One-third of retail businesses to close, wages down and jobless up


TDs have gone on a Christmas holiday for a scandalous 40 days, enjoying an "outrageous" €11m in largely unvouched, tax-free expenses in a stark illustration of the extraordinary disconnect between the political elite and ordinary people.

The Dail will not sit again until January 28, by which time employers and employees in the real, exposed economy will exist in a bleak house of rapidly mounting closures and redundancies.

At an office in the IFSC in Dublin on Tuesday night the owners of commercial property were told to expect that a third of retail businesses throughout the country will close between January and Easter next year.

The shocking assessment was delivered in a week in which definitive evidence emerged that the cosseted political and banking establishment are operating in what several observers have described as a “virtual world”.

The devastating impact of the economic crisis has been evident for some time: official figures last week showed that unemployment jumped from 4.6 per cent earlier this year to 7 per cent at the end of September.

The ESRI has predicted that unemployment will hit 10 per cent next year. But many economists believe that figure has already been reached and is likely to be surpassed: some say unemployment may even exceed an astonishing 12 per cent, or close to 500,000 people.

The Government’s decision to impose a VAT increase in the Budget is being blamed by retailers here for accelerating decline.

There is little doubt that the decision caused shoppers to flee north, where they took advantage of a slashed VAT rate and weak sterling across the Border.

Many businesses here, who have so far been reluctant to make redundancies, are instead proposing significant cuts in salary in the hope that they will somehow come through a recession which is now conservatively predicted to last for two years.

Against this bleak reality, the country’s TDs have gone on a 40-day festive holiday, the second-longest such break in all democracies, behind only Australia, which is predicting 2.5 per cent growth next year.

In Ireland, the economy will decline by at least 4 per cent, perhaps up to 6 per cent. As a result, at least 117,000 people will lose their jobs next year and a minimum 50,000 will be forced to emigrate.

Such startling analysis has not prompted the political establishment here to reassess its priorities, however.

Last week, the country’s166 TDs went on a comfortable break, secured by what one economist this weekend called “ludicrous” expenses, totalling in excess of €11m. This sum effectively doubles an average TD’s basic salary of €100,000.

The expenses can be claimed, substantially, on a tax-free basis and without the need to provide evidence of expenditure incurred.

The eight top claimants are: Brendan Kenneally (FF), €93,880; Jackie Healy-Rae (Ind) €89,705; Bernard Allen (FG), €88,831; Michael Moynihan (FF), €86,951 and Sean Fleming (FF), €86,828. Mr Kenneally said yesterday he wasn't surprised he topped the list after he received additional expenses for setting up his office.

“I was in the Senate before getting my seat back so I have had to set up a new constituency office. I am also on four committees and I was travelling a lot.” Last week the ESRI drew attention to the widening “significant” — up to 20 per cent — differential between pay rates in the private and public sector.

It has suggested urgent pay cuts for public sector employees. While members of the Cabinet have taken a 10 per cent salary cut, their lead has, overwhelmingly, not been followed by rank-and-file TDs, who still enjoy a lavish regime of salaries and expenses while the dole queues grow.

Yesterday Friends First economist, Jim Power told the Sunday Independent: “These huge sums of money are totally unsustainable, particularly when people are losing their jobs or taking savage pay cuts. “TDs almost doubling their pay through expenses and allowances is outrageous.”

Mark Fielding of Isme said the TDs expenses regime represented the “public sector mentality gone mad”. He said: “It’s no wonder public sector costs are out of control when these guys are they way they are . . . they take 40 days’ holiday just when the country is going down the tubes.

It’s absurd.” At a solicitors’ office in the IFSC last week, a retail property expert from Jones Lang Lasalle property advisers told of how a third of business will be closed by Easter.

The meeting was attended mainly by the owners of shopping centres and multiple retail outlets throughout the country: they were warned to expect a “bleak” outlook.

They were also told that with outlets closing and some landlords offering rent-free terms for two to three years they could expect retailers who manage to survive the Christmas downturn to return in large numbers to re-negotiate rental agreements.

It is understood that many retailers are already indicating that they need a 50 per cent rent reduction to survive in the current economic crisis.

It is widely accepted that the rents charged in major shopping centres and high streets are now unsustainable for many retailers, who have seen their business decimated by a combination of the economic downturn, the rising VAT rate and the parity of euro with sterling.

Independent.IE