AN ECONOMIC VISION FOR POST COVID IRELAND A new business model involving workplace democracy, green programmes, public housing initiatives, increased supports for families and workers and a climate friendly agriculture initiative are just some of the possibilities outlined by SIPTU researcher MICHAEL TAFT, as he considers the post-Covid ‘new normal’. Where does one start? We are witnessing the socialisation of the private sector, whereby the State has become the income provider of last resort. The government has provided massive subsidies to households, and we have seen what can happen when the public sector is given the tools to mobilise resources in order to deliver services. The optimists among us see the potential for a new normal. However, without a programme capable of generating majority support, without the ideas to combat the orthodoxy, we are in danger of slipping back into the ‘old normal’, if only because of inertia. So where do we start our way forward? We start where all economies start – with the productive sectors and the producers (aka workers). Without a strong productive economy, travelling the high road of value-added, skills, wages and investment, our hopes for strong public services, social protection and living standards will be disappointed. Of necessity, the State has had to close down huge swathes of productive activity. As there is no permanent exit strategy without a vaccine, we need considerable investment in the WHO’s protocol: test, trace, isolate and support. During this period, and the phasing out of the lockdown, we need to protect businesses to ensure they are in some sort of shape to return to activity and employment. The government’s package of business supports puts up so many barriers businesses will only be able to access them with great difficulty, if at all. More fatal to the government’s package is its reliance on loans. 22
Businesses are piling up debts during closure as they struggle with fixed costs without compensating revenue. So what does the government offer? More debt. A progressive programme would remove the myriad of barriers, increase access and provide subsidies debt-free while minimising the cost to the Exchequer. This can be done by: Taking equity shares whereby the state becomes part-owner of an enterprise in exchange for ‘investment’. Grant-and-tax subsidies whereby direct grants are provided, especially for SMEs and repaid by a small surcharge (e.g. 5 percent) on profits at 0 percent interest. In both cases, firms only repay when they have the means and, in the case of grant-and-tax subsidies, a zero or fractional percent interest rate would effectively write-down tax repayments. Second, to facilitate firm survival, we need to move quickly to a system of collective bargaining both at firm and sectoral level. This can maximise the benefits for all stakeholders in the enterprise and, so, the economy. The hospitality VAT reductions in the last crisis resulted in higher profits but lagging wages and working conditions. But, even more important it is a matter of driving firm performance. The jury is not out. It came in a long time ago. Collective bargaining and enhanced employee participation increases productivity, which in turn drives high-end economic growth. Also, the establishment of sectoral collective bargaining ISSUE NUMBER 2 – 2020 - UIMHIR EISIÚNA 2 anphoblacht
