GERARD HOWLIN: Social partnership is back on track. It’s not a move in Wright direction

Next week, social partnership, under a different name, will be resurrected and restarted writes Gerard Howlin

LAST week, we had the Government’s Spring Statement, another small installment on budgetary reform. It’s easy to be underwhelmed, but, critical as you may be, in big-picture terms the Government laid out its stall.

I bet my bottom dollar no opposition party will respond with an offering that gives less, or plans a less rosy economic scenario. Imprudent as it certainly is, the Government’s analysis has instantly become an opening offer, not a final bid, in terms of treats we can choose from.

Last Friday and Saturday, Dublin Bus and Bus Éireann went on strike. That cost the economy millions, and, in areas where those State bodies monopolise public transport, passengers were left stranded.

Living near a LUAS line, I know the difference. That privately-operated, public service continued running. So, some people had some chance. The LUAS puts paid to the nonsense that the strike was about ‘privatisation’ of bus routes. It was about control, and about power. Those who have control have power; it’s as crude as that.

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The third instalment in the disparate, but connected, series of events plays out next week, when social partnership, under a different name, is resurrected and restarted. That’s all about power, too. It’s about a relatively privileged group, in secure jobs, sitting on the golden egg of defined-benefit pension schemes, enjoying preferential treatment as monopoly providers of public services.

Their interests will be led by the new head of the Irish Congress of Trade Unions and former SIPTU official, Patricia King. She is an able lady with an underappreciated sense of humour. She recently had a rant about the ‘establishment’ that went down a treat with the troops.

But, of course, unlike most of us, she will be firmly tucked into the ‘establishment’ that enjoys the premium seats in the new, renamed ‘social dialogue’, which will be set up next week.

To put social partnership in historical context, the late Brian Lenihan said it did “enormous damage” to the Irish economy. When he made those remarks, in December, 2010, the Fine Gael spokesman on enterprise, Richard Bruton, agreed with him.

The context of Lenihan’s scathing criticism was the Wright report on the Department of Finance. Rob Wright is not a name that trips off lips now, but he was the senior civil servant in the Canadian department of finance for many years. Then, he got the job of looking at the undercarriage of our own set-up.

Essentially, he said that two policy streams submerged the critical faculties of the Irish department. One was the successive, over-generous Programme for Government, and another was social partnership. Ironically, last week’s Spring Statement has effectively put both back in business, before, metaphorically speaking, we could catch the last bus home.

Wright was back in town last December, giving evidence to the banking inquiry. Then, he said of social partnership that it “was used to leverage public service pay... in a way that was overdone”.

He instanced teaching, where average salaries in Ireland moved up from seven out of ten in an EU comparable group to third, within six years during the roaring noughties. That’s the establishment for you, Patricia!

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The little-known Wright is important in an institutional context, given the events of the last week, and next.

His report, ironically, recommended “major changes to the budgetary process”, as a counterweight to the Irish proclivity for pre-election splurges, that “would enhance ministerial accountability to parliament, expand the release of detailed departmental analysis for consultation well before budget time, and provide oversight by some form of fiscal council”. Thence, five years later, last week’s first-ever Spring Statement.

There are two key issues on the table in next week’s talks; pay and pensions. The bigger ones are under the table and they are reform and competitiveness. The reason that — seven years after legislation provided for it — an anaemic 10% of bus routes are out to public tender is because an establishment comprised of public-service trade unions and Government has dragged its heels on it all the way.

The bus routes, like the LUAS line, will remain completely in public ownership. They are licensed to private operators who can offer us, the public, a better deal to run them, for defined periods only, and on strict terms and conditions.

They will use the same bus stops and real-time passenger information systems. And, the springiness of the Spring Statement aside, in a country currently borrowing €1,000 a year per person to subsidise existing services, it will provide a better deal for the Exchequer and every bit as good a service to the public.

LUAS, and private bus companies operating around the country, prove that. They are also proof of the wisdom of ensuring, in the teeth of opposition from the ‘establishment’, that all public transport could not be brought to a halt by a single vested interest. That’s the nub of it.

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It’s the industrial relations leverage that a near-monopoly brings to those who enjoy it. Allowing LUAS out to competitive tender was fought tooth and claw. So was allowing Ryanair into the skies and the provision of commercial, licensed public service broadcasting in opposition to RTÉ. Invariably, the public have been well-served by competition, and the economy is certainly the better for it, but not the ‘establishment’.

The ‘establishment’, like the proverbial cockroach after nuclear Armageddon, has survived, and will officially re-emerge next week from the rubble of the destruction it caused. Teachers and bus workers strike to withhold public services, rather than implement reforms that are government policy.

The same government is setting the table for them to enjoy a repast of buttered parsnips. Of the €1.2bn to €1.5bn that is available next year, but will have to be borrowed before it can be provided, half is earmarked for spending. A chunk of that will be spent on increased public sector pay, regardless.

Some public servants are not well-paid. But most stand reasonably well in comparison with the private sector. If you take their defined benefit pensions into account, they stand much better. One suggestion for unwinding their pay cuts is to reduce public sector pension levies. That would be outrageous.

Public sector pay will increase over time. It is only a matter of negotiation. But as we live longer, public sector pensions cost ever more, and are increasingly valuable compared to what is possible on a comparable wage in the private sector. An essential part of any deal is that reforms, including in schools and transport, are delivered first.

Secondly, public sector pensions are paid for by those privileged to enjoy them, not taxpayers who don’t. The levies should remain, as a down payment. It is peculiarly Irish that the reforms Wright envisaged are teeing up, rather than seeing off, a repeat of what they were intended to avoid.

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