The European Commission’s second quarterly report today, states that Ireland has made “Important progress” on it’s public finances, banks and economic reform measures. Small businesses and the unemployed here in Thurles might not agree and possibly look to the future in a slightly poorer light. Those who now own this country, namely the EU and IMF, lowered the Irish unemployment rate forecast for this year slightly, from 14.5% to 14.3%, but warned that the rising figures for long term unemployment needed “Considerable attention“.
On Thursday, President Barack Obama talked the American Congress and the American nation through his “American Jobs Act,” a plan to create jobs in America now. It will of course be up to Congress to act on his set of bipartisan ideas, that claim will put people back to work and put more money into the pockets of working Americans, thus hiking consumer spending.
Here are a few important points about how the American Jobs Act plan will work, which is worthy of scrutiny by our own present Irish Coalition Government.
Firstly, it provides a tax cut for small businesses, not big corporations, to help them hire and expand and provides for an additional tax cut to any business that increases its pay roll. Yes it would require the managers of small businesses here in Ireland, to take a small leap of faith, but this leap could be encouraged if the tax cut itself was a real incentive. Keep in mind that our population stands at 4.58 million, our Retail Sales Index decreased 0.6% (July 2011 compared to July 2010) and our Standardised Unemployment Rate is 14.4% (August 2011) as per CSO Ireland. The last time unemployment reached near the current highs was in 1994.
Irelands Unemployment Rate
Ireland’s unemployment rate now exceeds the average rate prevalent in the European Union. The unemployment crisis is a function of the collapse mainly of the construction sector and related sectors associated with the so called housing bubble. Presently the lack of access to credit in our economy and the fiscal consolidation measures enacted by Fianna Fail, leave us somewhat stagnant.
A factor often proposed as a contributory factor in our unemployment crisis is the cost of Irish labour, but the sums do not add up. Irish labour costs in the wholesale/retail sector are 10.9 per cent lower than the EU average.
Labour costs in the EU rose by 1.3 per cent in the hospitality sector between 2008 and 2010 and by 4.9 per cent in the wholesale/retail sector over this same period. By contrast, note labour costs in Ireland declined in the hospitality sector and were just 1.3 per cent in the wholesale/retail sector.
Secondly, this proposed Act should put people back to work, including teachers, first time employees and construction workers who will begin repairing their crumbling bridges, damaged roads and public schools, with projects chosen by relative need, and not by ‘cute hoor,’ vote catching politics, the likes of which have existed, and I regret to relate, continues to thrive here in Ireland. Construction remains a drag on Irish employment, with the sector accounting for more than 40% of jobs lost in the year, to the fourth quarter of 2010.
I claim to be no economist, but the American Jobs Act rings of fair logic and if they have their figures right and support is forthcoming, it will be fully paid for by asking the wealthiest in their midst to begin to pay their just and fair share.
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