An Equitable Approach
The Government and Social Partners believe that support for these adjustments will be strengthened by measures which demonstrate that the burden is being shared equitably across society. This includes:
- the need to ensure that moderation in respect of executive remuneration is seen to contribute meaningfully to the adjustment required
- that those who benefited most from the economic boom should make a particular contribution to the adjustment required
Delivering the Fiscal Stabilisation Framework
The Government and Social Partners agree that a credible response to the fiscal situation requires a further adjustment at this stage of the order of €2 billion in 2009.
(But this is the same response Mr Lenihan announced in July. This means that either the Government finds no need to change its response to the crisis as it evolved since July, or that Brian-Brian-Mary are simply dumping more than 90% of the budget deficit for 2009 onto the shoulders of the private sector alone, with the unionized public sector carrying less than 10% of the burden. Is this their version of evidence-based equitable policy?)
In addition to this immediate adjustment required in 2009, the Government and Social Partners commit to working together under the Pact to support the further adjustments required to reduce the General Government Deficit below 3% over the remainder of the five year period.
(Can the authors of this document explain how on earth can this Partnership deliver on cuts of €4bn in 2010, €2bn in 2011, €1.75bn in 2012 and €1.25bn in 2013 – as envisioned by the DofF January 2009 forecast (see here http://trueeconomics.blogspot.com/2009/01/doff-instability-report.html) if the same Partnership is having such a hard time delivering a €2bn cut this year? Furthermore, observe that there is not a word about cutting excessively high public sector pay, freezing public sector wages or reforming public sector pensions and perks. None! This leaves the cuts to come solely from the service side.)
4. Short-term Stabilisation of the Economy
In order to maximise economic activity and employment in the short-term, the Government will:
- provide a fiscal stimulus in 2009 and 2010 by maintaining capital investment at a high level by both international and historical standards
- re-prioritise this capital expenditure in 2009 and 2010 in order to support labour-intensive activities where possible
- bring forward further proposals to support enterprises during this extremely difficult period, recognising in particular the pressures arising from currency movements, and thereby support those in vulnerable employments
- act quickly to improve competitiveness including increasing competition across the economy and reforming price regulation in areas such as energy
It is recognised that stabilising the financial and banking sector is essential to secure a banking system which is fit for purpose. Accordingly, Government action will seek to:
- assist those who get into difficulties with their mortgages; in early 2009 a new statutory Code of Practice in relation to mortgage arrears and home repossessions will be brought forward, and the mortgage interest scheme will be reviewed
- maximise the flow of credit to the enterprise sector and ensure early introduction of a code of practice on business lending
- introduce controls on the remuneration of senior executives, in accordance with the recommendations of the independent committee established by the Minister for Finance...
- maximise sustainable employment in the sector
Recognising that unemployment will rise significantly in the period ahead, the Government and Social Partners will work together to maximise employment and help those who lose their jobs by:
- designing a flexicurity approach appropriate to Irish conditions which keeps people working where feasible and equips people to return to employment as quickly as possible by maximising the availability and impact of education, upskilling and training supports
- redeploying resources to ensure efficient and timely delivery of direct State supports to those who lose their jobs including social welfare payments, redundancy payments and payments to workers in cases of insolvent companies
(Again, after wobbling through a list of secondary measures, a major area where reforms in the public sector and private sector are truly needed is left unadressed!)
More to come, stay tuned...