The competitiveness of the economy will be "threatened" by another social partnership agreement, according to the chief economist with Friends First Holdings.
Mr Jim Power said yesterday he believed the market should dictate wage developments. He was opening the keynote debate at the annual conference of the Chartered Institute of Personnel and Development in Ireland (CIPD) where his views were strongly contested by the Irish Congress of Trade Unions general secretary, Mr David Begg.
While social partnership was perceived to have been responsible for delivering "stability" in the past decade, it could also be argued there would have been industrial peace anyway without such an arrangement, suggested Mr Power.
"Statistically, there is a strong correlation between days lost to strikes and trade union density," he told up to 500 participants. "When partnership began, trade union membership was falling."
High wage growth in the Irish economy could only be accommodated if it was matched by growth in productivity, Mr Power said. If wage growth exceeded productivity, competitiveness would be lost. He said it would be "ill advised" for the incoming government to initiate a round of partnership which involved rigid wage setting, given that it would require further commitments on taxation and spending, without any guarantees on wage behaviour.
Mr Power warned against "pandering" to union requests in what was a very different economic climate. "The trade union movement insisted on a renegotiation of the Programme for Prosperity and Fairness (PPF) last year, when Irish inflation spiked higher than the projected rate," he said. "This is indicative of the one-sided process that social partnership has become. Would the trade unions have sought a downward revision to the wage agreement if inflation fell below the projected level?" he asked.
Reviewing the success of the partnership to date, Mr Power said it was clear the only workers who adhered to its commitment were those in "low-paid jobs in the private sector", while public sector workers and others in the private sector had largely ignored it.
But Mr Begg said he was weary of a constant "competitiveness-speak" which, he said, "degraded public policy debate".
Referring also to Mr Power's claim of falling union membership, the ICTU general secretary said membership had increased by 5,000 last year, although this rise was not in proportion to the growth in employment. Some 80 of the top 100 firms were unionised, as was the entire public sector, he noted.
The uniformity of opinion on the need for competitiveness assumed there was limited potential for prosperity, and overlooked the reality that exchange rates were the most critical factor in our ability to sell goods overseas, Mr Begg said.
A deeper question also had to be "confronted", he noted. "What is the point of a competitive economy unless it is seen to benefit everyone?"
Workers did not believe business people for one minute when they appealed for moderation in the name of competitiveness, he continued. "Most particularly, they do not listen to bankers - nor should they, having regard to the disgraceful record of the banks over the last few years. They believe, and they are right, that competitiveness-speak has to do with only one thing - profit."
Unless competitiveness could be set in the context of a broader agenda of desirable economic and social objectives, it would find few enough advocates in the ranks of organised labour, said Mr Begg. This broader agenda could be served through social partnership, he said, adding that the issues of carers and our approach to immigration represented the two greatest challenges facing Irish society.
During questions, Mr Power described partnership as being "anti-democratic", and also noted that the economic policies of the Green Party and Sinn Féin could lead Ireland down the road to "Calcutta", rather than the economic models of Boston or Berlin.
