Irish ‘social partnership’ may have been a mistake

Ireland’s
experiment with ‘social partnership’ may have been an economic mistake, the
CIPD Ireland annual conference was told last week.

Irish
economist Jim O’Leary told HR managers that income tax rates might have been
lower and the gap between public service and private sector earnings narrower
if the country had never bothered with the social partnership experiment 17
years ago.

A
frequent critic of  ‘social partnership’
and public sector pay benchmarking, the university economist told the CIPD
Ireland annual conference in Galway that it is time to debunk some myths about
the effects of the past six national social partnership deals.

One
myth, according to O’Leary, is that Irish public sector pay had fallen behind
during the 1990s. He said that in reality, public service employees enjoy a 13
per cent premium over similar jobs, qualifications and skills levels in the
private sector.

He
added that this premium has been further increased by the payment of the public
sector benchmarking awards, averaging at 9 per cent.

“Another
myth is that social partnership led to tax cuts. But there is a clear case that
without it, income tax rates could have fallen further,” he said.

O’Leary
added that a third myth is that partnership is based on concepts of social
solidarity and a social wage. He told the attendants that it was really based
on treating income tax as an imposition rather than a transaction between
citizens and the government for quality public services.

He
said that he was not one of those who pressed for a lower tax burden and
instead preferred to focus on the quantum, quality and costs of social and
public services. “We need to eliminate the resistance to taxes that are
required to finance service enhancement,” he said.

He
presented a pay chart for civil service executive officers, teachers and
nurses, showing that every year between 1991 and 2002, at least two out of
those three groups received pay rises significantly above the terms of the
relevant national wage increases.

He
also noted that the number of days lost to strikes had fallen sharply from more
than 500,000 to 200,000 a year by the mid 1980s before the social partnership
experiment commenced. He tied in the lower incidences of strikes with a drop in
trade union membership density in the workforce, but did not claim a direct
cause and effect.

Retiring
Irish Labour Court chairman and former managing director of Guinness Ireland,
Finbarr Flood, chaired the CIPD conference sessions. In his closing comments,
he said that “sight should not be loss of the value of appreciation, respect
and good old fashioned leadership when people were now concentrating on
performance measurement and motivation techniques.”

He
added that HR departments are always ultimately responsible for an organisation’s
culture and standards. In addition, HR directors should take a role in “minding
and keeping an eye on the chief executive, because often he needs to be closely
watched”.

By
Gerald Flynn in Dublin

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