“Realistic” review needed for Minimum wage – Minister

February 15, 2009

The Minister for Labour Affairs Billy Kelleher has stated that the minimum wage could become a barrier to employment and any review of it must be ‘realistic‘. The Minister stated that the Irish minimum wage is the second highest in Europe and he said the changed economic environment needs to be taken into account.

The Minister stated that he would be reluctant to give his personal views but a rate that is fair and equitable is needed. He said the issue is now before the Labour Court and he said a constant review of the rate is taking place. The current rate is €8.65.

The Minister stated that employers and employees will be the ones that decide the rate into the future. Employers are being officially warned not to take advantage of staff during the current economic downturn. The warning comes from the National Employment Rights Agency, which has published its annual report for 2008.

The agency recovered more than €3m in wages due to workers who had been underpaid by employers. The number of calls, interviews and inspections handled by the agency increased by 96% last year. The problem of staff not being paid the minimum wage extends beyond foreign nationals, according to the Director of NERA Ger Deering. The problem is not just one for migrant workers; the catering and security sectors were targeted during 2008.

Mr Deering said today the problem is evident across many sectors and added that there are significant breaches when it comes to the minimum wage and the keeping of records.




Irish Cancer services transfer to be completed by Spring 2009

February 15, 2009


The head of the national cancer control programme, Professor Tom Keane has stated that by late spring 2009, all initial breast cancer diagnosis and treatment will be centralised at eight hospitals in the country.

There were 33 hospitals providing these services just over a year ago.

Prof Keane said that over the coming period services are due to move from Our Lady of Lourdes in Drogheda, Tallaght Hospital, the South Infirmary in Cork and Sligo General Hospital.

He said that dialogue was continuing with Sligo General, where there is great opposition to the move. Prof Keane stated that he had been extremely sensitive to the need of patients in the changes. He stated that services would not transfer from Sligo until he was satisfied that alternative and excellent services were in place.

Prof Keane and Health Minister Mary Harney met with medical specialists at Sligo ten days ago to discuss the issue. Professor Keane stated that his goal was to get Ireland into the top 10 to 15% of top performing countries in terms of cancer care but this would take many years.




Mass Protests Across Eastern Europe as Economic Conditions Worsen

February 15, 2009

Mass protests over economic conditions have begun across Eastern Europe.  In Lithuania, protests  opposed to a government austerity plan collapsed into violence. The outburst follows similar incidents in Latvia and Bulgaria.
 Police used rubber bullets and tear gas to quell demonstrators in the Lithuanian capital, Vilnius, as economic hardship burst into street-level rage in another European country.

With dwindling budgets forcing unpopular spending cuts and tax hikes in many countries, the global financial crisis is steadily emerging as a political threat to governments. Demonstrations have begun in Lithuania, Latvia, Bulgaria and Iceland.

In Vilnius, Lithuania’s capital, a peaceful protest against a government austerity plan erupted into violence as thousands of demonstrators surged toward the parliament building, hurling eggs and rocks. At least 84 people were arrested and at least 14 injured, including four police officers.

Prime Minister Andrius Kubilius, who just took office last month, stated the following:

“We will only speak to those who unequivocally distance themselves from those who have staged riots, who sow chaos and who encroach upon the constitutional system,” Kubilius said in a statement released to news agencies. The  Prime Minister continued|: “The riot will not scare us.”

Lithuania’s economy is expected to enter a recession this year. The protests were called in response to the government’s attempts to curb the financial crisis, including widely unpopular tax hikes. “Thieves! Thieves!” some protesters shouted at the government Friday.

“The government has long neglected the social needs of the people, pensioners and others,” Algirdas Paleckis, leader of the Frontas radical left party, told Reuters news agency.

Lithuania’s northern neighbor on the Baltic Sea coast, is  Latvia. The largest party in its ruling coalition on Friday called for early parliamentary elections after a massive demonstration roiled the capital this week.

Once boasting the European Union’s fastest-growing economy, Latvia was forced to seek loans in 2008 from the EU and the International Monetary Fund (IMF). The government has dramatically cut social spending.

Festering anger boiled over in the capital, Riga, on Tuesday as a protest demanding early elections led to riots and looting. Youths dug cobblestones from the streets, smashed storefronts and destroyed police vehicles, news agencies reported. More than 100 people were detained in the worst violence to shake Latvia since the country gained its independence in the Soviet collapse.

Protesters also rioted outside Bulgaria’s parliament building this week as citizens of the EU’s poorest country railed against their government.



Shares in both AIB & BOI shares fall today despite Government Recapitalisation

February 12, 2009


Market reaction to the Government’s €7 billion recapitalisation of the State’s two largest banks AIB and Bank of Ireland has been muted with shares in both lower today. Some brokers have already questioned if the Government’s capital will be sufficient.

At 3.40pm shares in Allied Irish Bank (AIB) were 7.5 % lfell to 99 cent, having earlier fallen by 15 %. Bank of Ireland (BOI) stock was 8 % to 56 cent.

Under the Government’s plan it will pump €3.5 billion into each bank and get warrants giving it an option to buy a 25 % stake in the lenders. Both banks have welcomed the decision.

Kevin McConnell, head of research at Bloxham Stockbrokers, said the capital injection is “good news insofar that there is a sizable capital injection .. “However, without clarity on either an insurance scheme or the creation of a bad bank, there is still uncertainty over the size of the impact of bad debts on capital levels.”

Davy Stockbrokers analyst Scott Rankin said “investors believe that this will not mark the end of Irish Government intervention and believe it is highly likely that the state will proceed with a bad-bank/insurance scheme in order to fully deal with the problem.”

The Government statement indicates that it is going to further investigate “proposals for the management and reduction of risks”. It is unclear if this will involve further recapitalisation of both banks.

Mr. Rankin went on to state that the recapitalisation was welcome and would give comfort to bond investors and liquidity providers alike, ”it may not represent the end of the government’s involvement.”

On the same day as the announcement of the € 7 billion recapitalisation injection, BOI announced a revision of its impairments forecasts on property loans over the next three years from €3.8 billion to €6 billion, citing the worsening economic climate and rising unemployment.

Bank of Ireland also said it will make a fiscal second-half loss, without giving details, as it increases the amount of money set aside to cover bad loans.

Speaking on RTE’s Morning Ireland the Minister for Finance Brian Lenihan said he believes the Government had correctly judged the required capital level for AIB and Bank of Ireland: ”In terms of capital, I believe we got it right”.

The preference shares issued by AIB & BOI as part of the Government’s recapitalisation will pay a fixed 8 % dividend.  This is lower than the 12 % the Royal Bank of Scotland Group is paying the British government, when the British Government recapitalised in late 2008.

Mr Lenihan stated that he has discussed “management change” at both banks and that the boards of both lenders will retire before their annual general meetings and go forward for re-election. He said it would be “premature” for him to comment on the possible composition of a new board and that the appointment of chief executives at the lenders was a “matter for the board.”

Mr. Lenihan also stated that:

“I’m quite prepared to discuss schemes for assessing and eliminating risk for the bank, but would involve careful protection for the taxpayer.”

Source: Irish Times – February 12th 2009 – “Muted Market Reaction to €7bn racapitalisation plan:


Finance Minister insists that he has behaved in a competent manner in relation to Anglo-Irish Bank

February 12, 2009


Minister for Finance Brian Lenihan has said he has no plans to step down after coming under intense political pressure following his admission that he only learned about the transfer of €7 billion to Anglo Irish Bank last month, even though his department informed the Financial Regulator about the issue last October.

Speaking this morning the Minister said: “I certainly am not considering my position because I have done nothing wrong. “I have behaved in a competent manner as Minister for Finance.”

Mr Lenihan told the Dáil last night that information about the transfer of €7 billion from Irish Life and Permanent (IL&P) to Anglo was contained in a report by PricewaterhouseCoopers to his department last October.

He said his officials had then referred it to the Financial Regulator but had not informed him about it. Stressing that he only learnt about the issue last month, he said the money transfer was not identified as a risk factor in the 720-page report.

This morning Mr Lenihan said: “I wouldn’t fault my department for not telling me at that stage”.

“They did tell me subsequently when the matter came into sharper focus when a subsequent due-diligence exercise was analysing the deposit base of the bank,” he told RTÉ’s Morning Ireland . “I don’t believe my officials should be scapegoated on this matter.

“But I’m not convinced if I had read the passage that its significance would have jumped out at me at that stage because the focus of the report was on risks associated with the loan book of the bank not on accounting matters of accounts transferred between banks”.

The explanation offered is that this €7 billion transfer to Anglo-Irish Bank helped to bolster the bank’s financial strength before its year end last September following deposit withdrawals of €4 billion during the month.

The transaction remained in place for just several weeks and enabled the bank to sustain its deposit levels and disguise the dramatic levels of withdrawals suffered by the bank during the  financial upheaval last September.

The Opposition claims that Mr Lenihan’s credibility had been undermined by his admission. Labour leader Eamon Gilmore stated that he has “no confidence” in the Minister.

“These were the consultants that he appointed to go and find out what was going on in the banks, he didn’t read the information and more importantly didn’t give the information to Dáil Éireann before he proposed that one of the banks Anglo Irish Bank be nationalised,” he said.


Irish Times: Thursday, February 12, 2009: ‘I have behaved in a competent manner’, Lenihan insists


Minister for Finance states that €7 Billion in Capital provided for AIB / BOI is based on Best Available Information

February 12, 2009


Minister for Finance Brian Lenihan said today the assessment that Bank of Ireland and AIB required €7 billion in capital was based on the best information available. He was responding to claims that the sum may be insufficient. A number of observers reacted to the Government’s recapitalisation plan announced last night by suggesting the move may not mark the end of the State’s intervention in the Irish financial sector.

Davy Stockbrokers analyst Scott Rankin said in a research note today that “investors believe that this will not mark the end of Irish government intervention” and that it is highly likely that the state will have to proceed with a ‘bad bank’/insurance scheme in order to fully deal with this problem”.

“So today’s announcement is very welcome and will give comfort to bond investors and liquidity providers alike, but it may not represent the end of the Government’s efforts to win the battle,” Mr Rankin said.

Mr Lenihan said the Government had examined the loan books of Bank of Ireland and AIB before deciding that each required €3.5 billion. “We have looked at where the exposures are. We have applied to those exposures the negative trends which do apply to the economy and we have come to a conclusion in relation to how much capital is required”, he told RTE’s Morning Ireland .

He described the recapitalisation as a “very good solution to a lot of the problems facing those two particular banks, the Bank of Ireland and the AIB” and added it was equally important not to place too much capital into the banks.

The capital would provide a substantial buffer against future losses and would give them the confidence to lend, Mr Lenihan stated, stressing that the money being injected into these banks would not “be used exclusively to simply protect the banks against future losses”.

The Minister added that one of the preconditions of the recapitalisation was that Bank of Ireland and AIB “come clean about their future losses”.

This morning Bank of Ireland reported a 60% increase in its loan loss provisions over the next three years to €6 billion in an interim management statement.

Bank of Ireland said it expected its loan loss impairment charge for the three years to March 31st, 2011, to hit €4.5 billion, up from a previous estimate of €3.8 billion given in November. The bank also stated that the revised forecast had a downside risk of up to €1.5 billion if economic conditions deteriorate further.

Bank of Ireland also said it expected to make an underlying loss in the second half of its financial year, which ends on March 31st 2009, but for the full-year it said it expected to make an underlying profit due to cost savings.

The Institute of Certified Public Accountants in Ireland (CPA) said the banks supported by the plan needed to immediately start ‘real’ lending to business, and to Small and Medium Enterprises (SME’s) in particular.

Norman J. Adams, CPA president said: “There needs to be clear and decisive action to ensure that money is released and business has immediate access to urgently needed working capital. Freeing up of cash is the single biggest issue facing the economy.”



Broad Political Agreement on retention of key aspects of the National Development Plan

February 12, 2009


On February 6th,  Fine Gael leader Enda Kenny called on the Government to scrap the National Development Plan (NDP), claiming it is filled with “unachievable” political targets.

Speaking the following Saturday 7th February, on RTE, the Taoiseach Brian Cowan, stated that the NDP will not go ahead in all its facets, as it was based on a forecast of 4% economic growth annually. Mr Cowen said that targetted expenditure would see significant investment in higher education and research & development.

He said it would also target efforts to bring business ideas to fruition in order to develop what he called a “smart economy”, and so generate jobs.

Mr Cowen also said that the global economic crisis had shown that membership of the European Union was critical to Ireland’s fortunes and survival.  Mr Cowen also said that people were concerned at how quickly the change in Ireland’s economic fortunes had occurred. He said that in some cases things would get worse before they got better, but stated that Ireland could come through this if the ‘right decisions’ are made now.

In immediate response, on the same day, the Fine Gael Leader Enda Kenny stated that he welcomed the Taoiseach’s admission that there may have to be alternations to the National Development Plan.  Enda Kenny said that the focus of the plan must turn to labour intensive infrastruture projects.

It is unclear exactly what is meant by “labour intensive projects,” but it seems clear that the roads programme is intended to continue without pause or restraint. Just why Ireland needs an enormous roads network radiating out from Dublin instead of connecting existing cities (and their adjacent ports) by an interconnected roads and rail network remains unclear.