States urged to examine success of Celtic Tiger

 

Ireland has been chosen by the International Labour Organisation as a role model for successful employment strategies in developed economies.

Along with Austria, Denmark and the Netherlands, the Republic's success in creating economic growth and reducing unemployment was the centrepiece of a two-day conference by labour market policy-makers in Geneva last week.

The ILO says the success of Ireland and the other EU states shows that significant employment growth can be achieved using the European "welfare state" model. In a reversal of the traditional wisdom that public-sector cuts are the only route to growth, the ILO urges other states to look at the success of these four small EU members. "The factors explaining their relative success, social dialogue, macroeconomic policy and labour market policy, merit attention and might indicate new solutions to the problem of unemployment, which has afflicted Europe over the last two decades," it states.

The conference was part of the international programme for action on jobs adopted at the 1995 Copenhagen World Summit for Social Development. It was attended by senior civil servants from EU member-states and the European Commission, as well as representatives of trade unions and employers' organisations from many countries.

"Contrary to some of the bigger European countries, which still suffer from depressed labour markets with sometimes very high levels of unemployment, youth and long-term unemployment, the four countries under review have been experiencing a remarkable labour market recovery or have maintained low unemployment over the long term," the ILO report concludes.

The report's small print says Ireland has not been as successful as the other "role model" states in containing and reducing long-term unemployment.

Nevertheless, it states: "All four countries have arrived today either at low unemployment levels or at least rapidly declining unemployment linked sometimes to rapid job growth. While the hitherto dominant market model predicted such a positive change on the labour markets only if policies of deregulation, privatisation and a `hands off' policy of the government and the social partners was enacted, the four countries stand for a balanced policy approach.

"They all have a well-established net of social protection, and practise a social dialogue and social partnership, with a rather assertive role for governments. Their labour market institutions and welfare arrangements have been strengthened through an adaptation to new needs.

"In particular, after a period of crisis, the social dialogue was used to bring the countries back into a virtuous circle of low inflation, moderate wage increases, welfare reforms and finally, employment growth and unemployment reduction."

Figures produced in reports for the conference show that between 1994 and 1997 Ireland had by far the fastest economic growth, in terms of GDP, of any of the "role model" economies. It also had the fastest job growth rate.

But Ireland was not as good as Denmark or the Netherlands in converting growth into jobs. For every 1 per cent growth in Dutch GDP there was a 0.73 per cent increase in employment and for every 1 per cent increase in Danish GDP there was a 0.7 per cent increase in employment. For Ireland, every 1 per cent increase in GDP resulted in a 0.62 per cent rise in employment, although this was still better than the EU average.