Towards a Sustainable Economy and a Just Society - Green Party Conference Address

24 Mar 2006

Address To Green Party Annual Convention, Kilkenny - 24 March 2006
By David Begg, General Secretary, Irish Congress Of Trade Unions

I am honoured to have been invited to address your Annual Convention you and I bring fraternal greetings and best wishes for a successful Convention, from the trade union movement.

Congress shares with the Green Party the characteristic of being an All Ireland organisation. We have 55 affiliated unions representing 800,000 members. We are conscious of our role as the largest civil society organisation on the island.

There are, I believe, other things we share as well. We both want to create a just society in Ireland. You pursue that objective through the political process; we do it by organising workers in trade unions and using our collective influence to achieve a redistribution of wealth in the economy. We are the only actors in the market with this objective. The market economy is capable of generating great wealth but it has no imperative to share that wealth. Left to itself the market will concentrate wealth in the hands of the most powerful actors and will tend towards ever greater inequality. The share of wealth taken by labour and capital adjusts in relation to the relative strength of each. In the last twenty years deregulation, the increased mobility of capital and the process of globalisation have weakened trade unions relative to global corporations.

In an article in "The Financial Times" on Wednesday, Martin Wolf explained it this way:

"Rises in corporate profitability have been marked in most high income countries. Cyclical recovery is one reason. Globalisation is another, since it has generated a worldwide increase in the supply of labour relative to capital".

There is little doubt that Ireland has been a beneficiary of globalisation but we are seriously challenged by it as well. As an open economy we are more exposed to risk than most other European countries. A current example is the pressures being created in the labour market by high levels of immigration on the one hand and the migration of some sections of manufacturing industry to low cost countries on the other. So, even though our economic performance overall is exceptional it is not easy to maintain a balance between economic and social development. Nevertheless, that is what we have to do if we are to have any hope of a decent future.

In pursuing our mission we encounter considerable hostility because of tension between our objectives and those of business. People of a neo-liberal persuasion, particularly economists and a large segment of the business press, maintain a constant assault on our programme and our values.

In fact I never cease to be amazed at the capacity of these people to maintain two mutually exclusive propositions at the same time. On the one hand they assert that we are insignificant and of no consequence - despite our membership of 800,000 people. On the other hand they say we have too much power. In particular they resent the social partnership process as an unwarranted interference in free markets.

In truth this perspective is of little concern to me. But I do worry that people in politics also resent social partnership, seeing it as somehow replacing democratic politics. I think Senator Martin Manseragh had the correct sense of it when he wrote in the Irish Times column a few weeks ago:

"Right-wing critics claim partnership is undemocratic, as if democracy consisted only of parliamentary majority rule, rather than multi-layered participation in public affairs. While nominally Seanad Éireann is composed along corporatist lines, social partnership is much closer to the real thing. It is corporatism as an extra dimension to democracy, rather than as a substitute for it as envisaged by some in the 1930's"

Let me make it clear that I am aware that the Green Party has a strong attachment to participative democracy. I make this point about social partnership only to create a context for the main proposition I want to put to you - that the process can facilitate the transition to a just society notwithstanding the conflicts of aspiration which exist in civil society.

Apart from one period of five years when I was working for Concern I have been involved with the social partnership project from its inception in 1987.

Those who lived through the Eighties know how bad things were in Ireland then. Those who are younger would find it difficult to conceptualise how far we were removed from today's prosperity. It was the era of high unemployment, high emigration, shambolic public finances and corrupt politics. We didn't know the extent of the offshore accounts and the planning payoffs at the time. My family were small then and my greatest fear was that none of them would be able to live and work in their own country. Social Partnership has helped to change all by creating a stable climate for investment and economic growth.

The primary social policy objective of those years was that of ending unemployment which has been substantially achieved. That objective required an accommodation which provided business with whatever it wanted - low corporate taxes, low social insurance costs and minimal labour market regulation - and even up to recently, determination of immigration policy.

The other part of the core bargain which sustained the partnership project over the years was a trade off between modest wage growth and income tax reductions.

Taken together, and from the viewpoint of the ordinary person, these elements of the bargain, although they worked, might be considered to have something of a Faustian aspect to them. Still, ending large scale unemployment and emigration was a price worth some sacrifices. In effect we have caught up with the rest of Europe and outperformed it in some respects.

But there is no longer an employment premium to be gained from this bargain. In fact if we look at some forecasting done by the CSO we see Ireland's population rising to five and a half million by 2030. The population will consist of approximately 18 per cent of people of non-Irish birth. This will put us ahead of most immigrant receiving countries, including the United States. This is an extraordinary change by any standards. How are we to handle it? What are the implications for our already inadequate physical and social infrastructure? What is our risk exposure in terms of security of energy supply - an area in which we are already quite vulnerable? What about the environment? Do we want to cover the whole island concrete? It seems obvious to me that maintaining a policy model aimed at maximising economic growth almost as a mantra is madness. Logically we should try to optimise growth and to align it with an investment policy in infrastructure and indigenous energy supply and management which, taken together, offers a sustainable long-term outcome.

Our thinking on these matters is set out in some detail in our submission on the National Development Plan to be published on Monday.

With respect to the current discussions on a new partnership agreement our view is that a radically different model is called for - a complete paradigm shift which recognises that:

  • Offsetting wage claims with tax reductions is counterproductive;
  • Maximising economic growth for its own sake no longer has a social dividend and may in fact have social deficits build in;
  • That increasing GNP as distinct from GNP per capita does not improve wellbeing and living standards;
  • That sustainable development is in keeping with the common good
  • That economic development requires complementary social development.

In my opinion Social Partnership will make a more effective contribution if it can galvanise the social partners to subsume their individual wish lists into a relatively short list of strategic objectives where their input can add value. By concentrating on too wide an agenda the process has failed in the past to make an impact and lent credence to the charge that it was usurping the functions of the Oireachtas. The areas that Congress believes it can add significant value to are:

  • Labour market reform to ensure that every person who works in Ireland, whether they come from Warsaw or Wexford, will be treated fairly;
  • Health care in respect of which we want to propose a policy approach based on a report prepared for us by Professor Dale Tussing and Ms Maev Ann Wren";
  • The provision of an infrastructure of caring embracing children, older people and people with disabilities. While the measures included in Budget 2006 are welcome we believe, for reasons set out in the ESRI Medium Term Review and our own policy document "Who Cares", that a more strategic response is necessary. We are not persuaded that a market based solution is possible and it may be that caring will have to achieve the status of a "public good" that education has now;
  • With respect to education we believe that early childhood learning is crucial to a child's future. Indeed child care needs to be seen in this context rather than in just responding to labour market needs. The resources necessary to counter educational disadvantage at primary and secondary level must be commensurate with growing needs;
  • At another point in the spectrum the equipping of people in work with the skills to move up the value chain and to enhance their employability in terms of life long learning is crucial. In this regard we will be seeking a sea change in policy including the elimination of anomalies in relation to fees and time off which militate against this objective;
  • Pensions - there is a crisis in the coverage and quality of private sector pensions and we will have specific proposals to put in line with our own published policy document and the increasingly compelling case for moving to a mandatory and state based provision.

Nearly all of these social policy issues have a complementary function in sustaining the competitiveness of the economy. Just to give one example, if we don't provide a proper infrastructure of care women will find it difficult to continue working and labour supply will, accordingly, be curtailed.

Ireland has achieved the catch up phase of its economic development. It must now address the deficits in its economic and social infrastructure. We need a vision of the type of country we want it to be.

In my opinion the great political challenge for any society is to balance economic efficiency, individual freedom and social justice. Francis Fukuyama thought he had it sussed when he wrote "The End of History and the Last Man" ten years ago. His thesis was that, with the collapse of communism, liberal democracy would permeate the world with a set of universal values, and everything would be fine. The problem is that liberal democracy, in the American manifestation anyway, has a fatal gene. It cannot prevent growing inequality. I was interested to see Fukuyama resile from his earlier assertions in an article in the Guardian a few weeks ago.

So, with what country should Ireland compare itself? Where should we look to find a society we would want to emulate? To me the answer is to be found in the Nordic countries. They manage to combine economic efficiency and social cohesion. They all feature in the top ten countries for competitiveness, productivity, labour force participation, public services and social infrastructure such as childcare. They are highly unionised and operate on the principles of a well defined social dialogue. They have flexible labour markets in which the emphasis is on "employability" rather than job protection per se.

Moreover, sustainable development is a central part of their polity. They plan ahead with a skill and foresight that we have not yet mastered.

Realistically, the realpolitik of Ireland's situation is that we are not going to adopt the Nordic model anytime soon. Indeed, it would seem at first sight to be an impossible dream. A country whose people recently enthusiastically supported improved provision of care for the elderly but who baulked at even a mild increase in PRSI to fund it, would seem to be unlikely candidates for such a transition. But some of this can be explained by legacy problems in respect of the unfairness of our tax system where wealthy people, up to now at least, have had a wide variety of tax shelters to avoid paying their fair share. People need to be able to believe that the tax system is fair and that the money is efficiently and effectively used on their behalf. It will take time to build confidence in this regard.

This is a medium to long term journey. For the reasons already mentioned, to stay on our current trajectory is unsustainable. We have to make a choice and work towards it at our own chosen speed. For me anyway the facts about the Nordic model are compelling for anyone who wants a just society and a prosperous economy.

The strategy report of the National Economic and Social Council (NESC) recently published offers a via media between the Nordic model and where we are now. NESC is a body representative of Government, independent economists and social partners.

We have proposed a new approach to social partnership - a new paradigm if you will. We have suggested a medium term agreement of between 6 and 10 years based on the NESC strategy with priorities selected for attention in two year modules. Pay should also be negotiated at these intervals.

This new paradigm of social partnership offers the possibility of ushering in a new progressive era for Ireland. It is a prize worth striving for.

I mentioned earlier that there have been elements of a Faustian bargain in our engagement with business in social partnership but that the achievement of full employment offered the prospect of a paradigm shift. It seems to me that, for not dissimilar reasons, this is a time of opportunity for your political vision too. The end of the employment dividend from unlimited economic growth and the changed environment in agricultural production opens a new political space which, in my opinion, should allow for a dialogue on sustainable development. Concepts and ideas which to date have been seen as marginal may become mainstream.

As a citizen of Ireland I appreciate and value the contribution which the Green Party is making to public life and as General Secretary of Congress I would welcome a continuing dialogue with you in light of the exciting possibilities unfolding.