Social Pacts in Ireland: Partnership 2000 for Inclusion, Employment and Competitiveness

Period: 1997-2000

Negotiating parties: Nineteen organisations (farming organisations, community and voluntary organisations, trade unions, employer and business organisations) and government

Goals of the pact:

To secure and strengthen the economy’s capacity for sustainable employment, economic growth and social inclusion.

Matters agreed:

• Public finance: equitable and balanced fiscal policy (an action programme for social inclusion and equality, tax reductions, quantitative ceiling and target for current public expenditure and the General Government Deficits, and the debt/GDP ratio.)
• Maintenance of a firm exchange rate strategy
• Coordinated wage setting with a strong focus on competitiveness
• Increase in living standards through moderate pay rises, tax reductions and promoting social inclusion
• Adoption of a National Anti-Poverty Strategy (NAPS) by the Government early in 1997.  NAPS targets:
  • social inclusion and reduction of unemployment,
  • reform of child benefit and family income supplements,
  • modification of the rate of housing supplement,
  • expansion of targeted employment measures,
  • further development of employment services,
  • education,
  • adequate income through the improvement of the social insurance system, basic income, special measures for pensioners,
  • local development through devolution, enterprise trust, and community development and targeted programmes for the disadvantaged,
  • drugs problem,
  • rural exclusion
• Social inclusion (gender equality, promotion of employment for the disadvantaged, including the disabled, travellers)
• Support for small businesses (through an awareness programme, improvement of access to finance, administrative simplification, a programme for the unemployed to set up self-employment through a back to work allowance, training and tax incentives)
• Development of the agriculture, food and forestry industry and rural area development
• Partnership for competitive enterprises (enhancing partnership at enterprise level, by promoting employee involvement in training for improved competitiveness, support and technical assistance, and modernisation of the industrial relations system)
• Modernisation of the public service

Institutions involved:

In consultation with social partners (tripartite plus), the government departments to implement programmes and following tripartite institutions to monitor progress:

• the National Economic and Social Council (NESC): benchmark progress in the areas covered by the partnership
• the National Economic and Social Forum (NESF): provides opinions at six monthly intervals on the development of the provisions of the partnership agreement regarding social inclusion and equality, and ensures participation of social partners

Procedures:

• Meetings at six monthly intervals to review and monitor operations on pay agreements, the modernisation of enterprises and the modernisation of the Public Service,
• Quarterly meetings to review and monitor the Partnership Agreement (under the auspice of the department of the Taoiseach (Prime Minister)

Background: This pact follows the Programme for National Recovery (PNR), the Programme for Economic and Social Progress (PESP), and the Programme for Competitiveness and Work (PCW).  This pact increased the focus of these agreements by incorporating the issues of partnership within enterprises and the modernisation of the Pubic Service.

Economic and industrial relations background:

Three essential economic and social challenges facing the economy and society are addressed:

• maintaining an effective and consistent policy approach in a period of high economic growth;
• significantly reducing social disparities and exclusion, especially by reducing long-term unemployment;
• responding effectively, at national, sectoral and enterprise level, to global competition and the information society.

Since the adoption of a consensus approach in 1987, Ireland has made significant progress on the economic front.  There has been strong economic and employment growth, with low inflation, a significant fall in the government deficit and debt ratio, and a considerable increase in living standards.  Yet, the high level of current public expenditure, the persistence of long-term unemployment and growing income disparity are problem areas.  The reduction of public sector deficits and debt is important as it is one of the guidelines set by the Maastricht Convergence criteria for the transition to EMU.

Action taken: The partnership programme led to the reform of many public policies addressing social exclusion.  The programme also led to tax and welfare reforms to improve the incentives to work, an expansion of targeted employment measures, further measures to address the educational disadvantaged and the consolidation of the local partnership approach to economic and social development.  In addition to traditional social partners, the community and voluntary sectors were actively involved in a wide range of task forces and working groups on the design and implementation of the anti-poverty strategy.

Mixed picture on tax policy: While there was a strong and enduring consensus among social partners that tax reductions should be focused on low and middle income groups, politicians were inclined to implement visible reductions in tax rates, an approach which favours the rich over the poor.  Hence, the income inequality problem has not been tackled to the extent that social partners wanted.   

To promote enterprise-level partnership, the agreement established the publicly-funded National Centre for Partnership, located in the Prime Minister’s department, to promote involvement and partnership, monitor developments and to provide technical assistance.

Institution building for public service reforms: every government department and office has established a partnership committee and most formulated Action Programmes to implement the department’s strategy in partnership.

Impact:

Complex impact on poverty and inequality: the use of percentage pay increases allowed wage dispersion to widen.  The real value of welfare payments has been preserved or increased but not in line with other incomes and increases in living costs.  After initial cuts, there was strong growth in total spending on health and education.  There is no doubt that economic growth contributed to employment growth and labour market inclusion.  The tax reductions have led to a fall in the share of total taxation in GDP, which raised questions about the level of funding available to tackle issues of social exclusion while the economic growth starts to slow down.

Comments: The community and voluntary sectors were consulted during the 1993 agreement, but not fully considered as social partners.  They campaigned against their status of “participation without power” and achieved full social partner status in the negotiation of Partnership 2000 in 1996.

Reference: Rory O’Donneell and Colm O’Reardon (2000) “Social Partnership in Ireland Economic Transformation”. In Giuseppe Fajertag and Philippe Pochet (ed.) Social Pacts in Europe- New Dynamics. ETUI

Full text of the agreement: http://www.bettergov.ie/upload/publications/113.pdf