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| The Lough Erne Resort Site |
The recent announcement that the Castlehume-based, Lough Erne 5-star Luxury Hotel and Golf-course was being forced into administration due to the unsustainable debts which the owners had built up represents the latest in a string of blows to the local economy. This comes on the back of the transfer of both Quinn Insurance and the Quinn Group Ltd out of the hands of the Quinn family – both of which are likely to herald large-scale redundancies as new owners seek to ‘restructure’ their holdings to optimise profit-levels.
Last year a survey identified that one quarter of all local businesses anticipated that they would lose staff in the next two years and a further one in every eight local businesses did not know whether they would survive the same period. Unemployment in Enniskillen has doubled over the past three years and in some peripheral villages (with higher dependency on the construction sector), the unemployment rate has trebled. The very viability of the current societal structure of this county is threatened as never before.
What is behind the collapse?
The collapse in Fermanagh reflects that of the economy of the Republic of Ireland. Very many local people found work on building sites in Cavan, Leitrim, Monaghan and Donegal – some even commuted to work in Dublin and even further afield. When the bubble in the property sector in the south collapsed, some sought to continue working in the building trade in Belfast and elsewhere in the east of Northern Ireland before the property sector collapsed up north as well.
To some extent, the boom was exacerbated by the low interest rates offered by the euro at a time when the economies of central Europe were stuttering and the ECB’s priorities were to get these big economies growing. But there was clearly competition between banks to expand their loan book by offering ever more generous terms of credit – terms which were clearly unsustainable in the medium-term – and this built up a huge liability. Of course, governments in both London and Dublin decided that the banks had to be saved and that the working class would have to pay the price of this enormous bailout by higher taxation and massive cuts to public expenditure.
In Fermanagh, this agenda – agreed upon by all Assembly parties – has meant an onslaught on future public expenditure budgets. Although the impact of these cuts has been covered up ahead of the Assembly elections of May this year, it is clear that they will further devastate local public services and further pressurise the local economy.
Market Failure
What is happening to our economy is what the neo-liberal economists would term market failure but the reality is that the logic of what is happening is inherent in capitalism itself.
Capitalism has the capacity to generate considerable growth and spur technological development. The reason it is capable of these outcomes (we are not discussing its negative features), is that it is based on the self-regulating market mechanism. The theory of this is that the market allocates investment to those sectors and segments of the economy where profit is maximised. The idea is that this results in a growth in supply in those sectors which optimising net growth in the economy. One consequence is that this reduces the overall level of profitability in that sector or segment of the economy and that eventually reduces investment as it flows to some other ‘high profit’ sector. The idea is that the economy self-regulates always channelling growth to those sectors which offer the most at any point in time. Now while socialists have made a devastating criticism of this mechanism – it still characterises capitalism and its operation is central to how the global economy works today.
In the case of Ireland, the financial markets are unhappy with the profits to be made here – they are higher elsewhere – so it pulls out demand from our economy and we suffer stagnation or in the specific case of Fermanagh a massive collapse. The idea is that as workers are thrown into unemployment they will either move to places where growth is occurring e.g. Australia or Germany which will reduce the costs for their industry (and further increase profits in the short-term) or else they will stay on here and accept lower and lower pay for work (if they can find it).
The impact on public services has a similar effect. As the economy contracts, there is a fiscal deficit and this becomes an argument for privatising the remaining public assets and massively cutting back on the standards and costs of public sector provision. From the perspective of the financial markets, if they can effectively implement this, it will have the added bonus of further reducing public sector wages which will enable them to more effectively reduce those across the economy.
The unavoidable conclusion in terms of Fermanagh’s future is that our wages, which are already low by comparison to even those of Northern Ireland (75% according to the latest Labour Force Survey) must fall further. The surplus of our labour force (which is basically anyone currently unemployed and everyone leaving school over the next ten years) must leave the county – further depressing local economic demand and resulting in an even further contraction. Meanwhile, our local public services will be decimated with the agreement of all Assembly parties.
The Socialist Alternative
This economic context makes the case for a socialist alternative. We need to develop our economy on the basis of an alternative, publicly-owned (and not profit-driven) model. Only if we prevent the market mechanism’s imperative can Fermanagh sustain our people.
As a move towards this, we need to reverse all cuts to public services and instead invest in a large scale scheme of public works that will actually provide employment for people (and provide a stimulus to the local economy). To achieve this we need to build a social movement transcending the divisions of our society rooted in working class communities that will demand an end to the market dictatorship.
