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State workers are whiners - private sector workers in Ireland stomach the brunt of pay and pension cuts

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Liam Doran speaks to the media at Croke Park last Thursday.
Liam Doran speaks to the media
 at Croke Park last Thursday.

Viewing the sequester controversy in the U.S. from this side of the Atlantic last week was a reminder of how much we have in common with you guys over there.

The financial crisis in Europe, in the wake of the global downturn, has been caused largely by governments (like in Ireland) that can't balance their spending with their revenue and that run massive, unsustainable budget deficits.   And it's the same in the U.S.

You don't have to be Bill O'Reilly to see that America is in deep financial trouble, and that Uncle Sam's national debt simply cannot go on increasing at its present rate.   It's got to the stage now where another trillion dollars hardly causes a raised eyebrow!  

Just like here, the answer will be found in a balanced program of increased taxes and cutbacks in spending. President Obama wants more of the former and less of the latter, the Republicans vice versa.

There is certainly plenty of room for higher taxation at the upper end in the U.S., and that is something better off Americans are going to have to live with (unless they want to leave the debt problem to their children and grandchildren).   Equally, there is a need for a major reduction in government spending in the U.S., and so far there is little evidence that Obama is willing to do that on the scale that is required.

But America is running out of road. Just like in Ireland, and in other European countries like Greece, Portugal, Spain, Italy and even France and Great Britain, a major re-balancing of the state finances is needed urgently in the U.S.

In some European countries, like Ireland and Greece, the day of reckoning has already arrived. Corrective action was forced on us by the IMF and the EU in return for enough bailout money to enable the country to function until we can get our finances back in balance.  It was either that or turn into Argentina.

But the day of reckoning is also approaching in the U.S., probably faster than many people over there realize.

In Ireland, we've been though several years of so-called "austerity budgets" which cut spending and raised taxes and charges.  And it's going to continue for at least another two years as we try to reduce the budget deficit down to a sustainable level of around three percent of GDP.

Getting the books to balance again has been made far harder for us by the mountain of private bank debt which was added to our national debt, something that was completely unjust and which was imposed on the Irish people to save European banks and the euro.  At least in the U.S. you don't have that problem.  

But there are many similarities in the situations on the two sides of the Atlantic.  There are two big components in state spending, one being welfare programs or "entitlements" as O'Reilly calls them over there (that's when he's not ranting about it as "stuff for the folks").

There has to be major reform in that area both in the U.S. and even more so here.  If Bill knew what goes on in Ireland with "entitlements" he'd have a seizure! That's something we'll be coming back to in this column in the weeks ahead.

This week, however, we want to look at the other huge part of state spending, which is state payroll. In the U.S., much of it is decided at individual state level.  Here it's obviously decided at national level.  

One of our problems is that in the past workers on the state payroll here have tended to see the state as a bottomless money pit.  

In the private sector, market pressure dictates pay rates and efficiency levels.  In the boom years pay in many industries (construction being the best example) shot up.

Since the downturn it has come down again just as quickly.  Workers at all levels in companies under stress have accepted pay cuts, higher output demands and longer working hours so that their companies could show a profit and they could keep their jobs.

In spite of this, hundreds of companies have not survived and tens of thousands of workers in the private sector have lost their jobs.

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