Crisis of Social Partnership: Collapse of National Pay Talks in Ireland


The 21 year old social partnership pact between unions, employers and the Government in Ireland is entering one of its periodic crises as one national pay agreement Towards 2016 begins to run out and talks on a successor have collapsed. The Government is expected to attempt resuscitation in late August or early September, writes Padraig Yeates.*

Calls are being made for the social partners to invoke the spirit of 1987, but a lot has changed since then.  In 1987 things were so bad that the Government was about to run out of funds to make social welfare payments, unions had only to look at Thatcher’s Britain to see what lay in store if a new rightwing political consensus prevailed and business leaders were desperately seeking stability.  The then Taoiseach (Prime Minister) Charlie Haughey persuaded mandarins, unions and employers alike that centralised pay bargaining was the only game in town.

The gamble paid off.  Today the Irish gross national debt ratio is half the EU average, unemployment and inflation are a quarter of the real levels in the 1980s, interest rates are a third of what they were then and taxes have been slashed.  The problem is that personal debt levels for many workers, especially young home makers with mortgages, are multiples of what they were in the 1980s.  Interest rates are rising, while the price of basic items such as food and heating soar.  Cuts in direct taxation, in return for pay restraint, are no longer an option as they are already very low.  Instead, indirect taxation for a variety of increasingly privatised services has been rising for some time.

The natures of the key social partners, unions and employers, have also changed since 1987.  There are more workers organised in trade unions than ever before, but union density in the private sector has fallen.  This is partly because unions have been slow to supplement their traditional service model, based on meeting the needs of members in a fairly stable labour market, with the campaigning and organising activities required in a more dynamic and increasingly volatile economy.

But the main reason has been a deliberate policy by many employers, large and small, foreign and indigenous, to discourage employees from joining unions.  Professor John Geary of UCD, in the only independent national survey to date, found that over 70 per cent of workers would join a union if their boss approved.

While a pay freeze is a deal breaker for unions in the current economic climate, employers appear equally resistant to concede collective bargaining as a right to employees, although it exists in almost every other EU member state.  The balance among employers appears to be shifting increasingly in favour of this hard line position.

Unfortunately the ‘national interest’ counts for little when increasingly mobile and unregulated global finance capital turns investment into a lottery.  Profit is taken on a short term basis and many investors cut and run when the bet turns sour.  Unions, like social consensus, are seen as a handicap.  Long term sustainability, with the concomitant investment needed in people, plant and R&D, is no longer on the agenda of some employers.

Recent attempts to facilitate collective bargaining through social partnership were scuttled by Ryanair, now one of Europe’s largest airlines.  It successfully defended its right not to concede de facto recognition to IMPACT pilots in the Irish Supreme Court last year.  Some employers are now challenging voluntarist forms of collective bargaining which served the social partners well for decades.  Early this year hoteliers threatened a legal challenge to Employment Rights Orders and in June a group of electrical contractors obtained an injunction against the implementation of the Registered Employment Agreement for the industry.

Hundreds of thousands of workers in sectors governed by EROs and REAs could be affected if the courts rule in favour of these employers.  The Government could resolve the problem if it had the will.  It is a signatory to the UN Declaration of Human Rights, and International Labour Organisation conventions 87 and 98, which guarantee the right of workers to organise and seek representation with employers.

Far from showing any desire to do so, the new Taoiseach Brian Cowen refused to give a commitment to implement Article 28 of the EU Charter of Fundamental Rights, which would have achieved the same objective, during the recent Lisbon referendum.  This prevented SIPTU, the country’s largest union, from recommending a ‘Yes’ vote and confirmed two large private sector unions, the TEEU and Unite, in their opposition to the Treaty.

Cowen’s concessions to the farming lobby in the week before the referendum to protect it from trade liberalisation proposals in WTO negotiations underlined the message that workplace rights were low on the Government’s agenda.

Despite the economic downturn and hardening attitudes of some employers, partnership still has great strengths as a problem solving and conflict resolution mechanism.  It has worked for a small open economy because employers secured changes needed to maintain competitiveness and unions delivered pay increases and social wage dividends for workers.  As with any partnership entering hard times, this one needs reinforcing.  Instead one of the partners is progressively closing the door on the other.  Collective bargaining is certainly about power sharing, but it is even more critically about respect.

The current breakdown is nothing new.  In fact it is uncannily similar to a crisis seven years ago.  On December 17th, 2002, talks on a new agreement to succeed the Programme for Prosperity and Fairness broke down over a revised ‘inability to pay’ clause from the employers.  They wanted companies to be able to refuse any pay rises that might affect their competitiveness.

On August 2nd, 2008, the last straw in the talks was a proposal to amend the ‘inability to pay’ clause so that even companies doing well could avail of it if they faced the prospect of more difficult trading conditions in the future.  The effect of both clauses would be the same, to allow employers to renege on nationally agreed pay increases, or bargain down unions in local negotiations.

When talks collapsed in December of 2002 there seemed little chance of their revival and they did so from the most unlikely sequence of events.  In early January the Irish Independent ran a front page story that IBEC was advising members to hold the line with a six months pay pause.  The then chairman of the private sector committee of ICTU, SIPTU’s Jack O’Connor, responded by calling for a one day national strike, followed by a two day national strike, at which point the Government intervened and brokered a new agreement that became known as Sustaining Progress.

This too had its troubles, most notably when the Government failed to strengthen employment legislation ahead of opening Irish borders to the new EU accession state.  With high profile disputes exposing the systematic exploitation of migrant workers serving as a backdrop, SIPTU refused to enter talks on a new agreement until employment standards were addressed.  It subsequently took six months to negotiate Towards 2016, which had a pay deal lasting just 27 months.

The agreement did lead to better employment standards, including the establishment of the National Employment Rights Agency, but it was now taking longer to negotiate shorter agreements.  This reflects the growing disparity in objectives being sought from agreements by employers and unions.  The former group wants ever increasing flexibility, while the latter group wants to protect employment standards and employability of members with more in upskilling workers.

That basic dichotomy was reflected in the slow start to the current talks.  SIPTU insisted that the Government honour commitments to improve labour standards in Towards 2016 before negotiations began on a new agreement.  The talks were then sidelined by the Lisbon Treaty referendum campaign.  The Treaty’s rejection and the growing economic crisis meant the key phase of the talks took place in an atmosphere of collective gloom.  It was clear throughout July that the gap between the two sides was too great to be easily bridged and the Government had no strategy for doing so.  The employers wanted a pay freeze of between six months and a year for different groups of workers followed by pay rises with an annualized value of 2.8 per cent.  Unions wanted a deal that would at least compensate members for inflation, expected to continue at around four to five per cent until the end of 2009.  The Government was not even buying into the sort of modest tax reforms and anti-inflationary measures being proposed by the Irish Congress of Trade Unions, nor was it addressing the festering sore of collective bargaining.

Private sector unions have already begun serving pay claims, usually in the region of five per cent, to compensate for inflation.  The first strike by Mandate, the shop workers union at Byrnes, a small chain of bookstores, is due shortly.  One glimmer of hope is that SIPTU has concluded an interim deal for members in the motor trade just before talks on a national pay deal collapsed.  This was for three per cent over eight months and is up for renewal in December.

The book store dispute is largely symbolic, but as claims for bigger groups of unions begin to hit the wire the prospect of an irretrievable breakdown in social partnership grows.  At present the Government is anxious to portray that breakdown as nothing more than a trial separation, but without an improved pay offer from employers and some imaginative thinking from the Government on how to counter the effects of inflationary pressures it is hard to see partnership being salvaged from the wreckage this time.

*  Padraig Yeates is co-author of Saving the Future: How Social Partnership Shaped Ireland’s Economic Success with Tim Hastings and Brian Sheehan.  He is former Industry and Employment Correspondent of the Irish Times and acts as media advisor to a number of unions including SIPTU and the TEEU.

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