Frustration and anger at the Ansbacher scandal has led some people to ask what the Celtic Tiger has done for them. An impression is being created that somehow or other all the benefits of the remarkable economic growth of the past six years accrued to tax dodgers, and that the man or woman in the street has gained nothing from our remarkable economic success.
It may be as well that this kind of myth be scotched before it takes deeper root in the minds of the ordinary PAYE workers. The fact is that, while undoubtedly some have done better than others, and disproportionate gains have certainly been secured by better-off people, the benefits of this growth have in fact been very widely shared.
The first and most striking benefit has been in employment. In 1993, 1,154,000 people were at work in the State. Some 160,000 of these have since retired, while just under 1,000,000 of them are still at work. But the total number at work this year is estimated by the Central Bank at 1,585,000. So, in the past six years, almost 600,000 people have entered employment: an average of 100,000 a year.
This means that three out of every eight people now at work owe their jobs to the Celtic Tiger. That is an astonishing achievement. Our best performance in any previous six-year period has been an inflow of about 210,000 to the workforce. That was secured in the period 1975-1981 - but at the cost of a huge level of inflation and a subsequent collapse of the economy and of employment - and again in 1987-1993, when it was solidly based.
What the Celtic Tiger has secured has been an increase in job creation almost three times above our normal performance. This has provided employment for some 385,000 more people than has been achieved in any previous six-year period.
Many factors have contributed to this achievement. Among these have been key policy decisions by politicians of all parties over the past 40 years which were sustained by their successors in office. Three examples of such decisions are the lowering of corporation tax, the expansion of education, and the restoration of budgetary sanity by successive governments between 1981-1982 and 1989.
But undoubtedly a key contribution to this extraordinary job-creation performance has been the series of social contracts entered into by trade unions, managements and governments during the past 12 years. Without the pay moderation secured by successive national agreements, policy decisions could not have delivered the huge expansion of employment that has marked the past six years.
The burden of this policy was borne by PAYE workers, following the leadership of far-sighted trade union leaders. But that burden was not as heavy as some have come to believe. For the economic growth made possible by pay moderation not only created massive employment but also raised the purchasing power of workers, in particular by creating the buoyancy of revenue that made it possible to have major cuts in taxation during this period.
Since 1993, the tax burden on workers on the average industrial wage was reduced by nine percentage points. Thus, single workers on that wage have seen the tax take on their pay cut from 32.5 per cent in 1993 to 24 per cent this year, while in the case of married workers the tax take has been reduced from 24 per cent to 15 per cent.
The result of this has been that although during this period the average industrial wage rose by only 22 per cent, after-tax income was increased by 37 per cent. Since 1993 two-fifths of the increase in after-tax income of workers on an average wage has come from tax cuts, with three-fifths coming from pay increases.
Allowing for the 12 per cent increase in the cost of living during this period, the overall increase in the purchasing power of the average industrial worker since 1993 has been almost one-quarter.
Of course, some groups have done better than this - not just employers and self-employed, but also PAYE workers with skills that are now in short supply, as is the case in the construction industry. The average wage of skilled construction operatives has risen by 50 per cent since 1993. And because at these income levels the tax take has been cut by over one-third, their after-tax income has been increased by 75 to 85 per cent, depending on their marital status.
Taking into account the 12 per cent increase in the cost of living during this period, their living standards have risen by 55 to 65 per cent.
At the other extreme, pensioners and other social welfare beneficiaries have received welfare increases of between 24 and 33 per cent, yielding purchasing power increases of between 11 per cent and 18 per cent, which is a good deal less than the improvement in the living standards of those at work.
The application of the pay restraint policy during the past six years has benefited everyone in the community to a greater or lesser extent - but with these benefits strongly favouring people with higher and middle incomes, the benefits to the unemployed and pensioners were less.
All this points to the need for a new pay round which is geared particularly towards the low-paid and is accompanied by tax cuts benefiting the less-well-off, as well as providing more generous social welfare increases.
There is an urgent need to ensure a narrowing, rather than a further widening, of the gap between higher and lower incomes and between those in the workforce and those who through age or disability, or in some cases as a result of prolonged unemployment, are no longer capable of supporting themselves and their families.
It should also be said that there is every reason why this round of pay increases should be more generous than in the past. We no longer need to push for ever-improved productivity and still higher profits. Indeed, as I have been suggesting in this column during the past year, some loss of competitiveness is not only acceptable at this stage, but, in the words of the Economic and Social Research Institute, "is needed to bring the growth rate back to a sustainable level".
In its most recent report the institute said: "Losing competitiveness through a moderate increase in relative earnings, i.e. relative to our trading partners . . . is thus desirable, with rising real disposable incomes replacing increased employment as the principal form of benefit from economic progress."
The draft NESC report reported in this paper last Wednesday said: "With the attainment of high rates of employment and a slower prospective increase of the labour force, the balance between pay and jobs can shift towards improving the reward for work . . . Rising real disposable incomes will gradually begin to replace employment growth as the principal benefit from further economic progress."
And it reportedly added that investment in human infrastructural needs, such as life-long learning, better childcare and family-friendly workplaces is now more relevant than employment creation.
However, the Economic and Social Research Institute has emphasised that this process of raising real incomes should be gradual: "Overshooting, and allowing costs to rise too high, would be difficult to correct." It also expresses concern about the pattern of past tax reductions through which "a wealthy minority has received an undue share of the benefits".
Clearly, there is some danger that anger at the kind of abuses that have recently been revealed could now lead to a round of excessive pay increases. But the fact that room does now exist for larger increases provides leeway to the negotiators.
But it is vital the whole process should not be disrupted by a lunatic battle of relativities within the public sector - the part of the economy where for many years past, pay increases have regularly outrun those accruing to similar workers in the private sector.