The Government must match the high public-spending levels in Nordic states like Denmark and change its low-taxation strategy if it is to cope with globalisation, the general secretary of the Irish Congress of Trade Unions (Ictu) said last night.
David Begg told an audience in University College Cork a "new paradigm of partnership" was needed.
He said a new form of partnership should follow the example of Nordic states.
"They are highly-unionised and operate on the principles of a well-defined social dialogue. They have flexible labour markets in which the emphasis is on 'employability' rather than job protection per se."
Delivering the Philip Monahan Memorial Lecture, Mr Begg said Nordic countries succeeded in combining "economic efficiency and social cohesion". They featured among the 10 most competitive countries, with high productivity and excellent public services.
He said economic growth for its own sake could bring social costs, not benefits. Unions had in the past accepted low corporate and social insurance charges and weak employment regulations in a bid to end emigration and create full employment. Though worthwhile, those goals have now been achieved and a new partnership pact was needed.
He said Ictu's key aims would be improved healthcare, better services for the disabled of all ages, improved early childhood education and a move to mandatory and State-based pensions.
In a speech entitled Ireland's Future: Chicago or Copenhagen, Mr Begg said Ireland should look to the Nordic countries rather than Boston or Berlin for inspiration. Ireland needed better social services than the US and it must be more agile than Germany if it was to survive globalisation.
Ireland, as a small, open economy on the periphery of Europe, shared many characteristics with the Nordic countries, and needed to be more agile in its responses to sectoral difficulties than the more regulated Berlin model would allow.
The closure of the NEC semi-conductor plant in Ballivor, Co Meath, showed that the current Irish social welfare model was designed for an era of mass unemployment and needed to become more flexible.
He said Danish workers were guaranteed 90 per cent of their wages to retrain for other work, which would help Ireland cope with globalisation.
This would mean "a huge cultural change" away from the existing rules that were deemed to "be the cornerstone" of Ireland's recent economic success, particularly since most people even balked at higher PRSI charges.
However, this opposition was based on workers' suspicions that the tax system favoured the rich, and it would take time for people to have confidence that the tax system was fair and money used efficiently.