Labour market challenges debated at Labour Relations Commission forum

At a symposium held in Dublin in November 2004, organised by the Labour Relations Commission, participants debated important challenges facing the Irish labour market. There were calls to simplify the complex employment rights framework and harness employee participation to boost competitiveness.

The Labour Relations Commission, one of Ireland’s main dispute-resolution bodies, organised a high-level symposium in Dublin on 11 November 2004 entitled 'Meeting the challenge of change: Irish labour market issues in a global economy'. The aim was to bring together policy-makers and practitioners to debate the major issues facing Irish industrial relations in future. The event drew a range of participants from business, trade unions, politics and the various labour market and industrial relations institutions. The keynote address was given by the Prime Minister (Taoiseach), Bertie Ahern, who commented that there are now 25 Acts relating to employment rights and industrial relations, and eight bodies charged with enforcing these rights. According to Mr Ahern, 'whatever chance practitioners have of navigating their way around this maze, the average citizen has very little'.

In the Prime Minister’s view, this area is a prime candidate for the application of regulatory reform techniques, including a reduction in the number of Acts through consolidation, simplifying the language, and providing user-friendly guides to help people. However, Mr Ahern was careful to emphasise that the objective is not to reduce worker protection in any way, but rather to 'help the public and the expert practitioner to decode the system, to help them have a better appreciation of their rights, and the means of redress and dispute resolution open to them'.

Noting that a preliminary review of employment rights provisions has been produced by a review group on employment rights set up under the current national agreement, Sustaining Progress (IE0301209F and IE0304201N), Mr Ahern remarked that 'since the establishment of the Labour Court almost 60 years ago, structures and systems have evolved in an ad hoc way, in line with changing domestic needs and the evolving EU legislative framework'. He added that the government is conscious of the need to preserve the 'voluntarist' aspect of the industrial relations system, which 'provides a unique agility and responsiveness'.

Labour market trends

Professor John Fitzgerald from the Economic and Social Research Institute (ESRI) examined changing trends in the Irish labour market in the period up to 2010. He said that the overall economic forecast for Ireland was good, but warned that there was a possible danger of an imbalance in the US economy, which could have negative repercussions for Ireland, given its heavy reliance on US investment. For instance, a dramatic fall in the value of the dollar could have a 'ripple effect' in Ireland. Commenting on significant changes in labour supply, Professor Fitzgerald said that, in stark contrast to the huge emigration levels of the period around the 1950s, in the past decade or so there has been substantial immigration of skilled labour - partly due to the return to Ireland of former emigrants, who Professor Fitzgerald called the 'homing pigeons'.

On educational attainment, Professor Fitzgerald said that in the future the supply of skilled labour would rise, while the supply of unskilled labour would fall. The implication for employers is that they will have to promote more 'employee-friendly' work patterns in order to attract and retain skilled workers, especially the rising proportion of skilled female labour.

Competing for FDI

Martin Cronin, the chief executive of Forfas, the national innovation and training body, examined the impact of foreign direct investment (FDI) and the competitiveness challenge facing Ireland. In a climate of pervasive uncertainty, Mr Cronin suggests that there are still a few certainties, such as the continuing importance of technology and globalisation. He said that parts of Asia and Central Europe are winning much of 'Ireland’s' high-technology and services FDI business, but that Ireland is still strong in particular areas of FDI, such as financial services, software, web services and life sciences.

So, how should Ireland respond to sustain competitiveness? According to a recent Forfas Enterprise Strategy Group report, Ireland needs to focus on five areas of competitive advantage: expertise in markets; expertise in technology; product and service development; an attractive tax regime; and effective, agile government. Mr Cronin stated that the burden of labour market regulation has increased in recent years, and that there is growing employer apprehension about this.

The speakers took a number of questions from the floor. Owen Nulty, the general secretary of the Mandate retail workers' trade union, asked Professor Fitzgerald whether, now that there is nearly full employment in Ireland, he thought that a 'sub-economy' of immigrant workers was being created. Professor Fitzgerald responded that there is a need for a major change in immigration policy to encourage the free flow of skilled labour. Under the current system, he claimed, employers in Ireland have too much power over work permits, in the sense that workers are tied to individual employers, which control the permit. Instead, workers should be free to apply to the state for a permit, as under the Canadian or US permit system. Professor Fitzgerald rejected the idea promoted by some that Ireland is facing a flood of unskilled labour.

The 'psychological contract'

The next speaker, UK-based human resources academic Professor David Guest (of King’s College, London), emphasised the importance of developing a strong 'psychological contract' and good employment relations at work. Professor Guest identified a rise in individualism/non-unionism in employment relations, with the traditional collective bargaining model being less relevant in many workplaces. In the context of a breakdown of the traditional collective model, he said that a new framework of employment relations was required, based on a 'psychological contract' between managers and employees. This contract is seen as an implicit two-way deal between employers and workers, defined as: 'The perceptions of both parties to the employment relationship, organisation and individual, of the reciprocal promises and obligations implied in that relationship'. The state of the psychological contract is concerned with whether the promises and obligations have been met, whether they are fair and their implications for trust, according to Professor Guest. Whereas in the past, the 'deal' was more likely to be stable, now promises are more likely to be broken in the context of constant change, which has implications for worker perceptions of trust and fairness.

Professor Guest suggested there are ways in which the 'good employer' can build a positive psychological contract - for instance, by developing progressive human resource practices, enterprise partnership arrangements, a climate of positive organisational support, and a high-quality workplace environment. However, he acknowledged that the psychological contract is a nebulous, rather elusive concept to track. In the current economic climate, Professor Guest observed, American organisational culture is increasingly making the running and asserting its 'hegemony'.

Clashing models

In this context, a crucial issue at the core of the symposium debate was how to find an appropriate balance and manage the tensions between, on the one hand, the expanding influence of the 'European social model' on the Irish labour market context, and on the other hand, the significant dependence of the Irish economy on investment from US multinationals. In contrast to the European 'collectivist' social agenda, US corporate culture is widely perceived to be dominated by an 'individualist' model. There are obvious difficulties in reconciling this clash of two cultures in the sphere of the employment relationship - European collectivism and US individualism - and this will remain the case, speakers suggested.

The tension between individualism and collectivism was a recurring theme throughout the event, and was identified as such by the chair, broadcaster Olivia O’Leary. It was stated that non-unionism is now the norm in much of the Irish private sector, and that American organisational culture has become increasingly dominant in Irish workplaces.

Where does Dell fit?

The abovementioned issues were reflected in a presentation by Marie Moynihan, human resources director of the home and small business division of the US-based computer manufacturer, Dell. She said that Dell's US corporate philosophy views trade unions as a barrier to change. Dell promotes a direct relationship with its staff, and it does this partly via a twice-yearly employee survey called 'tell Dell'. Dell targets its employees carefully when recruiting, expecting recruits to adopt a mindset of individual flexibility and commitment to Dell’s corporate values, she stated.

By contrast, Paul Sills, director of EDS Ireland, which is also US-owned but unlike Dell, highly unionised, said that the advantages of unions outweighed the disadvantages. Mr Sills said that he welcomed the collaborative relations with trade unions at EDS, and he acknowledged that the unions have a responsibility to represent their members.

Commenting from the floor, a regional secretary from Ireland’s largest union, the Services Industrial Professional and Technical Union (SIPTU), said that, rather than having an individualist philosophy, Dell had a collectivist one, in the sense that individuals who work there have to conform to the dominant Dell corporate culture. Reflecting the practical complexities of the individualist/collectivist mix, a number of union leaders stated that Ireland’s economic success would not have been possible without a collective effort involving extensive trade union input, as embodied in the national social partnership process.

From an employer perspective, Brendan McGinty, director of human resources and industrial relations at the Irish Business and Employer Confederation (IBEC), said that there has to be a 'reality check', in terms of accepting the realities of non-unionism/individualist human resources policies in much of the private sector, and the need to have an environment supportive of FDI, especially from the USA. Mr McGinty queried why much employment legislation is still being framed collectively. He said that this does not reflect reality in much of the Irish private sector. He added that the growth of employment rights regulation has been relentless.

The chair, Ms O’Leary, posed the question 'at what stage do we stop worrying about what US bosses think?' She said that people were increasingly fed up about the country being run as an economy and not as a society.

Consultation directive looms

The clash of the 'two employment relations cultures' is illustrated by the evident uncertainty surrounding the impending implementation of the 2002 EU information and consultation Directive (2002/14/EC) (EU0204207F), which will represent a radical change in Irish industrial relations, especially in many non-union workplaces (IE0411202F). In the final presentation of the day, the audience was told by Professor Roy Green, dean of the Faculty of Commerce, National University of Ireland Galway, that there has been a distinct lack of debate on the implications of the Directive. Professor Green is of the view that while there are examples of good practice in Ireland in the area of information and consultation, many organisations are reluctant to share information and to consult employees, 'who are consequently limited in their capacity to influence decisions affecting them at work'.

He suggested that, in the context of Ireland’s evolving social partnership agenda, employers and unions should use the opportunity of the changing business environment and forthcoming information and consultation legislation to review arrangements for employee 'voice'- to the advantage of the organisation as well as individual employees. While it may be tempted to opt for what is seen as a UK-style 'minimalist' interpretation of the Directive (UK0407104F), Professor Green said that the Irish government should treat the new legislation as an opportunity to promote the transformation of workplace structures and performance through a well thought-out transposition strategy. He believes that the UK interpretation of the Directive is very legalistic, and should be avoided. To be effective, Professor Green suggests that this strategy will require national policy support measures, possibly on the model of Finland’s Workplace Development Programme (IE0411203F).

Responding to a question from the chair as to whether employees themselves are actually interested in receiving information and consultation, Professor Green said that, in his experience, there are instances where management provides much information to workers, but workers complain of information overload. However, he said that it is in no-one's interests for workers to remain apathetic, and it is up to employers and employee representatives to promote information and consultation and boost workplace innovation.

Dispute resolution

In the area of dispute resolution, Brendan McGinty of IBEC remarked that, for some time now there has been a low level of industrial action. Ms O’Leary responded that although official disputes have decreased, workers are finding other, more individualised, ways to express discontent, such as higher absenteeism. A number of union leaders said that more resources are required to fund the various dispute-resolution bodies. Niall Saul, human resources director at Irish Life and Permanent, argued that all Labour Court recommendations should be binding. He said that managers of companies based elsewhere in Europe he had spoken to cannot understand why Ireland does not having binding recommendations.

An LRC background paper on dispute resolution distributed at the conference, written by Professor Paul Teague (of Queens University, Belfast), identifies a need to move towards a more flexible system of dispute resolution to reflect changes in the external environment (IE0406203F): 'A flexible employment dispute-resolution system simultaneously encourages the resolution of conflicts nearest to the point of their origin and maintains employee access to wider public and quasi-legal conflict resolution procedures.'

Commentary

The Labour Relations Commission-sponsored debate on the challenges facing Irish employment relations raised many important issues, particularly the obvious requirement to reform and streamline aspects of the overall dispute-resolution and employment rights framework - but without jeopardising worker protection. Alongside the fact that the majority of private sector workers in Ireland are not represented collectively by a trade union, there has been a considerable expansion in individual rights-based litigation - a reflection of the increased individualisation and legalisation of the employment relationship. (Tony Dobbins, IRN)

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