James Connolly Memorial Lecture
18 Apr 2002
NUI Galway 18th April 2002
When it was announced this time last year that I was to become the General Secretary of Congress I received a very warm letter from Manus O'Riordan. Manus is, as many of you know, an authority on James Connolly.
In his letter he told me a very interesting story about Connolly and his association with No 52 Camden Street which is the head office of Concern Worldwide where I worked at the time.
According to Manus, Connolly is the only Irish politician ever to have published an election address in Yiddish. This was during the 1902 local elections when he sought the support of the immigrant Jewish workers who had fled to Dublin as refugees from Tsarist Russian programmes. Most of these people were tailors and garment workers and they formed a trade union to give themselves a voice. It was to the union that Connolly came for help and its head office was in 52 Camden Street! On Manus' suggestion Congress and Concern are collaborating on a project to erect a plaque to mark "The Jewish Union" as it was called on the building in Camden Street.
By the way, Connolly lost the election in Wood Quay Ward but he came a respectable second thanks to his Jewish Trade Union supporters. He was defeated by the Redmondite candidate JJ McGaul who is otherwise famous as the composer of "Kelly The Boy From Killane" and "Boolavogue".
In an April 1926 lecture in Glasgow, Farther Michael O'Flanaghan, speaking of Connolly's role in the Easter Rising, praised him for asserting the right of the people "not merely to be the political rulers of Ireland but the economic owners of Ireland as well".
Connolly's ideal, as set out in those terms has not been realised. Nevertheless, trade union influence in Irish society is strong. Congress is the largest civil society organisation in the country with 750,000 people affiliated to it through its trade unions. It is a unified body and it represents workers in both jurisdictions on the Island.
For the past 15 years we have sought to influence social and economic development through a series of five social contract agreements. While these agreements have their critics within the movement they are internationally recognised as being uniquely effective in transforming Ireland into a modern industrial economy. What Connolly might have though of this project we can only speculate. But he was a man for his time and we have to make our judgements in light of our own evaluation of current circumstances. As he said himself in the "Workers Republic" of 5 August, 1899 - "We are told to imitate Wolfe Tone, but the greatness of Wolfe Tone lay in the fact that he imitated nobody".
I propose tonight to share some thoughts with you about the current status of the partnership project and where, in my opinion, we need to go from here.
In the last couple of weeks we have witnessed strong attacks on partnership from a number of sources. IBEC mounted a major PR assault on the unions for allegedly not abiding by the terms of the current agreement, the ASTI reiterated their opposition and the minister for Finance said he thought the process had come to an end. The Taoiseach issued a statement subsequently indicating his support for partnership but it does not inspire confidence to see Government divided in this way.
What is particularly disappointing about these attacks is that they focus entirely on sectional interests and lack any sense of vision about the future of the country as a whole.
My opinion is that the partnership model has worked well and should be continued if possible. At the same time this opinion has to be qualified by the recognition that, while economic progress is a pre-requisite to social progress, it is not a guarantor of it. Because the concept of wellbeing encompasses subjective experience, such as people's levels of satisfaction and contentment with their lives, as well as objective conditions like wages, access to education, housing, health care and so on, the extent of questioning about modern living suggests that Irish people's wellbeing is far from keeping pace with the country's GNP.
If pay was the only issue there would not be a compelling case for another national partnership agreement. Negotiating pay directly with employers or with Government as an employer holds no fear for trade unions. But it is because the process embraces a whole range of issues that influence the broad state of the economy and the quality of life that it is of value.
Where do we stand after 15 years of social partnership?
Prima facia we have achieved a lot. Total employment in the Irish economy rose by 605,000 in the period 1987 to 2001, an increase of over 54 per cent in 14 years. Unemployment reduced from 17 per cent to 3.9 per cent in 2001 before rising again to 4.3 per cent today. Long-term unemployment is down to 1.2 per cent of the labour force. GDP per capita rose from 64 per cent of the EU average in 1986 to 111 per cent in 1999. The public finances were a shambles in 1987 but are now marginally in surplus with a provision to put away 1% of GNP in a special pensions reserve fund to cater for changing demographics. Between 1987 and 1999 the cumulative increase in take home pay for a person on average manufacturing earnings was over 35 per cent. By contrast real take home pay decreased by 7 per cent because of the impact of inflation between 1980 and 1987. Consistent poverty has been halved over the 15-year period. It is hard for people who did not experience the Eighties to appreciate fully the miracle that has been achieved in this country.
In addition there have been very substantial improvements achieved in the areas of taxation, social policy and equality issues. It can be asserted with some confidence that what has been achieved under these headings would not have been possible outside social partnership.
Nevertheless, there is reason to believe that the benefits of social partnership have not been evenly distributed. While all boats have lifted some of the yachts have been able to loose their moorings and sail to the Bahamas, so to speak.
Ireland is the most unequal country in Europe, after Portugal, as measured by the Gini coefficient and with the share of income going to the top decile higher than any country other than Portugal. Among OECD countries, while the US has a more unequal distribution than Ireland, Australia and Canada, often categorised with UK, Ireland and US as having an "Anglo-Saxon" tax and welfare structure, have more equal distributions. It is important to stress, however, that this inequality was not caused by the partnership agreements. It was deeply ingrained long before that. It is just that the degree of redistribution was not sufficient to change this position in the radical way that is clearly necessary.
Increased levels of employment have had a big impact on reducing consistent poverty because more income to a household obviously has that effect. Still there has been a parallel growth in wage inequality between 1987 and 1997. This has particularly occurred at the top end of the earnings distribution, where the hourly earnings of the top decile rose from 196 per cent of median earnings in 1987 to 224 per cent in 1994 and 232 per cent in 1997. In contrast the earnings of the bottom quartile fell from 73 per cent of median earnings to 69 per cent in 1997.
However, it is necessary to qualify this latter statistic by observing that the impact of the minimum wage is not taken into account and that there is a significant growth in the "student" workforce.
There is some evidence to suggest a continuation of this trend. Income tax receipts towards the end of last year fell short of expectations. They were expected to grow by 12 per cent but in fact the figure was only 2 per cent resulting in a shortfall of £1.2 billion. The estimated growth in revenue was predicated on employment levels increasing by 60,000 or 3.5 per cent. In fact the increase was 47,000 or 2.8 per cent but this would account only for about £70 m of the shortfall. Since it is known that PRSI receipts stood up, and since the figures for the public sector are known it suggests that incomes contracted in the private sector. However, the tight labour market for higher skilled jobs and the positive impact of wage dispersion for these people would not point in that direction. If incomes were falling in the unionised private sector workforce we would know about that pretty smartly too. If we also factor in that there were no significant job losses in that period under review there is only one possibility left. It is that the non-unionised services sector has been suffering either a pay or hours reduction.
The services sector includes hotels, restaurants, retail, transport, communication and financial services. The numbers employed rose by 460,000 or 72 per cent between 1987 and 2001. It is now twice the size of the industrial sector and three times that of the manufacturing sector. If it is indeed true that incomes have been falling in the services sector it is worth noting that services inflation continues to outstrip all other components of the CPI. The rate for miscellaneous goods and services on a year on year basis was 9.4 per cent last year as against an overall CPI average of 4.9 per cent. There is only one conclusion one can draw from this and it is that while workers' incomes are falling, significant profits are still being made.
The position we are in with regard to inequality is that we do at least know how to address the problems of people in receipt of social welfare. It is to link payments to gross average industrial earnings. The problem of the "working poor" is another matter entirely. There has always been a school of thought which argues that social welfare payments should not be a disincentive to work. I agree that it is most important for people to work. Work provides both income and fulfilment. But the solution is not to regard social welfare as a disincentive but rather to have conditions of employment which are an incentive to work.
There is another factor worth mentioning here. The received wisdom in respect of industrial policy is that we need to move up the value chain. We need jobs that are not vulnerable to moving towards lower labour cost countries. Education and training policies can help achieve this objective but there will still be people who cannot make the transition. On the available evidence a strong economy will need a services sector providing high levels of employment. But can we sustain a position where the quality of that employment is inferior and mainly populated by women? If we can achieve movement up the value chain, overall incomes will rise but increasingly the take home pay of those towards the bottom of the earnings distribution may fall below the relative income poverty lines. This would result in a condition of increasing inequality in which it would be impossible to have the social solidarity to sustain partnership.
There is an emerging picture where union density in the private sector is about 25 per cent. There is also a high-tech largely non-unionised workforce employed by multinationals which use the wage agreement of the PPF and its predecessors as a base on which to build competitive salaries in tight labour market conditions. These are companies who are freeloaders on the benefits of social partnership - social cohesion included. There is also a low paid services sector; mainly composed of women, - also non-unionised in many cases - who are potentially the new poor.
The size of the public sector is being reduced constantly through competition and regulatory policies which mainly affect utilities. Jobs lost in the public sector are to an extent replicated in the private sector but are generally inferior in quality. Public Private Partnerships have been used in other countries as a mechanism to transfer workers from the public to the private sector with serious consequences for conditions of employment, especially pensions. Occupational Pension Scheme coverage is quite low at 30 per cent and some employers are now seeking to transfer financial risk to workers by moving from Defined Benefit to Defined Contribution Schemes which will inevitably lead to under provision of pensions.
For trade unionists this is a disturbing trend. How can we be inside the tent smoking the pipe of peace while this is unfolding outside? Our mission is to organise workers, especially the most vulnerable people. It is the only way to prevent the erosion of social cohesion inherent in what I have been describing. If social partnership is to have a real meaning for us it must facilitate the organisation of workers in trade unions so that their right to a decent standard of living can be vindicated. In short, the imperative to organise has assumed an importance superior to any other at this point in our history.
In addition to what has been said already I would like to draw your attention to a number of other developments which would be relevant if the circumstances give rise to talks on another agreement. These are:
* A new Government will be in office by the time the agreement comes up for negotiation. It is possible that the new Government may not favour partnership or have views about the parameters of an agreement which do not find a resonance with the social partners. It is an open secret that there are people in all parties (not just Charlie McCreevey) who see the process as an infringement on parliamentary democracy. Whether you agree with this view or not depends on whether you see democracy as being limited to elections every five years or whether you see it as embracing civil society in an ongoing process of political accountability. This is a matter not explored in much depth as yet but it is likely to be on the agenda for the future and to involve arguments about the legitimacy of civil society actors. It is a topic which gets some airing from time to time in the pages of "The Financial Times" and "The Economist" in respect of the NGOs who oppose globalisation. These publications, it should be said, constantly defend the right of Transnational Corporations to trample on any Government which gets in the way of their ambitions;
* The tax/wage trade off is probably no longer viable. The moderate wage settlements of the partnership agreements, augmented by income tax reductions, were right for their time. They increased the rate of return on capital, encouraged FDI, created jobs, generated tax revenue from the increased employment and reduced social welfare expenditure at the same time. It was a virtuous circle but it meant that citizens transferred a greater proportion of their wealth to company profits and did without European standards of social provision and infrastructure. FDI is also encouraged by exceptionally low corporate taxes and social insurance rates. Public spending in Ireland is one of the lowest in Europe. The ESRI estimates that it will take 7 per cent of our income each year for 10 years to bring social provision and infrastructure up to average EU levels. A continuation of tax reductions in this context seems problematic. Nor would such a policy have the same validity now as in the past anyway. The imperative of attracting high levels of FDI to reduce unemployment is not there to the same extent. Moreover, if we are to attain the status of a mainstream EU country we cannot continue wage subsidies to employers;
* The Public Service Pay Benchmarking Body is due to report in June and inevitably its conclusions will influence the climate;
* EU enlargement will result in a very changed situation in Europe. Ireland will become a net contributor by 2006 and may also be affected in trade and diversion of FDI. There are conflicting views about the potential economic implications of enlargement;
* Immigration is not a transient phenomenon. It is here to stay and any future plan that fails to deal with the implication of a multi-cultural society will be deficient. Connolly's ethical principle that "Ireland without its people means nothing to me" takes on a new meaning in this context. I feel that this is a much more serious issue for our country than has been recognised to date;
* At the Lisbon EU summit a target of 60 per cent female participation rate in the labour force was agreed. Ireland now stands at about 46 per cent. Much of the burden of caring in Irish society has rested on the shoulders of women. With labour force participation rates at the level proposed by the EU that will not continue to be possible. The question then is who is to look after children, old people and special needs people? This problem will be compounded by an ageing population; people living longer and, as they do, needing higher levels of care. Current provision for both ends of the age spectrum is inadequate. This is an issue which dovetails with earlier observations about the working poor. People with decent incomes are finding childcare costs prohibitive. For people on low incomes paid childcare is not an option at all. The experience of the UK ins this matter is instructive. Expansion of childcare was a priority of the Government when it came to office in 1997. Yet the problems remain acute such that special payments to Grannies are now being contemplated to allow young mothers in poorer areas to take up employment. By comparison the issue has not had serious attention here at all. I predict that caring and immigration will be the biggest challenges we will face as a nation within the next ten years.
Maintenance of full employment and a fairer distribution of wealth must be Congress priorities. Wealth has to be created before it can be distributed and so we need to maintain a competitive economy. If we are able to recover to a longer term growth trajectory of the order of 5 per cent per annum then full employment should be possible. At the time of writing the international and domestic economies are beginning to show signs of renewed growth. However, political instability in the Middle East could cause oil price to rise to a point which could derail recovery. The most potent threat to competitiveness could come from a depreciation of the Dollar and Sterling and an appreciation of the Euro.
Whether there is another agreement or not there will still have to be a system for determining wages. If there is no agreement it seems likely that we would revert to the pre-partnership model which was that a number of major employments would probably establish a trend or "norm" which unions would seek to apply nationally. In those days companies like Waterford Glass or ESB were looked to as trendsetters. Economic circumstances today might suggest other trendsetters. During the partnership era some non-union multinationals were inclined to use the pay settlements as a base and to add a little more for the purpose of retaining staff. Unions might be inclined to look more closely at this sector in a decentralised environment.
In seeking to secure settlements in individual employments it would be logical to look at such factors as consumer prices, productivity gains, profits, GDP growth and higher level remuneration packages. Presumably some cases will go to the Labour Court but the Court will be lacking guidance as to the parameters of its recommendations. IBEC has indicated that it is mobilising 40 officials to assist companies in these negotiations. In our case it will be up to the officials of individual unions to negotiate but some guidance from Congress would probably be desirable.
There is no reason why we should not seek to advance our social agenda in direct negotiations with employers. Improvements in conditions such as parental leave, childcare, occupational pensions, flexible working arrangements and a healthy, safe and stress-free work environment could be covered in these negotiations.
With regard to the public services we will have to conduct negotiations with Government as an employer whether or not there is an agreement. This will also be likely to include the phasing of any award made under benchmarking. In public commentary the importance of phasing as an issue seems to have been missed because all of the emphasis has been on the size of any award. The ASTI in particular seem to have missed the point that there will have to be negotiations with Government on phasing and the Public Services Committee will have to negotiate as a body with Government on a post PPF settlement whether or not there is a centralised agreement.
It is too early at this stage to speculate about the size of a pay claim. The state of the domestic and international economy will hopefully be clearer in the Autumn and it would be best to leave the matter in abeyance until then.
It is hard to fathom the recent statements by IBEC. While our view is necessarily subjective it is difficult to see their position as being other than disingenuous.
The main point of complaint appears to be alleged refusal of trade unions to adhere to terms of the agreement and to wish to extract unreasonable pay settlements. The facts do not support this charge because:
* The income tax exchequer returns referred to earlier reveal a shortfall in expectations. If pay settlements were running substantially ahead of those provided for in PPF it would show up as a positive movement in income tax receipts;
* The disputes resolution machinery - Labour Court and LRC is working effectively;
* The NIB is the body created by the PPF amendment to ensure compliance with the terms of the agreement. In the past year four major issues have been referred to NIB - The Euro Conversion, Aer Lingus, the Carers' Dispute and the 1% lump sum interpretation - and all have been satisfactory resolved;
* Recent published CSO statistics indicate the lowest level of strike activity since 1917.
An alternative explanation is that employers realise that we have reached the end of the era of using income tax and moderate wage increases to subsidise profits. They have got what they can out of partnership and so they want out. It is an attitude that demonstrates a lack of vision and an indifference to the common good.
If the employers want out of this process then so be it. We shall pursue our social agenda through a combination of direct negotiation with employers and advocacy with Government. Paradoxically the freedom this will give us could help with recruitment and organisation. However, for Ireland to abandon social partnership, in the light of its internationally acclaimed success, will send the wrong signals. It will also weaken to the European social dialogue process and will mean that the concept of social Europe will be diminished.
The complexity of some of the issues facing us as a nation makes a compelling case for, not just a continuation of social partnership, but for a new and innovative approach to social partnership.
The process up to now has been attended by a high degree of pragmatism and a willingness to solve problems. Rory O'Donnell, Director of NESC, has made the point with some force and authority that it is this pragmatism which has sustained the process. He argues that if principles had had to be agreed nothing would have been achieved. No doubt he is right about that but one wonders whether we can go on in this mode.
I can understand that in our European catch up phase creating jobs was all-important. The next phase will see us try to align ourselves completely with standards generally. It seems to me to matter quite a lot whether the society we end up with is a European or Anglo-Saxon one. This is the social democratic versus liberal argument - Berlin versus Boston. It is a debate reflected in the Forum and Convention about the future of Europe. When we see Mr Blair making an alliance with Mr Berlusconi and Mr Aznar to increase the pace of liberalisation, including of labour markets, we worry about whether there will be a European social model to defend. Neither can we accept the constant erosion of the role of Government in the economy
Most of the public discourse around these agreements tends to focus on the pay elements. Few people know much beyond that. I am sure they have no idea that there are 56 working groups and committees operating under the PPF, for example. Some of the unions have put a huge effort into explaining the objectives and achievements of partnership but overall I suspect that it is not enough.
I think there are a number of changes we could make to achieve a greater empathy and support for the process in the future, viz;
* Any new agreement should be located in the context of a medium term vision of which we want Ireland to be like in 10 years - the common good concept again;
* If agreement were reached it should be looked on as a stage in the achievement of the medium term vision and have a limited number of objectives, actions to achieved them and indicators of achievement so that we know whether we are making progress or not. The objectives should be those that can be easily understood and supported by everyone, for example, achieving a health service to a benchmarked standard with a pre-set time;
* We should avoid having too complex an apparatus for achieving outcomes - like the 56 committees of the PPF;
* Some effort should be made to brand the implementation of the agreement in the way that the National Development Plan (NDP) is on every bus and billboard in town.
In summary then these are the issues which I think need to inform consideration of our involvement in any successor to PPF:
* It should be located in the context of a medium term vision of a more equal and just society;
* This vision is predicated on wealth being created in the economy to ensure prosperity and social provision. This wealth generation in turn requires a competitive and efficient economy. But competitiveness has to be viewed in an holistic way and not focussed on the type of wage suppression that would result only in a race to the bottom;
* It must focus on bringing Ireland up to the best European standards of health, education, childcare, housing and transport;
* It should agree the broad parameters for Government involvement in the economy and thereafter provide for investment in the public sector to maintain its efficiency and effectiveness;
* It should be constructed on the basis that all participants respect the role in society and the economy of each other. In particular, employers as a body should recognise the right of workers to join trade unions and to have them bargain on their behalf. Government and its agencies should positively advocate this position;
* It should eschew complex machinery for administering its implementation and actively seek to create a sense of popular ownership of its objectives.
After 15 years we should know whether we want it or not. There is certainly scope for disagreement about the content of any one agreement but we should not have to argue the concept from first principles on each occasion.
It is important to keep before us the enormous value of the change achieved in Ireland since 1987. The elimination of poverty is now attainable for the first time in our history.
All boats have risen. The task now is to tie them closer together; to achieve as far as it is possible for humans to do - a just society. It will not be easy but it is possible.
We have to bear in mind that we do not live in isolation from the wider world. One interesting similarity between our time and that of Connolly is that he lived through the most analogous period of growth, technological change and global reach to the present which was that between 1880 and 1914. What is perhaps somewhat different about the present phenomenon of globalisation is the increasing dominance of a model of capitalism which is much harder, more mobile and more assured of its dominance. Its overriding objective is to serve the interest of property owners and shareholders, and it has a firm belief, effectively an ideological one, that all obstacles to its capacity to do that - regulation, controls, trade unions, taxation, public ownership etc - are unjustified and should be removed. Its ideology is that shareholder value must be maximised, that labour markets should be "flexible" and that capital should be free to invest and disinvest in industries and countries at will.
This is the context against which I want to conclude with a quotation which I think epitomises both the enduring nature and morality of the struggle in which we are all engaged. It is not a quotation of Connolly but of a contemporary socialist colleague and collaborator in opposition to the Great War, albeit from a different perspective. His name was Eugene Debs. He was the founder of the American Railway Union and one of the most attractive people thrown up by the American labour movement. Based on a speech he made denouncing the war he was tried and convicted of sedition at the Federal Court in Cleveland. Before he was sentenced he spoke these words which I believe have a resonance today:
"I am opposing a social order in which it is possible for one man who does absolutely nothing that is useful to amass a fortune of hundreds of millions of dollars, while millions of men and women who work all the days of their lives secure barely enough for a wretched existence.
This order of things cannot always endure. I have registered my protest against it. I recognise the feebleness of my efforts, but fortunately I am not alone".