A-Infos (en) The Celtic Tiger ...who's doing the roaring?

[News from Workers Solidarity Movement <wsm_news@geocities.com>]

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Understanding the causes and consequences of the 
boom in the economy of Ireland (well the 26 county 
state) which has become known as the Celtic Tiger.
This article complete with graphs is at
http://flag.blackened.net/revolt/ws98/tiger.html

The Celtic Tiger ...who's doing the roaring?

The closure of Seagate in Clonmel with the loss of 
1,600 jobs underlines the knife-edge on which the 
Celtic Tiger economy is balanced. But, particularly 
in the greater Dublin area, there is an economic 
boom and for many - though not all - this boom has 
brought jobs and hope for the future. Where did this 
boom come from and how long will it last?

There is little agreement on these questions, there 
is even confusion about how big the boom is. Many 
sources, including the leading international 
business magazine, 'The Economist', quote a growth 
rate of 7% a year for the last three years. The 
factors that are cited as the cause of the Celtic 
Tiger seem to depend more on the political outlook 
of who is talking, than on any objective analysis. 
So many of the reformist 'left' will refer to the 
social partnership deals between bosses and unions 
as the key, while the neo-liberal right prefer to 
point to "an economy exceptionally open to trade", 
or to very low public borrowing.

Jargon

Most people are lost by the jargon used in these 
debates but one picture can be worth a thousand 
words. The graphs below, in the context of a 
European market and products that are easily 
transportable, explain the Tiger's growth. They show 
that companies investing here pay the lowest 
corporate tax in Europe in Manufacturing and 
Internationally Traded Services, and get workers 
cheaper than in almost any other European country. 
For companies exporting services or goods with a 
high value per kg, this is what attracts them to 
Ireland*. They have low or no transport costs in 
getting their goods to the European market.

This is the reason why the computer sector is at the 
core of the Celtic Tiger. Nearly one third of PCs 
sold in Europe are now made in Ireland. 
Pharmaceuticals, telemarketing and financial 
services also follow this pattern. In 1996 Irish 
'traditional exports' of food and live animals had 
fallen to 15% of total exports, computer related 
exports on the other hand had risen to 40% of the 
total. In the last thirty years manufactured exports 
have risen from 20% to 70% of total exports. The 
basis of the Irish economy has fundamentally 
changed.

It's not us they love...it's Europe

The European basis of these exports is underlined as 
only 30% go outside Europe. In the six years from 
1990 to 1995 exports rose from just over 50% of GDP 
(Gross Domestic Product, the total value of 
production in the economy) to over 70% of GDP. 
Ireland now ranks as the third largest world 
exporter on a per capita basis. (Behind Singapore 
and Belgium/Luxemburg.)

These factors have made Ireland attractive to US 
investors seeking a way into the European market. 
OECD figures at the end of 1994 showed direct US 
investment into Ireland running at $3,000 per head, 
Spain was receiving just $200. The $3,000 alone is 
higher then the per capita GDP of most '3rd world' 
countries. Total inward investment is currently 
running at IRIRP 3,000 million a year. 'The 
Economist' estimates that trans-national firms 
account for 30% of the economy and 40% of exports.

Both Trans-national and native business receive 
massive subsidies from the state in the form of 
grants, tax reliefs and tax amnesties. Apart from 
these massive legal subsidies, the news over the 
last year has often featured corruption scandals 
involving Irish business people and politicians.

Although the form of these has varied the plot is 
pretty much the same, business person hands 
politician money in return for a hand out from the 
Irish exchequer in one form or another. Few 
prominent Irish business people or politicians have 
not been mentioned in connection with, or suspicion 
of being involved in, such scandals.

Who pays the piper?

If Irish business people are taking money from the 
Irish state, then who paid for the Tiger. That is, 
who created the conditions where there can 
simultaneously be corporate tax rates as low as 10%, 
unemployment payments to 11% of the workforce and 
money to train "a young, skilled, well educated 
workforce". From our point of view these last two 
should not only be better funded but paid for by the 
rich. As they obviously are not paying, who is? The 
answer to this was given in Portraits of a 
"Partnership" which pointed out that

"In 1987, PAYE workers contributed 80% of all income 
tax revenue. By 1995, the PAYE sector contributed 
87% of all income tax revenue, farmers contributed 
1.7% and other self-employed 11.6%. Since 1987, the 
total PAYE income tax contribution has increased by 
almost one third, adjusted for inflation. Indirect 
taxes, (VAT plus Customs and Excise duties) which 
fall primarily on the working population and 
unemployed, increased by over 40% in real terms 
between 1987 and 1996. Average real earnings 
increased by less than 10% over the same period."

In short, whether it's cash handouts to 
multinationals, favours to Irish bosses or 
supporting the infrastructure the Celtic Tiger 
requires, it's you and me, Ireland's PAYE workers, 
who are paying for it. We are paying for it twice, 
firstly through our taxes and secondly by working at 
pay rates well below many other EU workers. Indeed 
while Irish bosses seem to be getting greedier and 
greedier we are working harder and harder to make 
life easy for them. From the same pamphlet "The 
annual index of unit wages costs has dropped from 
87.9 in 1990 to 72.1 in 1995, while output per 
person rose from 145.4 in 1990 to 214.1 in 1995".

This tax bonanza for Irish and multinational 
business is far more important than the EU 
subsidises so often talked about. In reality the 
vast bulk of these are either going on 
infrastructure projects like motorways (which again 
we also pay for) or to prop up the farming sector, 
in which only 10% of the population are now 
employed.

Work and pay

Working conditions for those paying for the Celtic 
Tiger are becoming worse, particularly for those at 
the heart of the beast. The computer sector is 
notorious for its long and often unpaid hours of 
overtime, its high pressure working environment, its 
lack of job security and, in case you want to do 
anything about this, its hostile anti-union 
environment. Although some people in this sector are 
well paid the vast majority are not, Seagate with 
wages as low as IRP 160 or IRP 180 a week being one 
example.

Total employment has increased by a little over 10% 
in the period from 1992 to 1996. But this increase 
is largely due to new people coming into the labour 
force (school leavers, returning emigrants, and 
women returning to work) rather than any substantial 
decrease in unemployment. Last year the number of 
unemployed only fell by 900 and the number of long 
term unemployed only fell by 300. Of the 200,000 
extra 'jobs' created between 1989 and 1996, 41,000 
were in Community Employment Schemes and one-third 
of the total were part-time. At the same time 34% of 
the population have incomes below the poverty line 
compared with 30% a decade ago (and many of these 
are people in work). There are 33,000 families on 
housing waiting lists, an increase of 40% on five 
years ago.

Statistics like these are causing much concern in 
liberal circles who see them as being at odds with 
the existence of the Celtic Tiger. John Lonergan, 
the Governor of Mountjoy prison has referred to "an 
era of success, of me feinism..where..the weak are 
left behind". He points out that "over 80% of 
prisoners in Mountjoy left school before the age of 
16, 90% were unemployed and 56% come from six Dublin 
postal districts". The point about figures like 
these however is that they do not contradict the 
Celtic Tiger, instead they show the ethos on which 
it is being built, one which excludes those it 
judges 'uneconomic'.

So what have we gained?

It soon becomes clear that the gains of the Celtic 
Tiger for ordinary Irish workers are somewhat 
elusive. We may have a better chance of a job, 
particularly if we are willing to move to Dublin and 
live in an expensive shoe box, but in this job we 
will have little or no control of our working 
conditions. We may have extra money, but this will 
be gained not through higher pay, but rather through 
longer hours and lower taxes. Lower taxes would be 
great if they were funded by higher taxes on the 
rich but in the last budget the rich gained the most 
from tax cuts. This means that in a future slump 
money will not be available to maintain or improve 
social welfare, or public health/education without 
again raising PAYE taxes.

Capitalism is prone to such slumps, where growth 
rapidly turns into collapse. A number of factors 
make the growth of the last few years in Ireland 
particularly prone to collapse. Again from 'The 
Economist' "Pessimists would emphasise the economy's 
extreme dependence on relatively few industries. A 
global contraction in computers or financial 
services, for instance, would hit very hard".

Seagate demonstrates this and more critical 
economists like Denis O'Hearn have pointed out that 
"it is barely an exaggeration...to say that the 
difference...boils down to a few US corporations in 
computers and pharmaceuticals". In 1994, research 
shows, ten large Trans-National Corporations 
accounted for 75% of all value added to goods (in 
assembly, etc) in 26 county manufacturing. 
Manufacturing accounted for 40% of the economic 
growth.

What's wrong with the figures?

Our very low corporation tax has attracted TNC's who 
can generate extraordinary profits by importing 
pieces from high tax zones, assembling them and 
exporting again to these high tax zones. A simple 
example is found in soft drinks where the parent 
company sells the syrup cheap to the Irish company 
who simply add water and re-export at a greatly 
inflated price. This of course inflates GDP and is 
the source of the argument over how real the GDP 
figures are. There are three indications that this 
is happening in Ireland, firstly Trans-National 
profit rates are far higher here than elsewhere for 
the same processes, and when compared with similar 
Irish owned companies. Secondly, there is a low 
ratio between investment and profits.

Finally, many of the jobs in the 'high tech' 
computer sector are in reality 'low tech' assembly 
and packing of components manufactured elsewhere. 
The cynic may argue that profit is profit but the 
point is that the presence of such companies here is 
dependant on low corporation tax rates. One of the 
consequences of European convergence will be the 
elimination of such differences between EU 
countries.

The other half of this equation is low wages. Irish 
wages are amongst the lowest in Western Europe, 
thanks in part to a decade of 'social partnership' 
that has seen extraordinary levels of growth 
accompanied by minuscule increases in wages. One 
indication of this is that huge amounts of Trans-
National profits are exported from the country, 
nearly 15% of GDP. This is only possible because 
Irish workers have seen so little benefit in terms 
of wages from these high profits or, as 'The 
Economist' puts it, "why the Irish still own fewer 
phones, cars, washing machines..".

Again a cynic (or many of our trade union 
bureaucrats) might argue that low wages are better 
then no wages. However Europe is expanding to take 
in the low wage economies of Eastern Europe so this 
phase is soon to end. Again Seagate is an example of 
this, low wages rates in the far east were cited as 
a reason why Ireland was no longer a competitive 
place to manufacture.

In its major analysis 'The Economist' points out 
that many of the conditions which created the Celtic 
Tiger are starting to vanish as Ireland catches up 
with Europe. It concludes "If Ireland has another 
decade as successful as the last one, it will be a 
miracle economy indeed". Elsewhere it points out 
that Ireland's comparatively high growth "owes much 
to the slowdown elsewhere in Europe".

Another example came to light in August with the 
threatened closure of the massive 'Fruit of the 
Loom' textile plants. The 'Irish Times' revealed 
that the average earnings of the 700 workers in 
Buncrana are IRP 200 a week. In Morocco 'Fruit of 
the Loom' is already operating a similar operation 
with average wages of IRP 30 a week. Dropping to a 
wage of IRP 30 a week is simply not an option in 
Ireland.

Irish workers have been sold a 'pig in a poke' by 
the trade union bureaucracy. We have been told the 
'poke' (bag) contains future jobs, and gradually but 
constantly increasing wages. The reality is that 
business believes it would take a 'miracle' for the 
boom to continue for another decade and, far from 
re-investing the profits here, large percentages are 
being exported for investment elsewhere.

All is changed

The Celtic Tiger has come to mean much more than the 
economy. Over the last couple of decades southern 
Ireland has gone through massive changes. 
Agriculture is now a minor part of the economy. 
Reliance on Britain is now replaced with a reliance 
on the USA for investment. The move to a majority 
urban population created the conditions where a real 
struggle could be launched against clerical 
domination of the southern state. This struggle is 
by no means over but it is transparently obvious we 
have come a long way since the 1980's when divorce 
was illegal, information on how to obtain an 
abortion elsewhere was illegal and the Bishops could 
keep the state from prosecuting priests involved in 
child abuse.

The Celtic Tiger has thus become a metaphor around 
which a new 26 county 'national' consensus is being 
defined. One that finally buries De Valera's "comely 
maidens dancing at the cross-roads". A new way of 
being 'proud to be Irish' is being sketched. This 
new consensus is as objectionable as the old one. 
'The Economist' points out that "for more than a 
century the view of Ireland that the Irish knew best 
was looking back from a boat heading somewhere 
else".

In a short period of time Irish workers have gone 
from a culture when economic emigration was a way of 
life to one in which racist abuse is heaped on those 
who wish to come here. Even the liberals are keen to 
draw a line between 'real' and economic refugees.

The Celtic Tiger is at the heart of this growth in 
racism because it assumes bosses have our best 
interest at heart. This is the assumption of 'social 
partnership', that workers and bosses agree a deal 
from which we all gain. Racism has become a tool in 
the hand of the state to 'explain' to Irish workers 
why we have yet to gain from this deal.

The reality is that 'social partnership' has stopped 
us gaining the improvements in living standards that 
the booming economy owes us. The boom will not last 
for ever. We either win these improvements while it 
is on or the struggle becomes far harder. Seagate 
shows that when the boom turns to a slump the bosses 
will reward loyal workers by dumping them straight 
back into unemployment.

At the end, the metaphor of the Celtic Tiger is all 
about the modern Ireland we live in. For anarchists 
it is also all about everything that is wrong with 
this society and a demonstration that a revolution 
is required to tackle these problems on a permanent 
basis. It is not a time to wait out until the slump 
makes workers angry over betrayal. It is a time to 
awaken that anger under the very nose of the tiger 
and directed at it.

Andrew Flood

---------

Celtic Tiger repression

It is no co-incidence that the years of the Tiger 
have also been years in which the state has given 
itself new draconian legislation, like the Public 
Order Act, to use against those who step out of 
line. It is claimed that the phrase 'Celtic Tiger' 
was first used on 31st August, 1994 but was not 
prominent in the news as that was also the day of 
the IRA cease-fire. Thus, lacking the excuse of 
"terrorism", the state invented crime waves to 
justify this new legislation but in practice it has 
been used against community protests like those of 
the anti-water charges and anti- heroin movements. 
In the workplace, the 1991 Industrial Relations Act, 
which makes many common forms of union action 
illegal, serves the same purpose. Mr Lonergan's 
prison (see main article) is very much a part of 
this model, the message is 'get down to work under 
the Tiger and don't complain'.

---------

Britain and the USA

The figures show that despite the breaking of the 
traditional relationship with Britain (which now 
accounts for less then 25% of exports rather then 
the 45% of twenty years ago) the economy has a 
typical neo-colonial structure with the most dynamic 
sectors being both foreign owned and highly 
subsidised by PAYE taxes. Alongside this is the 
massive rate of US investment ($3000 year/person). 
These figures should sound a note of warning to 
those republicans who so eagerly greeted Bill 
Clinton as an ally against Britain. In the longer 
term it could be a case of out of the frying pan and 
into the fire!

*In this article 'Ireland' and 'Irish' are used to 
refer to the 26 county economy.

This article is from Workers Solidarity No 53 
published in January 1998
-- 
<><><><><><><><><><><><><><><><><><><><><><><><><>
           Workers Solidarity Movement

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