StatusIreland

On April 2nd 2009, Ireland’s 3 largest stockbrokers; Davy, Goodbody & NCB issued a collective response to the current challenges facing the Irish economy. It is clear from the report that Ireland is in need of major change on many fronts.

One of the areas of change spoken about in the report is the area of the public sector. Public sector reform is, at this stage, a jaded conversation but clearly when top economists point to it as an area of serious concern then it is a sign that things need to happen here.

“The public pay bill has almost tripled since 2000 to reach almost €19bn (encompassing the recent pensions levy) in 2009. This increased cost base has led to a cost-push impact on prices across the economy and has not been matched by improvements in productivity. At a minimum, savings of c.€4bn need to be made to bring public pay/GNP back to 11%, in line with the 2003-2007 average.” – Joint Broker Research Report

In 9 years the public sector pay bill has tripled but equally as important is that productivity is nowhere near this and this fact is evident in almost every section of the public sector with health being the biggest of the black holes.

In order to get this economy turned around it will take at least 3-5 years but this is only if changes are put in place right now. The area of public sector pay has to be adjusted. It will cause pain to those who probably have never before experienced it but there will be little or no sympathy from the general public who have been shouldering 99% of the burden of this bust until now.

Unemployment at the end of March stands at 11% and counting. 369,100 people work in the public sector so there is room for optimisation in every department. There are other ways to reduce this number for the short term such as offering an incentivised career break for 3 years or so, offering early retirement to senior management, offering shorter working weeks etc.

The government have estimate that in 2009 they will need to borrow €23 billion to balance the books, a figure revised up from an €18 billion estimate only a few weeks before. The problem is serious.

Reducing the headcount will help to reduce the problem in the short term but more importantly put the country on the road to a speedier recovery. It is time that this government finally got it’s house in order. The same people have been there for long enough.

ireland davy, economy, goodbody, Irish government, NCB, public pay bil, public sector, recession

Out of the 20 highest ever single-day percentage gains on the Dow Jones two have occured in 2008. The 5th largest percentage gain was on October 13 and the 6th was on October 28, with gains of 11.08 and 10.88 respectively. With the exception of a 10.15% gain in 1988 every other of the highest gains occurred during the great depression.

Out of the 20 highest intraday points swing (difference between day highest and lowest points throughout a day) 16 have occurred in 2008.
Over the past week or so in Ireland there have been plenty of job announcements
[jobs, jobs, jobs, jobs, jobs] but even more announcements of redundancies (no links needed).

The association between stock market fluctuations and job fluctuations is risk. Uncertainty in both areas means that some people will take a risk and some will not be willing to take any risks. Governments around the world are trying to sure up banks and industries so that confidence will return and the element of risk will be reduced.

So if you want to know when the recession is over then ask yourself if you would invest in a bank or take a mortgage out for a second home. If the risk is way too high then you’re probably still in a recession.

Finance, Jobs, ireland confidence, jobs in ireland, recession, stock market