Societalism not Socialism?

Representatives of the social partners met on March 26, 2009, for preliminary talks on a new national agreement on economic recovery.

The agreement to meet came after a decision by the national executive of the Irish Congress of Trade Unions (I.C.T.U.) to "defer" a nationwide strike planned for Monday, March 30. It followed trade union leaders’ acceptance of an offer from Taoiseach Brian Cowen to enter talks on an "integrated national response" to the economic crisis.

Did the I.C.T.U. have a choice? No, not if their participation in the social partnership had any sense or meaning over the last 22 years. The coming weeks will determine whether the concept will survive or not and that is not going to be easy.

“The decision whether to conclude such a deal will be central to the trade union movement’s future, as it attempts to find a new relevance and halt a decline from a membership spread over 60% of the workforce 40 years ago, to approximately 30% at present.” (Irish Examiner, 25.3.2009).

A major anomaly appears to be a growing weakness and inactivity at local level with the apparent gain of strength and influence nationally through involvement in the partnership process.

The Taoiseach told the unions in his letter that there was an overwhelming case for “the development of an integrated national response to the complex interplay of domestic and global forces which must be confronted, and for this response to be effective by commanding widespread societal ownership”.

The Government believed that “a lot of this work” necessary to reach an agreement on a new social partnership had “been done anyway”.

He said he saw “considerable merits” in the many aspects of the 10-point plan for economic recovery drawn up by I.C.T.U.

“However, the signal by the Taoiseach yesterday that it [Government] may have to borrow more than the 9.5% of GDP which it had originally said could ease the progress of the talks. The unions had argued that such a target could force the economy into a deflationary shock and it proposed that the Government’s borrowing requirement should be relaxed to 11% this year.

“It is unclear yet whether Brian Cowen’s signal about higher levels of borrowing represents some form of choreography with the unions in advance of the new talks, whether the spending cuts in the offing may not be as severe as had been forecast, or whether the Government’s revenue figures for March are even worse than had been feared.

“In his letter to the I.C.T.U. inviting it to take part in talks, Cowen said that the core elements of a new integrated national response to the economic and other related crises had been outlined in the framework document agreed between the social partners in January. However, in that document, the trade unions signed up to cuts of €2 billion. The target for reduction in spending in next month’s budget could now be up to €6 billion.

 “Separately, a shift in the position of the Irish Business and Employers Confederation (I.B.E.C.)  last weekend could also improve the prospects of a new deal. In its letter to unions at the weekend, I.B.E.C. effectively said that while any new agreement would have to involve a lengthy pay freeze, it would not stand in the way of any employer who was in a position to pay the wage increases on a voluntary basis.” (Irish Times, 26.3.2009).

"The unions have indicated they are willing to consider a rethink of the transitional wage deal agreed last September which called for a 6% pay increase across the private and public sectors.” (Irish Examiner, 27.3.2009).

Unions, employers and Government have not formally met at Government Buildings since the start of February when talks on a new economic recovery pact collapsed.

Union leaders stated their priorities for the talks, which are expected to conclude after the budget on April 7, 2009.

Unions may find it difficult to justify their decision to re-engage in talks if the Budget is draconian, with tax hikes and reductions in social welfare.

Among the unions' chief aims for the talks are:

*  To ensure the Budget is fair and protect social welfare payments.
*  To extend government borrowing over a longer time frame.
*  To ensure compliance with the national wage agreement.
*  'Amelioration' of the public sector pension levy.
*  €1bn for unemployment initiatives and establishment of a pension protection fund.
*  Three to four-year stay before homes can be repossessed.

In a circular sent to members, S.I.P.T.U., the largest union, said its priorities in talks would be job protection and a fairer tax system.

The I.C.T.U. also called on the Government to raise borrowing this year to 11% of GDP from 9.5% so as not to "crash" the economy. They are also looking for greater protection for those on low incomes.

I.B.E.C.’s concerns are expected to focus on a wage freeze, employer PRSI reform and enterprise investment.

I.C.T.U. General Secretary, David Begg said he believed the Taoiseach was sincere in stating in his letter that outstanding difficulties could be resolved on the basis of the I.C.T.U. 10-point plan for national recovery: the Social Solidarity Pact.

The talks are likely to focus again around this framework. Scope seems to exist for some restructuring of the pension levy, with a view to reducing the burden on low paid public servants, as well as for closing off tax shelters and introducing a property tax -- all measures favoured by I.C.T.U.

Given the worsening fiscal situation, the unions will want to ensure that changes to income tax are structured in a strongly progressive manner.

What I.C.T.U. wants?

Mr. Begg…

“…has said the Government’s indication that it is prepared to relax its previous stance on limiting borrowing to 9.5% of GDP this year could be the 'key to the solution' of achieving a new social partnership deal.

“Mr Begg said last night the trade union movement had been concerned that by sticking to the 9.5% borrowing limit the Government ran the risk of 'crashing the economy'.

"He said the signal given by the Taoiseach that the Government may borrow more than originally planned this year potentially represented significant movement and the unions may 'be able to get something more liveable with' ". (Irish Times, 26.3.2009).

He warned the Government against cutting "too deeply and quickly" in the mini-Budget and pointed out that the threat of industrial action was only lifted until the budgetary measures were unveiled.

But he said the "sincere" tone of the Taoiseach's letter and informal contacts with senior government officials gave him the belief unions could "achieve something".

He stressed that their chief purpose was to ensure the "economic adjustment" was fair and transparent.

"One has to be conscious that this is a very difficult situation and it's hard to envisage any final outcome which is going to be received with delight by anybody in the country," Mr Begg said.

Construction Industry

One of the biggest objectors to the September pay deal (6% over 21 months) was the Construction Industry Federation (C.I.F.) led by former Farmers, and Progressive Democrats leader, Tom Parlon. Its confirmation that it was recommending its members refuse to pay the increases saw it excluded from the next round of talks. Indeed, the C.I.F. recommended a 10% cut in construction workers wages. However, the builders were invited back into the pay talks.

The C.I.F. had been looking to get "back around the table" having failed to receive an invite from the Taoiseach. Taoiseach Cowen  and Parlon share the same constituency Laois/Offaly.

Parlon said he had been calling and texting the Taoiseach to tell him the Federation must be represented at the talks.

"I have been trying to get in touch with the Taoiseach to ask him why we are not there, but I have heard nothing back, but I’ll keep trying," he said on March 26, 2009.

Figures released last month showed the construction industry suffered a 24% fall in output in the last three months of 2008, the biggest fall on record.

The Economy—
A 26 year low!

In the Dail on March 26, Minister for Finance, Brian Lenihan disclosed that projected tax revenues dropped by another €3 billion since January highlighting the scale of the challenge facing the Government in devising its emergency Budget for April 7th.

The figures showed the first annual fall in the country's national income since 1983. Income (GNP) fell by 3.1% over 2007, and output (GDP) was down 2.3%.

Mr Lenihan told the Dáil the projected tax take for 2009 will be €34 billion as against the €37 billion estimate in January. Last year tax revenue was €41 billion and in 2007 it was €47.8 billion.

With Government spending for 2009 estimated at close to €58 billion, a gap of €24 billion now has to be bridged. The bulk of that will be made up of borrowing, but savings and tax increases of the order of €6 billion will also be required.

Welfare payments are the biggest item of Government expenditure at about €21 billion and Ministers are searching for ways to control the bill, which is rising as a result of the rapid growth in unemployment.

Official figures published on March 26, show the economy shrank dramatically in the closing months of last year, resulting in the steepest decline in gross domestic product (GDP) in 2008 in a quarter of a century. GDP fell 7.5% in real terms in the fourth quarter of last year compared with the fourth quarter of 2007, while gross national product (GNP) fell by 6.7% over the same period, according to new figures from the Central Statistics Office (C.S.O).

The declines in GNP over three consecutive quarters have taken the economy back to the same size it was three years ago.

The C.S.O.’s quarterly national accounts suggest that the economy was weaker in the final three months of the year than had been previously thought. Since the beginning of the year the economy has deteriorated at an even faster pace.

Tax revenues are down 24% on last year, while retail sales are down by 20 %.

Structural Deficit

“The Government will shift its budgetary strategy to avoid having to pile on even more tax rises and spending cuts, Taoiseach Brian Cowen indicated yesterday.” (Irish Independent, 27.3.2009).

Speaking as new figures revealed that the economy had hit a 26-year low, Mr Cowen said the Government had to be conscious of what the economy could bear in terms of higher taxes and less spending.

"There is a balance to be struck between taking money out and maintaining jobs," Mr Cowen said.

The emphasis in next month's Budget would be on the underlying "structural" deficit, rather than the actual deficit.

There is no precise figure for the structural deficit. The targets agreed with the EU Commission put it at 8% of output (GDP) this year, or €14 billion.

Mr Cowen's comments may indicate that the Government will stick quite closely to finding the €3 billion a year needed to eliminate the structural deficit by 2013, and borrow whatever else is required on a year-to-year basis.

With the economy performing so badly, economists say there is something to be said for such an approach.

Borrowing

"You would need €8 billion to keep to the original borrowing figure for this year, and you just can't do it," said Pat McArdle, chief economist at Ulster Bank.

"The economy may shrink by more than 8% this year. The structural deficit is the right thing to target, but it is difficult to calculate."

The declines accelerated in the last quarter of the year as multi-national companies cut back production for the first time.

House-building fell by a half compared with the previous three months, and personal spending was down 4%. Even excluding the expensive purchase of aircraft, investment in plant and machinery dropped 26%.

"The only good news is that the quarterly declines in investment may not be quite so aggressive from here. If they improve, our latest forecast of a 7% contraction in 2009 will prove right," said Rossa White, an economist at Davy Stockbrokers.

The One-Day National Strike

“The new talks come at a time when the general perception appears to be that the unions’ hand has been weakened following the patchy response of workers to the day of strike action planned for Monday – in particular the failure of Impact, the largest public sector union, to generate sufficient membership support to take part. A month ago the unions organised 120,000 people to march on the streets of Dublin, and it appeared that the wind was behind them in dealing with the Government.

“However, it can be argued that they did not sufficiently capitalise on the momentum of the march and that the strategic decision to go for the day of strikes highlighted the lukewarm attitude of many members towards industrial action in the current climate.

“On the other hand, the unions will point out that the campaign on the day of strikes did lead to many private sector employers engaging with them on the national pay deal, and that the campaign succeeded in persuading the Government to go back into social partnership talks.” (Irish Times, 26.3.2009).

IMPACT, the largest public sector union, whose General Secretary is Peter McLoone, the former President of the I.C.T.U. said it had no basis to sanction industrial action after a ballot result fell marginally short of the level of support required under its rules.

The Association of Higher Civil and Public Servants, also voted decisively not to take part in the planned action.

It is understood that S.I.P.T.U. staff in the Higher Education Authority also voted against participating in the strike.

“We are interested in entering into negotiations,” said a Government spokesman, who refused to respond to questions suggesting that the unions had lost some negotiating power by the lack of enthusiasm among some workers for the National strike.

However, former Teachers Union of Ireland (T.U.I.) President Paddy Healy said "outrage" had been caused by the I.C.T.U. leadership’s basic acceptance of the public sector pension levy by re-entering talks.

Dublin’s post-primary branch of the T.U.I. passed a vote of no confidence calling for the resignation of Mr Begg. The Tralee IT branch of the T.U.I. has proposed a motion for the TUI congress to join with other trade unions to take strike action.

The IMPACT decision

“The surprise decision of IMPACT members not to ratify the Congress campaign had threatened to dilute the effects of working stoppages in the public sector.

“With over 55,000 members, IMPACT makes up a significant proportion of the roughly 300,000 union members in the public sector. Given that other public service unions are represented in most of the workplaces where IMPACT members are employed, the union's decision not to participate would not have fatally compromised the planned work stoppages, as many IMPACT members were likely to have refused to cross the picket lines.

“Why IMPACT members' support for the day of action fell just short of the required 66% margin will be a major concern for the union's leaders.

“IMPACT is a well organised, well led and professionally run trade union.

“In contrast with some other public service unions, such as the C.P.S.U., it has little tradition of either union members or elected representatives overturning the advice of senior officials. IMPACT has also long been a stalwart of both I.C.T.U. and of social partnership. There is little reason to believe that the members were unsupportive of the I.C.T.U. 10-point plan for economic recovery and its core concept of a 'social solidarity pact'. IMPACT members were to the forefront of a recent campaign to lobby public representatives in support of Congress's proposals and in opposition to the public service pensions levy.

“The most significant factor in the union's vote is likely to have been the leadership's inability to convince a significant minority of members that a national strike would be an effective industrial relations weapon in the current environment.

“Ironically, the union's own record of moderation under social partnership could have predisposed large numbers of its members against adopting a more militant posture this time around.

“The most significant effect of IMPACT's decision was to weaken the moral authority of I.C.T.U.'s campaign, not least given the uneven support that the day of action was likely to have attracted across the private sector.

“With an overall rate of private sector unionisation of about 28%, the campaign would likely have had an uneven or patchy effect across that sector, and major areas like public utilities, banks and retailers were likely to have been largely unaffected.

“Against such a background, I.C.T.U. will have been relieved that its main objective in calling for the day of action, to persuade Government and the employers to re-engage in talks, has met with a positive response.” (Irish Independent, 26.3.2009).

Cowen and Social Partnership

“Speaking after the weekend Fianna Fáil Ardfheis, on March 1, 2009, Mr Cowen said social partnership negotiations – which collapsed over the Government’s decision to impose a pension levy on State employees – will continue to be important.

“Social partnership continues to have a role to play in this country because I am making it clear that quite apart from having to deal with the question of having to deal with unemployment, providing enterprise supports and looking after the public finances and do something with the banks, we also need the agility and co-operation of everyone on the ground,” he said.

“However, Mr Cowen has already expressed caution about the prospects of the Government getting back into round-table talks with the social partners, saying in the Dáil last week that he agreed with Irish Congress of Trade Unions general secretary David Begg’s assessment that it would be “unwise” to resume formal negotiations “unless there is a reasonable degree of confidence that agreement on all the central elements can be found”.

“Responding then to questions from Labour leader Eamon Gilmore, he said then: “While I remain available for dialogue with the social partners, the basis for a resumption of formal negotiations has not been established at this time.”

“Nevertheless, some contacts have continued to exist between the State‘s top civil servant, Secretary to the Government Dermot McCarthy and union leaders, notably Mr Begg, since the sides divided on the levy. (Irish Times, 2.3.2009)

Cowen And Ahern

Bill Roche is Professor of Industrial Relations and Human Resources at the School of Business, University College Dublin, he has published a substantial body of scholarship on Social Partnership, Partnership in the Workplace and the issue of declining trade union organisation.

“An intriguing aspect of the crisis of social partnership has been the posture of Brian Cowen. Social partnership is less central to Cowen's political identity and track record than to that of his predecessor, Bertie Ahern.

“He seems to have adopted a more hard-headed and contingent posture toward the process -- viewing it as one of several options for resolving issues in a short time frame, but not otherwise worthy of the rather elevated philosophical commitment that seemed to be at the core of Ahern's political credo.

“If the reconvened talks succeed in reaching an agreement, any new accord seems likely to bring about a fundamental alteration to the social partnership model. “Until the current crisis, the social partnership model was based, above all, on unions' willingness to trade moderate pay rises for income tax reductions, and for commitments in the areas of public and social spending.

“Any new deal would be quite different in combining pay concessions of one form or another, with increases in income tax, and reductions in public and social expenditure.

“In this way, the basis of the social partnership will shift towards the kind of 'concession bargaining' commonly at the core of social pacts in European countries, but up to now largely unknown to Ireland's social partners.” (Irish Independent, 26.3.2009).

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Labour Party conference:
Mullingar, March 28, 2009

Delivering the most amusing speech of the conference, Jim O'Brien, a local election candidate in Portlaoise, said the concept of what is needed to live a normal life was one of the first Celtic Tiger casualties.

“‘Next week it looks like we are in for another interminable round of partnership talks where a bunch of extremely well paid individuals will attempt to decide what "enough" should mean for the rest of us. That's like asking a bunch of rabbits to decide our family planning policy,’" he said. (Irish Independent, 30.3.2009).

Jim didn’t mention which ‘rabbits’! Nor can one discover a single positive contribution from political Labour towards progressing Social Partnership. No bloody wonder they have to advertise in the media seeking candidates for the local elections. How bloody pathetic!

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Public Service Staff Cuts

Finance Minister, Brian Lenihan has signalled the imposition of an across-the-board public service recruitment embargo.

The move to impose an embargo — agreed by Ministers in pre-Budget talks behind closed doors — was mentioned by the Minister at the end of a Dail contribution on March 26, to the surprise of his civil servants and members of the opposition.

The disclosure will mean the loss of up to 3,000 jobs a year across the entire public service through natural wastage — meaning the non-replacement of those who retire or leave.

Such an embargo was last seen in the worst days of the 1980s recession, and was widely criticised. Its inflexibility was seen at the time as affecting the delivery of public services.

There are 330,000 people on the public purse in both the civil service and wider public service, i.e. nurses, gardai, firemen, teachers.

The estimates are that such an embargo could save €120-€150 million in pay each year. Four years of non-recruitment would raise at least half a billion Euro for the state coffers.

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“The fact is the bingeing was tolerated and stimulated by politicians of all sides. The persistence of their 'what we have we hold' greediness is unforgivable. The political scapegoating of bankers is a red herring . . . . our politicians . . . . were given a grand little economy. They have messed it up. Worse still, they persist in denial and in their refusal to share the pain. They have lost our respect utterly."

JOSEPH F. FOYLE.

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The Financial Crisis; New Labour
and phoney Social Democrats!

The political parties would like to portray the financial crisis as a result of bankers’ greed  and economic problems brewed up overseas; but even a blind man would have to acknowledge that it stemmed just as much from mistakes made by regulators and politicians. And foremost in the front ranks were were the new-age Labour leaders.

Everything has been thrown into the market. There is no longer a great hinterland of private life outside of the market. We are all speculators now, and if democracy is to be taken in earnest it must be said that we have all chosen to be speculators in which we risk our money every time we ‘save’ (i.e. invest) it in a bank.

So cut out the ‘cod’ about ‘irresponsible’ speculators as being responsible for the crisis. They are only the speculators who happened to be at the cutting edge of the system when it went into crisis. They were engaged in the business of expanding the market, which was a necessary business in the open capitalism chosen by the democracy. And the delivered the goods for a surprisingly long time.

“We are now suffering from what may be a terminal case of political paralysis which I define as a situation in which you can change the leadership of a party, or the government itself—but it has no effect on the basic condition of the nation.” (B.A. Santamaria)

David Quinn—a ‘child’ of Thatcher!

David Quinn is the former editor of “The Irish Catholic” and now a prominent commentator on religious and social affairs. He recently had a ‘go’ at Paul Sweeney, who is Economic Adviser to the I.C.T.U.—“On ‘Questions and Answers’ ICTU’s Paul Sweeney was practically salivating  at the prospect of a bigger State.” (Irish Independent, 13.3.2009).

The thrust of David Quinn’s argument was: “The future the Left wants is a much bigger State paid for by much higher tax.”. In the same paper on March 27, he was concerned about the fate of Sir Fred Goodwin of the Royal Bank of Scotland and ‘our’ own Sean Fitzpatrick of Anglo-Irish Bank: “Tax the rich too much and you take away their incentive to make money. If the rich, or those with the potential and drive to become rich, effectively go on strike, then the whole of society ends up poor.”

He appears to be absolutely opposed to liberal permissive social views, but is absolutely in favour of liberal ‘laissez faire’ economic views.

So far as the present writer is aware, David Quinn did part of his journalistic apprenticeship in Australia, where he worked on a magazine called AD2000, established by the National Civic Council leader, the late Bob Santamaria, the aim of which was to support traditional Catholic teaching.

B. A. Santamaria was one of the most controversial Australians of his time. His sphere of influence ranged across the nation’s political and social landscape. Santamaria, an ardent anti-Communist and devout Catholic, was fiercely intelligent and a natural leader, polarising the community into loyal followers and committed opponents. He died in Melbourne in 1998.

‘The Movement’ began in 1941 by Santamaria and Bert Cremean was designed to combat Communist influence in the trade unions. Formally set up as the Catholic Social Studies Movement, it was under the auspices of the Catholic bishops in 1945, but its existence was never announced.

At the same time, Industrial Groups were set up by the Australian Labor Party (A.L.P.) and successfully opposed Communist influence in union affairs. Santamaria’s ‘Movement’ though not formally linked to these groups, provided a considerable part of their muscle.

When the A.L.P. split in 1954, their leader, Dr. Herbert Evatt described ‘The Movement’ as “a disloyal and subversive group”, those ejected from the party formed the Democratic Labor Party (D.L.P.), which itself won only a handful of seats, but whose presence caused the A.L.P. to lose six Federal elections. The National Civic Council had considerable influence on the thinking and policies of the D.L.P.

Santamaria was an outstanding thinker and organiser, he was also mentor to Archbishop Daniel Mannix of Melbourne. Having been employed on Santamaria’s paper, AD2000, the present writer finds it extraordinary that David Quinn seldom refers to his Australian Catholic experience and never mentions the prolific writings of B. A. Santamaria.

The following extracts may explain why:

“The last big crisis campaign of his life [Santamaria] was on economics. Now that he had little political power, he returned to economics, his original interest from the Depression days of the 1930s. Then he had followed the Papal Encyclical line against both capitalism and communism. He believed capitalism was rearing its ugly head again in the 1980s, and would impoverish ordinary people and destabilise society. A combination of globalisation, rampant international money markets and Australia’s growing national debt meant the nation had lost control of its economic destiny. Men traded in paper to make money rather than producing things to make money. He remained wary of business practices, wanting profits shared rather than productivity increased. He believed in government intervention in the economy. (p.398).

“Santamaria saw in the 1987 stock market crash a potential return to another great depression:

‘The years 1989 and 1990 will witness the beginning of a period of great financial disorder, which will affect the whole of the Western world, but which, granted the size and continual increase of Australia’s foreign debt, will affect Australia with particular virulence. In this period of burgeoning turmoil, which will exceed in severity the recessions of 1971, 1981 and 1987 and which will bear a much closer resemblance to the collapses of the 1890s and the 1930s, it is critically important to reject the proposition that so long as Communism is defeated, finance capitalism is a worthwhile substitute.’

“He opposed the prevailing free trade, anti-protectionist, non-Keynesian small government policies associated with Hayek, Friedman and other, and promoted by Reagan and Thatcher. His argument was that he was consistently anti-liberal—against liberal permissive social views, and against liberal ‘laissez faire’ economic views. His economic views put him offside with many traditionalists, who came to support the new deregulationist views.” (B. A. Santamaria-Running the Show, Selected Documents 1939-1996, p.399, Edited by Patrick Morgan, The Miegunyah Press, Melbourne-2008).

“It has become normal to blame the ‘greed’ of the Bonds [Alan], the banks, the lawyers, the accountants for the present situation, which, in my view at least, will soon equal the Depression in its gravity.

“I believe that the problem lies with ‘the system’ itself. It is true that individuals are greedy. But if Governments accord tax deductibility for interest payments on business borrowings, if banks are given control of credit policy; if de-regulation permits any body who can raise ‘hot’ money abroad to bring it into Australia; if the principle of incorporation allowed clever individuals assisted by cleverer lawyers to control literally hundreds of shelf companies to mystify and defraud—what do you expect? (p.482).

“I have always believed that the present system of monopoly capitalism would lead us to this point, unless deterred by strong legal controls. It is merely ironic that it should have happened under a ‘Labor’ Government. The Liberals would not have been sufficiently game to try! (p.483).  (B. A. Santamaria, Your Most Obedient Servant, Selected Letters 1938-1996-p.483, Edited by Patrick Morgan, The Miegunyah Press, Melbourne-2007).

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“No, I’m not becoming ‘more radical’ with the passing years, although a new-found friend in Clyde Cameron insists on psycho-analysing me thus. It isn’t so. In 1936, I started a small paper called the Catholic Worker, which ultimately reached a monthly circulation of over 60,000. I won’t send you a copy of the first editorial I wrote, since the style is so amateurish. But in it, I did write that Communism was not the problem for us in Australia. Capitalism was.” (B. A. Santamaria).

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International TU Confederation

The International Trade Union Confederation (I.T.U.C.) announced a 5-point plan to combat the global economic crisis.  The announcement came on the eve of the G20 meeting in London.  Unions called for the following measures to be adopted:

* a coordinated international recovery and sustainable growth plan to create jobs and ensure public investment;
* nationalisation of insolvent banks and new financial regulations action to combat the risk of wage deflation and reverse decades of  increasing inequality;
* far-reaching action on climate change;
* a new international legal framework to regulate the global economy along with reform of the global financial and economic institutions

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