Ireland needs a "plan B" for a vibrant economy which can survive the withdrawal of foreign direct investment in the next decade, the director of the Nevin Economic Research Institute (Neri) has warned.
Neri economist Tom Healy has also called on trade unions to talk more about the value of a "social wage" , and to contribute to a "constitution or charter" encapsulating a long-term vision for Ireland.
Speaking at the Impact education division conference in Galway on Friday, Mr Healy noted that there was no guarantee that the "Facebook, Google and other Silicon Valley companies of Dublin 1 and 2" would still be here in ten years, given the rapid pace of global economic change.
Ireland's heavy dependence on foreign direct investment - supporting 25 per cent of gross domestic product (GDP) - exposed the fact that Ireland lacked a "well-rounded, native enterprise sector", comparable to that found in Finland, Norway and other European countries of similar size, he said.
Two politicians – Eamon de Valera in the 1930s, and Seán Lemass in the 1950s – had both made attempts to develop an indigenous sector, but so far this State had not succeeded in developing a “sufficiently strong native base”.
Long-term vision also extended no more than five years in public discourse, yet 30 to 50 year visions were required, he said.
Napoleon Bonaparte had once advised that constitutions should be "short and vague", and the same could apply for economic visions, he said.
What Ireland required was a constitution or charter “general enough to capture the uncertainties” and “specific enough” to articulate a vision.
Trade unions had an important role to play in this, he suggested.
Mr Healy said that more debate was also required on the value of a “social wage”, encompassing provision of education, early and elder care, health care, community services, pensions and homes.
Ireland’s social wage was “completely out of line with Europe”, he said, and Ireland was “bottom of the chart after Denmark” in measuring social insurance as a percentage of GDP in 2012.
France, Holland, Germany and the Czech Republic were among the highest scoring in terms of social insurance rates as percentage of GDP in 2012, he noted.
Effectively, Ireland was at the "bottom" of the scale as Denmark was a special case, he said.
As Neri economists have explained, Denmark has a system of “flexicurity” which combines flexibility in the labour market, social security on income, and an active labour market policy with obligations and rights for the unemployed, sustained through adequate taxation.
Mr Healy said that the “moral narrative” approaching the next general election was about “cutting tax”, whereas the social wage was the real issue, he said.
He challenged all three strands of a “narrative” which, he said, maintained falsely in his view that Ireland had the “most progressive tax system in the world”, that the public was “over-taxed”, and that tax cuts would boost economic growth.
Earlier this week, Mr Healy told primary teachers at the annual INTO conference in Ennis, Co Clare, that prioritising tax cuts ahead of investment in early childhood development would be “immoral, economically irrational and fiscally irresponsible”.
In a paper published by Neri on its website last January, he signalled that the “welcome and tentative signs of recovery in employment, retail sales, and general market confidence coupled with the exit from the bailout in 2013/14 should be treated with caution”.
“The risk of returning to “business as usual” is high, as political and business culture has not shifted that significantly,” the paper warned.
Mr Healy invited Impact delegates and other trade unions to contribute to the paper which, he said, he was currently updating.
