New Government to continue social partnership

Ireland's new minority Fianna Fail/Progressive Democrat coalition Government, elected in June 1997, promises to implement fully the terms of Partnership 2000, the three-year national economic and social programme agreed earlier this year between the previous coalition Government and the social partners.

Ireland's newly elected Government, a minority centrist coalition between Fianna Fail and the Progressive Democrats (PDs), is firmly committed to implementing Partners hip 2000, which was agreed between the social partners and the former "rainbow" coalition Government in January 1997 (IE9702103F). The rainbow Government was a left-of-centre administration made up of Fine Gael, the Labour Party and the Democratic Left.

The junior party in the new Government, the right-of-centre PDs, with just four members in the new Dail (Parliament), dropped its opposition to centralised agreements prior to the election. This enabled the PDs to move towards the larger Fianna Fail party which has traditionally been a strong supporter of social partnership. Fianna Fail has 77 members out of a Dail total of 166, with the Government receiving the backing of a number of non-party independent Dail members to sustain a majority.

The new Taoiseach (Prime Minister) and leader of Fianna Fail, Bertie Ahern, is one of the main proponents of social partnership. As a Minister for Labour in a previous Fianna Fail administration, he played a key in negotiating the Programme for National Recovery (PNR) in 1987, the first of a series of three-year agreements which culminated in the recent Partnership 2000.

The commitment to fulfil Partnership 2000 was expected, given the virtual political unanimity across the entire political spectrum in favour of such centralised programmes. What is surprising is the plan to introduce a national minimum wage, given the right-of-centre ideology of the smaller coalition party, the PDs, and the trenchant opposition of the main employers' body, the Irish Business and Employers' Confederation (IBEC).

Further, regarding the commitment to reduced taxation levels which is enshrined in Partnership 2000, the new Government is committed to reducing the basic rate of income tax to 20% and the higher rate to 42% over the next five years. These new commitments, if met, are likely to be greater than those agreed with the social partners. Basic allowances will also be increased, and will rise by at least the rate of inflation at each Budget.

A minimum wage?

On the minimum wage issue, the relevant section of the programme commits the parties to the introduction of a national minimum hourly wage, following early consultation with the social partners. IBEC has been strongly critical of this commitment, arguing that it would result in job losses and claiming that the existing system of Joint Labour Committee s (JLC s), which govern minimum pay rates in specific sectors, is sufficient to tackle any exploitation.

In reply, the president of SIPTU, the country's largest union, accused IBEC of using scare tactics about job losses. Jimmy Somers said that in most European countries a minimum wage was already the norm and with Ireland's chief trading partner, the UK, actively considering the introduction of a minimum wage (UK9704125F), genuine concerns about competitiveness will be allayed.

Public sector

Meanwhile, the new Government's approach to privatisation is characterised in its programme as a practical rather than an ideological one. Working in the spirit of social partnership and consensus, the document states:

"We will do whatever is necessary to enable them (state companies) to be competitive and cost-effective as providers of vital public services to the benefit of the consumer. Additional capital needs, where they cannot be provided internally, may be provided by means of strategic alliances, which may also enlarge their market, and by long-term pension-fund and employee shareholding. Our aim is to have a growing, vigorous, healthy companies, serving the public well and giving high quality employment at home and abroad, regardless of any evolution in structure" (authors' emphasis).

This commitment allows the incoming Government to adopt an entirely pragmatic stance on privatisation. With regard to employee shareholding in state companies, it leaves open the prospect of employees obtaining holdings of up to 14.9% in these companies, as was promised in Fianna Fail's pre-election manifesto.

With regard to state-owned Telecom Eireann, a commitment to employee shareholding was firmly spelled out on election day (6 June 1997) in the form of a letter jointly signed by Fianna Fail leader Bertie Ahern and PD leaderMary Harney. It asserts that the two parties are committed to social partnership and explains: "What this means in the case of Telecom Eireann and the 15% share holding is that whatever is agreed with the social partners is what will run. We have no difficulty with an Employee Trust holding the 14.9%."

The Irish Congress of Trade Unions is also committed to the trade union position in seeking a stake of 14.9% in Telecom. Its general secretary, Peter Cassells, has already gone on record in suggesting that the proposed deal could be a watershed agreement in the context of Partnership 2000.

Europe and EMU

EU Economic and Monetary Union (EMU) and the potential problems which could be faced by exposed sectors of the economy are alluded to in the joint programme. Consultation with these sectors is promised, so as to ensure that all sectors of the workforce derive equal advantage from EMU membership. It is also promised that full account of the possible effects of EMU participation will be taken in the negotiation of the next social partnership agreement. Urgent consultation with the social partners would take place in the event of any economic developments after EMU entry that would seriously threaten employment.


A unique political consensus now exists in Ireland, with the five main political parties committed to social partnership. At no time has a commitment to centralised structures been so unequivocal. There is, therefore, much to suggest that the new administration will try to maintain a "steady as she goes" approach to industrial relations management. It would be a mistake, however, to assume that the new Government will adopt an unadventurous approach. The commitment to allow employees to secure a significant stake in state companies, and the likely introduction of a national minimum wage, do represent fundamental initiatives.

Outside of the political parties, the main critics of social partnership are confined to: a strong block of opposition within the trade union movement; the alternative small employers' body, ISME; smaller far-left political parties without Dail representation; and a number of independent economists who argue that the agreements tend to produce unjustified special pay increases for civil servants. (Brian Sheehan, IRN, and John Geary, UCD)

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