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Cost of living package

Precursor to a new austerity offensive

14 February 2022

Finance Minister Paschal Donohoe.

It is easy to be confused about the current cost of living furore. The government claims that new measures will alleviate the effect of the sharp rises in the cost of living, especially in energy costs. The opposition parties predictably say it's not enough. The unions talk tough about wage increases.

However the different voices disguise a new period. Irish capitalism is beginning a class offensive without any sign of a genuine alternative.

The cost of living increase is set at €505m.

The Government announced plans for an electricity rebate of €100 before Christmas but has now decided to double this to €200.

Public transport fees will be reduced by 20pc from the end of April at a cost of €54m.

Families which are in receipt of the fuel allowance will receive a lump sum payment of €125 before St Patrick’s Day, at a cost of €49m.

The Drugs Payments Scheme, which sees households not having to pay more than €100 per month on specific medicines, will now be reduced to €80 per month at a cost of €17million. However, the decrease will be temporary.

The family cap for school buses will be reduced to €150 per family at primary level and €500 per family for secondary schools.

The Family Working Payment for low paid workers will also be brought forward and kick in from April 1 as opposed to June 1.

Is it enough?

It would appear not, and the Government has admitted as much. Opposition parties were quick to say the plan doesn't go far enough.

Labour party spokesperson on Finance, Ged Nash called the proposals half-baked and tokenistic. Social Democrats co-leader Catherine Murphy accused the Government of “tinkering around the edges”.

Sinn Féin said that they would make direct Cost of Living Cash Payments to support workers and families, in addition to a €100 electricity credit, bringing families on the lowest incomes €500 to offset the increasing cost of living.”

People Before Profit tabled a Dail motion to increase the minimum wage to €15 an hour, but admitted it would not be adopted by the government.

What is self-evident is the purpose of the government announcement. It is not to resolve the problems working class families are facing. Money is to be double counted and inflated, temporary payments made, the major burden of housing ignored and the door closed on the issue.

Taoiseach Micheál Martin said that the €500 million outlay was "mostly one-off" and would not be repeated in the summer if the rising rate of inflation does not level off. He accepted that the package will not solve the crisis in itself, but said it alleviates pressure on families.

"packages of the sort of yesterday’s will never fully obviously meet he current inflationary cycle in terms of the scale of it but it will help and it will help to alleviate the pressures that are on many families particularly hard pressed families."

The Irish Congress of Trade Unions (ICTU) are now recommending members ask for increases in the range of 2.5% and 5.5%.

However; "Every pay negotiation would have to be cognisant of the employer’s ability to pay, some will be less than the 5.5%, while many other companies were very profitable and could afford to pay wage increases".

Patricia King, the General Secretary of ICTU, called for further government action.

One example was the call on the Government to relax the Small Benefits Exemption rules for this year. Employers can give A non-cash one-off payment of €500 tax free. The union leaders want this increased to €1000.

It would be thought that the unions would be gearing up for a mass campaign. Instead they want the government to change rules for employers so that they might offer a bonus. Shortly they will be entering talks with the government on public sector pay.

After decades of sweetheart deals their influence in the private sector is low, which is why they aim at government regulation. Most public sector workers are unionised, so they negotiate with the government. However, just as private talks are based on ability to pay, so also are national pay talks. As has happened over decades, a sum will be agreed and the main activity for the unions will be policing the agreement and keeping their members in line.

Partnership between government and unions does not offer a way out. A political movement has to be built. PbP recently put a motion in the Dail calling for €15 hourly wage, but admit there is no chance of it being adopted. The next step is to bring that demand from the Dail to the streets. One major opening lies with the announcement of a 20% cut in transport costs. Up until now the government has denied having any real responsibility for transport, shifting the blame for ongoing privatisation and increasing costs to the National Transport Authority. Now they have shown their hand we should demand universal free public transport - a major saving for workers and a big step towards climate change targets.

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