Fighting for a ‘National Agreement’ in 2009: can a deal be done?

I have been busy doing interviews for my research over the past few weeks, and not had much time to write or reflect on the political stand-off between government, unions and employers.  Negotiations are on going and it would appear that Cowen has issued a directive to the public sector unions: present me with savings (through public sector reform), and a credible alternative to a €1.3bn cut in pay and we can talk. This puts the ball back into the union court and likely to generate intenal tension. The government do not seem to be budging on a short sharp correction, or a willingness to increase revenue via taxation, or a willingness to invest in a job security/stimulus programme. Thus, there is very little to exchange other than a commitment to approach the budget in a fair way.

But, without a willingness to balance and redistribute resources, this, if it did occur, would only be rhetorical. Public sector unions have balloted for strike action, and the expected media tirade against such an action in full swing.ICTU have planned a series of actions, under a banner ‘Get Up, Stand Up’, starting with a national demonstration in Dublin city on Friday.

The irony about the argument that the ‘country is being held to ransom by the unions’ is that we have had 20 years of industrial peace with almost no strike action, an achievement that has to be credited to the unions, employers and government via social partnership (many would argue that there was little for public sector unions to strike about, given that they are only interested in higher wages, which the got and in return for very little reform. Others would argue that the lack of industrial action is a sign of a trade union leadership who sold out to the capitalist bosses. So, they can’t win really). Ireland, along with the UK and Sweden are the only countries to have never had a national/general strike in the past 30 years.

ICTU re-launched its 10 point plan for National Recovery yesterday and it can be found here. It is an interesting document and certainly frames an alternative to the government’s approach (and broad academic-economic consensus) on the need for a quick, sharp reduction in public expenditure. This document tackles the argument from a ‘political economy’ perspective by claiming that such a ‘deflationary’ approach (what economists call contraction) would deepen the recession. Consumer spending would drop further, and hence, so would tax revenue. They call for an attempt to recoup money via a wealth, and higher rate of tax. Money that exists but being hoarded. Cogito, dont take money off those who spend what they have but recoup money from passive reserves (owned by the wealthy). This is what constitutes their ‘Fairer, Better Way’.

My sense is that unions will agree for cuts in pay (but not directly, but via working reform practices and other techniques that are eaiser to sell) over a longer period. The government is not likely, although I think the should, argue with the ECB for an extension beyond 2013 to reduce public borrowing. The unions got a boost during the week when the esteemed economist David Blanchflower, supported the view that pay cuts would have not make much difference to Irelands crisis, and that  in a recession you wait until the economy is growing before you take such decisions. You can listen to him on Morning Ireland here. Such a Keynesian approach is absent in the public debate in Ireland. Most economists dismiss it as not fully understanding the circumstances around Ireland’s economic and fiscal strategy. I think it is a lack of imagination. The differences are not that stark. Given that Ireland still has a relatively low debt-GNP ratio (in comparative terms) it should at least be discussed as a policy alternative. But, that would require talking about ‘capitalism’ in macro-terms and we are only allowed to talk about the ‘economy’ in micro terms. A point made by Wolfgang Streek in a review of ‘four capitalisms’ in the Socio-Economic’ review this month.

What is clear from the signals and indicators being given off the Unions is that they are fighting for a social pact. They are fighting for a national agreement but on different terms to the government. This fact is lost in a lot of the media commentary. Fighting for an agreement is not fighting for a strike. This is an issue highlighted in an interview with Jack O’Connor last weekend. You can listen to it here.  Whether a deal can be done depends upon whether the different interests of the actors can be bridged. If the public sector goes out on strike, trust will be lost and dialogue hard to re-ignite, but for ICTU to push its 10 point plan for a national recovery programme it needs more than a symbolic march. But, I sense that public sector members are not really in it for a national recovery programme, but the defense of their wages. This tension will be hard to bridge internally within ICTU.

Some of these points were debated and thrashed out between John Fitzgerald (ESRI) and Paul Sweeny (ICTU) on Monring Ireland. You can listen to it here. It is clear that they disagree on only one major issue: timing. Do we take the pain now, in one large cut, to achieve a monetarist-ECB criteria or do we try to invest our way out of recession through economic development. It is a classic Post-Monetarist v’ Post- Keynesian debate, Irish style.

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