DESPITE Ireland’s continued economic recovery, people are still less likely to have a job the further they are from Dublin.
It’s not just about lower jobs numbers either. Regional Ireland is not only dealing with greater job losses and a slower recovery, but has also seen more people leaving the labour force since the economic crisis.
The eastern side of the country now has more jobs and a larger labour force than it did at the time of Ireland’s peak economic performance just over a decade ago, and the South-West continues to struggle; employment is still down almost 5% on 2007, and the region around Cork has an unemployment rate of 6.2% compared to 4.2% 10 years ago. Only the Midlands experienced a bigger increase in unemployment over the last decade.
The labour force in the South-West is 2.5% lower than 2007, whereas in Dublin it is 2.5% higher. This sounds like a small difference, but in relative terms it is quite significant, particularly since notable differences existed already prior to the crisis.
One of the most notable trends to emerge from the CSO’s recent Labour Force Survey related to participation rates. Ireland’s participation rate (for people aged 74 and younger) has fallen from 67.4% to 62.2% in the last decade. But it has fallen by far more in some regions than others, particularly the South-West, Midlands and West.
The labour market participation rate is the proportion of working-age people in employment or actively seeking it. A low rate suggests a substantial number of ‘discouraged workers’, many of whom may have been out of a job for a long time and lost hope of finding employment. It indicates a residual lack of confidence in the jobs market.
Yes, unemployment rates are down. But a huge part of that is clearly due to people leaving the labour force altogether.
For 15-64 year olds, Ireland’s participation rate (at 70%) is below the European average and well below our peer countries like the UK (78%), Holland and Denmark (both 80%).
Among the reasons for the continued imbalanced recovery and low participation rates is Ireland’s low level of capital investment, which hinders economic development and social progress.
The failure to invest properly in a comprehensive national broadband network, hindering the growth of firms and businesses away from the major population centres, and the lack of investment in integrated regional transport have significant negative effects on balanced regional growth.
Part of the reason for this underinvestment is the failure of government to collect revenue at a level anything close to the average of our European peer countries whom we should be trying to emulate. As long as we as a society continue to collect revenue that is well below the European average, we will never close the deficit between the services and infrastructure available in Ireland and those experienced by the citizens of our European peer-countries.
Social Justice Ireland believes the Government needs to raise €3bn in additional tax revenue each year to fund a more balanced economy and a more equal society.
Raising taxes, or creating new ones, is often viewed as politically toxic. Instead, politicians focus on things like ambitions to abolish the Universal Social Charge (the most progressive of all our taxes and charges on income) or “giving working families a tax break”. Few are brave enough to point out the obvious: that a “tax break” is not a break if it leads to the further under-funding of the public services and social infrastructure that those same working families — as well as society’s most vulnerable — need to underpin their quality of life.
I’m referring in particular to Ireland’s lack of an accessible single-tier universal healthcare system; our underdeveloped and incredibly expensive childcare system; our under-funded transport infrastructure and, most topically, our current accommodation and homelessness crisis.
To solve these problems, and achieve balanced regional economic growth, the Government needs more revenue, not less. The three key policy priorities on taxation must be:
An increase in the overall tax-take.
A broader tax base.
A fairer system of taxation.
An increase in revenue of €3bn would move us closer to the European average, which we are currently far beneath. Ireland is projected to collect approximately 26% of our GDP in tax in 2018. The benchmark for a low-tax economy is 34.9%, and the European average is far above that again. A broadening of the tax base should encompass the implementation of a minimum effective corporate tax rate; the implementation of a Financial Transactions Tax; and policies to shift the burden of taxation from away from income tax to eco-taxes.
A fairer taxation system would, among other things, mean making the two main income tax credits refundable and the poverty-proofing of all Budget tax packages to ensure tax changes do not further widen the gap between those on low incomes and the better off.
As a policy goal, Ireland can remain a low-tax economy, but it should not do so at the expense of being able to collect sufficient revenue to build the fair and balanced society that Irish citizens expect and deserve.
Social Justice Ireland is an independent think tank. More at www.socialjustice.ie