Warnings not heeded

After 21 years, is our version of tripartite corporatism growing old instead of growing up, asks Gerald Flynn.

'HOW ARE things in the 120K Club?" I asked an acquaintance based in Government Buildings last week.

"How the hell do I know! I'm into hurling, not golf," he replied.

We were a bit at cross-purposes, as I was not referring to the Kildare Country Club favoured by well-heeled golfers (and a few anglers as well), but trying to find out how things were with the "social partners" ensconced in their "pay talks" for the past two weeks.

After all the commentary about pay rises for Government ministers and the €1 million-plus packages of senior executives of some of our poorly performing public companies, it occurred to me that the "social partners" are by no means on their uppers either.

Each of those playing a key role in setting new national wage terms enjoys a remuneration package comfortably above €120,000 a year. In fact, a few of them are on more than twice that in their basic pay before pension and bonus.

When you earn more than €2,500 a week, it is not too easy to see things from the perspective of those on €250 to €350 a week or even those on average earnings of about €26,000 a year or €500 a week.

The social partnership process is celebrating its 21st birthday as the select few, representing one in three employees and mainly larger enterprises and State bodies, meet again just two years after agreeing their last wage deal and a 10-year economic and social programme called Towards 2016.

At 21 though, is this Irish version of tripartite corporatism growing old rather than growing up?

Corporatism - where industry and finance join forces with organised labour unions and government - has a long history of fuelling economic expansion going back to the late 1920s, although sometimes with disagreeable political consequences.

For better or worse, this is how our national wage increases are arranged. But some sensible voices have been advising that the old ways will not continue to produce positive results for the wider population, and sustained prosperity.

One of these is a man who knows more about real employment relations than any of the 120K Club members but, given his position, is a little constricted in sharing his astute advice in a robust manner.

Nonetheless, Kieran Mulvey, chief executive of the Labour Relations Commission (LRC), is in a good position to see the cracks and stresses in Irish corporatism.

Nearly a year ago, he cautioned that the approach adopted for Sustaining Progress, Programme for Prosperity and Fairness, Partnership 2000 and its three predecessors, would now no longer work.

It is just under a year since he first signalled that the "cradle to the grave" perspective of Towards 2016, covering all aspects of Irish society for the following decade, was brimming with what he called "optimism, ambition and vision".

With dark economic clouds emerging, Mulvey cautioned that the social partnership set-up needed to rapidly secure a firm grounding in reality and show it is capable of reappraisal, renewal and review.

With squabbling over equal treatment for agency workers and use of inflation and employment statistics as point-scoring darts, it certainly does not look, at this early stage, that a major transformation has taken place in corporatism's "controlled confrontation".

Twelve months ago, Mulvey detailed five big black clouds blowing in the direction of the 120K Club, but his warnings were lost in the election campaign.

They were:

• inflation soaring above 5 per cent;

• productivity growth falling back;

• interest rates on an upward spiral;

• global competitiveness slipping further, and

• employment relations becoming tense.

This is without factoring in the changing international landscape with China yet to really dominate world trade, India ready to move up the scale in quality manufacturing where Germany has held a leading position and, closer to home, the newer EU member states which will give us a good run when it comes to "tax banditry" - offering bargain basement corporation tax rates for transnational profit allocation.

Mulvey and his mates in the LRC see things most of us happily can ignore, such as the horror stories of exploitation which are emerging within the four walls of the Rights Commissioners' hearings but which are not publicised.

The LRC sees that social partnership is largely confined to the 120K Club and does not extend into most workplaces and, by policing the "inability to pay" claims, it sees the underbelly of vulnerable enterprises. Mulvey is the first to acknowledge that those enterprises that operate effective management of stakeholder interests never need to trouble the employment specialists at the LRC headquarters in the former Beggars Bush military barracks.

Two other former senior public servants, though lacking Mulvey's bird's-eye view, have also offered suggestions to the 120K Club members on potential ways of changing the rules of the "wage deal" game to adjust to changing circumstances.

For the past eight years, Don Thornhill, currently chairman of the National Competitiveness Council, and Donal de Buitléir, policy adviser to AIB's senior management, have been suggesting a new "gain-sharing" pay formula be adopted by the "social partners".

Broadly they suggest a two-tier pay arrangement built on, first, an annual basic or "platform" pay increase related to trade-weighted inflation and, second, a growth-related part-payment linked to 80 per cent of the change in gross national product per person at work.

Unfortunately their formula plays around with real consumer inflation and, at first sight, does not look like something that even Mulvey could easily sell to a room full of 500 determined trade union members.

The "social partners" will have to find their own solution having been slow to face up to the issues brought to their attention 12 months ago by the most experienced employment relations expert in the state.

Gerald Flynn is an employment specialist with Align Management Solutions in Dublin.