Tag Archives: joan burton

Getting to the Hartz of the Irish unemployment problem

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Earlier this week I chanced to listen to an interview on the Pat Kenny show. Pat interviewed the Minister for Social Protection, Joan Burton, about reforms and unemployment etc. We have a major problem with unemployment in this country and so any reform is worth looking at if it can assist in solving this issue.

A few things struck me.

First, there was very little discussion of the role of aggregate demand. The minister did note that lots of the unemployed were such consequent to the collapse of the housing bubble. But the ongoing flatlining of the domestic economy was scarcely mentioned.

Second, and flowing from this, much of the debate was on supply side elements. The minister referred time and again to the german (and austrian) experience. When it was noted that these countries were not suffering recession (low aggregate demand) the response was a confused agreement – yes but they have good labour market supply side policies. To my ears this came across as a thinly disguised eulogising of the Hartz reforms.

the Hartz reforms consisted of two elements : a radical shakeup of the state support services, in effect merging and streamlining job agencies, welfare offices, job centers etc and a significant push to force people to take jobs regardless. The first element is surely uncontentious- streamlining and making it easier for people to find any posts that might exist is a good thing. The second however needs debate. It amounted to a significant cut in the payments to the longterm unemployed and a gradual shortening of the period of unemployment benefit.

the premise of the Hartz reforms was that the basic economic environment was, for Germany, benign. There were, it was argued, jobs there for the longterm unemployed BUT the social welfare rates were such as to discourage people taking these.

So what was the effect? A recent IMF paper summarises the finding of research on the issue. While the reforms improved the lot of the employed, it made the situation of the unemployed worse off. It did reduce the longterm unemployment rate by a small amount. Other research supports this overall finding.  Further research suggests that the package of Hartz reforms led to an increased substitution of (especially less skilled) full time work by parttime work. Finally, much of the gain appears to come from increased efficiency in matching – in other words the first part of the reforms, improving communication. Finally, Germany has no minimum wage – the resultant wage moderation and other unique features such as hour banking also matter hugely.

So, if we are going to go down the Hartz lines, lets have an open debate on this. By all means lets see a (labour) minister cut the longterm unemployment payment, in the hope that they will find jobs that are there to be found with the aid of an improved welfare office. But lets not think that this is going to be painless and lets also recall that these reforms worked for Germany in large part by making the domestic economy worker cheaper and more insecure while the economy as a whole powered ahead under an export engine. We need to be very cautious about replicating this in an environment where our exports are….fuzzy.

Anglo, Politicians and the bogs…

I kinda like Joan Burton. No, not in strange way, but she always seemed (at least in 2008-9-10) to have a good solid handle on the banking calamity. It’s a pity she got the smeared end of the stick when labour went into government. Actually, when you think of it – labour got the ‘go away out foreign and don’t bother us’ Foreign Ministry post for its leader, the ‘minister for hardship’ for Howlin, the ‘minister for rolling back the welfare state’ for Burton and all for what?

Anyhow, I kinda like her.

I have no animus towards Billy Kelleher TD either. I have met the man once, over a coffee at a summer school and he seemed an affable enough version of FF V2.03, Haughey free and not too infected with the Bert virus.

That said, the interplay between the two of them on the RTE Saturday news show “Saturday with Claire Byrne”  (what used to be Saturday view when Rodney Rice ran it) was enough to cause me to begin to lose the will to live. In fact there were two episodes, either of which would cause one to lose hope in the ability of the Irish political system to take any form of action.

The first interplay was around the Anglo tapes. Claire Byrne asked both of them their reaction and also about  the allegations (which I note here) by the Taoiseach that the main thing from any inquiry was to uncover collaboration between FF and the bankers (because we didn’t know that they were close….). All round the country people are outraged at the arrogance and petulance of the anglo dudes and still, for we are a charmingly naieve people, look to the political class for leadership and some indication that there will be justice or even vengeance. Instead of a measured reaction from two intelligent people about the tapes, about the constitutional problems of the dail holding inquiries that apportion decisions and blame, about the nature of banking and finance, we got…squabbling. Political point scoring, squabbling, polite point scoring and name calling, and a degree of disconnect from the issues that was dispiriting. It’s a game. What we have in politics bears as much resemblance to the concerns of the ordinary world as Kabuki theatre does to the realities of modern day Japanese life.

The second spirit sapping discussion came at the end, neatly bookmarking a show that resembled a political sandwich with a policy vacuum as filling. We heard about the turf cutting standoff. Farmers had moved heavy machinery onto protected peat bogs and were engaging in strip-mining it.  Lets be clear – this wasn’t a few auld lads with sleans and bottles of tae but commercial contractors, doing to protected boglands the same as illegal mahogany loggers do in the rainforest .  This was being done on boglands that were designated special conservation areas under EU and Irish law. There were police present including a superintendent, a senior officer. The reporter noted that they were leaning over a ditch observing the law-breaking…observing it mind, not stopping it, not arresting those engaging in it, looking on at it. Again here was an opportunity for our political leaders to show leadership. During the show we had talked about the need for the Anglo issues to be dealt with, in criminal court if needed. We had talked about the legal aspects of the dail inquiry and on the need for forensic and detailed examinations of what happened when where and how. Then we moved onto flagrant, public, mass law-breaking in front of police….the two politicians hemmed and hawed, admitting that yes it was a breach of the law but there were circumstances, issues, complications etc.  I asked how many of those breaking the law on the bog would that evening be supping stout in the pub decrying the anglo chaps and urging the full rigor of the law to be applied, to silence.

If we don’t get leadership, if we cant get leadership, from two intelligent thoughtful politicians, if we cannot get them to urge on national radio that the law be respected fully and it be challenged by legal peaceful means only as we are a mature and peaceable democracy, then we wont be always. People will rightly despair that a state which allows open defiance of a senior police officer who is not then supported 100% by politicians, that that state can ever come to grips with as complex a catastrophe as the banking crisis that has engulfed us.