There is no possibility of 1.8 million workers repaying around €200 billion in debts arising from the collapse of the banking system within any reasonable time frame, outgoing president of the Irish Congress of Trade Unions Jack O'Connor has said.
In an address to the organisation's biennial delegate conference in Killarney this morning he said that so far Congress had not supported the call for default on debts. However, he said that "we may well come to do so".
He said there was no moral justification for the proposition that "we should have to pay the recklessly accumulated debts of those at the top of the banking system".
Mr O'Connor said the country had to extricate itself from "the straitjacket" of the EU/IMF/ECB bailout agreement, which, he said, was suffocating any prospect of growth in domestic demand. He said without such growth there would be no appreciable recovery.
With resources being run down and the uncertain response of the European Central Bank, Mr O'Connor told delegates that the potential consequences of a unilateral default represented a risk.
“We can be pretty certain it would mean balanced budgets overnight - which would be devastating for working people and all who depend on public services.” Mr O’Connor said the problem did not lend itself to resolution in a “narrow national context”.
“It can only be solved within a European framework which would involve burden sharing and some kind of limited transfer union and a restructured democratically accountable ECB.”
Mr O'Connor called on the Government to develop a scheme with pension fund trustees to secure 5 per cent of their assets - €4 billion - for investment in infrastructure and venture capital in the domestic economic "on the basis of exemptions from the recently-introduced pension levy".
He said this would "more than offset the deflationary effect of the €3.6 billion cut scheduled for Budget 2012 and create upwards of 80,000 jobs".
Mr O’Connor also condemned plans to “dismantle” the wage-setting mechanisms for thousands of low-paid workers, claiming they were motivated from the same sentiment that drove “the race to the bottom” during the boom years.
“If job creation was really the objective, the issue of upward only rent reviews would have been dealt with long ago,” he said.
In the wider European context, Mr O’Connor said the European economy was on a growth trajectory. However, this was been overshadowed by the threatened default of one or all of the stressed countries, he said.
He suggested a Marshall Aid-type strategy was now required to rescue Europe both economically and politically. Those in charge have, however, opted for “the shock therapy of a reparations course” instead.
Mr O’Connor claimed the ECB was applying a supply side remedy to a demand side crisis “aggravating the problem rather than alleviating it”. “They have reduced the once great institutions of the European project to mere debt collection agencies for the major banks, obstructing recovery and inflicting misery on the citizens of Europe,” he said.
On the issue of mortgage default, the union leader praised two-year moratorium on all house repossessions secured by the Labour Party in the Programme for Government. “People must receive a firm and absolute guarantee that their homes will never be repossessed as long as they are making a genuine effort to service their mortgages,” he said.
Meanwhile, a delegate at the conference has called on the entire leadership of the trade union congress to step down.
Sinead McKenna of the Civil Public and Services Union said while the recession should be an ideal recruiting ground, members were leaving unions.