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The Irish government is under pressure to restore public sector pay to pre-financial crisis levels - Leaving Cert Economics - Question 1 - 2017
Question 1
The Irish government is under pressure to restore public sector pay to pre-financial crisis levels. Outline two opportunity costs for the Irish economy of this resto... show full transcript
Worked Solution & Example Answer:The Irish government is under pressure to restore public sector pay to pre-financial crisis levels - Leaving Cert Economics - Question 1 - 2017
Step 1
(i) Less funds available to improve state services such as improving the health services.
Answer
Restoration of public sector pay implies allocating a significant portion of the budget toward salaries. This could result in fewer funds available for improving essential state services, particularly in the health sector. For example, without these funds, hospitals might suffer from understaffing or lack advanced medical equipment, impacting the quality of health care provided.
Step 2
(ii) Less funds available to invest in capital infrastructure such as the provision of social housing.
Answer
Another potential opportunity cost involves reduced investment in critical infrastructure projects. When funds are prioritized for public sector salaries, it limits the government’s ability to invest in building social housing. This could exacerbate housing shortages, leading to higher homelessness rates and decreased overall economic stability.