As public sector pay talks re-start, Owen McCormack gives an account of the disastrous effects of Social Partnership on workers and explains why a return to these kinds of deals will provide no answer to the cost of living crisis.
Talks on a new national pay deal for public sector workers are set to begin again this week. With inflation hitting 8% and workers hammered by hikes in the cost of living, many will be hoping that any deal will see pay rises that, at the very least, match inflation. The Government and employers are keen to keep any wage rises low and ensure profits are not hit by the crisis. If experience is any guide, the likelihood is that many of the union officials at these talks will be obliging and willing to be “moderate”.
Some union officials hint that a deal could be arrived at with below inflation wage rises if other, non-wage issues are addressed. They talk of the need for a wider, new social partnership type deal such as those from 1987 to 2009. Then, in return for low wage rises , unions agreed to the Fianna Fáil/PD agenda of cutting income taxes and various promises on wider social aims such as commitments to combat poverty. The tax cutting agenda as an alternative to wage rises ended up benefiting the wealthy and corporations disproportionately, while many other commitments ended up as vague aspirations that never materialised.
Moreover, this period had profound effects on the union movement. It effectively gutted trade union militancy and shop steward organisation in the workplace. Over a 22 year period, the process shored up the power of trade union bureaucrats and left the wider working-class movement poorly equipped to fight or resist the massive onslaught on working conditions that swept in after the 2009 crash. While many union officials, (often politically aligned to the Labour party), are nostalgic for a return to these deals, workers should resist them and learn the real lessons of the 1987-2009 period: there is no partnership with Government and employers that is in the long term interests of the working class.
Most commentators will paint a picture of the first partnership deal in 1987 as a visionary move by an enlightened trade union movement and shrewd politicians, chiefly Charles Haughey and Bertie Ahern. In this retelling, 1987 saw massive unemployment, huge strike levels, rampant poverty and huge urban dereliction. By magic, social partnership ushered in the Celtic Tiger boom. The key was modest wage rises and social (i.e. workplace) stability. Strikes nearly disappeared, boom times came and the country became the best place in the world to do business. Riverdance and Italia 90 arrived and everyone was happy until the unfortunate events in 2009.
The reality was different. Fianna Fáil, under Haughey and Ahern, turned the state into a corporate tax haven based around the IFSC. This saw huge investment flow into the state from mostly US foreign direct investment. The country became the foremost neoliberal state in the EU. This meant an agenda of widespread contracting out and privatisation of many key services and an all-pervading ethos that competition and low business taxes were key to success. It paved the way for widespread deregulation or low regulation across many sectors, including banking which helped set the stage for the financial collapse and bankruptcy of the country in the 2009 crash.
The role of the country’s trade unions leadership was key. Haughey said himself of them; “Ireland had the good fortune to have probably the most enlightened trade union leadership we have ever had”. If by enlightened he meant “traitors to their class” he was correct.
The 1990 Industrial Relations Act and a weakened movement.
FFs Bertie Ahern pushed through the 1990 Industrial Relations Act, a carbon copy of Thatcher’s anti-union legislation which aimed to limit solidarity strikes. However, as Ahern boasted, Irish union officials were heavily involved in the drafting of the new law. Officials wanted to outlaw solidarity and sympathy strikes more than some of the bosses. Its aim was to legally dismantle the idea of solidarity and the working classes ability to resist attacks both in the workplace and outside. It wanted, in the words of one activist, to “make scabbing respectable”.
The deals demobilised the organised working class by co-opting it into a wider project to make the state the most neoliberal and pro-business one in the EU. It left a legacy of lower union density, falling membership and lethargic branches with low levels of activity.
In the preceding 20 year period between 1960 and 1980 union membership had risen by 70% and density by a quarter to 62%. There were 132 strikes in 1980 alone, of which 81 were unofficial, reflecting strong independent workplace organisation. By contrast, the decade up to 2020 saw 86 strikes in total. Union density fell from nearly 62% in 1980 to just 28% today. As full-time officials removed from the shop floor grew in strength and control over the union, the role of shop stewards diminished. As shop stewards could not influence pay demands or respond to the local circumstances in any sector, their ability to organise and lead workers or resist the bureaucratisation of their unions was reduced.
Boom For Some
While these deals limited strike action and saw profits soar for both foreign and Irish bosses, the returns to workers were not as healthy. If measured by the availability of permanent, secure, decently paid jobs, or the share of the country’s wealth going to working class people or even the so-called social wage benefits, the Celtic Tiger era was an utter disaster for workers and the labour movement from which it has not recovered.
Looking at these three areas in turn;
- The period saw a surge in the prevalence of precarious and low pay work, especially in sectors such as hospitality, retail and services. One report notes Ireland has the highest rate of low pay, compared to other Small Open Economies (SOE), at 24%, Ireland…, and is 10 percentage points above the EU-15 average. Another study reported in 2018 that 46% of workers were not in full time or permanent work and while many would not be classed as precarious, these figures give some indication of the changes to workers’ lives and working conditions in the years of supposed social partnership. The same report charts sharp falls in permanent full-time typical work contracts throughout the years of partnership.
- The most telling statistic about the social partnership era is the decline in the share of the wealth that is generated in the economy going to workers as opposed to capital in profits or dividends etc. By every measure, and consistently since 1987, that share has declined. In 1966 that share was 66%, after 8 years of social partnership it had fallen to 55%, and by 2015 it was just 44%. In another measurement used in a recent CSO study, even from 2000 to the present, it has continued to slump to just 30%. Ireland is way behind the EU average and pales in comparison to states like Denmark where labour gets a near 60% share.
- Ireland today is bottom or close to the bottom on a wide range of workers’ entitlements compared to other EU states, known as the “social wage” and usually paid for out of their PRSI contributions. This is no accident and the foundations for this poor position were entrenched during the boom time of the partnership years.
From access to sick schemes, maternity and paternity rights, holidays, or even wider rights such as the right to representation or the provision of decent defined benefit pension schemes, Ireland’s partnership era didn’t just fail to deliver for workers; it entrenched their poor position relative to other EU states at a time when logically they should have been advancing. According to the SIPTU economist Michael Taft, we work an extra 2.7 weeks a year compared to many similar EU states. We also get 2.3 weeks fewer paid public holidays, annual holiday leave, etc.
On top of all this, we are almost bottom of the league for EU countries when it comes to protection against dismissal and the regulation of temporary employment, according to an OECD report.
From 1987 on, the idea of social partnership was sold to workers as an alternative to militancy. Strikes couldn’t win, we were told; look at what happened to the miners in Britain; this was a smarter, cleverer way of protecting workers; “brain not brawn”, as one official put it. The unions would now be central to overall Government policy and have a huge say in the direction the country went, unlike Thatcher’s Britain, where unions were side-lined and ignored. This influence was akin to the old Henry Ford quip; you can have any colour you want for your car so long as its black; Union leaders could be wined and dined in elaborate forums once they agreed on the basic rules; competitiveness, privatisation and low wage increases; and once they donned the Green Jersey and saw the main goal as the success of Enterprise Ireland Inc.
Outside of the workplace, the baneful influence of the partnership model and how it was conjoined to the neoliberal agenda extended into other areas and services that the working class would need.
The foundation of today’s housing crisis was laid with an emphasis on private home ownership over publicly available homes. Privatisation of many semi-state companies and public services started off in earnest without a whimper from the trade union movement. The most egregious of these was Telecom Éireann, whose privatisation has directly resulted in the state’s woeful broadband coverage. Similarly, in health and care a wholesale reliance on private for-profit companies laid the ground for the dysfunctional two-tier health system and a nursing home and care provision sector dominated by low pay and profit seeking.
The effects of the partnership era have been profound for our class, for public services, workers’ rights and for the very idea of solidarity. Calls for a return to it today will ensure that the combativity of our movement remains blunted and unable to respond to the crisis and challenges ahead. Workers paid a huge price for the banking and financial collapse in 2009. The lack of any concerted fight by the union movement was, at least partially, the result of the hollowing out of the trade union movement by the partnership process. It is no accident that the most notable fights against the attacks came from outside the trade union or organised workers’ movement such as in the Water Charge campaign or the anti- property tax fight.
Today, warnings about wage inflation spirals should be seen for what they are; a fear that workers will fight and that they won’t willingly pay the price for another crisis not made by them. The issue today, as in the Celtic Tiger era, is who will profit and who will pay?
“Wage restraint” will do nothing about inflation but it will hammer ordinary workers and again prioritise profitability and competitiveness over people’s lives and needs .
Social partnership is about tying the hands of workers as the world heads into an era of crisis and recessions. We should resist it and say that unlike the mantra in the 80s, this time there very much is an alternative: The spirit and class consciousness of the Debenhams or RMT strikers. Militancy will serve us much better in the coming storms than moderation.