The Role of Social Partnership

Topics: Sociology, Macroeconomics, Unemployment Pages: 14 (4148 words) Published: November 28, 2012

Rory O’Donnell

From Studies, Volume 90, Number 357

1. Introduction

Social partnership has been a conspicuous feature of Irish economic, social and political life in the past decade and a half. This paper assesses its role in Ireland’s economic transformation and considers what role it might have in the years to come. Section 2 outlines the analytical foundations of Irish partnership and Section 3 shows how these are reflected in the five partners hip programmes since 1987. Section 4 summarises the self-understanding of partnership as a system of bargaining, inclusion and deliberation. The impact of partnership on economic performance is discussed in section 5. The paper close with consideration of the pressures on partnership and its possible future.

2. The Analytical Foundations of Irish Social Partnership

In 1990, the National Economic and Social Council (NESC) set out a framework which has informed its subsequent work, and which underlies the social partners’ understanding of the process. It argued that there are three requirements for a consistent policy framework in a small, open, European democracy: (I) Macroeconomic: the economy must have a macroeconomic policy approach which guarantees low inflation and steady growth of aggregate demand; (ii) Distributional: there must be an evolution of incomes which ensures competitiveness, which handles distributional issues without disrupting the economy and which is fair; (iii) Structural: there must be a set of policies which facilitate and promote structural change in order to maintain competitiveness in an ever changing external environment.

The Council argued that, in the Irish case, the first of these requirements is best met by adherence to the European Exchange Rate Mechanism (ERM) and transition to EMU. It argued that the second of these requirements is best met by a negotiated determination of incomes. To be really effective, such a negotiated approach must encompass not only the evolution of pay, but also taxation, the public finances, monetary policy, the main areas of public provision and social welfare. In pursuit of the third requirement, the Council advocated a programme of structural reform in taxation, social welfare, housing, industrial policy, manpower policy and the management of public enterprises. It argued that such reforms are best achieved with the consent and participation of those who work in the agencies and institutions concerned.

The international orientation of Irish social partnership was further underlined in the 1996 NESC report Strategy into the 21st Century. While globalisation has undermined many elements of national economic policy, there remain areas where national policy remains crucial. In a small, open, European democracy like Ireland: (I) Most of the policies which affect national prosperity are supply-side policies; (ii) Given rapid economic change, national policies must produce flexibility; (iii) Successful national supply-side policies, directed towards innovation and competitiveness, depend on the high level social cohesion and co-operation that the state can both call upon and develop. This suggests that once a consensus on macroeconomic policy is in place, the main focus of policy should be on the supply-side measures that influence competitive advantage and social inclusion, and on institutional arrangements that allow discovery and implementation of such measures (NESC, 1996).

3. Five Social Partnership Agreements, 1987 to 2001
The content and process of social partnership has evolved significantly since 1987 (O’Donnell and O’Reardon, 1997, 2000). All five programmes included agreement between employers, unions and government on the rate of wage increase in both the private and public sectors for a three-year period. The exchange of moderate wage increases for tax reductions has remained an important feature of...
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