A Faustian Pact with neoliberalism?

The rise and the fall of social pacts in the Republic of Ireland

Vincenzo Maccarrone & Roland Erne

Neoliberalism or what?

Which kind of social model characterized the development and the fall of the “Celtic Tiger”?It is correct to talk about a neoliberal turn in the Republic of Ireland even if it had a model of industrial relation with centralized bargaining?

Irish neoliberalism

Beginning: 1989, with the government of the coalition of Fianna Fail and Progressive Democrats (PD)The coalition enacts severe austerity measures to reduce the public debt, which had risen in the 70s-80s.lIn the following 25 years there is a neoliberal turn

Irish neoliberalism (2)

Privatisation of public enterprises (ambiguous results and a clear fail in case of Eircom) (Sweeney, 2005) A tax system which favourites the elites (Hardiman, 2002b; Allen, 2007)Deregulation of financial markets (McDonough and Dundon, 2010)Results? Rise in inequality (McDonough e Loughrey, 2009; Kirby e Murphy, 2011).

Irish Neoliberalism?

A big theoretical issue if you want to insert Ireland in the neoliberal framework: its model of labour relations, the s.c. “social partnership”Starting from 1987, there have been seven pacts between State, Trade Unions and FirmsA clear contrast with the “classic” neoliberal model of labour relations!

Irish Social Partnership

The roots of Irish SP can be found far back in time, starting from the 50s until the 70sYet, in the 80s Ireland was back to a decentralized wage setting system In the meanwhile, there was a severe economic crisis. The first agreement-the “Programme for national recovery” (1987), born in these conditions.

Irish Social Partnership (2)

The 3 main actors had good reasons to implement the pactsThe government driven by the Fianna Fail needed to enact austerity policies in a difficult macroeconomic situation and at the same time was concerned with avouding a clash with trade unions.Trade unions were weakened by the decentralized wage system and by the fall of unionization + fear of Thatcherism due to rising consensus towards PD Firms were concerned with the macroeconomic situation and wanted to link the agreement of wage moderation with the reforms they wanted

Irish Social Partnership (3)

Features of PNR: 3-years agreement.Wages could not rise more than 2.5% in each year of the interval 1988-1990 (special clause for low salaries to)In exchange the government offered a tax cut for 225 millions of Irish pounds for the 3 years covered by the agreement. At the same time of the agreement, the government reduced public spending for 900 millions of pounds (cfr Von Prondzynski [1998] on the reduced capacity of opposition of trade unions to these cuts after joining the SP agreement).

Irish Social Partnership (4)

From 1987 onwards seven SP agreement

-First pacts more concerned with reacting to an economic crises

- the followings took into consideration new problems, eg the

management of the growth process or the satisfaction of the

criteria to enter in the EMU (Roche, 2007; O'Connor, 2011).

Irish Social Partnership (5)

The systems of IR during the era of SP was, according to McDonough e Dundon (2010) and Von Prondzynski (1998): Voluntarist Antagonist Centralized and institutionalized Collectivist

Irish Social Partnership (6)

The system of SP resisted for more than 20 years, against the expectations of many commentators.Yet, it entered in a serious crisis during the current economic disaster (due to the unilateral decision of the government on cuts- especially to wages of public sector)The failure of “Croke Park 1” and “Croke Park 2” agreements

Different views on Social Partnership

Teague&Donaghey (2009): SP as one of the “institutional complementarities” that triggered the economic growth of Celtic Tiger.Allen (2000; 2003), O'Hearn (2003) and McDonough&Dundon (2010): SP as “disguised neoliberalism” or “thatcherism delayed”. Roche e Cradden (2003), Hardiman (2002a), Erne (2010, 2011a): SP as “competitive corporativism”-> we support this view

Irish competitive neocorporativism

Irish Neoliberalism&SP: pragmatic neoliberalism?

Does this last argument flaw the hypothesis of a neoliberal turn in Ireland? The answer is no!1) the context (historical, institutional, social) matters! (see also O' Riain, 2014)2) (Harvey, 2005): tension between theory and praxis in neoliberalismNeoliberalism as a class move

Pragmatic neoliberalism

Wage quote diminished well below the Eu average (54.34 against an EU average of 67.3), while in the 80s it was closer (71.2 against an EU average of 71.8).Striking was made harder by the Industrial relation act (1990)+ Ireland does not have yet a mandatory legal process through which a trade union can obtain recognition from the employer.

Pragmatic neoliberalism (2)

Pragmatic neoliberalism

So why should capitalists complain at all?

Further developments

What about the crisis? Path dependence of neoliberal policies (Murphy, 2014)From “let's accept a smaller share of the cake in order to get a bigger cake” to “let's accept a smaller slice of a shrinking cake” (Erne, 2013).

Thanks for you attention!

Bibliography

Allen, K.; (2000), The Celtic Tiger: The Myth of Social Partnership. Manchester: Manchester University Press.Allen, K. (2003), Neither Boston or Berlin: Class Polarisation and Neo-Liberalism in the Irish Republic in C. Coulter and S. Coleman (a cura di), The End of Irish History: Critical Reflections on the Celtic Tiger, Manchester, Manchester University Press, pp. 56-73.Allen, K. (2007), The Corporate Takeover of Ireland, Dublin, Irish Academic Press.Dumenil, G. e Levy, D. (2004), Capital Resurgent, Cambridge, MA., Harvard University Press.Erne, R. (2010), European Unions: Labour's Quest for a Transnational Democracy, Ithaca, NY., Cornell University Press.Erne, R. (2011a), Interest Association in Caramani, D. (a cura di), Comparative Politics, 2nd edition. Oxford, Oxford University Press. pp. 259-274.

Bibliography(2)

Erne, R. (2013), Let’s accept a smaller slice of a shrinking cake. The Irish Congress of Trade Unions and Irish public sector unions in crisis. in Transfer: European Review of Labour and Research, August, 19 (3).Hardiman, N. (2002a), From Conflict to Co-ordination: Economic Governance and Political Innovation in Ireland, in West European Politics, 25(4), pp. 1-24.Hardiman, N. (2002b), The Development of the Irish Tax State, in Irish Political Studies, 17(1), pp. 29-58.Harvey, D. (2005), A Brief History of Neoliberalism, Oxford, Oxford University Press.Kirby, P. e Murphy M. P. (2011), Towards a Second Republic. Irish Politcs after the Celtic Tiger, London, Pluto Press.McDonough, T. e T. Dundon (2010), Thatcherism Delayed? The Irish Crisis and the Paradox of Social Partnership, in Industrial Relations Journal, 41 (6), pp. 544-562.McDonough, T. e Loughrey J. (2009), The H.E.A.P Chart: Hierarchy of Earnings, Attributes and Privilege Analysis, Dublin, Tasc.

Bibliography(3)

Murphy, M. (2014): Ireland: Celtic Tiger in Austerity—Explaining Irish Path Dependency, Journal of Contemporary European Studies, 22:2, 132-142, DOI:O'Connor, E. (2011), A Labour History of Ireland: 1824-2000, Dublin, UCD Press.O’Hearn, D. (2003), Macroeconomic Policy in the Celtic Tiger, in Coulter, C. and Coleman, S. (a cura di), The End of Irish History: Critical Reflections on the Celtic Tiger, Manchester: Manchester University Press, pp. 34-55.Ó Riain, S. (2014) 'The Rise and Fall of Ireland's Celtic Tiger: Liberalism, Boom and Bust'. Cambridge University Press.Roche, W. K. e Cradden, T. (2003), Neocorporatism and social partnership, in Adshead, M. e Millar, M. (a cura di), Public Administration and Public Policy in Ireland, London, Routledge, pp. 69-87.Teague, P. e Donaghey , J. (2009), Why has Irish social partnership Survived?, in British Journal of Industrial Relations, 47(1), pp. 55-78 .Von Prondzynski, F. (1998), Ireland: Corporatism Revived, in Ferner, A. e Hyman, R. (a cura di), Changing Industrial Relations in Europe, Oxford, Blackwell, pp. 55-73.