Economics: Talks should seek to foster a cooperative culture that faces up to the reality of our dynamic economy.

Talks to replace the outgoing "Sustaining Progress" agreement with a new one began in earnest last week. But the partnership process is turning into a pagan ritual. In the wake of the winter solstice, the high priests of consensus kneel once again in submission before the gods of partnership, reciting the shrill and lurid mantras of their creed. Soon they will plunge their knives into its sacrificial victim: the taxpayer.

Government spending growth - already targeted at a staggering 12 per cent this year - will be pushed even higher to pay for hikes in the public sector bill that will arise from whatever replaces "Sustaining Progress".

Like all pagan rituals, a mythology is needed to sustain belief. The Irish Ferries dispute affected a tiny minority of Irish workers (the majority of whom voted for the company's redundancy package), but it was elevated to iconic proportions and used as a superstitious story to scare the sceptics back towards worship. For the greater the number of worshippers there are, the more likely the government will concede to trade union demands. Some of those demands are reasonable. Measures to prevent workers falling below the minimum wage are warranted. But others are simply outrageous. The demand for more public sector employment, disguised as calls for "improved public services" is one such example.

Instead of being a regular ritual, partnership could actually become a rational and productive process of real economic benefit. At present, it results in sectors where employment is falling (agriculture) or where it needs to (the public sector) being fed taxpayer money. The burden of this falls ultimately on productive, job-creating sectors of the economy and on taxpayers.

The present arrangements are also undemocratic. Taxpayers are excluded from its workings on the basis that their interests are represented by trade unions whose officials presume to speak on behalf of millions of people who never voted for them - scarcely credible, given that the trade union movement is dominated by public sector interests. After all, only one-third of workers are in trade unions and how representative those unions are of their own members is open to question. The trade union movement opposed abolition of the Groceries Order, even though the Government and opposition acknowledged it to be in the consumers' long-term interest.

Neither is partnership a transparent process. Instead of taking place behind a screen, all partnership negotiations should be conducted in open session where taxpaying citizens can see what is being done with their money.

And like all rituals, the agenda of partnership repeats mantras that have little focus on reality. The last "Sustaining Progress" agreement forgot to include references to finding a cure for cancer and achieving world peace. But apart from that most other imaginable policy objectives were catered for.

It could be very different. Recent history has shown that when social partnership is both representative and focused it can work in the public interest. In 1987 the country was in terminal crisis with the government highly indebted and running out of cash. Taxpayers were overtaxed and unions wanted pay increases. Ireland's hypersensitive electoral system made a slash and burn approach to the problem electorally suicidal. Instead, partnership achieved something real by getting unions to agree to moderate pay increases in return for future tax cuts. By the early 1990s debts were indeed reduced and the focus shifted to tax cuts, in turn helping to reduce unemployment.

While low income taxes and low unemployment have removed these reasons for partnership, new ones have emerged. Take, for example, the recent abolition of the Groceries Order. It justifiably removed an unfair advantage to the retail sector. But the retail sector is itself the victim of an unfair system of local authority rates. By encouraging sectors such as retail to accept the removal of unfair advantages (such as the Groceries Order) in exchange for the removal of unfair burdens (such as high rates), a vicious circle of protectionism could become a virtuous circle of reform. By the same token the benchmarking process could result in real public sector reform and costed savings to the taxpayer in exchange for rises in public sector pay.

These days partnership is a spray gun aimed in a hundred directions. Trade unions are now demanding increased pay for lower-paid workers in the public sector. This is fair enough so long as this is funded by cutting back on wasteful public spending. Given the burgeoning cost of public sector pay, not to mention pensions, public sector pay deals should henceforth be self-financing.

Public sector unions are also demanding better public services, code for more public sector workers. But previous increases in staff have done nothing to improve public sector performance. Any increase in public sector numbers must come at a price. Reforms that might allow the public sector to function better with fewer staff, such as open recruitment and the abolition of outdated and expensive pay grades must now be implemented.

What is most striking about partnership is that there aren't even any electoral benefits for the government. The electorate as a body is being invaded by cohorts of thirty- and twentysomethings who have a far more individualised approach to working than their parents' generation. They are meritocrats and resent outdated collective restrictions on how they work and what they earn.

As if to provoke voter outrage, pay increases in the public sector proposed under the partnership system are justified by the Government as a way of preventing "industrial unrest" in the public sector. Surely the Government realises such blackmail is unacceptable, if not totally offensive. Throw in the outrageous burden of stamp duty facing many taxpayers - which pays for this largesse - and you have a recipe for disaffection.

Ironically, there is a sense in which the idea of partnership has never been more needed. Workers and employers should be collaborating to face the challenges of globalisation and technological change. Divided they will fall, but united they stand a chance. A culture, rather than a system, of partnership is what we really need. Last year legislation was introduced calling on managers to consult workers on workplace changes. Good managers will see this as an opportunity, not a threat. Sadly, we will struggle on with inverted partnership - dysfunctional at the top and absent on the shop floor.