK. The top three areas which saw the biggest increases in unemployment last year were Magherafelt (183%), Cookstown (135%) and Dungannon (130%). Other areas in the North such as Banbridge (102%), Ballymoney (99%) and Limavady (98%) were amongst the worst hit.

The collapse in house prices still shows no sign of stopping. Prices have fallen 34% so far. Ulster Bank economist Richard Ramsay has recently stated that house prices will continue to fall this year. He predicts prices will fall 45% from their peak in 2007. However, this is based on an overly-optimistic outlook that the Northern Ireland economy will begin to recover in 2010. House prices could yet fall by more than half as a result of the recession. As a result of growing unemployment, mortgage arrears increased by 64% in 2008. There has been a huge increase in enquiries with the Housing Rights Service and other advice agencies such as Citizens Advice with thousands of people worried about home repossessions.

Since the latter end of 2008, construction job losses have begun to be overshadowed by job losses in manufacturing, retail and services sectors. The recession has spread throughout all sectors of the economy. An already weak manufacturing sector is losing jobs by the day (manufacturing jobs have fallen by 20% since 1998). Important local employers such as FG Wilson, Ryobi, Montupet, Ulster Bank to name but a few have announced job cuts, with many introducing wage cuts. Town and city centres are increasingly turning into ghost towns as more shops and retail stores are boarding up their premises.

Even with sterling at an all-time low against the euro, this has not led to a major rise in exports as consumer spending has dried up across Europe. The huge number of shoppers streaming across the border to take advantage of the strong euro has led to record sales for the major multi-national stores such as LIDL and ALDI on the edges of Newry for example but locally owned stores are not seeing anything like the same custom. In fact local business owners are up in arms at the dominance of foreign-owned giant stores taking most of the business from the South.

For young people especially, the prospects of finding work after leaving school or college are remote. Economic inactivity in Northern Ireland stands at 27.4%, which is the highest in the UK (20.8% average). This category includes the long-term sick, students and those looking after family. 13.6% of 18-24 year olds are officially unemployed, up 76.9% on last year, meaning young people are now three times more likely than older workers to be jobless. This figure is likely to sky-rocket in the coming months and years. In December, it was being predicted that the economy in Northern Ireland would contract by 1.5% in 2009. After December’s jobless figures were released, this was revised to 2.5% negative growth. The capitalist economists may well find themselves having to revise this figure yet again in the coming months. 

Assembly politicians shocked by recession
The recession has shocked the politicians in the Assembly Executive. They have been stunned by the turnaround in the economy and the consequent troubles it now causes for their “Programme for Government”. The global economic crisis does not just mean the disruption of the Executive’s budget plans. It represents a far more fundamental blow to their ideological adherence to neo-liberalism. All the parties in the Assembly sang in perfect harmony on the need to “modernise” the economy in the North through privatisation, cuts in corporation taxes, implementing major cuts in public services and supporting big business.

The much-hyped NI:US Conference organised by the Executive last May which invited over 200 representatives of big business to Northern Ireland to be wined and dined at the taxpayers expense was heralded as an event which would help boost a dynamic private sector. It was claimed “The new, stable Northern Ireland is open for business. It offers an ideal location for investors: close to market; cost competitive and culturally compatible with a skilled, young workforce. Northern Ireland’s pro-business Executive is ready to help investors exploit the many opportunities in this dynamic, growth market.” Then First Minister Ian Paisley said “The Investment Conference represents a major opportunity for Northern Ireland to secure its economic future for many years to come.” Not a single dime of investment came from this Conference. It was soon to be followed by the Great Wall St. crash in October when the US financial system imploded and triggered a world recession.

Now the Executive’s hopes of tempting US companies to locate and invest in Northern Ireland have been dashed. The illusion that the “new, stable Northern Ireland” power-sharing Executive could provide political stability was also shattered last year when the Executive hung in suspended animation for five months due to the stand-off between Sinn Fein and the DUP over the devolution of policing and justice powers to the Assembly. While the sectarian parties refused to meet, working class people were suffering the effects of the downturn. The parties were seen to be doing nothing for working class communities who began to attack their ineptness. This pressure combined with mounting demands from the construction industry for action to speed up public spending in infrastructure forced the parties, in particular Sinn Fein, to return to the Executive.

Executive’s financial blackhole
The Executive now faces an economic and financial crisis as a result of the global dowturn and the collapse in the local property market. Much of the funding for future services and projects was based on income which was to be generated through the sale of public land such as the 100-acre Crossnacreevy site and the sell-off of public housing stock. This was forceast to raise over £600m, but because of the collapse in land and house prices the Executive has decided not to proceed with these projects. A strategic stocktake carried out by the Executive has also revealed “current expenditure pressures” of £500m across all Departments. This arises from the deferral of water charges, the settlement of an equal pay claim for low-paid civil servants and a lower than forecast revenue from rates as a result of the closure of businesses.

Altogether, the Executive is faced with approxiametely £1.1billion blackhole in it’s budget over the next two financial years. But it gets worse. The pre-budget report of the British government has proposed cuts of £5billion across all Whitehall Departments, that would mean a cut in the annual subvention to Northern Ireland which makes up the overwhelming majority of the Assembly’s income. No matter what the Executive does to balance the books, a reduction in the annual subvention (currently around £7billion) from London would put the Executive under enormous pressure. The ‘efficiency’ targets of 3% which all the parties in the Executive agreed as part of their budget is now materialising in cuts in public services and job losses. 2,500 jobs are to go in the health service due to these cuts. 450 jobs in the Housing Executive. A vicious programme of cuts in the health service, such as the closure of residential care homes for the elederly and the menatally-ill has provoked outrage amongst health workers and residents families. At public meetings, hundreds of people have showed up to protest against these cuts which has rattled the politicians from the Executive parties. However, the Minister for Finance Nigel Dodds has expressed ‘concern’ at the delay in implementing these cuts across all Departments. It is also clear that the Executive is contemplating how they can introduce water charges in 2010 or 2011, a massively unpopular policy which the Socialist Party has campaigned on through the We Won’t Pay Campaign.

The Assembly Executive will still attempt to carry out their privatisation agenda, attack public services, jobs wages and conditions. But they will be met with fierce opposition from workers and communities who cannot afford more cuts and attacks. The trade union leaders have shown they are not prepared to take on the Assembly parties. Instead they have adopted a “partnership” approach with the Executive – one of supporting the parties at the expense of trade union members. The disgraceful cuts in the health service have been known to the leadership of the unions, in particular UNISON, for a long time. But they have went along with the “need” to carry out cuts. Workers will need to fight against both the parties in the Assembly Executive and the right-wing union leaderships in order to defend jobs and services.

End of the “peace process”?
Since the signing of the Good Friday Agreement 11 years ago, the “peace process” has managed to painfully limp forward from crisis to crisis. The devolved institutions have been plagued with instability, suspensions and sectarian division. While the level of sectarian conflict has receded in recent years, none of the causes of sectarianism have been resolved. In fact, under the “peace process” sectarianism has greatly increased. There are now less mixed residential areas and social interaction between Catholics and Protestants than ever before, in particular between young people.

Outside of the economic issues there is no agreement between the sectarian parties in the Assembly. From the Irish Language Act to the proposed Maze stadium, from academic selection to policing, there is no common ground. Up until now it was possible for the establishment to sell the “peace process” as a means to delivering a decent future, which would bring prosperity and jobs to Northern Ireland. With a growing world economy and booming economies in the Britain and the South, it was argued, wrongly, by the capitalist classes that a solution to the national question could be found on the basis of capitalism. The historic growth of the Celtic Tiger economy in the South gave nationalism, in particular Sinn Fein, a certain ideological boost. It encouraged a mistaken belief that an independent united capitalist Ireland could flourish. This idea has received a real blow as a result of the cataclysmic collapse of the Southern economy and will undermine Sinn Fein’s ability to sell their “strategy” of achieving a united Ireland. Now that we have entered a period of deep crisis of capitalism, support for the political process will come under major pressure. The politicians in the Assembly have no solutions to the crisis. When confronted with opposition to their anti-working class policies, sectarian politicians will not hesitate to resort to whipping up the clouds of sectarinism to divide the working class and deflect attention from their role in carrying out cuts, especially when they feel threatened by rival sectarian forces. Without a mass socialist alternative which could unite working class people, then sectarian forces to the extreme of Sinn Fein and the DUP will attempt to tap into the anger and discontent which will emerge. Like old wine in new bottles, old, failed ideas and methods can re-emerge if an alternative is not built. Dissident republicans who have failed to learn any lessons from the past, such as the blind alley of individual terrorism, and the potential for the re-emergence of loyalist forces and even fascist organisations can threaten to drag the working class into conflict, but this time on a far more sectarian basis and on a bigger scale than the Troubles.

However, the majority of the working class at this moment in time are completely opposed to such a development and would move into action against such forces. The weakening of the workers’ movement as a result of past defeats and years of bureaucratic control by right-wing leaderships of the unions though has resulted in the absence of a shop steward movement which was key to organising independent workers action against sectarian threats and killings. The re-development of a shop stewards movement will flow from the struggles which will unfold in the coming period. The emergence of a new generation of militant workers and youth who will be forced to fight against capitalism will provide the foundation for the building of a mass socialist party capable of linking up with workers across Ireland, Britain and internationally.

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