There is currently much justified political commentary about our current, and growing, pension crisis. I say ‘political commentary’ because, while the matter is political in every respect, the discussion avoids the political ‘hot potato’ issues that underpin the crisis in the same way that Irish political commentary generally ignores most inconvenient truths. The inconvenient truth this time?
The labour and housing markets are both deliberately designed and constructed in a manner that can only perpetuate and grow a pension crisis.
The easy elements that make up the crisis are routinely discussed in a circular fashion that takes the issue nowhere. For example, many people quite rationally expect their state pension at age 65 and righteously oppose the age increases that have taken place. Moreover, the full pension (which not everyone gets) of €12,912 may be ‘generous’ by international standards, but it’s not that much over half of what a full time worker gets on the minimum wage (€20,685). How comfortable are the lives of our massive band of minimum-waged workers? Not very.
As we listen to the daily news cycle we learn that 20% of householders are now renters, a figure that has doubled in a decade, and that 58,000 people aged in their 50s are renting. When we then consider that one-fifth of private sector renters pay over 40% of their income on their rent, we can see the problem shining a big flashing light (Rory Hearne is doing herculean work in this regard):
“Low pay and high rents, both of which are not alone deliberate Government policies but ideological holy grails, are intrinsic to the pension crisis and it will not be possible to solve it without addressing both”.
Consider pay. There are two things medium and well-paid people can do that low-paid people simply cannot do. And both are in the nation’s long-term interests. The first thing they do is contribute more tax to the central exchequer to enable the payment of the state pension. This seems so obvious that it should hardly need to be stated at all, but it is never stated in the pension debates I hear. You cannot have a pension fund, public or private, without contributions to that fund. The money has to come from somewhere and, in the case of the state pension, ‘somewhere’ is taxes paid by workers and consumers. The more we earn the more tax we pay, and the better we as a nation are able to afford both our increased longevity and a lower proportion of us being in work to pay ‘contributions’ (taxes) too.
The second thing that low-paid workers generally cannot do is to make their own private pension provision. Private pensions, and their attached costs and fees, are routinely presented by the avaricious private financial sector as a panacea for our pension crisis and, with the destruction of occupational schemes continuing apace, for all their flaws and greed they have a vital role to play. But how many workers on the minimum wage paying 40% of their income on rent (I know a low-paid worker who pays 65% of her income on rent) are paying into private pensions? Employers who can’t – or the many who simply won’t – breach what they consider the effective ‘pay ceiling’ of the National Minimum Wage are certainly not going to provide even minimal pension schemes, and no minimum wage worker can realistically afford to do it themselves. In fact, even moderately paid workers can’t.
Low pay, sustained and encouraged by the Government’s open door policy to lobbyists for retail, hospitality and tourism and many other sectors, is a massive contributor to the pension crisis and will eventually lead to not only homelessness, but hunger and possibly social breakdown itself, if even the state pension cannot be sustained and paid to all.
I was prompted to write this blog post listening to the usual circular discussion on a few aspects of the pension crisis on RTE’s ‘Morning Ireland’ on Monday September 27th. Sometime later the show turned to Germany’s election and which parties are likely to lead that country’s next coalition. As I listened, the presenter was at pains to get both guests to say that the result was ‘the centre holding’. Remember the ‘centre holding’ that Michael Martin and Leo Varadkar campaigned on during Election 2020? It’s important in RTE that the centre holds it seems, and in Germany it has. The next German Government will certainly be centrist, notwithstanding the worrying 11% for the racist far-right AfD.
But there was another story from centrist Germany that I didn’t hear covered on the show. It’s a massive story. In fact it came from the nation’s capital itself, Berlin. Berlin voters have just passed a Referendum supporting the forcible buy-back of private housing from property companies who own more than 3,000 rental units in the city. This could lead to the transfer of 226,000 apartments into public hands, reflecting German citizens’ concerns with rising rents and abuses of the market by large companies such as ‘Deutsche Wohnen SE’. Compare the holding, and passing, of this Referendum in centrist Germany to statements recently made by the Leaders of both Fianna Fail and Fine Gael expressing concern FOR LANDLORDS! If the actions in the housing market in Berlin are ‘centrist’, how are we to describe the politically-engineered sociopathy of our housing market by Fianna Fail and Fine Gael?
In the discussion of the pension crisis it is necessary to join the dots. Circular half-baked discussions which deliberately avoid all the issues that sustain the crisis achieve nothing, and let those who can act politically to address the issue off the hook. For as long as encouraging low pay and high rents are ideological goals of Government, the crisis will continue, will deepen and will become economically and socially disruptive.
We need a Government prepared to create a new social contract, one that puts workers, tenants and pensioners ahead of the 1%.