Why has the Irish economy grown more than twice as fast as the European Union's? How have we been able to create so many new jobs? Why has the unemployment rate fallen so dramatically? Why is Ireland today the envy of our European partners?
The answer is simple. Ireland is working to a winning formula - social partnership. That is self-evidently clear when we compare Ireland's experience since 1987 with our experience in the preceding decade - when social partnership was not in existence. When real take-home pay was falling. When unemployment was at record levels. When emigration was rampant. When the public finances had, by 1987, reached the point of crisis. And when the overall mood was bleak.
The figures speak for themselves:
we have enjoyed the fastest level of economic growth in the OECD for the past five years;
total employment has risen dramatically, from just over one million in 1988 to well over 1.6 million in the fourth quarter of last year;
the Live Register is at its lowest level for 18 years and our Standardised Unemployment Rate is now less than 5 per cent;
our debt/GDP ratio has been reduced from an alarming 120 per cent in the mid-1980s to just over 50 per cent today;
we had a Current Budget Surplus last year of £3.4 billion, compared to a deficit of £1.4 billion in 1986;
and Irish living standards are converging with the EU average, with GNP per capita at 93 per cent of the EU average, compared with less than 70 per cent in 1987.
Our recent performance is even more striking when set in a European context. In growing more than twice as fast as the EU since 1987, the Irish economy has delivered six times the EU rate of employment growth and raised living standards, as measured by per capita personal consumption, twice as fast as the EU average.
Social partnership has meant the creation of a virtuous circle in our economy, with significant increases in take-home pay combining with the restoration of our cost competitiveness, massive levels of job creation and a remarkable turnaround in our public finances - which in turn has allowed us to bring about a major reduction in the national debt and free up resources for spending on health, education and social welfare.
The Programme for Prosperity and Fairness will enable us to continue on this success path in the very different, but no less challenging, circumstances facing us today.
The new programme demonstrates the dynamic nature of the social partnership process. It shows clearly that partnership has an inherent capacity to respond imaginatively to changing needs and circumstances.
The programme sets out to ensure that everybody can feel the benefit of social partnership. Over the period of the programme, up to and including Budget 2003, there will be increases in net take-home pay, including pay increases, of up to 25 per cent or more.
The programme has a particular focus on people on low incomes. It also provides for a very substantial increase in the resources allocated to social inclusion, amounting to £1.5 billion. These provisions of the agreement will mean real, tangible improvements in people's day-to-day lives. In addition, the programme involves a concerted effort to address the issues affecting the quality of people's lives, such as housing, transport and healthcare.
Concerns have been expressed, on the one hand, that particularly because of the impact of inflation the pay increases provided in the programme are too low and, on the other, that the pay increases are too high and will damage our competitiveness.
I believe that in fact we got the balance right. The pay increases are substantial - as a major trade union leader has been saying recently, what other process could deliver such benefits? And all reasonable observers are confident that inflation figures will show significant reductions later this year and that the average inflation rate over the period 2000 to 2002 will be of the order of two to 2.5%. So the pay increases will be for real.
And so far as the effects on economic performance are concerned, the programme provides the means of ensuring sustained improvements in productivity on the basis of enhancing competitiveness and overcoming emerging supply-side constraints.
It is worth noting in this regard that our National Competitiveness Council, which has recently strongly endorsed the programme, believes that the terms of the pay increases strike the correct balance between higher incomes and the competitiveness needs of the economy.
The programme looks to the future, as well as providing for immediate needs. In addition to providing for major improvements in living standards for all, it contains a very wide range of measures to enable us to compete successfully in a rapidly changing world and to master the challenges posed by the information revolution, globalisation and EU enlargement.
There may be some who feel that our recent strong performance is some sort of guarantee of future growth. This would be a dangerous illusion. There is nothing surer than the rapid, negative impact that unsustainably high wage increases - whether through a free-for-all or otherwise - would have on jobs and investment here.
There are those who say they can have all the tax and spending provisions of the new programme without the pay agreement. Again, this is untrue.
The non-pay provisions are based on implementation of the pay terms - the policy environment without a pay agreement could require a very different response.
Those who argue against the agreement should be honest and say what they propose instead. Given our past experience, the alternative formula of pay free-for-all, industrial conflict, uncertainty and job losses could be a spectacular own goal.
This new programme is the result of intensive negotiations involving the Government, employers, trade unions, farmers and the community and voluntary sector. It brings social partnership into a new phase. It has the necessary capacity, dynamic and flexibility to move our country decisively forward on a range of fronts.
It seeks to build on what has been achieved in recent years while, at the same time, reorienting towards new challenges. It is the most ambitious and wide-ranging agreement of its kind to date. Once ratified, it will be implemented alongside the National Development Plan and the Government's Action Plan for the millennium. Together they provide the essential foundation for continuing growth, prosperity and fairness for all.
The Taoiseach, Mr Ahern, is currently on an official visit to Australia
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