Failure of unions and employers to strike a deal could boost political debate but at a high economic cost, writes Mark Brennock, Political Correspondent
When the Fine Gael and Labour Party leaders questioned the Taoiseach in the Dáil yesterday on the breakdown of the social partnership talks, they did so in tones infected with a gravity normally reserved for discussion of rare tragedies that unite Government and Opposition.
Both Mr Enda Kenny and Mr Pat Rabbitte inquired as to whether the Taoiseach would intervene to save the day. Mr Ahern said he would do no such thing, meaning that he sees no prospect of agreement in the short term.
"The question of political intervention does not arise unless there is a prospect of movement by both sides," said a Government spokeswoman last night. Or, as a British spokesman once said about Mr Blair, he doesn't do photo opportunities in front of plane crashes.
For 15 years, social partnership has, as Mr Pat Rabbitte said, been "a cornerstone of economic and industrial management by successive governments". Since 1987 there has been a period of remarkable industrial peace, with comparatively very few work days lost to pay disputes.
In the early hours of yesterday morning, however, the process appeared to unravel. According to the Taoiseach, the unions and employers had moved further apart during the previous day, leading the Government to conclude there was no prospect of a deal at this stage.
Contacts between Government, employers and unions yesterday found no basis for movement. The "social partners" - as it has been polite to call trade unions and employers since 1987 - revealed themselves in their more traditional roles of social adversaries during the day. Mr Turlough O'Sullivan of IBEC and Sen Joe O'Toole of ICTU demonstrated on national radio that the partnership approach detectable in the Dáil had been nowhere to be seen when the talks broke down early yesterday morning.
The trade unions want a 7.5 per cent pay rise over 18 months; employers want a pay pause followed by just 5 per cent over 18 months. The employers are resisting ICTU proposals to enhance the rights of workers to join unions and unions to be recognised and negotiate on their behalf. ICTU is resisting IBEC proposals for the Labour Court to enforce trade union compliance with their part of any deal.
Mr O'Sullivan said IBEC just couldn't pay. Mr O'Toole suggested his members would take their chances if necessary by lodging individual pay claims in companies throughout the State.
The issue is "parked" until after Christmas. In the intervening period, the Government hopes unions and employers will conclude that such a free-for-all would be a nightmare and will come back to the table to sign up to a deal. While the Taoiseach has said he will not intervene now, there is no doubt that in January the Government will push for a deal if it sees any prospect of one.
For social partnership has been hailed for 15 years as a key contributor to growth and prosperity. However, the difficulty surrounding the first attempt at a post-Celtic Tiger partnership adds weight to the argument that such agreements needed the boom as much as the boom needed them.
During the boom years, the Government found it easy to negotiate national pay deals. It offered tax cuts - to which it was ideologically committed anyway - to modify workers' demands for pay rises that would give them a share of the profits of the boom.
Business saw profits soar while the wage bill remained under control; workers got more take-home pay as a result of the tax cuts; and the Government got industrial peace which enabled the economy to forge ahead.
But now tax cuts are off the agenda, and any increase in workers' standards of living will have to come from higher pay. However, the higher pay is being sought at a time when business is enjoying much more modest growth and says it can't afford it.
THE trading of wage moderation for tax cuts had another long-term political effect that may take a long time to undo. Economist Mr Jim O'Leary pointed out in these pages last week that this tax cuts/wage moderation barter promoted "the notion of tax as an impost, as a deduction from wage packets, as something to be minimised, rather than as a payment for public services".
Now, as we know from the spending "adjustments" in 2002 and the estimates for 2003, there is not enough tax revenue to pay for existing public services, let alone for the services the Government promised us in the general election campaign. However, 15 years of social partnership, together with the boom that allowed for public spending increases and tax cuts, have created a disconnection between tax and services in public debate. Everybody is arguing for better services: who is arguing for the tax increases to pay for them?
With tax cuts off the table and the employers refusing to budge on pay, any prospect of the unions agreeing to a new deal rests on other issues, such as trade union recognition and improved workers' rights to redundancy payments. The Taoiseach yesterday made positive noises on these issues: it will be the New Year before we know whether any movement is possible.
Meanwhile, the Government is already thinking of Plan B, to be implemented in the absence of a national centralised deal. The Taoiseach said yesterday he was confident the Government could negotiate a public service pay deal while he hoped private- sector companies could also negotiate their own pay deals in an orderly manner.
This was not in their best interests, he said, but it may come to pass. For a deal to happen "the parties will have to change their views and attitudes". There was no point in continuing talks "when people are getting on each other's nerves".
If they continue to get on each other's nerves in the New Year, we may yet have a return to the old adversarial relationship between local unions and employers. If the Taoiseach's optimistic scenario involving orderly local negotiations and agreements comes to pass, the disruptive effect on the economy will be small.
The absence of a deal would please those who argue that partnership has been one of the processes that has marginalised elected politicians. Policies on tax, social services and labour law might return to the Oireachtas for real debate rather than be decided behind closed doors between competing social interests without democratic scrutiny.
However, if a talks collapse leads to costly, confidence-sapping industrial disputes, the economic price of this little bit of democratisation will be very high.