If we want a just society as well as prosperity, we must move on from the economic model we have relied on in the past, writes David Begg.
Business interests have become remarkably protective of this country's current economic model, a model which disparages much social investment as "wasteful".
Writing in these pages last Saturday, Danny McCoy of employers' group Ibec, voiced implicit but very clear criticism of a speech I delivered recently at University College Cork.
In that speech, I argued that we had reached a stage in our development where some critical choices about our future were required. To me, this is no more than common sense.
For the last 15 years the one overriding policy goal was to stimulate economic growth in order to end mass unemployment. Social Partnership played a key role in that process. Thankfully, this has largely been achieved and Ireland has "caught up" with our continental neighbours.
This fact alone dictates that we must fashion a new policy to fit with a new phase of our development. But there are additional and emerging factors which make this a matter urgent.
Recent forecasts from the Central Statistics Office (CSO) show Ireland's population rising to 5.5 million by 2030. Approximately 18 per cent of that population will comprise people of non-Irish birth. This will put Ireland ahead of most immigrant-receiving countries, including the United States.
This is an extraordinary change by any standards. What are the implications for our already inadequate physical and social infrastructure? What is our risk exposure in terms of security of energy supply, an area in which we are particularly vulnerable? What about the environment ... do we want to cover the whole island in concrete?
In this context, it is obvious that maintaining a policy aimed solely at maximising economic growth is outdated. Logically, we should aim to optimise growth and align it with investment in infrastructure, both social and physical. Simultaneously, we should also prioritise investment in indigenous energy supply and management.
Congress thinking on these matters is set out in some detail in our submission on the National Development Plan, published this week (see www.ictu.ie).
In the current discussions on a new partnership agreement, the congress view is that radically different circumstances require a radically different model. This is a paradigm shift that recognises:
- Maximising economic growth no longer has a social dividend and may in fact have social deficits built in;
- Increasing GNP as distinct from GNP per capita does not improve wellbeing and living standards;
- Sustainable development is in keeping with the common good;
- Offsetting wage claims with tax reductions is counterproductive;
- Economic development requires complementary social development.
We need to move away from the Anglo-Saxon model to one which offers some prospect of a decent quality of life for all our people. In my opinion the great political challenge of our day is to find the right balance between economic efficiency, individual freedom and social justice.
Where should we look to find a society we would want to emulate? In the speech criticised by the employers, I argued that the Nordic countries offered a good model for our future development. They very effectively combine economic efficiency and social cohesion. They feature repeatedly in the top 10 countries for competitiveness, productivity, labour force participation, good public services and social infrastructure, such as childcare. They have the highest level of investment in R&D and innovation in Europe. 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.
Moreover, sustainable development is a central part of their polity. They plan with a skill and foresight that we have not yet mastered.
The realpolitik of Ireland's situation is that we are not going to adopt the Nordic model anytime soon. Indeed, it would seem at first sight to be an impossible dream. A country whose people recently voiced enthusiastic support for improved provision for elder care, but who balked at even a mild increase in PRSI to fund it, would seem an unlikely candidate for such a transition.
But some of this inconsistency can be explained by the legacy of an unjust tax system, which provided the wealthy with a plethora of tax shelters to avoid paying their fair share.
People need to be reasonably certain that the tax system is fair and that money is efficiently and effectively used on their behalf. It will take time to rebuild confidence in this regard.
This is a medium to long-term journey. For the reasons already mentioned, to stay with the current model is unsustainable. We have to make a choice and work towards it at our own speed. But for those who favour a just society and a prosperous economy, the examples provided by the Nordic model are compelling.
The recently published strategy report of the National Economic and Social Council (NESC) offers a via media between the Nordic model and where we are now. NESC is a body representative of government, independent economists and social partners.
We have proposed a new approach to social partnership, which would see a medium term agreement of between 6 and 10 years, based on the NESC strategy, with priorities selected for attention in two year modules. Pay should also be negotiated at these intervals.
This new paradigm offers the possibility of ushering in a new progressive era for Ireland. It is a prize worth striving for.
The critical differences between my vision of Ireland's future and that of Ibec are to be found in the concluding paragraph of Mr McCoy's article, in which he states:
"The Nordics espouse egalitarian principles of equality of outcome and not just opportunity. The Anglo-Saxon model strives for equality of opportunity but depends on meritocracy to drive outcomes. Only if Ireland's population were to pursue egalitarian principles would a Nordic model be desirable."
Trade unions have as their raison d'être the pursuit of egalitarian principles. There is no prospect of achieving Utopia, but we could do a lot better than being the second most unequal country in the developed world, as revealed by the UN's development programme report.
David Begg is general secretary of the Irish Congress of Trade Unions, and a member of the Irish Times Trust.