by Frank Schnittger
Fri Jan 23rd, 2009 at 08:05:28 AM EST
It is often forgotten that the Irish model of social partnership between the Government, Employers, Unions, and the Voluntary/Community sector was the one factor behind the success of the Celtic Tiger which was unique to Ireland. Other countries had low corporate tax rates, were members of the EU, actively encouraged foreign inward investment, or promoted the development of a "Knowledge economy".
Now the Government is in talks with the Social Partners regarding the need to save in excess of €2 Billion per annum in Government expenditure to bring our Public Sector Deficit down from 10% of GDP per annum to a more sustainable 3% and in line with the EU Growth and Stability Pact. This will necessitate huge cuts in public services, wage freezes, and tax increases.
But why should the social partners agree to this unless they can also share in the benefits of recovery should these measures prove successful? Social Partnership cuts both ways. People will be more likely to accept sacrifices if they know that any resulting prosperity will be shared with them and not become the exclusive preserve of millionaire bankers, developers, lawyers and financiers.
Consequently private sector employees who accept wage freezes should be offered profit shares and share options in their companies. Public sector employees should be offered guaranteed personalised pension plans provided directly by the National Pensions Reserve Fund (and not subject to the whim of a future Government). Banks or other businesses which require public funding should be made explicitly responsible for providing clearly defined levels of employment, ethical standards, and publicly required services (e.g. low interest mortgages, loans to small businesses).
In addition there needs to be a national infrastructural development plan on the lines of President Obama's Stimulus Plan which provides a clearly defined return on the investment that the public are being asked to fund. Wind power provides such a clearly defined return on investment, reduces our carbon footprint, and saves a great deal of money on imported fuels (and exported jobs). As it happens Ireland also has the best wind power resource in Europe.
Any National Recovery Plan has to give people hope for a brighter future in return for sacrifices made now. It is time the Irish Government showed some courage, vision, innovation and leadership. The same old bait and switch tactics will work no longer. People need guarantees that the plan will work to their benefit in the longer term.
The above is a draft LTE I am considering sending to the Irish national newspapers in an attempt to influence the debate around the Government's proposed National Recovery Plan.
In my view one of Ireland's greatest resources is a social one. We have 20 years experience of moving away from a chronically disruptive, adversarial, and unequal industrial relations system (with some of the highest strike rates in Europe) to a much more consensual, pro-active, and coordinated approach at the national level with one of the lowest levels of disruptive industrial disputes in the developed world.
In contrast to Thatcher, who effectively demonised the Unions, Irish Governments have embraced them into a partnership approach and created a lot of supporting institutions - Labour Court, Labour Relations Commission, Equality Agency - and supporting legislation. Whilst open to a lot of criticism, it has created a culture and framework within which key national issues can be discussed with all the stakeholders at a national level.
The Government is starting a new round of talks in this process today:
Government, social partners to discuss public finances - The Irish Times - Fri, Jan 23, 2009
The Government will today start consultations with employer and trade union groups on its package to tackle the crisis in the public finances.
The consultations on achieving spending cuts of €2 billion are expected to continue over the weekend, and Ministers hope to make a final decision on a national rescue package by next Tuesday, when the Cabinet is set to meet again.
Trade unions have rejected the concept of pay cuts, and some unions have said they will refuse to take part in any process in which pay cuts in any form are on the agenda.
Speaking this morning, David Begg, general secretary of the Irish Congress of Trade Unions (Ictu), said unions had presented a "far-ranging" paper to Government that took a longer-term, strategic and holistic look at the economy.
Mr Begg told RTÉ's Morning Ireland: "The only thing we have ruled out is we won't contemplate pay cuts." He warned such cuts would spill out into the private sector and lead to a "deflationary spiral".
"Our view is that the solution to this problem has to be some combination of pay and pensions and taxation and public expenditure and borrowing and time," he said.
The union leader said there was no alternative but to deal with the economic crisis and expressed the hope that an package to deal with the State's financial problems could be sorted out "reasonably quickly."
"I would hope that in the paper we submitted to Government several days ago that that is of serious intent and would be recognised by them as a real and genuine willingness to deal with these problems," he added.
Mr Begg also called on the Government to address problems in private pension plans that were hit by the financial crisis.
Twenty years ago, such a constructive statement by the most senior trade Union leader would have been unthinkable. Industrial disputes were fought as a form of class war at the level of each individual business. If there is to be a way forward for Ireland, the National Partnership Process is one of the most important things we have going for us. But it has to be made to work for everyone.
