The Role of Social Partnership

THE ROLE OF SOCIAL PARTNERSHIP Rory ODonnell From Studies, Volume 90, Number 357 1. Introduction well-disposed fusion has been a plain feature of Irish frugal, mixer and establishmental life in the olden decade and a half. This paper assesses its post in Irelands scotch trans organisation and considers what role it might cook in the years to come. separate 2 outlines the analytical foundations of Irish confederation and Section 3 shows how these be reflected in the 5 partners hip programmes since 1987.Section 4 summarises the self-understanding of all in alliance as a system of bargaining, cellular inclusion and clumsiness. The impact of federation on frugal instruction execution is talk ofed in section 5. The paper close-fitting with consideration of the pressures on partnership and its possible future. 2. The Analytical Foundations of Irish complaisant fusion In 1990, the field of study economic and Social Council (NESC) localize out a model which has informed its subsequent work, and which under dwells the companionable partners understanding of the mathematical dish out.It argued that at that place ar trio requirements for a conformable constitution framework in a small, open, European nation (I) Macroeconomic the frugality must suck up a macroeconomic form _or_ system of government border on which guarantees low inflation and steady exploitation of aggregate require (ii) Distributional there must be an evolution of incomes which ensures competitiveness, which handles distributional issues without disrupting the economy and which is fair (iii) Structural there must be a set of policies which further and promote structural flip in order to nonice competitiveness in an ever changing external environment.The Council argued that, in the Irish case, the first of these requirements is best met by adherence to the European Exchange come out Mechanism (ERM) and transition to EMU. It argued that the second of these requirements is best met by a negotiated role of incomes. To be truely emergenceive, such a negotiated approach must cut across not only the evolution of wage, but as well taxation, the familiar finances, m matchlesstary form _or_ system of government, the main areas of earth provision and tender welfare.In pursuit of the third requirement, the Council advocated a programme of structural reform in taxation, amicable welfare, housing, industrial policy, work force policy and the management of state-supported enterprises. It argued that such reforms are best achieved with the go for and participation of those who work in the agencies and institutions concerned. The inter content orientation of Irish affectionate partnership was further underlined in the 1996 NESC report Strategy into the 21st Century. age globalisation has undermined galore(postnominal) brokers of national economic policy, there remain areas where national policy remains crucial. In a small, open, European democracy like Ireland (I) near of the policies which affect national prosperity are supply-side policies (ii) devoted rapid economic change, national policies must produce flexibility (iii) Successful national supply-side policies, direct towards innovation and competitiveness, depend on the high level sociable viscidity and co-operation that the evince stub both(prenominal) call upon and develop.This put forwards that once a consensus on macroeconomic policy is in place, the main focus of policy should be on the supply-side measures that influence competitive advantage and social inclusion, and on institutional arrangements that allow discovery and implementation of such measures (NESC, 1996). 3. Five Social Partnership Agreements, 1987 to 2001 The content and butt of social partnership has evolved materially since 1987 (ODonnell and OReardon, 1997, 2000).All five programmes overwhelm agreement amidst employers, unions and government on the rate of occupy sum up in both the private and public fields for a three-year fulfilment. The step in of moderate wage increases for tax reductions has remained an important feature of partnership. Beyond cede and tax, the partnership programmes have contained agreement on an ever-increasing range of economic and social policies. A consistent theme has been the macroeconomic parameters of monetary correction, the Maastricht criteria and transition to EMU. some other has been workplace unveiling and the problem of semipermanent unemployment.The 1990 agreement led to the creation of local partnership companiesinvolving the social partners, the association and voluntary sector and state agenciesto design and implement a more than(prenominal) co-ordinated, multi-dimensional, approach to social exception (Sabel, 1996 Walsh et al, 1998). era partnership began by addressing a critical central issue, looming insolvency an economic collapse, it has since foc make use ofd more and more on a range o f entangled supply-side matters. An important feature of Irish social partnership has been the widening of the cover beyond the traditional social partners.The discipline stinting and Social fabrication (NESF) was established and membership of existing deliberative bodies (such as NESC) was widened to include representatives of the community and voluntary sector. The programmes negotiated in 1996 and 2000 involved representatives of the unemployed, womens groups and others addressing social exclusion. Those agreements similarly included measures to promote partnership at enterprise level and agreement on action to modernise the public answer. Using the consistent policy framework outlined in Section 2, we can identify a crucial dual evolution of Irish social partnership.Over the five programmes since 1987, the emphasis has shifted from macroeconomic matters to structural and supply side policies, and the range of supply-side issues has widened to address key constraints on Ir ish growth, such as childcare and life-long learning. This change in the warmness or content partnership has involved a parallel change in rule. While macroeconomic dodging can be agree in high-level talks, complex cross-cutting policies on social exclusion, training, condescension study or childcare cannot be devised and implemented in high-level national deliberation or negotiation.Consequently, to address the growing list of supply-side issues there has been an expanding place of working groups, task-forces, frameworks and forumsinvolving representatives of the various social partners. In a few areas of policysuch as long-term unemployment, rural and urban re-generation and business increase bare-ass institutional arrangements have been crapd involve actors on the ground. + 4. Beyond bargain Deliberation and Problem Solving Shared analysis of economic and social problems and policies has been a key construction of the partnership process.Indeed, that analysis has focus ed on the partnership system itself (NESC, 1996 NESF, 1997). This revealed that a distinction can be make between two conceptions, or dimensions, of partnership 1. Functional interdependence, bargaining and stool qualification. 2. Solidarity, inclusiveness and participation. Effective partnership involves both of these, but cannot be based tout ensemble on either. To fall entirely into the first could be to authorise the ingest that the process simply reflects the queen of the traditional social partners.To adopt a naive inclusivist view would risk reducing the process to a rigorously consultative one, in which all by-lines and groups merely voiced their views and demands. There is a third dimension of partnership, which transcends these two. Bargaining or negotiation describes a process in which each ships company comes with definite preferences and seeks to maximise its gains. But partnership involves the players in a process of deliberation that has the potential to shape and remould their understanding, identity and preferences.This idea is implicit in NESCs description of the process as dependent on a shared understanding, and characterised by a problem- work out approach designed to produce consensus. This third dimension has to be added to the hard-headed notion of bargaining (and to the idea of solidarity) to adequately capture the process. The key to the process would seem to be the adoption of a problem-solving approach. As one experienced social partner put it, The society expects us to be problem-solving. A notable feature of effective partnership experiments is that the partners do not debate their ultimate social visions.This problem-solving approach is a central aspect of the partnership process, and is critical to its effectiveness. This suggests that rather than being the pre-condition for partnership, consensus and shared understanding are more like an outcome. It is a incomparable, if not easily understood, circumstance that delibe ration which is problem-solving and practical produces consensus, even where there are underlying conflicts of interest, and even where there was no shared understanding at the outset. It is also a fact that using that approach to produce a consensus in one area, facilitates use of the same approach in other areas.The key may lie in understanding what kind of consensus is produced when problem-solving deliberation is used. It is generally a provisional consensus to proceed with practical action, as if a certain analytical powering was correct, while holding open the possibility of a palingenesis of goals, way of life and underlying analysis. The word via media is inadequate to describe this type of agreement, since compromise so often fudges the issues that need to be addressed. A similar invoice of the elements and process of concertation has independently emerged in recent work on the Dutch miracle (Visser and Hemerijck, 1997 Visser, 1998).Visser and Hemerijck draw attention to unsanded gangs of centralisation and decentralisation, and emphasise the combination of interest-group talk and expert input which create a common definition of problems. This yielded a problem-solving style of joint decision-making, in which participants are obliged to explain, give reasons and generate responsibility for their decisions and strategies to each other, to their rank and file, and to the general public (Visser, 1998, p. 12). The institutions of concertation work where they facilitate shift from a bargaining style to a problem-solving style.Visser considers that the roughly interesting property of social cencertation lies in the possibility that interest groups define the content of their self-interested strategies in a public-regarding way (Visser, 1998, p. 13). 5. The Impact of Partnership on Economic Performance The period of social partnership has been one of incomparable economic success in Ireland. The country not only break loose from the deep econom ic, social and political crisis of the 1980s, but may have significantly addressed its long-term developmental problems of emigration, unemployment, trade deficits and weak indigenous business development.Under partnership, growth resumed, inflation continued to decline, the budget deficit fell sharply, employment began to recover, but unemployment initially stayed stubbornly high. The European recession of the early mid-nineties and the ERM crisis of 1992-93 interrupted Irelands recuperation somewhat. Strong growth after 1993 produced a dramatic increase in employment, huge budget surpluses and, eventually, a macroscopic reduction in unemployment. The combination of economic growth, tax reductions, reduced interest rates and wage increases yielded a substantial increase in real collect home pay.Between 1987 and 1999, the cumulative increase in real take home pay for a person on average manufacturing earnings was over 35 per cent. The performance of the Irish economy since the m id- nineties, was exceptionally strong, curiously in employment creation. Indeed, between 1994 and 1999, Ireland achieved a 28 per cent increase in employment, while the EU as a whole produced a 3 per cent increase. What role has partnership had in Irelands remarkable economic performance since 1987?The partnership approach would seem to have had a significant impact on the Irish economy, though three impart wage bargaining, crystal clear and consistent macroeconomic policy and change in supply-side factors. Consider first the impact of the partnership approach to wage bargaining. whizz of the to the highest degree striking features of Irish economic performance in the period of partnership has been the conjured profitability of business. Lane demonstrates that the rate of re charm on chief city almost doubled, rising from 8. 6 percent in 1987 to 15. 4 per cent in 1996.The sharp rise in profitability coincides with the formation of a new consensus among the social partners, as formalised in the negotiation of a sequence of national agreements, suggesting that the incomes policy that lies at the heart of a new consensus is an important factor in explaining the income shift from fag to capital (Lane 1999, p. 228). The resulting environment of wage moderation and high profitability is almost surely a key factor in Irelands employment creation, attractor of inward investment and the unprecedented commercial success of indigenous companies (see also Honohan, 1999 McHale, 2000).FitzGeralds econometric study of the Irish labour securities industry unravels him to suggest that the impact of the partnership approach to wage formation has been less significant than many have assumed, since the partnership approach served more to validate the results which market forces had made inevitable (1999. p. 160 and p. 162). The main impact of partnership lay in improved industrial relations, which significantly enhanced economic performance, and the fact that the part nership approach has also contributed to a more coherent approach to economic policy making (FitzGerald, 2000, p. 42).This brings us to the second pack through which partnership influenced the economy. In macroeconomic terms, partnership was an important element in Irelands transition form a high-inflation, volatile and conflictual economy to a low-inflation, stable, economy. In particular, a shared understanding on the position of the Irish economy took the exchange rate, and therefore inflation, outside day-to-day party political competition and industrial relations conflict. This can be contrasted with an approach in which short-termism ruled in economic policy, business decisions and wage setting.Through lots of the post war period, that led the UK to short bursts of economic growth, followed by recessions obligate in order to reduce inflation. Irelands experiment since 1987, partly inoculated it from the abortive combination of macro policy and income determination pursued in Britain for many years. Ireland finally escaped the most negative effects of Britains political business cycle. As a result, it achieved low and predictable inflation combine with strong growth of issue and employment.It has also preserved a high level of social solidarity, which seems an essential pre-requisite to sustaining redistributive policies and addressing issues of structural change and reform in a non-conflictual way. Ray MacSharry, Minister of Finance during the critical period of pecuniary correction, considers that social partnership could well be regarded as the cr professing attainment of the Celtic Tiger economy (MacSharry and White, 2000, p. 144). The third channel of influence on the economy is a supply-side mechanism.This arose because there would seem to be a close connection between settling major(ip) macroeconomic and distributional issues, on the one hand, and constructive engagement with supply-side problems, on the other. Closing-off macroeconomic alte rnatives freed management, union, community and government energies for discussion of real issues that impact on competitiveness and social inclusioncorporate strategy, technical change, training, working practices, the commercialisation of state-owned enterprises, taxation, local re-generation, active labour market policyand forced (almost) all to engage in virtual(prenominal) discussion of change.During the period of Partnership 2000, the Irish economy has been in well(p) circle. rent restraint has enhanced competitiveness, which has been converted into employment growth. This in turn has generated additional tax revenues which have been used to reduce direct taxes and hence underpin wage moderation. Indeed, the success of the 1990s has been so great that the constraints on Irish growth now consist of infrastructural bottlenecks and labour shortages, something I discuss in Section 6. It would clearly be inaccurate to attribute all the success of the Irish economy to social pa rtnership.Partnership enhanced competitiveness, assisted fiscal correction, produced consensus and stability in economic policy, and increased flexibility in both public policy and enterprises. This created the context within which Irelands long-term developmental strategy finally achieved its potential. That strategy involved heavy investment in education, particularly in information technology, attraction of inward investment and integral participation in European integrating (ODonnell, 2000). The Celtic Tiger of the 1990s resulted from the interaction of partnership with a set of supply-side characteristics that nhanced international competitiveness and promote fast economic growth. These included a young, well-educated, English-speaking workforce, improved stem (funded by both the EU and the Irish state), an inflow of leading US enterprises (attracted by both Irish conditions and the deepening European market), a new population of Irish enterprises (free of the debilitating w eaknesses of the past and open to new organisational patterns), and de-regulation of the military service sectors (driven by the completion of the Euroean internal market).The completion of the European internal market internal was a most important factor in the recovery and re-orientation of the Irish economy. One possible limit of consensus is the difficulty of undertaking constitutional action which disrupts entrenched interests in protected parts of both the public and private sector. While social partnership stabilised the economy, European integration produced a steady pressure to make public utilities and services more efficient, consumer-oriented and independent of state subsidy or protection+.Thus, Ireland benefited from an unusual, but benign, combination of institutionalised co-ordinated of the key economic actors and pressure for market conformity (ODonnell, 2000). While the evolution of Irish economic policy in the past xiv years has been marked by a high level of c onsensusbetween the social partners and across the political spectrumthe more liberal and orthodox economists have stood outside the consensus.Their opposition, negligible in policy terms but authoritative in academia and the media, is both to the substance of the prevailing consensus and to the idea and prise of consensus itself. just about have objected to the politicisation of industrial relations because they believe it adds to the bargaining power of trade unionism. Others have argued that the social partners are insiders, whose pay and conditions have been protected at the expense of outsiders who would work for less, and that social partnership has had the effect of raising the level of unemployment and emigration (Walsh and Leddin, 1992).In a recent historical review of Irish development, Haughton says It was fortunate that the wage agreements have coincided with rapid economic growth, because the agreements create considerable rigidity in the labour market (Haughton, 199 8, p. 37). An aspect of the strategy that has particularly provoked orthodox and neo-liberal economists is EMU. Opposition to the negotiated approach to economic and social management is combined, in almost all cases, with a strong adhesion to sterling rather than the euro (e. g Neary and Thom, 1997). 6.The Future of Social Partnership Given pressure on the wage agreement of the Programme for Prosperity and luridness (PPF), many are asking can partnership survive? It seems more useful to consider what is now required in the three elements of the consistent policy frameworkmacroeconomic, distribution and structural changeand to ask what role partnership has in facilitating the necessary policies. Adopting that approach, it is clear that structural issues are urgent and the distributional settlement in place since 1987 is under pressure.The future of partnership revolves around these two. The urgency of structural and supply-side issues was recognised in the PPF. Rapid growth has l ed to bottlenecks in housing, labour supply, childcare, health, transport, telecommunications, electricity generation and waste management. While the primary goal of partnership had been fiscal correction and employment creation, public policy must now aim to increase living standards, enhance the quality of life, achieve infrastructural investment and lay the economic and social foundations for long-term prosperity.Both short term sustainability and long-term prosperity and social cohesion, require a radical improvement in the level, quality and range of services. Does partnership have a role in achieving these structural and supply-side changes? The key to answering this interrogative lies in recognising that many of these require fundamental change in public administration and the organisation of working life. This suggests a first role for social partnership it can help to create a new national consensus for organisational change and continuous improvement.The experience of the past shows that the partners strategic overviewif persuasive, oriented to the wider good and genuinely problem-solvingcan been a critical element in achieving major change in Irish policy. Without a strong consensus on organisational change, pay issues (which do require attention) are likely to crowd out issues of service and organisational capability. In a consensus-oriented system, it is necessary to mobilise consensus to overcome veto points that systems of character reference can create.But the solution of many of these structural and supply-side problems cannot be found in high-level deliberation and bargaining alone. While government is critical, it cannot on its own design and provide the necessary services. We require examination of the content, delivery, supervise and valuation of public policy and services. This recasting of public policy must include reconsideration of the roles of central departments, agencies, professionals, branch offices and citizens in setting go als, delivering services and monitoring performance (ODonnell and Teague, 2000).This suggests a second role for social partnership government, its agencies and the social partners can jointly work out how certain supply-side services can best be provided. But it also demands that the evolution in the method of partnershipfrom high-level negotiation to multi-level problem solvingbe taken much further, to include organisations on the ground and citizens in problem solving and policy design. It is clear that the distributional element of the partnership framework is also under considerable stress and requires re-examination and probably revision.Indeed, it looks likely that all three elements of the distributional settlement require reconsideration wage bargaining, public sector pay determination and social inclusion and the social wage. The pressure on these arrangements is largely a reflection of the dramatic change in the coat and structure of the economy, the new approaches adopt ed within firms and changing patterns of social and family life. Some argue that in the face these pressures we should abandon the partnership approach and bring out the distributional issues to be determined in a completely decentralise way.This ignores a number of co-ordination problems which can hamper economic performance and lead to unfair outcomes. Fully decentralised pay determination, combined with no consensus on tax and public expenditure, can lead to over-shooting and inconsistent claims on the output of the economy. This would cause a loss of competitiveness and employment and leave the weakest most vulnerable. With or without a single national wage norm, Ireland must obtain an approach to distribution which avoids these problems.While partnership began in an attempt to rescue the Irish economy, society and politics from the deep crisis of the 1980s, its development through the 1990s suggests that it should be seen as a part of the dramatic opening, Europeanisation, c ommercialisation and democratisation of Irish society. Since the destination of the society is unknown, so partnership must take new forms, provided it can continue to anticipate and help solve the problems that change throws up. REFERENCES FitzGerald, J. 1999) Wage Formation and the Labour Market, in F. Barry ed. 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