Address to AGSI Conference

23 Mar 2005

Address by David Begg, General Secretary of the Irish Congress of Trade Unions
to Association of Garda Sergeants and Inspectors Conference, March 2005

In the Eighties, when my children were young, my greatest fear was that they would not grow up to live and work in their own country.

Economic conditions then were so different to what they are now as to be unimaginable for those who did not live through that period:

  • Unemployment was 17%;
  • Inflation was 15%;
  • 44,000 people a year emigrated;
  • Income in terms of GDP per capita was 60% of the EU average.

The progress to a position where we have virtual full employment - which an unemployment rate of 4.3% represents - is something which was beyond our wildest dreams. We created 56,000 new jobs last year and we know that a number of sectors - health, hospitality and horticulture - could not survive without immigration, currently running at 50,000 per annum.

I sometimes think our national psyche has not assimilated this change in our fortunes. We do not really believe that the bubble will not someday burst and we will be back to where we were 18 years ago. How else can we explain our failure to invest in the future? If we really believed we had become a mature industrialised country we would be putting massive resources into planning and building the future.

The truth is that our infrastructure and social services belie our economic achievements:

  • Investment in health, although it has increased significantly, is still below the European average in circumstances where the population is increasing rapidly. In a period of 20 years demand has increased by 30% but bed capacity has reduced by 15%;
  • House prices have been increasing at 3 or 4 times the rate of inflation for several years. People are commuting up to 60 miles to work clogging up the roads (the M50 is now the most congested motorway in Europe) because of affordability issues. There are 50,000 families waiting for social housing;
  • The cost and availability of childcare and eldercare is a major obstacle to labour force participation, particularly by women;
  • Despite the achievements of job creation, restructuring caused by outsourcing and globalisation is causing job losses in some sectors. We do not yet have the means to move workers exposed to these forces up the skills value chain sufficiently to maintain their employability;
  • Pension's provision in the private sector is woefully inadequate to provide security in old age. The position has worsened in recent years through stock market underperformance, low interest rates and changing demographics (people living longer);
  • The growth in our gross national product, though impressive, has not been uniform either by region or socio-economic class. As a result Ireland is next only to the US in social inequality.

These six issues, though formidable, can be cracked and if they are Ireland would indeed be a very good country to live in. A start has already been made on housing. The government, using state owned land, is committed to the provision of 10,000 affordable houses for those who find it impossible to get on the property ladder at current prices. But progress is slow, painfully, wearily, exhaustingly slow. The project has shown up a lack of cohesion in the apparatus of central and local government that amounts to a serious institutional weakness. Nevertheless, it is good to expose this because our capacity to meet the other challenges I have mentioned requires the whole of government focus backed up by a political will to make things happen.

We need also, I think, to take a more considered look at our economic policy. Since the Eighties our national priority has been jobs which rightly required us to focus on maximizing economic growth. But I am beginning to wonder whether growth at all costs, and almost as a mantra, is appropriate to our current circumstances. To continue to grow at 5% per annum is only possible with immigration of 50,000 - 60,000 people per annum. And that assumes that all the people who come will stay. If there is a replacement factor then gross immigration will be higher. Indeed we could be faced with a situation of jobs being lost to Irish workers due to outsourcing while immigration is increasing. This would be a costly proposition - people who come here need houses, hospitals and schools - while also potentially creating social tension.

It seems to me that the emphasis should be on sustainable growth. We have a finite land mass; we cannot cover the Island in concrete. We need an intelligent land use management strategy. We should try to maximize indigenous labour force growth and re-skilling of workers in balance with sustainable levels of immigration.

Rarely a week goes by in which I do not have a visit from some international group wishing to explore Ireland's success and the role of social partnership in it. I do not propose to present the case for social partnership here, except to say that it does have the capacity to get people to subordinate their own narrow agenda in deference to the bigger picture.

It is, I would say, possible to get people to focus on the issues I have mentioned if they can be persuaded that we would have a better country. The concept of the social wage has long been recognised by workers as being of value.

In the past some of the partnership agreements have tried to cover every aspect of social and economic policy. It is questionable whether they really added value on every subject. By trying to achieve too much they achieved too little, sometimes because the timeframe was too short.

If a consensus could be achieved around the five issues I have spoken of - health, the infrastructure of caring, upskilling, pensions and a less unequal society - there is a good prospect of cracking them as issues, not over 3 years but perhaps over 10 years.

This is not a big vision thing, it is a practical approach which would give the concept of the social wage a real meaning. It would reinvigorate social partnership and create in Ireland a reasonably fair society and a decent quality of life.

On the other hand failure to deal with these issues will eventually undermine our economic prosperity. There is already some evidence of a fall back in women working because of the pressure and cost of childcare for example. You only need to look at the Scandinavian countries to see that in terms of their economic efficiency and social cohesion they are the best in the world. The reason is that they have invested in the things which improve the quality of life and see no dichotomy between doing that and having a competitive economy.

No such consensus exists in this part of the world. The business case is that the market will solve all problems. Competitiveness is the key and anything that increases costs for business is unacceptable. That is why there is constant pressure for low corporation tax, low capital gains tax, low employer PRSI, a vast range of tax shelters for business investment and low rates. Indeed I saw in the papers yesterday that IBEC are attacking the EU for preventing grants to business even though its policy is to argue against public spending generally.

This circle cannot be squared. Business has been the principal beneficiary of economic growth. It is not unreasonable, indeed it is ultimately in its own interests, to ask business to recognise that social policy objectives must also be set out and achieved. This recognition requires a more mature approach to taxation and public spending, and business taxation in particular, than has been evident to date.

In this context I cannot allow the occasion to pass without making some reference to the announcement of 2,100 redundancies by Bank of Ireland. This would be regrettable in circumstances of business downturn but where the bank is making €1.3 billion profit per annum it is inexcusable. This decision is reflective of a mindset that places shareholder interests above all other stakeholders - staff, customers, small business, and communities. Quite honestly decisions like this, which are so mercenary, makes any discussion of the common good of society, seem futile.

In essence we have to decide whether Ireland's future can be best served by following the type of social market economy model which is the European way or whether we follow the free market model which characterises the United States - the argument sometimes articulated as "Boston or Berlin".

My own preference is firmly located in Europe. A country where 40 million people have no health insurance and 25% are illiterate has no attractions for me. What the proponents of the American model fail to realise is that the country has changed radically in the last thirty years. It is a very divided nation but the locus of political opinion has moved steadily to the right where a combination of Chicago School economics and protestant fundamentalism makes it unattractive to anyone with any disposition to social justice.

It was not always the case of course. As late as the 1960's Lyndon Johnson set out his great society project. John Kenneth Galbraith railed against "Private Affluence and Public Squalor". Shortly before he was assassinated Robert Kennedy spoke at an election rally in the University of Kansas. This is what he said:

"Even if we act to erase material poverty, there is another great task. It is to confront the poverty of satisfaction - a lack of purpose and dignity - that inflicts us all. Too much and for too long, we seem to have surrendered community excellence and community values in the mere accumulation of material things.... The gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile".

These sentiments would find a resonance in our public discourse in Ireland today. Despite the fact that you sometimes hear people speaking of "Ireland Inc" a country is not just an economy. The economy exists to serve society, not the other way round.

Ireland has now caught up with the most developed countries in the world. It is in fact the fourth richest country. We need to decide how we use that wealth for the benefit of all citizens.

I thank you for giving me the opportunity of contributing to that debate.