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DublinCityUniversitySchoolofLawandGovernment
AVeryPoliticalProject:CharlesHaughey,SocialPartnershipandthepursuitof
an“Irisheconomicmiracle”,1969-92
By
PhilipO’Connor
ThesiscompletedunderthesupervisionofProf.GaryMurphyin
fulfilmentoftherequirementsforthedegreeofDoctorofPhilosophy
DublinCityUniversity,SchoolofLawandGovernment
January2020
Declaration I hereby certify that this material, which I now submit for assessment on
theprogrammeofstudyleadingtotheawardofDoctorofPhilosophyisentirely
myownwork,andthatIhaveexercisedreasonablecaretoensurethatthework
is original, does not to the best ofmyknowledge breach any lawof copyright,
andhasnotbeentakenfromtheworkofotherssaveandtotheextentthatsuch
workhasbeencitedandacknowledgedwithinthetextofmywork.
Signed:________________(Candidate)DCUID:54160707Date:6thJan.2020
3
TableofContents
TableofContents 3
Acknowledgements 6
Abstract 7
Introduction 8
Chapter1:Theoreticalcontentionsandcompetingliteratures
Contentions 14Thepoliticaleconomyofpolicychange 15Policyandpartnershipintheeconomictransformation 19Ireland’ssocialpartnershipincomparativeanalyses 22Otherliterature 24
Part1:Leaps,BoundsandReversals,1945-86 29
Chapter2:Thequestforsocio-economicorganisation,1945-70Irishpoliticsandeconomicinterestsbefore1945 30Fitsandstarts:Irish“tripartitism”1945-56 36Lemass’seconomicinstitutionalism1957-63 40Systemstresses:fromexpansiontodissolution1963-69 45Spiritofthe‘60s:socialchangeandindustrialcrisis1967-69 49“Orderpluckedfromthreateningchaos”:Haughey’s1969-70initiative53Lynch’sretreattominimalism:the1970WageAgreement(NWA) 56Haughey,theITGWUandthesuspensionoftripartitism 59
Chapter3:Thepoliticsofretreatandrevival1970-81Asymmetricimpact:tripartitisminthe1970Northerncrisis64Corporatistminimalism:theNWAsystem,1971-76 66Fromtripartiterevivalto“NationalUnderstanding”,1976-79 72NewDeal:Haugheyrecaststhe“Understanding”,1980 81Fromimplementationtocrisis1980-81 88
Chapter4:Partnershipandautonomousgovernment1981-86BreakdownundertheFineGael-Labourcoalition,1981-82 92RevivalinanotherHaugheyinterlude,1982 97Policyconsensus,ideologyandpartyconflictinthe1980s 105Autonomousgovernment:economiccrisisandpolicychoice 108Unbridgeabledivide?–Employers,unionsandthestateinthe1980s 114
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Part2:Genesisandconstructionofthe“PNR”,1984-87 121
Chapter5:Policyrevolution:thepoliticsoftheNESCplanInception:ÓhUIginn,Flynnandthegenesisofanidea 122Partingoftheways:theLabour/unionpolicysplit 126StrategyrevolutionattheNESC 128“Palacecoup”:theICTUsecuresamandate 134The“HaugheyFactor”againdecisive 136Partnershiponprinciple:FiannaFáilinthe1987election 141
Chapter6:Longhaul:thedramaticroadtothe“PNR”,1987Governmentchoiceandpolicypositioning 143Firststep:Haugheyengagesthesocialpartners 144Blunttalk:Haughey’sthree-stagestrategy 149Broadbase:mobilisingsocialpartnerinput 153Payandplanningagendas:craftingtheagreement 157“Tothestrainsof‘MiseEire’”:thepoliticalsymbolismofaplan 162ThePNR:aplanforsocio-economictransformation 163Politicalhighstakes:therockyroadtoratification 166
Part3:Implementation,1987-89 177
Chapter7:Thestrategyanddynamicsofpartnership,1987-89Kick-startingthepartnership“system”,December1987 178Institutionaldrivers:CRC,NESCandtheState: CRC:a“mechanismuniqueintheEuropeanCommunity” 181NESC:the“appropriatebody”fornationalstrategy 186
Politicaldynamic:partnershipatthe“politicallevel” 190PartnershipasmobilisationofTotalFactorProductivity 194LeveragingEurope:the“NationalDevelopmentPlan” 200PartnershipandtheHaughey-Delors“alliance” 204
Chapter8:GreenShoots:recoveryandpolicyinnovation,1987-89“Turnaround”:apatternemerges 211Policytested:“indigenous”industry’sunevenperformance 212Growthdrivers:newsectorsandECleverage 218Innovation:IFSC“pipe-dream”andtheFDI“surge” 221Amixedeconomymodel:Haughey,theunionsandthesemi-states 226
Chapter9:Thepoliticsofpayandsocialcompensation1987-89Deferringreward:partnershipandthepoliticsofpay 236Newparadigms:“RuralDevelopment”,“Long-termunemployment” 242Thepoliticsof“unemploymentblack-spots” 248Managingdespair:governmentpolicyand“anti-poverty”politics 251Socialcompensationsandstatemodernisation 253Irishmodel:astate-dirigistegloballyactivemixed-economy 255
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Part4:Consolidation,1989-92 257
Chapter10:InstitutionalisingSocialPartnership,1989-91Haughey’scommitmenttopartnershipasa“permanentsystem” 258ICTUandprogrammedelivery:theleveragingofdiscontent 260Who’s“Left”?ICTUanditsrebels 266Systemconsolidated:localpay,apprenticesandindustrialrelations 270 Strategicshift:theHaughey/ICTUdealonthe“semi-states” 273Planningthetransition:towardsanewagreement 281Completingtheblueprint:NESCandthe10-year“PESP” 284
Chapter11:Metamorphosis:EconomicandpoliticalconsequencesofthePNR/PESP PrototypeTiger:towardsan“economicmiracle” 292TemplateforaSocialandDevelopmentalState 299Thusfar…:settinglimitstopartnershipinstitutions 301Partypolitics:the(partial)demiseofanti-corporatism 306Socialpartnershipandequalitypolitics:acasestudy 310Unrulyoffspring:partnershipandthepoliticsofpoverty 315
Conclusions 321
Addenda 331AppendixA:Membershipofthe“CentralReviewCommittee”,1990 332AppendixB:CRCattendanceunderthePNR,1987-90 333AppendixC:Payroundsandpartypreferences,1945-91 337Acronymsandabbreviations 338References:
Archivalsourcesandprivatepapers 344Interviewswithandinformationfromwitnesses 346Press 347Bibliography 348
6
Acknowledgements This thesis would not have been possible without the encouragement and
supportofProfessorGaryMurphy,whosupervisedit. Itwashewhoconvinced
me, after I completed an MA in 2014, to pursue the historical study of social
partnershipIwishedtoundertakethroughtherouteofaPhD,focusingonitas
anessentiallypoliticalprojectcentraltothehistoricIrisheconomicturnaround
achieved in the 1990s. DCU provided generous support through a 4-year
scholarshipandstudygrant.Myworkbenefittedfrommanyconversationswith
Gary,whoiscurrentlycompletingwhatwillbeadefinitivebiographyofCharles
Haughey.IamalsogratefultoDr.EileenConnollyofDCU,andtotheinternaland
externalexaminers,Dr.EoinO’MalleyofDCUandProfessorSeánÓRiainofNUI
Maynooth,fortheirthoughtfulcomments,suggestionsandencouragement.
MythanksarealsoduetoMartinFraser,secretarygeneraloftheDepartment
oftheTaoiseach,who,attherequestofShayCody,gavemegenerousaccessto
theextensiverecordsof theCentralReviewCommitteeofsocialpartnership in
thatDepartment,andtoarchivist JosephGoudeforhisunfailingassistanceas I
worked through them. Iwould also thankDavidBegg for similar access to the
recordsoftheICTU,Dr.RoryO’DonnelltothoseofNESCandShayCodythoseof
Fórsa. Thanks also to Seán Haughey TD, VincentMcBrierty, Manus O’Riordan,
DavidConnollyandmanyotherswhoassistedwithideas,accessingsourcesand
convincingkeywitnessestotalkwithme,aswellastheintervieweesthemselves
for their time and candidness. I also thank Jean Kennedy at SIPTU College,
PádraigMannionatILHS,andthestaffsofallotherarchivesconsulted,including
UCD,SligoIT,NLIandNAI.AspecialthanksalsotoPádraigYeatesforproviding
hisownresearchandinterviewpapers,andtoPhilFlynn,DesGeraghty,Kieran
Roseandotherswhomadeprivatepapersavailable.
FinallyIwouldliketothankbywifeandlifelongpartner,HelenLahert,fornot
aloneenduringbutencouragingmeinthisproject,andtofamilyandfriendsfor
theirsupportandon-going,oftenamusing,accompanyingcommentsthroughout.
Needless to say, none of thosewho assistedme bear any responsibility for
viewsorjudgementsexpressedinthestudy,whichareentirelymyown.
7
Abstract
AVeryPoliticalProject:CharlesHaughey,SocialPartnershipandthepursuitofan“Irisheconomicmiracle”,1969-92ByPhilipO’Connor
The social partnership model initiated in Ireland in 1987 was a key factorenablingthetransformationoftheIrisheconomyandsocietyfromoneofWestEurope’spooresttooneofitstopperformersinlittleoveradecade.Thispolicyparadigmshift,asprofoundasthatof1959-63,recasttheeconomywithinafewyearstoanewmodel,itsfuturedefiningcharacteristicsestablishedby1991.
The strategy involved exploiting emerging opportunities, particularly globalfinance, todrivea transformation,butalsoencompassedcomprehensive socialand institutional reform, employment growth, state industries, and a radicalremodelling of social and educational provision. The combined approach wasconsciously conceived as an alternative route to economicmodernity to solely“monetarist”orsocialstatedismantlingapproachesadoptedelsewhere.
Social state innovations under partnership, however, rapidly became itscentralconcernasjobcreationfailedtokeeppacewiththeattritionindecliningindustries.Butthedualsocial/economicstrategyofpartnershipmadeitamodelofinternationalsignificance,notleastinbeinginstitutedjustasmoststateswereretreatingfrom“corporatism”orabandoningitaltogether.
CentraltotheIrishtransformationwasacircleledbyCharlesHaughey,whoengineereditthroughtightcontrolovergovernmentandaworkingalliancewithkeyforcesamongthesocialpartners.InthisHaughey,amodernisingnationalist,realisedalong-conceivedpolicyapproachhehadpreviouslyattempted.
Social partnership was neither primarily an emergency response to theimmediatedebtcrisisnoraconformingtoasupposedEuropean“norm”.Ratherit was a strategy, long conceived by key groups, to resolve fundamentalinstitutionalproblemsattherootofIrisheconomicunderdevelopment.
Socialpartnership,establishedin1987-92,enduredwithsomemodificationsforovertwentyyears,duringwhichIrelandunderwentitsmostdramaticsocio-economic transformation in a century. Partnership was only partially andformally dissolved in 2010, many of its practices and legacy institutionscontinuingtoshapeIreland’ssocio-economicdevelopmentadecadelater.
8
Introduction This thesis focuses on the political dynamic of social partnership, and in so
doing fills an important gap in the literature. What studies of comparable
systemsacrossEurope invariablyconclude is that themany featuresunique to
Ireland’s“socialpartnership”makeitadifficult-to-categorize“outlier”andthatit
isthedomesticpoliticalfactorsaccountingforthis“exceptionalism”ratherthan
similaritieswithpatternselsewherethatrequireelucidation.1
StudiesofIrishpartnershipoftenfocusonindustrialrelations–animportant
butfarfromitsonlyaspect–orstructuralaspectsorinterestconflictswithinit
in its later period. As regards its origins, there is a near consensus that it
emerged in1987due to the immediatedebt crisis.This thesis contends that it
wasneitherindustrialrelationsnortheimmediatecrisisthatprimarilyaccount
forit.Ratheritresultedfromacoalitionofforcesunitedbyalong-termstrategy
to overcome the fundamental problem ofwhat Jim Larkin jnr. called Ireland’s
“underdevelopment” in relation to the standards of living and development of
othersmall,economicallymoreaffluentEuropeanstates.Fewstudiesanalysethe
profoundly political project it was, or its pre-history or the dynamics of its
implementation in its critical formative period, 1987-91. Many erroneous
conclusionsaredrawnduetothepaucityofthehistoricalevidentialbaseused,
whichthisthesisseekstoredress,muchfromsourceshithertolittleexamined.A
core contention is that the immediate economic crisiswas less a cause than a
contingenteventprovidinga“windowofopportunity”toeffectamajorandlong
advocatedinstitutionalchangeinIrishsocio-economicgovernance.
Thisthesisarguesthatsocialpartnershipin1987representedaninstitutional
rupture in how policy-making had hitherto occurred, and that the dramatic
economic transformation achieved in the 1990s “Irish miracle” cannot be
explainedwithoutthekeyroleplayedbysocialpartnershipinenablingit.Itdoes
notclaimthatpartnershipperse,oralone,causedtheeconomictake-off,butdoes
contend that the two processes were inextricably interlinked and mutually
reinforcing, with key elements of the latter enabled through the framework
1 ThesalientliteratureisassessedinChapter1
9
providedbytheformer.Italsoarguesthatintheshortperiod1987-91virtually
all major socio-economic policy innovations of the later “Celtic Tiger” were
initiated, their course, trajectory, and even many of their details, clearly
established. In arguing this, the thesis reveals key policy-making events that
shaped initiatives suchas the IFSCandurban renewalprogrammes, theastute
strategytowardstheEU,aswellasthepolicydecisionsshapingtheindigenous
and FDI industries that would drive the take-off. It also traces how the social
state formed through partnership was an essential corollary of its economic
aspect.Withthesecontentionsthethesischallengesmanyorthodoxies.
Followingthe3-yearProgrammeforNationalRecovery(PNR)of1987-90,the
1991 successor Programme for Economic and Social Progress (PESP) set a 10-
year framework – as agreed at the NESC - that was largely successfully
implementedover the followingdecade throughaseriesof3–yearagreements
subordinatetoandderivativeofit.Partnershipinstitutions,socontendedatthe
time of their establishment and continually challenged up to 1991, were thus
successfully consolidated, only being tweaked, refined or tinkered with
thereafter.Thepolicyinnovationsof1987-91setIrelandoncoursetobecomea
comparativelyrichnationincontrasttowhatithadbeen,doublingitsworkforce,
creatingaprogressivedevelopmentalsocialstateanddrivinglivingstandardsto
well above EU averages by 2004. A strategy of European “catch-up” was
successfully over-achieved. Fatal policy choices by governments after 1997
wouldmagnify the impact of the2008global financial crisis but, as this thesis
asserts, thesewere not inherent in the policy paradigm of 1987-91 but arose
fromdeparturesfromthatparadigminkeypolicyareasafter1997.
Politics, i.e.history,develops ina linearprocessofcauseandeffect.Leopold
vonRanke,thefatherofmodernsource-basedhistory,arguedthatthepurpose
ofhistoricalanalysisistoestablish“whatexactlyhappened”.Thisthesisadoptsa
multiple-streamsnarrative-historicalapproachtotracetheorigins,development
andpoliticsofthevariousstrandsoftheeconomic/socialpartnershipidea,from
its emergence in the 1940s, several attempts to realise it up to 1982, its final
adoptionin1987,andtheconstraintsanddynamicsofthesystemthatemerged
by1991,bywhenitsfuturecontourswereclearlyestablishedanditachieveda
10
certain equilibrium. It identifies the factors that converged in 1987-91 that
allowedtherealisationofahithertofrustrateddevelopmentprogramme.2
Atthecentreofthe1987-91socialpartnershipprojectwasagroupofpolicy
innovators who on several occasions previously had sought unsuccessfully to
realiseit.ThecentralfigureofCharlesHaugheyloomseverlargerthecloserthis
processisexamined,notonlyinattemptsfromasearlyas1969to1982,butalso
whenin1987-91asTaoiseachheprovidedthecentralpoliticalfactordrivingthe
strategy,interveningeventoshapemanyofitsdetails.Hisroleintheeconomic/
partnership transformation initiated from 1987 was comparable to that of
Lemass in theearlier1958paradigmshift. YetwhileLemass’sProgrammesfor
Expansion enjoy a near iconic paradigm-changing status in the socio-economic
literature,theequallytransformativeProgrammeforNationalRecoveryandPESP
are ignored.LemassandWhitakerarecreditedas the innovatorsof theearlier
departure, but no such credit is accorded to Haughey, Ó hUiginn and others
centraltothe1987paradigmshift.Thisthesisargueswhythisshouldchange.
Haughey drove the 1987 paradigm shift and there was a considerable
consistency in his views since the 1950s onwhat an economic take-offwould
entail, including a partnership concept similar to that eventually achieved in
1987-91. In political terms Haughey portrayed himself as the third significant
activistFiannaFáilTaoiseach.Ashe toldhis firstÁrdFheisas leader,whilede
Valera had definitively established Irish national sovereignty and intellectual
independence,Lemasshadcreatedthestate-buildingandpolicyinstrumentsto
achievethesocio-economicsuccessthatwasthesubstanceofthatindependence.
Haughey’sownrolewouldbetofinallyrealisethepotentialofthestructuresand
instrumentsLemasshadcreated.Heoncesaidthatpoliticswouldhavebeenless
attractiveforhimifthestatehadnotfacedthatdevelopmentchallenge.3
Haughey’sviewswere formedbyadopting reformproposals fromeconomic
andsocialinnovators,notablyamongbusinessandunioncirclesandlike-minded
nationalleaderselsewhere,whichdecisivelyshapedtheconceptimplementedin
1987-91, and this thesis traces this process of communication and strategy
formationfromthe1960s.Centraltoitwasaconceptoftheproductivepotential2 “wieeseigentlichgewesenist”,vonRanke18863 ÁrdFheisspeech1980,inMansergh,ed.1986:327;“hadnotneeded”,Keena2001:6
11
notonlyofentrepreneursbutalsooforganisationssuchastradeunions,asnot
primarily negative factors to be contained – a then predominant view – but
rather as productive forces in themselves if enabled to pursue their interests
withinacommonnationalstrategy.WhatunitedtheallianceHaugheyassembled
wasinessenceanationalistprogrammeforsocio-economicmodernisation.
Haughey wrote no memoirs and gave few legacy-building interviews. It is
thereforenotablethattheoneissueonwhichheinsistedinrecordinghisviews
insomedetailbeforehisdeathwassocialpartnershipasthekeyenablingfactor
inthesubsequenteconomictake-off,providing“theessentialbedrockonwhich
soundpublicfinancesandprogressivefiscal,socialandeconomicpoliciescould
befirmlybased”.Inhisviewitprovidedtheframeworkforanessentiallysocial
democratic transformation strategy, basedon the economicplandevelopedby
hiscloseplanningcirclein1982,TheWayForward.Heextolledthecentralrole
playedbycreativeexchangeattheNESC,producingtheconsensusbetweenthe
socialpartners,andpraisedboththecoordinatingroleattheDepartmentofthe
Taoiseachandas chairof theNESCofPádraigÓhUiginnand the “decisivebut
difficultrole”ofunionleaders.HealsocitedtheinfluenceonhisviewsofGerman
social democratic chancellor, Helmut Schmidt, his closest political ally, at
Europeanlevel.ThisthesisconfirmsHaughey’sassertionsonmanysuchpoints.4
HaugheyisacontroversialfigureinIrishpolitics.Heleftofficein1992inhis
late sixties but was soon again a centre of attention as state tribunals
investigatedhisratherbizarrepersonalfinances.Apopularhistoricalliterature,
includingmemoirsbypoliticalopponents,beganto imputethemajordecisions
of his career to allegedly corrupt relationshipswith somewealthy individuals,
but few if any such policy linkages have ever been convincingly established.
Speculationon this issuehas led toa seriousdearthofobjective studiesofhis
politicalroleandimpact.Evenacademicanalystshavesuccumbedtosuchviews,
Aiden Regan claiming that the 1987-92 governmentswere “dominated by the
political-economicinterestsofseniorFiannaFáilministers,particularlyCharlesJ
Haughey”,andattributinginnovativepolicyshiftsoftheperiodtocivilservants.
4 Haughey2014
12
This thesis disputes such assertions. But it does not interrogate Haughey’s
personalaffairs,thoughnordoesitexplorehisotherpolicyinnovations,suchas
inforeignandNorthernaffairsorthearts,exceptwhererelevanttothecentral
themeofhispolicyonsocial/economicpartnership.This, it finds, isquite fully
explicableinpoliticalprocessandpolicydecision-makingterms.5
The thesis also traces the fundamental divide over corporatist approaches
characterisingthedominantpoliticalparties,FiannaFáilandFineGael,andthe
competingexperimental/conservativesocialdemocraticmodelsofdevelopment
theyoffered.Italsoseekstoaccountforthepeculiarhostilityto“corporatism”of
the Labour Party,whichmade it an outlier among its sister parties in Europe.
This forced the national-oriented element of the trade union leadership, who
otherwisehadasocialistorientation,intodowngradingtheirlinkstothepartyin
favourof analliancewithHaughey, aspreviouslywithLemass.The thesisalso
reveals the stark divide in economic policy between the Haughey and Lynch
factions within Fianna Fáil, never previously satisfactorily elucidated. This
explainsboththefortunesofHaughey’svariouspartnershipinitiativesbetween
1970 and 1987 as well as the collapse of cooperative institutionalism in the
1960-70s due to Lynch’s institutional conservatism, which allowed minor
sectional conflict in industryescalatewithdisastrousconsequences.The thesis
also explores the conflicts over corporatist cooperationwithin themain social
interests,establishingtheirpoliticalratherpurelyinterest-drivencharacter.
Whilefocusingonthepoliticsandpoliticaleconomyofsocialpartnership,and
restoring the role of political leadership and agency to it, this thesis does not
discount structural or other co-determinants. The economy and social factors
had powerful autonomous dynamics of their own. But agency remains a key
variable,andthetendencyintheliteraturetogrosslyunderstateitischallenged.
Economists explaining the take-off of the 1990s often do so without even
mentioningHaughey,thepolitical-socialalliancehecreated,oranyotheraspect
ofpoliticalagencyasinanywayimportant.Thisthesischallengesthiseconomic
primacy,re-assertingthecentralityofpoliticalagencyandpoliticsitself.6
5 ForpersonalfinancesdeterminingHaughey’sdecision-making,esp,Connolly,F.2014andO’Toole2009;
relevantmemoirsincludeQuinn2005andBrady,C.2005;quotefromRegan,A.2012:1156 TheseanalysesareexaminedinChapter1
13
The thesisbuildson lengthy interviewswith leadingactors fromtheperiod,
including two former Taoisigh, aswell as public servants, union and business
leaders andothers.While these are only sparsely referenced,mostly for space
reasons, they provided insights into the period and into what central players
believed they were doing. They also helped clarify events and illuminate
relationships, agendas and conflicts. Such retrospective subjective testimony
mustnecessarilybetreatedwithcautionandemployedonlyinanancillaryrole.
Itisthereforeextensivearchivesources,manyneverbeforeaccessed,aswellas
contemporarymedia, that form the thesis’smainsource-base.Thesewere first
and foremost the comprehensive records of the “Central Review Committee”
(CRC)ofsocialpartnership,PádraigÓhUiginn’spapersandothermaterialinthe
DepartmentoftheTaoiseacharchive.Besidesminutesofmeetings,thesecontain
much internal correspondence, government communications and extensive
hand-writtennotesofmeetings,phonecallsandevents.Similarlyricharchivesof
theNESC,ICTUandotherbodiesnotpreviouslyusedwerealsoexamined.Older
recordsweresourcedfromtheNationalArchivesandothercollections,anduse
wasalsomadeofsomeprivatepapersmadeavailable.
Finally, the current writer’s own experience of social partnership since the
1980s through both political and trade union involvement and as director for
fourteenyearsofalargepartnershipproject,DublinEmploymentPact,meanthe
hadanacquaintancewithmanykeyfiguresinvolved,whichfacilitatedaccessto
recordsandintervieweesandhelpedinformjudgementsreachedinthisthesis.7
The thesis reveals much never before considered regarding the origins,
establishmentanddevelopmentnotonlyofthesocialpartnershipsystem,butof
thedecisionsthatshapedthe1990seconomictake-off,theforgingofaradically
new relationship with the EU in 1988-90, and the emergence of the Irish
developmental state. In sodoing it hopes tomakea significant contribution to
understanding the paradigm shift that occurred in Ireland’s socio-economic
governanceandfortunesinthecrucialdecisionsmadeinthe1987-91period.
7 OnDublinEmploymentPact,www.dublinpact.ie;forapreviousnon-academicassessmentofsocial
partnershipbythecurrentwriter,O’Connor,P.2007
14
Chapter1Theoreticalcontentionsandcompetingliteratures
Contentions
Themaincontentionsof this thesis, its sourcesand itsmethodology,areset
out in the Introduction. It is a controversial thesis, challenging common
assumptions and academic orthodoxies regarding the subject it is treating. It
asserts thatsocialpartnershipwasakey institution intheeconomicandsocial
transformationofIrelandthatoccurredfromtheearly1990s,andidentifiesthe
drivingroleinthatofkeypoliticalandinterestleaders.Insodoing,itarguesthe
primacyofpoliticalagency, leadershipandideas inthatparadigmshift, though
without neglecting structural and exogenous factors and also without
overstatingwhatmightbemisconstruedasa“greatman”interpretation.
This chapter firstly seeks to locate the contentions of the thesis within the
literatureanalysingpolitical-economicparadigmshifts,orinstitutionalruptures,
whichitassertsthe1987-91periodinIrelandrepresented.Italsoarguesforthe
detailed linear historical-narrative approach it takes to elucidate the various
strandsofcause-and-effectexplainingwhatledtothatparadigmshift,aswellas
itssocio-economic,politicalandinstitutionalconsequencesanditsdynamicsasit
consolidated as an altered policy-making system. This multiple-streams
approachilluminateshowspecificfactorsconvergedin1987toenablethepolicy
paradigm shift, which had been unsuccessfully attempted on several previous
occasionsandofteninvolvingtheverysameactors.Itestablishestherolesinthis
process of the failure and success of innovative pro-active leaders on the one
hand,andconservativeorreactiveleadersontheother.
Thechapterthenexaminesthemaincontentionsoftheexistingeconomicand
politicalliteratureontheorigins,establishmentandimportance–orotherwise-
ofthesocialpartnershipdepartureinIreland,challengingorthodoxiesinrelation
to it. Italsoreviewsthewidercomparative literatureonEuropeanpartnership
systemswhichhasattemptedtolocateandaccountfortheIrishdevelopmentin
15
that framework. By identifying the endogenous political drivers of Ireland’s
socialpartnership,thethesispresentsmuchnewmaterialtoassistfuturestudies
moreaccuratelylocatetheIrishcasewithinsuchacomparativeframework.
Thepoliticaleconomyofpolicychange
Thecentralcontentionofthisthesis,thatsocialpartnershipandgovernment
policy decisions of 1987-91 represented an institutional paradigm shift that
enabled the economic transformation achieved in the 1990s, challenges a
dominant narrative that emphasises external factors - such as pressures to
conform toECpolicyorglobalisation– inexplaining the1990s take-off. In the
literature the turning point accounting for the transformation largely remains
indeterminate and the roles of political agency - particularly of the Haughey
governments-andofinstitutionalinnovation-particularlyofsocialpartnership
–are largely ignoredas irrelevant.TheOxfordhistorianof Ireland,RoyFoster,
articulatedawidespreadviewwhenhewrotethat“theIrish”simply“gotlucky”.1
Political scientists grapplewith policy and institutional “paradigm shifts” in
democracies.TheIrish institutionalupheavalof1987-91certainlyrepresentsa
testcaseforthis.Theycontendthattheinstitutionsofdemocraticstatestendin
“normaltimes”tofollowanincremental,structure-determinedcourse,butwhen
a crisis induces institutional “uncertainty”, at whatever level, various factors
combine inadjusting the system to thenewcircumstances, resolving the crisis
andrestoringequilibrium,ornot,asthecasemaybe.
Positivists argue that institutions respond to crisis, or sudden uncertainty,
through an “objective” process of “risk reduction”, with institutional “supply”
increasingtomeetinstitutional“demand”,as“agents”actto“realizetheirgiven
interestsinariskyenvironment”.MarcBlythecountersbyshowingthatattimes
ofcrisisandhencepolicyuncertainty,whenfullknowledgeofitsdetailscanonly
beavailableinretrospect,influentialactorscannotknowhowbesttheirinterests
areservedandhavelittletoguidetheminidentifyingthoseinterestsapartfrom
ideas.Boththediagnosisofa“crisis”asacrisis,aswellastheprofferedsolutions
are necessarily constructed ideas vying for plausibility. During non-crisis
1 Lee,J.1989,Barry,F.ed.1999,FitzGerald,J.2000,Garvin2004,“gotlucky”,Foster2007,alsoDavid
McWilliams,‘ThefalloftheBerlinWallledtotheriseofIreland’,IrishTimes,09/03/19
16
periods,ideastendtoamundanereflectionofperceivedinterestbutatmoments
of “institutional uncertainty” they can emerge as “causal factors”, as “causally
powerfulconstructionsthatallowagentstodefineacrisisasa ‘crisis’andboth
plan and politic their way forward”. Where such ideas prove successful, they
achievehegemonyandformtheequilibriumofanewinstitutionalparadigm.2
Baumgartner and Jones similarly explain how “stability is the rule formost
issues most of the time”, with the equilibrium of relatively autonomous
subsystems and the defensive actions of powerful, constructed interests,
reinforcingsysteminertiaandactingagainstprospectiveinnovatorstomaintain
thestatusquo.Policies inperiodsofequilibriumare“framed”byan“image”of
coherenceandplausibility,foundedultimatelyonbelief.Butinperiodsofcrisis
thatequilibriumisdestabilised–or“punctuated”-andalternativepoliciesmust
gainplausibilityandbe“framed”inanewcoherent“image”.Thisoccursthrough
attritional “conflict expansion” as opposing parties and interests, in seeking to
shape and frame a new consensus, mobilise the actors “discontented” by the
crisisuntilacritical-massconstituencyisformedforadominantsolution.3
Ideas, however, can also be wrong. Extrapolating from Polanyi’s Great
Transformation, Blythe contends that how institutions are constructed and the
external pressures under which they arise determines why some states were
able to adopt successfully to the 1920s Great Depression by an institutional
paradigm shift towards “embedded liberalism”, as in the US “New Deal” or
Swedish social democracy, while others stagnated or opted for the ultimately
destructivecourseofmilitaristfascism.WhileBlythewasexamininganepochal
ideational conflict, his insights are nevertheless relevant to our case. Scholars
argue that authoritative ideas that achieve plausibility involve many political-
historical factors such as institutions’ historical formation, constructed social
interestsandproblem-solvingpropensitiesunderthepressuresof internaland
externalconstraints,inon-goingcompetitionforinfluenceandhegemony.4
Innovativeideasorpolicies,inwhateverinterpretation,arenotdisembodied
causal forces, but are introduced at moments of uncertainty by political
2 Blythe20023 BaumgartnerandJones19934 Polanyi1944;“ideas”,Bythe2002;“autonomousconstructs”,Zehfus2002;“criticalrealists”,Archer
2003;“influence”,PhillipsandJorgensen2002;“hegemony”,Gramsci1971
17
innovatorswhobuildcredibilityandplausibilityforthem.Attimesofcrisis,the
process of change through the interaction of structure and agency becomes
acute,withinstitutionalchangetraceablethroughboththisinterplayandthatof
contending narratives for resolving crises of uncertainty.5As noted, analysing
institutional change can be differentiated from analysing how preceding and
resultinginstitutionsaresustained.Systemsinequilibriumfollowamore-or-less
path-determined course, whose dynamic, as Pierson put it, is “amenable to
structural explanations”, while at crisismoments the intervention of “political
entrepreneurs”proposingnewideasisdecisive,withsuchcriticaljuncturesbest
examined through an agent-centred approach. At times of significant change,
therefore,politicalagencyandideasplayacriticalrole.6
This thesis establishes how the social partnership idea, with an economic
transformationratherthanamereindustrialrelationsoreconomiccrisis-solving
formula itscentralpurpose,hada longgestationintheIrishpolitical-economic
system. From first being proposed by policy innovators in the 1940s, through
severalattemptsatrealisingit-interspersedbyperiodsofreactive-conservative
dismantling and withdrawal from it - it was finally implemented successfully
from1987.Thequestionarisesastohowthisprocessshouldbestbeobserved.A
case study might apply innovation theory or a “diffusion of innovation”
approach, or apply a “multiple streams framework” as proposed by Kingdon,
whichoffersgreaterscopefornarrativeconflictandsocialpowerfactors.7
In Kingdon’s model, an identified problem in any policy system results in
variedproposalstosolveit,withthedominantsolutionemergingandachieving
criticalacceptancewhenthepolicyinnovatorhasorganisedthepoliticalfactors
necessary to implement it. This occurs when a contingent event, or “crisis”,
provides a “window of opportunity” for the innovator, who has assiduously
aligned those political factors, to implement the proposed solution. The
convergence of these elements of problem, solution and political organisation,
withthewindowofopportunityprovidedbyacontingentevent,thusenablesthe
resolving of the problem, whereafter a new system equilibrium results. The5 On“policyinnovators”,HallandThelen2009andHoganandFeeney2012;ontheinterplayofstructure
andagency,BergerandLuckmann1966,Zehfus2002,JørgensenandPhillips2002,WeissandWodak,eds.2007,Wendt1992,1999,OnufandKlink1989,andKratochwil1991
6 PaulPiersonquotedinBennettandEllmann2006:4647 “diffusion”,Rogers2010;“multiplestreams”,Kingdon2003
18
timingandflowofpolicyactionsiscritical.Resistancetotheideaoralternative
solutionsmustbeovercomeorcompromisedwith,thoughwilloftencontinueto
operateinpolicy“sub-systems”impedingordelimitingthesubstantivechange.
Thismultiplestreamsperspectiveallowsthecriticalelementsandprocesses
ofadvocacy,trial,contestation,setbacksandultimatesuccessofamajorpolitical
project to be traced and evaluated, explaining, in our case, why what finally
succeeded in1987-91hadnot inpreviousattemptsover thepreceding twenty
years.ItalsoaccountsforhowCharlesHaughey,asahighrisk-takingratherthan
reactive political leader, first secured the cautious buy-in of opinion-forming
allies by tailoring his project to their policy preferences and, once the
contingencyof theeconomic crisis lentplausibility to theproposed solution, it
was the securing of meaningful political power that assured the project’s
plausibility. Such an analysis also accounts for the political factors that
undermined itsplausibility inpreviousattempts.Through thisperspective, the
counter-tendenciesofalternativepolicyconcepts,systemresistanceandinertia,
conservative or reactive competing leaders and interests, political constraints
and other factors that accounted for earlier defeats and that impeded the
economicparadigmshiftuntil1987-91,canalsobeidentified.
It is of interest that Haughey himself – the key political innovator, among
several, in the central thesis of this study - viewed his finally achieving
convincingcontrolofgovernmentandthestateapparatusin1987astheturning
point that assured the plausibility and success of his economic/social system
proposal.Herecalled1987-88asthe“happiest”and“mostrewarding”yearofhis
politicalcareer.Politicswouldhavebeenoflessinteresttohimhadthechallenge
ofIreland’sunderdevelopment,whichhadnotbeenresolvedbytheLemass-era
reforms,notpresented itself.Decisivegovernment, andpower itself, he stated,
restedlessinpartyorbackbenchmajorities,whichcanbeincoherent,thanina
cabinetunited,ledanddeterminedonasingularpolicycourse.Thishadevaded
hisandothergovernmentspreviously,butheachieveditin1987.8
Inapaperjointlyauthoredwithhisformergovernmentsecretary,PádraigÓ
hUiginn,ayearorsobeforehisdeathfromcoloncancer,Haugheyidentifiedthe
8 Haugheyon1987andcabinetgovernment,interviewHaughey2005;“oflessinterest”,Keena2001:6
19
economicagenda,TheWayForward, compiledbya tightly-knitpolicygrouphe
formedin1981-82,coordinatedbyÓhUiginn,astheprogrammethatunitedhis
1987cabinet.CharlieMcCreevyoncedescribedÓhUiginnsomewhatcolourfully
as “the smartest civil servant I ever met …, his role was at least equal to
Whitaker”. This thesismakes an analogous claim in relation toHaughey as an
innovator and political leader of a similar significance to Lemass. The Way
Forwardformedthetransformative“idea”inourstudy,thoughonlyhalfofit,the
othercriticalelementbeingitsframingthroughasocialpartnershipsystem.9
ThatjointpaperwithÓhUiginnalsoidentifiedthedebtcrisisof1986asthe
immediate “near-disastrous” contingency, or window of opportunity, enabling
the departure, but the deeper structural “development” problem of the Irish
economysince1970asthefundamentalissuebeingtackled.InHaughey’swords,
thedebt crisis provided the “stimulus andneed” for thedeparture.This thesis
tracesHaughey’slongadvocacyofsuchaneconomicdepartureandofaalliance
withbusinessandunioninterestsasthepoliticalmeanstoachieveit.
In2005Haugheysaidsocialpartnershiphadplayedacentral,integralrolein
theeconomictake-off.While“otherfactorsassistedthattransformation,…social
partnershipfromitsinceptionandfor20years…providedtheessentialbedrock
on which sound public finances and progressive fiscal, social and economic
policiescouldbefirmlybased.”Thisthesisteststhishypothesisthroughaclose
analysisofmanyofthefactorssocialpartnershipcontributed.10
Policyandpartnershipintheeconomictransformation
ThataparadigmshiftoccurredinIreland’seconomicfortunesinthe1990sis
notdisputed.Agrowthandemploymenttake-offisclearfrom1993,continuing
foradecade todoubleGDPandemploymentandeliminateunemploymentby
2003.Apatternofweakperformancehadcharacterisedthepreceding1970-86
period, punctuated by growth spurts and turbulence through “creative
destruction” in the 1970s and bymanufacturing and FDI decline in the early
1980s causing the mass closure of many Lemass-era industries. In 1985-86
export growth began to revive to its modest pre-1980s level. This partial
9 “paper”,Haughey2013;“jointlyauthored”,interviewÓhUiginn;McCreevyquotedinHastingsetal.:3410 “mostadmired”,interviewwithMartinMansergh
20
recovery in growth - though not employment - was assisted by deflationary
fiscalpoliciesoftheFitzGeraldcoalition.11
So what was the identifiablemoment of qualitative policy and institutional
changeaccountingforthe1990stake-off?Thisthesiscontendsthatitoccurred
in1987.Withinayear,growthsurpassedtherecovered1980-levelof1986by5
percentand,whileslowingin1991-92duetotheMaastricht/currencymarket
crisis, surged from 1993 in a upward trajectory. The new growth was less a
“recovery”thanthetake-offofaneweconomywithnewgrowthdrivers.While
unemployment would remain high into the 1990s, new-job creation of ca.
20,000jobsp.a.occurred,inlinewithPNRtargets,withthenewjobsstrikingin
that they were almost wholly in new-sector areas. Although this pattern is
widely accepted for the 1990s, the precise policy turning point is rarely
identified,thetake-offmostlybeingattributedtopost-1990inputfactors.12
KleinandVentura’s trackingofGDP/outputgrowthdata from1980to2005
indicates thedepressionandmodestrecoveryof1980-86,andan initial surge
from1988thatslowedintheMaastricht/currencycrisisbuttookoffagainfrom
1993.Theyascribethistoachangedpolicy-inputparadigmfrom1988:
“GDPperworking-ageadultinIrelandmorethandoubledrelativetotheUSin25
years,increasing115percentfrom1988to2005”.13
Thisthesisnotonlyagreesthatthedecisivepolicy-inputturningpointwasin
1987-88 but also demonstrates that all essential elements of the economic
11 “growthfrom1993”,Kennedy,K.2001,Barry,F.ed.1999,BielenbergandRyan201212 “widelyaccepted”,e.g.Barry,F.ed.1999;Kennedy,K.(ed.)1997;FitzGerald,J.1999andKennedy,K.
2001;13 KleinandVentura2019
21
transformationof the1990s, in termsbothofpolicyandeconomic inputs,had
occurredby1991.Capitalopeninghaslongbeenidentifiedasakeyfactorinthe
take-off,thoughfartoooftenasitssingularsource.OthersmallopenEuropean
economies benefitted from the same EC market opening without achieving a
remotelycomparableresult.Thisrequiresexplanation,andthisthesiscontends
that the answer lies in the series of policy choices developed through social
partnershipandimplementedfrom1987.Theseincludeddecisionstopre-empt
andexploitsinglemarketreforms,almostbeforetheyoccurred,togetaheadin
thenascentcompetitiveEuropeaneconomy,andastrategyofalliance-building
in Europe to exploit EC structural funds as a lever to development. A further
factorwasadeferralofinputcosts–alsoprovidedbysocialpartnership-which
enabledadramaticcapitalinflowandasurgeofnewsectors,evenbefore1990.
Asserting a central role for social partnership in the economic turn-around
contradicts what many studies assume, that it was peripheral. This thesis
contendsthat,whilenotnecessarilythesingularcause,itprovidedtheessential
frameworkforanegotiatedopeningoftheeconomy,tracingtheprocessesthat
brought the opening about. It also ensured that government’s tightmonetary
adjustment was accompanied by expansive industrial policy, mixed-economy
initiatives and a substantial reshaping of the welfare state. These strategies
wereframedwithinadebt/GDPratio-reductionformulathatincludeddeferring
socialandwagecoststhoughoffsettingthembyawage/taxapproachgrowing
real incomesandprogrammesofsocial investment. Itwasthissetof formulae
thatsoongaveIreland’ssocialpartnershipitsinternationalsignificance.
Socialpartnershipalsoprovidedarangeof“intangiblecapital”inputssuchas
wageandpolicy certainty, industrialpeace throughbothpay/tax strategyand
institutional reform, co-ordinated mid-term planning systems across
departments andnewhuman resourceprogrammes inwelfare, educationand
socialpolicy.Theseinputsdeliveredvaluegrowthinthehumanresourcefactors
criticaltothereconfiguredhigher-valueeconomicmodelbeingpursued.These
variousfactorsenhancedwhatistermedtotalfactorproductivity(TFP),forming
thecriticalinputthisthesisgroupsasthesocialpartnershipeffect.Indeed,even
without the opportunities exploited in global economic opening, some studies
contend a less dramatic but nonetheless substantial economic improvement
22
would still have been achieved due to the 1987-91 policy departure.What is
also seldom realized is the paradigmatic quality of the second partnership
agreement, the PESP of 1991, which involved a template for an institutional
transformation towards a developmental state, framed as a 10-year reform
programmeasadvisedbytheNESC.Subsequentagreementsofthe1990swere
merelysubsetsofthisoveralldecade-longframework.Thisagainillustratesthe
formativequalityofthepolicychoicesofthe1987-91period.14
Ireland’ssocialpartnershipincomparativeanalyses
StudiesofIrishsocialpartnershipoftenanalyseitintheframeworkoftrends
in European systems of state/capital/labour industrial relations and economic
policy coordination, commonly referred to as “neo-corporatism”. While such
systems had their origins in the command economies of WorldWar One and
evenoldercorporatisttraditions,theyaremostlyexaminedintheirroleduring
theso-called“Keynesianconsensus”of1945-75,a“goldenage”ofunprecedented
economic growth, cooperation andwelfare expansion. The Irish system is also
sometimes compared with howmany of these systemsmutated as they were
down-graded,oragainrevived,reconfiguredas“competitivecorporatism”,inthe
economicallylessoptimisticperiod1993-2005.Butinsuchparadigms,thevery
initiation of Irish social partnership represents an outlier, in that it occurred
preciselybetweenthese two“classic”periodsofEuropeancorporatistsystems.
The same applies to the Irish pattern of economic performance,which during
theseperiodsrandirectlycountertothatoftheusualcomparatorcountries.15
During the Keynesian era, different models of neo-corporatism evolved in
differentstatesandgroupsofstatesalongaspectrumofwhatiscalled“varieties
of capitalism”, the variations determined by differing economic structures and
theirendogenouspolitico-culturalandeconomic-institutional traditions.By the
1980s, party political exchange in most states determined much of the
redistributive dynamic, with corporatist systems – increasingly commonly14 Keyroleof“TFP”factors,KleinandVentura201915 OnWW1commandeconomiesandstate/industry/labourcoordination,e.g.fortheBritish“Whitley
system”,ILO1973,andGermany,Feldman1966.Forliteratureon“neo-corporatism”,McGinley1998;onrevived“competitive-corporatist”pactsofthe1990s,Ebbinghaus2002,EbbinghausandManow2004,GroteandSchmitter1999,DonagheyandTeague2005,BaccaroandSimoni2008,Avdagic,RhodesandVisser2011,Compston2003,andNataliandPochet2009;on“competitivecorporatism”alsoRhodes2001,Hemerijck2013,Kirby/Murphy2011
23
referred to as “social partnership” - largely confined to wage determination,
industrialrelations,andlabourmarketandsocialsecuritypolicy.16
The Irish social partnership system established from 1987 combined both
redistributiveandcompetitivepolicyelementsandentailedafargreaterpolicy
range than comparable contemporary European systems, encompassing
monetarystrategyandEUintegration, industrialpolicyand industrialrelations
reform, tax policy, welfare state configuration, liberal-social reform and a
transformation of local development structures. In its pre-determining of
Programmes forGovernment itwasevenaccusedby itsdetractorsofusurping
parliamentarydemocracy.Thepower-sharingelementof itentailedseniorcivil
servantsandotherstateofficials,forthefirsttimeinthestate’shistory,havingto
answertoandcollaboratewiththeinterestcoalition.Itsestablishmentin1987
thus representedbyanystandardamajor institutional innovationandhistoric
departure,intermsbothofdomesticpolicyandcomparableEuropeanpractice.
Social Partnership presents something of a puzzle for historians, political
scientists and political economists alike, in that it was counter-intuitive at a
number of levels: it was instituted with only a minimal prior history of
corporatist governance, by an ostensibly “centre-right” government, while
corporatistarrangementselsewherewerebuilton long-standingtraditionsand
wereinitiatedmostlybyandidentifiedwiththepolitical left; itwasintroduced
as corporatism was being discarded elsewhere across the OECD; it combined
monetaristadjustmentwitharedistributivestrategy,acombinationconsidered
contradictory; and it remained highly contested asmuch in the party political
sphere, thecivil serviceandgeneralexperteconomicopinionasbysubstantial
minorities within the interest organisations themselves. Despite its unifying
elementasastrategyforconsensuspolicydevelopment,apoliticalconsensuson
it as anew system for socio-economic governmentwould continue to elude it.
The conclusions invariably drawn in comparative studies is that the
“exceptionalist” domestic political factors shaping or impeding Irish social
16 Hall1997;Lehmbruch1984;HallandSoskice2003;HallandGingerich2009
24
partnership, and characterising its divergence from European “norms”, rather
thanitscompatibilitywiththem,arewhatrequireelucidation.17
As the formative period of Irish social partnership presents such an
asymmetric pattern to contemporary developments elsewhere, a comparative
study based on partnership “norms” could not but fail to identify meaningful
events determining it. In identifying the ideational development, relationship-
building,agency/structuredynamicandpoliticalconflictthatshapedit,thiscase
study therefore adopts a deep-description narrative-historical approach. This
allowsthelinearprocessesofcauseandeffectandthecausalchainsexplaining
the institutional innovation of 1987-91 to be traced, and the agency/structure
interactionsshapingthe1987-91institutionaloutcomestobeidentified.18
Later periods of Irish social partnership, after it had achieved institutional
equilibrium,arecertainlyamenabletostudyinaframeworkbasedonthenorms
ofotherestablishedsystems.Butthatseemsaninappropriateframeworkforits
formative period in 1987-91, onwhich this study focuses. Future comparative
studies might usefully compare this formative period with similar formative
rather thanequilibriumperiodsofcomparablesystems,suchasearlypost-war
Denmark or Austria, or West Germany in 1949-54, when a unique political
departure, combinedwith the dramatic contingent events of theMarshal Plan
andtheKoreanWar,similarlyframedaradicalsocialpartnershipinitiativefew
woulddisputewasakeyelementinGermany’ssubsequent“economicmiracle”.
Otherliterature
Many studies of the dynamics of the Irish partnership “model” focus on its
later period as a “hybrid”, “advocacy coalition” or “networked” policy system.
Many examine particular aspects, such as unions or industrial relations, the
autonomyoftheeconomy,thewage/taxbargainingformula,theroleofthethird
sector,oritsinstitutionalweaknessasapolicyvehicleinthe2008crisis.Evenas
it was being instituted in 1987, informed opinionwas highly sceptical. Niamh
Hardiman, a respected and sympathetic analyst, was just one of many who
17 BaccaroandLim2007;onIrelandasaEuropeancorporatist“outlier”,alsoBacarroandSimoni2008and
Carey2007;onIrish“exceptionalism”,Mjøset1992,Breen,HannanandRottman199018 On“thickdescription”historicalcasestudiesandcausal-processobservations,Box-Steffensmeier2008,
Gerring2006,Clifford,G.1973;Mahoney2010,BennettandElman2006
25
doubtedthatIrelandhadthe institutionalprerequisites for it tosucceed.There
arefewstudiesofthepoliticsbehinditsformation,onlyonepartial,journalistic
historyofithaseverappeared,andthemotivationofthosewhoconceiveditor
the strategies thatunderlay it are seldomexamined.There is also a consensus
that itappearedin1987asacrisisstrategyinresponsetoanimmediatedebt/
unemployment problem, or, less benignly, as a cynical stratagem to exploit a
crisis“opportunistically”forpoliticalgain,viewsthisthesischallenges.19
Butinmostanalysesfromwhateverperspective,Irishsocialpartnershiphas
tendedtobestrippedofitsideationalhistoryandidentity.Somegosofarasto
dismissitasmerelyalocalexpressionofadominantpolicyapproachatEClevel,
evenDavidBegg,aleadingunionfigure,concludingthatitwas“notacoincidence
that it followed hot on the heels of Delors’ 1986 institutionalising of social
dialogue as part of the Single Market construct”.But this thesis contests this,
arguing that partnership was primarily a product of domestic politics and a
political project which, although influenced by events elsewhere, preceded
Delors’ initiatives which of themselves were limited in their achievement and
influence. Itwas for this very reason of an absence of “models” to follow that
Irishpartnershipassumedaformanddynamicuniquetoit.20
InfluentialeconomicstudiesoftheIrisheconomictake-offalreadyreferredto
makelittleornoreferenceatalltosocialpartnership,oronlytodismissitasa
coincidental,peripheralor inconsequentialoccurrence.Theyequallyrefer little
to any role of political agency in engineering the turnaround, in particular
avoidingattributinganypositiveroleinittoHaughey,althoughasTaoiseachhe
presidedoverwhat this thesis identifiesas thecriticalperiodofpolicychange.
ThedestructionofHaughey’sprevious reputationas a giftedandablepolitical
innovatorinthequasi-judicialtribunalsof1996-2006enabledthisdepoliticised
19Oninstitutionalinnovation,O’Donnell2001,Hardiman2002,2006,ÓRiain2004;“thirdsector”,Kirby
2002,Adshead2011;onlaterinstitutionalweaknesses,AvellanedaandHardiman2010;“prerequisitestosucceed”,Hardimann1988;Apartfromtheoreticalstudies,theonlyactualhistoryofsocialpartnershiptoappearisthejournalistictreatmentbyHastingsetal.2007.Onthe1986debtcrisisprecipitatingpartnership,interaliaRegan2012.Onthe1987partnershipagreementasan“opportunistic”politicalmanoeuvre,Roche2009.
20Begg2014
26
framing of the Irish economic “miracle” to persist into later studies, which
remainweddedtofunctionalistinterpretations.21
Evenwhere political agency is allowed for, it sometimes assumes a formof
near caricature. A 2009 study by leading industrial relations scholar, William
Roche, dismissedHaugheyas a “political adventurer”who in1987, “more as a
political opportunist than a monetarist or corporatist visionary”, adopted
monetaryadjustmentonlybecauseexperteconomistspressedtheneedforiton
him,and“embraced”socialpartnershipbecauseaseniorcivilservanturgedhim
todo soas ameans toquiet theunions.This thesis challenges thisdismissive,
indeedcontemptuous,viewofHaughey’srole.22
The fact is that Haughey staked his political reputation and career on
achievinganeconomicturnaroundframedbyasocialpartnershipsystem.This
was an extremely high-risk political strategy, as the dramatic processes of
ratifyingthePNRbythepartnerorganisationsin1987demonstrated.Following
nearly a year of intense political exchange, the PNR barely survived these
multiplechallenges.Ifevenone“partner”hadwithdrawn,asseveralnearlydid,
the strategy would have collapsed, fatally undermining Haughey politically.
Haughey benefitted from the acquiescence of the political opposition to his
monetary adjustment, but that accommodation did not extend to his social
partnership initiative, which they, including the Labour Party, vociferously
rejected. Haughey’s high-cost pursuit of a partnership agreement – while
alternativestrategieswereconstantlyurgedonhim–isthusaclassicpuzzle,but
atleastitclearlyestablisheshowforhimtheeconomicstrategyandpartnership
structureshewasdeterminedtoestablishformedanindivisiblewhole.
Misinterpretation of the origins of social partnership is compounded by
misinterpretationsastoitspurpose.Contemporarypoliticianswholaudedit,or
wereinvolvedinitsdevelopment,werewonttopraiseitratherpatronisinglyfor
having delivered “social peace”, thus contributing something to economic
success. This has misled analysts to over-emphasise its purely industrial
relationsaspectas theproblem itwasaddressing.Somewhohaveapproached
21Kennedy,K.1991;FrankBarryed.1999;Nolan,O'Connell,andWhelan,eds.2000;FitzGerald,J.1999
and2000;Sweeney,P.1999;Hardiman2000;Honohan1999;Kirby200222 Roche2009:194-5
27
partnershipfromacriticaltheoryaspectadditionallyseeitasamereconforming
toglobal“neo-liberal”capitalismcamouflagedwithaveneerofanillusorysocial
democracy.EventhenuancedstudybyAidanReganpostulatesitasprimarilyan
adaptation toglobalisation, althoughhe then reaches somesimilar conclusions
to this thesis.Thesenotably include identifying the centralisingof government
power in the Department of the Taoiseach under Haughey to achieve it, and
elevatingthepartnershippolicybody,theNESC,asamechanismforformulating
solutions to dysfunctionalities of the Irish electoral system and the “silo”-
structurednatureofpublicpolicy-making.23
An important corrective to apolitical analyses is provided by Baccaro and
Simoni,whoestablishthatcorporatistsystems–includingIreland’s-cannot
“simplybeascribedtotheindustrialrelationssystem,but[are]aneminently
political phenomenon that needs to be framed against the backdrop of the
structuralandstrategicconfigurationofthepoliticalsystem...Approachingit
throughtheprismofstructuralinterestgrouporindustrialrelationstheories,
ashasoftenbeendone,mayimplymissingmostoftheaction.”24
This thesis argues that Irish social partnershipwas conceived as a solution
neithertoindustrialrelationsnorimmediateeconomicproblems,butratherthat
thewindowofopportunitytheseproblemspresentedwasusedtoimplementa
long-developedstrategy toaddressadeepercompoundproblem, thatof socio-
economic“underdevelopment”,ofwhichrepeatedcriseswereonlysymptoms.In
thisitwasahighlypoliticalproject,engineeredbyapoliticalallianceratherthan
aconfluenceofinterestgroupsengagedinsimple“collectivebargaining”.
RocheandHardiman,amongothers,admittoasignificantpre-history,butare
handicappedbyafocusonindustrialrelationsandinterestgrouppressures.This
thesisarguesthatthe1987partnershipformulahaddevelopedinthemindsof
key actors over several decades. Many involved in 1987 had experienced
Haughey’s initial attempt at such a departure in 1969-70, which had been
derailedbythe“armscrisis”,itselfaneventrevealingtheasymmetricimpactthe
Northern conflict henceforth exercised on many aspects of Irish politics,
including social partnership. But the key question that remains is why, if the
23 Kirby2009,2010;KirbyandMurphy2011;Allen,K.1997,2000;Regan201224 BaccaroandSimoni2006:19
28
1987 socio-economic formula, including its partnership aspect, proved
successful in resolving a widely accepted underlying problem of
underdevelopment,didittakesolongtogainpoliticalacceptance?25
Theideationalaspectofsocialpartnershipandtheroleofpoliticalagencyin
initiating it at a pivotal moment of crisis are of central importance. A central
contention of this thesis is that its specific goals, which gave it its common
purpose, were to overcome structural underdevelopment through a sustained
industrial strategy, an expansive and transformedwelfare state,monetary and
political convergencewith the core EU integrationist powers, and an on-going
processof liberal-social reform.Theseaimswereoftensuccinctlyexpressedas
the achievement of both “full employment” and “average European” levels of
developmentandstandardsofliving.Irelandshouldbecomea“successfulsmall
open European economy” like others. Each partnership agreement reiterated
theseprimarygoals,recordinghowmuchcloserIrelandhadcometoachieving
themunderthepreviousone.Someastuteanalystshavedescribeditscoredeal
onpay and tax as the “glue” of the system.But this thesiswould contend that
while the pay/tax/welfare aspect was important in the political exchange of
socialpartnership,itsreal“glue”wasthatbroadercommonpoliticalaimuniting
itsplayers.Thoughbeyondtheboundsofthisstudy,itcanbeobservedthatonce
the coreproblem– “underdevelopment” – hadbeen resolved and “averageEU
standards”notonlyachievedbutsurpassed,i.e.after2002,partnershipbeganto
becomeincoherentasitscommonpurposewaslost.26
25 Roche2009;Hardiman200126 “averageEuropeanlevels”,NESC1986,1990,1992;“eachpartnershipagreement”,Governmentof
Ireland,1987-1998;pay/tax“glue”,O’Donnell,R.andThomas1998
29
Part1
Leaps,BoundsandReversals,1945-86
30
Chapter2Thequestforsocio-economicorganisation,1945-70
Irishpoliticsandeconomicinterestsbefore1945
The“exceptionalism”ofIreland’ssocialpartnershipsysteminEuropeanterms
arisesinpartfromthedistinctiverelationshipbetweenpartypoliticsandinterest
organisations. This party/interest relationship differed from then mainstream
WestEuropean left/rightpatternsandwasalsodistinct in that therelationship
tookshapeinitsessentialfeaturesevenbeforetheestablishmentofthestate.An
extensive literature has appeared seeking to account for these party/interest
relationsandtheconsequentpartypoliticaldynamicinIreland.1
TheIrishParliamentaryParty(IPP),focusedontheprimaryHomeRuleissue,
combiningdiverseinterestsacrossaleft/rightspectrum,asdidtherivalUnionist
Party,withparticularMPsandfactionsidentifiedwith“conservative”or“liberal”
approachestoland,housing,business,socialorlabourpolicy.TheUnionistParty
predominated in the North East and the IPP elsewhere. No unified, cohesive
bourgeoispartyemergedintheareaofIPPdominance,astherelativelysmallbut
politicallypowerfulbanking, large-farmingandbig-businesselitesweremostly
unionist and remained aloof from it, while rising Catholic business, farming,
trading,professionaland labourgroups formed itsbackbone.The landreforms
andmodernisation/democratisation of the 1890s Balfour era created a small-
propertyowningdemocracy,with the introductionofelected localgovernment
generatinginterestorganisationsthatwouldlatershapetheFreeState.
AnevolutionofthefactionswithintheHomeRuleandUnionistblocksintoa
conservative/liberal or conservative/labour party divide, asmany expected to
followHomeRule,failedtomaterialise,apartfrominareasofMunsterin1910-
14, as the Home Rule Crisis, partition and the Great War saw Unionism
consolidateintheNorthandledtotheeclipseelsewhereoftheIPPbySinnFéin1 Amongthemostnotable,inalargeliterature,beingMair1979,1992;Chubb1982;McGrawand
O’Malley2018;Dunphy1995;Puirséil2007,2018;Gallagher1985;GallagherandMarsh2004;GirvinandMurphy2005;Murphy,G.,2009
31
onwhattheLordLieutenantidentifiedin1917asthe“singularlyfrankissueof
self-GovernmentwithintheEmpireversusanIndependentIrishRepublic”.2
SinnFéin itselfsplit in1922overtheTreatyandbecameseparateparties in
theensuingconflict.Thesplithadlittlesocio-economiccontent,againbeingona
“singularlyfrankissue”,ofDominionHomeRuleora“sovereignRepublic”.Anti-
TreatyRepublicanismpredominatedwhereSinnFéinhadbeenstrongest.Butin
the course of the Treatywar, the party division increasingly assumed a socio-
economicform.AswellastheIRBelementoftheIRAloyaltoCollins,formerIPP
“notable”circles,thechurches,andbusinessandunionistinterestsralliedtothe
Treatyparty,CumannnanGaedhal,asaforcefororderor lesseroftwo“evils”.
The Catholic Church declared the Free State the “constitutionally established
authority” and excommunicated Republicans, while southern Unionists
supported it as preventing “anarchy” and theTreaty as at least enabling them
“remainBritons”.3
FollowingtheRepublicandefeat,CumannnanGaedhalconsolidated itsbase,
restoringpre-conflictjudicialandotherinstitutionswhilecleavingtoorthodoxy
onsocialandeconomicquestions.ItmovedfromCollins’sviewoftheTreatyasa
temporary “stepping stone” toO’Higgins’ viewof it as a settled framework for
sovereignty.Apartfromsomelandreformandindustrialinterventionmeasures,
notablytheESB,itdefendedtheexistingsocio-economicorder.Republicans,on
the other hand, sought the replacement of the “Treaty State” by a Republic,
appealing to small-holders, the “landless”, potential entrepreneurs and urban
workers with an alternative “Republican” platform of state interventionism,
protectionist industrialisation and land, labour and welfare reform. A party
divideemerged,oforthodoxyversussocio-economicradicalism.Whileimpatient
radicals on the Fianna Fáil side tended to defect to the left, to the Republican
Congress,ClannnaPoblachta,theIRAorevencommunism,defectionsfromFine
Gaeltendedtobetotheright,toauthoritarianparamilitarismandevenfascism.4
To contend that Irish politicswas dominated thereafter by two “competing
versionsofnationalism”withan“absence”of“classpolitics”isthusagrossover-
2 Wimbourne’sreporttoCabinet,14/07/17,inMacLysaght19783 “remainBritons”,ChurchofIrelandGazette09/12/214 Regan,J.1999;O’Connor,E.2004;Manning,M.1970
32
simplification,areductioadabsurdumofgovernmentssinceindependenceasan
illusory,non-ideologicalalternationbetween“tweedledumandtweedledee”.The
realitywasaclearsocio-economicdivisionwhich, ifnotalongstraight-forward
left/rightlines,representedrivalconstitutional/socio-economiccombinations.5
Interest groups developed alongside this party reconfiguration. Business,
professionalandindustrialinterestshadconsolidatedorganisationallysincethe
1890s in their modern form, in chambers of commerce, employer federations
andprofessionalassociations.GiventhedivisioninsuchcirclesoverHomeRule,
they remained largely neutral during 1919-21 conflict, though tending to a
conservativeunionism.Theirsubstantialbase,nevertheless,wasreflectedinthe
support of up to twenty per cent achieved by “ratepayer” and “independent”
candidates in the 1920 urban district elections against the 80 per cent
nationalist/republican block. In 1922 and 1927, ratepayer and farmers’ party
candidateswonmoreseatsthanLabour,thoughwerelaterabsorbedbyCumann
nanGaedhalinresponsetotheperceived“communist”threatofFiannaFáil.
TheconservativenatureofCumannnanGaedhal–andFineGaelintowhichit
later evolved –was due to its dominance by these strands,whether ex-IPP or
unionist.ButitsFenian-RepublicanoriginsintheIRBandsupportamongGreat
War and Civil War-era National Army veterans limited its purely bourgeois
character.While generally hostile to unions – employing brute force to break
themontheShannonSchemeinthe1920s-CumannnanGaedhalingovernment
nevertheless accepted and negotiated with unions in the pubic services,
developedarbitrationsystems forresolvingdisputesandeven legalisedaright
tostrike inthepostofficewhenthiswasstilloutlawedinBritain.ThoughFine
Gaelwouldneverhavemorethanamarginalpresenceintheunions,itretained
theloyaltyofanotinsignificantworkingclassfollowing.
Formaltradeunionismin itsmodernsensealsotookshapeinIrelandinthe
late19thcentury,initsBritishform,andwithinaBritishparentstructure,though
confinedtolargertownsandcities,especiallyBelfast,ortonetworkssuchasthe
railways, at a time when urban Ireland accounted for less than a fifth of the
population. The historical attention trade unionism attracts exaggerates its5 “competingnationalisms”,Breenetal1990,Ferriter2005,Begg2016;“tweedledum/tweedledee”,recent
IrishTimescommentariesbyFerriterandO’Toole
33
significanceatthetime.The1913Dublinconflictshockedpublicopinion,which,
outsidetheNorthEast,hadhithertoregarded“classconflict”asaminoraspectof
politicallife,especiallycomparedtothelandstruggles.
General, or so-called “unskilled”, labour only organised after 1900 again
largelythroughBritishunionsuntiltheemergencein1909oftheinitiallysmall
but militant Irish Transport & GeneralWorkers Union (ITGWU), which broke
from the British-oriented structure on a nationalist basis. The largest labour
organisation in nationalist Ireland was in fact outside the formal trade union
fold. This was the Land and Labour Association (LLA) which, beginning in
Munster andwith links to both left-wing IPP circles and Fenianism, organised
agriculturalandotherlabourersinruralIreland–thelargestcomponentofthe
working class – to agitate for housing, direct council employment andplots of
landforself-sufficiencytosurvivetimesofunder-employment.From1914,and
particularly during1919-21, the ITGWUwas transformed as it absorbed these
local groups, expanding from a hitherto urban force of about 15,000 into a
nationalandpredominantlyrepublicanruraloneofover120,000.6
ITGWUmemberswereprominentinthe1916Risingandtheensuingconflict,
providingmanyleadingSinnFéinandRepublicanLabouractivistsandlaterIRA
volunteers. Its influencewasapparent in the labour-friendlyprogrammeof the
FirstDáil–laterdisparagedbyO’Higgins-andintheundergroundDepartment
ofLabourwhich,withConstanceMarkieviczasMinister,ranindustrialcourtsto
resolvedisputesandoverseeofficialrecognitionofunionsand“directlabour”in
republicanlocalauthorities. ITGWUleaderWilliamO’Briendescribedhisunion
as “the industrial wing of the national movement”. In addition, IRB activists,
commanded by Collins, organised the separation of craft and public service
unionsfromBritishparentassociations.Thehithertostaidall-islandIrishTrade
UnionCongress(ITUC),whichwassimultaneouslytheLabourParty,experienced
theriseofthisrepublicanlabourmovementasaninstitutionalusurpation.7
TheITGWU’sRepublicanismdifferedbothfrommainstreamSinnFéinandthe
ITUC in espousing James Connolly’s “Workers’ Republic”, i.e. a republic in the
SinnFéinsense,butwithsocialistinstitutions.Itsupportedandhelpedbuildthe6 Bradley1988;O’Connor,E.2011;Lane1993;Devine20177 Onlabourinthenationalstruggle,Codyetal.1986;O’Brien,W.1969;Yeates2008,2014,Mitchell1974
34
LabourPartyasavehicleforthis,butinbothpartyandITUCoftenclashedwith
the more British-socialist oriented majority outlook. An added division in the
1920s was theWorkers Union (WUI), founded by Jim Larkin as a communist
breakawayandtemporarilydisplacingtheITGWUinDublin,.Tensionsbetween
unions shaped by British traditions and republican unions such the ITGWU
formedaconstant fault-linethatwouldcontinuetocharacterise themovement
downtothesocialpartnershipera.8
The Labour Party was established by the ITUC in 1912 to represent the
“labour interest” both in local government and in the anticipated Home Rule
parliament. But the extent of labour movement involvement with Sinn Féin
limited its scopewhile partition,which removed itsmajorNorthern industrial
base,furtherhandicappedit.Itstruggledtoestablishitselfagainstrepublicanism
as the country’s specifically “social democratic” strand. Occasionally, as on an
“anti-militarist”platformduringtheCivilWar, itwouldenjoywhatwould later
becalleda“SpringTide”inprotestatthemisdeedsofthetwomainparties,but
suchpeakslackedanorganisationalbasisandprovedtransitory.
Nevertheless,aslongasRepublicanswereexcludedfromtheDáil,theCumann
nanGaedhal/Labourdivideassumeda conservative/labour form.Although the
stillabstentionistSinnFéinandthenFiannaFáilassiduouslycultivatedanurban
base,intheJune1927electionLabourincreasedits14seatswonin1923to22.
ButtheillusoryqualityofthisbecameapparentafterFiannaFáilenteredtheDáil
in 1927, restoring a central Republican/neo-Redmondite conflict narrative. In
addition, in a concerted campaign managed by Lemass, Fianna Fáil targeted
Labour’svote,especiallyinDublin,accusingLabourofambiguityonthe“national
question”andurgingtradeunioniststoseeFiannaFáilastheirtruechampions.
LabourrespondedbyattackingFiannaFáilasinsincereinitssocialpoliciesand
ofbeinginan“unholyalliance”with“thecommunists”.Italsorefusedacoalition
offerfromdeValeraandwouldwatchfromtheside-linesasheconsolidatedhis
governmentinpartonthebasisofLabour-typepolicies.9
8 O’Connor,E.20159 IngeneralDunphy1995,Puirséil2007;Lemasscampaign,‘IrishLabourPartyStandsforImperialism’,The
Nation02/04/27and,ontradeunionists,‘ANewPoliticalParty?’TheNation,03/08/29;Labourresponse,“unholyalliance”and“CommunistsandFiannaFáilCombine’,TheIrishman12/04/30
35
Protectionisminthe1930swonforFiannaFáilanenduringbaseamongnew
industrialists. A new managerial and entrepreneurial class emerging in the
protectedprivate and state industries led to the founding of the Federation of
IrishManufacturers(FIM),whichdevelopedacloserelationshipwiththeState.
The simultaneous expansion of welfare, public housing and industrial
employmentquicklyalsoconsolidatedtheparty’sworkingclassbase.
FiannaFáil’sworkingclass supportwouldproveconditional andvolatile, as
whenin1943,thelate1940sandagaininthe1980s,asignificantproportionof
it,discontentedwithgovernmentsocialpolicy,switchedintemporaryprotestto
Labour or left-republican parties. Fianna Fáil therefore cultivated its relations
withtherepublicanwingofthetradeunions.Inthe1930s,withITGWUsupport,
itconsideredlegislatingtoendBritish-basedunions,thoughdecidedagainstthis
to avoid sparking a Dublin working class revolt and also for wider political
reasons. Lemass compromised, licensing such unions once they credibly
separatedouttheir“Irishregions”withlocalheadquartersandleaderships.10
Trade unions enjoyed a significant revival in the de Valera period, growing
fromalowof60,000ITUC-affiliatedmembersin1929–thoughthatnumberis
likely exaggerated - toover110,000by1944.By1960,320,000workerswere
organised, or55per centof theemployedworkforce, a ratehighbyEuropean
standards.Themovementretained its incongruous32-countystructureaswell
asincluding“British-based”unionsintheRepublic,andsplit in1944alongthis
British/Irish, Labour/Nationalist fault-line into the ITUC and CIU (Congress of
IrishUnions).TheITUCretainedmost“Irishregions”ofBritishunionsandsmall,
sectionalandcraftunions,aswellasLarkin’sWUI,whiletheCIUcomprisedthe
ITGWU and nationalist-oriented groups. This division would continue in
subduedbutpersistentformwithinthere-unifiedICTU,formedin1959.11
Theorganisationsofbusinessandemployers–animportantdistinction–also
changedunder protectionism.Different strands of business remained separate
until the 1970s. While elite commercial circles, still largely Anglo-Irish,
continuedtorelatecloselytosimilarBritishcircles,manufacturingdevelopeda10 OnFFandLabour,Dunphy1995,Púirséal2018;on“Britishunions”conflict,McCarthy,C.197711 Membership,Nevined.1994:372-73;“exaggerated”–againstITGWU’s“official”20,000membersin
1931,itsleaderWilliamO’Brienrecordedanactual12,677inhisdiary–Morrisey2007:278;“Britishunions”conflict,McCarthy,C.1977:118-34;229-90
36
dependencyonthestate.TheFIM,anationallyorientedgroupformedto lobby
the Department of Industry and Commerce for licenses and protectionist
advantage,aroseasaprimarylobbyanditscloserelationshipwithgovernment
would endure. Employers, organised separately as employers in response to
union pressures, tended to associate more with Fine Gael. In the absence of
national-level industrial relations institutions, numerous industry-specific
employergroupsformedtodealwiththerevivingunions,thelargestinsectors
such as provisioning,manufacturing and construction. These disparate groups
coalescedintheFederatedUnionofEmployers(FUE)from1942.12
The de Valera governments, through Lemass, conferred regularlywith both
industrialistandunion interestsandestablishedanumberof jointstatebodies
with them. Fianna Fáil confronted union power only oncewhen, under tightly
disciplinedwartimeconditions,itfacedarevoltofDublinlabouroveritswages
“standstill”orderof1941.Thiscostitdearlyinthe1943election,alessonwell
learnedandnot repeated.Lemass is reported tohavequippedat the time that
Labour,infailingtocapitaliseontherevolt,hadmissedamajoropportunity.13
Fitsandstarts:“tripartitism”1945-56
Witheconomicdirigisme,thewelfarestateandtripartitismderigeurinAllied
statesandtheirplanningforpost-warEurope,deValeraandLemassdiscusseda
similarcourseforIreland.Evenbeforethewar,theyhadtakenakeeninterestin
“tripartitism” as initiatedby IrishmanEdwardPhelan at the ILO inGeneva, an
institutionwithwhichIrishgovernmentsengagedfromitsfoundation.Whenthe
BeveridgePlan–theblueprintforthepost-warBritishwelfarestate-appeared
in 1942, Irish government circles studied itwith a view to a similar initiative.
Allied plans for a stimulus programme to rebuild a shattered Europe – the
EuropeanRecoveryProgramme(ERP)–combinedaspectsoftheAmerican“New
Deal”,BritishwartimeindustrialplanningandEuropean“corporatist”traditions,
in part, as with the ILO, to counter the attractions of Soviet communism. De
Valera’s alleged “isolationism”hasbeenmuchexaggerated, ashehadbeen the
12 Onuniondevelopment,McCarthyC.1977,andbusiness/employersChubb1992,Hardiman198813 OnFiannaFáilandbusiness/labourinterests,Murphy,G.2005,2009andEvans2011:207;Lemass
quotedinMcCarthy,C.1977:246
37
leadingadvocateofcollectivesecurityintheLeagueofNationsasPresidentofits
General Assembly. It was the League’s refusal, at great power insistence and
against his urgings, to intervene against Japanese and Italian aggression that
determinedhimtoensureIrishneutralityinthe1939war.BeforeWW2ended,
he again orientated Irish policy to connect with the new post-war order,
preparingtoapplyformembershipoftheUNdespitedistrustingitsgreat-power
domination. The government also sought engagement with the ERP, Lemass
urgingthat“wemakecertainweparticipate[init]whenitcomes”.14
Lemass endorsed the tripartite aspect of ERP as an institutional departure
Irelandshouldembrace,tellingtheITUCin1945,beforeitsplit,the“increasingly
importantpart”hesawunionsplayingin“nationallife”in“ademocraticstate”,
“notmerelyasaguardianoftheworkers’interests,butasanessentialpartof
themachineryofindustrialorganisation,acceptingtheresponsibilitieswhich
relate to its real power, and proceeding from the stage of negotiating
particularagreementswithprivateemployersto…formulatingandcarrying
intoeffectageneralpolicyforthefurtheranceofthelong-terminterestsofthe
workersasaclass”.15
TripartitismwasnotforeigntoIrishindustrialpractice,withinheritedwage-
setting structures surviving since the 1920s through a government labour
inspectorate,wagesboardsinsomeindustriesandthearbitrationsysteminthe
public service, but Lemass, who initiated Ireland’s ERP application, also
embraced its tripartite agenda. He viewed his 1946 Industrial Relations Act
establishing the Labour Court as just the first stage towards such a system. A
leading left-wing tradeunionist called it the “most revolutionarydeparture” in
Irishindustrialrelationshistory,asitwasnotjustacourttoresolvedisputes,but
established“JointLabourCommittees”(JLCs)ofemployerandunionnominees,
with an “independent” chair, to set wages across sectors, legally enforceable
through “Employment Regulation Orders” (EROs). Lemass had envisaged
statutorypowersfortheCourtitself,but,apartfromtheEROs,thiswasopposed
bybothbusinessandunions jealoustodefend“voluntarist”bargainingandthe14 OnLemassandPhelan,prefaceandintroductiontoILO2019;onIrishstateandBeveridge,Carey2007,
McCashin2004;politicalstrategyofERP,Angster1999;deValeraandneutrality,McCullagh2018;deValeraandUN/BrettonWoods,DorrN.2010;LemassquoteinGarvin2004:85
15 McCarthy,C.1977:572
38
unions intentonensuringan “abstentionof the law”,which,with considerable
justification,theyregardedasinherentlyclass-biased.16
Lemass proposed incorporating price-and-incomes setting, economic policy
making and “JointDevelopment Councils” in industry, using the price surge of
the post-war imports boom and revival of wage bargaining following the
removal of wartime controls to initiate national talks on wage/price
management.This ledtothefirstevernationalagreementonbroad“Principles
tobeObservedintheNegotiationsfortheAdjustmentofWages”.Oncivilservice
advice, the initial 1948 application to ERP made no reference to a tripartite
approach,butwhentheunionsprotestedLemassincorporatedthem.17
UndertheInter-Partygovernmentthisnascenttripartitewage/policysystem
lapsed, only the Labour Court and the ERP involvement surviving. Fine Gael,
whosedalliancewith“corporatism”inthe1930shadbeensolelywithitsfascist
form, was hostile to union involvement in policy as an intrusion into state
authority.Labour,despitemanyof itsTDsbeingunionofficials,hadbroken its
formal link with ITUC in 1930 specifically to escape “union control” and was
equallyunenthusedbytripartitism,focusingingovernmentonexpandingsocial
provision.The ITGWU-linked“NationalLabour”TDs,whohadbroken fromthe
LabourPartyin1944,alsodidnotrevivetheidea,beinghostiletotheITUCand
preferringareturntoFiannaFáilgovernment.Governmentdidhoweveractona
proposalfromITUCleaderandLabourTDJimLarkinjnr.,tofoundtheIDA.18
Despite the Inter-Party government’s disinterest, Larkin, son of the 1913
Lock-out leader, promoted tripartitism as a central ITUC strategy. A former
communist, he was unusually well versed in the debates of the international
labourmovementandin1949usedhisspeechasITUCPresidenttoadvocatean
economy-widetripartitesystem.Heurgedthatunionsmovebeyondtraditional
bargaining to negotiated “productivity”-driven industrial expansion and
managed incomes growth within the parameters of a planned economy,
16 “radicaldeparture”inInt.JohnSwift;conflictoverLabourCourt,CIUCentralCouncilmtgs.,24.09-
26.11.48,NAI:CIUandCIUAC1946;“abstentionofthelaw”Hardiman1984:8417 Lemassplans,Hardiman1988:45,Girvin1994:123;“import-drivenboom”FitzGerald1968:7-8;
‘PrinciplestobeObserved…’,D/I&C1948;“permanentinstitution”O’Brien,J.1981:9;incorporationofunions,CIUNCmtgs.24.09-26.11.48,NAI:CIU
18 Labour/ITUCseparation1930,constituencyfocus,and;“NationalLabour”,Mitchell1974,Puirséal2007andMcCarthy,C.1977;LarkinandIDA,O’Riordan2001
39
participationincompanymanagement,andtripartitenationaleconomicpolicy-
settingtodriveagrowth-orientedeconomytoprovidehigherqualityworkand
wages. He proposed that the ITUC adopt a strategy on wages based on a
resources/expenditure/productivity formula, anticipating the later central idea
of social partnership, and defended Irish involvement in the ERP against left-
wingcriticsasa“developmentofcollectiveeffortcompletelycontrarytothevery
basisofcapitalism”.Hisideasformedthestrategicperspectiveofthemovement
for those leadership circles that thought beyond immediate wage conflict, his
speech,unusually,beingpublishedandwidelydisseminatedinthemovementas
anauthoritativestatementofunionstrategy.19
There was otherwise considerable policy continuity between governments.
The Inter-Party government was no less internationalist than its Fianna Fáil
predecessor, joining the Council of Europe, where Seán MacBride was
instrumental in shaping theConventiononHumanRights, andalso considered
NATOmembership. It participated in ERP,which, through theOEEC, drove an
upgrading of national industrial planning, though given the innovations of the
1930s-40s period Bielenberg’s contention that this represented “in some
respects … the first exercise by an Irish government in economic planning”,
seems exaggerated. De Valera returned to power in 1951, and throughout the
early 1950s the ERP brought government officials, employers and workers
togetherwithAmericanandEuropeancounterparts throughexchangevisitsas
well as industrialmodernisation projects at home, which saw the founding of
someenduringtripartitebodiessuchastheIPA,IPCandIIRS.20
De Valera also revived Fianna Fáil’s tripartite plans, encouraging Lemass
against conservative opponents in cabinet to seek an “Agreement on Wages
Policy”for1952-54,whichsetparametersforwagebargainingratherthanactual
wage rates, and in reviving Lemass’s 1947 proposals for sectoral Industrial
Councils.ButtheseinitiativespredictablylapsedwhenFiannaFáillostpowerto
19 “YoungJim”,Desmond2009:273-83;speechITUC1949,onimpactO’Riordan200120 MacBrideandECHRandNATO,Keane2007;“firstexercise”,BielenbergandRyan2013:17;
implementationofERP,Murray2009
40
anewInter-PartyGovernmentin1953,whichreturnedtoorthodoxdeflationary
measurestocounterthedeepeningeconomicrecession.21
Lemass’seconomicinstitutionalism1957-63
The road to “opening” the economy is much debated. A “world economy”
hardly existed before the emergence of the OECD, EEC and EFTA in 1957-58,
withtheonlyoptionfor“internationalisation”thepoliticallyunacceptableoneof
re-integrationwiththeBritisheconomy.Europeslowlyre-emergedthroughthe
ERPandKoreanWarboom,andIrishpolicymakersengagedwithboththeOEEC
and OECD, aligning economic policy with their prescriptions. The key dispute
wasnotoverwhetherbuthowtoeffectanopeningtofreetrade.Thiswasgiven
addedurgencybytheseverityoftheIrishdepressionthatfollowedtheEuropean
downturn on the ending of the Korean War, with record unemployment
provokingsocialunrest.Thedeepeningcrisisdidnotcausethechangeofpolicy
direction,butconcentratedmindsonitsurgency.22
In1956thecoalition’s“CapitalInvestmentProgrammeCommittee”proposed
a gradual opening combinedwith supports for export-led industrial expansion
and inward investment. But such ideas remained theoretical as government
wrestled with the monetary and balance-of-payments crisis through
contractionary budgets. Lemass in opposition followed the international
economicdebate,havinghisson-in-law,CharlesHaughey,purchasebooksonit
for him he had seen reviewed in the press. When the EEC/EFTA opportunity
arose in1957/58, itwaspursuedvigorouslybygovernmentwith littledissent
internallyorfromtheopposition.Lemassinhiseconomicplanninginopposition
envisagedtripartitestructures,welcominganindustrialplanproposedbyITUC-
draftedlargelybyLarkinandDonalNevin-whichproposedsuchaframework.23
21 “Agreement…”,D/I&C1952;“resurrect”,Carey2008;“DevelopmentCouncils”CIUCentralCouncilmtg.,
28/03/52,NAI:CIU;22 Onthebalance-of-paymentscrisis,FitzGerald1968:8-9;1950s“discourse”and“keydispute”,McCarthy,
J.1990:40,FitzGerald,G.1968:54-5,Finn2012,Fanning1990,Daly,M.andLitton1997,andBielenbergandRyan2013;on1950ssocialprotests,Kilmurray1987
23 Haugheybooks,McCarthy,John,1990:67;Lemass-uniontalks,PUTUO1956,Desmond2009:273-83;onLarkin/Nevinrole,PUTUOECmtg.14.10.1957,NAI:PUTUO,andMcCarthy,J.F.:69;Lemass’sresponsetounionproposals,PUTUOECmtgs.1956passim;Horgan1997:174
41
On Fianna Fáil’s return to power in 1957 on a programme of industrial
expansion,LemasshadDepartmentofFinance secretaryT.K.Whitakerpublish
his memo, ‘Economic Development’. This synopsised the “open economy”
discourse, though assumed an agriculture-driven growth and contained many
proposalsgovernmentneveraccepted,suchaswithdrawingfrom“unproductive
investment” in areas such as housing and health to fund industrial expansion.
Lemass had government endorse it, though suggested publication under
Whitaker’s name to “get its acceptance over political boundaries”. He
simultaneously again concluded a “Joint Agreement on Guiding Principles
relating toWages Claims and the Present Economic Situation”with employers
andthejointITUC-CIUbody,PUOTO,providingforwagedevelopmentin1957-
59withinanoverallexpenditure/productivityassessmentoftheeconomy.24
CivilserviceplanningfortheProgrammeforEconomicExpansion,launchedby
Lemass asTaoiseach in1959, didnot include interest group involvement. It is
oftenclaimed,bysomewhatsleightofhand,thatWhitakerinitiatedthetripartite
structuresthatfollowed,buthisoriginalmemoforesawonlyanadvisorycouncil
ofofficials,agencyleaders,industrialistsandeconomic“experts”.ItwasLemass,
whohadmaintainedcontactwithunionleadersandencouragedtheformationof
a united ICTU, who sought out their views on structures to accompany the
Second Programme, specifically “the best means of securing the maximum
degree of co-operation between the various interests concerned with the
progressof theNationaleconomy”. ICTUsuggesteda tripartite “nationalpolicy
council”andrevivingthesectoralcouncilshehadproposedinthelate1940s.25
The“CommitteeonIndustrialOrganisation”(CIO)finallyestablishedin1961
to oversee the adaptation of industries in preparation for free trade and EEC
accession was initially composed as advised by Whitaker, without union/
employerinput.ICTUprotestedandLemass,againstcivilserviceadvice,invited
not only ICTU but also the employer body FUE (as distinct from the already
involvedFIM)ontoit. ICTUappointeditsmostseniorofficials, includingLarkin
andITGWUleaderJohnConroy.24state-industrysectoral“AdaptationCouncils”
24 Whitaker1958;“getitsacceptance…”Fanning1990;“JointAgreement”,O’Brien,J.198125 Whitaker/tripartitism,BewandPatterson1982:145(whogivenosourcefortheassertion),Roche2009:
196;Whitaker’sactualproposal,Whitaker1958:III:10;“bestmeans”,LemasstoICTUECmtg.06.07.59
42
were established to report into the now tripartite CIO, with Lemass requiring
them, on ICTU’s proposal, to cooperate with parallel “Trade Union Advisory
Committees” it had established for each sector. With the experience of
cooperation on ERP bodies, and despite the EEC application falling with de
Gaulle’s veto on British accession, the CIO and Adaptation Councils were
retained,largelyprovingeffectiveagentsofindustrialmodernisation.26
Lemass also proposed upgrading wage determination from “guidelines” to
actualpayagreements,establishingan“Employer-LabourConference”(ELC)on
a statutorybasiswithan independent chair as thenegotiating forum,with the
stateparticipatingaspublicsectoremployer.TheELCwasalsotobetaskedwith
negotiating a fundamental industrial relations reform. When the next “wage
round” began in 1963, Lemass made what James O’Brien called “a fairly
sustainedefforttopersuadeCongressand…employerstonegotiateatnational
level” through the ELC, setting wages, as he told the Dáil, “on the basis of an
intelligent understanding… of the national interest rather than procedures of
horse-tradingandstrikes”.27
TheoverallsystemLemassenvisagedwassetoutinaWhitePaper,Closingthe
Gap, which described a widening discrepancy between labour costs and
productivitygrowth.Thiswentfurtherthanpreviousplans,suggestinginvolving
thestate,beyonditsroleaspublicemployer,inundertakingabiennial“objective
tripartitereview”inajointplanningbodyasthebasisforwagedeterminationat
theELC.Theonlyalternative,itstated,werestatutorywage/pricecontrols.28
Theinstitutionthatemergedforthe“objectivereview”Lemassproposedbuilt
onICTU’ssuggestionofanationalcouncil.Itwasfinallyestablishedinlate1963
as the “National Industrial and Economic Council” (NIEC) tasked “to prepare
periodic reportsonprinciples tobeappliedbygovernmentand theEmployer-
LabourCouncilforthedevelopmentofthenationaleconomyandtherealisation
andmaintenance of full employment at adequatewageswith reasonable price
stability”. Whitaker, as Department of Finance secretary and head of the civil
26 FormationandpurposeofCIO,Murphy,G.2005:36-8;ICTUprecipitateICTU/FUEinvolvement,
FitzGerald1968:56-7andICTUECmtgs.28.07and01.12.61;ICTUappointees,ICTUAR1962:94-6;effectivenessof“AdaptationCouncils”andTUcommittees,FitzGerald1968:57-67
27 O’Brien,J.1981:10-1128 D/Finance1963b;O’Brien,J.1981:37-38
43
service,was appointed chair, thoughonly after the original nominee, diplomat
F.H. Boland, declined due to private sector commitments. Whitaker did not
initiate theNIEC, and indeed had acted in 1960 on his own preference by co-
foundingaprivatesector-funded“EconomicResearchInstitute”(latertheESRI),
initiallyunderSSISIauspices. Itsboard includedaminorityofemployer/union
figures,butappointedonapurelyindividualratherthanrepresentativebasis.29
ICTU/FIM objections to NIEC’s purely wage-guideline function enabled
Lemasstacitlyexpandittoamuchwideroneof“supervisionandreview”ofthe
Second Programme itself. Garret FitzGerald, then an FIM economist, described
howtheNIECassumedownershipoftheThirdProgrammeas“itsownfromthe
outset”. Lemasswelcomed the NIEC asserting itself, gladly conceding to it the
roleofdevelopinga“consensus”betweenthestateand“themainsectorsofthe
community”toensurethat“measurestakentoimplementtheProgrammehave
thefullsupportofallsectionsoftheCommunity”.Larkin,statingthat“allofour
basiceconomicandmanyofoursocialproblemsstemfromthesameweakness,
economic underdevelopment, both in industry and agriculture”, declared the
NIECtobe“planningaswehaveconceivedit”.30
LikemanyIrishinstitutions,theNIECresembledcomparablebodiesemerging
elsewhere, but its structure and functions were shaped by organic factors. A
“NationalEconomicDevelopmentCouncil”had justbeenestablished inBritain,
modelledinturnontheFrenchbody,andIrishofficialsvisitedandstudiedboth.
ButtheNIECdevelopedalonglinesofitsown.TheBritishCouncil,forexample,
includedministers aswell as industry, union and civil service representatives
and,underHaroldWilson,waschairedbythePrimeMinisterhimselfand later
linkedtoanetworkofsubordinatesectoralcouncils.ThisencouragedtheICTU
also topressLemass to revive the sectoral councils hehad suggested in1947.
NIECwas shaped by participants’ experience of the “Adaptation Councils” and
CIO and, unlike in Britain, deliberately excluded politicians to minimise
clientelist pressures. Its first report formed the basis for the “National Wage
29 NIEC1966;onWhitaker,theNIECandESRI,FitzGerald1968:71,157-9,alsoChambers2014:155-630 LemassinNIEC1966:14;Larkin“allofour…”,WUIADC1963:11-17;“conceivedit”,Girvin1994:127-8
44
Recommendation”agreedin1964,whichseta12percentwage“guideline”for
theperiodto1966whichnegotiatingbodieswereurgedtofollow.31
NIEC had 29 members, nine from Government and ten each representing
unions and the employer/business interest. State representation, headed by
Whitaker andDepartment of I&C Secretary J.C.B.McCarthy, camemainly from
Finance’s“EconomicDevelopmentDivision”(EDD)andagenciessuchastheIDA
and IAOS.TheEDDhad itselfbeenan institutional innovationasboth the first
specific civil service economic planning unit, but also, in theNIEC, the first to
servea “non-government”body.TheEDDhadbeencreated to fill the strategic
planning policy gap identified during the First Programme and would later
evolve into the Department of Economic Planning and Development. The
absence of farming representatives (apart from IAOS) was not deliberate, but
due to divisions among farming bodies preventing agreement on their
representation. Such divisions were a phenomenon plaguing all interest
representationsduetothefragmentednatureoftheeconomy.32
Theemergingcollaborativeapproachenthusedallinterests,withtheITGWU,
for example, even proposing that individual companies pursue growth targets
agreed through a joint business-union effort, and that a network of Regional
Technical Colleges be established to train professional workers, a goal later
included in the Third Programme. Union enthusiasm was further reflected in
ICTU support, against marginal dissent from some craft and British-based
unions, for IrishEECaccession. ICTUdefendedthisontheoptimisticbasis that
cooperative planning in such a context would enable declining industries be
replacedbynewindustriesandworkersfromweakersectorsre-trainedfornew
jobs. Larkin dismissed asmisguided left-wing criticswho rejected tripartitism,
Lemass’sProgrammesandtheNIECas“politicalbaits…toensnareandenmesh
tradeunionistsinthepoliticalelectionmanoeuvringsofFiannaFáil”.33
31 BritishNEDC(“Neddy”)system,Dell1997;Irishstudyvisits,earlyNIECand“exclusion”ofpoliticians,
FitzGerald1968;“WageRecommendation”,O’Brien1981:10-11,37-3832 FitzGerald1968:158-64;onfragmentation,Hardiman1988:48;onfarmers,ICTUECmtg.,28.02.196433 “workingconvergence”,Murphy,G.2009;Horgan1997:228;ICTUandstatecompanies’role,ICTUAR
1962:64-5;ITGWUproposals,ITGWUADC1962:72-3,98-99;“defendedonthebasis”,ICTUADC1962:227-30;ICTUandEEC,Murphy,G.2003;“politicalbaits”LarkininBulletin(WUI)Sept.-Oct.1963
45
Systemstresses:fromexpansiontodissolution1963-68
From1963Lemass,absorbedwithotherissues,tookanincreasinglybackseat
in relation to the tripartite institutions he had initiated, leaving them to the
ministersresponsible.Until1966theindustrialrelationsbodiescameunderJack
Lynch asMinister for I&C, and then Patrick Hillery at the new Department of
Labour,while theNIEC remainedunder Finance and its energetic and capable
minister, James Ryan. Like Lemass, of whom he was a close ally, Ryan was a
veteran of the independence struggle and drove implementation of the ever
moredetailedProgrammesforExpansionwithconsiderableenergy.
During1963-66,theNIEC,underRyan’sguidanceandwithWhitakeraschair,
flourished, pursuing the mandate it had assumed in relation to the Second
Programme and preparing the parameters for its successor. Despite its tight
representational base and lean bureaucracy – henceforth hallmarks of Irish
social partnership – its output was prodigious and authoritative. Its reports
includedannual economic reviewsaswell as studiesof individual sectors, and
alignedstrategywiththeinternationalpolicyframeworkssetbytheOECD.The
CIO’s1965SurveyofIndustryprovidedthebasisfortheNIEC’spreparationsfor
theThirdProgramme.Thisidentifiedmajorconstraintsonexpansionsuchasthe
“backwardness”of Irish industry, inefficiencies,small firmsize, lowinvestment
ratios,limiteddiversificationandpooruseof“modernmanagementtechniques”.
Itsetanambitiousnationalaimofovercomingthesetoachievebothcompetitive
advantage and a steady increase in real incomes through a productivity-based
formula for price/wage growth in 1966-68, a national prices commission and
redistributive equity through progressive taxation. It urged that the Third
Programme include sectoral “adaptation” plans to be implemented through
tripartite “Industrial Development Councils”, cooperative structures within
companiesandathoroughreformofindustrialrelationspractices.34
But concrete initiatives by Departments to progress NIEC proposals were
often weak and ineffective. William Roche describes Lynch at I&C as an
“industrial relations conservative in sharp contrast to [Lemass]”.While paying
“lip service” to tripartiteplanning, he saw littleneed to change “theprevailing34 “prodigious”,FitzGerald1968:158-63;“Survey”,CIO1965;initialconclusions,NIEC1965:Pt.IV,paras.
50-61,andstrategyproposals,NIEC1965,1966a,1966c
46
system of collective bargaining”, preferring these continue autonomouslywith
“minimum interference from the State”. He ignored suggestions for reforms
towardswhatRochedescribesasa“Dutchsystem”ofworkscouncilsandsocial
partnership as “outside the realmof practical politics”. It is notable that up to
1965alldecisive interventions, includingthose initiatingwageagreementsand
establishingtheCIOandNIEC,wereLemass’sown,withLynchcontributinglittle
discernible. But Lemass was in declining health and these initiatives now
depended on Lynch, who failed to secure a successor “National Wage
Recommendation” at the end of 1965. A central agreement was not to return
until1970.AlthoughICTUshowedawillingnesstoreturntosuchaframework
bysettingitsown“maximumguideline”andseekingequalisationofemployment
conditions - which Lemass welcomed as the basis for an agreement - wage
determinationrevertedfrom1966underLynchto“localbargaining”.35
The drift back to free collective bargaining at a crucial stage in industrial
expansion was to prove disastrous, as the lack of regulatory reform saw
industrialconflictescalatetoanationalcrisis.Therehadbeenagradualincrease
in conflict – examined in the next section – but up to 1966 this had been
manageable,withELC-agreedwage“guidelines”generallyimplementedandthe
1965 CIO Survey judging industrial relations to be “fairly good” apart from
“restrictivepractices”inafewsectors.Lemassmadeafinalinterventioninearly
1966 before retiring,warning of an urgent need to reform industrial relations
which had remained essentially unchanged since 1906. Hillery at the
DepartmentofLabourdraftedaTradeUnionBilltoreducethenumberofunions
and strengthen Congress authority over “unofficial action” and ICTU gladly
cooperated in this initiative. But when Hillery circulated the heads for an
Industrial Relations Bill in June 1966, proposing the outlawing of unofficial
strikesandgivingtheLabourCourtstatutorypowerstoenddisputes,ICTUwas
outragedandthegovernment-ICTUtalksonreformsstalledforthreeyears.36
With these ominous failures by Lynch andHillery, thewhole framework of
tripartite institutionalism frayed. The Adaptation Councils floundered, NIEC
35 OnLynch,Roche2009:190;failureofwageagreement,O’Brien1981:12-13;Lemasshealth/retirement,
Horgan1997:326-3;ICTUpositionandLemasswelcome,ICTUADC196636 LemassIRreforminitiative,McCarthy,C.1973:184-98;Hilleryproposals,ICTUECmtgs.,21.06.1965,
25.02and06.05.1966;reactiontoIRBill,Hardiman1988:47
47
lamentingthepoorlevelof implementationoftheirproposalsat industrylevel,
the CIO was disbanded and the “Industrial Development Councils” never
materialised, formally because of FUE’s refusal to countenance sectoral union
involvementbutprincipallybecausegovernmentshowedlittleinterest.Progress
onindustrialrelationsreformcametoahalt,thejointworkinggroupceasingto
meet in1967,andneitherHillery’s initialproposalsnoranyalternatives,apart
from a 1969 bill modifying secondary Labour Court functions, were enacted.
RelationsbecamesostrainedthatICTUaccusedHilleryoflyingtotheDáilwhen
heclaimedtohavereceivednorequestsfromICTUtoconsultonit.37
Even the NIEC became fractious. Following 17 unanimously agreed reports
since 1963, a major study, Planning for Full Employment, begun in 1965, was
delayedfortwoyearsoverWhitaker’sinsistenceonincludingacompetitiveness
principle of maintaining incomes below British levels, by statutory means if
necessary.ICTU,whichclashedcontinuallywiththebullishNIECchair,accused
himoftryingtoimposea“one-sided”incomespolicy,andonlyacquiescedtothe
report’spublicationonceitsdissentonitswageformulawasformallynoted.38
WithanewMinisterforFinance,CharlesHaughey,justestablishinghimselfin
office after already being embroiled in conflict with the farmers’ association
(NFA), government disengagement from the council continued as the civil
servicere-asserteditsautonomy.ButHaugheysoonbegantomakehispresence
felt, reviving engagement with the NIEC. Larkin described the 1967 full
employmentreportasreflectingarevivaloftheNIECaftertwo“difficultyears”.
Another NIEC report, which used an OECD critique to propose a radical
expansionofsecond-leveleducationalaccess,wasopposedbytheDepartmentof
Education until its own Minister, Donogh O’Malley, intervened in its favour,
leading to his famous initiative freeing secondary education to general access.
Yet another report, which proposed replacing Social Welfare’s antiquated
“labourexchanges”withasemi-statemanpowertrainingagency,wasrejectedby
37 declineofCouncilsandCIO,FitzGerald1968:66;“lamenting”,NIEC1966c;IRworkingGroup,ICTUEC
mtg.,25.08.67;1969bill,Hardiman1988:47;“lyingtotheDáil”,Murphy,G.andHogan2008:1338 FullEmployment’delay,FitzGerald1968:216;ICTUdissentatNIEC,ICTUECmtg.13.01.67
48
a civil service committee, though NIEC influence at least ensured a semi-
autonomousserviceoverseenbytheDepartmentofLabourdidemerge.39
ThedecayoftripartitismwascompoundedbyLabourPartynegativity.Larkin,
whohad affiliated his union, theWUI, to the party in 1964not least to create
somepoliticaldistance togovernment, faultedLabourpoliticianswho “in their
naturalanxiety to criticiseandexpose the faultsand failingsof theFiannaFáil
government…appearedtobeinoppositiontothewhole…[tripartite]exercise”.
Heregrettedtheir“coolanddetachedinterest”intheNIEC,theirdismissalofit
asmere“FiannaFáilpropaganda”,andtheirfailureto“make[its]reports…the
basisofacontinuingpositivecriticismofgovernmentpoliciesand failings”.He
pleadedwiththeparty to“distinguishbetweentheNIECandtheFiannaFáil…
government” andwork “to strengthen thewhole concept of planned economic
development and the leading role of the state in its realisation”. Calling on
Labour to support theProgramme, he said its seven-yearplanandcentral role
for the NIEC would have seemed like “an election slogan of the labour
movement”justafewyearspreviously.DespiteLabour’sadherenceto“national
planning”, its wariness of tripartitism as a Fianna Fáil “three-card trick”, as
Larkindescribed theirnegativeviewof it,was resonantof their resentmentof
FiannaFáilusurpingtheirpositionsincethe1920s,andwouldpersist.40
The flowering of tripartite institutionalism under Lemass thus went into
reverseunderLynch.Insteadofbeingconsolidated,theNIEC/ELCplanningand
wage guidance system collapsed, sectoral councils disappeared, industrial
relations reform was shelved and the NIEC weakened, its policy consensus-
building function side-lined as civil service policy primacy returned. Lemass’s
tripartitismhasbeendescribedas “neo-corporatism”,but itsnascentquality is
better captured by Gary Murphy’s description of it as “proto-corporatism”.
Lynch’snon-interventionismbecamedominantfrom1966.Oneexceptiontothis
trendwas NIEC’s revival in 1967,which occurred under the newMinister for
Finance,CharlesHaughey,adiscipleofLemassandanadvocateofwhatwould
laterbetermed“socialpartnership”.Butanindustrialrelationscrisisaroseinthe
39 Larkinview,O’Riordan2001:34-5;NIECeducationreport,NIEC1966b,andD/Educ.opposition,
FitzGerald1968:175;fateof“manpower”report,FitzGerald1968:17440 “naturalanxiety”and“threecardtrick”,speechatWUIAR1968,inO’Riordan2001:35;“electionslogan”,
Bulletin(WUI)Sept.-Oct.1963,quotedinO’Riordan2001:31
49
institutionalvacuumcreatedbyLynch’snon-interventionism,culminatinginthe
industrial “chaos” of 1968-69. There were simply no institutions in place to
channelthegrievancesthatundelayittowardsaproductiveresolution.41
Spiritofthe‘60s:socialchangeandindustrialcrisis1968-69 Up to 1961, average annual workdays lost in disputes was about 170,000,
higher than most North European corporatist countries but modest for the
“Anglo-Saxon” liberal-voluntarist world. In the pre-1960 closed economy,
externalcompetitivenesshadnotbeenadecisivefactorbutthischanged.Wage
bargaining, characterised by what Lemass called “procedures of horse-trading
andstrikes”,wasdrivenbythreetendencies,ofworkerswithnegotiatingpower
pressing their advantage to secure better pay, expanding industries “buying
peace”byconcedingincreases,andmostbarelyprofitableenterprisesrelyingon
suppressingwages.Mostwage settlements up to 1965 nevertheless remained
within agreed national “guidelines”. But 1968-70 witnessed an “upheaval” of
industrialconflictwhichwascompoundedbystateinstitutionalminimalism.42
Astheeconomyopened,strike-daysrose,to450,000in1964,552,000in1965
and 784,000 in 1966. These arose from long disputes involving relatively few
workersinseveralspecificindustriesratherthanapatternofconflictacrossthe
economy,and inmanycases involvednon-ICTUunionsornon-FUEemployers.
80per centof strike-days in1964were in the construction industry, ina long
dispute not over wages but a 40-hour week, which employers refused to
concede. The union concernedwas the breakawayMPGWU,whose pickets, by
uniontradition,otherworkersrefusedtopass, thusclosingdownthe industry,
whileon theemployersideconstructioncompanieswerestilloutsideFUEand
sought topreventan industry-wideconcessionwhichFUEactually favoured.A
similardynamiccharacterisedtheprintstrikeof1965,whichaccounted for66
percentofall strike-days,withsmallcraftunions forcing theclosureofa then
largeindustry,andthebankandpapermillsstrikesof1966,againcraft-driven,
whichthatyearsimilarlyaccountedformoststrike-days.Thebankstrikeagain
41 Onemergenceoftheterm“neo-corporatism”,McGinley1998;on“proto-corporatism,GirvanandMurphy
2005;on“stakeholdercapitalism”,Hutton199642 Strikedays,McCarthy,C.1973;Lemassquote,O’Brien1981:10-11;“mostwage”,CIO1965;“upheaval”,
McCarthy,C.1973
50
involved employer andworker associations outside FUE or ICTU and Ryan at
Financeendeditwithastatutorybanksalariesorder.Thesedisputeswereseen
at the time as arising fromweak institutions andpoor employment standards,
withLarkinontheunionsiderecognizingtheneedforpicketingreformsothat
generalworkers’interestswerenotabusedtobenefitsectionalcraftdemands.43
Industrial unrest spread more generally after 1966 as economic expansion
reversedemigration,generatingwhatCharlesMcCarthycalleda“moodofrising
aspirations”. There was also a wider social restlessness reflecting the US civil
rightsmovementandculturalrebellionamongyoungpeople.Whilethesurgein
workermilitancyreflectedaninternationaltrend,itsscaleinIrelandwasgreater
thanelsewhere,with strike-days treblingby1968 to1,405per1,000workers,
comparedtojust4per1,000inWestGermanyand489intheUK,andin1969
topped theEuropean leagueapart from Italy.Thiswas clearly a crisisofweak
institutions, as at the heart of Ireland’s strike figures were small groups of
craftsmenwithvetopowerinkeysectorsorofemployersstubbornlyrefusingto
concede reforms otherwise widely accepted. ESB craftsmen shut down power
generationin1968and3,000picketing“maintenancecraftsmen”locked35,000
general workers out for six weeks in 1969 in what James O’Brien called “the
worststrikeinthehistoryofthestate”,closingmuchofIrishindustry.44
Theexampleofcraftunionsandtheweaknessofstateinstitutionsencouraged
“breakaway”unionstoformandexploitpicketingtraditionsandweaklawtobid
for members in a spiral of competitive militancy. British-based unions also
exploitedtheseopportunitiestogrowattheexpenseofestablishedforcessuch
as the ITGWU, introducing a rousing left-wing rhetoric rejecting “class
collaboration”.Britishunionstrategywastobuildautonomousshop-floorpower
and brought the institution of the “shop steward” to Ireland, where it was
hitherto little known, spreading even in the ITGWU where local officials had
previously managed industrial relations. The success of union militancy also
encouragedpublicserviceofficialsandwhite-collarworkers,whohadpreviously
stayedalooffromtheproletarianCongress,toaffiliatetoit.Thestrikewavewas
beyondeither theLabourCourtor ICTU tomanage,with theCourt as early as43 Strikedata,Nevined.1994:396;disputes,McCarthy,C.1973;Larkin1962,inO’Riordan2001:26-744 “risingaspirations”,McCarthy,C.1973:25;statisticsinICTUAR1969:253andNevin1980:172;details
ofstrikes,McCarthy,C.1973;“worststrike”,O’Brien1981:15
51
1963lamentingthe“remarkable…numberofoccasionsonwhich…strikeaction
wastakenorthreatenedbeforetheLabourCourtwasaffordedanopportunityof
either arranging a conciliation conference or investigating the matters in
dispute”.By1969nearly60percentofallstrikeswere“unofficial”,i.e.occurring
withoutofficialunionhead-officesanction.45
Mainstream unions had engaged with Lemass’s original industrial relations
reform process, with ICTU proposing “industrial democracy” along European
lines as an alternative to confrontational relations. The ITGWU advocated the
German system, which an ICTU document described as “probably the most
advanced formof industrialdemocracy inanycapitalistcountry”.Similar ideas
werepromotedbyCharlesMcCarthy,teachers’unionleaderandICTUPresident,
and also, though more as an alternative to unions, by Jeremiah Newman, a
leading Catholic theorist and sociology professor. Basil Chubb, a prominent
political scientist and later chair of the ELC, argued that industrial democracy
was an inevitable reform that should be conceded. Such ideas had interested
Lemass,butLynchdismissedthemas“outsidetherealmofpracticalpolitics”.46
Theriseofunionmilitancy,perceivedbymanyasdueto“British” influence,
revived the old basic divide in the movement. Left-wing militants, often from
British-basedunions,disparagedICTU’s“industrialdemocracy”proposalsasthe
“co-option” of workers in the running of capitalism, and inter-union disputes
over membership “poaching” increasingly dominated the ICTU agenda, at one
pointcausingtheITGWU,themaintargetof“poaching”,toconsiderdisaffiliating.
Maintaining leadership legitimacy against member impatience was not a
challengefacedonlybyunions,butalsobyemployergroups,whosemorehard-
linememberscomplainedofgovernment“leniency”inthefaceofunionpower.47
But the 1968/69 crisis led to some institutional innovation by unions and
employers as well as by government. Craft union power, said Larkin, was
ultimately not that of a powerful “lone wolf” “hunting alone”, but relied on
45 Int.Geraghty;Int.O’Raghallaigh;“rhetoric”e.g.ICTUADC1969;LabourCourt,McCarthy,C.1973:25;
“competitivemilitancy”e.g.McCarthy,C.1973,“unofficialstrikes”,Hardiman1988:95-6;“whitecollar”affiliations,Maguire2009
46 ICTUadopts“industrialdemocracy”,ICTUADC1967;ITGWUonGermansystem,Liberty,passim1967-8;“probablythemostadvanced…”,ICTUADC1968:165-70;Newman1953,1966;McCarthy,C.1966;Chubb1969;LynchquotedinRoche2009:190
47 “British”influence,Newman1966;left-wingoppositionto“industrialdemocracy”,ICTUADC1968;ITGWU“disaffiliation”,ITGWUADC1971;employerposition,FitzGerald1968:208-9,Hardiman1988
52
general workers’ loyalty in observing pickets. The “go-it-alone” approach of
someemployergroups,suchasintheconstructiondispute,similarlyweakened
the FUE. After heated debates, and fearing statutory controls, ICTU in 1970
instituted the discipline of a “Group of Unions” approach to joint and binding
bargainingwithcompanies,andin1971adoptedrulesrestrictingpicketing,with
workers henceforth obliged only to observe ICTU-approved “all-out-pickets”.
Similarly, employers consolidated in 1969 as the Irish Confederation of
Employers (ICE), incorporating the FUE and various individual associations,
specifically “to counter… leap-froggingwage claims… [and] the playing off of
one industrialgroupagainstanother”.Both ICTUandICEwererelatively loose
associations, if democratically structured, their constituent organisations
jealously guarding their autonomy. But despite rebels in both camps,whether
“bloody-minded”sectionalunionsor industry leaderswhorejecteda “common
good”,themeanpreferenceamongbothwasforbothstrengtheningtheunityof
purposeontheir“side”andfororderlystate-business-unioncooperation.48
Therebelliousspiritofthe1960swasexperiencedinIrelandinitiallythrough
amodernisingofCatholicisminthewakeofVatican2andtheriseofaCatholic
“left”onthebasisofPopeJohnXXIII’scommitmentto“social justice”.Thiswas
reflectedintheadoptionbyFineGaelofaprogramme,“TheJustSociety”,often
wrongly described as “liberal”, and in the emergence in the Labour Party in
Dublin,whichhadbeenreducedtoasingleTDinthepersonof theRepublican
ITGWU official Michael Mullen, of a group of liberal-socialist intellectuals,
developingfromabaseinTCD,whowouldbeelectedTDsin1969.Liberalisation
was also a strand in Fianna Fáil in the later Lemass years, epitomised in the
unbanning in 1966 at the stroke of a pen by Brian Lenihan of nearly 10,000
booksprescribedby thepuritanical censorship regime installedbyCumannna
nGaedhalin1929.AharderbutmorefringeLeftalsoemergedinthelate1960s
connectedwiththewaveofunionmilitancy,bothingroupssuchastheIWL,ICO
and others connected with the union conflicts and involving many returned
militant emigrantworkers, aswell as studentmovements such as the reform-
minded “Students for Democratic Action” and the more fundamental Maoist48 LarkininO’Riordan2001:28;on“GroupsofUnions”andICTUpolicy,ICTUADCs1970-72,Int.McCarthy,
S.;ICEand“leap-frogging”,Hardiman1988:162-5;weakcentralbodies,O’Brien1981:14;employerattitudes,FitzGerald1968:206-10
53
‘Internationalists’.Buttheserepresentedanessentiallyculturalrebellionrather
thanasocietalletalonerevolutionaryone.49
Union/employermilitancywaseconomicallydrivenandthusdidnotsignifya
deeper intractablepolarisationofsociety.Thiswasshownin the1969election
bytheunexpectedlypoorshowingofbothLabourandFineGael,whichhadboth
sought to capitalise on it from opposite sides. Fianna Fáil, winning a large
majority,includinginDublin,wasagainreturned.Buttheindustrialconflicthad
neverthelessgraphicallyexposedhowstate institutionshadfailedtokeeppace
withtheexigenciesofindustrialmodernisation.50
“Orderpluckedfromthreatingchaos”:Haughey’s1969-70initiative In March 1969, just as the maintenance workers’ dispute was ending, an
initiative at the NIEC revived discussion of both an agreed prices/incomes
framework,dormantsince1966,and industrial relationsreform.Thisreflected
aninternationaltrendasOECDpromotedareturntosuchanapproachtomaster
inflationarypressures,whilenewLeftgovernmentsacrossEurope,appealingto
the expectations of the 1960s, were elected on platforms of expanding liberal
freedoms, workers rights and industrial-democratic institutions. In Britain,
Labour Secretary Barbara Castle recommended a similar course, her famous
proposals,InPlaceofStrife,publishedinJanuary,beingdiscussedattheNIEC.51
NIEC’s policy revival occurred following what the Irish Times called an
“unprecedented” intervention by Haughey, who in response to the wave of
strikes proposed a novel event, a pre-budget meeting between government
“economicministers”andICTU’sfullExecutiveCouncil.WhileHilleryandothers
attended, ICTU’sminutesmake it clear thatHaughey dominated, proposing an
agreedpay“guideline”andarevivaloftheNIEC’sstrategicpolicyrole.Haughey
had a frosty but business-like relationship with Whitaker, his department
secretary,whoasaresulthadretiredprematurelyinDecember1968totakeup
thethensubordinateroleofGovernoroftheCentralBank,thoughremainedon
as NIEC chair. The council had become fractious andmoribund, producing no
49 Quinn2005;Thornley,Y.(ed.)2008;Thornley,D.1964;Puirséil200750 1969election,Puirséil200751 Maintenancedisputeoutcome,O’Brien1981:16;OECD,Hardiman1988:34;Castle1969;NIECdiscusses
Castle,McCarthy,C.1973:229-31
54
major reports in 1968, but now, encouraged by Haughey, it revived both its
shelved1965plansforaprices-and-incomesstrategyandforindustrialrelations
reform.Haugheymaintainedcloserelationswithbusinessandunioninterests,in
thelattercaseespeciallytheITGWU,anditwasonitsproposalthattheNIECin
March1969agreedtorevivetheseplansasHaugheyhadurged.52
This initiative coincided with publication of the Third Programme for
Economic and Social Development which included a Department of Finance
instruction that income increases should, while incrementally improving the
relativepositionofthelowerpaid,trackproductivitybutremain“slower”thanin
the “main competing countries” (i.e. Britain). The confluence of the ITGWU
initiativeattheNIECandtheFinancestatementintheThirdProgrammewasnot
coincidental.Themeetingbetween“economicministers”andCongress,andthe
NIECinitiativewhichsucceededthem, followedcontactsbetweenHaugheyand
the ITGWU. Freed by Whitaker’s retirement, Haughey, described by the Irish
Timesasthe“dominantpersonalityintheGovernmentparty”,tooktheinitiative
torecovercontrolofeconomicrelationslostsinceLemass’sdeparture.53
Haugheystrengthenedhispositionwiththeunionsbyincludinginhisbudget
thatmonthmeasureshehaddiscussedwithITGWUtobenefitthelowerpaidso
as to enable “an orderly policy in relation to wage and salary agreements” to
evolve,withapotentialnationalagreementheralding “awholenewera in this
field”.Healsoincorporatedwelfarereformsand“envisaged”aseriesofnational
agreements “inwhich budgetarymeasureswould play a vital role”. Both ICTU
and FUE welcomed the initiative and during the June 1969 election Haughey
calledthis“oneof themosthelpful thingsthathashappened… inmanya long
day”,theresponseoftheunions“magnificentinitsresponsibilityandmaturity”.
“Order”,heannounced,hadbeen“pluckedoutofthreateningchaos”.54
FollowingtheelectionandtheHaugheyinitiative,ICTUconferencesdecisively
rejected opposition to a national agreement, adopting ITGWU-sponsored
motions proposing a “full-scale NIEC Report on all aspects of income
52 “unprecedentedintervention”ITeditorial,15.03.1969;Haughey-ICTUmeeting,ICTUECmtg.26.03.69,
item3844;Haughey-Whitakerrelationship,Chambers2014:180-2,190-2,217-223;ITGWUinitiativeatNIEC,IT15.04.69
53 ThirdProgramme1969:143-9;“dominantpersonality”,IT,30.05.6954 “wholenewera”/“pluckedoutof…”,Haughey,‘Electionmeeting’06/06/69,inManserghed.1986:111;
“pivotalrole”,Dáil07.05.69
55
distribution”anda“pricesandincomespolicy”.AjointFUE/ICTUcommitteewas
establishedinJuly1969tostarttalksontermsforanagreement.Haugheymet
with ICTU the following November, accepting their internal “Note on a Wage
Negotiation System”, undoubtedly revealed to him by ITGWU, proposing a
complementaryNIEC/ELCarchitecture.Withincabinet,hecriticisedWhitaker’s
by-passingof him in advisingLynch to opt for statutory “corrective action” on
wages,andinJanuary1970,againaftermeetingITGWUleaders,hemetCongress
to suggest that the forthcoming “pay round” upgrade negotiations to a full
“tripartite agreement” embracing wages, economic policy and reform of both
statutoryandvoluntaryaspectsofindustrialrelations.AlthoughacautiousICTU
insistedthetalksbedescribedasyetonlyas“consultations”,Haughey’sinitiative
ledtotheNIEC’sground-breakingreportthefollowingmonth.Thisproposeda
broadtripartitesystemaswellasaPricesCommissionandanadjudicatingrole
fortheLabourCourtoverdisputesundertheproposedagreement.55
Employerswelcomed the breakthrough and theNIEC exploited its restored
prestigetopropose itsownreconstitutionasanup-graded“NationalEconomic
Council”.Haughey,alongwithLynchandotherministers,metwithICTUandFUE
inaformal“tripartiteconference”inApril1970,whichagreedtothedraftingof
enhanced terms of reference for the revived ELC to cover industrial relations
reform.AstheESRI,abodyco-foundedbyWhitakerandcautiousoftripartitism,
latercommented,“itdidseemasifthemachineryforaneweraoforderlywage
adjustmenthadfinallybeenpiecedtogether”.56
At themomentof this imminent achievement, on5May1970Haugheywas
sackedfromcabinetbyLynchfollowinganapproachbyoppositionleader,Liam
Cosgrave, claiming, on thebasisof ananonymousnote fromSpecialBranchor
British sources, a “plot” involving military intelligence and some ministers,
includingHaughey, to importarms“foruse inNorthernIreland”.Withinweeks
of Haughey’s removal and arraignment for what amounted to treason, the
nationalwageagreement initiativewouldcollapse.Hewouldbeacquittedbya
55 ITGWUmotions,ICTUADC1969:394-410;FUEinitiative,O’Brien1981:17;HaugheyonICTU‘Note’,
ICTUECmtg.12.11.69item4102;criticisesWhitakerproposal,Chambers2014:219-20;Haugheymtg.ITGWUleaders,Manserghed.1986:141,andCongress,ICTUECmtg.28.01.70;finalreport,NIEC1970
56 FUE/ICEposition,O’Brien1981:41-2;NIECproposalsfor“NEC”,NIEC1970,ICTUECmtg.04.70,item4195,McCarthy1973:179-81andIT17.04.1970;Haugheyand“tripartiteconference”,IT17,18.04.1970,O’Brien1981:19;ESRIquotedinO’Brien1981:19
56
jury convinced he had implemented government policy but, while avoiding
imprisonmentandretaininghisDáilseat,hewasexcludedfromcabinet.57
Whether Haughey’s initiative would have succeeded cannot be known.
Industrialrelationsatthetimewereinturmoil,thecountrygrippedbyastrike
by the IBOA - a non-ICTU union - closing the banking system for six months.
Haughey was also only a mere minister, even if at Finance, under a cautious
Taoiseachindisposedto“intervening”inthesocialrelationsoftheeconomy.
Lynch’sretreattominimalism:the1970“NationalWageAgreement”(NWA) Just prior to the arms crisis, the ICTU, againstmodest internal dissent, had
accepted theNIEC’sproposedvoluntarist framework. Ithadalsocooperated in
the plans to reconstitute the NIEC as a “National Economic Council”, which it
itselfhadproposed.Itacceptedtheinclusionoffarmingbodiesonitbutrejected
Whitaker’sproposalsdilutingthetripartiteformulabyadding“consumers”and
the professions. Wage agreement talks had commenced and ICTU had even
suggestedre-conveningtheNIECtosetimmediateguidelinesforthem.But,after
Haughey’s sacking, the ITGWU caused a major surprise when its leaders
announced that while they supported the “principle” of a national agreement,
theydoubtedtheadvantagestoworkersofwhatwasproposedandgovernment
sincerity on price controls. At the ICTU conference the followingweek, at the
start of July, the ITGWU took an even harder line, amazing other unions by
calling for ICTU’s support for the proposed NIEC/pay system to be “referred
back”, i.e. shelved, pending clarification on how it would work. The ITGWU’s
derailing of ICTUwage strategy,which it had largely itself engineered, caused
publicdismay,theESRIcallingit“thistotallyunexpectedsetback”.58
With the ICTU’s position in tatters,Whitaker and influential commentators,
suchasGarretFitzGerald,warnedthatawage/priceinflation“spiral”threatened
and called for wage controls. The Irish Times, commenting on the collapse of
tripartitism and endorsing FitzGerald’s view, opined that British experience57 CosgravenoteinClifford2009:73-4.Thereisalargeandcontradictoryliteratureonthearmsconspiracy
trialwhichisoutsidethescopeofthisthesis58 NECdisagreement,ICTUECmtgs.20and31.07.70;FUEinvitationandICTUcallforNIECmeeting,
O’Brien1981:19and41-2;ITGWUleadershipstance,ITGWUADC1970andICTUAR1971:99-120;publicamazement,IT10.07.70,Hardiman1988:50;“unexpectedsetback”,O’Brien1981:19;
57
showed that voluntary agreements were “ignored as blithely as speed limits”,
whiletheindustrygroup,CII–theformerFIM-briefedagainstpricecontrolsas
“unconstitutional”. Whitaker, although NIEC chairman, urged a statutory pay
“pause”untilthenewNEC/ELCsystemcouldbeestablished,andFitzGerald,once
a champion of the NIEC, now attacked its report as a “fudge” showing the
“limitationsofconsensus”andadvisedunilateralgovernmentaction.59
The NIEC polarised, with ICTU, under ITGWU pressure, refusing to accept
statutory guidelines or a paper by Whitaker, ‘The Need to Control Inflation’,
which argued for wage control. Lynch supported Whitaker, saying if unions
would not engage at the ELC, government, regardless of the NIEC’s proposed
role,would unilaterally impose controls. Congress responded by threatening a
return to aggressive bargaining and to review “the whole question of
participatinginbodiescounsellingtheGovernmentoneconomicmatters”,i.e.the
NIEC itself. The new Finance Minister, George Colley, introduced a statutory
prices/incomes bill, which reached its second Dáil reading before Lynch
relented,meetingtheICTU–whichhehadseldomdoneintwoyears-toagreeto
suspend the bill if ICTU returned to the Employer-Labour Conference (ELC).
Colley,inwithdrawingthebill,confirmedunionsuspicionsbynowadmittinghe
hadneverseriouslybelieveda "price freeze”was “apracticalproposition”.But
the talkswere saved, as the ITGWU required an agreement for itsmajority of
lower-paidmembers, and the first “NationalWageAgreement”was concluded.
The ELC had been re-established at Haughey’s initiative - with Basil Chubb, a
championof industrialdemocracy, its chair - as akey “institution”of theNIEC
system.Despiteitscollapse,thetalksleadingtotheNWAtookplacethroughit.60
The NWA became an enduring system, but it was a minimalist form of
tripartitism compared to what Haughey had envisaged and ICTU/FUE had
agreed in May 1970. It simplified bargaining, setting common wage increases
over 18 months for all workers. But government participated solely as pubic
sectoremployer,withoutanywiderpolicyinput,andtheNIECwasnotinvolved
atall.Thewageformulacombinedpercentageand“flatrate”increasesassought
59 “spiral”,IT01.08.70;“blithely”,ITeditorial01.09.70;CIIbriefing,IT08.10.70;FitzGeraldinIT01.08.7060 ICTUrefusestoendorse,ICTUAR1971:135;LynchthreatandICTUresponse,ICTUECmtg.10.70,item
4443;ColleyinDáil,IT26.11.70;“industrialdemocracy”,Chubb1969
58
byICTUintheinterestsofthelow-paid.TheNWAalsoleftscopefor“above”and
“belownorm”payadjustmentsundervariousheadings,including“productivity”
and protecting “differentials” between grades of worker, and accorded the
Labour Court an “interpretation” role. It also aimed to gradually equalise
working conditions through working hours, holiday and sick pay norms, with
implementationnegotiated“locally”.61
The NWA did not link to budget policy, a wider incomes/prices policy or
overall economic strategy. Lynch praised the tripartite approach, extolling the
“newrole”ofunions throughvarious “consultativeordeliberativebodies”, but
he dismantled it as a central economic policy approach.What remainedwere
some formal bodies, which Roche describes as “bolted onto” an unreformed
wage-bargaining system. Neither government nor the Department of Finance
were henceforth centrally involved, with the NWA the responsibility of the
Department of Labour as a purely “industrial relations” matter. This
conservatism contrasted with developments in Europe where wide-ranging
reformsexpandingcooperativeinstitutionsatnationalandcompanylevelssaw
the late-1960s wave of militancy abate. In Ireland, industrial and inter-union
disputes remainedhighdespite theNWAs,with strikesand industrialdisputes
invariablyatthetopoftheOECDleaguethroughoutthe1970s.62
Following Haughey’s removal and the collapse of his wider pay/policy
strategy,theNIECitselfdisintegrated,its“immediateplans”,asCharlesMcCarthy
lamented, “in ruins”. Its proposed “Incomes and Prices Commission” failed to
materialise and plans for a wider “Economic Council” stalled after ICTU
withdrewinprotestfirstoverLynch’swagesorderandthenWhitaker’sadamant
insistencethat“consumers”beincludedonit.Itwouldre-surfacein1973inabill
for a “National Economic and Social Council” (NESC) with a narrow advisory-
consultativeremit,whichfinallyconvenedunderthecoalitionin1974.63
While theLynchgovernment’s institutional conservatismexplains thedecay
of tripartitism from 1965, with disastrous consequences in industrial conflict,61 ELC197062 NWAnowiderlinkages,ELC1970;O’Brien1981:42-8;Lynchonunionparticipation,IrishPress,20.10
70;“boltedon”,Roche2009:188;Europeanreformsandunrest“abating”,Frieden2007:350,367-9;strike“league”,Nevin1980:172
63 “inruins”,McCarthy,C.1973:180;PricesCommission,Hardiman1988:49;Whitakerproposals,ICTUAR1971:135;establishmentofNESC,NESC1974
59
andalso itsacceptanceofaminimalNWAframework following theremovalof
Haughey,thevolte-facebytheITGWUprecipitatingtheendofHaughey’sNIEC/
ELC project after his sacking from government had a further aspect,
demonstratingthewiderimpactofpoliticsonthefortunesofIrishtripartitism.
Haughey,theITGWUandthesuspensionoftripartitism Haughey’srelationshipwiththeunionswasthroughtheITGWU,forwhomhe
represented, in the Lemassian mould, both Fianna Fáil’s technocratic social
democratic wing and its republicanism, or popular nationalism. For ITGWU
leaders,theseformedacontinuum,threatenedbytheeventsofMay1970.
TheITGWU/HaugheybondmightseemtoconflictwithHaughey’simageasa
wealthyman, theoriginsofwhosewealthhisconstituencyadversary,Labour’s
ConorCruiseO’Brien,firstmadeaboneofcontentionin1969.O’Brienattacked
himforhisroleinfund-raisingforFiannaFáilamongbusinesscircles,andforhis
fortuitous purchase of a run-down country house with land in Raheny, near
where he grew up, which had reaped a dividend. But many contemporaries,
including Irish Times editor Douglas Gageby, dismissed these attacks as mere
political sniping. Haughey was at the centre of a group of businessmen and
reformingFiannaFáilpoliticianswhosawthemselvesas“modernisingIreland”,
andhadbeenentrustedbyLemasswithdeveloping“Taca”toraiseparty funds
frombusinesscircles.Chargesofhavingacceptedmoneytofundanextravagant
lifestyle were to be levelled against him in later years, but acquaintances
described his pursuit of wealth as driven more by a desire to achieve status
among society leaders.He also combinedhis closeness towealthy circleswith
impatience with and disdain for the shoddiness of much of “backward” Irish
industry,famouslyderidingBenDunneforthe“drip-dryshirts”hedisplayedata
NewYork trade fairwith the remark “where do you think you areDunne, the
fuckingIveaghMarket?”PropertydeveloperPatGallagherdescribedHaugheyas
determinedtomoderniseIrelandbycreatinga“national”businessclasscapable
of operating on the world stage, and he cultivated relations not only with
“national” entrepreneurs but alsowithwealthyAnglo-Irish circles, such as the
Guinnesses,CongrevesandHely-Hutchinsons.Throughhispatronageofthearts,
60
and initiatives such as ROSC, he aspired to raise the cultural horizons of the
nouveauricheproducedbyLemass’sindustrialisation.64
Haughey’s social democratic tendencywas apparent - even before Lemass’s
firstProgramme–inhis1957maidenspeechintheDáil,inwhichheadvocated
an expansionist industrial policy, opening to foreign trade, shifting the public
service towards economic activism, and providing a capital budget for a
“dynamic programme of investment”. Ronan Fanning described him as “the
personificationofFiannaFáil’s commitment toplanninganddevelopment”.He
critiqued the “Left” for its propensity for confrontation, not its aims, as he
favoured improving wages and welfare and a national role for unions. As
Minister for Justice he institutedmany reforms, especially benefittingwomen,
and attempted to initiate an inquiry into Church-controlled reformatories. At
Agriculture he confronted farmers over poor productivity and grant-seeking,
provoking a revolt by proposing to change farm subsidies from incomes to
investments,thoughalsoboostedthe“farmers’dole”tocounterruralpoverty.At
Finance he combined advocacy of industrialisation with financial discipline,
separatedoutthecapitalbudgetandproducedabalancedbudgeteachyear.65
Haughey was also a champion of EEC accession, accompanying Lynch on a
tourofcapitalsin1967toadvanceIreland’scase.InParishepressedthisonthe
French foreign minister, despite de Gaulle’s continued hostility to British
membership. Against thosewho claimed the economic restructuring accession
wouldentailruledoutIrishmembershipwithouttheUK,hearguedthattheEEC
wouldbeobliged to support Irishmodernisation.TheEEC leaderhewasmost
drawntowastheGermansocialdemocratparexcellence,HelmutSchmidt.66
Haughey’s republicanism was unexceptional in Fianna Fáil tradition. The
party had been founded on a platformof completing sovereignty and giving it
substancethroughstate-driveneconomicdevelopment.ThiswashowdeValera
64 OnHaughey’swealth,Keena…andRyleDwyer…;onO’Brien,Arnold2006;GagebyIT30.05,06.12.69;
ondevaluationaccusation,,Chambers2014:183-4;onwealthasstatus,Maume2007,Cronin1997andtribunalcommentsbyfriendsinKeena;“IvyMarket”inSmyth1997,GallagherinKeena2001;onHaughey’srelativewealthandhisartsinitiatives,alsoCronin1997andMaume2007
65 Haugheymaidenspeech,Dáil14/05/57;“personification”,Fanning1990:103;asM/Justice,Manserghed.4-7andMaume2007;proposalsonAgriculture,Dáil05/01/66
66 onIrelandjoiningEECwithoutBritainandEECaidforrestructuring,Dáil26/07/67;ondinnertalkwithdeGaulle,notebyWhitakerondraftarticlebyJoeCarrolloftheIrishTimes,11/09/89,UCD:P175/096;onHaugheyandSchmidt,interviewwithMartinMansergh
61
could describe Lemass’s 1959 Programme as the embodiment of the party’s
founding principles. Both of Haughey’s parents had been active in the
independence struggle and he was reared in very modest circumstances,
educated through scholarship by the ChristianBrothers and atUCD,where he
excelled,comingfirstinIrelandinaccountancy.Hestruggledtoestablishhimself
electorally,butwasassistedbyministerandveteranIRAleader,OscarTraynor,
whose ministerial assistant he became. Traynor, a social radical, had been
instrumentalinbringingDublin’sworkingclassrepublicanbasetoFiannaFáil.67
ButHaughey’s republicanismwas also distinctive in that hewas personally
acquainted,throughfamilyties,withconditionsintheNorth.Inthe1950shehad
co-drafted a partypaper onNorthern strategy, often interpreted aspromoting
insurrection.Infactitdescribedarevoltasinevitablegiventheconditionsunder
whichCatholicslived,andproposedthatthestatepreparetointervenewhenit
occurred to channel it towards reformunderDublin direction. AsMinister for
Justice he justified de Valera’s wartime suppression of the IRA as essential to
defendNeutralityandin1960dealtwiththeIRAbordercampaignwithspecial
courtsandinternment.Hisallegiancetothestatewasunequivocal,hispolitical
raisond’etre,asreflectedbytheminimalistdefencehemountedinthearmstrial,
leaving themilitary defendants to argue the substance of the case and voting
confidence inLynchafterhisacquittal.Hewasno“subversive”,andduring the
somewhat illusory Lemass/ O’Neill détente, Agriculture, while Haughey was
minister,wasoneoffewareaswhereadegreeofcross-bordercooperationwas
achieved. But that he was a serious nationalist is undoubted. In late 1969 he
startledBritishofficialsbyconfidentiallysuggestingtothemthatStormontwas
unreformable,arenewed“Lemass/O’Neil-typehoneymoon”a“foolishidea”,and
theonlysolutionajointBritish-IrishgovernmentdealwhichcouldinvolveIrish
concessionsincludingevenmilitarybasesorNATOmembership.68
Haughey had grown up in Donnycarney, a working and lowermiddle class
districtonthecity’sthennorthernfringe,withastrongtradeunionpresence.By
backgroundhedidnotdiffergreatlyfromleadingDublinunionleaders,suchas
67 DeValeraonLemassprogramme,McCarthy,J.F.1990b:53-4;Haugheybiography,Maume200768 on1950smemo,ÓBéacháin2010:234-5;“falselyinterpreted”,Kelly2016:29-36;Haugheyonwartime
executions,UCD:P176/347;North/Southagriculturalcooperation,ÓBéacháin2010;on“minimalist”armstrialdefence,Clifford,A.2009,andsuggestionstoBritish,FOreportsinibid.:661-3
62
the ITGWU JohnCarroll, also a scholarship-enabledChristianBrothers boy.He
builtabasefirstfromthelocalGAA,inwhichhehadexcelledasaplayer,andthe
part-time defence forces, the FCA, in which he was a local officer. He did not
share in popular moralising at the “irresponsibility” of striking workers or
protesting activists, describing these as a “symptom of success”, as people
seekingtobettertheirlotinthenewwealthandexpandingfreedomsofthetime.
He advocated resolving industrial conflict through institutional reform,
worker/employercollaborationinexpandingnationalwealth,andstatefunding
ofunionandmanagementorganisationstomoderniseandprofessionalisethem.
He cultivated relations both with business and union leaders, especially the
party’s natural allies in the ITGWU. Haughey regarded himself as a political,
rather than business, entrepreneur, and recognised a similar trait in such
leaders.TheserelationswereofatypewiththosefosteredbyLemass,butwhich
Lynch,fromanon-republicanCorktraderbackground,neverachieved.69
These relationships help explain how Haughey’s sacking and arraignment,
which were part of the general disorientation of Irish politics due to the
Northern crisis, nearly collapsed tripartitism too. The Haughey-ITGWU
relationshiphadbeenpivotaltoitsre-emergence,andhisremovalfataltoit.
The ITGWUwas themost republicanunion in the ICTU.Republicanismwas
still a strong force inworking class culture andhence in the ITGWU’soutlook.
Haughey’s main contact with the ITGWU was its powerful general secretary,
MichaelMullen,anex-LabourTDwhohadservedtimeforIRAactivities.Mullen
hadtacitlysupportedpre-“Troubles”IRAsocialactivism,whichhadincludedan
incendiary incident at EI, General Electric’s Shannon-based Irish subsidiary, in
support of a seminal union recognition dispute. This action had nipped in the
budplansbysomemultinationals,thenjuststartingtoinvestinIreland,toavoid
unionisation,andledtothe“sweetheart”agreements,especiallywiththeITGWU,
arrangedbytheIDAwith incomingcompaniesthereafter.TheITGWUwasalso
the only “southern” union, apart from the INTO, to organise among Northern
Catholic workers. Many of its Northernmembers, such as Belfast “Republican
69 onFCAandGAAnetworks,interviewswithKateNugentandEoinBrettandmaterialontheHaughey
familywebsitewww.charlesjhaughey.ie;Haugheyonsocialunrestandunions,‘TheFutureoftheLeft’,speechatTCD08/03/61,inManserghed.1986:3-4,‘ProteststemsfromProgress’,22/05/69,ibid.109-10;onenterprisingunionleaders,Haughey2014
63
Labour”MPandITGWUofficialPaddyDevlin,wereprominentintheCivilRights
MovementandthemilitarydefenceofCatholicareasin1969-70.Somebecame
earlyvictimsoftheconflict.Duringattemptstobringsupport,includingarms,to
besiegedNortherncommunities–aspubliclydemandedbyDevlinandothers-
Mullen liaised with the government’s “Distress Committee” managed by
Haughey.ABelfastITGWUexecutivememberwasarrestedonarmschargesand
Mullen himself prosecuted for possession of a gun. He was later involved in
secretcease-firetalkswiththeBritish,andwhenhediedin1983hisfamilyhad
HaugheyunveilhismemorialintheRepublicanPlotinGlasnevin.70
ThearmscrisisandLynch’svolte-faceendedgovernmentinterventioninthe
Northern crisis, stabilising the state by disentangling it from the conflict. This
retreatwouldpropeltheCatholicrevoltintoautonomouschannels–asHaughey
hadwarnedadecadepreviously–butinsulatedtheRepublicfromit.According
toMartinO’Donoghue,LynchembracedtheEECtoavoidthe“Republicantrapof
theNorth”,andhis1977electionmanifestodevotedjusttwoparagraphstoit.71
Lynch’sabandonmentofaNortherninterventionpolicyandhissacrificingof
Haughey and others to achieve it destroyed the ITGWU’s willingness to
cooperatewithhisgovernment.Theunioncontinuedtourgedirectsupportfor
theNorthernminority, includingwithinICTU,andtoopposesecuritymeasures
directedagainstrepublicansbybothLynchandthesucceedingcoalition,though
some in the ITGWU dissented from this. Mullen lost the Labour whip in the
SenatebyvotingagainsttheEmergencyPowersAct,asdidlateranotherITGWU
Senator,ChrisKirwan,forasimilarreason.TheITGWU’sdiscontentwithLynch’s
changeofNorthernpolicywasthusasignificantfactorinitsJune1970endingof
ICTU’spolicycooperationwithgovernment,includingontheNIEC,whichwasno
longerunderHaughey’sdirectionbutthatofColleyandWhitaker.72
70 OnMullenandEIincident,and“sweetheart”deals,Inf.fromthelateConorLynch,atthetimeaCorkIRA
activist,alsoAllen,K.1997:129,Roche1994:139,Devine2009:523,532,605,649;ITGWUvictimsofNortherncrisis,Libertypassim1969-72,Devine2009:602,701;MullenandHaughey’sCommittee,Devine2009:517,1094;ITGWUNCmemberimprisoned,Devine2009:599;Mullencharged,IrishTimes,27.02.1971;Mullenintrucetalks,Puirséil2007:296;Glasnevin,Haughey,‘TributetoMichaelMullen’06/11/83,inManserghed.1986:784-5
71 “autonomouschannels“,Walsh,P.2016;O’DonoghueinBegg2016:164;“manifesto”,FiannaFáil197772 ITGWUurgesintervention,ICTUECSpecialMeetings18.08and03.09.71;ITGWUmembersdissentonNI
position,Allen1997:146-50andDevine2009:599,641-3;Kirwanloseswhip,Horgan1986:137
64
Chapter3Politicsofretreatandrevival1970-81
Asymmetricimpact:tripartitisminthe1970Northerncrisis The context of the ITGWU’s abrupt about-turn on national pay strategy
followingHaughey’ssackinghadotherrepercussions.TalksbetweentheITGWU
andWUIonamalgamation,whichwerenearingfruition,brokedownafterWUI
leadersdenouncedHaugheyasthecentreofa“bourgeois”conspiracytorevive
“the decaying Nationalism of the North” and divide workers along “sectarian
lines”.Theunionhadbeenfoundedonsocialistprinciplesinthe1920sasasplit
from the ITGWU, and by the 1960s its leaders regarded republicanism as a
nationalistdistractionfrom“classpolitics”.PriortotheNortherncrisis,withthe
nationalissuenotprominent,commonleft-wingviewshadbroughttheWUIand
ITGWUcloser,revivingamalgamationtalksandleadingbothtore-affiliatetothe
LabourParty.Buttheoldriftnowre-opened,withtheNorthernconflictcentral.
This was reflected in a new but bitterly personal animosity between anti-
RepublicanWUIleaderFrankCluskeyandMichaelMullenoftheITGWU.1
ThecrisisalsoreinforcedITGWUhostilitytoBritish-basedunions,whichhad
been challenging it industrially through competitivewagemilitancy butwhich
nowalso,withtheirlargemembershipamongNorthernprotestantworkersand
despitetheCP-inspiredoutlookofmanyoftheirleadersandactivists,theITGWU
and others accused of tacit complicity in discrimination against Northern
Catholics. Of the elevenmembers of ICTU’sNorthern Ireland Committee (NIC)
justone– though thechair -wasaCatholic, andof78 full timeunionofficials,
just16wereCatholics,almostallin“Catholic”unionsliketheITGWUorINTO.An
activist later prominent on the NIC, Andrew Boyd, recalled the influence of
Freemasons even in themilitantAEU, andhowwhen startinghis career as an
officialhehadbeenadvisedtojointhemifhewishedto“geton”.2
1 “bourgeoisstrategy”,WUIADC1970,IrishTimes11.05.70andHanleyandMillar2009;onthenew
Cluskey/Mullenantagonism,Horgan1986:1372 ITGWUsuspicionsofATGWUintheNorth,Merrigan1991;NICandofficials,CampaignforSocialJustice
1969;Boydand“Freemasons”,O’Connor,E.2019:99
65
ICTUhadover90affiliatedunions,thegreatmajoritysmall,craftorsectional
ones. British-based unions accounted for less than 15 per cent of total
membership,basedmainlyintheNorththoughrapidlyexpandingintheSouth,
whilethetwogeneralunions,theITGWUandWUI,accountedtogetherfor30per
cent. On wage policy there was a block of about 20 per cent, mainly public
service unions, supporting central agreements, especially on public pay, while
British-based,craftandsectionalgroups,whichwereonprinciplecommittedto
“free”,i.e.non-centralised,collectivebargaining,hadacombinedtotalof25per
cent.Howthetwolargegeneralunions“swung”wasthusdecisive,andaslongas
theyfavouredacentraldeal,therewasagivenmajorityforit.ButtheITGWU’s
turnafterHaughey’ssackingcreatedanICTUmajorityagainstpolicycooperation
withgovernment,thoughacceptingthepurelypay-orientatedNWA.
Anexampleofthemovement’schangedpoliticalorientationundernationalist
pressure arising from the Northern revolt was ICTU’s change of policy on the
EEC. A decade previously, and despite reservations and left-wing and British-
union opposition, ICTU had backed the government’s application,with ITGWU
support decisive. In 1967 the ICTU, again with ITGWU support, backed the
renewedapplication.Butinmid-1970,attheheightofthearmscrisis,theITGWU
suddenlychangedtostridentoppositiontobothgovernmentanditsEECpolicy.
Leaders who previously had supported accession now vigorously opposed it,
many, like the risingDublin firebrand and ITGWUVice-President John Carroll,
adopting theargumentsofpreviouslymarginal left-nationalistanti-EECgroups
suchastheWolfeToneSociety,SinnFéinandtheIrishWorkersLeague.3
The ITGWU’s change of position had wide ramifications, not only for its
relationshipwith Fianna Fáil. In the pre-“Troubles” 1969 election Labour, like
theunions,hadnotcampaignedagainstEECmembership.Thisnowchangedas
Labour politicians, influenced by the ITGWU to believe in a growing working
classdisenchantmentwith theEEC, cameout inmid-1970 tooppose it.Newly
electedTDsJustinKeating,ConorCruiseO’BrienandDavidThornley,backedby
party-leaderBrendanCorish,issuedananti-EECmanifesto,co-signednotonlyby
3 ICTUposition1961,Murphy,G.2009:171-235;initialITGWUposition,ITGWUAR1962:67andICTU
1962:227-30;1967position,ICTUAR1968;MullenandKennedyatICTUADC1971;ontheleftgroupsandITGWUsupport,Treacy2012andO’Halpin2012
66
traditional anti-EEC union figures but now also by prominent ITGWU leaders.
Keatingdeclaredthat“theoriginsoftheEEClieinHitler’sNewOrder”andBarry
Desmond, a former ICTU officer later prominent in the European Movement,
castigated it as a “neo-colonial trading block” dominated by a “cartel ofmulti-
national companies”. Within two years Cruise O’Brien, Keating and Desmond
wouldbeamongthemostardentchampionsoftheEECingovernment.4
Themedia were taken by surprise when the ITGWU conference in January
1971,whichwascharacterisedbygeneralattacksongovernmentacrossmany
areas, including theNorth, voted “virtuallyunanimously” to opposeEECentry.
Carroll became a regular speaker at anti-EEC rallies, and the new ITGWU
position, to the dismay of many even in Congress, ensured that ICTU’s own
conference two weeks later adopted the same stance. Lynch retaliated by
rejectingICTU’srequestforarepresentativeontheIrishnegotiatingteam.Inthe
eventtheelectoratevotedby83percenttojointheEEC,thoughapollshoweda
lowerthoughstill60percentmajorityofITGWUmembersfavouringaccession.5
ITGWU friction with the Lynch government fromMay 1970 thus had deep
rootsbeyondmereindustrialrelations.Theseinformeditsnegativestanceinthe
EECreferendum,whichHaugheywouldcertainlynothaveshared.Nevertheless,
ITGWU leadersmaintained their linkswith him, inviting him in October 1970
immediately following his acquittal to address the full union Executive, an
honourunprecedentedfora“capitalist”politician.6
Corporatistminimalism:theNWAsystem,1971-76
Despite the disruption of the Northern conflict, the minimalist NWA that
survivedfromHaughey’smoreambitious1970tripartiteplanproveddurable,a
seriesofsimilar12to15-monthagreementsfollowingupto1978.Government,
nominallyinvolvedonlyasanemployer,continuedwiththestructureasatleast
providinganelementoforderinadisorderlywagessystemandespeciallyasa
4 on1969housingdemonstrations,ÓBéacháin2010:278,IT22.01.69;changeofLabourpolicymid-1970,
Puirséil2007:297,300-1,O’Halpin2012:143-4andCollins,S.2012:155-6;LabourEEC“Manifesto”,IrishTimes19.09.70;KeatingquotedinCollins,S.2012:156-7andDesmondinICTUAR1971:380-411;“mostardentsupporters”,Collins2012:158-9andO’Halpin2012
5 “virtuallyunanimously”,IrishTimes24.01.1971;ICTUconferenceposition,ICTUAR1971:381-425;Lynchresponse,ICTUECmtg.July1971item4480;ITGWUvoteandpoll,Devine2009:629
6 Haugheyinvite,Liberty,Nov.1970andspeechatmeeting,Manserghed.1986:141
67
framework for pubic pay. Minimal tripartitism survived through secondary
bodies, but neither Lynch nor his coalition successors sought any return to
Haughey’swiderframework.TheNIEChadbeendisestablishedandHardiman
describes itsweaker reincarnation as theNESC as differing “in function from
the earlier body”, its reports “informative policy-oriented documents rather
than consensus-building exercises”, with dissenting opinions “frequently
appended”. Aswith Lynch, the Cosgrave coalitionwas strongly influenced by
CentralBankgovernor,T.K.Whitaker,who in1974urged it against "allowing
theunionstosetthetoneofthenegotiations"."Itshouldbeforthegovernment
to take the initiative in securing, either by agreement or, failing that, by
statutory enforcement, a limit on income increases”. Unions should be made
“agreetothiscourseofactioninadvanceofanyconcessions…inthebudget”.7
The1970seconomywashitbytheglobalmonetary,inflationandoilcrises,
the growth of the 1960s replaced by stagnation. But the turbulence of an
openingeconomycontinued,acceleratedbyEECaccessionin1973.The“Third
Programme”,drivenfrom1972bythestate’sfirstrecoursetodeficitbudgeting,
initially continued, driving an expansion ofwelfare state and social spending.
Liberalised trade led the workforce to expand, accelerated migration from
agriculture into industry and improved industrial performance, with output
risingoverthedecadeby62percentandexportsincreasingto40percentof
output,mainly through foreign firms.But industrialdevelopmentwasuneven,
withnew,mostlyFDI-financedplantsincreasingemploymentin“lessdeveloped
regions” by 57 per cent while traditional industries closing saw employment
contract,mostlyinthecities,byover20percent.Joblossesinolderindustries
rose from 4,000 in 1970 to 19,000 in 1975, with an “unprecedented rate of
change”seeing92,000newindustrialjobscreatedby1980thathadnotexisted
in 1973 while 81,000 older ones disappeared. Multi-national employment
expanded,mainly in new centres,while indigenousmanufacturing contracted
from155,550to128,500,inarelentlessprocessof“creativedestruction”,butat
acostofrisinguniondiscontent,especiallyinDublin.8
7 “providingorder”,MurphyandHogan2008:27;Hardiman1988:62;WhitakerinChambers2013:240-18 Programmeexpansionism,BielenbergandRyan,2103:31,andexports/output,83-87;IDAjobfigures
O’Riordan1976:101-14andWhite1983:51-72;“creativedestruction”Whelan,WalshandQiLi,2007
68
In this turbulent economy, the NWAs enabled a generally orderly wage
development, particularly in thepublic sector. They grantedpercentagewage
increasestrackinginflation,thoughweightingby“flat” increasesimprovedthe
relative position of the low-paid. But as inflation often surpassed these rates,
successive agreements were often only narrowly agreed by unions. Varying
scope was provided for top-ups based on improved “productivity” through
clausesopentointerpretation,andtheseprecipitatedthemajorityofdisputes.
Employers indistressed firmscouldclaim“inability topay”,adefaultposition
often pleaded by them at the Labour Court. The NWAs were poorly co-
ordinated,witha“bewilderingarray”ofstartandenddatesacrosssectors.9
Higher-wage multi-nationals drove wage expectations across the economy
andthemomentumofplant-levelsupplementary“productivity”claimsdrovea
steep35percentincreaseinunionmembershipoverthedecade,to527,000or
65 per cent of the workforce. Wages “chased” inflation, and while NWAs
maintainedakindoforder,productivity claimsdroveopportunistbargaining,
with the incidenceof strikes, oftenunofficial, remaininghigh.These averaged
500,000work-days a year, a strike rate surpassing even that of Britain in its
1978“winterofdiscontent”andsecondonlytoItalyinEuropeby1979.10
Thesestrikes,thoughnumerous,involvedrelativelyfewworkers,onaverage
just 40,000 annually. Inmost of industry, wherewages averaged just 70 per
cent of British rates and employers sought to suppress these low wages to
maintain“competitiveness”,workersreliedontheNWAstograduallyimprove
theirbasicposition.Buttheleewayforlocalbargainingmeantthatinstronger
industries the NWAs were remembered by employers as having “failed
miserably to keep wage growth in check”, an opinion shared by some union
leaders. Exaggeratingmore than a little, Phil Flynn later conceded the NWAs
were “more honoured in the breach than the observance” and Bill Attley
recalled“theheadydaysoftheseventies”when“theonlyissue...confrontingus
waswhether...[to]takethemoneycentrallyorattheleveloftheenterprise”.11
9 O’Brien1981;alsoGunnigleetal.1999:113,194-910 MNCsandwages,O’GormanandCarroll1987:150;unionmembers,Nevin1994:393,strikefigures17211 strikefigures,Nevin1994:395-97;employerview,Hardiman1988;Flynnview,Hastingsetal2007:28;
AttleyinICTUADC1986:221
69
The turbulence in industry was thus again largely a consequence of weak
institutions,whichwasnaturallyexploitedbyworkerstoimprovetheirposition
in theabsenceof alternativeoptionsor legal rights.Thiswas compoundedby
sociologicalfactors.IndustrialtransformationbroughtsocialchangeasIreland
moved from amainly agricultural to an industrial society. Conflict wasmore
commonlessintraditionalsectorswithlong-unionisedworkforcesthaninnew
industrialplants,oftenlocatedinpreviouslynon-industrialtownsandinvolving
newworkers,“manyruralandnewtounionisation”,intownssuchasAskeaton
and Fermoy. British shop-floormilitancywas an added influence, brought by
thousands of emigrants returning to take up the new jobs at home, Ford’s
expandingmega-plantinCorkbeingacaseinpoint.Theinstitutionofthe“shop
steward”,hithertounknownoutsideDublin,spreadrapidly.12
Weak institutions also facilitated debilitating inter-union disputes and
membership “poaching”, especially in the expanding engineering andbuilding
sectors where labour shortage and competitive militancy drove wages,
strengtheningtheanti-centralagreementforcesinCongress.Thephenomenon
wasepitomisedbythedisputeattheDutch-ownedFerenkaplantinLimerick.It
finally closed despite efforts by the ITGWU to achieve a compromise through
the traditional route of the LabourCourt and government intervention,when
the sectional break-away MPGWU exploited what it ridiculed as ITGWU
“moderation”to“militantly”outflankitontheshopfloorwithhigherdemands.
This dynamic across industry assisted marginal sectional and amalgamated
unions togrowat theexpenseof traditionalones.Membershipof theBritish-
based ATGWU in the Republic trebled to nearly 20,000, as did that of the
“maverick” AGEMOU and MPGWU, while the ITGWU, despite a growing
workforce,grewonlymodestlyfrom162,478to185,566overthedecade.Shop
stewardscommittees,anewinstitution,emerged,whichcompanies,tomaintain
production, had to engagewith, rather thanwith official structures. By 1977,
12 workers’options,McCarthy,C.1966;“ruralandnew”,Devine,2009:684-5,alsoWickham1980;“British”
influence,Int.ÓRaghallaigh;“shopstewards”,Int.Geraghty
70
nearlyhalfofallstrike-dayslostwerein“unofficial”disputesas“management
abdicateditsresponsibilities”,asonecompanystudylamented.13
A parallel phenomenon of the 1970swas a large expansion of thewelfare
stateandhenceofemploymentineducation,health,welfareandstateagencies,
and the effective nationalisation of working relations in formally voluntary
bodies such as hospitals.Women entered theworkforce, particularly through
thesepublicservices,afterthe“marriagebar”wasliftedandequalitylegislation
introduced followingEECmembership, soon accounting for 40per cent of all
unionmembers.Thoughpublic sectordisputeswere constant, especiallyover
“relativity”claims,the1976upgradingoftheConciliationandArbitration(C&A)
service - an exception as an institutional innovation in this period - enabled
most“specialclaims”tobemanagedwithoutresorttostrikes.14
BarbaraCastle’sInPlaceofStrifehadinfluencedHaughey’s1969-70initiative
proposing a “tripartite system” encompassing pay, industrial relations reform
and industrial policy. Escalating conflict in British industry saw further
initiatives,notablyHeath’s1971IndustrialRelationsActwhichwasdefeatedby
aminers’strike,andWilson’sBullockCommissionof1975,whichwouldreport
in 1977 recommending a continental-style “industrial democracy” solution.
Reforms in many European countries widening worker participation ended
widespreadindustrialconflict,andin1975theEuropeanCommissionproposed
thatcompanylawbeamendedacrossEuropealongsuchlines.15
But neither Lynch nor the succeeding coalition undertook any comparable
reforms,FinanceMinisterRichieRyandisparagingeconomicplanningin1975as
basedon“irrelevanciesinthepast,hunchesastothepresentandclairvoyanceas
tothefuture”.OneexceptionwasthetransposingintoIrishlawofEECequalpay
andequalityprovisionsin1974,andMichaelO’Leary’sWhitePaperof1976on
worker directors in state industries. But these were minimalist reforms, with
governmentdisappointingICTUonworkerdirectorsandseekingtodeferequal
13 sectionaldisputesandanti-agreementtendency,ICTUARs1972-78andHardiman1994:151-3;
“Ferenka”,ICTUECmtgs.,1977passim,LimerickSocialist,6,1977:10andDevine,2009:614-9;membershipfigures,Nevin(ed.)1994:435-6andDevine2009:684;unofficialstrikerate,Hardiman1988:221-2,andingeneral,Int.Geraghty;Waterfordmanagement,Cooke1990
14 Onwomen,Daly,M.1994;white-collar,HaroldO’Sullivan,‘OpeningaddresstoSeminarorganisedbyDublinBranchesLGPSU’,17/10/1980,ILHS:LGPSU-2
15 CastleseeChap.2;alsoBullock1977;Europeanreforms,Frieden2007:350,367-9;Eur.Comm.1975
71
pay.EvenwhenthiswasrejectedbytheEuropeanCourt,itwasimplementedin
suchawayastoprovokefurtherdisputestoclarifyit.Equalpaywasonlyfinally
concededwhenICTUthreatenedtowithdrawinprotestfromtheNWAitself.16
TheNWAdidevolvesomewhat,withgovernmentconcedingsomelinkageto
budgetprovisions,assoughtbyICTU,tosecureanagreementduringthe1975
inflation crisis. It expanded food subsidies as a counter-inflationary measure
and a quid-pro-quo for a moderate settlement, and some in ICTU hoped to
exploitthisasalevertowardsareturntoawidertripartitism.Governmentalso
expandedtheC&Asystemin1976tomollifypublicsectorunions.ButwithFine
Gael intent on government autonomy and Labour, ever suspicious of
tripartitism, focused onwelfare state expansion, neither, as one study put it,
wereinclinedtomovetowards“aScandinavianstylecorporatiststate”.17
TheICTUitselfwasfarfromunitedonstrategy.Thedynamicofcompetitive
militancy and scope forwage expansion through local bargainingmeant that
many unions – especially sectional and amalgamated groups – sought an end
even to themodestNWAs.Leading ICTUofficialswerealsoambiguouson the
meritsofNWAs.GeneralsecretaryRuairiRoberts,andhislatersuccessor,Donal
Nevin, “careful, thoughtful men” from civil service backgrounds, had been
formedbytheFabiansocialismofLabour’s“CentralBranch”.Theirpreference
wasforunionbargainingfreedomandaLabourPartylegislatingaBritish-style
welfarestate.TheydistrustedtripartitismasaFiannaFáil-ITGWUstratagemto
decouple the unions from Labour and basically preferred the state’s role in
NWAstobeconfinedtothatofthepublicsectoremployer.18
Unions however were also “modernizing” in a form that increased their
preference for tripartitepolicyparticipation.Theyprofessionalised,with ICTU
developing an extensive training/advisory service. Through this its state
fundinggrewtoexceeditsunionaffiliationincomebyathird,andthisexpanded
capacity greatly enhanced its formerly meagre four-man full-time team. The
non-bureaucraticand loosecoordinatingroleof the ICTU iswell illustrated in16 RyanquotedinO’Riordan1976;O’LearyWhitePaperandequalpaycontroversy,Int.O’Donovanand
documentationinILHS:LGPSU-217 “lever”,O’Brien1981,Roche1994:158,Hardiman1988;C&Asystem,H.O’Sullivan,‘RevisedSchemeof
ConciliationandArbitration(nowinforce)’,n.d.[1976],ILHSArchive:LGPSU-2;“Scandinavian”,MurphyandHogan2008:27
18 Horgan1986:139-43:“publicemployer”,Inf.O’Riordan
72
themulti-taskingby this small coreofofficials.DonalNevin, assistantgeneral
secretary, produced ICTU’s main publication, Trade Union Information, “with the assistance of his wife Maura and daughter Anne”. From 1972 theITGWUbuiltaresearch/trainingcapacityofitsown,whattheunion’spresident,
FintanKennedy,calleda“brainbank…ofdedicatedexperts”.Manyofficialsin
these services had a university education, a rarity in trade union circles a
decadepreviously, orweremembers of left-wing intellectual groups.Another
modernising influence was the rapid growth of white-collar unionism and
professionalorganisationsaffiliating to ICTU,suchas taxofficials, civil service
technicians and evenmiddle management groups.While on the other “side”,
employer bodies eschewed state funding, the state subsidised management
trainingheavily,enhancingtheroleandinfluenceofbodiessuchasIMI.19
Interaction at EEC level had a further “modernising” effect. Irish business
organisations, particularly CII, engaged enthusiastically, opening an office in
BrusselsandbecomingactiveinEEClevellobbying.Irishunionshadpreviously
had few systematic international contacts beyond attending conferences, but
aftertheETUCwasfoundedin1974, ICTUbegantoengageenthusiasticallyat
EEClevel.TheroleofEEClegislation,suchasonequalpay,workers’rightsand
company law, convertedmany previously sceptical trade unionists to amore
benign view of the community. ICTU employed a “European Officer”, Patricia
O’Donovan, funded by an EEC grant, to explain and transmit European
directives,andETUCpoliciescametoplayanincreasingrole inICTUstrategy.
ButthisEuropeaninfluenceshouldnotbeexaggerated,astheETUCwasitselfa
divided house, still excluding many, mostly communist inclined, national
federations,anditsconsultativeroleatEEClevelwasasyetminimal.20
Fromtripartiterevivalto“NationalUnderstanding”,1976-79
ICTU,withthegeneralunionstothefore,adoptedapolicyin1974,proposed
bytheITGWU,advocatingareturntotripartite“democraticeconomicplanning”.
TheFWUI,nowheadedbyPaddyCardiff,supportedtheproposal, thoughurged19 Congressstaffandincome,ICTUAR1985:46;“sometimeswiththeassistance”,Nevinobituary,IT
22/12/2012;“brainbank”,Devine2009:63520 OnCII,Power2009,Int.PowerandO’Sullivan;EECprogressive”,O’Donovan:1999,McCarthy,S.2013
andIntO’Donovan;ETUCinfluence,Dølvik1999:43-76
73
that theNESCbeupgraded from itscurrent “purelyconsultativerole” toa “key
role in the actual formulation of the plan”. ICTU hosted a “summer school” in
1976,addressedbyunionleaders,includingITGWUeconomistManusO’Riordan,
aswellasCIIofficialsandformertopcivilservantT.K.Whitaker.EchoingLarkin,
O’Riordan argued a sophisticated case for tripartite “economic and social
planning”.Industrialstrategyneededtobalanceincreasedemploymentandliving
standards against “proper proportions of national output” being “allocated
between consumption, investment and public expenditure”. With a growing
population, 30,000 new jobswould need to be created annually to achieve full
employment,andmanymorehigher-qualityjobswouldbeessentialiftheaimof
achievingaverageEECstandardsofliving,asstatedintheAccessionTreaty,was
toberealised.Withlivingstandardscurrentlyjust45percentofthat,aplanfora
wholesale industrial restructure and upgrade was needed. Deciding priorities
was critical given that the current rate of public expenditure growth, which
exceeded that of GNP, could not continue, and financing it through increased
taxation only depressed living standards and consumption. Planning required
agreementonresourceallocation, includingwagesandpublicexpenditure,with
unionsneedingto“prioritisethestateexpenditure…crucialtomeetemployment
targets” and agree managed wage growth compatible with these targets. The
NESCwastheappropriatebodytobetaskedwithformulatingsuchaconsensus.21
TheICTUmajorityforsuchastrategyinthe1970swasnarrow,with leaders
cautiousof returning topolicycompromisesandunions tradingoncompetitive
militancyopenlyhostile.But itwas supportedby the leadersof generalunions
thathadbeenat theheartof theLemassiansystem,theITGWUandFWUI,who
alsosoughtinstitutionalreformsalongthelinesproposedbytheBritishBullock
Commission. Civil service unions too supported such an approach, as did the
LGPSU,thelargestforceinthepublicservice.O’Riordan’sformulaforatripartite
strategytradingwagemoderationforarole inplanning industrialdevelopment
andresourceallocation,withtheNESCatitscore,becameICTUpolicyin1976.22
21 O’Riordan1976:51-6622 PromotingBullock,Liberty1974-6andO’Riordan1976b;onLGPSU,O’Sullivan,‘IndustrialDemocracy-
WorkerParticipationinDecisionMaking’,13/01/76,ILHS:LGPSU-2;ICTUpolicy,ICTU1976b
74
Following the 1975NWA,which included a cautious andminimal linkage to
budgetpolicy,ICTUpressedforawideningtoafulltripartiteagreement.In1976,
indecidingonthelatestNWA,severalunionsonlyaccepteditunderprotest,the
LGPSU proposing it be rejected “in its present format” and seeking a wider
frameworkcoveringjobprotection,welfare,taxreformandlow-paysecurity.The
ITGWU,whenballotingonit, forthefirsttimerejectedanNWA,by70percent,
with the “sticking point” ostensibly employers’ increasing resort to pleading
“inabilitytopay”.Buttherealreasonwasthattheleadershiphadrecommended
rejectionasameanstoforceawideningoftheNWAtoa“aco-ordinatedpolicy
approachoverthewholefieldofsocio-economicissues”.TheNWAprofferedby
government was finally accepted by an ICTU conference by 240 votes to 215,
againsttheITGWU’sblockvote,duetomanysmallerunionsusuallyopposedto
central agreements panicking at the consequences and voting in favour! The
followingyear theLGPSUproposeda return to freecollectivebargaining in the
absence of awider plan andbecause of the “ever increasing restrictiveness” of
NWAs.ICTUconcludedafinalNWAwiththecoalitioninMarch1977,thoughonly
onconditionofaccompanyingtripartitetalks“oneconomicandsocialmatters”.23
ThisoffensivebytheICTUforarestorationoftripartitism,andparticularlythe
ITGWUrevolt,didnotoccurinavacuum.Sincethearmstrial,Haugheyhadused
his“wildernessyears”torebuildapoliticalbase,withinandoutsideFiannaFáil,
notthroughfactional“clientelism”alone,asoftenclaimed.HemadewhatConor
Lenihandescribesasan“extraordinaryeffort”towinbusinesstobackarevivalof
theeconomicpolicyapproachhehadchampionedatFinanceandalsocultivated
union leaders, especially the ITGWU’s Michael Mullen as well as its Vice-
President,JohnCarroll,whomheregularlymet.TheseimpressedonhimITGWU’s
ideas for a return to tripartitism, which Haughey eagerly adopted, requesting
copiesofanynewarticlesbyO’Riordan.Hecombinedthisalliancebuildingwith
businessandunionswithrepeatedattacksongovernmentborrowingforcurrent
expenditureratherthancapitalinvestment,andalsodirectedcriticisminternally,
criticisingColley’sabandoningofbalancedbudgetsandtheparty’sexpansionist23 “underprotest”,ICTUAR1977,Roberts,ICTU,‘Toallaffiliatedunions.:ProposedInterimPayAgreement.
Draftencl.ECrecommendation’,22/07/76,“enshrine”,“ToBranchSecretaries,DocumentsforNECmtg.:ProposedInterimNWA’,09/08/76,ILHS:LGPSU-2;“stickingpoint”Devine2009:609-11;“restrictiveness”,O’SullivantoBranchSecretaries,‘DocumentsforNECmeeting-ResolutionsadoptedatAnnualConference’,09/08/76,ILHS:LGPSU-2;“proviso”,Devine2009:610
75
1977manifesto,writtenbyO’DonoghueandO’Malley, fromthe launchofwhich
he and Lenihan “silently absented themselves”. Though still excluded from the
innerleadership,Lynchhadhadtore-appointhimtothefrontbenchin1974.24
Onhisreturntotheshadowcabinet,Haugheyusedaninvitationtoaddressa
conferenceoftheDublinCharteredAccountants–abodyhehadhelpedfound-to
set out his ideas for a private sector-based, government-managed, industrial
transformationwithinafiscallycontrolledframework.InLemassiantradition,he
proposed that this be developed through a “consensus” of government and the
majorsocialinterests.These,hesaid,couldpursuetheirrivalinterestsseparately
or their power couldbeharnessed in a commonnational economic endeavour.
EchoingLemass’sdescriptioninhis1945addresstotheITUCofsocialinterests
asproductiveforces,andcleavingtoITGWUpolicy,Haugheydescribedmanaging
thewage/productivityrelationshipasthekeytoindustrialgrowth:
“Trade union power is a socio-political fact which no legislation can
diminish…Itisnousesimplypreachingtothetradeunionmovementthatthe
containment ofwage claims is essential to future survival… If the planning
processdoesnotpermittradeunionpowertobeexercisedindevelopingthe
economic system we must not be surprised if it seeks its own ends
independently…Thevehicleforthateffortcanonlybeparticipativenational
economicplanning”.
Suchplanningrequired,“asanessentialpartofitsoperation”,“aconsultation
framework” inwhich “the short term interestsof all groupswouldbe thrashed
out in the context of the overall growth of the national income” and common
“outcomepoliciesandgoals”agreed.Thesewerenotperspectivesadvocatedby
LynchandColley,butaccordedwiththosesetoutbyManusO’Riordan.25
Fianna Fáil returned to power in 1977 on an expansionary programme. Tax
cuts and the abolition of domestic rates were to fuel consumption, which,
togetherwithincreasedborrowing,wouldfinanceastate-drivenindustrialdrive
toachieve“fullemployment”.CalledbyRocheIreland’s“Keynesianinterlude”,it
24 “clientelism”,Garvin1981;Lenihan2015:82;CarrollandHaughey,Hastingsetal2007;“copiesof
articles”,Int.O’Riordan;Haugheyoncoalitioninvestment,Dáil03/02/77;opposesmanifesto,Lenihan2015:87-8,alsoWhelan,K.2011:194
25 co-foundsassociation,Inf.SéamusLantry;‘SpeechtoDublinSocietyofCharteredAccountants’,05/11/75,inManserghed.1986:204-6
76
wasdoomedfromthestartasKeynes’formulaappliedtoclosedeconomiesand
wasdysfunctionalinavulnerableopeneconomysuchasIreland’s.Themanifesto,
inwhichHaughey played no part,made no reference towage agreements and
onlyreferredto“tripartitism” in itsproposal foran“EmploymentActionTeam”
with business, unions and “community organisations” to develop “suitable
employment schemes for school leavers and other young people”. Actual
economic planning would be strictly in-house, as recommended by Whitaker,
under a new Department of Economic Planning and Development “consulting”
withsocialinterests.MartinO’Donoghue,aTCDeconomicsprofessorandanother
Lyncheconomicpolicyadvisor,wasappointedMinister.26
Whitaker’sviewsontheseissuesheavilyinfluencedLynchandO’Donoghue.As
CentralBankgovernorhehadmadeclear to theCosgravecoalition in1974his
hostilitytoICTUattemptstolinkbudgetpolicyandwagebargaining.Government
mustinsiston“securing,byagreementor,failingthat,bystatutoryenforcement,
alimitonincomeincreases”andunionsmustagreetothisinadvanceofbudgets.
He set out his views on planning and tripartitism at the same 1976 ICTU
conference atwhichO’Riordan had presented the union case for a partnership
system.Whitakerarguedthatplanningwastheprerogativesolelyofgovernment,
not“socialpartners”.Itshouldproposeaplanandthenelicitcommentsthrough
“consultation”, with budgets serving as a “rolling” process of review and
adjustment.Plantargetscouldnotbepre-agreedandshouldinvolve“indicative”
rather than “prescriptive” goals. “Democratic principles are not fully served by
consulting only the major organised interests” which were “not necessarily
coincidentwiththegeneralcommunity interest”.Wageregulationwasessential
to investmentplanningbuttoensurerestraint“ratherthan link[ing]bargaining
about pay rounds with the annual budget”. As regards “the consensus issue”,
while consensus was useful for any plan, “the theory that people are always
reasonable … is not always valid”. “No Minister for Finance could expect the
advanceagreementofdrinkerstoan increasedtaxondrink”and“there iseven
26 Roche2009;FiannaFáil1977:33
77
fainterhopeoftradeunionsagreeinginadvancetoatemporarypaypauseorpay
restraint”.Hispreferencewasclearlyforstatutorywagecontrol.27
ICTUexpressedsupport forFiannaFáil’sexpansionistmanifesto,particularly
itscommitmentto“fullemployment”,whileLabour-affiliatedunionsopposedany
renewedcoalitionwithFineGaelbecauseofitsbudgetarypolicies.Apollafterthe
election showed that 65% of organised workers had voted Fianna Fáil, with
supportamongskilledworkersrisingsince1969from40to54percentasthose
whohadvotedLabourabandonedit.Otherissuesalsointruded,withITGWUalso
opposing the coalition’sNorthernpolicy andMullen resigning theLabourwhip
overtheCriminalLawJurisdictionBill.As theLabourPartyvotecollapsed, left-
wingfactionsbrokeawaytoformashort-lived“SocialistLabourParty”(SLP).28
Followingtheelection,ICTUreiterateditscallfor“participativeplanning”and
“theextensionof collectivebargainingand industrialdemocracy”,urgingLynch
to“pushthefrontiersof…bargainingbeyondthefieldofwagesandconditions”.
But Lynch, as when previously Taoiseach, embraced neither ICTU’s nor
Haughey’s advocacy of a return to tripartitism, and retained the NWA system,
while O’Donoghue’s department developed industrial strategy autonomously.
ICTUmeetingswithGovernmentcontinuedtobestrainedandinconclusive.29
O’Donoghue’s plans appeared in 1978 in the form of two “Green Papers”,
NationalDevelopment1977-80andDevelopmentforfullEmployment.Whilethese
had a Keynesian flavour, neither had involved union or NESC input, and the
limitedtripartitismproposedwasalongthelinesoftherolling“consultation”or
“politicalexchange”Whitakeradvised.GovernmentaskedNESCto“comment”on
theplanswhentheywerealreadyfinalised,and,unsurprisingly,NESC’sresponse
thereforefocusedonlyonminutiae,avoidingreferencetogovernancestructures.
While Lynch’s planning conformed to the rather vague “social partner
consultation”recommendedby theEEC, itwasconsistentwith theapproachhe
had pursued in government previously. O’Donoghue’s post-1977 expansionary
plansappearedinitiallytobeardividends,withinflationhalvingintheirfirstyear
27 WhitakerandCosgravecoalition,Chambers2014:240;atICTUconference,Whitaker197628 Post-electionpoll,Allen1997:150;MullenresignationandSLP,Horgan1986:131-229 “Participativeplanning”,ICTUAR1977;“pushthefrontiers”,ICTUmotionsinNAI:Taoiseach/2009/135
/132/2;“strained”ICTUAR:318-29andICTUAR1979:163-65
78
to7.5percent,theeconomygrowingby9percent,andrecruitmentofthe20,000
promisednewpublicsectorjobsbegun.30
As the expiry of the coalition’s last NWA approached, the new government
proposedasimilarsuccessoragreement.ButtheITGWUagainsoughta“broader
package”encompassingsocialandeconomicplanningandataspecialconference
inOctober1978ensuredthatICTUvotedbylargemajorityonlytodiscussadeal
thatincorporatedjobcreation,EMSconditionsandtaxreform.ICTUpressedthis
agendaongovernmentatameetinginNovemberwithLynchandhis“economic
ministers”.Butwhileoffering“consultation”,Lynchrefusedtogobeyondhisoffer
ofalimitedNWA.Themeetingendedwithlittleprogressbeingmade.31
Whatchangedthepowerbalanceinthisstand-offwasapopulartaxrevoltthat
began in early 1979, and how ICTU used it to leverage a broader tripartite
agreement. The disproportionate and growing burden of income tax borne by
PAYEworkershadbeenasimmeringissuethroughoutthe1970sandadriverof
wageinflation.From71percentofallincometaxin1975,PAYEhadgrownto87
per cent by 1979. The trade union and left-wing press increasingly contrasted
thiswiththeneartaximmunityenjoyedbyfarmersandprofessionalsandothers,
withtheSFWPemergingasanelectoral forceforthefirsttimenot leastonthis
issue. Spontaneouswalk-outs by unionmembers inDublin firms in reaction to
Colley’s capitulation to the IFA bywithdrawing a proposed 2 per cent levy on
farming incomes in January1979sparkedgrowingdemonstrationscoordinated
by Dublin Trades Council.While union leaderswerewary of “political strikes”
andICTUofficials,aswellasBarryDesmond,aformerLabourminister,criticising
the movement, groups such as the B&ICO, which included ITGWU economist
ManusO’Riordan,andtheSFWP,whoseinfluencewasgrowingintheunions,saw
therevoltasare-awakenedclasspoliticsandurgedICTUtouseittosecureafull
“economicandsocial”pact.WhenITGWU’snationalexecutivedecidedtosupport
the tax movement, protests grew, culminating in a one-day national stoppage
involving700,000workers,thefirstsince1922,inadvanceofthe1980budget.32
30 D/EPD1978a-b;NESC1978;plan“success”andcost,Whelan,K.2011:195,Foster2007:1731 “broaderpackage”,Liberty,Aug.1978;ICTU-Lynchmeeting,ICTUAR1979:43432 OnSFWP,Walsh1994,HanleyandMillar2009;left/unionpressontax“burden”,Liberty(ITGWU)and
IrishPeople(SFWP)1977-9;“walk-outs”andtaxrevolt,Devine:613,778-9;onB&ICO,IrishCommunist,March1979;onSFWP,HanleyandMillar2009,SFWP1978;ICTUAR1979:268-80
79
In this atmosphere, ICTU’s special pay conference in March 1979 rejected
Lynch’s proposed NWA, deciding to accept nothing short of a wide-ranging
tripartitepay/policyagreement.Itproducedcounter-proposalstoO’Donoghue’s
National Development, proposing a pay agreement incorporating an industrial
plan with specific job-creation, tax and social reform targets. Under pressure,
Lynch agreed to a joint “Working Party”, chaired by O’Donoghue, to develop a
joint document, with sub-groups drafting sections on education, tax reform,
employeeparticipation,employment,andhealth.Thisappearedon23Aprilasa
draft “National Understanding for Economic and Social Development”. But the
ITGWU’s block vote ensured this was rejected as inadequate by an ICTU
conference in September,Mullen saying it failed to concretely link pay and tax
reform, granted “pointless” “paper money” increases, much of which would
returnto“governmentandtherich”intaxandpriceincreases.Whileitmarked“a
significantstepforward”,specifictaxandjobtargetswereessential.33
Despite his large Dáil majority, Lynch’s authority was fading from January
1979,with themediadescribinghimas “tired”andhisEuropeanPresidencyas
his “lap of honour”, and he himself publishing memoir-like reminiscences in
Magill. Following Colley’s budget debacle and with the tax protests escalating,
FiannaFáil supportplummeted. It lost twoCorkby-electionsandpoled just35
per cent in the first European election, its worst electoral performance since
1926.Withgovernmentauthorityfading,unofficialindustrialdisputesmultiplied,
making1979theworststrikeyearonrecord.Lynchrespondedwithpredictable
threatsofwagecontrols,buthadlittleoptionbuttoofferanimproved“National
UnderstandingMarkII”,withsomebudget-linkedtaxreformasICTUhadsought.
Ruairi Robertswelcomed his “effort… tomeet the trade union point of view”,
enablinganagreementsuchas“wehaveneverinhistoryseen”.34
The“NationalUnderstanding”,effectivefromOctober1979,hadseparatepay
andnon-payaspects(“Parts1and2”),asconstitutionallawprescribedtheformal
autonomy of both collective bargaining and budget policy. Pay, negotiated
separately at the Employer-Labour Conference as had the NWAs since 1970,33 ICTUAR1979:268-80,NUtextinibid.:257-66;“workerparticipation”,D/Labour1980(March);“paper
money”,Devine2009:613;CarrollinICTUADC1979:28634 IrishTimesquotedbyManserghed.1986:316;ingeneral,Keogh2008;“lifeandtimes”,Magill,3/21979;
electoralperformance,Lee1989:492-5andWhelan,K.2011:193-8;RobertsinICTUADC1979:434
80
providedforinflation-linkedincreasesover12months,witha“no-strike”clause
andonlylimitedscopeforextraproductivityorpublicservice“specialclaims”.On
policy,“Part2”,negotiatedwithO’Donoghue,wasconceivedas longerterm,not
confinedtothe12-monthpayframework.Itincludedincrementalreformsintax,
working hours, worker participation and education, a Tripartite Committee on
Employment,SectorIndustrialCommittees,aCommissiononindustrialrelations
reform,andNationalEnterpriseandEmployment/Trainingagencies.35
Butthe“NationalUnderstandingMarkII”didnotincludeeitheranintegrated
wage/growth formulaora tripartitepolicy system,nordid it establisheithera
deliveryorcoordinationmechanism,oranystrategicpolicyrolefortheNESC.It
was thus a compromise between a consultative and a tripartite system,wrung
from a reluctant government under electoral pressure led by a vacillating
Taoiseachwithlittleenthusiasmforanysocialpartnership-typedeparture.
ButICTUwasoptimistic,inNovembercirculating120,00copiesofaReviewof
Progress. This declared: “the concept of the National Understanding is a trade
unionconcept;itconceivesofasocietydedicatedtosocialends;itisforthetrade
unionmovementtoensurethattheobjectiveisfullyanduniversallyunderstood”.
On ICTU insistence, the “Tripartite Committee” was quickly convened, and by
Decemberhadmettentimesand“commencedtheworkofseeking,sortingand
selectingsuitableprojects”forits£20menterprisesupportfund.ICTUoptimism
was reflected inRuairiRoberts’ statement that the tradeunionmovementnow
wielded“influenceandpowerfargreaterthanatanytimeinourhistory”.36
Buttheoptimismprovedpremature.Byearly1980ICTUwascomplainingthat
theEnterpriseAgency,whosecompositionandstructurehadbeenfinallyagreed
inNovember,was“notonewhitfurtheradvanced”,theSectoralCommitteeswere
“inthesamestate”,otherpromisedbodieshadyettoappear,andtherehadbeen
noprogressonthe“GreenPaperonWorkerParticipation”orpromisedinitiatives
in education. By the time Lynch resigned in early December 1979, little of the
“Understanding” had in fact been implemented, with civil servants using the
35 TextinICTUAR198036 ‘Review’inICTUAR1980:120;“TripartiteCommittee”,ICTUADC1980:231-47,393
81
interregnum of the Fianna Fáil leadership contest to disengage from a process
manyofthemseemedtoregardasinappropriateifnotwhollydistasteful.37
NewDeal:Haugheyrecaststhe“Understanding”,1980
Haughey had returned to national prominence in 1978-79 as Minister for
HealthandSocialWelfare.Hetransformedthattraditionallydullministry–his
appointmenttowhichtheUSAmbassadorandothersassumedwasintendedto
endofhiscareer- intoapowerfulpoliticalbasebymodernisingitsstructures
andservicesandundertakingmany low-costbutpopularreforms.Within two
yearsheinitiatedsemi-commercialactivitiesthroughagenciessuchasPARCto
exporthealthexpertisetotheMiddleEast,upgradedhospitalservicesthrough
public-private partnerships, introduced new welfare measures, particularly
favouringwomenand theelderly, legalisedcontraceptionwithaprescription-
based “Irish solution”, and revamped contributory social insurance (PRSI) as
soughtbyICTU.Hisreformswerewidelyseenas“progressive”,includingbythe
ICTU. The “Understanding” contained little on health and welfare as ICTU
regardeditsdemandsintheseareasasalreadylargelymetinthebudget.38
Haughey used the popularity his new position conferred to intervene to
resolve a major Dublin postal strike, although as minister for health he was
responsible neither for the post office nor industrial relations.Hemediated a
solutionwithhisally,MichaelMullenof the ITGWUwho,althoughtheITGWU
was not involved in the dispute, was influential with Dublin trade unionists.
Haughey secured cabinet acquiescence for his intervention, whichmust have
been galling for Lynch and his circle. It nevertheless showed the powerful
positionHaugheyhadachievedlongbeforeLynch’sretirement,andpresageda
newapproachagovernmentledbyhimwouldbringtoindustrialrelations.39
Haughey had no involvement in the first “National Understanding”, which
O’Donoghue,LynchandColleyhadnegotiated,anditwasunclearatfirstwhat
heintendedforitonbecomingTaoiseach,especiallyashesignalledhispriority
37 ICTUAR1980:124;civilservicedisengagement,interviewswithanon.D/FinanceofficialandAttley38 Appointedminister,Lenihan2015:87,Whelan,K.2011:196-7;USview,DubEmbtoSecretaryofState
20/02/75,UScable75-Dublin-1828,wikileaks;reforms,ICTU1978:201-04,ICTU1979:172-5,Devine2009:631,RyleDwyer,‘WhyHaugheynowdeservessomecompassionateunderstanding’,IrishExaminer,10/06/2006;onPRSI,ICTU1978201-2;S/WbudgetandNU,ICTUAR1979:160,172-9
39 OnstrikeinterventionIT06.11.2014andcabinetacquiescence,Lenihan2015:92
82
as cutting the budget deficit and, to Congress’s alarm, immediately abolished
O’Donoghue’sDepartment.LynchhadresignedexpectingColleytosucceedhim,
but to public surprise a backbench landslide saw Haughey become leader.
Althoughencumberedwithahostile,Colley-loyalcabinet,Haugheyimmediately
signalledpolicy reversals inkeyareas, abandoningKeynesianism for financial
discipline (“living way beyond our means”) and restoring an interventionist
policyonNorthernIreland(“afailedpoliticalentity”).Healsosignalledradical
changeinsocio-economicpolicy,movingtheplanningsectionsofO’Donoghue’s
abolished department, which had evolved from Finance’s old EDD, to the
DepartmentoftheTaoiseachasits“EconomicandSocialPolicyDivision”,along
with the NESC, merged the Departments of Public Services and Labour and
announcedaninitiativetoestablish“orderlyindustrialrelations”.Thesemoves
indicatedanintentiontorestructuretheNationalUnderstandingbyintegrating
a tripartite approach to economicpolicy, combiningpublic andprivate sector
pay,andinitiatingaprocessofindustrialrelationsreform.40
Haughey’sfirstperiodasTaoiseachwasdoggedbythehostilecabinethehad
inherited. Some openly plotted a reversal of the leadership election outcome
andColleyhimselfexpressedonlyconditionalloyaltytohimasleader,hisdeep
hostility extending to leaking details of cabinet discussions to antagonistic
journalists.Thedivisionswerepresentedbythepressasaclashof leadership
valuesandpolicy,especiallyontheNorth, thoughalso,asthesecondoilcrisis
tookhold,oneconomicpolicy.O’Kennedywastheonlycabinetmembertohave
votedforHaugheyasleader,beingrewardedwiththeDepartmentofFinancein
place of Colley who refused to continue in the role. The new minister
immediately announced that Government had an “open mind” on whether it
wouldcontinuewiththeNationalUnderstandingatall.41
Haughey’s links to business and unions served as a counter-weight to his
precarious political position, but his decision to revive and restructure the
failing“Understanding”wasalsoconsistentwithhislong-heldpositiononhow
national bargaining should be shaped. Hemet the ICTU Executive in January
40 Congressalarm,ICTUAR1980:121;onaimsandD/EPD,Dáil11and13/10/79and‘BroadcastbyAn
Taoiseach’,RTÉTV,09/01/80,inManserghed.1986:316-2641 Oncabinetalliancesandevents,Whelan,K.2011;“openmind”,Dáil31/03/80
83
1980 both to assure it of his “full” commitment to the agreement once pay
discipline was maintained and develop it beyond the uncoordinated Lynch/
O’Donoghue model. In a veiled reference to events in Britain under its new
premier, Margaret Thatcher, who had dramatically declared breaking union
powerherprimarygoal,hecommittedtotacklethe“radical…deteriorationof
theeconomicsituation”not through“deflationary”methodsbutbycombining
“prudent” financial management with industrial expansion. He favoured “in
principle”anewUnderstandingastheframeworkforthis,thoughone“different
fromthecurrentone”.Inparticular,andtellingly,heurgedICTUtomovefrom
employmenttargetstoagrowthformulaasthebasisforagreedstrategy.42
HaugheyunderpinnedhistalkswithICTUthefollowingmonthbytellinghis
Árd Fheis - towhich, tomuch annoyance in anti-Fianna Fáil union circles, he
waspipedinbytheITGWUbandwith‘ANationOnceAgain’–thatheintended
developingtheNationalUnderstandinginto“anewtypeofpartnershipbetween
workers, employers and Government … a better way of doing things” which
“couldshowtheoutsideworldthatwehadatlastfoundthewaytohandlethis
difficult,complex,butvitallyimportantaspectofournationallife”.43
When the budgetwas published, Congress, while criticising its lack of any
reference to “full employment”, agreedwith the need for spending discipline
anddescribeditstax/welfareprovisionsasconsistentwiththeUnderstanding.
But,alarmedbyO’Kennedydeclaringthatgovernmentmightdispensewiththe
agreement, ICTU sought anothermeetingwithHaughey, atwhichCarroll told
himthatdespitehisassurances,little“progressoncommitments”hadoccurred.
For this he blamedDepartment of Finance hostility and theMinister himself,
whohad ignoredrequests forameeting,andsuggested thatresponsibility for
theagreementbetransferredtoHaughey’sownDepartmentgivenhowitsrole
hadnowbeen“enhancedsignificantlyintheEconomicandSocialarea”.44
Haugheydidnot immediatelyactonCarroll’sproposal, initiallymoving the
agreement from Finance to the new Department of Labour and the Public
42 Thatcher,‘SpeechtoConservativePartyConference’,12/10/79,ThatcherArchive:CCOPR1059/79;
HaugheymeetingwithICTU,reportinICTUAR1980:121-243 ITGWUband,‘ITGWUbandtogreetSoldiersofDestiny’,IT15.02.1980andManserghed.1986:327;
Haughey,‘PresidentialAddress,49thFiannaFáilÁrdFheis’,16/02/80,inManserghed.1986:33044 ICTUECmtg.11/04/80;ICTUAR1980:131-41
84
Service,buthesimultaneouslybolsteredthesocio-economiccapacityofhisown
Departmentby transferringNESC to itsnewE&SPolicyunit underPádraigÓ
hUiginnandappointingdepartment secretary,NoelWhelan, to chair it. These
moves were part of a general radical expansion of the Department from its
previousminor role as a government secretarial office, as he also transferred
Northernpolicy,theartsandhisotherprioritypolicyareastoit.HetoldICTU
that despite the Department of Labour and Public Service’s remit on the
UnderstandingtheyshouldtreatWhelanastheirchannelfordirectcontactwith
government.Healsoactivatedthestalledinstitutionsoftheagreement,suchas
theTripartiteEmploymentCommittee,theManpowerandEnterpriseAgencies
and various agreed educational initiatives. A renewed confidence among the
unionswasreflected in the largemajority ICTUvote inMay forentering talks
withgovernmentonanewandmore“integrated”NationalUnderstanding.45
Modestexpenditurecutsin1980/81begantoreducethecurrentdeficits,as
it appeared at first the public expenditure crisis could bemastered.Although
unemploymentcontinuedtorise,itwasbelievedtheeconomywasrecovering.
Haughey implementedUnderstanding commitments, approving thebalanceof
the agreed public service jobs promised under it. New FDI continued to be
secured,notablyincludingApple,thefirstmajorUScomputerfirmtoinvestin
Ireland, which opened a plant in Cork. Haughey innovated with economic
initiativeseveninforeignpolicy,securingbothhealthandengineeringprojects
forsemi-statecompaniesandincreasedbeefsalesintheMid-East.Heassisted
thiswiththe“BahrainDeclaration”whichalignedIrishpolicywithArabopinion
ontheMid-Eastconflictand,asthefirstEECstate,recognisedthePLO.Withthe
optimismofanimminentrecoveryandtheeconomicbounceofthesestimulus
measures,industrialdisputesdeclinedtotheirlowestlevelinfiveyears.46
The EEC played a part in Haughey’s plans to reconfigure the National
Understanding.HehadlongbeenanadvocateoftheEECandin1978,backto
prominenceincabinet,stronglysupportedEMSmembershipandbreakingwith
Sterling, which a wavering cabinet had ultimately decided to do against the
45 ICTUECmtgs.22/01and11/04/80;ICTUAR1980:124-31,143,24746 Reducesdeficit,Lee1989:502-3;‘BahrainDeclaration’,O’Connor,P.2012;“optimism”Bielenbergand
Ryan2013:31-2;disputes,Nevin(ed.)1994
85
oppositionofFinanceandtheCentralBank,itsformergovernor,T.K.Whitaker,
warningLynchitwouldbea“quixoticgesture”.DespiteaviewthatBritainwas
inpermanentpost-imperialdeclineandthatcontinuanceofthelinktiedIreland
toaweakeconomy, itwasastatementbyaFrenchministercastingdoubton
Ireland’s economic independence fromBritain that tipped the scales. “Ireland
facedaclearchoice”,thenCentralBankgovernor,MauriceO’Connell,latersaid,
“to go with Britain or Germany: we finally opted for Germany”. After 1979
Irelandwithin the EMS invariably supported German proposals, ensuring the
IR£ closely tracked the DM. At the European Council in Dublin in November
1979,atwhichThatcherfirstraisedherfamousdemand,“Wewantourmoney
back!”, Haughey met Helmut Schmidt, with whom he was immediately
impressedandwouldformaclosepoliticalalliance.47
AlthoughtheUnderstandingrantotheendof1980,Haugheymovedearlyto
preparethegroundwithICTUforanewand“different”,“integrated”successor
agreement.HealignedhispolicywithECpriorities,whichhadanewurgency
sincethestartofEMSandtheadoptionof“policycoordination”in1979under
it. TheEuropeanCouncilwas divided over how to tackle themonetary crisis,
butinJune1980,anddespiteBritishopposition,proposedthatmemberstates
preparemonetaryadjustmentin“consultationswithemployersandlabour”and
in December recommended that in implementing “structural adjustments” to
meet EMS requirements “a combined effort by Governments with the
collaborationofemployerandlabourorganisationsisessential”.Thiscoincided
withHaughey’spreferredapproachanyway,butfurtherreinforcedhiminit.48
KeyunionfiguressharedHaughey’sviewsontheshapeasecondagreement
shouldtake.PubicservicesleaderHaroldO’Sullivanwarnedthatwhileprevious
expansionary policies had greatly grown the public service, this had meant
increasedborrowingwhichinturnhadcausedthecrisisinthepublicfinances.
Unionswerepartlyto“blame”,hesaid,byhavingfailedto“expandanddeepen
dialogue with Government” and for a tendency to see “the Understanding as
little more than an NWA in new clothes” instead of a negotiated strategy of47 DecisiononEMSandFrenchstatement,HonohanandMurphy2010;“gesture”,Chambers2015:190;“opt
forGermany”,Int.O’Connell;“trackDM”,Lee1989:492,James2012:146-80;Thatcher,‘PressConferenceafterDublinCouncil’,30/11/79,ThatcherFoundation;HaugheyandSchmidt,Int.Mansergh
48 EuropeanCouncil,1980(June)and1980(Dec.)
86
socialandtaxreforminsensiblemonetaryparameters: “Ifmonetaristpolicies
aretobeavoided,someconsensuswillbeneededwithGovernmentonthis”.49
WithICTUsupportandECCouncilencouragement,Haugheyofferedtalkson
aSecondUnderstanding.Whilepaywouldbenegotiated through theELC, the
“non-wage” aspect was to be negotiated with the E&S unit of his own
Department, with he himself, as Taoiseach, playing a central role. If Lynch’s
Understanding had been a “redistributive” expansionary plan, his would be
basedonaconsensuseconomicstrategyforarecessionarycontext.50
While on ICTU insistence, and against Haughey’s preference for a growth
formula,thenewUnderstandingretained“fullemployment”asitsprimarygoal,
it accepted the principle of expenditure controls. The pay deal combined the
NWApercentage-plus-“flat-rate”approach,providing forabout17percent,or
roughly equivalent to inflation, over15months.Budget linkagewasprovided
throughwelfarebenefitandPAYEreformcommitments.Thepaydealsimplified
thespreadofdatesunderthepreviousUnderstanding intoasingletwo-phase
schedule, tied to “industrial peace” through a pledge signed by unions and
employers in eachworkplace, though allowed for some “local” bargaining on
limitedspecificissuessubjecttoLabourCourtadjudication.Thesecondphase,
duefromJune1981,couldberevisitedifinflationexceededprojections,andthe
recourse by employers to “inability to pay” was replaced by a company-by-
companyapproachfordistressedfirms,withthedecisiononwhetherviability
oremploymentwereactuallythreatenedreservedtotheLabourCourt.51
Harold O’Sullivan, chair of the ICTU’s powerful Public Services Committee,
said thenewUnderstanding“dissipated the threat”ofa “monetarist”strategy,
having combined, as recommended by the EC, wage moderation, financial
discipline and budgetary targets within EBR goals, while protecting
employmentandagreeingmeasuresonindustrialstrategy,health,welfare,tax
and supports for the unemployed and deprived. Improving public service
efficiencyanda“rootandbranch”reformofindustrialrelationswereincluded
49 O’Sullivan,‘OpeningaddresstoSeminarorganisedbyDublinBranchesLGPSU’,17/10/1980,ILHS:
LGPSU-2,Exec.Boardpapers50 ‘MeetingwithTaoiseach’inICTUAR198151 ICTUAR1981:210-23;Power2009:52-4
87
with further provisions promoting employee participation in companies at
boardandlocal,plant,level.52
Other non-pay elements included employment-boosting commitments on
IDAadvance factory completions, central and local government infrastructure
investment,housebuilding,industrialtraining,a£79mEnterpriseAgencyfund,
the ring-fencing of welfare, a £10m joint government/employer-financed
“EmploymentGuarantee Fund”, youthwork-experience/training programmes,
expanded worker consultation and other measures. Talks were promised on
fundamental industrial relations reform, paid maternity leave, anti-poverty
measures,education,child-care,labourandwelfarereform.Tripartiteworking
groupswouldbeestablishedtodraftdetailedproposalsforeacharea.53
Despitelateraccusations,notablybyCharlieMcCreevy,thatthispackagewas
a negation of Haughey’s promised counter-expansionary policy, the EBR
parameters, conditionality of the second phase and restrictions on additional
claims in fact locked the agreement into a controlled spending framework, as
HaroldO’Sullivanstressed.ICTUrecommendedacceptanceofthepackageand,
with anti-agreement unions subdued by Thatcher’s offensive against union
power inBritain, itwasoverwhelminglyendorsed.Notonlydida77percent
majority in the ITGWU accept it, but so did a majority of members of the
traditionallyanti-collaborationATGWUwhoignoredtheirleaders’calltoreject
it.PublicserviceunionsoverwhelminglysupporteditandtheICTUconference
on23Octoberendorseditbyan80percentmargin.JohnCarrolloftheITGWU
declared:“ifthetradeunionmovementweretoldtomorrow,‘youtakeover’,the
typeofprogrammetheywouldseektoimplementwouldbe,almostlineforline,
assetoutintheProposalsforaSecondNationalUnderstanding”.54
This extraordinary endorsement by ICTU unions, with Haughey’s special
relationshipwiththeITGWUatitscore,contrastedwiththedividedbusiness/
employercamp,which,influencedbyeventsinBritain,soughtastrictcounter-
52 O’Sullivan,‘OpeningaddresstoSeminarorganisedbyDublinBranchesLGPSU’,17/10/1980,ILHS:
LGPSU-2,Exec.Boardpapers53 GovernmentofIreland1980(July)54 McCreeveyinterview,SundayTribune,27.12.1981;O’Sullivan,‘OpeningaddresstoSeminarorganisedby
DublinBranchesLGPSU’,17/10/1980,ILHS:LGPSU-2,Exec.Boardpapers;unionballots,Devine2009:705;publicservicevote,ExecutiveBoardmtg.,26/04/79,ILHS:LGPSU-2;ICTUconference,ICTUAR1981.:75-9,240,246;Carrollinibid.,240
88
inflationary strategy instead.While the industry lobbyCII decided to endorse
the Understanding for both the stability and involvement in planning it
promised,FUEdemurred.Inacharacteristicintervention,Haugheyforcedtheir
hand in an “unscheduled and unprecedented visit … to their headquarters”
whentheirGeneralCouncilwasinsession,arguingthemeritsofconsensusover
confrontational“monetarism”.Whileavowing“prudentfinancialmanagement”,
heconcededthatsome“slippageonborrowing”wasprobably inevitablebuta
price worth paying to prevent the “economy collapsing”. He undertook to
includebusiness-friendlyreforms inhis1981budgetbutalso indicatedthat if
employers still rejected an agreement hewould conclude a public sector one
anywaythatwouldsetabenchmarkfortheprivatesector.TheFUEreluctantly
endorsedtheagreement,whilelistingitsvariousreservationsaboutit.55
Fromimplementationtocrisis1980-81
Implementationof thesecondUnderstandingbegan in late1980. Industrial
disputes continued to decline andmany of the agreed initiatives commenced.
Working parties on education and social reform were formed and the
Enterprise Agency and Sector Industrial Committee established, the former
chaired byMarkHely-Hutchinson, a leading figure in Guinness’s and Bank of
Ireland,andthelatterbyDepartmentofTaoiseachsecretary,NoelWhelan,with
aremittostimulateentrepreneurialandproductivecapitalinvestmentprojects,
bothstateandprivatesector-led.TheEmploymentGuaranteeFund,co-financed
byanemployer levy,eventually funded33projectscreating2,800whole-time
jobs.FinalpaytermshadbeenagreedinOctoberandthefirstphaseincreases
paid..Onworkers’participation,a“JointParticipationCommittee”pilotedinthe
IIRSwasjudged“reasonablysatisfactory”anditwasagreedtoextendthemodel
tolocalauthorities,HealthBoardsandotherstateagencies.56
ThenewUnderstanding lacked an overall joint coordinationbody, but this
didn’t cause noticeable dissent. Government shared the European Council’s55 CIIposition,Power2009:53-4;Haugheyintervention,Power2009:54andMurphyandHogan2008:
587,591;“unscheduled”,Allen,K.1997:160,‘Haugheyrulesoutdeflation’,IT18.10.80and‘Haughey’sroleinFUEtalks’,IT21.10.80;“slippage”,Dáil21/10/80;“benchmark’threat,Hardiman1988:212;FUEdecision,FUEBulletin,Nov.1980
56 Implementationandchairs,ICTUAR1981:120-27and‘Sectoralcommitteemeets’,IT15.05.81;EGFprojects,Power2009:53;firstphase,LGPSU,‘LG&PBDiv.Exec.Mtg.’07/11/80and‘ReportonAgendaLGPSUExec.Board’,14/11/80;“JointParticipation”,LGPSUExec.Boardmtgs.28/05,05/06,14/08/81
89
optimism that with EMS stabilising interest and exchange rates, strategies
involving “intense consultation with the social partners” and combining
“prudent monetary policies, healthy budgetary management, and the
reorientation of public and private sector expenditure in the direction of
productive investment”, wouldmaster the crisis. Haughey told the ICTU that
EMSdeficittargetscouldbeachieved,whilefundsaccumulatingdomesticallyas
aresultofEMSwouldfundpublic/privatecapitalinvestmentwithoutaneedfor
recoursetoincreasedforeignborrowing.Headdedthatheplannedto“setthe
target for infrastructural development as high as possible”. His 1981 budget
reducedcurrentspendingandtheexcessofactualoverprojecteddeficit,while
increasing short-term welfare benefits, modestly reducing PAYE taxes and
committing£1.5bntothecapitalprogramme.HetoldhisApril1981ÁrdFheis
thatthenewNationalUnderstandinghadhelpedrestoredisciplinetothepublic
finances,reducedindustrialdisputestotheirlowestlevelinyearsandaverted
thesocialconfrontationwidespread“elsewhere”,meaningBritain.57
Inamoveofparticularimportance,Haugheyalsorevivedthelong-neglected
NESC,assoughtby ITGWU,requesting ithenceforth to“report togovernment
through the Taoiseach”. He asked it to prepare proposals regarding its own
future strategic role. In responding in February 1981, NESC, emphasising its
uniquerolecombiningthemajorsocial interests,policymakersandeconomic
experts, requested amandate to develop a consensus approach on “strategic
policy issues” and review government socio-economic policy, instead of as
heretofore commenting on individual policies at government request. It had
firstintervenedonnationalstrategyin1978wheninresponsetoagovernment
request ithad issued“Comments”onO’Donoghue’sFullEmploymentplan.But
nowsoughtapro-activestrategy-proposingrole.Haugheyimmediatelyagreed,
andthisresultedinaprodigiousoutputthatveryyear,withreportsonIreland’s
socio-economic position in the EEC and “Aims and Recommendations” for
nationalsocio-economicpolicy.InJuly1980Haugheyhadalreadysuggestedit
develop a comprehensive review of industrial policy,whichwould eventually
result in the ground-breaking October 1982 report, Policies for Industrial
57 ECCouncil1981(March);HaugheyatmeetingwithICTUEC,ICTUAR1981:120-1;budget,Lee1989:
502-3;Haughey,‘PresidentialAddress,50thFiannaFáilÁrdFheis’,11/04/81inManserghed.1986:469
90
Development,which J.J.Lee laterdescribedasawatershed, initiating “the first
seriousdebateonindustrialpolicyformorethantwentyyears”.58
Buthopesforeconomicrecoverybegantoevaporatefromearly1981asGDP
acrosstheECcontractedby1percentandunemploymentrose.Thedeepening
recessionwas due to the continued instability of the globalmonetary system
sincetheUShadabandonedthegoldstandard,towhichEMSitselfhadbeena
response.Theoptimisticforecastsof1980gavewaytoadmissionsofstructural
recession,which the Commission nowdescribed as “much deeper,wider and
morepersistentthanhadbeenanticipated”.Irishinflationagaintopped16per
cent, unemployment rose and exchequer figures showed a deficit 40per cent
higherthanpredicted.DespiteevenmoreradicalexpenditurecutsintheUK,its
inflation also soared, to 18 per cent, with unemployment reaching 2m,while
Germany entered its first sustained post-war recession. It was now accepted
that the economic slowdownwas no temporary reversal due to the latest oil
pricehikes,butadeeperstructuralcrisisandmonetarypolicyfailure.59
Inresponsetothesuddeninflationrise,ICTUsoughtanadjustedincreasein
thesecondpayphasewhilecountycouncilspleadedtheneedtodeferpayment
ofspecialawards.Privateemployerscalledforafreezeonallpayincreasesand
agreed to discontinue contributions to the Employment Guarantee Fund.
Government froze all spending commitments and promised tax reforms. The
MinisterforFinanceapproachedCongressfortalksondeferringspecialawards
given “the community’s inability to find the resources tomeet further special
increaseswithoutrisktojobsandtheviabilityoftheeconomy”.Internally,ICTU
leadersacceptedthatcompromiseontheseissueswouldbenecessary.60
InMarch1981Haugheydiscussedthecrisis,ECpolicyco-ordinationandthe
“UK problem” with Helmut Schmidt, telling him Europe needed an economic
policy.HetoldhisÁrdFheisthattheNationalUnderstandingwouldhavetobe
reconfiguredinlightofthecrisis,thoughnotabandonedassomeofhiscabinet
58 Newrole,NESC1981a;“firstintervention”,Hardiman2002:8;1981reports,NESC1981b-d;Haughey
andIndustrialPolicy,NESC1982;Lee1989:50459 USmonetarycrisisandEMS,Frieden2007,James2012;“muchdeeper”,‘Recessiondeeperthan
expected’.IrishTimes,27/03/81;situationinEurope,EuropeanCouncil1980(Dec.)and‘FromBadtoWorse’(editorial),IrishTimes,02/04/81
60 ‘Unionsseeknewtalksonpay’,IrishTimes,19/03/81and‘ICTUrelationswithemployersworsen’,IrishTimes,23/03/81;“internally”,LGPSU,‘ReportonAgenda,LG&PBDiv.Exec.Cttee.Mtg.’10/04/81
91
opponentsproposed.HedecidedonageneralelectioninMay,hopingtosecure
the overall majority polls indicated he could attain and finally establish his
authority.Butrenewedcrisis in theNorth ledtothe interventionof“H-Block”
candidateswhodenouncedhishandlingofthehungerstrikes.Thesemobilised
considerablesupport,withJohnCarrolloftheITGWUprominentintheDublin
H-Block movement, and denied Haughey the majority he sought, again
illustratingtheon-goingimpactoftheNorthernconflictonsouthernpolitics.61
Haughey’sweakenedpositionledtoincreasingpublicattacksontheNational
Understandingby farmingandbusiness interests,whodemandeda12-month
pay/pricefreezeas“partofanall-outGovernmentcampaigntocurbinflation”.
WhileICTUcalledforcommitmentsandC&Arulingstobehonoured.employer
claims for thesecondphase increases tobedeferred through localagreement
were increasingly upheld by the Labour Court, keen to avert a formal FUE
withdrawal from the agreement. Government criticised the “precipitative
deflationary action” sought by employers as it would only serve to dampen
demandand couldprovoke “widespread industrial and socialunrest”, but the
media increasingly portrayed this position as that of a Taoiseach who now
foundhimselfaprisonerof“interestgroups”and“fearfulofunpopularity”.62
Union leaders’acceptanceof theneedtoadjust theNationalUnderstanding
tocounterrecessionarypressuresandthecontinuedifweakenedpreferenceof
businessintereststoremaininvolvedwithgovernmentmighthavesufficedfor
asuccessfulrestructuringof theagreement tobenegotiated.ButHaugheydid
notgettheopportunitytoattemptthisashelosttheelection,tobesucceeded
byanewFineGael/Labourcoalition.Thenewgovernmentinitiallydeclaredits
intentiontocontinuewiththeNationalUnderstanding,butbyre-structuringit
byseparatingpay,budgetarystrategyandindustrialpolicy,andrevertingtoits
publicservice-centredapproachofthemid-1970s,itwouldensureitsdemise.
61 ‘Confidential.MeetingbetweenTaoiseachandChancellorHelmutSchmidtinBonn’,31/03/81,NAI:
2012/90/926/3;Haughy,‘PresidentialAddress,50thFiannaFáilÁrdFheis’,11/04/81,inManserghed.1986:466;“opponents”,McCreeveyinterview,SundayTribune,27.12.1981;1981electionMurphy,G.2016andWhelan,K.2011;CarrollinEnglish2004:203
62 “NU”crisis,ICTUAR1981:75-9;“urgedparties”,‘ReportonAgendaforExecutiveBoardmtg.’28/05/81and05/06/81;“rejectsprecipitativeaction”,‘Observations…onCIIpointsaselementsofafive-yearindustrialprogramme’,n.d[May1981],for‘informingareplybyMichaelWoodstoLiamConnellanoftheCII’,UCD:P176/183;‘Haughey:fearfulofunpopularity’,IrishTimes,25.05.81
92
Chapter4:Partnershipandautonomousgovernment1981-86
BreakdownundertheFineGael-Labourcoalition,1981-82
The minority coalition government formed in June 1981 and headed by
GarretFitzGeraldwouldfallwithineightmonthsoveracontentiousbudget.The
samecoalitionpartnership,under themoreconservativeCosgrave leadership,
hadsuccessfullymanaged thewageagreementsof the1970s, evenexpanding
them, however reluctantly, to incorporate minimal budget and social policy
aspects in the 1975-76 inflation crisis. The FitzGerald government claimed
initially to favour retaining theUnderstanding framework, butwithinmonths
haddiscarded it.Thisdecision, and the retreat toanarrowerpay framework,
againdemonstratedthecorepartypoliticaldivergenceoncorporatistsolutions.
FitzGerald,fromtheurbanliberalwingofFineGael,sawhimselfasa“social
democrat”.Heclaims thatwhenstartingout inpoliticshehadconsideredbut
decidedagainsttheLabourParty,principallybecauseofits“dependenceonthe
tradeunionmovement”.HehadneverthelessbeenanenthusiastforLemassian
economicplanning.Asaministerinthe1970scoalitionhehadoftensidedwith
Labour on social policy issues against his party colleagues and supported the
broadeningof theNWAin1975,evenpraising theNESC’srole inachieving it.
But while favouring pay agreements he remained essentially hostile to
“consensus” policymaking, having argued in 1970 thatwhile a body like the
tripartite NIEC might recommend an approach, it was compromised by the
“limitations” of “consensus”. Government shoulddeterminepolicy. But during
the1981electioncampaignhecriticisedFiannaFáil’s1980taxconcessionsonly
fornothavingformed“partofalessinflationarynationalunderstandingdeal”.1
Labourunexpectedlylostseatsin1981initspoorestelectoralperformance
since 1957, reducing its bargaining power in the coalition. Major affiliated
unionsopposeditcoalescingwithFineGaelandsomeDublinTDsadvocatedan1 FitzGeraldonLabourPartyandNESC,FitzGerald1991:67,295-304;“limitationsofconsensus”,
FitzGerald,‘NIECreportonincomesandpricesshowsbackwardprogress’,IT15.04.1970and‘Wage-pricespiralcanleadtoeconomicstagnation’,IT01/08/70;“lessinflationary”,‘Governmenthandlingofincomespolicycriticised’,IT04.05.81
93
arrangementwith Fianna Fáil instead. But, as ever, amajority prioritised the
exclusionofFiannaFáilfromgovernment.Labouralsostatedapreferencefora
nationalpayagreementbutwitheconomicplanningreturnedtogovernment.2
Thenew“ProgrammeforGovernment”proposedtocontinueprudent fiscal
managementwithaneventualreturntoexpansionarypolicy.Besidesarangeof
socialreforms,ring-fencingwelfare,extendingprovision,andsometaxreform,
it pledged to avoid pay freezes and honour arbitration awards in the public
sector.Economicpolicyprioritised“gettinginflationdowntoEEClevels”,with
wage determination through “free central wage bargaining” within pay/price
“guidelines” toberecommended“byan independentbody”– i.e. theESRI - to
maintain“competitivenessathomeandabroad”.Industrialpolicywouldbethe
remitofanew“NationalPlanningBoard”(NPB)composedof“thekeyeconomic
and social Ministers” and “representatives” of unions, employers, farmers,
youth,consumersand“publicagencies”,“presidedoverbytheTaoiseach”.This
woulddrafta “four-yearplan”, tobe implementedbyaMinister forEconomic
PlanningandDevelopment.Theproposedapproachwasareturntoside-lining
theNESC,separatingpayandeconomicpolicy,andpost-hoc“consultation”on
government-drivenplans,ashadalsobeenWhitakerandLynch’spreference.3
FitzGerald appointed an “independent expert body” in the form of a
Committee on Costs and Competitiveness. This consisted of three academic
economists - Professors Brendan Walsh (UCD), Dermot McAleese (TCD) and
TerenceBaker(ESRI)-dubbedthe“ThreeWiseMen”afterasimilargroupingat
EC level. Their role was to recommend price/incomes “guidelines” and in
August 1981 they proposed an incomes freeze, a public sector employment
embargo, increased indirect taxes and drastic cuts in foreign borrowing.
FitzGerald accepted the advice, alarming ICTU by declaring that while a
“nationalwagesagreement”was“vital”,itmustbewithintheseguidelines.4
ForLabour,BarryDesmond,aformerICTUofficial,concededtheneedfora
“temporary pay pause”, but championed a new National Understanding as a
2 ITGWU/FWUIrejectcoalition,IrishTimes22.06.81;DublinTDs,FitzGerald1991:359;LPmanifesto19813 OnPfGcommitments,LGPSU,‘ReportonAgenda,LG&PBDiv.Exec.Cttee.mtg.’10/04/81and‘FineGael
andLaboursetoutaimsforgovernment’,textofprogramme,IT29.06.814 ‘Living10percentabovemeans–FitzGerald’,IT15.08.81;EuropeanCouncil1979(Dec.)and1980
(Apr.);ICTUAR1982:132
94
“prerequisite”forafairapproachto“economicandsocialplanning”.Otherwise
the “weak, those on low incomes and the unorganised” would “lose out”. To
softentheprescriptionsofthe“ThreeWiseMen”,heproposedthattheNESCbe
“incorporated” intotheNPB.Butthiswouldhavenegatedboththepurposeof
theNESCand thepay/policy continuumof theUnderstanding. In essence, his
positionreflectedcontinuedLabourantipathytoFiannaFáilcorporatism.5
But with the public finances in a worse condition than anticipated, and a
weakenedLabourPartyinlittlepositiontodictatepolicy,FitzGeraldrevertedto
traditional Fine Gael solutions, i.e. deflationary price/income controls, tax
increasesandexpenditurecuts.HesoughtNESCendorsementforhisapproach,
whosechairman’sdraftreplywasleakedbeforethecouncilconsideredit.This
supported the proposals of the “Wise Men” adding only that controls should
extendtoallincomes,notjustwages,andwascertainlyinfluencedbyWhitaker,
the dominant “expert” on the council and advisor to FitzGerald. ICTU’s NESC
representatives dissented, querying government’s ability to control non-wage
incomes or prices. Pat Rabbitte of ITGWU described the leaked proposals as
intendedtoundermineanychanceforanewagreement,andeventheFUEsaw
themas“moretheoreticalthanpractical”.6
Withinweeksofthecoalition’sformation,anddespiteelectioncommitments,
any potential for a new National Understanding had evaporated. Employers
backedgovernment’spreferenceforapaypause,addingthatthepolicyaspect
ofpreviousUnderstandingshadbeenagreedbetweengovernmentandunions
without their input. Fine Gaelministers declared that while “social partners”
mightbeconsulted,theyhad“norighttodecideimportantsocialandeconomic
policy”, and matters “such as education and maternity leave, which bear no
directrelationshiptoincomes…shouldnotbethesubjectofbargaining”.7
This separation of pay bargaining and economic planning led FitzGerald,
despitetherecedinghopesforfruitfulpaytalks,tomeetICTUanywaytodiscuss
thethree-year“nationalplanforeconomicandsocialdevelopment”hehopedto
publish “before end of year”. Some institutions of the Understanding were5 ‘Desmondagainstwagefree-for-all’,IrishTimes18.08.816 ‘FitzGeraldseekstocontrolallincomes’,IrishTimes24.08.81;‘NESCcallsfor18-monthfreezeonincome
rises’,IrishTimes27.08.81;ICTUAR1982:200-1;RabbitteandFUEquotedinIrishTimes28.08.817 IrishTimes28.08.81
95
retained,suchastheSectoralDevelopmentalCommittee,or,liketheEnterprise
Agency, abolished on the promise that their functionswould reappear in the
planned “National Development Corporation”. While still aspiring to a “new
National Understanding”, unions adopted to the new situation, with an ICTU
conferenceinSeptember1981voting3-to-1to“explorethepossibility”ofapay
agreementwithemployersonlyand“negotiateseparatelywithGovernmenton
…tradeunionpolicyonsocialandeconomicmatters”.8
FitzGeraldagainmetand “consulted” ICTU inDecember1981, encouraging
themtopursueaprivatesector“centralagreement”withemployers.TheNESC
position when published, while amended from the leaked August draft, still
advocatedapaypauseandincomes/pricecontrols,andICTUrefusedtosignit.
Union disillusionment at the ending of tripartite wage/policy bargainingwas
apparentinabitterITGWUappraisalwhichdeclared“theword[had]failedto
becomeflesh”,theinstitutionsestablishedinApril-May1981havingprovedto
beaFiannaFáilelectoralployandstallingbycivilservantshavingenabledthe
Coalition dispense with them “with contempt”. But ICTU President Paddy
Cardiffmournedthedemiseof theNationalUnderstandings, “abrave,original
andcreativeattempttobroadenthescopeofcentralisedbargaining”.9
Abandoningtripartiteplanningdidlittletoenhancestatecontrolofincome/
pricedevelopment.Governmentitselfratherabsurdlypleaded“inabilitytopay”
to justify a proposed 18-month pubic service deal which, despite inflation of
over10%,would freezepay forayear, followedby increasescappedat7per
cent,andwiththeprivatesectorexpectedtofollowsuit.Privatesectortalksat
theEmployer-LabourConferencecollapsedwhenemployersinsistedonholding
tothis“governmentguideline”andunionsonmaintainingwagevalues.Pressed
byLabour,FitzGeraldaccededtoa15-monthpublicpaydealmatchinginflation
andweightedtothelow-paid,thoughfreezingspecialclaims.ICTUdeclinedto
recommenditbutitswearypublicsectormembershipballotedtoaccept.10
8 “beforeendofyear”,ICTUAR1982:114;institutionsretained,ibid.205-6;“aspiring”,LGPSUExec.Board
mtg.25/09/81;unionvote,ICTUAR1982:1279 FitzGerald-ICTUmeetings,ICTUAR1982:127-30,179;NESC1981d:91-94andICTUAR1982:201;
ITGWUresponse,Liberty,Nov.1981;CardiffquotedinDevine2009:76310 ‘Governmenthasnotbrokenpact–Kavanagh’,IrishTimes11.09.81,‘Governmentwillnotinterveneto
savepaytalks’,IrishTimes02.11.1981,andICTUAR1982:131;ELCbreakdown,ICTUAR1982:129-30;agreement“wearily”accepted,LGPSU,‘ReportforAgenda,H&WDiv.Exec.’22/01/82
96
Nosidewascontent,farmersaccusingthecoalition,“likeitspredecessor”,of
“abandoningitsanti-inflationprogramme”,theCIIdecryingthedealforsetting
“anutterly unreal example” for private industry, and the FUE condemning its
renegingonthepaypause,“ignor[ing]theimplicationsfortheprivatesector”.
Settlementsintheprivatesectorneverthelessmostlyfollowedthetermsofthe
public deal, though few of those without bargaining power received any
increases.Government,whichCongressaccusedofseeking“toruntheeconomy
bydiktatandeconomic lecture”, resorted to increasinglydraconianmeasures,
cutting spendingand increasing taxes that severely reducedwagevalues, and
embargoingathirdofpublicservicevacancies.Itdispensedwithpublicservice
“specialclaims”bysimplynotre-appointingtheArbitrator.Strikedaysroseby
a third in 1981 while the budget deficit climbed to 7.3 per cent. While
“discarding”theNationalUnderstandingsitendedupwitharancorousold-style
publicpayagreementthatantagonisedunionsandemployerswhilealienating
expert economicopinion.TheCoalition fell bya singlevote inFebruary1982
overabudgetimposingVATonchildren’sclothesandshoes.11
InoppositionHaugheyhadcontendedthathisgradualistapproachtocurrent
expenditure reduction and capital investment, with a recovery of revenues
through revived growth, was the only way “to avoid serious economic
disruptionandgreaterunemployment”.Havingeschewedatripartiteconsensus
in favour of deflation, the FitzGerald government also failed to achieve an
electoral consensus, and lost the February 1982 election, being replacedby a
further minority Haughey administration. On Haughey’s threatened return,
Whitaker resigned from NESC, reminding its chair both of his opposition to
socio-economicplanningbeingmoved fromFinance to theDepartmentof the
Taoiseach-whichFitzGerald,whilealsocriticisingthemove,hadnotreversed-
and his belief in the need for “effectivemeans of keeping incomes and costs
from rising faster in relation to real output than in countrieswithwhichwe
compete”,i.e.statutorywagecontrols.12
11 “farmers”,‘FUE,unionsconsidernewwagetalks’,IrishTimes17.12.1981;CIIview,‘Employergroup
condemnspaydeal’,IrishTimes17.12.1981;FUEview,‘EmployerschallengeGovernmentpayproposals’,IrishTimes22.12.81;“settlements”,ICTUAR1982:125-6;“diktatandlecture”,IRN,30.10.1981
12 HaugheyinDáil21/10/81;WhitakertoNoelWhelan,NESC,10.02.1982,NESCArchive:Box3
97
RevivalinanotherHaugheyinterlude,1982 ThefirstbudgetofthenewHaugheygovernment,inMarch1982,retainedthe
coalition’sspendingcutsandintroducedadditionaldeficitcuttingmeasures.But
whileunionscomplainedthatthe“savagecutbacksrepresentanattack…onthe
poor”,Haugheyincludedleft-wingmeasureswhichensureditwaspassed.These
includedhissecuringofIndependentDublinTDTonyGregory’svotebyagreeing
with him a radical social plan for the inner city, brokered by ITGWU general
secretary Michael Mullen, and ensuring the abstention of the three Workers
Party TDs by ring-fencingwelfare benefits. He alsomaintained the basis for a
returntotripartitismbyre-activatinginitiativesunderthe1980Understanding,
paying the first phase of FitzGerald’s pubic service agreement and intervening
directlytosettlevariousfesteringindustrialdisputes.UnlikeforFitzGerald,none
ofthesemeasuresrepresentedanideologicalcompromiseforHaughey.13
What is notable in retrospect about this short-lived8-month government is
howmuchitscoreapproachtosocio-economicpolicyandattemptstoorganise
these politically would be replicated in 1987. He revived key elements of the
NationalUnderstandingapproachabandonedbyFitzGeraldbutbylatesummer
1982 remodelled it into a new paradigm pre-figuring the 1987 departure. He
revived other innovations of his 1980-81 government, in the arts, third-level
technical education,Northern and foreign policy, semi-state commercialisation
andurbanregeneration. In industrialpolicyherevivedhis formulaofacapital
investment/welfare expansion/growth rather than “full employment” model,
restored the NESC to a central strategic role, re-asserted the primacy of
monetarypolicy,andcentralisedpolicymanagementinatightteamcoordinated
inhisDepartment.Finallyhepursuedasocialpartnershipstrategyfirstwiththe
unions and then other forces, notably the CII. Why was this strategy, almost
identicaltotheparadigmshiftheengineeredin1987,notsuccessfulin1982?
13 “savagecutbacks”,‘AnnualConference,LGPSUH&WDivision’,13/05/82,ILHS:LGPSU-1;onGregory,
Gilligan2011,withtextof‘AgreementreachedbyCharlieHaugheyTDandTonyGregoryTD’,196-223,andonWP,HanleyandMillar2009;“stoke”,JoyceandMurtagh1983;revives“Understanding”initiatives,ICTUAR,1983andManserghed.1986:617;implementspaydeal,LGPSU,‘ReportonAgendaforLG&PBDiv.Exec.’,16/04/82andD/Env.circularE14/82;onsettlingdisputes,GerConnollyTD,‘Addressto…annualconference’LG&PBDiv.,13/05/82and‘AnnualConf.,LGPSUH&WDivision’,13/05/82,ILHS:LGPSU-1
98
Having attacked FitzGerald for “abandoning” the National Understanding,
Haughey announced his intention to develop a “comprehensive plan” in
consultation with unions, employers and “economic and social research
institutions”, i.e. both the NESC and ESRI. Despite Congress scepticism arising
fromitsbruisingexperienceswiththeunravellingoftheNationalUnderstanding
in1981, ITGWUleader JohnCarrollagain liaisedwithHaugheyandhisunion’s
Executive welcomed his proposals. It called for the suggested talks to begin
immediately between the “social partners” on a “national economic and social
plan”to“maximizethecountry’sresources”,acceptedtheroleofpayrestraintin
“securing economic recovery” and proposed a state-sector-driven industrial
policyand“majorextensionoftheprincipleofindustrialdemocracy”astheway
toachieveit.Haugheymetbothemployersandunions,pressingonbothhiswish
on the expiry of the pay round in December 1982 to conclude a national
agreementcoveringpayandtaxaswellas“appropriate[tripartite]structuresfor
longtermeconomicandsocialplanning”.AshelatertoldtheDáil:
“Therearethosewhothinkeconomicpoliciescanbepursuedonthebasis
ofconfrontationwiththetradeunionmovement.Wedonotsubscribetothat
…Wealsomaintainfullconsultationwithemployerorganisations,againon
the fundamental principle that in a small community such as ours the
confrontationpolicieswhich theOpposition seem to favourwill only bring
dissensionanddivision.Oureconomicplanwillprovideabasisforunitingall
economiceffortandinterestsinaconcertedprogramme,tobuildupamore
competitiveandbetterstructuredeconomy”.14
Againprefiguringeventsoffiveyearslater,Haugheysimultaneouslyconvened
an inner cabinet group headed by Finance Minister Ray MacSharry, which he
taskedwithproducingwithinthreemonthsa4-year“economicandsocialplan”
toformthebasisforaprogrammetobeagreedwithemployers,unions,farmers
and “economic and social research bodies” to transform the economy
fundamentallyandgrowitoutofrecession.This,hetoldtheDáil,would firstly
14 “abandoning”Haughey,‘BudgetspeechJanuary1982’(notdelivered),inManserghed.1986:589;also
‘Cabinetfailedonpaytalks,saysHaughey’,IrishTimes13.11.81;“comprehensiveplan”,Haughey,‘SpeechtotheEconomicClub,NewYork’,15/03/83,inManserghed.1986:604and‘Plantorighteconomypledged’,IrishTimes16.03.82;ITGWUresponse,‘UnionwantstomeetHaughey’,IrishTimes25.03.82;Haugheyproposal,ICTUECmtg.21.04.82;“therearethosewhothink”,Dáil01/07/82
99
identify the “measures and sacrifices” needed to tackle the immediate deficit
problem and then drive an industrial take-off. The Enterprise Agency, IDA
schemes and other initiatives of theNationalUnderstandingwould be revived
and state industries, if operated efficiently, would have an enhanced role.
Followingan initialperiodofradical financialadjustment,anagreementwould
besoughtwiththe“socialpartners”onthedetailofthelonger-termplan.15
Planning by the MacSharry group, coordinated by Ó hUiginn through the
DepartmentoftheTaoiseachincloseliaisonwithHaughey,involvedatightcircle
ofministers, civil servants, agency leaders (notably PádraicWhite of the IDA)
and economists (notably KieranKennedy of the ESRI). Inwhatwould prove a
politicalmistake,however, itwasnotcoordinatedwithasimultaneousprocess
with the socialpartners atNESC.Tensionsarose inAprilwhenamootedPRSI
increase led ICTU to threatenrenewed taxprotests,but thiswasreversedasa
critical Dublin by-election loomed. On 31 July, within Haughey’s deadline,
MacSharry announced his financial plan to “progressively” but “prudently”
reduce the deficit through spending cuts while protecting lower incomes and
avoiding tax rises. Industrial policy initiatives being developed by Ó hUiginn’s
groupwould follow,withthe jointmonetary/industrial/socialstrategy forming
thebasisforaprogrammewiththesocialpartnersbeforetheendoftheyear.16
The as yet speculative industrial strategy and partnership agreement were
notenough todeflectunionshockatMacSharry’s31 Julystatement,whichnot
onlydrasticallycutalldepartmentbudgetsandextendedthepublicrecruitment
embargo,butdeferredfor18months,into1983,paymentofbothpublicservice
special awards and, even more critically, of the final 5 per cent phase of the
current public service pay deal. Haughey suggested that MacSharry’s pay
deferralformastartingpointforwidertalkswithICTU.Buthehadnointention
ofrescindingit,andatthesametimeinstructedthemeasurealsotobeenforced
in the array of contracted non-state agencies delivering health services. ICTU
denounced MacSharry’s plan as an “arbitrary breach of a freely negotiated
agreement”,warninggovernmentto“desistfromthecourseofconfrontationand
15 HaugheyinDáil02/05/8216 Planning,MacSharryandWhite2000:53-5;notconsult,‘TheWayForwardtoWhat?’Liberty,Nov.1982
100
conflict” which would “end any possibility of a constructive dialogue on
economicpolicy”.17
Haughey responded bymeeting the ICTU on 17 August and proposing that
while thepaydeferralhadtostand, itcouldbe incorporated intoawiderpay/
policyagreementthat includedelementsoffsetting itsuchascompensatorytax
reductions andothermeasures. In Septemberhe further eased tensionsby re-
appointing the Arbitration Board suspended by the coalition, which health
unionsweresoonreportingwas fairlyadjudicatingspecialclaims,even if their
eventual payment was deferred. But the public pay crisis dominated ICTU’s
agenda, one union noting “all else in the period [was] overshadowed by the
shockannouncement”.ICTUthreatsofprotestsandstrikesrecededasHaughey
againofferedtoencompassthedeferralofthepaymentphasewithinawider18-
monthpublicpayagreementthatcouldencompasscompensatoryelements.18
In fact Haughey already realised his mistake in not accompanying the
MacSharry financial adjustmentplanwith a social partnershipprocess and in
deferring the latter until after the former was achieved. After an EC Council
summit in Brussels in June he had had a “chat”, which he “vividly” recalled
twentyyearslater,withhismainECally,HelmutSchmidt,whomheadmiredas
the quintessential European social democratic leader. He met him again two
weekslaterinBonn,discussingeconomicpolicyandindustrialrelationsatboth
meetings. When he casually asked Schmidt what he planned to do after the
council,theGermanleaderrepliedthat“thisweekendisthemostimportantone
in my annual calendar - I meet with the employers and the trade unions to
hammeroutanagreementontheratesofpayandsalariesappropriateforthe
comingyearinthelightoftheeconomicsituationanticipated”.Haugheyrelated
howhewas“immediatelystruckwiththiscommon-senseapproach”andhow“I
began, inmymind,asI listenedtoChancellorSchmidt,todevelopandexpand
the concept [of social partnership].” This statement, just two years before his
death, in a paper he co-drafted with Ó hUiginn, might be misconstrued as17 BudgetplanandHaugheyproposal,‘Governmentstatement:PublicExpenditurePolicy’,30/07/82,GIS;
instructiononhealthbodies,LGPSU‘ReportonAgendaforExec.Boardmtg.’06/08/82encl.AlbertReynoldsTD,circular,“toallDepartments”,30/07/82;CongressreactionICTUAR1983:146-7
18 HaugheymeetsICTU,ICTUAR1983:148-51;re-appointsArb.Brd.,‘StaffPanel[HealthService]’mtg.07/09/82,ILHS:LGPSU-1;“allelseintheperiod”,LGPSU,‘ReportonAgendaforH&WExec.Cttee.’27/09/82;Haugheyoffer,ICTUAR1983:148-51
101
Haugheyadoptingapartnership strategyafter these “chats”, but thatwasnot
the case. What Haughey took from Schmidt was the need to integrate his
monetary/industrialstrategy fromthestart inapartnershipprocess,securing
buy-intoitsessentialoutline.Itwasamistakehewouldnotrepeatin1987.19
Once the deficit strategywas announced, theÓ hUiginn-coordinated group
finalisedits industrialandeconomicplans.Theclaimthatthiswasaninternal
civilserviceinitiativeinwhichHaugheyplayedlittlepartisnotsustainable.Not
only did Haughey form the group and personally appoint its members, but
KieranKennedy,recallingHaughey’sregularinputstoit,waslaterreportedas
saying he had “never encountered a person with such an incisive mind and
intellectasHaughey”,whoasTaoiseach,“unlikesomeothers,…listenedtohis
suggestions”.ÓhUiginn,whilenaturallystressinghisownrole,similarlyadmits
discussingtheplanwithHaughey“virtuallyonadailybasis”asitdeveloped.20
Thefinalplan,TheWayForward,publishedinOctober1982,wasnotsolely
the product of the tight group that compiled it, as it in turn built on key
strategies produced by the tripartite NESC after it had been upgraded by
Haughey in1980 fromasubordinatepolicy function toastrategic role.These
reports included a pro-integration EEC strategy, a sector-focused industrial
strategyandareport-bytheUSconsultancy,Telesis,alsocommissionedbythe
NESC - advising a radical reconfiguringof FDI andpreferential state supports
forpromisingindigenousexportingcompanies.Thesereportshaddevelopedin
parallelwithTheWayForward,involvingmanyofthesamepersonnel.21
TheWayForwardproposedbotheliminatingthenationaldeficitinfiveyears
and simultaneously driving an economic transformation through “productive
investment” in export sectors and aggressively increasing foreign inward
investment, though shifting fromWhitaker’s now collapsing laissez faire FDI
model to a targeting of selected high value-added hi-tech sectors
complementing indigenous development. In addition, as advised by Telesis,
19 “greatlyadmired”,InterviewwithMartinManserghandHastingsetal.2007:33;“chat”Haughey2013
andbackgroundmaterialinNAI/Taoiseach/2012/90/926,‘Brief:Taoiseach’smeetingwithChancellorSchmidt,Bonn,13July1982’;“co-drafted”,interviewwithÓhUiginn
20 “oftentouted”,e.g.Roche2009,Regan2012;KennedyquotedinCharlesLysaght,‘Wherearetheynow?’,SundayIndependent17/09/06,similarlyinterviewwithPádraigWhite;“dailybasis”,int.ÓhUiginn
21 WayForward,FiannaFáil1982;onitsdevelopment,MacSharryandWhite2000;NESCplansNESC1981aandb,and1982aandb
102
promisingindigenousfirmsweretobeselectedforstateassistancetogrowtoa
globally competitive scale. New industries should be created, in ICT, marine
technology and other areas, and access to technical education radically
expanded.Theeconomicturn-aroundshouldbeaccompaniedbyanewNational
Understanding agreeing the stages of industrial transformation, ring-fencing
welfare anddelivering industrial peacebyoffsettingpaymoderationwith tax
cutsboostingrealpayat lownetcosttoindustry.Acceptingthisshift inprofit
distribution,thoughsubsidisedbyworker-friendlyfiscalreform,wasregarded
as themajorcontributionsocialpartnershipcouldprovide.Therecessionwas
to be “out-grown” while stability was assured and confrontation avoided.
Revenueswouldexpand throughcorporation taxesandabroadened taxbase.
Whenaccusedofapolicyvolte-face,HaugheycrypticallytoldTheIrishTimes:“I
don’tintendtobeaprisonerofmypast,andyoushouldnotbeeither”.22
Haughey,ashelaterrecalled,nowapproachedunionsandemployersformally
and informallywithTheWayForward “to see if their agreementwith thePlan
could be obtained”. But despite “exchanges of views” an agreement “did not
prove possible”. He told the ICTU the plan was as significant a departure as
Lemass’sProgrammesandhadbeenwelcomedbyemployers,farmersandtheEC
Commissionandsuggesteda “socialpartnership” thatexcludedstatutorywage
controls“atthisstage”andbasedona“newpermanentstructureforeconomic
and social planning”. But ICTU equivocated, still reeling from the public pay
“shock” and reluctant following its1981experience to yet again enter awider
dealwithagovernmentwhosestabilitywasbecomingincreasinglyprecarious.23
UntilAugust1982,theHaugheygovernmenthadappeareddetermined,stable
andunited,withanimpressedmedialargelysupportive.Butaseriesofbizarre
mishapsfromlatesummer,eagerlyseizeduponbysensation-hungryjournalists,
notably,despiteitsHaughey-friendlyeditor,inTheIrishTimes,underminedhim,
revivinganinternalpartyoppositionintentondisplacinghim.Haugheybelieved
that successfulgovernmentpowerdependedonaunitedcabinet committed to
delivering specific goals rather thanparty or backbench support,whichwould
22 FiannaFáil1982;“laissezfaireFDI”,O’Riordan2019,Pt.7‘BeyondourKen!’;“profitshare”,Kennedy,K.
2001;“prisoner”,IrishTimes22.10.8223 “seeiftheiragreement”,Haughey2013;proposalstoICTU,ICTUAR1983:148-51;
103
follow when these existed. But this unity was now collapsing. Nevertheless,
despitehiswaningauthority,diminishinghisplausibilityasanegotiatingpartner
for social interest leaders, “intense negotiations”with ICTU produced a public
payagreementinOctober,withHaugheyagreeingtophasinginincreasesrather
thanoutrightdeferral,andconcedingonotherissuessuchastop-upproductivity
bargaininginstateenterprises.24
Agreementonpublicservicepaywasaprerequisiteforabroaderpartnership
agreement, but, to demonstrate its distance fromgovernment, the ICTUpublic
services committee that negotiated it put it to membership ballot without
recommendingacceptanceorrejection.IntheDáilHaugheypleadedwithpublic
serviceunionmembers,traditionallyFiannaFáilvoters,toacceptitas“thelimit
ofwhattheExchequercanbear”,addingthathehopedbargainingintheprivate
sectorwouldfollowbasedon“unitwage-costcompetitivegain”.25
Unions distancing themselves from Haughey as his authority collapsed
included even the ITGWU, which now castigated the Way Forward as “the
greatest expression of blind faith in unbridled capitalism issued by any Irish
Governmentfortwodecades”andan“exercisein ‘Reaganomics’”asifdesigned
tomakeanagreementimpossible.ICTUhadnotinfactsetitsfaceagainstanew
NationalUnderstanding,butitsExecutivewasdeeplydividedandstillarguingits
positionwhen thegovernment fell on28October asGregoryand theWorkers
Party,opposingMacSharry’scuts,supportedamotionofno-confidence.26
Intheevent,thepublicpaydealwasacceptedbyunionmembersballotingin
Novemberduring theelectioncampaign.Followingmuchwrangling reflecting
deep internal divisions over a return to an Understanding strategy, the ICTU
Executivenarrowlyagreeda10-pointpolicystatemententitled ‘TheRealWay
Forward’, which advocated a partnership agreement that accepted monetary
retrenchment anddebt reduction if combinedwith an expansionist industrial24 “sensation-hungry”,JoyceandMurtagh1983,andcontemporarycolumnsinTheIrishTimesbyHaughey’s
oldadversary,ConorCruiseO’Brien;onGagebyandHaughey,Whittaker2006andBrady2005;Haugheyviewsonpower,interviewHaughey2005;“intensenegotiations”,LGPSU,‘ReportonAgendaforLG&SBExec.Cttee.’13/10/82;‘DraftProposalsforamendingtheAgreementonPublicSectorPaybetweentheMinisterforthePublicServicesandthePublicServicesCommitteeoftheICTU’,inLGPSU,‘ReportonAgendaforLGPSUExec.Board.’22/09/82
25 “laterrecalled”,Haughey2013;“socialpartnership”,IrishTimes22.10.82;“limitofwhatexchequer”,Haughey,Dáil27/10/82;“unitgain”,Dáil22/10/82
26 ITGWUposition,‘TheWayForwardtoWhat?’,Liberty,Nov.1982;“arguing”,ICTUECmtgs.Oct.-Dec.1982;fallofgovt.,Manserghed.1986:706
104
policybasedonNESCpolicies,paymoderationoffsetbytaxreform,andunion
participationin“allfacetsofeconomicandsocialplanning”.Itsredlinewasthat
realwageandwelfarevaluesbemaintained.ThePlanappearedbeforeanew
governmentwasformed,andHaugheyrespondedeagerlytoeachofitspoints,
claiming their compatibility with his own concepts and even intimating his
willingnesstoformacoalitionwithLabourasabasisforrealisingthem.27
TheWayForwardandHaughey’sproposedsocialpartnershipframeworkhad
someparallelsinpost-Keynesianrecoverystrategiesbeingpursuedbyotherleft-
of-centre governments with which Haughey was aligned, notably Schmidt’s in
Germany andMitterand’s in France.Many social democratic governments lost
power in Europe in this period, being replaced by right-of-centre alternatives
committed to austerity and monetary adjustment or, as in Mitterand’s case,
survivingbyabandoningwhathasbeentermedhisexperimentin“Keynesianism
inonecountry”andpartlyadaptingsuchacourse.ButtheWayForwardwasalso
differentfromtheseinalsobeingalong-termplantoaddressdeeperstructural
problemsofIrisheconomicunderdevelopmentand“lateindustrialisation”.28
At EC Council level, differing approaches to monetary adjustment led to
increasingdisunity.InMarch1982amajorityontheCouncilhadstillfavoureda
consensus approach and “convergence” of national policies along such lines,
recommendingthatmemberstatestacklethe“majorstructuralcrisis…affecting
every country” by reducing inflation and controlling production costs, but
simultaneously increasing “productive investment” in the public and private
sectors,in“industriesofthefuture”andinyouthtrainingandemployment.But
thisEECcouncilconsensushadcollapsed,givingway toseveralyearsofpolicy
disunityandCommunityinaction,oftentermedtheperiodof“Eurosclerosis”.29
DespitesuchexogenousfactorsandthepolicydisunityatEClevel,Haughey’s
1982governmentpoliciesandthefateofits“socialpartnership”initiativewere
primarily determined by domestic factors. Inmanyways his 1982 corporatist
formula,developedfromhisfirstNationalUnderstandingof1980-81,aswellas27 Paydealaccepted,LGPSUExec.Boardmtg.07/10/82;Reporter(LPGSU)Dec.1982;“wrangling”,ICTUEC
mtgs.Oct.-Dec.1982;‘TheRealWayForward’,ICTUAR1983;Haugheyresponse,‘SpeechtoDublinNorth-CentralComhairleDáilcheantair’,09/12/82;onLabour,ManserghinManserghed.1986:716-8
28 “parallelsinothercountries”,IrishTimes22.10.82;“Keynesiasminonecountry”,Dølvik1999;“lateinustrialisation”,Hardiman1988
29 EuropeanCouncil1982(March)and1982(June);“Eurosclerosis’,Meenan,1999
105
thepoliticalprocesstorealiseit,wouldberepeatedin1987,butwiththecritical
factorsofearlypartnerengagementandconvincingcabinetauthorityresolved.
Policyconsensus,ideologyandpartyconflictinthe1980s Ireland’spolitical turmoil in1980-82wasmulti-facetted,butat its corewas
disarrayovereconomicpolicy,commontomostcountriesasvyingformulaefor
apost-KeynesianordercausedpoliticalturbulenceanddivisionacrosstheOECD,
paralysingeventheECCouncil.By1982aconsensusconsolidatedinIrishpolicy
circleson aneed to combinemonetarist adjustmentwith a stimulus industrial
strategytoovercomestructuralunderdevelopment.Whatwasdisputedwasthe
combinationandframeworkinwhichtheseshouldoccur.30
NESC reports commissioned under the Haughey government of 1980 and
completedin1982,aswellasFiannaFáil’sownWayForward,setoutaspectsof
this dual strategy.While how to resolve themonetary challengewas taken as
given – by reducing both inflation and government consumption – the major
policychallengeofhowtoovercomeindustry’sfailingtoadapttofreetradeand
revive on a development path remained contended. Companies that had
prosperedunderprotectionwereoftensubsidiariesofforeignfirmsengagedin
basicassemblyandexploitingremainingprotections,butthesewerenowclosing
as those benefits ended. Indigenous firms had neither the scale, skills nor
capacitytoexploitfreetradecompetitivelyandbecametheprimaryvictimsofit.
Foreigninvestmenthadbeenamajordriver,buttheFDIsectorstalledasfirms
withdrew,itslegacyofunreliabilityandhigh-costperjobmuchcriticised.Aview
emerged at policy level advocating supports be redirected to indigenous firms
withthepotentialtobecomeinternationallycompetitiveplayers.31
The IDA opposed this policy turn, Pádraic White vigorously defending FDI
whileadvocatingitbere-focusedtowardsselectedhigherquality-addedsectors
in place of the hitherto laissez faire approach, though also “picking winners”
amongindigenousfirmsand“scalingthemup”tohighervalue-addedtrading.A
primaryweakness in the indigenous economy he identifiedwas the dearth of
investmentcapital–an issue thathaddogged the Irishstatesince the1920s–
30 Emergingconsensus,O’GormanandCarroll198731 NESCreports1982a,1982b;Kennedy,K.1984;“dualstrategy”Lee1989:504
106
withtraditionalfinanceweddedtounproductive“rentseeking”,especiallyinthe
Londonbondmarkets,andanaversiontoproductiveinvestmentathome.Inits
absence,anactiviststatewouldagainhavetodriveproductivedevelopment.The
NESC additionally identified reforming archaic institutions and how best to
exploittheeducationalexpansionofthelate1960sasfurtherpriorities.32
A concept that rapidly gained traction inpolicy circles, early identifiedby a
risingeconomist,ColmMcCarthy,wasaneedforaninstitutionaltransformation
toemulatemoresuccessful “smallopenEuropeaneconomies”.Anewtheme in
the international economic literature identified how states, by “concerting”
government, agencies and business in a “consensus” strategy, had successfully
pursuednicheforeignmarketadvantage.ButtheIrishcasewas“exceptional”not
onlyinitsunderdevelopedinstitutions,butalsoinwhatNiamhHardimancalled
thechallengeofa“lateindustrialising”countryundergoing“astructuralshiftin
economic composition of quitemajor proportions”. Agriculture, Ireland’smain
economicresourceuntilthe1960s,had,despitetheCAPboom,failedtoexpand
significantly in the absence of a strong food industry. On the other hand, new
manufacturing and services firmswere emerging in place of collapsing 1960s
industriesinaprocessof“creativedestruction”athighsocialcost.33
Theconsensusona“smallopeneconomy”developmentformulawasreflected
inthequitesimilareconomicagendasproposedincompetingpartymanifestos.
Thegoalswerenot contested,onlyhowthe transformationmightbeachieved.
Opinions differed on the prioritising of financial adjustment or developmental
innovation,howtheycouldbecombinedandtheformthisshouldtake.
Astrident“NewRight”economics,thoughnotyetuniversallyascendant,and
epitomised by the new Thatcher and Reagan governments in the UK and US,
aggressivelypromotedanewcapitalistgrowthparadigmofcontrollinginflation
throughmonetarist discipline, “unshackling” business from the state, restoring
share-holder hegemony, curbing union power and “restrictive practices”, and
abolishing capital controls. Even the OECD, hitherto a guardian of Keynesian
orthodoxy,begantochallengetheprimaryemploymentcreationroleofthestate,
andacrossEuropenewgovernmentswereelectedadvocatingvaryingdegreesof32 White,P.1983;NESC1982b33 McCarthy,Colm1979;NESC1982a,1982b;“literature”Katzenstein1985;Hardiman1988:4-8;
agricultureandFDI,Whelan,C.etal,2007
107
the paradigm. A new right/left divide emerged over how to respond to the
monetarycrisis,whetherthroughgreatercapitalautonomyandliberalisationor
aconsensusrestructuring.ThepolicyparalysisatEClevelreflectedthisschism.34
While electoral democracies involve much rhetorical polarisation masking
underlying policy agreement, the paradigm shift in international economic
thinkingrevived“conservative”policyimpulsesinFineGaelwhileweakeningthe
Keynesian ones in Fianna Fáil. Social democratic tendencieswere strong in all
parties, but Labour, which claimed to embody them, dissipated its social
democratic appeal by an obsessive opposition to Fianna Fáil less on socio-
economicgroundsthanforbeinga“nationalist”, “corrupt” forcetobeexcluded
frompower.ThisLabourviewofFiannaFáil–determinedbyLabour’selectoral
marginality - had been present since the 1920s and been strongly revived by
CruiseO’Brien in the late 1960s. Itwas re-articulated by Frank Cluskey in his
evisceratingspeechonHaughey’selectionasTaoiseachin1979.Itwasamoral
position that not only bewildered many working class voters but restricted
LabourtothesolegovernmentoptionofcoalitionwithFineGael.Italsoshaped
Labour’scontinuedsuspicionoftripartitismwhich,asLarkinhadtriedtoargue,
wouldanywhereelsehavebeentheessenceofalabourmovementprogramme.35
Thepartydivideofthe1980sthusremainedthatbetweenvarietiesofsocial
democracy, with Fianna Fáil, Fine Gael and Labour differentiated not least by
theirconflictingapproachestocorporatistplanninganddevelopmentstrategy.
Autonomousgovernment:economiccrisisandpolicychoice The coalition of 1982-87 had little opportunity to pursue development
strategies as proposed by the NESC or other bodies, as it faced a deepening
economiccrisis,oneoftheworstinthestate’shistoryandasdestructiveasthat
of the mid-1950s in its social effects. Although primarily a subset of another
global crisis, it impacted in Irelandonaneconomyalready strugglingwith the
challengesof“late”industrialisationasits1960sindustrialmodelre-structured
autonomously and drastically to free trade conditions. Employment fell nearly
7%from873,000to816,000between1982and1986while,withthepopulation
34 “NewRight”,GrahamandClarke1986;onOECD,McCracken1977;“paralysis”,Meenan,199935 CruiseO’BrienseeChap.2;CluskeyinDáil11/12/79,alsoMcGinleyed.:224-231
108
growing,unemploymentdoubledtoanunprecedented250,000or18percentof
theworkforce,toppingtheOECDleague,andwouldhaverisenfurtherbutforthe
return of high emigration. The decline was starkest in manufacturing, with
employment falling 20 per cent to 204,000. Government responded primarily
with deflationary measures to maintain competitiveness, cutting spending,
raisingtaxesandcontainingwelfare,whileseekingtominimisecutstoservices.
While successfully reducing inflation to5per centby1986, social expenditure
increased due to rising unemployment, reaching 75 per cent of GNP, and the
nationaldebttrebledto148percent.Theinflation“success”wasnotcombined
with productive investment or expansion, and hence contributed to deflating
economicactivity. Investment fell,byacatastrophic37percent in1984alone,
andFDIcontractedforthefirsttimesincethe1950s.Apovertycrisisemerged,
concentratedinurbanareasofpreviouslyrobustindustrialemployment,witha
growing welfare-dependent population suffering severe social decline and
persistentpoverty.Forthoseinworklivingstandardsalsofell,withrisingtaxes
reversing earlier improvements, after-tax real wages falling 15 per cent and
wage costs to employers rising 10 per cent. Housing policy encouraged
occupants with means to vacate public housing, exacerbating poverty
ghettoizationandcrime,andgeneratingadrugscrisisneverbeforeexperienced,
asFiannaFáilhighlightedinopposition.36
Focusedonmonetarypolicy,governmentsawfewopportunitiestoundertake
industrial expansion. In October 1984 it finally published its growth strategy,
Building on Reality, but its development policies, based on supporting SMEs,
relied on deflation reducing interest rates to generate growth, and economic
historians judgeitashavingsimplyfurtherdepressedactivityanddemoralised
entrepreneurs. Within eighteen months, economic performance lagged far
behindtheplan’sprojections,with73,000feweratwork,emigrationfourtimes
theprojectedlevel,andunemployment40,000abovetheplan’s“stabilised”level.
FitzGerald, regretting not having implemented his stimulus measures earlier,
laterclaimedthatbythetimeheleftofficetheplanhadnothadtimetoproduce
results, pointing out that by 1986 not only had inflation fallen, but output,36 FiguresinHardiman1988:222-8;FDIcollapse,IDAIreland1986;fallinwagevalue,OECD1985:38;
housingpolicy/drugscrisis,Gilligan2011,MickRafertyinInt.InnerCityGroup;“highlighted”,Haughey,‘TheCrimesCrisis.PresidentialAddresstoArdFheis’,30/03/85,inManserghed.1986:932-4
109
exportsandforeigninvestmentwererecovering.Thisiscertainlytrue,aslower
inflationassistedtheprocessof“creativedestruction”andrevivedsomeoutput
and productivity growth, which increased 30 per cent by 1986 despite falling
employment. ButBuilding onReality lacked an overall industrial strategy, and
deflation-drivenchoicesalienatedwidesocialgroups.37
TheFitzGeraldgovernment’sadherence todeflationwasreflected in itsEEC
orientation. Apart from continuing the traditional CAP-defensive policy and
initiatingsomeimaginativeusesofECSocialFundsfortraining,communityand
youthschemes,italignedwiththecentre-rightintheECCouncilpolicydivide.In
1984FitzGeraldappointedasIreland’sCommissionertheattorneygeneral,Peter
Sutherland, who epitomised the private-educated Fine Gael patrician with a
strong free market outlook. At his request Fitzgerald secured for him the
competition rather than agriculture or social policy portfolio. Although the
EuropeanChristian-democraticmainstreamwasnotaversetotripartitismandin
many cases had initiated it, such governments were now retreating from it.
Sutherland became central in the Single Market project and while impressed
with President Delors’ leadership, saw him as “not a natural deregulator” and
was hostile to his state-dirigiste tendencies and attempts to “impose” social
constraintsontheemergingsinglemarketconstruct.38
In domestic socio-economic policy, FitzGerald, while struggling to expand
socialprovision, continuedhis1981anti-corporatistdirectiononplanningand
pay.Hebelievedcircumstancesallowednootheroptionand,despitehis social
democraticinclinations,optedforatraditionalFineGaeldeflationaryapproach.
In November 1982 the party had won its hitherto greatest number of seats,
thoughconsiderablybehindFiannaFáil,whileitscoalitionpartner,Labour,had
beenweakenedandhadtoacceptaverysubordinaterole incabinet.The1981
coalition had initially sought to continue the National Understanding but had
donesoinsuchawayastoendit,andtherenewedcoalition,reflectingatrend
among right-of-centre governments elsewhere, simply dispensed with it. But,
unlikeThatcher,FitzGerald, inWilliamRoche’s judgement,wasnotdisposedto37 “depressedactivity”andhistorians’views,BielenbergandRyan2012:32-3;projections/performance,J.
Travers,D/Taois.,‘Possiblesupplementary’PQbyMichaelKeating’,DTA:DTA:S25858-A;governmentchoices,FitzGerald1991
38 AppointmentofSutherland,FitzGerald1991:615;onhiscareer,FintanO’Toole,‘TrumpandBrexitareproductsofSutherland’ssuccess’,IT09/01/18;onDelors,Sutherland1999:289-90
110
“breaking unions” and was not adverse to consulting with them. He had long
been sceptical of policy “consensus”, hadbeen critical of Lemass’s “vocational-
bureaucratic system of government”, and was generally “unwilling to regard
collectiveactors,andespeciallytradeunions,asmorethan‘lobbyinginterests’”.
Other senior ministers, notably John Bruton, were more stridently hostile to
tripartitism. The coalition resumed its 1981-2 strategy though, on Labour
insistence, also continued funding union and management bodies and
established a National Development Corporation (NDC) to develop industrial
strategy.ItalsomaintainedafewinitiativesinheritedfromtheUnderstandings,
such as public service “worker participation” projects and bodies like the
SectoralDevelopmentCommittee,thoughtreatingitsreportsasephemeral.39
TheNDCwhenitemergedin1983,farfromthe“planningagency”promised,
wasapurely“advisory”bodywithlimitedresources,composedofcivilservants
andeconomicexperts,alongwithafewbusinessandunionofficialsselectedby
the Taoiseach rather than representatives nominated by those interests.
FitzGeraldsaw theNDCreplacing the tripartiteNESC in the role the latterhad
acquiredunderHaughey.ThisfollowedadvicefromWhitakerandLoudenRyan,
replicatingtheirpreferenceforacivilservice-led,purelyadvisoryforum.40
FitzGeraldintimatedtoICTUhiswillingnesstoconsiderwhathebundledasa
“National Understanding/Wage Agreement”, though strictly separated from
budget and economic policy, a formula which negated the very idea of an
Understanding.Publicserviceunionsfoundthemselves“awaitingtheoutcomeof
thesediscussions,includingthepossibilityofcentralisednegotiations”onanew
Understanding,beforedecidingontheirstrategy.TheMarch1983budgetclearly
revealedgovernment’sdeterminationonadeflationarycourse.Governmentalso
announceditspreferenceforastand-alonepublicpayagreement,consistingofa
six-month pay freeze and single figure increase thereafter, followed by “free”
bargaining in private industry. The FUE responded approvingly, suggesting a
similar “guideline” on pay terms for the private sector, while a resigned ICTU
instructed unions in both sectors to get on with individual claims for a
39 “scepticalofconsensus”,seeChapter2;“vocational-bureaucratic”,BewandPatterson1982:66;
“unwilling”,BacarroandSimoni2007:9;BrutoninRoche2009:196;onNDC,FitzGerald1991;onworkerparticipationinitiatives,LGPSU,‘ReportonAgendaforExec.Boardmtg.’11/01/85
40 Chambers2014:227,240-1;onWhitaker’spreferencesseealsoChapter3
111
“substantialgeneralincrease”tocounterbothinflationandthereductionofreal
wagevaluesbytaxincreases.Theloomingthreatoffragmentedbargainingand
widespreadindustrialconflict,especiallyinthepublicsector,forcedgovernment
tonegotiateapublicagreementdifferenttoitsstatedpreference,concludingitin
late 1983 on terms very similar to what Haughey had proposed to ICTU in
autumn1982,whiletheprivatesectorrevertedtolocalbargaining.41
Withde-industrialisationandhighunemployment,privatesectorunionshad
littleleverageandwagesstagnatedorcontracted.Disputeswerepredominantly
inthepublicsector,becomingendemic,withstrike-daysrisingagainto412,000
by 1985. Recruitment embargoes and service cuts in health, local government
andeducation led towork-to-rules,boycottingofvacantposts,demonstrations
and threatened strikes. LGPSU’s central council repeatedly rejected
government’sproposedpay terms, thoughwhencivil serviceunionsvoting for
themformedamajorityonICTU’sPSC, itsbranchesgrudginglyacceded.Aone-
daygeneralpublicservicestrikeinOctober1985followedagovernmentrefusal
– the first since 1935 – to implement Conciliation Board and Labour Court
awards,andfurther longerstoppagesplannedfor1986wereonlyavertedbya
last-minutecompromise. InSeptember1986governmentrefusedtore-appoint
the arbitrator, froze public pay and extended the recruitment embargo. A
teachers’strikefurtherunderminedpublicdisputeresolutionsystemsandatthe
end of 1986 LGPSUdecided to “black all public representatives” and refuse to
implementrentandhousingschemes,andstrikesoverlocaldisputesmultiplied.
GovernmentrelationswiththepublicserviceshadcollapsedbyJanuary1987.42
In1983FitzGeraldsetouthisplansfortheNPBplantoasceptical ICTU.He
envisagedtheNPBsubmittingproposalstohis“TaskForceofMinisters”onhow
to “maximise output and employment in competitive conditions”, a “public
works” scheme for the unemployed, and welfare reforms “to reconcile social41 FitzGerald“willingness”,ICTUAR1983:142;publicserviceunionsawaitoutcome,LGPSU,‘Reporton
AgendaforExec.Boardmtg.’04/03/83;ICTUandFUEpost-budgetdecisions,LGPSU,‘ReportonAgenda’and‘Exec.Boardmtg.’04/03/83andICTUEC,‘StatementbyExecutiveCouncilonPay’,16/03/83,inICTUAR1983;publicpayagreementandprivatesector,ICTUAR1984:139-43
42 Publicserviceresistance,LGPSU,‘ReportonAgendaforExec.Board.SpecialMtg.’28/01/83,‘ReportonAgendaforH&WDiv.Exec.Cttee.’29/07/84and‘ReportonAgendaforLGPSUExec.Board’12/02/85;branchesaccede,LGPSUH&WDiv.Exec.mtg.16/12/83,LGPSUExec.Boardmtgs.09/12/83and18/07/86;one-daystrike,‘ReportonAgendaforExec.Boardmtg.06/09/85encl.‘GovernmentStatementonPay’;furtherstrikesplanned,teachers’strike,Exec.Boardmtgs.Sept.1985-Jan.1986;“blackallrepresentatives”,LGPSUExec.Boardmtgs.,Oct.andNov.1986
112
equityandtheefficientuseofpublicresources”.NPBinputswouldformonlya
peripheral element of the plan, Building on Reality, notably reforms in public
servicedelivery,incometaxchanges,DIRT,theFarmAdvisoryServiceandroad
investment,butitsproposedpublicworksprogrammewasrejectedas“notvery
realistic”. FitzGerald later conceded the NPB had proven ineffective, failing to
impacton“thepermanentadministrativestructurefordecisionmaking”ormake
“asenduringamarkonpublicadministrationasIwouldhaveliked”.43
Having established the NPB, FitzGerald reframed the purpose of the NESC.
TheCouncilwasdueforre-appointmentin1984andheusedtheopportunityto
dilute its functions and reduce it from 47 to 23 members, five each for
employers, unions and farmers, along with seven Government-appointed
economists, politicians and other figures. The Department of the Taoiseach
continued to chair it, but would no longer provide expertise, research or
secretarial supports,which transferred to the NPB. The new task of the NESC
wasdescribedasprovidingreportsasrequestedbyministers.Thusemasculated,
NESC was busied until 1986 with projects on secondary issues such as the
criminal justice system, local authority finance and profit sharing.Building on
RealitywascompiledwithoutNESCinputand,unsurprisingly,thecouncilhardly
featuresatallinFitzGerald’smemoirs.ICTUprotestedthisdown-gradingofthe
tripartite NESC and its subordination to the NPB. When it was being re-
constituted, it requested that civil service representatives be at least secretary
grade,objected to the inclusionofnewgroupsandpleaded toberestored toa
strategicrole,butwasignoredonallcounts.Resignedtothedown-gradingofthe
NESC,Congressnominatedsecond-tierrepresentativesontoit.44
WhenBuildingonRealityappeared,ICTUcriticiseditsdiffusecontentandlack
of consultation with the NESC in its preparation, and the LGPSU produced a
hostilecritiqueofit,StarkReality.Amongstotherinitiatives,theplanestablished
theSocialEmploymentScheme(SES)toprovidepart-timerolesforunemployed
peopleincommunityorganisations,schoolsandpublicservices.ICTUobjectedto
thisas“agimmick”andtoitbeingusedtodotheworkofpublicjobsunfilleddue
43 PlansforNPB,ICTUAR1983:186;FitzGeraldaimsforNPB,FitzGerald1991:449,roleinBuildingon
Realityand“notrealistic”,Ibid.:450-144 Govt.announcementreNESC,‘PressStatement’,20/07/1984,GIS;“busied”,ICTUAR1985:219;
FitzGerald1991;ICTUappointeestoNESC,ICTUECmtgs.20/06and19/09/84
113
to the embargo, but internally, fearing the “public perception of an attempt to
take it head-on”, moderated its stance, insisting only that it not be used to
replace“realjobs”anddemandingatripartitemonitoringcommitteetooversee
it. While government conceded this, it was yet another occasion where prior
consultationmighthaveavoidedill-willandarancorousdispute.45
The secondaryministerial projects entrusted toNESCwere often politically
divisive ones. John Bruton requested a study of employee shareholdings to
promote“cooperationintheworkplace”,whichneitheremployersnorunionson
the NESC favoured, if for opposite reasons. Employers opposed worker
encroachments on managerial or shareholder power while the report’s
consultantbemoanedhisdifficulty“engagingtheunions”duetoICTUantipathy
to “employee shareholding” as a “New Right” strategy for de-unionisation. A
report on local government financing through “consumer” service chargeswas
equallydivisive,beingnaturallysupportedbybusinessbutviewedwithhostility
byunions,whoopposed them in the absenceof tax reformor incomeoff-sets.
LGPSUstaff“boycotted”servicechargeschemes,theunionthreateningtoexpel
memberswhocooperated in them.Bothprojects lingeredon theNESCagenda
untilfinallybeingshelvedunderthenew1987government.Otherprojectsfared
littlebetter,rejectedbyICTUorthereportspublishednotingtheirdissent.46
Abandoning pay/policy tripartitism and allowing its institutions erode was
essentially ideological,with governmentdetermined to restore its “autonomy”,
buttolittleobviousbenefit.Itsouredrelationswithpublicservants,undermined
staffcooperationandincitedwidespreaddisruption,whilesquanderingplanning
assetssuchastheNESC.AnITGWUleadercriticisedgovernmentforabandoning
“emerging arrangements” for cooperative planning and conflict resolution. It
“put nothing in planning terms in their place”, facing “the worst employment
crisisinthehistoryofthestatewithoutanysenseofdirection”.47
45 ICTUonBuilding,ICTUECmtg.17.10.84andICTUAR1985:181;‘StarkReality’,LGPSU1984andLGPSU
Exec.Boardmtg.06/12/84;“gimmick…publicperception”,ICTUpositioninLGPSU,‘ReportonAgendaforExec.Boardmtg.’08/03/85;ICTUcircular,n.d.[1985]“SocialEmploymentScheme”
46 Onemployeeshareholdings,BrutontoDrNoelWhelan,chairNESC,29/01/1984,NESCArchive:Box3b,andNESC,‘CouncilMeetings’,16/10and26/11/1986;onlocalgovernmentfinancingandlocalcharges,LGPSU,‘AGMofLG&PBDiv.’of17/05/84and18/05/85,and‘ReportsonAgendaforLG&PBDiv.Exec.’,27/05and22/07/83,20/07/84;LGPSU,‘ReportonAgendaforExec.Board’,20/7/84;“lingeronagenda”and“shelved”,NESC,‘CouncilMeeting’19/12/86inc.draft:‘EmployeeShareholding’;“progresslittle”andICTUdissent,NESC,‘CouncilMeeting’01/03/87andattchd.‘Workprogramme’
47 ICTUADC1986:102
114
Government could and did comprehensively “walk away” from tripartitism
though,evercourteous,FitzGeraldregularlymetwithICTU.Herecalledhowthe
unionshadhad“aneasytimeofitwithFiannaFáil”andhowhismeetingswith
theICTUwere“formal,oftentense,andonthewholeunproductive”.JohnCarroll
recalled how FitzGerald “lectured us when we met him; he told us about the
economy;wemadenoprogress”,whilecivilserviceleaderDanMurphysaidthat,
whilenot“unsympathetic”,FitzGeraldcouldn’tsee“unionshavinganyparticular
role” in economic policy. Another ITGWU leader said FitzGerald “had no
intention whatever of consulting with us” let alone “engaging in a search for
consensus”. “We were told there was no alternative to the Coalition view of
reality”. Bill Attley of the FWUI regarded Fine Gael in general and especially
FitzGerald as unable to grasp the potential of a national agreement either to
mobilisebusinessandunionsinacommonendeavourorinitssocial-integratory
function:“asanorthodoxeconomisthejustcouldn’tgethisheadaroundit”.48
Despite FitzGerald’s social-reformist inclinations, the coalition in effect
reverted to the pattern of previous coalitions in deflationary economic policy,
interestgroupdisengagementandrelianceonbusinesseconomistsforadvice.
Unbridgeabledivide?–Employers,unionsandthestateinthe‘80s
WhenThatchercametopowerinBritainin1979,oneofhercentralmessages
was that union power was throttling the economy and the remedy was its
disestablishment and the restoration of market forces. Tripartitism in Ireland
hadariseninadifferentcontexttotheriseofunionpowerinBritain.Whilethe
disruptivepotentialofunionswasafactor, itwasasecondaryone,andLemass
andHaughey in pursuing a tripartite paradigm had regarded it as ameans to
“harness”unionsandotherinterestsascreativeforcesratherthantoneutralise
them,therebyexpandingthesocial-institutionalbaseofeconomicdevelopment.
Manyinotherparties,inthecivilserviceandeveninFiannaFáilopposedthis
Lemass/Haughey perspective. In 1984 Whitaker noted that “no-one twenty
years ago would have believed the amazing strength which trade unions,
employersandfarmersnowpossesscomparedwithpoliticalparties”.Thiswas
48 “walkaway”,MurphyandHogan2008;“easytimeofit”,FitzGerald1991:453-4;“lecturedus”,ICTUADC
1986:226;MurphyinHastingsetal.2007:16;“noalternative”,ICTUADC1987:98;AttleyinInt.Attley
115
nowbeingreversedinBritain,hewrote,andFitzGeraldshouldforegotripartite
experiments and rely insteadon theDepartment of Finance, economic experts
and “independent” economic institutions. FitzGerald followed his advice.
WhitakerhadbeenappointedanNESCmemberbyFitzGerald,butresignedfrom
itinFebruary1982whenthecoalitionfellandareturnofHaugheyseemedlikely.
Onhisresignation,hewrotethatsocio-economicpolicyshouldneverhavebeen
transferredtotheTaoiseach’sDepartmentandshouldbereturnedto“theclear
responsibility”ofFinanceassistedby“planningunitsinotherDepartments”.49
Unions in Irelandorganisedhalf amillionworkers, 55per cent of the total.
This was not evenly distributed across the economy but concentrated in
particular areas, including over 90 per cent in the public service and state
enterprises,and, in theprivatesector, instrongervocationalgroupsand larger
enterprises.Asahistoricalinheritancetherewereover70unions(comparedto
12inGermany),manyevolvedfrompre-industrialeraguilds.Over85percentof
unionmembersweregrouped ina few largegeneralandpublicserviceunions
andaboutfivecraftandsectionalones.Whilethereweremilitantgroups,anda
significant socialist sub-culture, most members were passively engaged, with
unionmembershipasecondaryaspectevenoftheirworkinglives.50
Ontheemployerside,overhalf, includingall thelargestandstrongest,were
also organised, in groups combined in the Irish Confederation of Employers,
thoughmanysmalleremployersstayedalooffromthese:
Growthandconcentrationofunion/employerorganisations1970-8351TradeUnions(ICTU)(Republiconly) EmployerOrganisations(ICE)
1970 1983 1965 1981Membership>20,000
UnionsMembers2 181,400
UnionsMembers3 235,053
OrganisationsRetail,Grocers(RGDATA)
Members3,000
Members1,350
10-20,000 3 45,000 3 49,992 Fed.UnionEmployers(FUE) 1,630 2,5635-10,000 9 60,600 7 53,522 Construct.Ind.Fed.(CIF) 750 2,1661,500-5,000 27 75,300 23 62,518 PharmaceuticalUnion 1,061 1,402<1,500 54 24,500 35 19,966 MotorIndustry(SIMI) 945 1,119 LicensedVintners 560 676 Elevenotherminorassocs. 1,306 1,193TOTALICTU 95 386,800 78 498,900 TOTALmembershipICE 9,252 10,469
49 WhitakerinHardiman1988:205;viewsonBritainandadvicetoFitzGerald,innotesforRadioSenate,
RTÉRadio,01/09/93,quotedinChambers2014:241;FitzGeraldtakesadvice,FitzGerald1991:449,Chambers2014:227,240-1;NESCresignation,WhitakertoNoelWhelan10/02/82,NESCArchive.Box3
50 Gunnigleetal.1999:111-3951 FiguresfromtablesinHardiman1988:131,163
116
Unions and the ICTUhad been subsidised by the state in their training and
advisoryfunctionssincethe1950s,andwhileemployerorganisationseschewed
state funding, many ancillary bodies, such as the Irish Management Institute
(IMI),wereequallyheavilysubsidised,aswasin-companytraining.Asindustrial
relationsweredeterminedbyconstitutionalandcommonlaw,umbrellabodies–
theICTU,FUE,CIIetc.–werevoluntaristleaderships,withonlydirectivepower
totheextentconcededbyaffiliates.Whilesmallandloose, forthatveryreason
they had to lead and reproduce their legitimacy through considerably more
democraticpracticesthanwascommonamongtheirEuropeancounterparts.52
Employers,farmingbodiesandbusinessopinionleadersgenerallysupported
FitzGerald’s deflationary policy as a prerequisite for recovery. But they also
jealously defended grants for industry and subsidies to agriculture, while
advocatingreductionsinotherpublicspending,ininputcosts–includingtaxes-
and in “red tape”. As they were reliant on linkages with the state, they also
remainedactivewithincooperativepolicybodiessuchastheNESC.53
After being cajoled by Haughey into the 1981 National Understanding, the
FUE, influencedbydevelopments inBritain, adopteda strategy -PayPolicyfor
the1980s –with the aimof ending centralised bargaining. Influencedby “new
right”economics, thisalso reflected realities inaneconomybeing transformed
byindustrialchange.Asconditionsbetweenproductiveanddecliningindustries,
individualfirmsandthepublicandprivatesectorsradicallydiverged,itwasheld
to be increasingly counter-competitive to enforce national pay standards or
industry-specificpay“norms”.Firmsshouldbargainseparately(“locally’),based
on competitiveness and productivity gain, trading pay for new technology
acceptanceandflexibilisationofworkpractices,andgraduallymovefromgroup
bargainingaltogethertoindividualised“humanresources”management.54
Intheabsenceofanational framework, thisnewemployer ideology ledtoa
fragmentation of industry agreement patterns and timeframes, with FUE
triumphantly declaring in 1986 “the wage round has ceased to exist”. When
NESC’s 1986 Strategy for Development tentatively proposed a national52 Onlegalframe,McCarthy,C.1977:482-523,andvoluntariststructuresHardiman1988:138-41,171-453 Hardiman1988:21854 PayPolicy,Fogartyetal1981;“graduallymove”,‘SixPrioritiesfor1986:PolicyStatementbytheNational
ExecutiveCouncil’,FUEBulletin,Jan.1986
117
agreementframeworkforarecoverystrategy,theFUE,whichhadresistedthisat
NESC,reluctantlyagreedtoparticipateinexploringsuchacommonstrategybut
stressed “there was hardly any support” among its members “for a return to
national agreements or understandings”. The ICTU believed employers feared
thatnationalbargainingwouldonlyserveto“breathelifebackintotheunions”.55
Employers per se often differed from the more strategically-orientated
businessgroup,theCII,which,havingdevelopedfromtheFIMandrepresenting
largecompanies,valuedclosestate-businesscollaboration.Butinthe1981crisis
it convergedwith FUE thinking, highlighting the “unsustainable level of public
expenditure”, sought radical income/business tax cuts and blamed Labour’s
influenceingovernmentforthe“unsustainable”levelofsocialspending.Usinga
popularmonetaristphrase, itaccused thecoalitionofhavingbeen“seducedby
BigGovernment”.In1981ithadurgedendingtheUnderstandingandfrom1983
unreservedlysupportedFineGael’sadvocacyofadeflationarypolicy.56
But the CII also became frustrated with FitzGerald’s government for its
ineffectual industrialpoliciesasbusinessactivity contracted.AsNESC’sTelesis
Reportshowed,theprogrammesofthe1960s-70shadnotproducedadynamic
indigenoussector,withvirtuallynointernationallytradingperformerssurviving
by1984.Financeinstitutionsremainedriskadverse,weddedtosafeinvestments
inBritishor Irishbondsandhideboundbywhat the IDA termedunproductive
“rent-seeking”.Themassindustrialclosuresoftheearly1980sresultedfromthe
unwillingness or inability of the type of industry generatedbyWhitaker’s free
trade formula to adjust to open competition, tending to close once protective
advantage was withdrawn. This was exemplified in such high-profile 1980s
closuresasFord,Dunlop,Semperit,Talbot,Parsonsandmanyothers.Asregards
indigenous industry, Albert Reynolds, when he became industries minister in
1987, lamented to a CII audience that the very “survival” of the economy
dependedonbuildingexportcapacity,but thishadyet tomaterialiseas “many
55 “ceasedtoexist”,FUEBulletin,Oct.1986;FUEresponsetoNESCreport,FUEBulletin,Dec.1986;“breathe
lifeback”–DanMurphyquotedinHastingsetal2007:1056 “seduced”,Power2009:38;supportsFG,Int.Power;Int.O’Sullivan
118
seniorIrishmanagerswereeducatedandgainedtheirformativeexperienceina
protectedenvironmentwheremarketcompetitionwasnotasignificantfactor”.57
Theretreattodecentralisedorevennon-bargaining,encouragedbythepolicy
preferencesoftheFitzGeraldcoalition,canbeseeninretrospectastheexception
rather than rule for the post-war period. The dismantling of tripartitism and
reversion to local bargaining alsoweakened business associations such as the
FUEandCII.Newer -notonlyUS - firmsevadednotonlyunionsbut even the
supportservicesofemployerorganisations, takingthese“in-house”.Bargaining
wastheraisond’etreofemployerassociations,withFUEhavingdescribeditself
on its foundationasacoordinatinggroup“similar to theTradeUnionCouncil”,
while concerted planning was that of the CII. Employers had participated in
national “wage rounds” since the 1950s, andmanagement training at IMI and
business collegeswas still imbuedwith Catholic sociological views of a “social
order”towhichorderlyrelationswithtradeunionswereintegral.58
Trade unions faced different but not unrelated challenges. While public
servicecutsandrecruitmentembargoesledtopublicsectorunionmembership
contracting, intheshrinkingprivatesector,de-industrialisation,fallingincomes
and rising unemployment precipitated an even greater decline. This followed
twodecadesofgrowthand increasingworkerempowerment.Membershiphad
peakedat524,000in1980–56percentoftheworkforce–butfellby1984to
501,000,mostnotablyinmanufacturing.Amalgamationsincreased,withsmaller
unionsabsorbedbylargerones.Themembershipdeclinewasnumericallysmall,
butamoremarkedphenomenonwasthedropinactivity.Despitethereversion
to localbargaining,workermilitancyandshopstewardpowerfelldramatically
astherebelliouswaveofthe1960s-70sreceded.CasesbeforetheLabourCourt
declined,withstrike-daysthroughunofficialaction-46percentofallstrikesin
1977-fallingto12percentin1985andjust6percentin1986.Inarecessionary
economycompetitivepaymilitancylostitsraisond’etrewhilelabourlawreform
eroded traditional grounds for conflict. Sectional unions like the MPGWU and
AGEMOU shrank dramatically and where disputes occurred these were57 CIIcriticisms,Power2009:58-9;economicmodelincrisis,Telesis,NESC1982a,1982b,Kennedy,K.
1984;“rent-seeking”,White1983;tendencytoclose,Whelan,C.etal.2007;Reynolds,‘Speech…attheAnnualLunchoftheCII’,13/05/87,GIS:D/I&C
58 “in-house”,Hardiman1988:167,RocheandLarragy1987;“newerfirms”,Turneretal2013:216;“similartotheTUC”,FUEBulletinAug.-Sept.1983,quotedinHardiman1988:163;onIMIseechapter2
119
increasinglyovertermsforcompanysurvivalorredundanciesratherthanwages
or productivity. These factors and a related fall in income led to redundancies
among union staffs themselves, not least in the ITGWU. Even the “militant”
ATGWUfounditselfwith“staffsurplustorequirements,ifnottotallyredundant
thenunderloaded”,asitsleader,MattMerrigan,putit.59
Disputes were increasingly in the public service, where unions that still
exercised veto power fought recruitment embargoes, the suspension of pay
awardsandworseningconditions.But theprivatesectordeclineandendingof
tripartitism caused a crisis for unions regarding their future role. ICTU
conferencesbecamecircularset-piecedebatesinvolvinganageingcoreofafew
hundred officials, as an internal ICTU report concluded, and with growing
memberapathy,delegatesmostlythesamelong-termexecutivemembersorfull-
time officials pre-mandated to vote on agenda items. Leaders like Attley and
Carrollsawthemovementfightingtopreventitsthreatening“marginalisation”.60
An inner circle in the ICTU strove to reverse this threat by maintaining a
commitment to a National Understanding, as in the lastminute initiativewith
Haugheyat theendof1982.Theyrecognised thatwithrelations inproduction
changingunderthe“newcapitalism”,shop-floormilitancyandvetopowerwere
phenomenaof a passing era. They looked toworkerparticipation in economic
planningandinpartnershipatcompanylevel–vigorouslyopposedbytheLeft-
as a new strategy for the movement. The ICTU based its case for a revived
tripartitismnot solelyon thepayaspectbut ratheras abasis for an industrial
and particularly employment recovery. This case was articulated in ‘The Real
Way Forward’ of December 1982 and in a pamphlet by three “socialist
economists”,JobsandWages,which,influencedbytheriseoftheWorkers’Party,
markedaturnbytheLefttoastate-orientatedtripartiteindustrialstrategy.61
Thecase foranautonomous industrial strategybasedonaunion-employer-
government partnership was further reinforced by disillusionment with the
Labour Party. Following the first FitzGerald coalition, an ITGWU officialwrote
59 “empowerment”,Wickham1980;unofficialstrikesandLabourCourt,Hardiman1988:221-2;issuesin
disputes,IRNR1982-6;Devine2009:794;unionredundancies,RocheandLarragy1987;inITGWU,Devine2009:692-3;“underloaded”,MerriganatICTUADG1985:7
60 ICTUreportinICTUAR1987:8-9;“marginalised”,ICTUADC1987:5-12andHastingsetal2007:1061 “ageingleft”,Merrigan2014:163-5;newICTUstrategy,ICTUADC1986:206-9;GroupofSocialist
Economists1983;
120
that “in the Irish context, the trade union movement has a particular
responsibilitytoarticulatetheaspirationsofworkers,giventheabsenceofany
real effective political party to do so”. Unions looked to north-European
corporatismforinspiration.ICTU’spowerfulpublicservicescommitteedeferred
itspaystrategyin1983until itwasclearthatFitzGeraldwouldnotentertaina
return to an Understanding-type agreement. “Organised labour”, Phil Flynn, a
rising LGPSU leader, told a 1984 ICTU conference, had been “on a hiding to
nothing”.“Ourcredibilityisontheline”astheunemployedandtheyoungwere
“callingintoquestiontherelevanceoftradeunions”.Unionshadnochoicebutto
prepare an industrial plan, “mobilise around a set of social and economic
demands”andinsistonarecoverystrategyasthebasisof“thenextpayround”.62
Thecoalition’sendingof tripartitismandside-liningof its institutions,while
intunewithaglobaltrend,were,apartfromacertainfreeingofbargaininginthe
private sector, increasingly regarded by many on both sides of industry as a
regressive development, especially as the employment and development crisis
deepened.Withthisrealisation,particularlyontheunionside, theframingofa
returntoaconsensusindustrialrecoverystrategyhadalreadybegunin1983.
62 “intheIrishcontext”,Liberty,Feb.1982;Flynn,‘CollectiveBargaining,ICTU1984’,FlynnPapers
121
Part2:
Genesisandconstructionofthe“PNR”
1984-87
122
Chapter5
Policyrevolution:thepoliticsoftheNESCplan
Inception:ÓhUiginn,Flynnandthegenesisofanidea
PádraigÓhUiginn,regardedbycoalitionleadersastoocloselyassociatedwith
the1980-82Haugheygovernments,was “exiled”byFitzGerald to chair the re-
constituted but downgraded NESC in June 1984. This would have major
unintended consequences. Ó hUiginn sought to revive the “demoralised”
institution, whose business and union representatives found his informal but
energetic style refreshingand invigorating. FromamodestnorthsideCork city
background and, like Haughey, educated by the Christian Brothers through
scholarship, later also excelling at university, Ó hUiginn, following a brief
involvement inradicalrepublicanism,hadenteredthecivilserviceatamodest
gradebutthenadvancedrapidlyinit.Heenjoyedanunusualcareer,especiallyin
hisconsiderableEuropeanandinternationalexperience ineconomicbriefs.His
risetothetopoftheservicewaspurelymeritorious,aswithcontemporariesof
hissuchasSeánCromien inFinance,amanfromasimilarbackground.ThatÓ
hUiginnwouldthriveinHaughey’scirclewasunsurprising,andduring1980-82,
ontransferringtoHaughey’sDepartmentwiththesocio-economicplanningstaff
ofO’Donoghue’sdisbandedone,hewaspromotedtosecretarylevelandoversaw
its new Economic and Social Policy Division, where he played a central role
coordinatingHaughey’s1982WayForwardplanninggroup.1
Despite the ICTU’s fraught relationswithgovernment, and itsmembership’s
hostility to a return to central bargaining, those favouring an Understanding
soughttoreviveabasisforit.AmongthemostcommittedwasPhilFlynn,newly
appointed LGPSU “acting general secretary” following Harold O’Sullivan’s
secondment to FitzGerald’s National Planning Board. Flynn, from a border
countyandwhosefatherhadsuffereddiscriminationandlongunemploymentin
theNorth,wasaRepublicansocialist,hispoliticsandactivism formed through
the IrishWorkersGroup in1960sLondon.As anofficial in theLGPSU’shealth
servicesectionhehadhaddealingswithHaugheyasministerinthelate1970s.
1 InterviewswithÓhUiginn,Attley,O’Sullivan,Power
123
In1982hewaselectedVice-PresidentofSinnFéin,thenamarginalpartytiedto
theIRAbutsincethehungerstrikesemergingasanelectoralforce.2
FlynnurgedhisLGPSUexecutive,despitetheon-goingpublicpayconflicts,to
pursueareturntoaNationalUnderstandingwithgovernment,apositionitthen
formallyadopted in1983. “In thepresent climate”,heargued, “the interestsof
membersandtheirfamilieswouldbestbeservedif[bargaining]wasnationalin
characterandincludedbothpayandsocio-economicelements”,withthe“actual
cash increase into the hand of workers achieved by the necessary tax
adjustment”. Thiswas already a formula tried in the 1980-82Understandings.
Flynn proposed it essentially as a political strategy at ICTU level, urging it to
adopt “anationalapproach tobargaining in thenextpay round”and“mobilise
around a set of social and economic demands”. But an ICTU pay conference
rejectedthisaspointlessin“theabsenceofsupportfor[it]fromGovernment”.3
Otherrising leaders,notablyAttleyoftheFWUI,adecidedlynon-Republican
socialist,andolder“centralists”suchascivilserviceleaderDanMurphyandJohn
Carrollof the ITGWU,wereawareof thenewpossibilityopeningatNESCwith
the appointment of Ó hUiginn, and manoeuvred for a mandate from ICTU to
exploit it.At the following ICTUannualconference, in July1984,whichelected
ATGWU leader Matt Merrigan - who decried central bargaining as “class
collaboration” - as Congress President for the year, a proposal from Flynn to
pursueanationaldealencompassing“jobs, taxation, landpropertyspeculation,
health and education” was again rejected. But two lengthymotions, proposed
through theirunionsbyCarroll andAttleyadvocating “economicplanning”– a
mantra all accepted - were carried. Carefully buried within them were
statements that planning be “in full co-operation with the trade union
movement”anddeliver “an integratedprogramme”agreedwith “Government”.
Theymadenolinktopay,whichwouldonlyhavedrawntheireoftheLeft.4
Withthismandateatleastfornegotiatingan“industrialplan”,pro-agreement
leaders drafted an ambitious document, Confronting the Jobs Crisis, timed to
2 InterviewwithFlynn3 “Inthepresentcimate”,FlynnatLGPSUExec.Board08/04/83and‘ReportonAgendaforH&SDiv.Exec.’,
08/04/83;FlynntoICTU,‘CollectiveBargaining,ICTU1984’(speech),FlynnPapers;“reportedback”,‘ReportonAgenda,Exec.Board’,23/03/84
4 “maneouvre”,InterviewswithCassells,Flynn,McLoone,Attley;“classcollaboration”,Merrigan2014:142-8;ICTUADC1985:3-14;motions,ICTUADC1984:61,73-83
124
appearthatautumnaheadofFitzGerald’sBuildingonReality.Thedrivingfigures
behinditwereallcommittedtoachievinganewUnderstanding-Carroll,Flynn,
Murphy, Quigley and Attley. It was compiled by the new deputy general
secretary, PeterCassells, unlikeNevin an enthusiast for social partnership and
onceassociatedwiththeB&ICO,withassistancefromlike-mindedresearchersin
individual unions, such as O’Riordan and Róisín Callander in the ITGWU, both
formerB&ICOmembersandCallendernowinfluentialintheWorkersParty.The
planavoidedtraditionalunionjargonorthelanguageof“demands”,specifically
so as to enable a “policy dialogue” develop at the NESC. Cassells, showing the
plan to Ó hUiginn, proposed that he try to secure FitzGerald’s consent to the
NESC,despiteitsweakenedremit,workingona“consensus”industrialstrategy.5
ConfrontingtheJobsCrisisrepeatedtheprinciplesofICTU’searlier ‘RealWay
Forward’ of 1982, but greatly expanded on them. It accepted the need for
controllingpublicexpenditurewhilepursuinganexpansionist industrialpolicy,
and,uncommonly,and thoughseeingstate industry inapivotal role,proposed
anexpansionofprivatesectorindustry.Also,somewhatstretchingitsconference
mandate, it indicated a role for pay moderation, weighted towards the lower
paid and compensated for through social policy and tax reform. Critically, it
identifiedthetripartiteNESCasthe“appropriatebody”todeveloptheplan.6
The ICTUplan’s backers ensured itwaswidely circulated in themovement,
billedasitsmainstrategy,thoughthemotionsenablingithadhardlysuggested
that.FlynnurgedLGPSUbranchestoendorseitandataspecialICTUconference
on itdescribed its core strategy: “The struggle for aplannedeconomy ismore
thanafirmlyheldtradeunionprinciple…Anationalplanmustbeanegotiated
document…extendingcollectivecentralisedbargainingtoanewlevel”.7
ThePlan’sproposedrolefortheNESCmirroredthatofLemass’sNIECofthe
1960s, aswell as thatof the transformedNESC the ICTUhadargued forwhen
pavingthewayfortheNationalUnderstandingsandwhichHaugheyhadsought
torealisein1980.Butitsimmediatecontextwastheopportunityopeningatthe
5 “drivingfigures”,ICTUECmtgs.18/07,19/09/84;drafting/language,InterviewsAttley,Cassellsand
Callander;promotewithNESC,ICTUECmtgs.19/09,17/10/84;Cassells’approach,InterviewÓhUiginn6 Confronting,ICTU19847 Dissemination,ICTUECmtg.17/10/84;promotionbyFlynn,‘ReportonAgendaforH&WDiv.’and
LGPSUExec,17/12/84;“plannedeconomy”,speech,‘SpecialConferenceICTU01/11/84’FlynnPapers
125
NESC.ThiswasagaindemonstratedinanunorthodoxmovebyICTU’sExecutive
which,afterpublishingtheplan,nominatedAttleyandCarrollas“alternates”to
itsexistingsecond-tierrepresentationontheCounciltoensureanauthoritative
pro-partnershippresenceattheNESCshoulditassumeastrategicpurpose.8
These ICTU appointments and the proposing and drafting of the plan had
followed Cassells’ soundings with Ó hUiginn on the possibility of the Council
serving as a vehicle for an economic strategy. Ó hUiginn had responded
positively,andICTU’splan,withitsconciliatorylanguage,wastheresultofthese
contacts.ÓhUiginncirculatedtheICTUPlantokeyDepartments,ostensiblyfor
their comments on “what is already policy,…whatmight be acceptable [and]
what is definitely unacceptable”, but in reality to engage them in a newpolicy
process.Hewrote to FitzGerald, urginghim too to engagewith it, drawinghis
attentiontoitsinnovatoryaspects-forauniondocument-andits“manypoints
ofagreement”withgovernmentpolicy.Apartfromits“unrealistic”emphasison
stateindustry,helistedtheseasitsacceptanceofreducedpublicexpenditure,a
pro-active EEC policy, and industrialisation through “advanced technologies,
high-growthandresourcebasedareas”.Hestressed itsproposed“well-defined
rolefortheNESC”andsaiditsproposalfor“someplanningofincomes”through
thepay/taxrelationship“suggestsanopeningwhichshouldbeexplored”.9
Butgovernmentwasuninterested.Atanawkwardmeetingwith the ICTU in
early1985,FitzGerald “lectured” itonhisdeflationarystrategy, towhich there
was,hesaid,noalternative,andinsistedpublicpayremainastand-aloneissue.
Invain,ÓhUiginninJuneagainurgedhimtoengagewithICTU’splan,repeating
its pay/tax proposal and willingness to contribute to “solving the deficit
problem”.DespiteevenanESRIstudyproposing“thatpayrestraintcouldbestbe
achievedthroughabroadly-basednegotiatedincomespolicy”,hecontinuedtobe
swayedbyT.K.Whitakerwhoheldtoastatutorycontrolsapproach.10
8 ICTUECmtg.17/10/849 Sec.[ÓhUiginn]toTaoiseach,‘MeetingwithICTU’,28.11.84,andICTUtoTaoiseach28.11.84,DTA:OHP10 ICTUAR1985;ICTUECmeetings18.09and10.10.1985;Secretary[ÓhUiginn]toTaoiseach,20.06.85,
‘M/Financeletterof17JuneonPayPolicy’,DTA:OHP;ESRIposition,Kennedy,K.1984
126
Partingoftheways:theLabour/unionpolicysplit
DespiteFitzGerald’sdismissalofboththeICTU’splanandÓhUiginn’spleato
engage with it, Phil Flynn and other union leaders worked to keep alive its
possibility.TheICTUwentthroughthemotionsofinvitingbothgovernmentand
employerstoengageonitinthehope,asFlynnputit,thatthiswould“contribute
tocontinuinginthepublicmindtheconceptofa[pay]roundwhichemployers
have been anxious to bury”. He had the LGPSU Executive secure itsmembers’
support for a motion that ICTU should “rigorously pursue negotiations with
government … at the earliest possible date” for “a return to centralised pay
bargainingintheformatofanannualNationalUnderstandingforEconomicand
SocialDevelopmentastheonlyeffectivemethodofensuringatradeunioninput
intonationalplanning…toendunemploymentandachieveajustdistributionof
the nation’s wealth and a real and substantial reform in the tax system, …
structured in favourof the lesswelloff”.Given thatLGPSUmembers’ interests
wereaddressedinpubicsectorpayagreements,thiswasapoliticalmanifesto.11
Two other union leaders promoted an identical position – Carroll of the
ITGWU,andAttleyoftheFWUI,withCarroll,whomaintainedclosecontactwith
Haughey,bluntlytellinghisunionthattheICTUjobsstrategywasonlyrealisable
through a National Understanding. Thiswas not solely a personal position, as
both unions had been central to corporatist endeavours since the 1940s. But
bothmenwerealsoLabourPartymembers,AttleypassionatelyandCarrollmore
ambiguously, and hoped though despaired of a coalition change of course
throughtheagencyoftheparty.Theysidedwiththepartyleadershipagainstthe
Left,CarrolldeployingITGWU’sblockvoteagainsta1985motiontorenegotiate
thecoalitionprogramme,whichwouldhavebroughtdownthegovernment.12
But as Labour was increasingly side-lined in cabinet, party-union relations
becamemore fractious. This had begunwith the resignation in 1983 of Frank
Cluskey, who on losing the party leadership had been relegated to a junior
ministryandmarginalised.HeresignedoverBruton’sbailingoutofDublinGas
shareholders, denouncing it as crony capitalism. The new Spring/Desmond
leadership, guided by advisor Fergus Finlay, prioritised social reform in areas
11 ‘ReportonAgendaforExec.Board’,09/05/85;‘AnnualDelegateConference’15-18/05/85,ILHS:LGPSU12 CarrollinDevine2009:708;“blockvotes”,Horgan1986:127-8
127
such as contraception and defending health and welfare spending, and were
hostiletoICTU’stripartiteagenda.LikeNortoninhisdismissaloftheNIECinthe
1960s,theywere,inessence,asopposedtotripartitismasFineGaelwas.13
Finlay recalled how relations between party and unions “plummeted
throughoutthetimewewereingovernment”,theirrespectiveleaders“barelyon
speakingterms”by1986.TheICTU,heclaimed,regardedthepartyas“adogthat
would bark whenever they kicked us”, Carroll “routinely” denouncing as
“Thatcherite”budgetsinwhich“DickandBarryhadfoughtforweekstoprotect
essentialsocialspending”.Desmond,aformerICTUofficial,whoingovernment
in1981hadfailedtoretrievetheNationalUnderstanding,wasequallyresentful,
particularlyofAttley,whoheaccusedof “undermining”Labour ingovernment.
Thepartywasalsounderpressureelectorallyandintheunionsfromtherising
WorkersParty,whichin1985wonnineseatsonDublinCityCounciltoLabour’s
twoandappearedtobeonthevergeofreplacingitinthecapital.14
Labourwas in a dilemma, only able to pursue its objectives in coalition by
submittingtoFineGaeleconomicpolicy.Thecabinet’soverrulingofarbitrators’
awards and resulting widespread union unrest, and the subsequent teachers’
strike, further tested union patience. In August 1986 Bruton reiterated his
deflationarystrategy,followingan8percent“downwardadjustment”oftheIR£
in the EMS by instituting a pay freeze to “suppress inflation” in September.
UnionsaffiliatedtoLabour,ledbytheITGWUandFWUI,hadalreadyinFebruary
1986calledforitto“stayoutofgovernmentforadecade…tobuilditselfupasa
crediblealternativegovernment”.Theynowalsobackedtheleft-wingleadership
challenge by Emmet Stagg and, in an unprecedented move, the ITGWU had a
motionadoptedthatforcedtheICTUtodemandthatthegovernmentresignand
parties fight an election on both their socio-economic policy record and their
positionontheICTU’splan,whichofcourseonlyFiannaFáilhadwelcomed.15
The Northern conflict intruded again to further sour union-government
relations when Phil Flynn was appointed acting LGPSU general secretary.
FitzGerald forbade ministerial meetings with Sinn Féin members, which
13 Cluskey,inO’Mahoney2015:27-9,36-8,Halligan2015:132-314 Finlay1998:43-4;Desmond2000:210;onriseoftheWP,HanleyandMillar2009:468-7115 Brutonposition,‘StatementbyMinisterforFinance,JohnBruton,02.08.86’GIS:D/Finance;“stayoutof
government”,Horgan1986:140;ICTUcallongovernment,ICTUADC1986:100-13
128
Desmond defended as “an act of political hygiene”.Minister Noonan called on
LGPSU members not to ratify Flynn’s appointment and when Flynn was
nevertheless appointed, another Fine Gael Minister, Paddy Cooney, urged the
ICTU to exclude him from its Executive. Some LGPSUbranches did oppose his
ratificationordemandedheresignhisSinnFéinrole,buttheever-popularand
effectiveFlynnsucceededinnotonlybeingvotedontotheICTUExecutivebutin
becomingchairof itspowerfulPublicServicesCommittee.Hisownunioneven
lobbiedgovernmentforavisaforhimtotraveltotheUS,arequestitrefused.16
Ironically, itwasjustasunionrelationswithLabourhadreachedanall-time
low and the coalition appeared on the point of disintegrating that FitzGerald
finallyriskedamovetowardsasharedsocio-economicplanningapproach.
StrategyrevolutionattheNESC
FollowingFitzGerald’srejectionofhisproposaltoengagewithICTU’splanas
thebasisforapay/taxstrategyin1985,ÓhUiginntookadifferenttack.Henow
suggestedthatheapproveanICTUrequestfortheNESCtobeallowedpreparea
“mid-termreview”ofmacro-economicpolicy.FitzGeralddeflectedthisbyasking
theNESCfor“feasibleproposalsintheshorttermforspecific improvementsin
the environment for job creation and job protectionwhich the social partners
could jointlyrecommend”.But therelativelymarginal issueshesuggested they
examine - disability benefits, PRSI and employment schemes - were precisely
“micro-issues”ÓhUiginnregardedasofakindwiththedivisivesubjectswhich
Ministers had been imposing on the council. FitzGerald, unsurprisingly, found
the inconclusive results that NESC produced on these issues “disappointing”,
confirminghisnegativeviewofthe“consensus”seekingCouncil.17
During1986,however,ascabinetrelationsdeteriorated,FitzGeraldagreedto
a suggestion by Ruairí Quinn that Quinn sound out Carroll and Attley on the
potentialfora“socialpact”basedonatax/paytrade-off.Quinn,aminister,FWUI
member and Cluskey protégée, was the only front bench voice even mildly
favourable to tripartitism. But when he reported their positive response,16 DesmondandNoonaninBrowne,V.2006;Flynn’sposition,LGPSU,‘ReportonAgendaforExec.meetings’
04/11/83,24/02/84,Exec.Boardmeetings19/12/1980,09/12/83and‘AnnualDelegateConference’15/05/84,SpecialExec.Boardmeeting,25/04/86
17 “review”,ICTUAR1984:223,Hastingsetal:27,InterviewÓhUiginn;“feasible”,Power2009:57-8;FitzGeraldidea,‘CouncilMeeting25/07/1986,NESCArchive:Box3b;“disappointing”,Power2009:58
129
FitzGeraldwassceptical,tellingcabinetthatNevintoldhimunionleaderswould
oppose talks with him. These “leaders” were presumably Carroll, Attley and
Flynn, but Carroll, although certainly favouring dealing with Haughey, later
claimedICTUwaswillingbutFitzGeraldwouldsimplynottakethe“gamble”.18
At theendof1985,however, FitzGerald,his governmentunderpressureby
public servicedisputes, finally conceded thatNESCmight “playauseful role in
looking at the employment/unemployment/public finance situation and
attempting to reach someagreedpositionon it”, especially “if itwere to come
withagreementbyallsocialpartners”,andtoldaCIIconferencethathewould
welcome “agreed views on development policies … that would have a strong
impactonemployment”.ÓhUiginngraspedtheopportunity,usingtheexcuseof
theCouncil’slimitedresourcestosetasideits“micro”projectsandfocusonthe
“plan”.Work, initially delayed by heated public debate between the ICTU and
FUE/CIIoverbudgetpolicy,gotunderway,ÓhUiginntablingtheICTU’sJobsPlan
andFiannaFáil’sWayForwardamongthedocumentsforinitialdiscussion.19
A framework “economic and social review set in the medium term” soon
emerged,with“policygroups”ofcouncilmembersinterrogatingoutsideexperts,
receivingsubmissionsandexaminingpoliciesunderthestrategyheadingsofthe
ICTU plan - macro-economic/financial, industrial, tax and social policy. The
outcomesweredebatedandcollatedbyNESCstaff intoanevolvingdocument,
titled “Strategy for Development”. The process was driven by Ó hUiginn in an
atmosphere described by Cassells as “like a government-in-exile”, one civil
servantsayingÓhUiginnturnedtheNESCfroman“underusedback-roomintoa
policypowerhouse”, applying “ChathamHouseRules” to ensure confidentiality
andencouragingtheICTUandFUEtoleavetheirdifferencesatthedoor.20
Employerswereinitiallyreluctanttoengage,giventheirhostilitytoareturn
tocentralagreements.Butthebusinesslobby,CII,wasconvincedbyÓhUiginnto
participate,especiallyon industrialpolicy,and internallybegantoconsiderthe
18 Quinninitiative,Quinn2005:246-7;“gamble”,Hastingsetal.2007:2819 FitzGeraldproposaltoNESC,‘CouncilMeeting’16/10/1986and‘DraftPreface’,NESCArchive:Box3b;
Power2009:58;ÓhUiginntoTaoiseach,n.d.[11/02/86]‘Re:NESCReport’,DTA:OHP;originisofreport,ÓhUiginn‘Presentation…onStrategyforDevelopment’,NESC‘CouncilMeeting’11/06/87;tables“Confronting”and“WayForward”,interviewwithÓhUiginn
20 ‘PresentationbyChairmanonStrategyforDevelopment’,CouncilMtg.11/06/87.NESCArchive:Box3b;InterviewswithCassells;“ChattamHouse”,interviewwithanon.D/Taoiseachofficial
130
framework of a “social partnership” as proposed by ICTU leaders for the
“strategyforeconomicrecovery”emerging.Thecouncil’smodusoperandiwasan
implicitunderstandingtocooperatewhileagreeingtodisagreeonwhatdivided
them, such as specific options in reducing public expenditure rather than the
principleofit,orevenwhetherapayagreementhadtoformpartofarecovery
strategy.WhileICTUwascommittedtothis,CIIstillfavouredapurelyindustrial
strategy backed by “political “consensus”. But the principle of controlling
spendingandaconsensusindustrialstrategyweresharedbyallpartners.21
Haughey followed the NESC process closely and, as will be seen, played a
criticalroleintheemergenceofboththeICTUandNESCplans.WhileFitzGerald
appearstohavetakenlittleinterestintheNESCwork,Haugheyensuredhewas
keptappraised,urginganywithwhomhehadinfluenceto“trytohammerout”a
“consensus”. Ó hUiginn had no formal contact with Fianna Fáil and kept his
professionaldistance,butallinvolvedsawhimasadrivingforce,McCreevylater
describing him rather colourfully as “the smartest civil servant, the smartest
personIevermet…HisrolewasatleastequaltoWhitaker,ifnotgreater”.22
ByOctober1986themassive,400-pageStrategyforDevelopment1986-90had
emerged.Itincorporatedandsynthesisedawiderangeofpolicies, fromTelesis
toTheWayForward, IDA’ssectoraland inward investmentstrategies, theICTU
Plan’sproposalsonstatecompanies,taxandsocialpolicy,andCIIsuggestionson
infrastructureandgreenfieldsectorssuchastradedservices.Itwasuniqueasan
“integratedfour-part”plan,coveringthemacro/financial,industrial,taxationand
socialequityelementswhichit insistedhadtobeimplementedsimultaneously.
Taxreformwasapolicylevertostimulategrowthandexpandthelabourforce,
compensate for pay moderation and increase equality. The Plan stressed the
needforanystrategytoformaconsensusacrosssocialinterestsandparties.23
WhilereferencingthesenseofpurposeoftheLemassera,theplanningNESC
proposedsurpassed thatof the1960s instateactivism. Italsoreferenced then
currentinstitutionalist“smallopeneconomy”theory,notablyKatzenstein,which
21 CIIpositioninConPower,‘StrategyforDevelopment.SpeechtoSouthCo.DublinFineGael’,25/02/86.
PowerPapersandCIINewsletter,11/11/8622 “hammerout”,InterviewwithÓhUiginn;“influence”,interviewwithMansergh;ÓhUiginnrole,Rafter
2002:128;McCreevyquotedinHastingsetal.:3423 NESC1987
131
argued the central role of an integrated institutional state and national policy
consensus in generating and implementing successful development strategies.
Given the dearth of venture capital or an industrial investment culture, NESC
proposed interventionistplanningas thekeydriverofdevelopment, criticising
the traditional over-reliance on purely fiscal policy. It also critiqued the
conservatism and inefficiencies of indigenous industry, proposing that
modernisationandscalingupofpotentiallarge-scaleexportperformersthrough
preferentialstatesupportsbeapriority,particularlyinunderdevelopednatural-
resource-basedandservice industries.FDIwasseen inanancillarybut critical
role.Insteadoftheindiscriminateapproachofthe1960s-70s,FDIshouldtarget
only select high-skill sectors to develop comparative advantage, drive a rising
value-chain, improve production quality and through “linkages” develop
indigenous firms.The foodsectorwas singledoutashavingsignificantgrowth
potential, but to supply it agriculturewouldhave toovercomeover-seasonally
dependent production and be weaned from grant reliance towards greater
commercialisation.Improving“socialequity”wouldbeessentialtodevelopinga
motivated, skilled workforce, by removing welfare traps, facilitating social
securitysupportsandeducationalaccess,andremovingbarrierstotheeconomic
andsocialparticipationofwomenanddisadvantagedgroups.24
One area on which a consensus was not achieved was, ironically, on what
exactly“consensus”entailed!Thiswasduetopoliticaldifferencesbetween,and
within, union and business groups. The NESC report could only agree “that
reference bemade… to the importance of building consensus if themeasures
necessary to deal with the current economic and social situation were to be
implemented”. Inearly1986,ontheICTU’s initiative, thecouncilhadagreedto
study“institutionalarrangementsforeconomicandsocialplanning”elsewhere,
identifyingaspecific“numberofEuropeancountries”.Butattemptstoprogress
“studyvisits” to furtherthismade littleheadway,andweresoonabandoned.Ó
hUiginnsuggestedacompromiseformulafortheStrategy:
“There isaneedto fosteragreaterdegreeofconsensus in Irishsociety if
these measures are to be implemented without giving rise to conflict. This
consensus is necessary both on the national level and the level of the24 NESC1987;on“SOE”theory,Katzenstein1984
132
workplace. The Council intends to pursue this issue further, through
examiningtheinstitutionalarrangementsforeconomicandsocialplanningin
anumberofEuropeancountriesandinparticularthemechanismsinplacefor
theachievementofconsensus”.25
In the event a weaker formulation was agreed, that stressed the value of
“consensus”withoutspecifyinginstitutions,especiallyattheworkplacelevel,but
committing NESC to “pursue this matter further”. The reason was employer
antipathy to “powersharing” in industry,which theyhadconsistentlyopposed
sincethe1960s,andwhattheysawasICTUattemptstofoistacommitmenttoan
Austrian-style corporatism on theNESC. The Councilwas a consensus-seeking
ratherthannegotiatingbody,andinotherareasitavoideddivisivesubjects.AsÓ
hUiginnpointedout,consensusonstrategycouldonlyrecommendsomuch,with
specificmeasuresamatterforthenegotiatingpartiesandpoliticalarena.26
TheNESC strategywasnovel in its comprehensiveness, its rangeof specific
proposals collated from existing plans, the indivisibility rather than a-la-carte
nature of its four strategy areas, and its emphasis on state institutions being
coordinatedinaconcertedconsensus.Inessencethisapproachwasinherentin
TheWayForward,TelesisandtheNESCproposalsof1982,onlynowintegrated
as a national strategy. The core aim was tackling Ireland’s comparative
underdevelopment rather as well as the immediate debt crisis, and this
contradicts awidespread view that the plan could “only” have emerged in the
conditionsofthe1986crisis.Butonmonetaryadjustment,itproducedaformula
to also resolve that problem. This originated with Jim O’Leary, a young
economistontheNPBsecondedtotheNESCtoworkontheplan.Heproposed
replacing linear deflationarymeasureswith gradual debt/GNP reduction ratio,
“stabilising”itatatargetlevelwithinthreeyears,andwitheconomicexpansion
throughindustrialstrategy“out-growing”itthereafter.ThelastNESCmeetingon
theStrategyagreedtoinclude“someoftheimplicationsofthisnote”.27
25 “examinestructures”and“studyvisits”,NESCmtgs.25/07,19/09,19/12/1986,‘DraftReport’,‘Work
Programme1986’,NESCArchive:Box3b;ÓhUiginntext,‘DraftReport’,NESCCouncilMtg.19/09/86,26 NESCCouncil19/12/86–‘WorkProgramme1987.NotefromSecretariat’27 “onlyhaveemerged”,Begg2016;O’Learyformula,‘SecretariatNote–AlternativepathstoFiscal
Adjustment’[byJO’L],CouncilMeeting16/10/1986,NESCArchive:Box3b;alsoHastingsetal2007:20
133
NESC members were aware that many of the report’s proposals would be
opposedbygovernment.Buttheyneverthelessagreedoneexplosiveconclusion:
that“whilethecurrentsituationisgravetheCouncilisevenmoreconcerned…
that the medium term prospects on the basis of unchanged policies offer no
relief”.Theyalsocriticisedas“defeatist”thepopularpublicdiscourseonthe“end
of work” and a “jobless future”, insisting that “the fall in manufacturing
employment… ismore theresultof the typeof industrialandotherpolicies…
pursuedthantheproductofanysetofimmutablehistoricalforces”.28
FitzGeraldwasfurious.WhentheNESCpresenteditsStrategyforDevelopment
in November 1986, he effectively rejected it by claiming it justified his
deflationarystrategy.Muchofthepress,includingeventheIrishPresswhichasa
FiannaFáil-linkednewspapermighthavebeenexpectedtosympathisewith its
approach, showed little understanding for it, highlighting almost solely, and
approvingly, the recommendations prioritising spending cuts and debt
reduction.SpringdemandedtoknowwhichspendingcutstheNESChadinmind
and,althoughproposingthatNESCneverthelessbeconsultedwhendraftingthe
budget,sarcasticallywelcomed“tradeunionstakinganewattitudetowardspay,
competitivenessandrestrictivepractices”.NESCwasalarmedat theresponses,
thoughmediahostility tounionswasnothingnew,with someunionsofficially
“boycotting”theIrishIndependentbecauseofitsbiasedcoverageofdisputes.But,
fearing“forthefateofthereport”,theNESCissuedastatementemphasisingitas
an“integrated”four-partstrategy,nopartofwhichcould“workonitsown”.29
ICTU condemned the government’s “scandalous abuse and misuse of the
report” and its “selective use” of its recommendations. The report did not, “as
claimed by the Taoiseach”, “endorse current Government policy”, but on the
contrary concluded that current policies were driving unemployment and the
“deteriorationinthepublicfinances”.TheCIIalsopubliclydefendedthereport,
stressingitsintegrated“four-part”aspect.Morereservedly,FUEwelcomeditas
“helpfulforbusinessplanningandpaybargaining”tohave“aslittleuncertainty
aspossibleaboutnationaleconomics,social,industrialandagriculturalpolicies”.28 Mtg.19/09/86,‘DraftReport’,NESCArchive:Box3b.Also,InterviewCassellsandAllen,M.1998:247-5029 FitzGeraldposition,‘GovernmentStatement’inNESCCouncilMeeting13/11/86andIT14/11/86;press
reports,IT,II,IP,13-16/11/86;SpringinIT17/11/86;LGPSUboycottofIndependent,LGPSU,‘ReportsonAgenda.LG&PBDiv.Exec.’,18/01and18/10/85,Exec.Boardmtg.18/01/85;NESC‘PressStatement’,13/11/86,inIrishPress,14/11/86andCouncilMeeting19/12/86
134
Whileitsupportedatripartitedevelopmentpolicy, includingguidelinesonpay,
itwasstillopposedtonational-levelwagesettingandminimumwages.30
Given the debt, emigration and unemployment crisis, the obvious imminent
disintegrationof theFitzGeraldcoalitionoverbudgetpolicy,andthecontinued
industrial unrest, these responses by government and employers to the NESC
report were hardly surprising. The pro-partnership faction in the ICTU
leadershipwaswellawareofthis,havingengineereditsownJobsPlantorevive
abasisforsocialdialoguein1984andbehindthescenesworkingwithÓhUiginn
to have the NESC secure government consent to develop a plan for economic
recovery.By1986itwasinlittledoubtthatthegovernmentwithwhichitwould
most likely be able to realise a restoration of social partnership was not the
incumbentonebuttheimminentprospectofaHaugheyone.
“Palacecoup”:theICTUsecuresa“mandate”
Itisnottrue,assomestudiesclaim,thatICTUenteredtalkswithHaugheyon
socialpartnershipin1987“withoutamandate”fromitsmembers.Thiserroris
understandable given the considerable subterfuge involved in securing that
mandate.Asworkgotunderwayon theNESCreport inearly1986,andwitha
changeof government in1987 increasingly likely, thepro-partnership leaders,
convinced a once-off opportunity was presenting, determined to secure a
mandate tobeable toenter talks immediatelyanewgovernmentwas formed,
wellawarethatthatthiswouldnotbeasimpletask.31
The tradeunionmovementwas ahousedivided.Asdescribed in chapter4,
ICTUwasanallianceofinterestsoftendividedduetothedivergentinterestsof
different unions. Congress’s carefully balanced 25-member Executive Council
reflectedthedominantstrandsinthemovementanditsauthorityreliedonthe
acquiescenceofitsaffiliateunionstopolicycoursesadopted.Socialpartnership
dividedthemovementlikenootherissue.
Two ICTU conferences in 1983 had rejected Phil Flynn’s proposal for a
restoration of social partnership as ICTU’s central strategy, on the ambiguous
grounds that it was “pointless” pursuing it in the absence of a government
30 ICTUAR1987:212;CIINewsletter,11/11/86;FUEBulletin,Nov.andDec.1986,Feb.198731 “nomandate”,e.g.Adshead2011
135
willingtoengage.Thepro-partnershipgrouphadhadtocarefullypoliticfirstto
buildthebasisforareturntosuchastrategy.Asdescribedabove,thishadbeen
achieved,followingFitzGerald’s“exiling”ofÓhUiginntotheNESCinJune1984
and union leaders’ discussions with him, through disingenuous motions they
secured through ICTU’s July 1984 conference authorising Congress to draft an
“industrial policy”, though with a coded link to pay buried in the text of the
motionstoenableastrategyformthebasisofanegotiatedagreement.Thisplan
–ConfrontingtheJobsCrisis-kick-startedboththestrategydevelopmentatNESC
andICTU’spoliticalre-engagementwithHaughey,nowsecurelyincontrolofhis
party,whoadvocatedapartnershipstrategy ifhereturnedtogovernment.The
pro-partnershipleadersnowrequiredamandatetoopentalksonanagreement.
Given the on-going union conflicts with FitzGerald’s government and the
collapseofrelationswithLabour,ICTUleaderscouldhardlyproposeastrategy
ofpolicycollaborationwiththatgovernmentoropenlydeclareapreferencefora
futureFiannaFáilgovernmenttoreplaceit.Butifontenuousgroundpolitically
and uncertain of support on the ICTU Executive, the pro-partnership leaders
were strong organisationally. They dominated the ICTU Executive’s agenda-
setting “General Purposes Committee” (GPC) and its NESC representation, and
usedthispositionbothtoensurethatJohnCarrolloftheITGWU–whohadclose
relations with Haughey - would be in the key position of Congress President
during1986-87whenthelikelychangeofgovernmentoccurred,andtoarrange
the1986ICTUconferenceagenda.Achievingamandatetoengagewithafuture
governmentwas a “high-risk strategy”, entailingwhat anLGPSUofficialwould
call“somethingofapalacecoup”attheJuly1986ICTUconference.32
ICTU conferenceswere four-dayaffairs,with a social eveningbefore a final,
usually poorly attended, morning session devoted to worthy, non-contentious
issues.Thepro-partnershipgroup–Carroll,Attley,MurphyandFlynn-decided
to have a brief and seemingly innocuous motion on pay not adopted and
proposedthroughtheExecutive,aswouldbenormal forsuchan issue,butput
directly to conference during that sleepy final morning session as a routine
motion by the LGPSU. To further avoid highlighting its significance, Flynn
32 GPCandNESCmembershipinICTUAR1987;“highriskstrategy”,interviewwithCassells;“palacecoup”,
interviewwithMcLoone;seealsoHastingsetal.2007:18
136
absentedhimselfandhadhisthenlittle-knowndeputy,PeterMcLoone,propose
itwithashortspeechhehadpreparedforhim.Flynn’sspeechdeclaredthatthe
traditionalunionaimsofarighttowork,decenthousing,healthandeducation,
and “a fair return for [their] labour” could be realised only “by extending
collectivebargainingtonewlevelsthroughaseriesofnationalunderstandings”.
Themotion itself simply proposed that ICTU seek “a return to centralisedpay
bargainingintheformatofanannualNationalUnderstanding…ensuringtrade
union input into national planning”. Moved to objections from surprised anti-
agreement delegates in what McLoone called a “near-empty hall”, it was
supportedbyCarrollandMurphyandpassed.Theleadershiphadthemandateit
neededtoopennegotiations,withthecriticalword“pay”included.33
Followingthesecuringofthemandateand,inDecember1986,publicationof
theNESCreportasageneralelectionwasincreasinglyobviouslyimminent,ICTU
helda “SpecialConferenceonPay, JobsandTaxation” tostrategise itsaims for
the series of National Understandings it envisaged. With the anti-agreement
unionspowerlesstoopposethisasitaccordedwithadoptedpolicy,themeeting
assessedtheweaknessesofpreviousUnderstandings,decidingthatamonitoring
body would be essential to ensure delivery of any new agreement. It also
identified the policy areas ICTU should prioritise - summarised in A Plan for
Work - endorsing the NESC report and its debt/GNP formula, and a tax-offset
approachtopaynegotiations.10,000copieswerecirculatedtopoliticalactivists
nationwideduringtheelection.34
ThecontextwasafirmcommitmentICTUleadershadsecuredfromHaughey.
The“HaugheyFactor”againdecisive Haughey, summarising his party’s history in 1980, described de Valera’s
achievement as establishing the nation’s sovereignty and intellectual freedom,
and Lemass’s as an economically successful state as the substance of that
independence. His own political goal was to realise the economic success for
which Lemass’s “techniques of modern nation-building” had laid the basis.
“Harnessing” the creative potential of social forces such as unions to realise it33 InterviewswithMcLoone,Cassells,Flynn;on“littleknown”,theICTUconferencereportmisnameshimas
“McClune”!“debate”,ICTUADC1986:223-9;Flynnspeech,‘ICTU,1986,Res[olution]7’,FlynnPapers.34 ICTUAR1987:194
137
wasthesubstanceof“nationalendeavour”.Thiswasaconsistentpositionhehad
presentedrepeatedlysincethe1960sasasingularly“pragmatic”concept.35
HaugheyhadsoughttoframehisWayForwardeconomicplaninanewtype
“social partnership” in autumn 1982 and before going into opposition in
DecemberhadagainapproachedICTUproposingaNationalUnderstandingasa
balanced programme combining financial adjustment, pay determination and
industrial expansion. FitzGerald, while not averse to cooperative policy
structures, considered tripartitism and monetary entrenchment mutually
exclusive, and suspended the former to achieve the latter, while Haughey’s
model remainedGermany’s corporatist approachwhichhehaddiscussedwith
HelmutSchmidt.WhileFitzGerald ignored the ICTU’sDecember1982renewed
call fora“negotiated”plan,Haugheyhadwelcomed it,pointingtoFiannaFáil’s
record of interventionism and describing, point-by-point, the compatibility of
TheWayForwardwithCongress’sposition.Heendorseditsproposalsonpublic
enterprise,sectoralplanning,industrialgrowthbasedonnaturalresources,and
evenworkerparticipation.Arecoverystrategycouldprotectwagesandwelfare
benefits, he said, andhepromiseda “permanenteconomicand socialplanning
system”foundedon“widespreadconsultation”.36
Once in control of theparty following several failed “heaves” by opponents,
Haugheyinoppositioninthemid-1980sdevelopedaprogrammebuildingonthe
sectoralapproachofTheWayForwardandideasgatheredfromunconventional
businessandsocialentrepreneurs.Heintegratedtheseintowhatheincreasingly
calleda“programmefornationalrecovery”.Onhearingofaninnovativeideahe
would typically invite the individual concerned to present it and, if convinced,
adopt it as party policy. Thiswas the casewith Dermot Desmond’s idea for a
financial services centrewhich the coalition had rejected, and Eoin Sweeney’s
marinepolicy.WhenSweeney,a former ITGWUofficial, called foran industrial
strategy to exploit maritime resources, Haughey “summoned” him and after
listeningtohiscasehaditadoptedvirtuallyunchangedasFiannaFáilpolicy.37
35 Haughey,‘PresidentialÁrdFheis,16/02/80,inManserghed.1986:32736 On1982initiativesseechapter437 Haugheyon“NationalRecovery”,‘PresidentialAddresstoÁrdFheis’,30/03/85,Manserghed.1986:935,
andinDáil16/01/86;onDesmondproposal,seechapter8;Sweeney,Obituary,IrishTimes19.08.17
138
In 1984 Haughey re-committed to tripartitism: “We will re-establish in
Governmentacloseunderstandingwiththesocialpartnersandsecuretheirfull
co-operation in achieving clearly stated and fully understood economic and
socialobjectives”.Followingthecoalition’srejectionofarbitrationdecisionsand
thewaveofpublicsectordisputes,heattackeditforits“insensitivehandling”of
industrial relations and failure to “win the confidence of workers and their
representatives”or“establishsomeunderstandingofpoliciesandtargets”with
the unions. Government should revive the National Understanding or “devise
somesimilarkindofmechanism”touniteemployers,unions,expertcentres“and
allotherrelevantsectorsfullybehindclearlydefinedeconomicpolicyobjectives
…Thefullcooperationofthetradeunionmovementisvital”.38
ThiswasconsistentwithhisapproachasMinisterinthe1960sandTaoiseach
in 1980-82. For him, trade union power, as he had put it in 1975, reflecting
Barbara Cassells’ In Place of Strife of 1969, was a “socio-political fact” to be
harnessedinacommonplan:“Iftheplanningprocessdoesnotpermit[it]tobe
exercised in developing the economic system, we must not be surprised if it
seeksitsownendsindependently”.Whilehecontinuedtoholdtohis1982Way
Forward plan, with its combination of monetary reform and state-driven
industrial expansion, he castigated FitzGerald’s government as “monetarist”, a
prisoner of “Thatcherism” and “New Right” economics wedded to a “book-
keepingethos”.Growingsocialpolarisationwasaconsequenceofits“uncaring”
policies,butcouldbeovercomebyanational“cooperative”approach.39
Hiscritiqueextendedtothegovernment’sstanceonEurope.Before1986the
EEC had played little role in Irish economic development apart from CAP
transfers and modest social funding, Haughey describing it in 1985 as “quite
frankly irrelevant” to an Irish recovery. He criticised the “one-sided” Single
EuropeanActandCommissionerSutherland’soppositiontoDelors’balancingof
regional/social policy proposals: “Unless there is…meaningful regional policy
one can forget about economic integration and monetary union … Economic
integration without a proper redistributive mechanism is nineteenth century38 “Wewillre-establish…”,‘PresidentialAddresstoÁrdFheis’,31/03/84,inManserghed.1986:824;
“insensitivehandling”,Dáil19/12/85;“revivetheNU”,Dáil06/02/8539 “Iftheplanningprocess…”,speechtoDublinSocietyofCharteredAccountants,inManserghed.1986:
205-6;“WayForward”combinedplan,Dáil01/02/84and14/12/84;“monetarist”,“NewRight”,“Thatcherism”etc.,inDáil10/10/84and‘PresidentialAddressÁrdFheis’,30/03/85
139
economics”. EEC policies played far from the central role in Haughey’s social
partnershipplanscriticshaveclaimed.HisviewofEuropewasepitomisedbyhis
reply to Schmidt in 1981 that the EEC could not aspire to shape international
economicaffairsaslongasithadnoeconomicstrategyofitsown.40
Many union officials distrusted Haughey for his connections withmoneyed
interestsandhisconservativestanceonsocial reformssuchasdivorce.Buthe
saw himself as a sophisticated and subtle statesman and felt insulted by the
Leftist narrative – such as inTheBoss, a book by two IrishTimes journalists -
portraying him as a venal, corrupt and even thuggish leader.Hewas similarly
outragedwhena fauxpasbyhisPR“handler”,P.J.Mara,whojokinglyusedthe
fascistslogan“UnaDuce,unavoce!” todescribehis leadershipstyle,waswidely
reported.Unionleaderswerereluctanttoengagewithhimashisdaysasparty
leader, at least until 1984, seemed numbered, with even the Irish Press
publishingaprematurepoliticalobituaryofhim.Thechaosofthefinalmonthsof
his 1982 government, MacSharry’s expenditure cuts and the collapse of the
National Understanding had strengthened anti-agreement sentiment and sewn
uniondistrustofFiannaFáil,including,critically,ontheITGWUExecutive.41
Nevertheless, Haughey hadmaintained contactwith leaders such as Carroll
and Flynn and when ICTU published Confronting the Jobs Crisis, he “endorsed
fully”itsobjectivesandexpressedhisparty’s“broadagreementwiththethinking
ofCongress”,demurringonlyoveritsrelianceonstateenterprisewhichhadalso
beenÓhUiginn’ssolecriticismof it toFitzGerald.HaugheyproposedthatICTU
meetFiannaFáil’sfullfrontbenchtodiscussit,somethingCongresshadturned
downin1981ascontrarytoICTUpractice,butthistimeaccepted.Atthemeeting
Haughey praised “the broad economic policy outlined in their valuable
document”anditscompatibilitywithFiannaFáilstrategy,convincingkeyunion
leadersthey“coulddobusiness”withhim.42
Haughey’s social partnership idea gained little traction with the press or
electorate, or even noticeably within Fianna Fáil. But he was attentive to its
40 HaugheyonSEA,Dáil26/06/85;“criticshaveclaimed”,Foster1988,2007;‘Confidential.Meeting
betweenTaoiseachandChancellorSchmidtinBonnon31stMarch1981’,NAI:TAOIS/2012/90/92641 Viewas“statesman”,Cronin1997;irritationat“Left”portrayal,RyleDwyer1996;outragedatMara,RTÉ
2016;“obituary”,IrishPress,21/01/83;ITGWUdistrust,‘TheWayForwardtowhat?’Liberty,Nov.198242 HaugheyinDáil10/10/84;Secretary[ÓhUiginn]toFitzGerald,28.11.1984,‘MeetingwithICTU’,DTA:
OHP;Hastingsetal2007:33;ICTUECmeeting10.12.1981
140
electoral aspect and in 1983 established a task force to address Fianna Fáil’s
failing support in Dublin working class areas where the Workers’ Party was
making inroads. “OperationDublin”, ledbyBrianLenihan, re-focusedpolicy to
meet working class concerns and revived local Cumainn. Haughey also
established a “Committee on Trade Union Affairs” of TDs and party trade
unionists such asNoreen Green and TonyMcKenna, to “position” the party in
tacklingthe“recession”.Thiswasunsurprisinggiventhatmanytradeunionists
wereFiannaFáilvoters.ThecommitteewaschairedbyBertieAhernandMichael
Woods, the party’s labour andwelfare spokesmen, and produced positions on
issuesofunionconcernsuchasPRSIreformandindustrialtraining.Butitdidn’t
pandertouniondemands,withAhern,despitetheon-goinguniondisputeswith
government,stressingthatonpubicpay“ourpolicy…wouldlikelyincludeonly
cost-of-livingincreasesandnotpaymentofspecialawards”.43
Haughey also used the committee to educate his own front bench. At his
directionitwas“lecturedto”onpartnershipinEuropeandsentona“studyvisit”
toAustriatoexamineits“modelofsocialpartnership”.This,Ahernrecalled,was
becauseofHaughey’sviewthatitwaswhyAustria-anoftenreferencedmodel
“smallopeneconomy”witha“consensusapproach”-hadrisen“fromtheashes
ofaworldwartorankwellabovetheOECDaverageonmostindices”.Ahernwas
also instructed to build relationswith union leaders and developed a rapport
particularlywithAttleyoftheFWUI,inwhichhehimselfhadonceserved,aswell
as Phil Flynn of LGPSU and Christy Kirwan of ITGWU. He organised the front
bench meeting with ICTU on its Jobs Plan and drafted the party’s response
endorsingit.ButitwasHaugheyhimselfwhodominatedthatmeeting,andwho
also“lunchedregularly”withITGWUPresidentJohnCarroll,anaustereandaloof
butauthoritative figure inmanywaysresemblinghim inbothbackgroundand
character.Itwasclearthat,whatevertheroleofAhernorothers,underaFianna
Fáilgovernmenttripartitestrategywouldbedrivenfromthetop.44
Just before the NESC report was published and with an election imminent,
Attleymadeawidelypublicisedcallforareturntothe“pioneeringspiritofthe43 On‘OperationDublin’,NewHibernia,Oct.1984andUCD-A:P176/382-3;ontradeunioncommittee,
Ahern2009:79-82;AhernquoteatCommitteemeeting,12/12/1985,UCD-A:P176/39344 AhernandAustria,Ahern2009:92,alsoInterviewwithAhern;andunionleaders,Ahern2009:92-3,
InterviewswithFlynn,Cassells;onCarroll-Haugheylunches,Hastingsetal2007:31;“hammeroutconsensus”,InterviewwithÓhUiginn
141
1960s”, lauding the “virtuous circle” of the “Nordic model” and advocating a
“national plan for economic recovery” agreed between government and social
partners. There was little doubt to whom the speech was addressed, and
Haughey responded by welcoming Attley’s proposal, stating that a social
partnership as in “Austria, Norway and Sweden” would be “an important
element” inFiannaFáil’sprogrammeforrecovery”.TheireoftheLabourParty
with ICTU thus had some basis, as ICTU’s preference for the election outcome
wasnowunambiguous.Asafinalstraw,whengovernmentdismissedtheNESC
report, Haughey turned on it for its selective treatment of it, saying “reduced
publicspendingalonewillnotrevivetheeconomy”andemphasisingthereport’s
integratedstrategyandthecentralitytoitofinvolvingthesocialpartners.45
Despite his friendships with individual entrepreneurs, Haughey’s relations
withbusinessorganisationswerefrosty,amajorityoftheCIIboardsupporting
FitzGeraldandhostile toa return toFiannaFáil government.Buthe contacted
them just before the NESC report appeared, and over an extraordinary three
daysofmeetingswithCIIofficialsdiscussedtheirpolicyproposals,incorporating
many into his strategy. He also urged their support for social partnership,
suggesting a meeting between his front bench and the full CII board. This
occurred on 8 January 1987, shortly before the budget that brought down the
FitzGerald government. The CII leaders cautiously agreed to engage with his
“consensus” strategy.While both CII and FUE continued to espousemonetary
orthodoxy,theypubliclyendorsedtheNESCtripartiteplanonindustrialpolicy.46
Haugheyhadsethishopes,andreputation,onachievingacomplex,high-risk
partnershipframeworkforhisrecoverystrategy,whichhewasintentondespite
mediaandpublicscepticismanddividedcouncilswithinbusinessandunions.
Partnershiponprinciple:FiannaFáilinthe1987election
Thoughlongcertain,Labourministersresignedon20January1987,unwilling
toacceptBruton’sfinalbudget,whichaswellasfurtherpublicservicecutsand
taxincreases,continuedthepublicpayfreezeandadvocatedprivatesectorpay
45 Hastingsetal2007:34;FUEBulletinNov.1986;IT18/10/86andIT,IP14/11/86;Attleyspeechin
Liberty,Nov.1986andFUEBulletinNov.1986;Haughey,speechtoFiannaFáil,Athlone,17/10/86,inMansergh(ed.)1986:1160-61
46 Haughey-CIImeetings,Power2009:60-2;FUE-CIIpositions,FUEBulletin,Feb.1987,Power2009:61
142
beingsuppressedbelowinflation.Springadoptedan“independentprogramme”,
with “opposition to cuts” central to Labour’s manifesto, along with “social
partnership”. This was formulaic and unconvincing, inserted by Quinn on the
urgingofAttleyandCarroll,whohadimpressedonhimHaughey’s intentionto
returntotripartitismandtheirownintentiontocooperatefullywithit.Despitea
Labour-FG coalition being off the cards, and a campaign overshadowed by
economiccrisis,mediareportingconcentratedontheissueofHaughey’s“fitness”
togovernandprovidedsoftsupport forDesO’Malley’snewPDparty.Haughey
had long lost theoutletcritical tothenarrativeofpreviousFiannaFáil leaders,
TheIrishPress,andhispartnershipplanbarelyfiguredintheelectioncoverage.47
Fianna Fáil’s manifesto, Programme for National Recovery, accepted the
“principles”oftheNESCreportandlistedahostofindustrialandinfrastructure
projectsalongwiththeeconomic/fiscalstrategyofTheWayForward.Employers
and unions promoted opposing forms of tripartitism, with ICTU circulating
10,000 copies of its partnership-orientated Plan for Work while employers
favoured a common industrial strategy only. Haughey’s manifesto straddled
both, down-playing the pay aspect but tilting towards ICTU: “The economic
situationrequiresus to takeamajorstep forward…toworktogethertowards
nationalgoals”through“a foruminwhichthesocialpartnerscannegotiatethe
termsofanationalplanbasedonagreedmedium-termobjectives”.48
Haughey gained a surprising supporter during the campaign. Following a
privatemeetingatKinsealy,newIrishTimeseditorConorBrady,along–standing
Fine Gael supporter, was so impressed by Haughey’s economic/partnership
strategythatheeditorialisedfavourablyonit.Thismetwith“outrage”fromIrish
Timesstaff,mostlyhostiletoHaugheyandinclinedtothePDs.Bradypraisedthe
plan’s coherence and noted IDA warnings that FDI flows were contracting
becauseofaperceptionthatIrelandlackedagrowthstrategy.Whilefallingshort
ofurgingreaderstovoteaccordingly,asthatpaperhadneveradvocatedsupport
for Fianna Fáil, it was a substantial endorsement from a surprising source,
thoughnodoubtinformedbythenearcertaintyofaHaugheyvictory.49
47 Brutonstatement,IrishTimes21/01/87;Springposition,IrishTimes21and26.01.1987;“impresson
Spring”,InterviewwithAttley;48 ICTUAR1987:194;FUEBulletin,Mar.1987;IT13/03/1987;IRNReport,Mar.1987;FiannaFáil198749 Brown,T.2015:339-40;Brady2005;IrishTimes,editorial,02/03/87
143
Chapter6:
Longhaul:thedramaticroadtothe“PNR”,1987Governmentchoiceandpolicypositioning HaugheywaselectedTaoiseachon10MarchonthecastingvoteoftheCeann
ComhairleandwithTonyGregory’sabstention,formingaminoritygovernment
inacontextwhereneitherthemootedFG/PDcoalitionnoranyotheralternative
commandedamajority.Inhisacceptancespeech,Haugheydeclaredhisintention
tomeetwiththeNESC,the“principles”ofwhosereport-a“consensus…among
theprincipal economicandsocialpartners” -was “consistentwithourviewof
whatisrequired”.Buttopublicdismay,hethenannouncedhispriorityasradical
expenditure cuts, continuing those of Bruton’s defeated budget, including its
public pay decree. Introducing a drastic budget on 31 March, McSharry
nevertheless repeated that NESC’s “strategy and principles” would “form the
basis for the Government's general approach”. It is claimed by Conor Lenihan
that McSharry insisted to Haughey on budget autonomy (and, less likely, that
BrianLenihanlikewisedidonforeignaffairs),butthishadlongbeenHaughey’s
perspectiveanyway.MacSharry,itmightbenoted,wasaninsideronHaughey’s
smallteamandhadplayedanidenticalroleinhis1982governmentstrategy.1
Minoritygovernmenthadadvantagesforastrategyoffinancialretrenchment.
AsFineGaelandthePDssharedthisprinciple,andFitzGerald,andlaterDukes,
committed to support Haughey in continuing their budget policy, clientelist
pressures could be kept at bay. Haughey praised FitzGerald for the difficult
decisionshehadtakenwhen,asheputit,thestatehadfewotheroptions.Buthe
planned achieving monetary stabilisation and growth through an alternative
routethateschewed“Thatcherism”infavourofasocial“consensus”strategy.
Given Haughey’s repeated commitment to such a course, it is striking that
whilehewouldengagewith the “socialpartners” from the start, itwouldbea
yearbeforeanagreedprogrammewouldbeinplace.
1MacSharryinDáil31/03/1987;insistedtoHaughey,Lenihan2015;“praisedFitzGerald”,Dáil10/03/87
144
Firststep:Haugheyengagesthesocialpartners
HaugheydelayedhisannouncedmeetingwiththeNESC.Beforethechangeof
government, Ó hUiginn had had the NESC agree to invite the “incoming
Taoiseach”tomeetittodiscussitsreportandseekastrategicrole“elaborating”
the“NationalPlan”.HaugheyonbecomingTaoiseachhadacceptedtheinvitation
andameetingwasinitiallysetforApril.But,followingdiscussionswithCassells,
Ó hUiginn’s advised a delay to accommodate ICTU. Congress feared talks in a
tripartite setting would put it “at a disadvantage since it can be assumed the
otherpartieswouldformaunitedfront”againstit,andalsosoughtanagreement
structuredeterminedbyICTUandgovernmentbeforeinvolvingotherpartners.2
Congress proved equally accommodating to government. Despite public
outcry over the budget, ICTU onlymildly criticised it, expressing its “extreme
disappointment” at the “savage cuts”, but the same day wrote to Haughey
seekingtalks“onallaspectsoftheeconomicsituation…todeviseanationalplan
forgrowthandeconomicrecovery”alongNESClines.Haugheyofcourseagreed,
publicly down-playing it in the Dáil as routine “consultation with the social
partnersatleastoneconomicandsocialobjectives”.Buthewarnedthatwithout
pay restraint “major lay-offs” in the public service were inevitable. ICTU put
downamarkerbyinsistingbothpublicandprivatesectorpayform“anintegral
partofanagreednationalprogrammeofeconomicandsocialpriorities”.3
ÓhUiginnagreedwithCongressonprinciplesandstructuresfornegotiations
beforeengagingotherpartners.ICTUinsistedthatany“negotiatednationalplan”
bedrivencentrallyfromtheDepartmentoftheTaoiseachtoensurecontrolfrom
the top and that it adoptNESC’s “four-part” strategy approachwith integrated
macro-economic, industrial, tax and social policies, fromwhich “pay questions
cannotbedivorced”.Bilateral“workingparties”chairedbytheDepartmentand
involving,ataminimum,secretary-levelofficialsshoulddevelopthedetailanda
2 NESCCouncilMeetings23.02,and24.04.87,alsoCouncilMeeting24.043.87‘NotefromSecretariat’;
Secretary[ÓhUigin]toTaoiseach,13/04/1987,‘Subject:MeetingwithICTU’,DTA-OHP;Cassells,‘BriefforGeneralPurposesCommitteereDiscussionswithTaoiseach’,13/04/87,ICTUArchive:GS-PA-1a
3 ‘BudgetStatement’,01/04/87,inICTUAnnualReport1987:206;Carroll(Pres.ICTU)toTaoiseach01.04.87,ICTUArchive:GS-PA-1a;HaugheyinDáil07and08/04/1987;‘Leadingtradeunionisturgesnewapproachonpublicpay’,IT11/04/1987
145
“Ministerial-ICTUWorkingGroup”dealwithpayandagreethefinalplan.ICTU’s
insistenceonthisstructurewasbecauseofitsexperienceofseniorcivilservants
in1980-82asuncooperativeandgiven to “blocking tactics”,and their “general
contemptforunions”duringtheFitzGeraldyears.ItwasaperceptionHaughey’s
circleshared.WhenAhern,nowMinister forLabour, toldofficialsofHaughey’s
plansforsocialpartnership,theyadvisedhimto“stayawayfromit”.4
Haugheyhimself facedconsiderableresistancefromseniorofficialswhohad
resentedhiscentralisationofpowerintheTaoiseach’sDepartmentin1980-82.
EndaDelaney,anewrecruittoForeignAffairs,describedhow,ontakinguphis
post in early 1987 he encountered “an incendiary group of embittered senior
officials … plotting against [Haughey]” and “drawing up ‘Documents of
Resistance’”.TheyresentedhismovingresponsibilityforEuropeanandNorthern
policy from their Department to Taoiseach’s, as he had also done with socio-
economicpolicy in1981.Haugheywouldcontinue to face resistance fromcivil
servicecircles,necessitatingatightcentralgovernmentgroup.5
Internally,Cassells,whospokeregularlywithÓhUiginn,recommendedthatin
thetalksICTU“recogniseandacceptthenecessityforpayrestraint/moderation
given the difficult competitive position of the private sector and the acute
Exchequerfinancialproblems”.Thiswould“persuadeGovernmenttoengagein
meaningful discussions on public service pay”. A period of budget autonomy
followedbya2-yearagreementwould“helpget[us]outfromunder”thebudget
paydeferralandbuildapositiveframeworkforfuturepaydevelopment.6
Governmentalsohadastrategy,partofwhich,despiteHaugheyunderstating
it in the Dáil, was engaging the social partners early to avoid themistakes of
1982. InpreparingforHaughey’smeetingwithICTU,ÓhUiginnadvisedhimto
commit to the NESC principles and structures Congress sought but stress the
centralityofNESC’sdebt/GNPformula,whichwas“sorealisticinitsapproachto
the public finances”, its prioritising of the exporting and FDI sectors as the
“locomotives of growth”, and its tax/pay formula. “It is clear that the union
4 H/wnote:‘PresidentofCongressandreps.ofEC’[formtg.15/04],and“BriefforGeneralPurposes
CommitteereDiscussionswithTaoiseach’,13/04/87,ICTUArchive:GS-PA-1a;‘JointGovernment-ICTUPressStatement’,15.04.1987,GIS:D/Taoiseach;AherninHastingsetal2007:22-3,33-4andInterviewwithBertieAhern
5 Delaney(2001),AccidentalDiplomat:1-36 ‘BriefforGeneralPurposesCommittee.DiscussionswithTaoiseach’,13/04/87,ICTUArchive:GS-PA-1a
146
leaders want to be involved … A Plan will take them off a number of hooks,
particularlytheevolutionofpublicsectorpayoverthenextfewyears”.Taxwas
alsothekeytoinvolvingbusinessinterests.The“prospectsofsuchaconsensus
Plan,giventheNESCbasis,areexcellent”and“wouldbeagreatachievement”.7
ÓhUiginnalsourgedHaugheytoacceptthe“institutionalmechanisms”ICTU
proposedforthetalks-thepolicy“workingparties”chairedbyhisDepartment
and only secretary-level civil service involvement, as well as the “Ministerial-
ICTU Working Group”, chaired by Haughey himself. Just before the meeting,
CassellstoldÓhUiginnthatICTU’smainconcernwashowseriousHaugheywas
regardingthe“integrated” four-partNESCstrategy,whileHaugheytoldhimhis
concern was how serious ICTU was on debt reduction. Two intensemeetings
followedon15 and29April clarifying these issues, atwhichCongress leaders
stressedtheircommitmenttoreducingthedebtandHaugheycommittedtothe
NESCframeworkandthe“institutionalarrangements”ICTUproposed.8
Itwas clear from thesemeetings that theagreementwouldnotbea1970s-
style “redistributive” one, but instead involve monetary retrenchment and
industrial growth on the basis of the NESC plan, as well as a trade-off of pay
restraintforjobcreation,taxandsocialreform.Thekeymomentcamewhen,as
Cassells had intimated to ICTU beforehand, Haughey said they would have to
“envisage[aninitial]periodoftime”to“enabletheExchequerfinancestobeput
inorder”andtheEBR“reducedtoasustainablelevel”.AProgrammecouldthen
be ready foragreeing inSeptember.While ICTUagreed to this,Carrollwarned
thatpubliclyICTUwouldhavetocontinueopposinghealthcutsandtheretention
of Bruton’s public pay freeze. But Haughey agreed to try to get employers to
includeanationalprivatesectorpaydealwithintheagreement,andthemeeting
agreedatargetdateofSeptember.ÓhUiginnwasconfident thatwith theICTU
committed,otherpartnerswouldhavelittleotheroptionbuttofollow.9
7 Secretary[ÓhUigin]toTaoiseach,13/04/1987,‘Subject:MeetingwithICTU’,DTA-OHP8 ICTUstrategy,‘BriefforGeneralPurposesCommitteereDiscussionswithTaoiseach’,13/04/87,ICTU
Archive:GS-PA-1a;ÓhUiginnadvice,Secretary[ÓhUigin]toTaoiseach,28/04/1987,‘Government/ICTU’and‘MechanismsforImplementingtheProgrammeforNationalRecovery’,DTA-OHP;onNESCstructureanddebt,interviewwithPádraigÓhUiginnandHastingsetal2007:36;onmeetingoutcomes,CassellstoICTUEC,‘DiscussionswiththeTaoiseachonaNationalPlanforGrowthandEconomicRecovery.ReportofMeetingon29April1987’,ICTUArchive:GS-PA-1aand‘JointGovernment/ICTUPressStatement’,29/04/1987,GIS:D/Taoiseach
9 “enabletheExchequer”,‘StatementbyTaoiseachatthemeetingwithICTU’,15.04.1987,ICTUArchive:GS-PA-1a;discussion,CassellstoEC,‘DiscussionswiththeTaoiseachonaNationalPlanforGrowthand
147
Havingprioritisedagreeinga frameworkwiththeunions,Haugheynowmet
theotherpartnerstobringthemintotheprocess,startingwiththeconstruction
industry, the CIF, on 30 April. Though opposed to national agreements and
minimumwagesetting,CIFmorethananysectorwasdependentongovernment
capital programmes, a pointHaughey exploited.He chided their infrastructure
proposalsas“notambitiousenough”andtheyquicklycommittedtoengagewith
his more audacious plan. A joint CIF-Departmental “working party” was
established, though with the Department of the Environment rather than the
TaoiseachaswasthecasewiththeprivilegedICTU.10
On7MayHaugheymetfarminggroups.Givenhishistoryofconflictwiththe
IFA,hehadensuredawidergroupingwas involved, includingdairyproducers
(ICMSA), the coop industries (ICOS) and, to the delight of AgricultureMinister
Walsh,the“progressive”youngcommercialfarmersofMacranaFéirme.IFAhad
welcomed the NESC report, its President, Joe Rea, praising its expenditure
targetsand food industryambitions.Hehadcalledonallparties to “putaside”
their antipathy to Haughey and support him in implementing it. But Rea now
pressedHaugheyfora“stronglineon[the]EEC”tocounterthreatstoCAPand
presenteda listof IFAgrant-seekingdemands,whichhedescribedas the IFA’s
“development proposals”. Before the meeting, officials bemoaned the poor
economicperformanceof farmingand the IFA’ssuperficialendorsementof the
NESC report: “This line, set out in the forward to the IFA proposals”, Finance
noted,“isincontrasttothepolicyproposalswhichfollow”,whichwouldinvolve
“substantialoutlay”bytheexchequerand“mustberejected”.11
The IFA pressed their shopping list onHaughey,which he deftly evaded by
welcoming their endorsement of the NESC report with its strategy for
commercialising farming.Here-statedhisgoalof transformingagriculture into
an entrepreneurial, export-led and consumer-oriented sector by up-grading
product quality, farmer training and marketing. He side-stepped demands for
EconomicRecovery.ReportofMeetingon29April1987’,ICTUArchive:GS-PA-1a;concessionsandprivatesectorpay,Secretary[ÓhUigin]toTaoiseach,13/04/1987,‘MeetingwithICTU’,DTA-OHP
10 ÓhUiginntoTaoiseach,30/04/87,‘MeetingwithCIF’,DTA:OHP11 ‘MeetingwithICMSA/ICOS7thMay1987’,FergusO’Farrell,chiefexecutive,MacranaFéirmeto
Taoiseach,16/04/87,Travers,D/Taoiseach,hand-writtennote,‘farmbodies’,01/05/87,DTA:S25861-A;‘Reacallsfordecisiverule’,IT02/03/87;IFA(1987);JoeReato‘Mr.Haughey’,02/03/87,D/Taoiseach,‘MeetingwithICMSA/ICOS7thMay1987’,F.Coleman,D/FinancetoPO’Sullivan,D/Taoiseach,06/05/87:‘BriefformeetingofTaoiseachwithIFA,7May1987’,DTA:S25861A
148
wider grant schemes by suggesting the IFA pursue them and other ideas in a
jointWorkingPartywiththeDepartmentofAgriculture,towhichtheyagreed.12
Finallyhemetbusinessandemployerleaderson14May.Theywere,asever,
divided on priorities. While what Ahern called the “big boys” of the CII were
eager to progress proposals they had discussed with Haughey before the
election, the “small boys” of the FUE remained truculent. They had endorsed
NESC strategy but opposed any return to “National Understandings”, as they
againrepeatedatthemeeting.ÓhUiginnadvisedHaugheytofocusonindustrial
policyandleavepaytobedealtwithlaterat“MinisterialCII-FUEGrouplevel”.13
AlthoughtheFUE’sinsistenceonexcludingpaywasachallengeforHaughey,
he was not overly perturbed despite his promise to ICTU to try to ensure its
inclusion.Finance,neverenthusiastsfor“Understandings”,hadadvisedhimthe
differences between the ICTU and FUE on pay made “the achievement of a
central dealwell nigh impossible”, and typically recommended that he control
public pay along the lines of the FitzGerald government and hope this set the
pacefortheprivatesector.Butitwasalsoagrowingpublicperception,withthe
IRNbelievinganagreementonindustrialpolicy“withoutanationalpaydeal”the
most likely outcome. For Haughey the pay stand-off provided more time for
governmentplanningwithouthavingtoconfrontthe issueyet.HetoldtheDáil
thetalksunderwaywereona“medium-termprogrammebasedontheprinciples
recommended by NESC” and should not be “confused” with pay negotiations.
Governmentwould “adhere to [the] strategy of the budget”, including on pay,
andbudgetpolicywouldremain“amatterfortheGovernment”.14
BeforemeetingtheFUE/CII,Haugheyhadagreedtoacceptemployers’views
onpaywhileencouragingthemtoengagewiththerecoveryplan,withpaytobe
“revisited”.At themeeting theyconfirmedtheirsupport for theNESCplanand
agreedtoworkwithgovernmenton“industrialdevelopmentstrategy,industrial
promotion, productive infrastructure, taxation and industrial input costs” to
12 ‘Taoiseach’smeetingwithIFAonMonday27April1987’,ÓhUiginntoTaoiseach,06/05/87,re‘Meeting
withIFA,ICMSA/MacranaFéirme’,‘StatementbytheTaoiseachatmeetingwithPresidentsandrepresentativesoftheIFA,ICMSA,ICOSandMacranaFéirmeon7May1987’,DTA:S25861-A;IFA,NationalRecovery.TheRoleofAgricultureandFood
13 “bigboys”,AherninMcGinley1997;FUEBulletin,Feb.1987;‘SearchforConsensus’(editorial),IT13/03/87;FUE‘PressRelease’,15/04/87;ÓhUiginntoHaughey.‘CII/FUEMtg.’,14/05/87,DTA:S25875
14 D/Finance.‘BriefingsforTaoiseach’smeetingwiththeCII/FUE’,26/04/87,DTA:S25875;IRNReport21/05/87;HaugheyinDáil28/04/1987
149
make industry “competitive internationally”. Three CII-FUE “working parties”
were established with the Department of I&C, on “Employment-Development
Measures”, “Social Policy” and “Environment for Enterprise”. On industrial
policy,CIIwasverymuchinthedrivingseatontheemployer/businessside.15
Blunttalk:Haughey’sthree-stagestrategy
Haughey had a clear three-stage monetary-industrial-partnership plan.
Engaging the “partners” in protracted planning gave him space to implement
radical monetary adjustment while integrating the major social forces by
involvingtheminthedetailofwhatcouldbecommittedto.Heavoidedrepeating
hismistakesof1982bymakingitcleartotheunionsthatthiswashowhewould
proceed, but also promising to achieve an agreed integrated recovery plan by
September.Whattheydidnotknowwashisdeterminationalsotopre-determine
aspectsofthatplanbyproceedingimmediatelywithindustrialinitiatives.
Haugheywouldlaterstatetheviewthatrealpoliticalpowerrestednotinthe
party or on the backbenches, but in cabinet. An authoritative Taoiseach
managing a cabinet united on a clear strategy could marshal the support of
backbenchersandparty.Whilegeographicfactorswereunavoidableinforminga
government, the key figures must be able for the task. Irish politics were
constrained by PR and multi-seat constituencies, exaggerating clientelist
influences,butastrongcabinetcouldovercomethese.Inasmallcountry,“where
you sort of know everyone well”, personalities and connections were vital in
strategy building and implementation. Fianna Fáil would unite behind
governmentonceconvinced itwasadvancing thenationalwelfare.Thesewere
principleshefollowedinassertinghisauthorityovergovernmentin1987.16
Haugheyfirstmovedtoestablishhisauthorityovergovernmentandhisown
ministers.HereinstatedtheDepartmentoftheTaoiseachtoacommandingrole,
elevatingitsSecretary,ÓhUiginn,tothecentreofgovernmentandinvestinghim
with “plenipotentiarypowers” to re-organisedepartments, integrateagencies -
particularlytheIDA-intheplanningprocess,andensureministers’compliance.15 “revisited”,[ÓhUiginn],hand-writtennote,‘CII/FUEMtg.19/5/87’,DTA:S25875;‘JointGovernment-
FUE/CIIStatement’,14/05/87,GIS:D/Taoiseach;‘DiscussionswithSocialPartnersonNationalProgrammeforGrowthandEconomicRecovery’n.d.,DTA:S25281-E;D/Finance:‘BriefingsforTaoiseach’smeetingwiththeCII/FUE26/04/87’,DTA:S25875
16 InterviewHaughey,2005
150
He formed an inner cabinet of himself, MacSharry and Ahern to work with Ó
hUiginn in driving policy. It was largely the same group, strengthened by the
union-friendlyAhern,thathadproducedtheWayForwardin1982,a“cabal”he
hadpreviously attemptedbut failed fully to achieve in1982, andwhichAhern
andCowanwouldlaterreplicateintheirgovernments.17
Thenewstrategywasdrivenhometoministersatameetingon13April,the
day before Haughey’s first meeting with ICTU. Ó hUiginn circulated a memo
synthesisingHaughey’spriorities.Monetaryautonomywasessentialforthefirst
year and ministers were to report, on a monthly basis, their progress in
achieving targets and, to relieve interest rate pressures, postpone spending
plans.Ministersofstate,meanwhile,weretodevelop“quickpracticalactionon
developmentproposals”,“fleshedouturgently”withtheIDA.Allsuchinitiatives
were to be tailored to fit with a later negotiated social partnership plan and,
whilekeptstrictlywithincurrentresources,shouldemphasisetheiremployment
potential,a“keyinputintothediscussiononaPlanwiththesocialpartners”.The
DepartmentsofEducation,Labour,HealthandWelfareweretodeveloplow-cost
reformsreflectingNESCprioritiesthatcouldbeimplementedimmediately,such
as moving from institutional to community care in health, job-friendly school
curriculum reforms, social employment initiatives in place of “ephemeral”
training,andreformingwelfare tobenefit “lower-incomes,bringgreaterequity
andreducecosts”.Ontax,Financewastoplanfortwothirdsofworkerstomove
to the standard tax rateovera seriesofbudgets, akeymanifesto commitment
and “quid pro quo for pay restraint”. On industry, state supports were to be
redirected from fixed assets tomarketing andmodernization, and the Finance
Act should include provisions to encourage multinationals to re-invest, as
currently“mostofthemkeeptheirfundsoff-shore”.McSharrywastopreparea
1988“budgetprofile”asa“keytothePlandiscussions”,encompassingspending
reductions but alsomaking “a start on PAYE tax concessions etc.” to facilitate
“social partner agreement to changes”. All measures were to be complete by
17 CruinniúRialtais,13/03/87,‘ChangesinGovernmentalStructure’,DTA-OHP;oninnercabinetgroup,
MacSharryandWhite2000:43-5;ontheAhernandCowancabinet“cabals”,O’Riain2014
151
September, which, Ó hUiginn told Haughey, would put him “in a very strong
politicalposition”insecuringapartnershipdeal.18
Ministers were ordered to report to ameetingwithMacSharry by 22May,
afterwhichexpendituredecisionsbythecorecabinetwould issueonaweekly
basis.Proposalsweretoinvolve“radical”cuts,“theeliminationorreduction”of
programmes, “rooting out overlaps and duplications”, and “the disposal of
physicalassetsthatarenolongerproductivelyused”.Afinalprogrammewasto
be ready by September for discussionwith the “social partners”. Haughey did
“notwanta seriesof justificationsof the statusquoor specialpleadings”.This
clear if somewhathumiliatingmessage toministerswasdeliberately leaked to
themediatoaddfurtherpressureandsignalgovernment’sdetermination.19
Haugheyevenactedtoslowdowntheworking-partypolicyprocesswiththe
socialpartners,firstdelayingappointingthem.On21MayÓhUiginninstructed
officials to treat the “workinggroups” for themoment aspurely “exploratory”,
gather “costed” proposals for later consideration at “Ministerial-social partner
level” but “without prejudice to decisions at that level and clearly subject to
budgetary constraints”. The framework for an eventual plan would be the
“emerging macro-economic and budgetary scenarios for 1988 and the years
beyond,tobeagreedbyGovernmentonasubmissionnextweekbytheMinister
forFinance”,andthen“puttothesocialpartnersastheframework”.20
In another move, possibly both to put ICTU on the defensive and deflect
oppositioncriticismofarevivedtripartitism,TánaisteLenihantoldtheDáilthat
ICTU’s engagement reflected its “agreement” to continuing the previous
government’spublicpaypolicy.Governmentwasdetermined“togetorderinto
thepublicsector”whichwaswhyithadagreed“theseworkingcommittees”with
ICTU,with private sector pay a purely “separate operation”. An alarmed ICTU,
who Lenihan had portrayed as hapless collaborators, demanded that Haughey
distancehimselffromLenihan’scomments,whichhepromptlybuttactfullydid
inastatementtotheDáil.WithICTUonthedefensiveoveritsengagementwith
18 Secretary[ÓhUigin]toTaoiseach,13/04/1987,‘Subject:MeetingofMinisters’,DTA-OHP19 TaoiseachtoallMinisters,13/05/87,ICTUArchive:GS-PA-1a;onleakstothepress,Bew,Hazelkornand
Patterson1989and‘Bombshell’(editorial),IT27/05/198720 ÓhUiginntoPaddyMullarkey,D/Finance,21/05/87[withh/wnote:“lettersinsimilarterms”issuedto
Secs.ofallrelevantDepartments],DTA:S25281-E
152
government, the weekly announcements of drastic cuts continued into the
summer.Theymetwithgrowingunrest in thepublicservice,especiallyhealth,
andoppositionintheDáil,butwidespreadmediaapproval.21
Governmentthusmovedsimultaneouslyonmonetaryplanningandaparallel
processof industrialpolicyinitiativeswhilealsoengagingthe“socialpartners”.
Theapproachwasagreedataninnercabinetmeetingon27April,justdaysafter
Haughey’s second meeting with ICTU. The cabinet meeting was attended by
agencyofficials,notablyPádraicWhiteoftheIDA,andreviewedindustrialpolicy
optionscompiledfromvariousMinisters’reportsbyÓhUiginn’sstaff.
Thereviewdescribedtheperformanceofindigenousindustryas“disastrous”,
its“management,marketingandproductdevelopment…poor”,domesticmarket
share down “sharply”, investment down by two thirds since 1980, and
employmentathirdsince“wejoinedtheEEC”.Despite1960splanning, Ireland
had failed “in creating strong indigenous companies based on our natural
resources”andcompaniesremained“productionratherthanmarketled”.Dairy
coops,forexample,with“largeunwieldyboardsdominatedbyproductionrather
than market interests”, were performing poorly commercially. Policies
prioritising indigenous industryhadtobe“called intoquestion”and incentives
redirectedand “concentratedon fewer firmswithhighgrowthpotential to the
exclusion or benignneglect ofmany small firmswhich soakup a gooddeal of
time, effort and resources of the State with little return”. But internationally
traded FDI had proved uniquely successful, greatly outperforming domestic
industry and providing high quality jobs, linkages to the economy and know-
how, andwasan “areaof growingopportunity suitable toourhighly-educated
work-force”.“Ashiftofresourcestothisarea”,itconcluded,“isjustified”.
Todrivethepolicyshift,stateagenciesweretoberationalisedandsupports
re-directedtogrowthsectorsona“companydevelopmentplan”basis.Supports
should shift from fixedassets tomarketing, upgrading technologyandproduct
21 LenihaninDáildebates21/05/1987;ICTUECmeeting20/05/87;NevintoHaughey,21/05/87,and
NevintoECmembers,05.06.87‘ref.1030’,GS-PA-1a;Haughey’s“tactful”statementinDáil27/05/87;“opposition”,inDáil04/06/87;“mediaapproval”,ITeditorials,27/05,and04,26/06/1987
153
development. International and financial services, and natural-resource based
exportingfirmswithgrowthpotentialshouldbe“selected”andassisted.22
This reflectedNESC proposals, though inmuch starker language, aswell as
IDA thinking, especially its robust defence of the FDI sector against Telesis’s
criticisms. The targets identified revealed Haughey own preferences and
Departmentsweregiventwoweekstocomeupwithappropriatecostedplans.
On 26May Haughey publicly announced several major projects to proceed
immediately,notably the financial servicescentre(IFSC),expansionof thebeef
industry, a commercially funded gas pipeline, and initiatives in forestry,
horticulture, tourism and maritime policy, again all private-sector driven. By
playingdownthepartnership“workingparties”butannouncingtheseinitiatives,
hewaspre-determiningthethrustofindustrialstrategy.23
Government also proceeded with a policy to radically commercialise the
farming sector. Responsibility for the food industrywasmoved from Industry
andCommercetoanexpandedDepartmentof“AgricultureandFood”,whichwas
henceforth to be industry- rather than producer-driven, and a horticultural
marketingboard,BordGlas,was established.Aplan for the food industrywas
producedbyIDAinitsfirstevercollaborationwiththatDepartment.24
Broadbase:mobilisingsocialpartnerinput
Having achieved budgetary breathing space, and with the MacSharry
Committee driving expenditure cuts and the Way Forward team industrial
strategy,Haugheyreturnedtothetalkswiththesocialpartners.
Giventherollingcuts,ICTUfacedgrowinginternaldissent.Disputeserupted
in the ESB, the new training agency FÁS, CIÉ and other public bodies, and a
campaign of non-compliance was launched by an “Alliance of Health Service
Unions” led by ambitious ITGWU official, Pat Rabbitte. Congress found itself
managing these revoltswhile facing a government determined on a continued
suspensionofspecialawards,andpublicpayguidelinesstipulatingcost-of-living
22 ÓhUiginntoHaughey,n.d.,withmemobyJohnTravers,‘PresentationtoTaoiseachandMinistersfor
FinanceandLabouronApril27thonIndustrialPolicy’,DTA-OHP23 HaugheyinDáildebates24and/05/1987;PressRelease,‘OfficeoftheTaoiseach’[notitle–announcing
initiatives],26/04/1987,GIS:D/Taoiseach24 “firstever”,JoeWalsh,MinisterforAgriculture,toTaoiseach16/04/87,and‘DraftofGovernment
Minutes’,23.4.87,‘BordGlas’,inDTA:OHP;IDAIreland(1987)
154
increases only, “tailored to EBR goals”. Ó hUiginn also insisted to ICTU that a
campaignfornon-paymentofhospitalchargesbeabandoned:“Theauthorityof
the Dáil cannot be flaunted”. Congress mounted token protests, refusing for
example to nominate to the new FÁS board, but drew back from Rabbitte’s
campaign. Ó hUiginn later suggested to Haughey that it was now time for a
conciliatorymove:ICTUcouldnotbeexpectedto“buyapig-in-the-poke”.25
Haugheyrevivedmomentumwithatypicalintervention.HeapproachedPhil
Flynn, LGPSU general secretary and, as observers noted, a republican if of a
differentstripe,proposingheaddresstheunion’sannualconferencedinner.This
wasunprecedented,forwhileministerialaddressestotheunionwerecommon,
thiswouldbeafirstbyaTaoiseach.Flynnconvincedhisexecutive,despitetheir
angeroverservicecuts,toinvitehim.McLoonerecallshowHealthMinisterRory
O’Hanlonhadbeengreetedwith“stonysilence”attheunion’shealthdivisionand
EnvironmentMinisterPádraigFlynn“faredlittlebetter”withits localauthority
division, but “it was different with Haughey”. Flynn in his conference speech
urgedtheuniontoholdtoitscommitmenttoanationalplan,mentioning“other
successful small economies where a consensus approach ... [had] resulted in
standardsoflivingfarhigherthanwehavehere”.ICTU,hesaid,wouldmake“any
faircompromises…tosolveIreland’seconomicproblems”.Haugheyinhisafter-
dinnerspeechdefendedhisstrategybutalsopromisedanagreementbeneficial
topublicservantsas “anessentialelementof theprogramme”.Hewasgreeted
byastandingovationanddelegatesqueuingforhisautograph.26
TheICTUremainedwary,notyetconvincedofHaughey’sbonafides,though
alsofearingthatabudgetdefeatwouldprecipitateanelectionthatcouldreturna
government less favourable to its strategy. It agreed to a first meeting of the
“Ministerial-ICTUWorkingGroup”on9 June todiscuss the“NationalPlan”and
public/private pay. The policy “working parties” agreed in April also finally
begantomeet.ÓhUiginn,asagreed,appointed“secretarylevel”andothersenior
civilservantswhileCongressnominatedsixtoeightofitsExecutivemembersto
eachgroup,ensuringthetwodriversofitsstrategy,AttleyandFlynn,wereonall25 ‘dissent”,‘CivilServiceUnionprotestsatpowersofnewBill’and‘UnionstomeetthreeMinisterson
healthcrisis’,IrishTimes13/06/87,andICTUECmtg.17/06/87;alsoNevintoTaoiseach,08/06/87,ICTUArchive:GS-PA-1a;ÓhUiginntoTaoiseach,29/07/87,‘Subject:MeetingwithICTU’,DTA:OHP
26 InterviewswithPhilFlynnandPeterMcLoone;“observersnoted”,Hastingsetal2007:37;Flynn,‘SpeechtoLGPSU’,15/05/87’,FlynnPapers;HaugheyinIRNReport21/05/87;Hastingsetal2007:37
155
three,alongwithofficialsNevinandCassells.Representativesofanti-agreement
unions, hostile to engaging, were conspicuous by their absence. The meeting
withHaugheywas short and formalbut, critically, he repeatedhiswish for an
agreementwhich“sawjobs,pay,taxreformandsocialservicesasinterlinked”.27
ICTUmobilisedallitsresourcestofleshoutproposalsforatwo-yearbudget-
linked plan. Years of ICTU policies were “ransacked” for useful material, and
priorityobjectivesset.Itwouldseekastatutoryminimumwageand“tradeoffs
between jobs and pay ‘moderation’” and pay increases and tax reform. A “40-
Point Jobs Plan” was produced, adopting NESC’s private-sector drivers while
stressingthepotentialofsemi-states. ICTUopposedprivatisationonprinciple,
but sought improved welfare benefits, reform of employment services from a
punitive to an enabling system, and reduced working hours. Ó hUiginn told
Haughey: “basically they are prepared to be moderate on pay in return for
measuresonjobsandtaxreform”.Theydidnotexpect“firmresponses”nowbut
onlythattheprocessgetunderwayandthatthearbitratorbere-appointed.28
Initial meetings of the policy groups consisted of ICTU representatives -
mostly Flynn, Cassells and Attley – presenting proposals, with officials, on Ó
hUiginn’s instructions,“noting”thesewithoutcommitting.Atearlymeetings,as
ICTUnoted,secondarynon-cost-increasingdemandsweremet,suchassupports
for workers’ cooperatives and advisory forums on worker participation and
industrialrelationsreform.Addressingthefirstmeetingofthegovernment-ICTU
industry policy group on 11 June, Haughey departed from his script to
emphasise, Lemass-like, how the “viability of the economy [was] at stake” and
theplanwouldbea“historic”departure.“Consensusondevelopmentmeasures”
would produce “an improvement in morale”, the “key to success”. This was a
27 ICTU,SpecialMtgofEC,02/06/87,‘NoteonAgendaforPayTalks–theCongressPerspective,27May
1987’,ICTUArchive:GS-PA-1a;ICTUECmeeting29/05/87,Item1260;NevintoECmembers:05.06.87,‘ref1030’and‘DiscussionswithTaoiseachonNationalPlan’,ICTUArchive:GS-PA-1a;‘JointGovernment-ICTUStatement’,09/06/87,GIS:D/Taoiseach
28 InterviewwithCassellsandfollowingmaterialinICTUArchiveGS-PA-1a:‘JobsandDevelopmentMeasures:DiscussionsonaProgrammeforNationalRecovery”,June1987;‘TaxReform.Discussions’,ConstructionIndustryCommittee:AProgrammeforConstruction.A40-PointPlanfortheBuildingIndustry,ICTUPressRelease.18/06/87.‘ICTUsubmitsproposalsfortheHealthServices’;‘SocialPolicy’,12/06/87,‘SocialPolicy’,12/06/87;D.Nevin,‘MeetingsofCongressCommitteesetc.inJune1987involvingExecutiveCouncilmembers,’28/05/87,[Cassells],‘SpecialMeetingofExecutiveCouncil02/06/87:NoteonAgendaforPayTalks–theCongressPerspective,27May1987’,Nevin,‘BriefingNoteforMeetingwiththeTaoiseach,9June1987’,09/06/87ICTUPressRelease,‘NationalTalkswiththeGovernment-ICTUProposalsforaProgrammeforNationalRecovery”,09/06/87,‘ICTU40-PointPlanonJobs’;ÓhUiginntoHaughey,cc.P.Teehan,‘Re:ICTUMeeting’,08/06/87,DTA-OHP
156
pointheoftenstressed, includingprivatelytothe IrishTimeseditorandtoPhil
Flynn:“thegreatmeritofwhatwe’retryingtodo…istoinstilconfidenceinthe
economy…,theessentialingredient…toturn[it]around”.29
Onthesameday,11June,HaugheyalsofinallymetandaddressedtheNESC,
making a significant proposal. Introducing the NESC report, Ó hUiginn said
councilrequestedareversalofthepreviousgovernment’smarginalisationofthe
bodyandanewstrategicroleforit.Haugheyundertooktoholdtothefour-part
NESCstrategy, abolishministers’ right to seek studies from the council, and to
restoreittoacentralrolein“elaborating”the“RecoveryPlan”.Hethenproposed
thecouncilundertakeanin-depth“strategic”studyon“IrelandandtheEEC”to
shapegovernmentstrategy.AlthoughtheEEChadplayedonlyamarginalrolein
Irishrecoveryandpartnershippolicy,Haugheyexpectedthistochangewiththe
SingleMarket.ÓhUiginnhadalreadydraftedabriefforthestudyandthecouncil
eagerly agreed to pursue it, Ó hUiginndescribing it as a keynational-strategic
task. Following the meeting, Ó hUiginn suspended all work on subordinate
projectstoconcentrateNESC’senergiesontheEECstudy,whichwouldtaketwo
yearstocompletebutplayasignificantroleinIrishECstrategy.30
Inastatementtwoweekslater,Haugheyemphasised“thewholetraditionof
Fianna Fáil Governments back to the early thirties” of “active intervention to
promote economic and social development in accordance with the resources
available”. This would continue, with a “realistic consensus with the social
partners”“oneofthemostimportantendeavoursofthisGovernment”.31
This statement came days before ICTU’s annual conference where the
leadership faced a swathe of motions denouncing health cuts and national
bargaining. The Health Service Alliance in particular had mobilised anti-
government sentiment which ICTU sought to assuage by presenting their
complaints to government. But anti-talks sentiment had largely shrunken to
29 J.Mooney,D/Fin.,toJ.TraversD/Taoiseach,12/05/87,inc.financialbriefingonICTUproposals,DTA:
S25875;ICTUECmtg.17/6/87;Haughey,inh/wnote,“Firstmtg.WorkingPartyonIndustry/Devpt.’n.d.,ICTUArchive:GS-PA-1a;IrishTimes,Brady2005:8-9,andFlynninHastingsetal.2007:31
30 ‘SpecialMeetingoftheCouncilwithTaoiseachandMinisterforFinance(Minutes),’11/06/87,‘PresentationbyChairmanonStrategyforDevelopment’,11.06.87,‘IrelandandtheEEC.RequestfromtheTaoiseach.’Confidential.11/06/87,NESCArchive:Box3b;‘AddressbyTaoiseach,Mr.CharlesJ.Haughey,TD,toNationalEconomicandSocialCouncil,’11.06.1987,GIS:D/Taoiseach;MinutesofCouncilMeetings17/07,11/09,16/10,20/11and17/12/1987,‘MeetingwithMinisteroftheEnvironment’,17/07/1987,CouncilMeeting16/10/87-‘LiteraturereviewforEECStudy’,NESCArchive:Box3b
31 Dáil25/06/1987
157
what a government official called ICTU’s “Dublin problem”, i.e. the sectional,
militant “Left”.Despite ill-tempereddebates, a strong speechbyCarroll,which
the Executive had urged him to give, stressed government’s concession of an
integrated pay/policy package, and ETUC leader, Matthias Hiinterscheid,
passionatelybackedtheICTUleaders,contrastingthepositiontheyhadachieved
to the retreat from tripartitismelsewhere inEurope and the stalling of “social
dialogue” even at EEC level. An ITGWUmotionwas easily passed, committing
ICTU to “pursue its objective of a national economic and social programmeby
consensusbetweenthedisparateelementsofsocietyandtheGovernment”.32
Over the summer, the working parties progressed laboriously, with much
stallingby theofficial side.Thegovernment-ICTU social policy groupmetonly
twice, officials refusing to commit on issues with “budgetary implications” or
which disturbed elite vested interests, such as medical consultants’ tax-free
earnings or drug procurement policy. The tax talks also met with official
unwillingness to commit until budget strategy was finalised. At the FUE/CII
social policy group, employers pressed for cost relieving demands, while the
farming group,whichmet six times, advanced little beyond IFA’s catalogue of
costincreasinggrants.ButbyAugustarangeofcompositepolicydocumentswas
neverthelesscompleted,themostsubstantialonethatonindustrialpolicy.33
Payandplanningagendas:craftingtheagreement
Government’sstallingonthepolicyworkinggroupswasofcoursedeliberate,
reflecting its pre-emptive strategy. But ICTU by this stagewas the least of its
worries,asemployers,whohadgainedleveragethroughtheplan’sdependence
onanagreedpaystrategy,suddenlyadoptedahardline,publiclydeclaringtheir
opposition to a central pay agreement and even taking out newspaper
advertisements explaining their objections. Their opposition also extended to
statutory minimum wages, reduced working hours, proposals for a Labour
RelationsCommission,paternity leave,reformofoccupationalpensionsand,as
32 ICTUADC1987:5-13,77-80,97-129,150-2;‘ICTUproposalsfortheHealthServices’,18/06/87,ICTU
Archive:GS-PA-1a;IT13/06/87;Interviewwithanon.D/Taois.official;ICTUECmeeting17/06/8733 ‘DiscussionswithSocialPartnersonNationalProgrammeforGrowthandEconomicRecovery’n.d.,DTA:
S25281-E;J.Cantwell,D/TaoiseachtoNevin,ICTU,15/07/87,encl.summaryreportofmeetingofWorkingGrouponTaxof6July1987,‘JobsandDevelopmentMeasures.DiscussionofaProgrammeforEconomicRecovery’,and‘ICTU/GovernmentDepartmentOfficials,WorkingGrouponJobsandDevelopmentMeasures:WorkingGroupSummaryPaper:IndustrialPolicy’,ICTUArchive:GS-PA-1a
158
they particularly impressed on Haughey, any “legislation for worker
participationatboardandbelowboardlevelintheprivatesector”.34
Government decided to first secure terms on public pay with ICTU. Before
meeting Haughey, ICTU agreed its own objectives as a “gross post-tax”
improvement in “real pay” in both public and private sectors, composed of a
modest annual 3 per cent increase – below predicted inflation – once it was
combinedwithequivalentcompensation intaxdeliveringarealvalue increase.
Toappeaseemployers, ICTUwaspreparedtoaccept increasesbeingsubject to
firms’ competitiveness and “ability to pay”. But in return it would need “firm
commitments” fromgovernmenton jobcreation,“howevermodest”,andtothe
“pay/taxadjustments”startinginJanuary1988.Suchasettlement,itwasaware,
“wouldinvolvea…scalingdownof[members’]expectations”.35
TwomeetingswithHaugheyandhisministersfollowed.Theseweretakenup
dealing with press rumours of a renewed public pay freeze, which Haughey
dismissed as “speculative …. rubbish”, and solo runs byministers announcing
industrial projects, which Haughey undertook to rein in. Government even
provided“confidential”revenueaccountsfor1987todemonstrateitsbonafides.
Tosecurethe“veryrestrained”settlementICTUnowappearedwillingtoaccept,
Haughey, at Ó hUiginn’s urging, and while continuing to stall on detailed
commitments,hintedpubliclythathewouldconcedesubstantialtaxreformand
“firmcommitments”onjobspolicy.WhatenabledgovernmentacceptCongress’s
pay proposal was ICTU’s unexpected consent to a voluntary redundancies
programmewhichwould“ease”pressureon thepublicpaybill.ÓhUiginn told
Haugheythatwithinflationfallingtowards3percentandexportsgrowing,the
1987 public pay bill “used in Finance estimates up to now” was in fact an
overestimate, and with staff reductions, “a gain” of £80m could be achieved,
sufficienttofinancethedeal.“Wehavenot”,headded,“toldICTUofthis”.36
34 FUEBulletin,June1987;IT,II,IP23/07/87;DiarmuidQuirke,Pres.FUEtoTaoiseach,27/07/87,‘Planfor
EconomicRecovery’,DTA:S2587535 dn[=DanMurphy],‘NoteforSpecialGrouponPaymeeting10/07/87’,J.Cantwell,D/TaoiseachtoNevin
15/07/87,encl.reportofmeetingoftheWorkingGrouponTaxof6July1987,‘Confidential.July1987.NotesformeetingwithTaoiseach,16July1987’15/07/87,ICTUArchive:GS-PA-1a
36 ‘JointStatementonMeetingbetweenGovernmentandICTU’,16/07/87,GIS:D/Taoiseach;ÓhUiginntoTaoiseach,29/07/87,‘Subject:MeetingwithICTU’,DTA:OHP;ICTUh/wnotesofmeetingof15/07/87,JohnTravers,D/TaoiseachtoDonal[Nevin],22/07/87,encl.‘ReceiptsintoandIssuesoutofExchequerbetween1/1/87and30/6/87’,ICTUArchive:GS-PA-1a;‘HaugheyhintsatPAYEcutinreturnforpay
159
With movement towards a public pay deal, the development plan was
finalised as government gave “firm commitments” on expanding semi-state
activities and “social equity”measures. The text of a “Programme forNational
Recovery” (PNR) was “generally agreed”, encompassing monetary and fiscal
goals, indicative job targets, social policy initiatives and a tax/jobs “trade off”.
Congress publicly lauded the package, Attley reminding members that unions
hadnofutureifthey“concentratedpurelyonwagesandconditions…Theonly
waywastogetthecountryonagrowthpattern”.ICTUpressedtheDepartment
oftheTaoiseachfor“continuousmeetings”tofinaliseit,withspecificjobtargets
forindustrialprojectsandapay/taxformulaweightedtothelowerpaid.37
But,asTheIrishPressreported,talksonthePNR“threatenedbreakdown”as
Congressrefusedtowithdrawitsinsistenceontheprivatesectorbeingincluded.
Ó hUiginn told Haughey he believed FUEwould relent with a bit of pressure,
given ICTU’s modest 3 per cent claim, which had to be “very attractive” to
employers given thehigher settlements emerging at theLabourCourt through
local bargaining. But, ignoring Irish Times editorials describing the emerging
consensusasessentialtoeconomic“certainty”andtoarecoverythatavoidedthe
social divisions of “Mrs. Thatcher’s Britain”, FUE’s Central Council again voted
againstany“returntonationalunderstandings”,andrejectedminimumwagesas
topping-uplowpaywasamatterforwelfarepolicy.Butitagreedtopostponea
definitivedecisionuntilafinalGovernment-ICTUpublicpayformulaemerged.38
Governmentand ICTUconspired to force thepacewithapublic sectordeal,
whichtheyquicklyconcludedaweekbeforegovernment’sbudgetplandeadline
of9October.Congressdroppeditsdemandforastatutoryminimumwage.But,
asÓhUiginninformedHaughey,itsfurthertermswerealsomoderateandakey
dealonredundanciesmadethepackageworkable.ICTUwouldnowaccepta2.5
percentannual increasewithmatching taxconcessionsover twoyears,witha
rises’,IrishIndependent,17/07/87;‘Cabinetofferspaydealforunionsupport’,IT05/08/87;ÓhUiginntoTaoiseach,26/08/87,DTA:OHP
37 Nevin‘To:EachmemberoftheExecutiveCouncil”,27/08/87,ref.4030:‘SpecialmeetingExecutiveCouncil,2September’,Cassells‘To:EachmemberoftheSpecialWorkingGroup”,11/09/87,ref.4030:NextmeetingwithTaoiseach,18Sept.’,ICTUArchive:GS-PA-1a;AttleyquotedinIT26/09/87;onICTUpressureanddemandsonD/Taoiseach,TraverstoTeahonandSec.[ÓhUiginn],handwrittennote,18/09/87,DTA:S25871andP.O’Sullivan,‘MeetingswithSocialPartners,conferenceroom,DepartmentoftheTaoiseach,18-23September’,15/09/87,DTA:S25875
38 ‘PayDealTalksonTightrope.Unions’ChallengetoHaughey’,IrishPress26/09/87;ÓhUiginntoTaoiseach,26/08/87,DTA:OHP;ITeditorial‘TonicfortheTroops’25/09/87;‘Specialdealforlowpaiddelayseconomicplan’,IT26/09/87
160
higherincreaseof3percentonearningsbelow£120p.w.oraflatminimumof
£4p.w.toensuretheover80,000publicserviceworkersandthequarterofthe
entire private sector in that category benefited proportionally. As tax
improvements in the Januarybudgetwouldserveasapay increaseequivalent,
deferringthefirstpayphasetoJuly1988wouldnotrepresentapay“freeze”.The
arbitratorwouldbere-instatedand“specialclaims”allowedtobelodgedthough
with awards only payable from July 1989.The cost of the overall paypackage
wouldbepartlyoffsetby theagreedvoluntaryredundancyscheme.Bothsides
agreed recommending that the same terms apply in the private sector except
wherestressedconditionsinindividualcasesprecludedthem.39
TheIrishTimesurgedtheFUE,whichdismissedthedealasgearedtoappease
thepublicsector,tocomeonboard,editorials(“IntheInterestsofAll”)stressing
its centrality to recovery and stressing ICTU’s concessions meeting employer
fears on the minimum wage, the “local conditions” clause, and the purely
voluntaryapproachtoworkerparticipation.ÓhUiginnwasshockedbytheFUE’s
obstinacy,havingbelievedthelowwage/taxformulasufficientforthem.Hesoon
learnedthatindigenousindustry,withitspredominantlyweak-sectoremployers
dominatingtheFUE,had“morelower-paidworkersthanwehave”andopposed
the 3 per cent or £4 flat rate minimum proposal. With little other choice,
Haugheyset9Octoberforlaunchingtheprogramme,settingfinalmeetingswith
eachgroupforthatverymorningtotrytofinalisetheiracceptance,followedbya
presseventintheafternoonlaunchingtheProgrammeforEconomicRecovery.40
Governmentmobilised its leverage to bring employers around. Inmeetings
with the FUE Haughey, as Turlough O’Sullivan recalled, intimated that “if we
didn’tgoalongwithit”hewould“dothedeal[withICTU]anyway”whichwould
“set the pace for the private sector”. On 7 October the FUE conceded the
minimum3 per cent/ £4 increase though onlywith strong conditionality. The
ratewouldbea“guideline”onlythat“could”applybutonly“withdueregard…
to the economic and commercial circumstances of the particular firm or
industry”, subject to “local negotiations and local agreement”, and with “no39 ‘CassellswarnsGovernmentonconditionsforpaypact’,IT05/10/87;ÓhUiginntoTaoiseach,02/10/87,
re:[draft]‘ProgrammeforNationalRecovery’,DTA:OHP40 IT30/09;ÓhUiginntoHaughey,02/10/87‘ProgrammeforNationalRecovery’,DTA:OHP;ÓhUiginnto
Ministers,08/10/87,encl.‘DraftProgrammeforNationalRecoveryfordiscussionwithsocialpartnerson09/10/87and‘MeetingswithSocialPartners’09/10/87,DTA:S25281-E
161
furthercostincreasingclaims…exceptwhereotherwiseagreedatlocallevel”.As
aseniorcivilservantnoted,thisformularepresentedthe“breakingpointasfar
as the FUEwere concerned”, and “thewords ‘could’ and ‘by local negotiations
andlocalagreement’…theoutcomeofverymanyhoursofdifficultnegotiation”.
Employersachievedotherconcessions,suchasexcludingtheLabourCourtfrom
an“interpretative”role,andtheclausesonannualleave,part-timeworkersand
working hours also all subject to “local agreement and practice”. Industrial
relationsreform,workerparticipationandparentalleavewereleftunspecific,to
be advanced through “consultation” and “advisory committees”. On securing
theseconsiderableconcessions,andwithonedaytospare,FUEagreedtosign.41
Farmers too sought further concessions. Their “working party” with the
Department of Agriculture and Food had progressed little beyond the IFA’s
catalogue of grant demands. But, after a meeting with Haughey in late
September, the IFA,believing ithadsuccessfully rebuffeda looming tax threat,
announced its new “special relationship” with government, and intimated it
wouldjointheagreement.ICMSA,ontheotherhand,fearingthethreatofafull
PRSIlevyonfarmersremained,threatenedtopullout.Atthefinalmeetingwith
Haughey on the morning of 9 October, ICMSA complained of the proposed
“unsuitable tax treatment for farmers”. Ó hUiginn presented a compromise
offering a consultation process with the PRSI charge phased in over several
years. When ICMSA rejected even this, Haughey offered to “solve ICMSA’s
problem by scrubbing their name from the draft Programme”, whereupon its
representatives “made no further contribution at the meeting …, having been
eliminatedfromfurtherparticipationbytheTaoiseach’saction”.AtÓhUiginn’s
urging,Haugheyalsoresistedotherfarmerdemands,suchasIFA’sEurocurrency
proposal, which Finance had warned would “involve a heavy cost for the
taxpayer”andexchequer lossesof25percentofamountsdrawndown. ICMSA
also demanded levies only at point of sale rather than income, but Ó hUiginn
warnedthatthiswas“completelyinconflictwithGovernment’scommitmentto
tax farmers on the same basis as everyone else”. Government offered some41 “setthepace”,interviewwithTurloughO’Sullivan,andsimilarHastingsetal2007:39;‘Major
breakthroughonEconomicPlan’,IT08/10/87;‘ProposalsforanAgreementbetweentheICTUandtheFUEandCIF’,[Memo:]‘MeetingswithSocialPartners’09/10/87,andÓhUiginntoTaoiseach,08/10/87,‘PointsEmployerbodiesarelikelytoraise’,DTA:S25281-E;KevinMurphySec,PSMD(D/Lab.)toÓhUiginnandTravers,01/12/87,DTA:S25857-A
162
sweeteners, such as “an aggressive international marketing strategy” for food
exports which the Minister had just that night agreed in Berlin. In the event,
Haughey had to concede several of the IFA’s demands. But government’s
leverageremaineditsCAPbargainingrole,and,asthepressreported–andapart
from ICMSA - the IFA and the other groups, describing the agreement as a
“historiclandmark”,agreedtosign,“pendingratificationbytheirmembers”.42
Congress secured some final concessions too. The Department of Labour,
warningofemployerhostility,hadadvisedÓhUiginn“againstany inclusionon
WorkerParticipation”,orifunavoidablethenatmosttalksonrecommendations
fromtheexisting“AdvisoryCommittee”.Italsoinsistedthatsimilarmeasuresin
thepublicsectorbemadesubjectto“budgetaryconstraints”.Aclausewasnow
agreed, even if diluted to the maximum employers had indicated they would
accept.Commitmentstoequalitymeasuresandindustrialrelationsreformwere
also finalised, again subject to consultative/“review” processes. Finally an
“umbrella” clause was added for “outstanding” issues, such as on-going local
authoritylay-offs,outstandingLabourCourtrulingsinthesemi-states,astrikeat
Irish Sugar etc., which it was agreed be resolved in urgent “bi-lateral” talks
betweenICTUandMinisters immediately theagreementwasratified.Congress
then agreed to sign, pending ratification by affiliates. The ICTU Executive
convenedstraightafter themeeting,narrowlyvoting–bywhatmajority isnot
recorded-torecommendthePNRataspecialconferenceon19November.43
Finally,havingfinaliseddisputedclauses,theFUEmetHaugheyandagreedto
sign,thoughsubjecttoratificationbytheFUECentralCouncilinlateOctober.
“TothestrainsofMiseÉire”:thepoliticalsymbolismofaplan ThefateoftheProgrammeforNationalRecovery,contentiousevenamongthe
signing groups’ leadership strata, now depended on endorsement by volatile
memberships.ButHaughey’sparamountdeterminationwas tohave itsucceed,
42 ‘MainPointsFarmerBodiesarelikelytoraise’,08/10/87,DTA:S25281-E;‘FarmtalksboostHaughey
strategyoneconomicplan’,IT24/09/87;ICMSAreport,‘NationalPlan1’,09/10/87,‘DepartmentofFinanceviewonextensionofEurocurrencyscheme,’12/10/87,DTA:S25858-A;DavidCostello,D/A&F,onbehalfofMinisterKennedy,inBerlin,toD/Taoiseach,09/10/87,andJ.Travers,D/Taoiseach,‘Note’,07/10/87,DTA:S25281-E;‘ICMSApullsoutofdraftNationalPan’,IT10/10/87
43 J.Travers,‘Note’,07/10/87.‘PointsICTUwantincluded’,andÓhUiginntoTaoiseach,08/10/87,‘PointsICTUarelikelytoraise’,DTA:S25281-E;ICTUECmeeting09/10/1987(‘SpecialMeeting’)
163
with his and his government’s political credibility riding on it. It was an
extraordinarilyhigh-riskpoliticalgamble,but,ashewouldlatersay,thecritical
turningpointandcrowningachievementofhispoliticalcareer.44
On the afternoon of those final meetings, the partner leaderships, together
with Haughey and his full cabinet, assembled in a Dublin hotel for the press
launch.When Ó hUiginn announced Haughey’s arrival, the doors swung open
and,asCarolCoulterreported,hesolemnlyledhisentourageupthehalltothe
“strainsofMiseÉire”,SeánÓRiada’sfamousscoretoafilmcelebratingthebirth
ofthestate.Thefragilityofthemomentwasreflectedinalastminutepanicata
rumoured public sector rebellion. Haughey, muttering “that’s very helpful”,
turned to those beside him, repeating “rhubarb, rhubarb” as he shook their
hands.Later,seeingaphotographerpoised,heputhisarmaroundanoff-guard
embarrassedPhilFlynn.Attleylatersaiditwaslikebeingin“afuckin’play”.45
InabriefspeechHaugheystressedthePNR’s“historic”significanceensuring
“alongperiodofindustrialpeace”thoughalso,withits“morerealisticbasisthan
any previousNational Plan, Understanding or Agreement”, “a better andmore
productivewayofconductingouraffairs”.Keepinghisoptionsopen,heentereda
caveatthatthePNR“supplemented”the“developmentandemploymentpolicies
already being carried out by Government in accordance with its own
programme”while adding “greater precision and newpossibilities”. Observing
fromadistance,T.K.Whitaker,whohadalwaysopposedHaughey’stripartitism
and been a proponent of statutory controls, and who would later describe
Thatcher’s “most creditable and enduring achievement” her re-establishing of
“thesupremacyofGovernmentandParliamentoversectionalinterests",seemed
bothaghastandimpressedinequalmeasureatHaughey’sachievement.46
ThePNR:aplanforsocio-economictransformation The PNR proposed a 3-year plan running from January 1988 to December
1990.Comparedtolateragreements,itwasarelativelyshorttext,theproduct,it
44 Haughey201345 Coulter,‘Nothingalloweddisturbthesoundofharmony’,IT10/10/87;AttleyquotedinHastingsetal
2007:4146 ‘EconomicPlan“amajorachievement”’,IT10/10/87and‘OpeningremarksbyTaoiseachatPress
ConferencetolaunchPNR’,09/10/87(“NotreleasedthroughGIS”),DTA:S25281-E;WhitakeronThatcher,and“impressed”,Chambers2014:240,371
164
stated,of the “concertedeffortsbyall interests” to face “thegrave stateofour
economicandsocial life”and “regenerateoureconomyand improve the social
equityofoursociety”.Itendorsedthe“principles”ofthe1986NESCReportand
followeditsstructure.Governmentwouldcontinue“tocontrolandcurtailpublic
expenditure” to reduce borrowing and the National Debt, but also “increase
economicactivity,reduceinterestratesandstimulatenewemployment”.Strong-
EMSalignment,paymoderationandtaxreformwoulddeliverlowinterestrates
and“promoteinvestorconfidenceandinhibitspeculativecapitalmovements”.It
detailedarangeofspecificcommitmentsontax,welfareandsocial“equity”,and
over a hundred infrastructure and industrial projects which, together with a
specialroleforstatecompanies,woulddriveeconomicandsocialrecovery.47
Surprisingly, given its secondary role in the creation of the plan, the first
sectionwastitled“EuropeanCommunityDimension”.ThisalignedthePNRwith
theasyetun-concludedDelorsplan,embracedthesinglemarket,andadvocated
anenlargedEECbudgetandregional/socialstrategies“tonarrowdisparitiesin
economicdevelopmentand living standards”.Achieving this consensusonEEC
strategy was a significant achievement by Haughey. Many employers
sympathisedwithThatcher’s anti-centralisation stanceandunions,notably the
ITGWU, anddespite reservationsby ICTU leaders, hadopposed the SEA in the
Aprilreferendum,rehashingtheir1972oppositiontoEuropean“capitalism”.48
ThePNRagreedprecisetaxreformtargetsoverthecourseoftheprogramme,
subject to improvingpublic finances, including reduced rates, an expanded tax
“net”, curbing the “black economy” and reforming collection systems to
“guarantee a significant improvement in compliance”, core issues for ICTU.On
“social equity”, welfare would be ring-fenced regardless of public spending
pressures, long-term dependent rates increased, servicesmodernised, equality
legislation introduced, and voluntary organisations “consulted” on policy. A
strategy for an “equitable, comprehensive and cost effective health service”
wouldbeproduced, includingprimarycare,de-institutionalisation,community-
basedandpreventativestrategies,reformofthepsychiatricservices,andother
areas.The “considerable”arrears inhealth contributionsowedby farmersand47 GovernmentofIreland198748 ICTUpositiononSEA,ICTUADC1988:220-1;“Europeancapitalism”,O’Dowd1992:iv
165
the self-employedwould be recouped.On education,measureswould increase
participation by “working class children”, the disadvantaged and those with
special needs. Vocational training was to be expanded and a Housing Bill
introduced. These reforms reflected ICTU positions developed over years, and
severalhadpreviouslyfeaturedintheNationalUnderstandings.
EmploymentandindustrialpolicycombinedWayForwardinitiatives,suchas
the IFSC, tourism, food, marine and forestry, with CII sectoral proposals and
ICTUdemandsforthesemi-states.Anoveralltargetof20,000jobsannuallywas
set, each project allocated a specific target, from 1,000 in beef processing to
smallbutprecisefiguresinvariousmicro-projects.Thestrategyhingedonstate-
driven growth of the indigenous industrial and services base by supporting
“selected Irish companies” to develop to be internationally competitive and
achieve the “size and vitality other small economies have achieved”. Inward
investment(FDI),whichhadperformedpoorly in the1980s,wasnotseenasa
primary driver, but rather an auxiliary element supporting indigenous
expansion,focused“onaspecialisedbasis”inspecificsectorsand“encouraged”
through re-fashioned fiscalmeasures. Thiswas a compromisewith theTelesis
position, hardly reflecting the driving role Haughey’s inner circle actually
foresawforFDI.Thewholestrategywouldbesupportedbyadrivetomodernise
marketingandmanagement,targethightechnologiesandnewskills,undertakea
“radical re-organisation” of agency supports, andmeasures to reduce costs to
businessand remove restrictionson state-companyexpansion,by legislation if
necessary.Itwasaprogrammeforaradicaloverhauloftheproductiveeconomy.
Thestrategycontainedonenotablehostagetofortuneindefiningprecisejob
targetsandstating these referredonly tonew jobs,notnet joboutcomes.This
representedamajorsuccessforHaughey.WhileICTUhadinsistedon,andwas
conceded,concretetargets,thatbêtenoireofWhitaker,Haugheyinsistedthatjob
lossesinsunsetsectorswereinevitableandthestatecouldnotacttosavethem.
ManyPNRinitiativesmetpartner-specificdemands.WhilethePNRpromoted
a market-led expansion of food, forestry and horticulture, the IFA secured
commitments “to safeguard Irish agriculture and family farm income” by
defending CAP, expanding “headage” schemes and renewing the Eurocurrency
166
programme Finance had opposed. The CII secured commitments on lowering
costs tobusinessandexpanding infrastructure.While ICTUgoals toendhealth
cuts, a national anti-poverty strategy and national minimum wage were not
achieved,itsecuredexpansionplansforstateindustries,socialpolicymeasures,
increasedwelfarebenefitsandanambitiousprogrammeoflegislativereform.
Finally, the PNR included provisions to ensure its delivery, especially, as
soughtbyICTUinparticular,amonitoringcommitteeoftopofficialsandpartner
representatives,chairedandsupportedbytheDepartmentoftheTaoiseach,with
inbuiltrecoursetotheTaoiseachandministersforresolvingproblems.
Politicalhighstakes:therockyroadtoratification Political partisanship and traditional partydispositions towards tripartitism
shapedpartypoliticalresponsestothePNR.Itwassooncleartherewouldbeno
“politicalconsensus”onitassoughtbytheNESC,theCIIandHaugheyhimself.
ThenewPDpartysimplyrejectedthePNRonprinciple,opposing“deals”with
“interest groups”. Fine Gael, because of rather than despite its “Tallaght
Strategy”, announced in September 1987, also attacked it as compromising
monetaryautonomybyitscapitulationto“vestedinterests”,whilepromisingto
supportthe1988budgetifitcontinuedintheveinof1987.Inamoretraditional
partisanpose,FineGaelinseveralDáilinterventionsrepeatedthislineofattack.
DukescondemnedthePNRas“neitheraplannoraprogramme”buta“dickied
up public service agreement” with “a fungus of promises attached”. He urged
partnerorganisations, thenballotingon it, toreject “the infamousprogramme”
with its“fictitious jobtargets”.Noonancalled it“acynicaldealbypublicsector
unions trading jobs for pay”. In the tradition of Whitaker’s and FitzGerald’s
fundamental antipathy to tripartitism, Dukes decried its “consensus” as
“illusory”,leaving“norolefortheDáilinthisprocess”.“Itisinthishousethata
democraticconsensusmustbeworkedout…andthattheimplementationofthe
actionrequiredtoreachtheagreedtargetsmustbedesignedandcrafted”.49
Labour’s initial response, reflecting its own historic internal contradictions,
sawSpringbothlaudCongressforseekingtosecureimprovementsforthelower49 Dukes,“vestedinterests”,IT03/09/87;Dukes,“neitherplannorprogramme”,Dáil08/10/97;“infamous
programme”Dáil20/10/97;NoonaninDáil02/11/87;“consensus…illusory”,IT24/10/87
167
paidandinsocialpolicy,andattackthePNRforits“miserly”payterms,funded
by“firing…publicservants”.TheWorkers’PartyrefrainedfromcriticisingICTU
directly,butgenerallyattacked “cuts”.Labour,whichhadbeenbadlyhit in the
election, barely returning twelve TDs, was convulsed by internal division as
EmmetStaggmountedaleadershipchallenge,withunionsupport,onaleft-wing
socio-economic policy platform. The embattled leadership of Spring, Desmond
and Finlay fought back with “a war to the death”. Bitter exchanges erupted
betweenDesmondandAttleyatLabour’sSeptember1987conference,justasthe
final, tense negotiations on the PNR were concluding. Attley defended ICTU’s
PNRstrategytoahostilehallandshoutsof“lies”and“nottrue”,whileDesmond
attacked theunions and eviscerated thePNR, pledging theparty’s unremitting
opposition. The Spring leadership saw off Stagg’s challenge, and immediately
positionedthepartytoopposeonprincipleHaugheyandallherepresented.50
Spring remorselessly attacked the PNR in the Dáil as “the con trick of the
century”, with its “sell-out” of natural resources, “firing” of public servants,
slashingof services, “niggardly”pay increases, and “cosmetic” tax reforms that
were“aninsult”toworkers.ICTUhadsignedadeal“hostiletoworkingpeople”
thatwouldbenefitonly“yuppiesandfinancialservices”hidingtheirmoneyina
capitalist “Holy Grail” on “twenty-seven derelict acres of Dublin dockland”. As
unionswereballoting,Springencouraged ICTU’sdissidents,alsocalling for the
Dáil toreject thePNRandgovernment to“re-opennegotiationswith thesocial
partners”torescind“thecuts”:“Weintendtofightthisplan”.51
The political opposition’s hostility to the PNR, and encouraging of partner
organisations to reject it, chimedwith the viewsof leading economists.Kieran
KennedyofESRI,despitehisroleindraftingTheWayForwardin1982,damned
it with faint praise, its job targets “unconvincing”. Colm McCarthy, despite
headingHaughey’s“BordSnip”,andPaulTanseyattacked“socialpartnership”as
anout-datedconceptandthreattoparliamentarygovernment.ASundayTribune
editorialcalledita“self-destructive”planandSeanBarrettofTCDapaydeal“the
countrycannotafford”.ThenearesttoapositiveviewwasBusiness&Finance,an
50 Spring“miserly”,Dáil,07/10/87;WPposition,IT08/10/87;“wartodeath”andDesmond-Attleyconflict,
Finlay1998:38-61alsoQuinn2005:246-8;“lies…nottrue”,IT28/09/87,Finlay1998:46-751 SpringinDáil,12,17and20/10/87
168
employer-friendlyorgan,whichgaveitlukewarmapprovalforcontainingwages,
while BrendanKeenan suggested itsmarginalmerit in defusing conflict in the
semi-states.The“DohenyandNesbittSchool”wasnotimpressed!Almostalone,
TheIrishTimes,ineditorialscontradictingthehostilecommentariesitpublished,
supportedboththepartnershipconceptandthePNRrecoverystrategy.52
Given the political and “expert” opposition, ratification of the PNR faced a
rockyroad.TheICMSA,whoseleadershadwalkedawayfromtheirfinalmeeting
with Haughey on 9 October, the day the other partners signed it pending
ratification,denounceditasa“capitulation”totheunions,causingtheIFAtooto
waver in its commitment. Haughey, under pressure from ICTU not to retreat
from theprincipleofequitable taxation,dispatchedMacSharry tokeep the IFA
onboardbyconcedingthatfarmers’PRSIwouldbebasedontheirdeclarednet
ratherthangrossincomes,enragingtheICTU.ButitmollifiedIFAleaders,though
evenfurtherconcessionswouldlaterberequiredtokeepthemonside.53
Employerswaveredtoo,despitethemajorconcessionstheyhadsecured.The
divided FUE Central Council deferred its final decision until ICTU’s conference
had made the unions’ position clear. With farmers exploiting their leverage
beforeratifying theagreement,and theFUE fearing theagreement’s impacton
their credibility with members, the PNR’s survival was down to whether the
unionswouldratify it.The ICTUExecutive, inaccordancewithpractice,agreed
that unions ballot their members and send mandated delegates to the 19
Novemberconferencetodecidethefinalstanceoftheoverallmovement.54
As this ballotingwas underway, opposition parties boosted the PNR’s trade
union opponents by intensifying their assaults on the PNR in the Dáil. Spring
declaredthat“beforetheinkwasdry”onit,governmenthadcapitulatedtothe
“bullyboytactics”offarmers,“desperatetohavetheirnameonthedottedline”,
something “all tradeunionists should take… into account”.. FineGael attacked
education cuts,demanding that government “suspendall furtheraction”under
52 Kennedy,IT15/10/87;McCarthy,IrishIndependent;Tansey,ST11/10/87;STeditorial11/10/87;
Barrett,IT10/10/87;Business&Finance14/10/87;Keenan,II10/10/87;ITeditorials10and11/10/8753 ICMSAattack,IT13/10/87;ICTUpressure,CassellstoHaughey,19/10/87,ICTUArchive:GS-PA-1c;
O’Sullivan,D/Taoiseach,toTravers,‘MeetingbetweenMinisterforFinanceandIFArePRSI’,30/10/87,DTA:S25858-A;‘SplitloomingoverPRSIreport’,IrishFarmers’Journal19/12/1987;JohnHynes,Dept.SocialWelfare,toJ.Travers,Dept.Taoiseach,10/12/87,DTA:S25858-C
54 FUEBulletin,Oct.1987;ICTUECmeeting09/10/1987(‘SpecialMeeting’)
169
thePNRandappealing tounions to foregopay increases tosave teaching jobs,
i.e.rejecttheagreement.APDmotiondemandedastatutorywagefreeze.55
GovernmentassistedthebeleagueredICTU,Haugheyhavingofficialssupplyit
with agency plans for specific PNR projects, instructing ministers to provide
details on projects within their remits, and launching several significant PNR
initiatives,notablytheCustomsHousesite, thenewsemi-state forestryagency,
Coillte,andthenewDepartmentoftheMarine,andstartingthedecentralisation
programme.Cabinetbackeddownonprimaryeducationcuts, launchinga joint
INTO/Department “review”. The public service redundancy scheme, already
popular,wasextendedtoallreleasablepublicofficialsover50yearsold.56
ICTU ratification depended on how unions voted at the special delegate
conference (SDC), where individual union delegates would be bound by the
positionadoptedbytheirunionthroughtheirvariousinternalprocedures.These
varied from democratic workplace or union hall-based secret ballots in most
publicserviceandlargergeneralunions,whichrepresentedthegreatmajorityof
workers, to “democratic centralist” executive-determined decisions in craft
unions–someofwhom,inadvisingrejection,toldtheirmembersthetermswere
“confidential” and to simply follow their instruction - and someemploying the
arbitrary process of a “show of hands” at mostly sparsely attended branch
meetings. Few British-based unions balloted, relying instead on their “Irish
Region” ormilitant-dominated local executive councils to reach an “informed”
position, aprocess controlledbyunionofficials and shop stewardswhowould
followthemilitantline.Eveninlargeunionsthatheldsecretballots,countingof
voteswas“in-house”.Butthebindingsenseofclassacrossallunionsmeantthat
eventhemost“militant”wouldacceptandabidebywhatevercommonposition
theSDCdetermined.TherewasnoappetiteforwithdrawalfromCongress.While
not impeccable, the ratification processes across the movement, representing
500,000workersintheRepublic,was,onbalance,aroughlydemocraticaffair.57
55 SpringinDáildebates20/10/87,FineGaelinDáil12,13,17/11/87;IT13and14/11/8756 ÓhUiginntoPádraicWhite,IDA,‘BackgroundBriefing’,23/10/87,CTT,‘SectoralDevelopmentProposals’
n.d.,DTA:S25281-E;‘SummaryConclusionsofMeetingofMinistersandMins.ofState’,01/11/87andM/Finance‘Aide-memoireforgovernmentonDecentralisationProcess,’01/11/87,DTA:S25858-B;‘GovernmentStatement’,04/11/87,GIS
57 IndividualratificationprocessesinPádraigYeates,unpublishedMAresearchpaper,2003,YeatesPapers
170
Thebasicdivide in theunionswas the sameas thatoverNWAs throughout
the1970s,ontheprincipleandbenefitsofcentralisedbargaining.Sectional,craft
andBritish-basedunionstendedtooppose,whilethelargernational-orientated
generalandmostpublicserviceunionshadleadershipsgenerallycommittedto
central agreements. These could usually secure amajority ofmembers behind
them,howeverprecariously.Somefactorscutacrossunions.Tradeunionistsin
strongprivatesectorfirmswhobelievedtheycouldsecurebettertermsthrough
localbargaining,forinstance,includingingeneralunionsliketheITGWU,tended
tobehostiletonationalagreementslevellingwagesdown,astheysawit.
Butanyagreementtosecureamajorityat ICTUlevelhadtohavethepublic
serviceandlargergeneralunions-especiallytheITGWUandFWUI-behinditto
outweigh themass of smaller opposing groups. Teachers could go either way
depending on on-going disputes with government, with INTO, representing
nationalschools,andTUItechnicalteachers,tendingtofavour,whilesecondary
school teachers (ASTI) tended to oppose, resenting being “held back” in the
interestsofthelow-paid.ThoughtheleadershipsoftheITGWUandLGPSUhad
beeninstrumentalinbringingthePNRabout,itwasunclearhowtheirmembers
wouldvote,withmuchinternaldiscontentevident.Themodestwageincreases,
and the impact of left-wing agitation or calls for rejection by Labour and Fine
Gaelleaderscouldwelltipamajorityevenintheseunionsagainstratification.58
Theresultsproducedanunevenpattern.Unionsballotingtoacceptincluded
most public servants, with civil service technicians (UPTCS, 6,000 members)
10:1, teachers (INTO, 20,000, and ASTI, 12,000), 2:1, telecom workers (CWU,
9,000)6:1andpostofficeworkers(PTWU)3:1 in favour. In theprivatesector,
bricklayers and painters, usually opponents, surprisingly supported it, swayed
perhapsbyhope fora recoveryof theirbattered sectors through theplan.But
theoppositioninitiallyseemedstronger,withtheATGWU(23,000),onthebasis
oflocalexecutivedecisions,rejectingit,ostensiblyby15:1.Itwasalsorejected,
bysometimessimilarlyquestionablemeans,byelectricians(ETU,10,000),white
collar/managerial staffs (ASTMS, 14,000) and construction craftsmen (UCATT,
11,000).Cutbackssawvocational teachers(TUI),unusually, reject it,aswellas
58 unpublishedresearchpaper,2003,YeatesPapers;‘Unionsuncertainonnationalplan’,IT02/11/1987
171
the small clerical-grade civil service union (FUGE). The greatmajority of very
smallunions,asusual,decided,usuallybyleadershipfiat,against.59
Withthisnearequalbalance,allnowdependedonhowthethreelargeunions
whose leadersweremost identifiedwiththePNR–theITGWU(Carroll),FWUI
(Attley) andLGPSU (Flynn) – all ofwhichused secret balloting, voted.Attley’s
traditionally well-disciplined pro-agreement FWUI (60,000), with its mainly
publicservicemembership,voted2:1infavour.Butinthelargestpublicservice
union, the LGPSU, whose general secretary, Phil Flynn, had been a primary
architectandpassionateadvocateofthePNR,itslargeelectedExecutivedecided
to recommended rejection. Thiswas due to the radical cuts in the health and
local government sectors, which dominated its membership. But despite this
recommendation, LGPSU members balloted to endorse the PNR, albeit by a
narrowmajority. The surprise result reflected both Flynn’s popularity and the
FiannaFáildispositionofmostmembers.IntheITGWU,itsExecutive,followinga
long, heated meeting, recommended a “yes” vote, after its authoritative
President,JohnCarroll,alsoaleadingarchitectofthePNR,urgeditto.60
The results in the LGPSU and ITGWU illustrated the key role of leaders in
determining union choices. This factor had also been critical in the unusual
decision by the bricklayers and secondary teachers to support the PNR. Both
unions were traditionally hostile to central agreements, but their general
secretaries,KevinDuffyandKieranMulvey,werepersuasivepersonalitieswho
stronglysupportedthepolitically-drivenpro-partnershipICTUleadershipcircle.
After the ITGWU counted the ballot of its 110,000 nominal members, the
union dramatically announced it would not reveal the result until the ICTU
conference,ostensiblysoasnot toprejudicehowotherunionsvoted.The Irish
Timesreportedthat“itisunderstoodtheballotcameclosetorejectingthedeal”
andsomeinCongresscertainlydoubtedamajorityhadactuallyvotedinfavour
atall.ButthemovewasalsotacticalbyCarroll,topanicopponentsofcentralised
dealsinotherlessdemocraticunionleaderships,whoroutinelyrejectedcentral
agreementtofostertheir“militant”image,butinrealitywouldpanicifanICTU
59 ‘SpecialDelegateConference,LibertyHall,Dublin,’19/11/87,[unpublishedreportofproceedings],ICTU
Archive:GS-PA-1c;‘Unionvotes’IT18and20/11/8760 OnITGWU,IrishTimes19/11/87andDevine2009;onLGPSUvote,IrishTimes18and20/11/87.
172
majorityactuallyrejectedit.TheofficialITGWUresultwas54percentinfavour,
inapollinwhich60percentpollofitsactual90,000membersvoted.61
ThetenseICTUconferenceon19Novemberreproducedthesedeepdivisions.
Cassells,onbehalfoftheCongressExecutive,argueddefensivelythatthePNR,in
which some “central features of our approach are incorporated”, was entirely
separate to government’s “massive cuts in public expenditure”,which had not
been negotiated, formed no part of the agreement, and would continue to be
opposed.ThePNRofferedtheonlyrealisticalternativetoatriumphofthe“new
right” economics of Thatcherism, which many in the elite, he said, eagerly
awaitedanopportunitytoimplement.Attleystressedthatunionaimsofdecent
wagesandlivingstandardscouldsimplynotbeachievedby“whatyoucangetby
negotiating in a few profitable companies”, throwing “the lower paid to the
wolves”. IncomingCongressPresident,BillWallace, pleaded for the agreement
“for the sake of the unemployed, … of our members and of those on social
welfare”.Withdelegatesvotingasmandated, thePNRwasendorsedby181 to
114.Thiswasacomfortablemajority,butthelarge“no”minorityinunionssuch
as the ITGWUandLGPSUwhosemajorityhadvoted“yes”,meantamajorityof
union members overall opposed it, certainly if the results declared for
oppositionalunionsaretakenatfacevale.TheICTUmandatewasprecarious,the
IrishTimesdescribingitas“effectivelyswungbyafewthousandITGWUvotes”.62
But armedwith themandate, ICTU immediatelydeclared itspriority to “get
on”with“rebuildingourindustrialbase”byensuringspeedydeliveryofthePNR
plan.InalettertoHaugheyonthedayofthevote,itsoughtanurgentmeetingon
the “immediate implementation of the Programme” and to establish the
structures“tomonitorachievementoftargetsandobjectives”.63
Employer endorsement followed twoweeks later, but only after a flurry of
backgroundactivitybygovernment.TheFUEhadbeenalarmedbyrumoursthat
the Labour Court, whose exclusion from an “interpretative” role they thought
61 IrishTimes19/11/87;onICTUdoubts,interviewwithS.McCarthy;onITGWUstrategy,Interviewwith
Attley;actualITGWUballotresultDevine200962 ‘SpecialDelegateConference,LibertyHall,Dublin,’19/11/87,[unpublishedreportofproceedings],and
‘RemarksbythePresident,Mr.BillyWallace,atthecloseoftheConference’,19/11/87,ICTUArchive:GS-PA-1c;ICTUAnnualReport1988:216;‘ICTUacceptsnationalplanbymajorityof63’,IT20/11/87
63 ICTUPressRelease,‘JobCreationfirstprioritysaysCongress’,19/11/87,ICTUArchive:GS-PA-1c;CassellstoHaughey,24/11/1987,ICTUArchive:GS-PA-1d;
173
they had secured, intended to regard PNR rates as generally applicable.
GovernmentstressedtoemployersthePNR’s“importancefornationalrecovery”,
with“adherencetothepaynormscrucial”,especiallyasiteffectivelysubsidised
payincreasesthroughtaxreforms.This,aswillbeseen,hadbeenHaughey’sfinal
concession to ICTU to assist it secure a majority at its conference. But the
DepartmentofLabourwarnedAhernthattheFUEwasrebellingontheLabour
Court issue. The 3 per cent/£4 “floor” had been the cause of “considerable
acrimony and negotiation” with employers, who had only finally agreed to
generallyapply itona locally-agreedvoluntarybasisand“wouldnotbe forced
by the…LabourCourts to do so”. A rumour circulated that the chairs of Joint
LabourCommittees(JLCs) intended, intheeventof tiedemployer/unionvotes,
toadoptadefaultpositionof issuingbindingwagesordersapplyingPNRrates.
This ledDanMcAuleyof theFUEtowarntheDepartmentthatanyadoptionof
the£4as “mandatoryonemployers”wouldberegardedbyFUEasabreachof
trust. The Department warned Ó hUiginn of “a real risk the FUE would be
instructed to withdraw”. He therefore intervened to assuage employer fears,
stressingthegovernmentpositionthattheCourtwouldnothavesucharole.64
While the Labour Court position was thus parked rather than resolved,
anotherproblemforemployers,indicatingthelimitedremitoftheFUEinmore
dynamicsectors,was,paradoxically,companieswantingtoretainfreedomtopay
increases above PNR rates. It was a problem similar to ICTU’s in profitable
industries.ThepresswasreportingnewwagedealsandLabourCourtawardsof
over 5 per cent, and the FUE confided its fear to a Department official that
“certainemployersandunions”had “jointly indicated to theLabourCourt that
theywanttooptoutoftheagreement”.McAuleysecretlylobbiedgovernmentto
pressure such companies to comply. Although Finance reported that the cases
werenotnewandmostlyinvolvedthelastphasesofpre-PNRdealsandinsome
cases non-FUE-member companies, the Department warned Ahern that “any
continued divergence from the agreed norms … will ultimately make it more
difficult to hold the line in the public sector”, and, stressing government’s
insistence on “adherence to the pay norms as crucial”, suggested he have
64 KevinMurphy[Sec.,D/Lab.]toMinister[forLab.],‘PayinthePrivateSector’,24/11/87,MurphytoÓ
hUiginnandTravers,01/12/87,andTraverstoTeahonandSec.[=ÓhUiginn],02.12.87,DTA:S25857-A
174
Haughey personally write to the MDs of the thousand largest companies
emphasisingtheagreement’s“importancefornationalrecovery”.65
TheFUEalsoworriedthatFDIcompaniesreliantonhighskilledlabourwould
offer pay increases “over the odds”, again putting it under pressure. Although
suchfirms,asadvisedbytheIDA,tendedonprinciplenottogoagainstnational
norms,theFUEbelievedthatHowmedica,aUSpharmaceuticalfirm,notanFUE
member but a pay “trendsetter”, intended to exceed the PNR’s 2.5 per cent
“guideline”. He needn’t have worried for, as Ó hUiginn told Haughey, its
managingdirector,DermotWhelan–laterCIIPresidentandLimerickUniversity
luminatus-had“assuredmethat,asamatterofprinciple,theywouldnotexceed
the guideline”. “They regard themselves as guests of the Irish economy and
wouldnotwish to takeanyactionwhichwouldbedetrimental to thenational
interest.Mr.Whelanalsoaskedmetoconveyhisregardstoyou”.66
Finally“assured”,especiallythroughthe“amplescopeforresolvingproblems
andtakinginitiativesatlocallevel”,theFUECentralCouncilannouncedthat“in
generalmemberswerepreparedtosupporttheProgramme…intheinterestsof
thecountryandthedevelopmentoftheeconomy”.WhiletheFUEwasfinallyon
board, the construction industry needed a further nudge. To bring it over the
line,governmentconfidentiallyprovided“clarification”thatthe1-hourworking
time reduction agreed in the PNR would be understood as applying in
construction only to workers on over 40 hours, and promising that public
contractswouldbeadjustedtocompensateforPNRpay-increasecosts.67
Fine Gael, after talks with whips on a commonmotion opposing increased
pupil/teacher ratios failed due to the PDs, moved another motion in the Dáil
demandingpublicservicepayincreasesbesuspendedtosaveteachingjobsand
rejectingthePNR.Haugheysoughtthroughalastminuteamendment,draftedby
ÓhUiginn,tosecuresupportforthePNRbystressingitsconsensusaspect.But
thisfailedandFineGael’smotionwascarried.Asitwasnotaconfidencevoteit
65 ‘Unionsuncertainonnationalplansupport’,IrishTimes02/11/87;Murphy[Sec.,D/Labour]toMinister
‘PayinthePrivateSector’,24/11/87,DTA:S25857-A;D/Finance,‘SettlementsinexcessofPrivateSectorPayAgreementassociatedwiththePNR’,Dec.1987,DTA:OHP
66 OnIDAguidancetoTNCs,InterviewwithPádraicWhite;onHowmedica,ÓhUiginntoTaoiseach,‘NationalProgramme-PayGuidelines’,11/11/87,DTA:OHP.OnWhelanalsowww.ul.ie/ceremonies/dermot-patrick-whelan
67 FUEBulletin,Nov.1987;ThomasReynolds,MD,CIF,toÓhUiginn,24/11/87,DTA:S25858-C
175
could not stop the PNR proceeding, but it showed the limits of the Tallaght
StrategyandendedHaughey’shopesofa“politicalconsensus”onthePNR.68
LastminuteconcessionshadbeenessentialtosecuringratificationofthePNR,
including a rather dubious interpretation of the Labour Court’s remit and the
working hours clause of the PNR to appease employers. The agreement also
failed toachievepolitical consensus in theDáil. Its final ratificationbypartner
organisations,howeverclose,resultedfromthesingle-mindeddeterminationof
government and beleaguered pro-partnership ICTU leaders to achieve their
“consensusplan”.DespiteCIIenthusiasm,considerablepoliticalinterventionhad
been required to finally bring employer leaders on board. Haughey’s own
dramaticinterventionsmeanthishigh-stakesstrategynowhadbuy-in,however
precarious.Withoutthe“fewthousandvotes”oftheITGWUhispoliticalposition
might well have been fatally undermined, as the only alternative available, a
Thatcher-likestrategybackedbyFineGaelandthePDs,wouldhavecontradicted
everythinghestoodforinpolitics.EnsuringthesuccessofthePNRasmorethan
simply a “dickied up public service agreement” with “a fungus of promises
attached”,asDukescontemptuouslydescribedit,wasHaughey’snextchallenge.
68 ÓhUiginntoChiefWhip17/11/87,DTA:OHP;Dáil24/11/87;DáileventsalsoIrishTimes25/11/1987
176
177
Part3:
Implementation,1987-89
178
Chapter7Thestrategyanddynamicsofpartnership,1987-89Kick-startingthepartnership“system”,December1987 Once the unions had ratified the agreement, Haugheymoved to embed the
newsystem.ICTUwasjustasdetermined,intentongettingthe“CentralReview
Committee” (CRC) up and running while simultaneously establishing political
distancetogovernmentwitha“CampaignforJobs”aheadofthe1988budget.1
Beforemoving,governmentassesseditsposition.Theeconomicsituationwas
precariousfollowingtheLondon/NewYorkstockmarketcrises.TheESRIurged
thattoavoidrecessionPNRexpenditurereductiontargetshadtobemet“infull”
which, it pessimistically opined, should lead “within a couple of years” to a
“return toapathof steadygrowth”.The IrishTimeswarned that a “worst case
scenario”mightrequirere-negotiatingthePNRtoachievehighercuts.ThePNR’s
prioritisingofmonetarystabilisationallowedgovernmentagradualistmoderate
approachontaxreform,soitstartedwithlow-costcommitments,suchaslabour
lawreform.ButMacSharry’sreportingtocabineton10Decemberthat1987ERB
reduction targets were “certain to be achieved” created budgetary space,
allowingHaugheyorderthatChristmaswelfarebonuses,whichthecoalitionhad
suspendedandhehadnotcommittedtorestore,bepaid.2
This opened the door for ICTU to engage. But it had several “outstanding”
issues,which PNR’s “umbrella” clausewas designed to resolve, it firstwanted
addressed. These included local authorities laying off workers for cost-saving
reasons, health boards cutting student nurse salaries, the pupil/teacher ratio
review,and thehomelessnessbillpromised forChristmas. Itwasalso irritated
byministerial announcements of PNR initiativeswithout consultingwith it or
mentioning their PNR context. These included the Gleeson Report which had
embarrassingly advised a 15 per cent salary hike for top state officials, an1 CassellstoHaughey,24/11/1987,DTA:S25857A;‘PNR-ICTUContinuesCampaignforJobs–Addressby
PeterCassells…toSSISI’,03/12/87,ICTUArchive:GS-PA-1c2 ESRI,Mid-termforecast,Dec.1987;IT(editorial)20/11/87;‘M/LabourpublishesReviewofEquality
Legislation,’30/11/87,GIS:D/Labour;D/FinancetoD/Taoiseach,‘BudgetaryDevelopments’n.d.[10/12/87],DTA:S25862-A
179
“efficiencyaudit”demandedbytheIFAofstaffandservicesattheDepartmentof
Agriculture,andsolorunsbyAhernwith“discussiondocuments”onlawreform.3
Employersalsohadconcerns,FUE’sprioritybeing toensurePNRpay terms
werenotanational“norm”enforceablebytheLabourCourt.DefiningPNRpay
termsassubjectto“localconditions”and“localnegotiation”hadbeenvitalinit
signingthePNR.Anyattempttore-openthesubjectontheCRC,Departmentof
Labour officials warned, would only “muddy the waters on what the Pay
Agreement entails” and cause anFUE “walk-out”. Congress,when it learnedof
this,wasalarmedattheapparentconcessiontoemployersonwhichithadnot
beenconsulted.TheDepartmentoftheTaoiseachknewtheissuewouldhaveto
beresolvedinICTU’sfavour,asthey“had‘sold’theProgrammetotheirmembers
on[the]basis,interalia,of[its]specialprovisions…forlow-paidworkers”.4
HaugheyarrangedtomeetbothICTUandCII/FUE–inthatorder,asever.He
assured Congress beforehand on some issues, explaining that the “efficiency
audit”was a purelyDepartment-IFA affair, formedno part of the PNR, andhe
hadnotorderedit.Actionwouldalsobetakenontheotherissuestheyraised.He
had Ó hUiginn berate the Department of Environment over continued local
authoritylay-offsandthehousingbill,tellingtheminaction“detractedfromthe
credibilityof theProgrammeandtheGovernment’scommitment to it”.Healso
orderedthatarrangementstoestablishtheCRCbe“expedited”.5
Before meeting ICTU, Haughey, through Ó hUiginn, instructed ministers to
arrange “bilateral”meetings to resolve its grievances. Theywere also tomake
sure departments were “gearing their activities very firmly to secure the
employment targets set out in the Programme” and that unilateral
announcementsceased.TheICTUvotehadbeen“veryclose”and“agooddealof
scepticism among union members in relation to Government commitment”
remained. Their “perception” was of “Government Departments and State3 J.T.[=Travers]toSec.[=ÓhUiginn],‘MeetingbetweenTaoiseachandMinisters…withReps.ofICTUon
10thDec.’,03/10/87,CassellstoÓhUiginn,04/12/87re“efficiencyaudit”,DTA:S25862-A;‘MeetingofTaoiseach,M/FinanceandM/Agric.withIFA,ICOSandMacranaFéirme’,13/11/87,GIS:D/Taoiseach
4 TraverstoTeahonandSec.[=ÓhUiginn]02.12.87,andJ.T.[=Travers]toSec.,‘MeetingbetweenTaoiseachandMinisters…withRepresentativesofICTUon10thDecember’,03/10/87,DTA:S25857-A
5 h/wnote,J.T.[=Travers]oftelephoneconversationbetween“Sec.”[=ÓhUiginn]andPeterCassells,07/12/87,‘MeetingbetweenTaoiseachandMinistersandEmployerBodies’,14/12/87,DermotNally,Sec.,D/Taoiseach,toM/Finance,08/12/87,andÓhUiginn[toHaughey],‘AideMemoireforGovernment-PNR:ProposedArrangementsforEstablishmentandOperationoftheCentralReviewCommittee’,ÓhUiginn,h/wnote,n.d.,‘PNR1987ReviewandMon.Cttee’.,DTA:S25857-A
180
agencies not actively pursuing the provisions of the Programme” and this
“lackadaisicalapproach”mustchangetoan“urgentone”.Congress’sfearsmust
be “allayed by firm implementation of the measures … and by demonstrating
earlyprogress”, essential “if theprogrammewasnot todisintegrate”.Plans for
PNRinitiativesintheirremitweretobesubmittedbeforeHaugheymetICTU.6
At themeetingwithCongress,Haugheydominatedon the government side,
withministerscontributingonlywhenasked,andsimilarly,anddespitea large
delegation, Cassells and Flynn – as Attley couldn’t attend - provided most of
ICTU’s input. In front of his silentministers Haughey detailed how each ICTU
issuewasbeing“immediately”addressed,andundertooktoreininsolorunsand
deferGleeson.Hegavedetailedupdatesonmeasures initiatedandtheplansof
eachdepartment,andassuredICTUof fullcivilservicecooperation.Timescales
forcommencingprogrammeswerediscussed,bilateralmeetingswithministers
arranged, terms of reference for the CRC, which Ó hUiginn had drafted with
Haughey, agreed, and an inaugural date set for its first meeting the following
week.InamajorcoupfortheICTUthatdisregardedFUEthreats,Haugheysaid
governmentconsideredthePNR’spaytermsasgenerallyapplying,unlesswhere
inexceptional casesa company’sdifficultiesprevented this.He thuseffectively
concededLabourCourtenforcement. ICTUagreed to theCRCbeing focusedon
programmedelivery,withpayamatterforaseparateforum.Agovernment-ICTU
“Joint Statement” followed, listing the PNR measures already initiated,
welcomingtheCustomsHouseproject,andnotingthe“bounce”intheeconomy
alreadyapparentduetothestabilityandconfidencethePNRprovided.7
6 Instructionstodepartments,ÓhUiginntoTaoiseach,‘MeetingwithICTU10/12/87’,alsocorrespondence
betweenTravers/ÓhUiginnandvariousDepartments/agenciesB.McDonagh,D/CommunicationstoTravers,D/Taoiseach,09/12/87,DTA:S25862-A;“ICTUvoteveryclose”,J.T.[=Travers]h/wnoteoftelephoneconversationbetween“Sec.”[=ÓhUiginn]andCassells,07/12/87,and‘MeetingbetweenTaoiseachandMinistersandEmployerBodies’,14/12/87,DTA:S25862-A
7 h/wminutesofGovt.-ICTUmeetingof10/12/87,‘Documentation,PNR’[formeeting10/12/87],J.T.[=Travers]toSec.[=ÓhUiginn],‘MeetingbetweenTaoiseachandMinisters…withRepresentativesofICTUon10thDecember’,03/10/87,DTA:S25862-A;D/I&C,‘ListofIndustrialMeasures’,TourismSection,D/I&C,‘BriefforTaoiseach’smeetingwithICTUon10December’,09/12/87,JohnHynes,D/SocialWelfaretoTravers,D/Taoiseach,‘MeasuresbeingimplementedbyD/SocialWelfare’,10/12/87,andD/Taoiseachmemo,‘SocialPolicyAspect’,DTA:S25858-C;ICTU,‘Confidential–PNR,ReportofMeetingwiththeTaoiseach,10December1987’,ICTUArchive:GS-PA-1c;ÓhUiginn[forTaoiseach]:‘AideMemoireforGovernment,PNR,ProposedArrangementsforEstablishmentandOperationoftheCentralReviewCommittee’,DermotNally,PrivateSec.D/Taoiseach,toM/Finance:08/12/87andÓhUiginntoTaoiseach,10/12/87,DTA:S25857-A;‘JointGovernment-ICTUStatement’,10/12/87,GIS:D/Taoiseach
181
HaugheythenmettheFUE,CIIandCIF.Whileexpressinghis“understanding”
for their position on the pay issue, he quickly moved on to the benefits to
businessofbudgetdiscipline,theeconomicstabilityprovidedbythePNR,andits
growth and infrastructure plans, with which CII enthusiastically engaged. He
then met farming organisations. He remained hopeful the ICMSA could be
induced to re-engage, instructing thatplacesbe reserved for themon theCRC,
andassuredanervousIFAthatPRSIlevieswouldbedeferreduntilthePensions
Boardhadcompletedareviewoftheinsuranceliabilitiesoftheself-employed.8
Withthemainpartnersplacated,thefirstmeetingoftheCRCtookplaceon18
December. “Bilateral” pre-budgetmeetingswere also arranged during January
1988. The budget continued MacSharry’s schedule of cuts and while the PDs
attacked concessions to “interest groups”, Fine Gael did not oppose it and the
FUE and CII welcomed it. Although it deferred farmers’ PRSI and Spring
denounced it as “miserly and penny-pinching”, it included PAYE and welfare
improvements.ICTU,whilecriticisingthecuts,welcomedthis“firststeptowards
theimplementationofthetaxreformandsocialequityelements”ofthePNR.9
Partnership did not end the routines of class warfare, with Congress
responding to an employers’ Christmas statement, which boasted of having
minimisedwagesandcoststhroughthePNR,byattacking“scroogeemployers”
resisting basic PNR increases and highlighting ICTU’s success in having the
minimumratesagreedapplyinggenerally.10
Socialpartnershipwasupandrunning.
Institutionaldrivers:CRC,NESCandtheState
CRC:a“mechanismuniqueintheEuropeanCommunity”
A1990reviewofthePNRdescribedtheCRCasa“mechanismuniqueinthe
EuropeanCommunity” enabling “the social partners tohave anon-going input
into Government decision-making on economic and social policy”. Those
8 Mtg.,TaoiseachandMinistersandEmployerBodies.14/12/87’,DermotNally,PrivateSec.D/Taoiseach
toMin.Finance:08/12/87,DTA:S25857-A;JohnHynes,D/SocialWelfare,toJ.Travers,D/Taoiseach,10/12/87,DTA:S25858-C;‘SplitloomingoverPRSIreport’,IrishFarmers’Journal19/12/1987
9 FUEBulletinandCIIBulletin,Jan.1988;ICTU‘StatementonBudget’,27/01/88,inICTUAR1988:223-5;DickSpring,‘Miserlyandpenny-pinching’,andCassells,‘Firststep’,CorkExaminer,28/01/88
10 FUEBulletin,Dec.1987;‘JLCs£4minimumtoberepaid’,IRNReport,07.01.88;ICTU,‘PressRelease’,22/12/87,ICTUArchive:GS-PA-1c
182
involved, from Ó hUiginn to Flynn, Cassells to Power, recall its meetings as
sometimesgruellingorexasperating,butmostly collegial, innovativeandquite
effective. It provided the PNR’s administrative dynamic, coaxing programme
delivery, trouble-shooting problems and resolving impasses. It met monthly
(except August) in the prestigious conference room of the Taoiseach’s
Department, over 19 months from December 1987 to September 1990, when
negotiationsonasuccessoragreementbegan.Itsmodusoperandiwasconsensus
and confidentially though, as Haughey told opposition leaders criticising its
“secrecy”,itsminuteswereonthepublicrecord,availableintheDáilLibrary.11
TheCRC,chairedbyÓhUiginnwhonevermissedameeting,consistedofsix
members each from ICTU and business/employer groups (two each from CII/
FUE/CIF),and four from farmingbodies (two IFAandoneeach fromICOSand
Macra na Féirme),with two held “open” for ICMSA. Civil servants – “assistant
secretary or higher”, as the terms of reference specified – were appointed by
Finance,LabourandIndustryandCommerce,withothersattendingasrequired.
The CRC focused on monitoring programme delivery, accepting that pay and
otherissueswereseparatemattersforthe“negotiating”and“politicallevels”.12
ICTU’srepresentatives-Attley,Flynn,Browne,KirwanandQuigley-wereall
strongpartnershipadvocates,andmembersofeither,orboth,theNESCandthe
CongressExecutive’sGPC.Theywerebacked-upbyfull-timeofficialsNevinand
Cassellsor,followingNevin’sretirement,PatriciaO’Donovan,theCRC’sfirstand
solewomanmember.Althoughetiquetteprescribedthatseniorelectedfigures–
“presidents”etc.-representtheirorganisations,itwasthefulltimeofficialswho
providedmostinput.CongressPresidentJohnCarroll,despitehiskeyroleinthe
PNR, attended only the “inaugural meeting”, as figures at this level, like their
politicalcounterparts,didnottoattendtheCRCbutpresidedinsteadat“political
level”meetingswithHaughey.Thesenior figureswhoattendedregularlywere
Attley,FlynnandBrownethemostconsistentforICTU,thedominantfigurefor
employers Jim O’Brien, divisional director of FUE/FIE, until joined by John
Dunne in 1989, for the CII Liam Connellan, Director General, and Con Power,11 CRC1990;InterviewswithCassells,ÓhUiginn,Power,O’Sullivan,Attley,O’Donovan;Dáillibrary,
HaugheyinDáil,02/03/8812 ÓhUiginn[forTaoiseach]:‘AideMemoireforGovernment,PNR,ProposedArrangementsfor
EstablishmentandOperationoftheCentralReviewCommittee’,DermotNally,PrivateSec.D/Taoiseach,toM/Finance:08/12/87,DTA:S25857-A;onCRCmembershipseeAppendixA
183
chiefeconomist,andfortheIFAMichaelBerkery,itsgeneralsecretary,andCon
Lucey, its chief economist. Similar level officials also attended for ICOS and
Macra.GovernmentwasrepresentedbyÓhUiginn,hisassistantsecretary,Paddy
Teahon,andagainwithconsistentattendance,assistantsecretariesfromFinance
(Tutty and O’Gorman), Labour (Bonner) and Industry and Commerce (Woulfe
and Dorgan). These were also government appointees on NESC. Typical CRC
meetingsinvolved8to12“socialpartners”andfrom12to20stateofficials.13
InFebruary1988,ÓhUiginnproposeda“SecretariatGroup”(SG)toconvene
betweenmeetingstoorganisetheagendaandfreeCRCofmundanebureaucratic
work.AsomewhatsuspiciousCRCagreedtoit“onatrialbasis”,butitbecamea
regularancillarystructure.The“SG”waschairedbyTeahonandcomprisedeight
“partner”members - themain full-time official for each organisation - and an
assistant secretary from each department. For ICTU this was Cassells, or
sometimesO’Donovan,butgiventheiractivismandtheconsensusethos,thefact
theywerejusttwounionpeopleamongeightpartnersontheSGdidnotdilute
the ICTU input.To facilitateopendiscussionandefficientdecision-making, the
SG dispensed with minutes, producing only simple agreed “Action Points” for
consideration by theCRC, though luckily for historians extensive hand-written
notesofmostSecretariatGroupmeetingssurvive.14
HaugheyhadplannedtoopentheinauguralCRCmeetingwithahigh-minded
speechonitshistoricsignificanceandthe“solemn”commitmentofgovernment
todeliveronPNRgoals.Butitturnedoutamoreprosaicaffairlackinghistorical
resonance, as Haughey was again ill and could not attend. It discussed
departmental progress in resolving “outstanding” issues and a long composite
document of progress by departments on PNR commitments. The CRC’s
confidentialand“consensus”modusoperandi, farfromnourishing“groupthink”,
facilitated open and robust debate, with little grand-standing.With no voting,
numbersattendingwasirrelevant.Consensuswasfarfromalwayspossible,but
only rarely did partners insist on their dissenting views being recorded.More
usually,minorityviewsweretakenbypartnerstothe“politicallevel”.Thatthis
13 RecordsofCRCmeetings1987-89;ICTUECmeeting16/12/87,Item1371;SeealsoAppendixA,CRC
membership,andAppendixB,CRCattendance1987-9014 DTASGandCRCrecords
184
modusoperandi workedwas assisted by the fact thatmost CRCmembers and
officials,includingÓhUiginn,kneweachotherfromNESCandotherforums.15
Ó hUiginn, a pro-active chairman, representedHaughey,withwhomhe had
closealmostdailycontact,ratherthangovernmentperseorthecivilservice.He
intervened to initiate or steer debates, support particular partner demands,
pressurise officials, or deflect partner claims to defend state interests. Hewas
highly respected by all members and his authority – often “a weary stare”
sufficing-enoughtoensurecompliancefromthemostrecalcitrantcivilservant.
Whendivisionsarose,hissupport forwhicheverside–representingHaughey’s
preference – determined the balance of “consensus”. Other civil servants also
actively debated propositions or defended their departmental interests. Itwas
notalwayspossibletoleavedisputesatthedoor,causingtheFUEinJune1988to
againinsistthatpayanddisputesbeexcluded.ArareexceptionwaswhenICTU
protestedtheCIF’srefusaltoincreasepensioncontributions.Claimingthiswas
“contrary to the spirit and intent of the PNR” and warning of inevitable
“confrontation”, ICTU asked Ó hUiginn to use his “good offices” to ensure CIF
“respect[ed]theunderlyingcommitments”.CIFwasbroughtquicklytoheel.16
RegulardisputesaroseoverinterpretationofPNRpolicies.WhentheIFAand
ICTUclashedoverVATrefundsandPRSIforfarmers,onÓhUiginn’ssuggestion
theCRCparkedtheissuebyadvisingtheIFAtopursueitsgrievancedirectlywith
government. On other partner clashes with government, the CRC sometimes
backedaggrievedpartners,aswhenAgricultureMinisterO’Kennedyinsistedon
appointingdirectorsofhischoicetothenewTeagascboard.TheIFAprotested,
demandingformalrepresentation,andICTUtheelectionofworkerdirectors.On
ÓhUiginn’sadvice,HaugheyhadO’Kennedy“takeaccount”oftheirrequests,and
theirnomineesweredulyincludedamongO’Kennedy’sappointees.17
15 ‘DraftStatementbyAnTaoiseachattheInauguralMeetingofthe[CRC]establishedon18December
1987’,DTA:S25857-A,TraverstoSecretariesofallDepartments–02/12/87,andcorrespondencewithDepartments,DTA:S25858-C;‘SpecificMeasuresincludedintheProgrammeforNationalRecovery:SummaryofpositionsasreportedbyGovernmentDepartments,Dec.1987’,‘CRC,PNR:firstmtg.Friday18December1987,Dept.TRoom116’,Agendaandcorrespondenceforfirstmeeting,andMinutesFirstmeetingoftheCRC,18/12/87,DTA:S25857-A
16 “wearystare”,Attleyinterview;FUEinsistence,h/wnotes.‘SecretariatGroup16/6/88’,DTA:S25857-F;constructionindustry,TomMcGrath,ICTU,toÓhUiginn,26/04/89:‘Re:ProgrammeforNationalrecovery’,DTA:S25857-R
17 farmer’sPRSIissue,h/wnotes,CRCSecretariatGroup,‘Sec.Group16/6/88’,DTA:S25857-F;Teagascdispute,CRC.SummaryReportofThirdMeetingheldonThursday,18Feb.1988,DTA:S25857-B;D/A&F,memo,‘AbolitionofAFT’,21/03/88,S25857-C;CRC6thMeeting–h/wnotesforMinutes,n.d.[26May
185
ICTU ensured that the check-listing approach tomonitoring progress of the
programme,whichHaugheyhadproposedfortheinauguralmeeting,becamethe
CRC’s standard operating procedure. Each meeting examined the bulky
composite document, updated monthly, “Specific Measures included in the
Programme for National Recovery: Summary of positions as reported by
Government Departments”. This rolling reporting process provided the
committee’smonitoringdynamic.ICTUalsoinsistedonprecisedates“bywhich
implementation of specific measures are to be achieved”, reflecting its
frustrationwithbureaucratic“blocking”andevasiverepliesbyofficials.18
Despite Haughey’s centralised control, officials were prone to continue in
whathehadcalledtheir“lackadaisicalapproach”.TheDepartmentofI&C,while
establishing a special unit tomeet CRC’s reporting requirements, remained, to
the exasperation of Congress, often evasive, or vague on detail, while Finance
also tended to minimal reporting, quoting budget confidentiality, and
Environment listed other impediments. When John Travers of Taoiseach’s,
reflecting the CRC’s growing impatience, politely asked I&C to provide “more
activefollow-uponspecificcommitments”andon“precisestepsbeingtakenon
a sector by sector basis”, it responded that “while not wishing to be
uncooperative”and“whilesatisfiedtoworkwithintheparameterslaiddownby
the Taoiseach” for the PNR, itwould require time to study the issues, and for
“material tobeprepared,co-ordinatedandcleared”.Traverspromptly“put the
Departmentonnoticethatdetailedprogressreports”beprovided,sarcastically
suggestingleaving“the‘study’tofollowtosupportsuchactioninduecourse”.19
ThepartiesmostcommittedtothePNRdrovetheCRC.TheactivismoftheCII
was especially impressive, presenting papers and pressing for action on
initiatives, fromexport costs andan international conference centre, to roads/
1988],ÓhUiginntoMichaelO’KennedyTD,M/A&F,26/05/88andSec[ÓhU]toTaoiseach,30/05/88.‘BoardofTeagasc’,DTA:S25857-E
18 CRCSecretariatGroup,‘ActionPointsarisingfromFirstMeeting[ofSG]’,08/02/88’,DTA:S25857-B19 Ondepartmentalreluctance,CRC,SummaryReportandh/wminutes3rdMeeting,18/02/88,DTA:
S25857-B;D/I&C,Feb.88,‘CRC/14–PlansforMonitoring,ImplementationofOverallManufacturing/InternationalServices/JobCreationTargets’,DTA:S25857-B;MichaelO’Connell,D/Environment,toTravers,16/02/88,DTA:S25858-E;D/I&CandD/Fentriesin‘SummaryReport,SpecificMeasures…’,15/02/88,DTA:S25857-B;forTravers/I&Cexchange,TraversD/TtoPaulBates,D/I&C25/02/88,andtoSec.[ÓhUiginn],23/02/88,inc.CTTdraft,‘PNR:AutomotiveComponentsExports’,DTA:S25857-B
186
infrastructureprojectsandadulteducation.ItsproposaltomarketIrelandasan
“InternationalEducationCentre”advancedonceHaugheyvoicedhissupport.20
TheDáiloppositiontreatedtheCRCasaneasytarget,Labourcallingforitto
demandareversalofeducationcuts-absurdlyatoddswithitspurpose-andthe
Workers Party, ironically given its own history, querying its legitimacy as a
secretive, unaccountable body, and demanding its deliberations be subject to
publicscrutiny,despitetheCRCminutesbeingavailabletoitintheDáillibrary.21
The major constraint on the CRC were the boundaries government put to
informationprovidedorwithheld,asexampleslaterwillillustrate.Butallsocial
partners involved recall it as a heroic effort, an innovative institution that
generated inter-agency collaboration in what was a profound break with
traditionaldisjointedcivilservicetraditionanddecision-makingroutines.
NESC:the“appropriatebody”fornationalstrategy
The NESC was the representative national-level strategic agency of social
partnership, forming its senate. Haughey elevated the “principles” of its 1986
report to the framework for government socio-economic strategy and, when
addressingthebodyin1987,restoredit,ashehadpreviouslydonein1980-82,
to a central role in further “elaborating” national strategy.He underscoredhis
support for the NESC by lauding its recommendations on issues such as state
social spending at the expense of its rival, the semi-private-sector ESRI, the
economicthink-thankco-establishedbyWhitakerandfavouredbyFitzGerald.22
TheCRCdebatedhowthepartnershipsystemcouldbe furtherconsolidated
andtheemergingpartnershiparchitecture“rationalised”,suchasbymergingthe
1980-eratripartiteSectoralDevelopmentCommitteeandotherinstitutionswith
it,anddefiningthemutuallycomplementaryrolesoftheNESCandCRC.Noting
how theNESC’s advocacy of “awell developed consensus approach in a small
country like Ireland” was “now recognised”, and how the use of the NESC by
previousgovernments in“commissioningconsultants’reportsandcommenting
uponthem”wasnowpast, itproposedthat“forthefuture[NESC]shouldfocus20 Memo,JohnKenna09/03/88(‘fromMrPowerCIIforCRC’,10/03/88)-‘FreighttransportCoststoUK
andContinentalEurope’,DTA:S25857-C;D/Marine,‘Confidential.SummaryofReportonInitialMeetingwithCIIonAccessTransportCosts’,26/08/88,DTA:S25857-G;Power,CII,toPTeahon,26/10/88andCRC,SummaryReport14thMeeting,19/04/89,DTA:S25857-R
21 Dáil02and09/03/8822 ‘StatementbyGovernmentonReleaseofNESCReportNo.85’,30/11/88,GIS:D/Taoiseach
187
ongettingagreementon[strategic]prioritiesandsubmittingthemthroughthe
system”.TranslatingNESCproposals intoprogrammes, suchas thePNR,wasa
“political”matter,with“oneofthestrengthsoftheNESC”beingthat“politicians
could take or leave its recommendations”: “without a conscious political
initiative,thegapbetweenNESC’s…StrategyforDevelopmentandnegotiationof
thePNRcouldnothavebeenbridged”.Butemployersresistedanydeepeningof
partnership structures as “premature”, and the CRC agreed to await the re-
constitutionofNESCin1989beforeagainconsideringinstitutionalchanges.23
Once the first-stage legislation freeingcapitalmovementunder theSEAwas
passed, Haughey and Ó hUiginn decided to request the NESC to undertake a
majorproject“elaborating” IrishpolicyontheEEC,Haugheytellingthecouncil
heregardeditasthe“appropriatebody”toundertakesuchastrategicreview.An
enthusedNESCshelveditsmicroprojectstofocusonthe“EECstudy”,entrusting
the research and field-work to the talented young economist Rory O’Donnell,
who in a future erawould play a central role at theNESC itself. Even the IFA
supportedtheupgradingoftheNESCgiven,asitschiefeconomistConLuceyput
it,the“restricted[policy]expertiseinDepartments”.Theseriousnesswithwhich
the NESC took Haughey’s promotion of it was reflected in the ICTU Executive
nowretiring its second-tierNESC representatives (“due topressureofwork”!)
and replacing them with senior partnership figures, Phil Flynn and Kieran
Mulvey,andCIIsimilarlyappointingitstopstrategists,ConnellanandPower.24
The first sections of the “EEC study”, already available by autumn 1987,
examined Ireland’s comparative performance in the EEC, critiquing its poor
relative institutionalperformanceandshort-termpolicyapproachcomparedto
other “more successful” “small” states. NESCmeetings over the following year
scrutinisedsuccessivedraftchaptersandtheirconclusions.Aconsensusposition
quicklyemerged,thoughfinalisingthestudywasdelayedpendingEECapproved
ofstructuralfundplans,anditwasonlyfinallypublishedinAugust1989.ICTU
focusedonindustrialpolicybutensuredastrongendorsementofDelors’“social
23 CRCSec.Group.ActionPointsarisingfrom3rdmtg.,18/04/88,DTA:S25857-D;h/wnotes.‘Sec.Group
16/6/88’,DTA:S25857-F;‘Functions,MembershipandWorkProgrammeoftheCRC,SDCandNESC’,SG/70,n.d.[Sept.1988],DTA:S25857-I;h/wnotes,SGmtg.13/12/88,DTA:S25857-M;ÓhUiginntoO’Sulivan,‘CRCSec.Group:preliminarydiscussion,possiblerationalisation’,13/12/88.DTA:S25857-R
24ÓhUiginntoCouncilmembers,21/05/1987,CouncilMinutes,27/05/88,Danaher(Sec)tomembers,04/10/87,NESCArchive,Box3;h/wnotes,CRCSecretariatGroup.meeting10/03/88,DTA:S25857-C;
188
dimension”,while theCIIpromotedsectoralstrategiesandthe IFAagricultural
goals.Whencompleted,TomToneroftheFUEdescribeditas“ourlatestblock-
buster”,thefruitof“enormouslyconstructiveand,Ihope,usefulwork”.25
The NESC quickly reachedwhat it termed a “fundamental conclusion” that,
contrarytotheCommissionview,theworkingoftheinternalmarket,onitsown,
would not “narrow the income disparities between regions … let alone bring
aboutconvergence”.Itslogicwouldratherbetoconcentratewealthatthe“core”
at the expense of periphery.Major interventionism, as opposed to themodest
structuralfundingproposed,wouldbeessentialtocounterthismarketlogicand
achieve “convergence”. The Irish experience of EEC membership had been a
“constant attrition” of indigenous industry: “instead of integration stimulating
dominantindigenousfirmstoexploiteconomiesofscaleandthuseliminatethe
tailofhighcostproducers,largerIrishmanufacturerswouldseemtohavebeen
part of the tail eliminated by producers in other countries”. It concludedwith
polite understatement: “part of the rise in unemployment since accession is
attributable…tothetradeeffectsofEECmembership”.26
The absence initially of a credible EEC transfer strategy, and the negative
critique of single market planning by the European Trade Union Congress
(ETUC),haddeterminedICTU’scallfora“No”voteintheSEAreferendum.Union
economistsarguedthatinanopenmarket“foreigndirectinvestmentwilltendto
move more to the centre of Europe in the absence of a European industrial
policy”.Anotherresultofan“unfettered”marketapproachit identifiedwasthe
trendalreadyapparentsincetheliftingofsomecapitalcontrolsofIreland’sforty
biggestcompaniesbeginningtoexpandthroughacquisitionsabroadratherthan
investmentathome.ICTUusedthistoarguethatonlythesemi-statesoffereda
crediblebasisforalarge-scaleindigenous-based“export-ledindustrialisation”.27
But another perspective on freeing capital controls as an opportunity for
Irelandalsoemerged,evenbeforetherapidfreeingofcapitalmovementscame
on the European agenda. It should be stressed how unexpected this policy
departurewas.TheSEA initiallyhad limitedobjectives, and itwasonly in July
25 CouncilMinutes,27/05/88andsubsequentmeetings1988-89,TonertoÓhUiginn,24/10/90,NESC
Archive,Box3;Int.Power26 NESC1989:160,51527 Sweeney1990:204
189
1988 that theECCouncil agreed to anew “DelorsCommittee” to examine and
proposestepstowardsEMU.ReportinginApril1989,itproposedmovingrapidly
toachieveit,though,asRoryO’Donnellnoted,centralbankers“probablysigned
the report believing it was primarily a descriptive document” which member
states would “quietly drop” when its political ramifications became clear.
Instead, theDelorsReport “rapidlyunderwentametamorphosis andwas soon
seen as a prescriptive document”, leading to “a series of remarkable political
decisions”.InJune1989theECCouncildecidedtoproceedtofullEMU,withthe
first stage set for July1990.The contextwas thewhollyunexpected imminent
collapseoftheEasternEuropeanstates.Irelandcametotheforeasasupporter
of theEMUplanwhen itemerged,Haugheyagreeing toallDelors’ “principles”,
particularly free movement of capital and labour. That course was opposed
initiallybyotherECstates,andobserverswereamazedwhenDelorsproposedin
July1989theimmediate“completeliberalisationofcapitaltransactions”.28
A year earlier, in August 1988, before that EC policy turnaround, Liam
ConnellanoftheCII, inoneofthefirstairingsofwhatwouldbecomecoreIrish
strategy, criticised early drafts of RoryO’Donnell’s EEC report for treating the
singlemarketasa“closed”economytowhichIrishcompaniesshouldrelate.The
opportunity,hesaid, lay inthesinglemarket’s function inthewiderprocessof
globalopening.“OneofIreland’smainadvantages”,hecontinued,wasitsunique
positiontoexploittheEuropeanopeningtoestablishitself“asagatewaytothe
SingleMarket forcompanies fromtheUnitedStatesandFarEast”.This radical
idea quickly gained acceptance, and the NESC report would combine the two
perspectives–urgingbothenlargedECbudgetsandregionaltransferstoeffecta
rapid convergence for Irelandwithin the EEC, and a radical opening of capital
marketstoenableIrelandbecomeabaseforglobalcapitalaccessingEurope.To
achievethesetwinaimsIrelandshouldallywiththepro-EMUpowersandadopt
a“vigorouspro-integrationposition”to“enhance”itsadvantage“inthepractical
negotiations”. These conclusions emerging atNESC already in 1988 reinforced
Haugheyincontinuinghis1980-82alliancestrategyatECCouncillevel.29
28 O’Donnell1991:9,1429 CIIinitiative,ConnellanCIItoDanaher,NESC,29/09/88,‘CouncilMeeting16/12/88’,NESCArchive,Box
2;“NESCcombined…”,DanahertoCouncilmembers,n.d.[16/12/88],onchapter‘HistoricalPerformanceandFutureProspects’,NESCArchive,Box3
190
As the CRC had noted, however, the step from NESC proposals to practical
programmes, suchas thePNR,wasessentiallya “political”matter, requiring “a
consciouspoliticalinitiative”to“bridgethegap”betweenNESCstrategyandits
implementation. Even then, while the CRC could administer programme
implementation, impasseswould arise that could only be overcomepolitically.
Thesocialpartnerswereacutelyawareoftheprimacyofpolitics,whichwaswhy
directrecoursetopoliticalpowerwaswrittenintothePNRasadeliverydriver.30
Politicaldynamic:partnershipatthe“politicallevel” Socialpartnershipstruggledtogaintractionforitsnarrative.WhileHaughey’s
monetary policy determination won widespread approval, few, apart from
Brady’slonelyIrishTimeseditorials,recognisedthesocial-productiveor“factor-
mobilisation”rolepartnershipplayed.PreviousFiannaFáil leadershadhadthe
Irish Press to communicate an authoritative narrative, but Haughey faced a
mostlyhostilemediaandhadlosteventheColley-supportingPressin1980.Once
farmore influential than the IrishTimes, thePress, uncoupled from itspolitical
purpose,was rapidly declining and finally shut in 1995. Haughey had even to
convincehisownÁrdFheisofthe“miracletheirgovernmenthadachieved”.31
Fine Gael was bewildered by social partnership and the PDs ideologically
hostile. While this was understandable, Labour’s peculiar resentment of it
weakened ICTU’s bargaining position. Attley’s attempt at Labour’s 1987
conference to explain it as a dynamic alternative to Thatcherism in achieving
recovery,industrialgrowth,tripartiteplanning,andwelfareandstate-enterprise
expansionmetonlywithderisionandcontemptfroma“socialdemocratic”party
peculiarly fixated on ridding Ireland of “Haughey”. Even within the unions,
whose members were more influenced politically by the general media and
political leaders than by internal ICTU discourse, Attley, Carroll, Flynn and
Cassellsstruggled tomaintainsupport for theirstrategy.Whilepartnership for
30 CRCSec.Group.ActionPointsarisingfrom3rdmtg.,18/04/88,DTA:S25857-D;h/wnotes.‘Sec.Group
16/6/88’,DTA:S25857-F;‘Functions,MembershipandWorkProgrammeoftheCRC,SDCandNESC’,SG/70,n.d.[Sept.1988],DTA:S25857-I;h/wnotes,SGmtg.13/12/88,DTA:S25857-M;ÓhUiginntoO’Sulivan,‘CRCSec.Group:preliminarydiscussion,possiblerationalisation’,13/12/88.DTA:S25857-R
31 IrishPress,O’Brien,M.2001;“miracle”,‘SpeechatCáirdeFáilDinner’,04/12/1990,DTA:S25858-Z10
191
the PD right was an affront to market purety, for the Labour left it was a
reprehensible“deal”witha“right-winggovernment”,or“classcollaboration”.32
Although handicapped by this narrative conflict, interest leaders within
partnership understood its ultimately political dynamic. What during the
negotiationswascalledthe“politicallevel”wasintegratedinthePNRintheform
of direct recourse to government or the Taoiseach to resolve impasses and
conflicts. The CII and ICTU constantly lobbied Haughey and his ministers to
advance projects or overrule bureaucratic obstinacy. This differed from
traditional lobbying in that rather than favour-seeking it sought to realise
consensus-agreedmeasures,eveniftheconsensushadsometimesbeenminimal.
AnexamplewasICTU’smeetingswithAherntoadvanceindustrialrelations,
worker participation and other agreed areas of reform, or, more rarely, with
MacSharry, on issues such as the state-owned assurance company, Irish Life,
given the “role of the State in the development of the financial services sector
providedforinthePNR”.InwasfromthistimethatAhern,whohadpreviously
playedasecondary,ancillaryrole,emergedtoprominence,beingnowreferred
tobythemediaas“oneofthechiefarchitectsoftheprogramme”.ICTUusedthis
ever-closer relationship to have departments stalling on PNR commitments to
act,suchasEnvironmentontheissueoflocalauthorityredundancies,whichwas
puttingICTUleaders“underseverepressurefromtheirmembership”.33
Conflicts on such issues, some, though not all, relatively minor, consumed
muchCRCtime,butthiswasoneofitsvitalfunctions.Ultimateresolutionoften
required “political level” intervention.The ITGWUwarnedgovernment that its
inaction over issues in semi-autonomous agencies such as health boards, local
authorities and theOPW,which it had repeatedly raised on the CRC, “posed a
growing problem of credibility for them vis-à-vis their stance on the PNR”.
MacSharryhadOPWredundancynoticesrescindedbuttheywerelaterre-issued
despite the Labour Court concluding they were “probably in breach of that
agreement”.Theunion finallyhad tohave recourse to adirect interventionby
Haugheytohavetheissueresolved.ICTUinsistedin1989thatthepublicservice
32 ICTUADC198833 “roleoftheState…”,ICTUAR:223-4;“chiefarchitects”,IT09/02/90;ArthurO’MalleyD/LabourtoPat
O’SullivanD/Taoiseach,24/05/88,encl.‘ReportofMeetingbetweenM/LabourandICTU…oncommitmentsinthePNR’,20/04/88,DTA:S25857-E
192
staff embargo, whose continuation at Finance’s insistence it said was another
“breachofthewholespirit”ofthePNR,beurgentlyreviewed,leadinginJanuary
1990toasummitwithHaugheywherehefinallyagreedtoendthemeasure.34
A political driver of the systemwas also provided by the Dáil opposition’s
relentlesscriticismsof job lossesdespite the“so-called”PNR.Haughey insisted
that delivery of the 1988 target of 20,000 new jobswas on course, explaining
that the target referred to new jobs, not old ones being shed or overall net
employment.AlthoughthiswassetoutinthetextofthePNR,ICTUwasalarmed
bythenegativediscourse,andrequestedCarrollandFlynntopressonHaughey
theurgencyofprogressingPNRprojectsorotherwiseitwould“lookseriouslyat
itsposition in relation to theProgramme”.Haugheyrespondedbyconveninga
highlypublicised“summit”betweenhiscorecabinetandthefullICTUExecutive,
whichconcludedwithaformal“agreement”topublishanupdateonprogressin
PNR jobs initiatives and to appoint a “designated” official to “co-ordinate
development projects” in the semi-states and report to the CRC. Following
ministerialinterventions,withintwoweeksstalledinitiativeswerere-activated,
especially in the semi-states, and, following several drafts, a report satisfying
ICTU(Nevin:“exactlywhatwewanted”),waspublished.Afurthermeetingand
“Jointstatement”followed,statingthePNRwasdeliveringonitscommitments.35
A furtherpolitical dimensionwasprovidedby internalpressures inpartner
organisations. ICTUat its1988annualconferenceonlynarrowlyheadedoffan
attempt to force the Executive to hold a special conference “with a view to
withdrawaliftheProgramme’stargetsandcommitmentsarenotfulfilled”.Attley
argued that job creation, while slow, was on course, and “for our State
34 ‘ReportofMeetingbetweenM/LabourandICTU…oncommitmentsinthePNR’andCRC,Summary
Reportof6thmtg.,26/05/88’,DTA:S25857-E;D/Taoiseach,‘Redundancies/Short-timeworkinginOPW’,11/03/88,DTA:S25857-C;D/Taoiseach,note‘reAOB_’,n.d.[June1988],DTA:S25857-F;Browne,ITGWUtoHaughey,20/10/88,DTA:S25857-J;D/Health:‘RemunerationofStudentNurses’,NoteforCRC,21/06/88;D/Finance,‘Point4ofICTUdocument–PublicService’,n.d.[Dec.89],DTA:S25857-Z;O’SullivantoO’Gorman,D/Finance,03/05/89,DTA:S25858-S;CRC,SummaryReportsandh/wnotesof14th–20thmeetings,April1988-Sept.1989,DTA:S25857-RtoY;CRCSGmtg.02/05/89(h/wnotes),DTA:S25857-S;‘’BriefingMaterialforMeetingbetweenTaoiseachandM/Finance,I&CandLabourwithrepsECofICTU’,23/01/90,‘PositioninRelationtoICTU30PointPlan’andh/wreportofmeetingICTU-Government,23/01/90,D/Finance,DTA:S25862-F
35 On“newjobs”,HaugheyinDáil02and09/03/88;ICTU“concern”,ICTUECmtg.20/04/88,item1419;Haughey-ICTUmeeting,‘JointGovernment-ICTUstatement’,18/05/88,GIS:D/Taoiseach,CRCSummaryReportof6thmtg.,held26/05/88,DTA:S25857-E,InternalD/Taoiseachh/wnote,‘reICTUdocument’,26/5/88,andNevininInternalD/Taoiseachh/wnote,‘reICTUdocument’,26/5/88,DTA:S25870-C;‘JointGovernment-ICTUstatementonjobcreationdevelopmentsundertheProgrammeforNationalrecovery’,27/05/88,withattached‘ProgressontheProvisionofJobs’,27/05/88,GIS:D/Taoiseach
193
companies, we have started the process of stopping their run-down, and
returningthemtowhattheywereintendedtobe,vehiclesforjobcreation”.The
alternativetoa“negotiated”recoverywasconfrontation,theexclusionofunions
andthedismantlingofwelfare,aswashappeninginBritain.Buthewontimeby
concedingthattheExecutivehad“warnedGovernmentthatifsufficientprogress
wasnotmadeinparticularareas”,itwouldholdaSpecialConferencewherethe
Executivewould“recommend…thatwewithdrawfromthisProgramme”.36
ICTUcontinuallyemployedthisthreatofamembershiprevolt,Nevinwarning
HaugheyofCongress’sdeterminationtoopposeprivatisationonthatbasis.Most
importantly, anti-PNR sentiment was strong even in the ITGWU, causing Ed
Browne to remindHaughey that assurances the previous year on ending local
authority redundancies had been “of major significance in determining our
members’votetoaccepttheProgramme”andCarrollwritingtoÓhUiginnthatit
had been “no easy job for the platform to convince [the recent ITGWU]
Conference of the bona fides of all concerned”. “Early and positive indications
that thePNR isworkingand isnowgoing todeliver”wereneeded,andamid-
termreviewwouldbea“majorsteptothisend”.ÓhUiginnusedthispressureto
forcedepartmentalactionandconvinceHaugheytoagreetoafull-scalereview.37
Onthebusinessside,CII’smembershipacceptedtheultimatepotentialofthe
PNR,anditsleaderswereunderlittleapparentpressurefrommembers.Butthe
FUE remained less engaged and more single-mindedly focused on defending
employerinterests.ThisFUE-CIIdivergencewasreplicatedinthefarmingsector,
where smaller non-negotiating partners such as Macra and the ICOS engaged
activelyontheCRC,especiallyonruraldevelopmentandenterpriseplans,while
the IFA, underpressure from the ICMSAoutside the system, remained itsbête
noire, engaging little other than to oppose threats of tax or social insurance
reforms or the strengthening of market dynamics in agriculture. When Tom
Clintonwas elected IFA President, joining the CRC, Ó hUiginn sent Haughey a
gloomy profile, concluding that Clinton would continue the IFA’s defensive
stance. Clintondidn’t disappoint and intervenedon theCRCmainly to seek an36 ICTUADC1988:97-9,11337 NevinICTUtoHaughey,13/09/88,DTA:S25858-M;BrowneatCRC,SummaryReportof8thmtg.,
08/09/88’andh/wnote,‘CRCmeeting8Sept1988’,DTA:S25857-H;BrownetoHaughey,20/10/88,DTA:S25857-J;Carroll,toÓhUiginn,27/09/88,DTA:S25858-K;Teahonh/wnoteofSGmeeting,05/10/88,DTA:S25857-I
194
expansionofCAP,despiteAgriculturewarningthatthiswasalready“atitslimit”.
Confrontation over farmer taxation dominated the 1989 budget, Ó hUiginn
tellingAlbertReynolds,thenewMinisterforFinance,thatfarmlobbyresistance
meantonlyaslow,incrementalapproachtofarmertaxationwouldbepossible.38
At“bilateral”meetingswiththeIFA,Haugheycontinuedtopromotehisideas
foracommercialisedagriculture,buttheIFA,facingsimilarmemberscepticism
as the ICTU, spoke only of tax, support schemes and CAP. In response to
Department of Agriculture requests for proposals to expand the cattle herd to
overcome shortages inhibiting expansion of the beef industry – a PNR target
sector–theIFAsuggestedthat“ataxincentivetodairyfarmers”toproducebeef
calves “might be appropriate”. To keep farmers on board, government had to
slow,thoughnotstop,farmertaxreform.Whilesecuringtheprincipleoffarmer
socialinsurancecontributionsinthePNR,andannouncingamorethandoubling
ofthefarmertaxyieldto£80min1988,Haugheylaterhadtoadmititwasaslow
process, with that figure being “inclusive of the [tax] amnesty” and the 1989
intakeexpectedtobejustoverthe1987figureof£36m.39
The “political level” partnership dynamic was vital to both maintaining or
revivingmomentuminthePNRandaddressingparticulargrievancesanimating
partners outside the policy consensus. If lobbying is the bread and butter of
politics, in Haughey’s social partnership it had the added role of a corrective
levertoimpassesinthesystem’sadministrativeandeconomicdrivers.
PartnershipasmobilisationofTotalFactorProductivity Socialpartnershipwasitselfaneconomicdriver.ThePNRwaspredicatedon
economic success, and the collaboration contributed at many levels to what
economistscall“TotalFactorProductivity”(TFP), includingthrough“intangible
capital”,factorsoftenmorecriticaltosuccessthanpurelyfiscalmeasures.40
38 InterviewswithPower,O’Sullivan;‘RowoverPRSIReport’,IrishFarmers’Journal,09/01/88;‘Woods
ReceivesPensionBoard’sReportonExtensionofSocialInsurancetotheSelf-employed’,14/01/88,GIS:D/SW;J.T[=Travers].‘MeetingbetweenAnTaoiseachandTomClinton,PresidentdesignateofIFA’,06/01/88:h/wmemo–“forfile”.DTA:S25858-D;CRC,SummaryReportof6thmtg.,26/05/88,andD/A&F,‘BeefCowHerd.MaterialforReplytoCRC’25/05/88,DTA:S25857-E;ÓhUiginntoAlbertReynolds,Min/I&C,28/02/89,andtoÓMaryO’Rourke,M/Education,31/01/90,DTA:S25857-R
39 ‘MeetingoftheTaoiseach,M/FandM/A&FwithrepsofIFA,ICOSandMacranaFeirmeunderthePNR’,13/11/87,DTA:S25857-B;‘SpecificMeasures….’,15/02/88,DTA:S25857-B;HaugheyinDáil,02/03/88;‘CRC:SummaryReportof8thmtg.’,08/09/88’,DTA:S25857-H;HaugheyinDáil,01/02/89
40 KleinandVentura2019
195
Economic policy was tightly controlled by Haughey’s inner cabinet, a
triumvirate of gifted ministers – MacSharry (Finance), Ahern (Labour) and
Reynolds(IndustryandCommerce).ReynoldswastobepromotedtoFinancein
January 1989when, as Haughey had agreed, MacSharry, having overseen two
budgets to secure the decisive monetary adjustment, would move to the EC
Commissioner role. Other ministers, senior or junior, were kept far from the
leversoflittlemorethanpettypatronage,orbroughtintolinewhentheycaused
problems,asinO’Kennedy’sclimb-downoverhisTeagascboardappointments.41
Haughey saw government’s primary role as managing a credible monetary
adjustment and encouraged the social partners to be pro-active in economic
planning.TheCRC relentlessly studied industrialdata, analysing successesand
failures. Its meeting of 26 October 1988, which would mark a turning point,
focused on job creation, with members interrogating officials from across
departments.ThedocumentationÓhUiginnensuredwasprovideddetailed job
gainsandlossesbysectorandregion,withtheIDA’sPádraicWhitereportingon
these and “pipelineprojects”. Industry andCommercewas adamant thatnew-
jobtargetswerebeingmetandthatthe20,000targetfor1988wouldjustabout
bedelivered.Butdemographic factorsmeant thatunemploymentwouldbarely
fall. The CRCwas as determined to highlight success, even accepting casuistry
such as I&C’s explanation that target achievement would involve combining
13,000actualnewjobsand7,000“recoveriesofjobslost”.That“old”jobswould
continue to be lost in declining sectorswas accepted. All partners agreed to a
“JointStatement”confirmingthatthePNRwasdeliveringasplanned.42
ICTU urged that the PNR successes be publicised, but employers refrained
fromextollingpartnershipand initiallyopposeda JointStatement.ButwhenÓ
hUiginn stressed the need to counter relentless media negativity, which was
dampeninginvestorconfidence,theFUEconcededtheneedto“getthemessage
across” that there was “lots of good news”. Agreeing the media was “not
presentingaveryfavourablepictureontheprogress…achieved”,FUEleaderJim
41 SeeChapter642 ‘StatementbyCRConProgressinJobCreation,revisedDraft’24/11/88,andD/I&C,’20,000Targetfor
Manufacturing/InternationalServices-ProgressReport‘,Aug.1988,DTA:S25857-G;IDA,‘UpdatedProgressonProvisionofJobsunderPNR’,21/10/88,DTA:S25857-J;CRC,SummaryReportof9thmtg.,26/10/88,‘ReviewofProgress…andevaluationoftheirimpactontheobjectivesoftheprogramme’,21/10/88,andPadraicWhite,IDA,‘Presentation.PNR.CRC.October1988’,DTA:S25857J-2
196
O’Brienagreed to sign theStatement.AnotherFUEofficial afterwards toldThe
IrishTimes:“Todayclearedallthehotair.Therewasageneralacceptanceofthe
figures…[and]solidevidencethatnewjobsaredeveloping…Thescalemightbe
modest but the trickle was gaining momentum”. Even farmers’ groups were
enthused, with IFA obstinacymellowing as farming enjoyed its best year in a
decade,outputexceeding£3bnforthefirsttimeandincomesrising17percent.
SeánDorgan,I&CDepartmentsecretary,statedsimply:“It’sworking”.43
A particular concern of ICTU was the role of state industries, where it
organised88,000workers,themostpowerfulforceinthemovementapartfrom
the public services. In 1987 it hadmade the semi-states itsmain issue in the
election, circulating 100,000 copies of a leaflet opposing privatisation and
extolling the potential of the semi-states. Haughey had assured it of his
commitment to an “efficient and effective semi-State Sector as a major
instrumentofeconomicdevelopment”.HecitedtheAerLingusengine-overhaul
subsidiary,Airmotive,whichhehadopenedin1981,as“anexampleofthetype
ofdevelopmentwehadinmind”.DavidBegg,leaderofthetelecomunionCWU,
reflectedtheviewofmanypublicsectortradeunionistswhenhedeclared:“we
favouracentrally-plannedandcontrolledeconomyrelyingheavilyonState-led
investmenttothesemi-StateCompaniestocreatejobs”.OfficialICTUpolicywas
more nuanced and supported sectoral expansion through joint ventures with
privatecapital,anaimwhoseinclusioninthePNRitsecured.44
ICTUwasnot thealone inadvocating for state industries,with thebusiness
group,theCII,whichhadmostsuchcompaniesasmembers,championingtheir
expansionwhileseekingstricterperformancecriteriaandjointventures,aswell
ascallingforincreasedsub-contactingandoutsourcingofpublicservices.45
When negotiating the PNR, Haughey boosted his credibility with ICTU by
convening semi-state executives to impress on them “the importance which
43 ‘Jobs:ICTUkeepsupthepressure’,IrishIndependent,27/10/88;‘’14,500newjobscreated’,IrishTimes
27/10/88;‘Vigorousjobcreationprogrammeneeded’,CorkExaminer,27/10/88;‘StatementbyMichaelO’Kennedy…launchingtheAnnualReviewfortheAgricultureandFoodIndustry’,18/01/89,GIS:D/A&F:CRC,SummaryReport9thmtg.,26/10/88andh/wnotesCRC26/10/88,DTA:S25857J-2
44 O’Dowd,J.ed.1989:51;ICTU1987;ICTUECmtg.18/02/87;HaugheytoCassells,20/01/1987,DTA:S25862-F;BeggatICTUADC1988:117;PNRVandAppendix,‘State-SponsoredBodies–Proposals’
45 ‘TheComplementaryRolesofPublicandPrivateEnterprise’,CIINewsletter,13/04/82;‘GrowthIndustrieswithEmploymentPotential,’CII8thAnnualCareersinIndustryConference,19/09/86,PowerPapers;‘ParticipationinStateEnterprise’,CIINewsletter,24/02/87;‘SwedishExamplebacksStateParticipationCase’,CIINewsletter,28/04/87;Power2009:93
197
Government attached to the developmental potential of the State-sponsored
sector”andseekingproposalsforexpansionthroughjointventureswithprivate
capital to “contribute to theProgramme”.Heestablisheda “WorkingGroup”of
semi-state chiefs to report on the sector’s “developmental potential”. Many
specificprojectsresultingfromthisprocesswereincludedinthePNRandfrom
early1988,assistedbytheIDA,manywereoperationalised.ICTU’sstubbornness
borefruit,withAerLingus,alreadyIreland’slargestcompanybothincapitaland
employmentterms,outperformingallprivatesectorcompaniesin1988.46
Akeyfactor in1988-89wasadecline indisputesandtheachievingofwage
certainty and “industrial peace”. That pay disputes rarely surfacedwas due to
howthePNRwasstructuredandotherfactors,examinedinchapters8-10.The
PNR set wages and disallowed strikes over “cost-increasing” claims. Although
moststrikesinthe1980shadbeeninthepublicsector,thePNRgaveemployers
wage certainty andprevented awage-inflation “spiral”. The role of theLabour
Court and acceptance of its application of PNR termswas critical. Compliance
withthePNRacrossindustry,byboth“sides”,wasalmosttotal,andstrikedays
plummetedspectacularly in1988 toa tenthof the1979 figure,and in1989 to
“theirlowestlevelsincetheStatewasfounded”,asAhernputit.Thefewstrikes
thatdidoccurconcernedredundancytermsorchangedworkpractices.47
Ireland’s newfound “industrial peace” made the PNR the talk of the global
businessworldanda“keyfactor”enablingtheIDAsecurethefirstgrowthinFDI
since 1980. This was intangible capital of major value, enabling partners and
governmenttoconsiderafundamentalreformofindustrialrelationssuchashad
eluded them for decades. The PNR agreed “discussions” to create “a better
framework for collective bargaining and dispute settlement” conducive to
“employment-generatinginvestment”.Ahern,eagertomakehismark,usedthis
modestphrasetoinitiateamajorreform.Hestartedthe“discussions”asthePNR
46 ‘StatementonMeetingofTaoiseachwithChiefExecutivesofState-sponsoredbodies’,22/06/87,GIS:
D/Taoiseach;‘AideMemoire.MeetingbetweenTaoiseachandConsultativeGroupofChiefExecutivesofStateAgencies,22June1987:MainConclusions’,DTA:S25857-E;‘DevelopmentProposals–MechanicalEngineeringSector.NotesarisingfrommeetingatIDAofficeson15February1988’,S25857-C;J.Lloyd,IDA’:“EngineeringProposalforSSBsisgoingwell…”,n.d.[April1988],DTA:S25858-G;MalcolmTaylor,D/T&T,toO’Sullivan,D/Taois.,07/03/88:reAerLingus-Aeroflottalks,DTA:S25858-F;Sweeney1990
47 ‘Strikes,RedundanciesandUnemploymentfellin1989–AnnualReportoftheD/L’,30/03/90,GIS:D/Labour;CRC,‘ProgressReport.PreliminaryDraft’,Nov.1989,DTA:S25857-Y;D/Lab.‘BriefingforT’smeetingwiththeICTUon24Nov.’,DTA:S25862-D;Sweeney1990:26;‘SpeechbyMrBertieAhern…attheformalannouncementoftheFrameworkAgreementonHoursofWork’,17/02/89,GIS:D/Labour
198
wasstillbeingnegotiated,andinFebruary1988theIrishPress,reportingaBillin
preparationforautumn,statedthat“hisapproachwouldbecompletelydifferent
tothatoftheBritishGovernment-Theiraimwastosmashtheunions:hiswasto
strengthen thepositionofunionexecutives”.Thebillwasnotpresented to the
DáilasemployersinitiallyrejecteditandbothFineGaelandLabourthreatened
to oppose some of its provisions, for opposite reasons. Though not legislated
until 1990, its proposals curbing picketing, strengthening union authority and
instituting a ‘Labour Relations Commission’ as a powerful conciliation tool,
signalled thedeterminationof government to establish anorthEuropean-style
industrial relations system.The1990 IndustrialRelationsActwasunthinkable
withoutsocialpartnership,andprovidedafurthereconomicgrowthdriver.48
Through its role in planning, co-determining semi-state development,
deferringsocialandwagecosts,calmingindustrialrelationsandprovidingwage
certainty,socialpartnershipcontributedkeyTFPfactors toeconomicrecovery.
Haughey’sattempttoexplainthistotheDáilwasmetwithoppositionderision,
Brutonscoffingatthis“programmeofso-callednationalrecovery”anddeRossa
demanding to know following the historic October 1988 CRC meeting if “the
questionofdisadvantagedpeopleinoursociety[hadbeen]raisedbyanyofthe
socialpartners”.Partnershipwasstillabesiegedconcept.49
Measuringtheeconomicroleoftotalfactorproductivityiscomplicatedbythe
sometimes protracted and complex nature of such “intangibles” as “labour
quality”,oneoftheelementsofithighlightedbyKleinandVentura.Thedelayed
impact of the introduction of free secondary education in the late 1960s –
recognized already in the 1990s - is a case in point. This had effectively been
forced on government by Donogh O’Malley’s surprise announcement in 1966,
though in coordination with Lemass, during the absence abroad of the then
Finance Minister, Jack Lynch and against the advice of an “appalled” T.K.
Whitaker, who in what Carl O’Brien called a “scalding memo” to Lemass had
“ragedagainsttheproposal”.Whilesecondaryschoolcompletiongrewbyleaps
and bounds, it was still only 60% by 1979. A network of regional technical
48 InterviewswithWhiteandAhern;PNR,SectionVI/5;‘DiscussionDocument’,30/11/87,GIS:D/Labour;
TheIrishPress04/01/88;CRC,‘SpecificMeasures…’,15/02/88,item125,DTA:S25857-B;Dáildebates,10/03/88;‘Minister’sProposals:MixedReactionsLikely’,IRNReport,25/02/88
49 Dáil,08and26/10,08/11/88
199
collegesinitiatedundertheThirdProgramme,alongwithinitiativeslikethetwo
NIHEs,providedanexpandingtertiaryskillproductionbase,butthesetooonly
cametofruitionbythe1980s.Thecomingtomaturityofthefirstgenerationto
widelybenefitfromthiseducationalwideningaccountedformuchofthe“labour
quality”aspectinKleinandVentura’sstudy.Accessto3rdleveleducationplaces
wasstillrestrictedinthe1980s,butthePNRinauguratedafurtherexpansionof
provisionand,asimportantly,ofaccessthatwouldwidentheskillbasegreatly.
Education,however,wasonlyone,ifamajorTFPfactor.50
Other TFP factors provided through social partnership included a range of
“intangible capital” inputs such as co-ordinated long-term planning across
departments and new support programmes in welfare, education and social
policy. These delivered value growth in human resource factors critical to the
reconfiguredhigher-valueeconomicmodelbeingpursued,especiallyexpanding
thelabourforceparticipationofwomenandpreviouslyexcludedsocialgroups.
Analysing the 1980-2005 period in terms of TFP effect, Klein and Ventura
showthat,contrarytowidespreadassumptions,onlyasubordinateproportion
of23%ofoutputgrowthwasattributabletobusinesstaxchangesalone:
Furthercontrollingforexpenditurecuts,theyfindthecombinedimpactoftax
andstateexpenditurechangesin1987-2005risingonlymarginally,to27%.But
whenTFP factors from1988are included–especiallycapitalopeningpolicy -
thesealoneaccountfor76percentofoutputgrowth,i.e.thegreatbulkofit:50 “TFP”,KleinandVentura2019;“recognisedinthe1990s”,Kennedy,K.2001;“freeeducation”Chambers
2015:176-78;“appalled”,DesO’Malley,IrishIndependent,05/01/17;“scaldingmemo”,CarolO’BrienquotedinO’Riordan2019,Pt.7
200
Inotherwords, “intangiblecapital”andpolicymatter,muchof itenabledby
social partnership, which was thus not only an important but arguably a
decisivefactorintheeconomictake-off.Asasetofco-ordinatedpolicyandinput
changes, partnership represented a significant policy paradigm shift in itself.
KleinandVenturaalsocontendthatevenwithoutcapitalopening,theotherTFP
factors added in 1988-89 –which this thesis groups as the social partnership
effect –would, in conjunctionwith the tax/consumption policy changes, have
causedsignificantGDPgrowthanyway,of55percent,i.e.halftheextraordinary
growthactuallyachieved.Thus,evenwithouttheopportunityofglobalization,a
less dramatic but still substantial economic improvement would have been
achievedduetothe1987-89policydepartures,includingsocialpartnership.
But the optimism of the CRC meeting of 26 October 1988, despite the
continuednegativityofthemediaandDáilopposition,asohadafurtherbasis-a
breakthroughachievedthatverysamedayinBrusselswhich,asHaugheywould
laterdescribeit,wouldtaketherecoveryplanto“anewplaneofdevelopment”.
LeveragingEurope:the“NationalDevelopmentPlan”(NDP)
ThenatureofthePNRandofthesocialpartnershipstructureitcreatedwould
change dramatically in 1989. Its interactionwith new opportunities emerging
throughEuropeanpolicyexemplifiedtheflexibilityofthePNRasapolicysystem.
ThePNR’seconomicplanwasfocusedinitiallyonnational-economicdrivers.
Irishlivingstandardswerejustover60percentofthethenEEC-12averageand
the “EC Dimension” of the PNR was notably cautious, committing only to
implement the SEA, defend CAP, protect the indirect tax base in EC
201
harmonisation, and seek an expanded EC education programme. But it also –
decisively–agreedtofullysupportthe“DelorsPlan”.Thatconsensusonthiswas
achievedwasasignificantfeatinitself.Thatstatementwouldformthebasisfora
farmore ambitious policy departure asHaughey aligned Ireland, and the PNR
partners,withonesideinanopeningfundamentalEuropeanpolicyconflict.
The“DelorsPlan”,publishedinFebruary1987,wasaCommissionproposalto
completetheinternalmarketby1992.ItsoughtanincreasedECbudget-highly
contested by net-contributor states - to double structural and social funding
(ERDF/ESF)tooffsetthesinglemarket’scentripetaleconomicdynamicthrough
a “convergence” process by funding regional/social infrastructure in “less
developed regions”. Irish Commissioner Peter Sutherland sided with the free
marketers in opposing “anti-competitive” tendencies and social policy
“impositions”intheDelorsPlan.Butevenbeforetheplanappeared,Haughey,in
opposition, criticised FitzGerald for supporting a “one sidedly … monetarist”
single market project, demanding strong regional and social investment
programmes.Europeantradeunions,includingtheICTU,sharedthisview.51
TheECCouncil,aftermuchwrangling,withtheDepartmentofForeignAffairs
pessimistic of the outcome, finally adopted a diluted versionofDelors’ plan in
February1988, fivemonthsafter thePNRwassigned.Thecontentof theplan,
managedby the Commission and involving “multi-annual”-funded “operational
programmes” (O/Ps) - a novelty for Irelandwith its strictly annualisedbudget
tradition-–wastobeclarifiedduring1988,butmemberstatesweretoprepare
proposals, for submission, negotiation and eventual sign-off by early 1989.
Preciseprogrammeswouldthenbeagreed,andtransfersbeginin1990.52
WhentheDelorsPlanfirstappeared,justweeksbeforehebecameTaoiseach,
Haughey had grasped its potential: “The far-reaching significance of that Plan
andthehistoricopportunityitpresented…toaccelerateoureconomicandsocial
developmentwasimmediatelyobvious”.AthisfirstEuropeanCouncil inMarch
1987, which was still divided over the plan, he unequivocally backed Delors’
proposals,sayingasuccessfulsinglemarketdependedon“greatereconomicand
51 ECCommission1987b;Sutherland1999;Dølvik1999:24-7;ICTUAR198752 OnD/FA“pessimistic”,F.M.Hayes,Dep.Secretary,D/ForeignAffairs,toJ.Travers,D/Taoiseach,
17/12/87,DTA:S25858-C
202
social cohesion”. Helmut Kohl, in discussion with Haughey, admitted that
Germanyrealisedthat“thelatter[was]anecessaryconditionoftheformer”.53
Structuralfundinghadhithertoprovidedaminor,ifgrowing,contributionto
Ireland’sPublicCapitalProgramme(PCP).In1986theNESCdidnotyetforesee
itplayingmorethanaminorroleindevelopment.ERDFhadincreasedfromjust
1.6 per cent of the PCP in 1976 to a significant but still ancillary 10 per cent
(£239m) in 1988, the last pre-Delors allocation. Finance prided itself on how
“Ireland has consistently been one of the most successful Member States in
takingup themoneyavailable fromtheERDF”.ButunderDelors,whichwould
more than double Ireland’s allocation to 30+ per cent of the PCP given its
weightingto“lessdeveloped”regions,FinancebelievedERDFwouldhenceforth
drivethePCP,andurgedcredibleprojectstoensurefulldrawdown.54
Haugheyhada radical idea for combining theusuallydiffuseERDF funding,
ingenuously proposing Ireland apply as a single region, with seven “sub-
regional”programmes,butframedasawholeasa“NationalDevelopmentPlan”
(NDP).He further proposed, in linewithDelors’ thinking, that it be developed
involving local interests and agencies, and include the private sector.55 The
government intention, he told the Dáil, was “to avail of the opportunity to
formulate a comprehensive investment plan… to overcome the economic and
socialdeficienciesthatareholdingusback”.Allplanningwastobealignedand
integratedwiththePNRandsocialpartnershipmadecentraltoit.Thisframing
ofdisparatestructural fundprojectsasa“nationalplan”wasutterlynovel,and
greatly enthused Delors. Haughey described the NDP as an “extension” of the
PNR, “consistent with its objectives” and bringing it to a “new plane of
development”. He established a “Committee on EC Coordination” of senior
officialsandCRC“socialpartners”toprepareforthesinglemarket.56
The mandarins at Finance were appalled at Haughey’s extending social
partnershipoverwhattheysawastheirpreserve,warningTeahontodisabuse
53 HaugheyinDáil,01/02/89and23/03/8754 NESC1986;D/Finance,‘FutureDevelopmentofERDF’,14/03/88,S25857-C55 ECCommission1987b;W.KirwintoPatO’SullivanD/Taoiseach,23/03/88attaching‘Programmesfor
E.C.Funding’and‘RevisedDraftFrameworkRegulationissued16/03/88,CRC39,DTA:S25857C;O’Connell,D/Env.,toHelenKehoe,D/Taoiseach,12/05/88,DTA:S25857-E
56 HaugheyinDáil,12/04/89;CRC,‘SummaryReport5thmtg.,’28/04/88’,S25857-D.CRCmembersoftheJointCommitteewereConnellan(CII),Cassells(ICTU),O’Brien(FUE),Hennessy(CIF),Collier(Macra),Whelan(ICOS)(D/Taoiseach,‘PreparationforCompletionofEECInternalMarket‘,DTA:S25857-E)
203
theCRCoftheideathat itwouldplayasubstantialrole:“nodecisionshaveyet
been takenonhowtheoverallnationaldevelopmentplan…willbeprepared”.
ToavoidantagonisingFinance,ÓhUiginntoldtheCRCitmightatbestexpectto
beconsulted,andinstructedofficialstorefrainfrommentioningasocialpartner
role. But he advised government that itwould be “difficult to see howwe can
avoidconsultingCRCbodiesonanyplaninvolvinganevolutionofthePNR”.57
FollowingHaughey’sstatementofhisintentiontointegratetheNDPandPNR,
theCRC,seeingitselfas“theappropriateforuminwhichtoconsidertheoverall
…plan”,nowdemandeda role indrafting it. In July1988governmentordered
that structures representing social partners and local interests be formed to
advise and assist the drafting of the “sub-regional” plans, and that the overall
NDP on completion be submitted to the CRC for approval before finalisation.
Finance, as yet, would retain the chairmanship of the planning groups,
responsibilityforcoordination,and“afinalsay”onprogrammespecifics.58
A first draft NDPwas produced, following a similar format to the PNR and
alignedwith it. Its aimwas to stimulate growth locally and nationally, reduce
unemployment and “raise per capita incomes towards average Community
levels”. Additional training and labourmarket programmeswould be financed
through the European Social Fund (ESF). Haughey urged CRC partners to
mobilise their local structures in the planning process, which they did. This
participative planningwas unique in Europe, and so impressedDelors that he
promotedittoothercountriesasamodeltoemulate.59
TheCRCmeetingof26October1988which,asdescribedinthe lastsection,
hadtrawledthroughgovernmentandIDAreports,confirmedtheeconomyhad
“turned a corner” and publicly endorsed Dorgan’s view of the PNR (“it’s
57 TuttytoPTeahon,20/04/88,S25857-D;ÓhUiginninh/wnotesformins.,4thCRCmeeting24/03/88,
DTA:S25857-C;W.KirwantoTeahon,‘PaperformeetingoftheCRC28April’,26/04/88,S25857-D58 CRC,‘SummaryReportof6thmtg.’,26/05/88,DTA:S25857-E;h/wnotes,SecretariatGroup,‘SGCRC
29/7/88’,DTA:S25857-F;GovernmentdecisioninDermotNally,RunaíanRialtais,toanRunaíPríobháideach/AntAireAirgeadais,26/07/88,DTA:S25857-F;D/Finance,‘Confidential-BackgroundBriefingforSRCSecretariatMeeting’,24/8/88,andD/Finance,‘NoteforCRCSecretariat:ConsultativeProcessonRegionalProgrammesforECFunding’,26/8/88,DTA:S25857-G;NallytoPrivateSec.,M/Finance23/09/88,,attachingD/Finance‘AideMemoire’agreedbygovernment,DTA:S25857-
59 D/Finance,‘OutlineofNationalDevelopmentPlan’,July1988,DTA:S25857-G;onHaugheyandlocalsocialpartnerengagement,h/wnoteofmeeting,SG,05/10/88,DTA:S25857-Iand‘ActionPoints…fromSGmtg.of5October’,12/10/88,DTA:S25857-J;‘ECStructuralFunds:DiscussionatCRCSec.Group,5Oct_1988’(internalD/Taoiseachuseonly);‘StatementbytheTaoiseachonNESCReportIrelandintheEuropeanCommunity,Dáil,24/10/89
204
working”),alsoreviewedpreparationsfortheNDP.ÓhUiginntolditofamajor
breakthrough: civil servants who had just met Delors had been told how the
Commissionwas “very impressed”with thePNRandwould fund theproposed
NDPsectoralplansalignedwithitwitha£700mpackage.Furthermore,Brussels
hadagreedanextraprogrammeto“createjobsinemploymentblackspots”.60
Drafting theNDP brought the PNR, inHaughey’swords, to a “new plane of
development”,withtheNESCtaskedwithdevelopingEuropeanstrategy,theCRC
givenoversightoftheNDP,andlocalsocialpartnersintegratedintoplanningits
“sub-regionalprogrammes”.HaugheydescribedtheNDP’sasaimedtoovercome
the“costlyimpedimentofourperipherallocation”andthewideinvolvementin
itsplanning“generat[ing]agreatcountry-wideeffort…insupportofthisplan”.
Speaking for him in the Dáil, Lenihan said the approach would “become an
integralpartoftheState’swholeeconomicandsocialplanninginthefuture”.61
PartnershipandtheHaughey-Delors“alliance” TheOctober1988breakthroughwhenBrusselsendorsedIreland’s“NDP”was
the result of a deliberate strategy. On the EC CouncilHaughey had nurtured a
rapportwithFrancoisMitterand,whohehadhostedonaprivatevisittoIreland
in March, and successfully pressed Ireland’s case on Helmut Kohl. Framing
Ireland’s ERDF/ESF programme as a “National Plan” enthused Delors. These
threeleadersweredeterminedtoprogressECintegrationagainstoppositionled
byBritain,withKohlandMitterandsealingtheirallianceatasymbolicrenewal
ofthe1963DeGaulle/AdenauerÉlyséeTreaty.Thatcher’sfamousBrugesspeech
opposinga“newstate…imposedataEuropeanlevel"hadbeenmadejustweeks
earlier,inSeptember,andboththeCommissionandtheFranco-Germanleaders
neededallies.HaugheyassuredthemthatIrelandwouldbeoneofthese.62
Haughey’s enthusiasm for Europe had always gone beyond the generalised
small-state/Commissionconfluenceof interestoftenascribedtoIrishpolicy.As
Minister for Finance in 1967 he had been involved in the renewed EEC
application, during which he was present at de Gaulle’s reiteration of his
60 CRC,‘SummaryReportof9thmtg.’,26/10/88,DTA:S25857J-2;‘14,500newjobs,IrishTimes,27/10/8861 Haughey,‘Speechatlaunchof“NDP1989-1993’,31/03/89,GIS:D/Taoiseach;Lenihan,Dáil26/10/8862 ÉlyséeTreaty,…;Thatcher,‘SpeechtotheCollegeofEurope’,20/09/88,
https://www.margaretthatcher.org/document/107332
205
opposition to Britishmembership, and inDublin argued in favour of pursuing
membershipregardlessofBritain.AsTaoiseachin1979-82hehadalignedwith
Germany, agreeing at ameetingwith Chancellor Schmidt that rapid European
integrationwasanexistentialnecessity.OnagainbecomingTaoiseach in1987,
and against considerable opposition from Foreign Affairs, hemoved European
policy to theDepartmentof theTaoiseach,appointingMáireGeogheganQuinn,
whowouldlaterbecomeIreland’sfirstwomancabinetmembersinceMarkievicz,
toco-ordinateEuropeanpolicy.AssoonastheSEAwaspassed,hemandatedthe
NESCtodraftaEuropeanstrategyand,inaremarkablefeatgivensocialpartner
divergence over the SEA six months earlier, succeeded in having a consensus
integrationistpositiononthe“ECDimension”includedinthePNR.63
Haughey personally led European strategy, launching a “new departure in
Irishgovernmentalorganisation”byestablishinga“CommitteeofMinistersand
Secretaries”,chairedbyhimself,to“takecontrolanddirectpreparations”forthe
SingleMarket.FollowingBrussels’approvaloftheNDP,hepresenteditasaplan
jointly developed through the “unique” Dublin-Brussels “partnership”. Delors
reciprocated and, in Dublin to “cement and deepen” what he called the new
“partnership between the European Commission and the Irish Government”,
issuedanunprecedentedjointstatementwithHaugheydescribingthis“historic
partnership” as based on a common will to both “integrate European and
nationalpoliciesinacommonplantodeveloptheIrisheconomy”,andprogress
European “economic and social cohesion”. “By our actions, the policies of the
Communityand thoseof the Irishnationwillbe fullyandeffectivelycombined
and integrated”. Ireland would “fully coordinate its policies with those of the
Communitytocreateanefficientandcompetitive[Irish]economy”.Itwasagreed
thatHaughey’sECCommitteecollaboratewithaCommission“taskforceheaded
byPresidentDelors”, thatthetwowould“meetregularly”toensurepolicywas
“fullyco-ordinated”onboththeNDPandEuropeanintegration,andthatIreland
wouldsupportrapidfreeingofcapitalmovements.DelorsalsoassuredHaughey
63 OnIreland/Commissionrelationship,FitzGerald1991andBrennan2008;onHaughey,France,Germany
andEECmembership,seechapter2;onD/FA“resistance”,Delaney2001;‘ECDimension’,PNR,I;onsocialpartnersandSEA,Hourihan1996:90-1
206
that NDP approval deadlines would be met. This “partnership” was
unprecedented,theCommissiondescribingitas“sofarunique”inEChistory.64
IndevelopingtheNDP,Haugheyusedthis“uniquepartnership”tosecurekey
policy goals. Ó hUiginn sought a front-loading of 1989 current-round ERDF
fundingtofreebudgetprovisiontomeetPNRcommitmentsin1990.Heargued
thisonthebasisoftheneedforcontinued“restraintonExchequerborrowing…
in line with Community guidelines”, warning that “we are likely to have
difficultieswith the social partners, particularly the…unions, unless the1989
Budgetcanindicate…additionalresourcesforjobcreation”.Whilethiswasnot
disclosed to the CRC, such was the new relationship with Brussels that the
requestwasapproved.Irelandalsosecuredthemaximuminterventionrateof75
percentandaper-capitaallocationfarinexcessofanyothermemberstate.65
ThefinaldraftNDPwascompletedbytheJanuary1989deadline.Followinga
lengthy meeting, the CRC issued a “Joint Statement” “endorsing” it and
committing to cooperate in developing its “sub-regional programmes”. The
Commission, impressed by Ireland’s focused planning, its intention “to spread
the projects of the [NDP] Programmes throughout the country” and its
integration of the structural-funded NDPwith the PNR, praised the “thorough
and comprehensive work presented by the Irish Government”. Delors was
particularlytakenwithitslocalandsocialpartnerinvolvement,whichHaughey
stressedwereIrishinnovationstheCommissionhadnotspecificallysought.66
Government proposed another innovationwhich, in a series of concessions,
Brusselsalsoapproved.ThiswasforprivateinvestmenttobeeligibleforECco-
finance, prohibited under the 1986 ERDF regulation. Haughey argued it was
indispensible to enable the NDP proceed while maintaining budget discipline,
though it also of course reflected the private sector-centred ethos of the PNR.
Government first sought this for the plan’s roads programme,which it argued
64 OnECCoordinationCommittee,HaugheyintheDáil01/02/89’;Haughey-Delors,‘JointDeclarationbythe
Taoiseach,CharlesJ.Haughey,TD,andPresidentDelorsontheEconomicandSocialDevelopmentofIrelandwithintheEuropeanCommunity’,28/10/88,GIS:D/Taoiseach;onDelors’“personaassurance”,h/w:‘Notes–CRCSG31/8/88’,DTA:S25857-G;and“sofarunique”,‘JointDeclarationaftertheMeetingbetweentheCommissionandtheMembersoftheIrishGovernment’,Bxl.16/01/89.Comm.IP(89)13
65 ÓhUiginntoAntonioCosta,DGII,CommissionoftheEC,19/12/88,and,onsecretstrategy,O’SullivantoSec.[=ÓhUiginn],‘reCRCmtg.11January’,05/01/89,DTA:S25857-N
66 CRC,‘SummaryReportof11thmtg.’,11/01/89,DTA:S25857-N;‘GovernmentStatement’,11/01/89,GIS:D/Taoiseach;‘JointDeclarationaftertheMeetingbetweentheCommissionandtheMembersoftheIrishGovernment’,Bxl.16/01/89;HaugheyinDáil01/02/89
207
theExchequeralonecouldneverfinance.Delorsapproveditinprinciplewithin
weeks. It then sought and secured the same exemption for infrastructure
generally, especiallywater facilities forwhich an extensivemodernisationwas
planned. Government had secured EIB loanswhen establishing Coillte to fund
PNRforestryandtimberindustryprojects,whichhadenabled“recordplanting”
andnewindustrialplantsin1988.Haugheynowsoughtapprovalforthissector
tootobeeligibleforprivate/ERDFco-financing,securinganamendmenttothe
relevantERDFregulation.Dublinsimilarlyandsuccessfullylobbiedforthesame
fortourismprojects,whichÓhUiginntriumphantlyreportedtotheCRCinJune
1989theCommissionnow“fullyaccept[ed]”.Theprinciplewaslaterextendedto
private/communityco-financingoflocaldevelopmentprojects.67
Thesocio-economicstrategyofthePNR,aswiththoseofLemass,wasfocused
solelyontheeconomyoftheRepublic.Whilehavingan“ECDimension”,itmade
nomentionofNorthernIreland.Businessorganisationshadneitherapresence
normembersintheNorth,andviewedtheattritionalconflictmainlyintermsof
itsimpactonsoutherneconomicdevelopment,deterringinvestmentandforeign
trade.AlthoughICTUhadathirdofitsmembershipandplayedasignificantrole
intheNorth,itkeptthisseparatefromitsactivitiesinthesouth.But,likePádraic
White of the IDA, ICTU leaderPhil Flynnhad grownup in a depressedborder
county. A prominent republicanwhose father had endured discrimination and
unemployment in the North, it was Flynnwho first raised the potential of EC
funding for cross-border projects under the NDP. Finance hadmentioned this
possibility, but dismissed it as probably limited to minor initiatives. Flynn
persisted, stressing that the single market meant the border would be “gone
otherthan[for]security”,butFinancecounteredthatmoreambitiousinitiatives
would be “difficult to implement”. But Ó hUiginn, who was a republican in a
similarsensetoWhiteandHaughey,calledtheFinancesecretary,Tutty,totask,
remindinghimoftheAIAstudygroups,whichcoulddeveloprelevantproposals.67 DiscussionofERDFregulationandIrishstrategy,h/wnotes‘CRCmeeting’08/09/88’,DTA:S25857-H;
Haughey’sjustificationinDáil,12/04/89;onDelorsapprovalforroads,CRC,‘SummaryReportof7thmtg.’,30/06/88’,DTA:S25857-F;extendedtoinfrastructure,CRC,‘SummaryReportof8thmtg.’,08/09/88’,DTA:S25857-H;onEIBloansforforestry/timber,‘EuropeanInvestmentBankfundsforForestry’,15/12/88,GIS:D/Energy,andDenisMehigan,PrivateSec.,toPaulineO’Shaughnessy,D/Taoiseach,‘BriefingmaterialforD/TaoiseachforreplytoletterfromP.CassellsregardingLeinsterPaperMills’,06/02/89,DTA:S25857-O;onprivate/ERDFextensiontoforestry/timber,‘ECActionProgrammetoaidIrishforestry’,29/05/89,GIS:D/Forestry;andtourismCRC,‘SummaryReportof16thmtg.’,22/06/89,DTA:S25857-U
208
Thiswasasmallbeginning,butwouldleadtoagrowingcross-bordereconomic
elementintheNDPthatwouldlaterbeofsignificanceinthe“PeaceProcess”.68
If theNDPandDelorsPlanwerethe frameworkforthebeginningsofanew
aspectofNorth-Southdevelopment,theyalsoshapedanewleft/rightalignment
in Europe that brought the ICTU, andmuch of the Irish Left, closer to the EC.
Following union opposition across Europe in 1987 to the “one-sided” free-
marketorientationoftheSEA,Delorssoughttowinlabourtothesinglemarket
bydramaticallyannouncing,attheETUCconferenceinMay,there-activationof
EC-level“collectivebargaining”througha“EuropeanSocialDialogue”hehadfirst
announced in1985andhad includedprovision for in theSEA.Even inBritain,
where the TUC had long been hostile to the EEC, he enthused trade unionists
with his call to them to join in building a “Social Europe”, unveiling at their
conference in September 1988 his proposed “European Charter of Workers’
Rights”,whichhepromisedwould formpartof the1992Treaty.Hisspeech, to
which Thatcher’s Bruges address the following week was a direct riposte,
reportedly “electrified” delegates, who gave him a standing ovation, singing
“frere Jacques!” (Delors was a former union official). Unions across Europe,
including Britain, rallied to Delors as representing a “social capitalism”, the
“optimistic” opposite pole to Thatcherism.ICTUwas equally enthused, and its
endorsementattheOctober1988CRCmeetingoftheNDPandthegovernment’s
casethatanIrishrecoverywasunderwaywascriticallyinfluencedbyit.69
Bothbusinessandunions in Ireland threw themselves intoplanning for the
NDP. The promise of Europe dissipated residual sympathies for Thatcherite
policies among Irish employers, though these had always beenmoremuted in
the CII.Planningworkshops by partner organisations onEurope followed. The
newly optimistic farming groups hosted meetings on CAP and rural
development,andICTUalargeeventontheEuropean“socialdimension”,which
Delorshimselfaddressed.Haugheywasalsoduetoattendbutcouldnotdueto
68 OntheNorthandtheeconomy,Reynolds2009:124-5;CIIview,Power2009:25;onICTUNorthernrole,
ICTUARs1971-89;Tuttyonthepossibility,in‘£239millionRegionalFundassistanceforIreland’,06/01/88,GIS:D/Finance;Tutty,FlynnandÓhUiginninh/wnotesforMinutes4thCRCmeeting24/03/88,W.KirwintoO’SullivanD/Taoiseach,‘re‘rogrammesforECFunding’,23/03/88,DTA:S25857-C,h/wnotesofSecretariatGroupmtg.,‘SGCRC29/7/88’,DTA:S25857-F,andCRC,‘SummaryReportof9thmtg.’,26/10/88,DTA:S25857J-2
69 ECComm.1988b,c;Lee,D.2010;LangeandTeague,1992:24;Hourihan1996:70;McGinley1999:128-9
209
illness, his speech being delivered by Lenihan. While the ICTU quibbled with
aspects of theDelors Plan, especially the “inadequate” scale of ERDF transfers
envisagedintermsofIrishneeds,itembracedDelorsandthe“SocialCharter”.70
TheDublin-Brussels “special partnership”didnotprecludemore traditional
practices, the Department of the Environment, for example, reporting its
continued “strictly confidential” policy in defiance of EC rules of covertly
“promotingimportsubstitution”byfavouringIrishmaterialssuppliersinpublic
construction contracts. Nor did the “partnership” deter government from
dissenting fromCommissionproposals itdisliked, strongly resistinghastyVAT
harmonisationor,tothereliefofcivilservantsandbusiness,whenAhernjoined
BritaininopposingtheVredlingDirectiveonworkerdirectorsinJuly1988.71
Butthe“alliance”withtheCommissionwasaveryrealone,ofmutualbenefit.
Irelandreciprocatedthespecialconsiderationitreceivedby–asNESCadvised–
consistentlysupportingFranco-German integrationpolicyand fast-tracking the
liberalising of capital movements ahead of others, though this accorded with
governmentstrategyanyway.Asalreadythe“mostopeneconomyinEurope”,Ó
hUiginntoldtheCRC,IrelandstoodonlytogainfromopenECpublictendering,a
positionalsoadvocatedbytheDepartmentofFinance,CIIandgovernment.72
Before the finalised NDP was approved by Brussels in March 1989, it was
again sent for CRC’s “consideration” and only submitted following its
endorsement.AdditionalSocialFunding(ESF)forunemploymentmeasureswas
addedinJune.TheNDPinvolvedatotalinvestmentof£9.7bn,including£3.9bn
ERDF,butwithmuchoftheIrishinputfromtheprivatesector.Haugheyhailed
the75percentinterventionrateandeligibilityofprivateinvestment,sayingthe
NDPwouldthusachieveitsgoalswithoutbeing“aburdenontheExchequer”.73
WithBrussels’finalapprovaloftheNDPinApril1989,andfollowingtherole
of the unions in drafting it, Congress seized on Haughey’s commitment to
partnershipas“anintegralpartoftheState’s…planninginthefuture”tosecure70 OnCII/FUE,Power2009andInterviewswithO’SullivanandPower;forICTUevent,ICTU1988bandc71 On“importsubstitution”,MichaelO’Connell,D/Env.toJohnTravers,D/Taoiseach,16/02/88,DTA:
S25858-E;onoppositiontoVredling,IrishTimes,20/07/88,andcivilservicerelief,SeánDorgan,notetoTravers,“materialforTaoiseach’sspeechon1992campaign’,22/06/88,DTA:S25281-E
72 CRC,‘SummaryReportof8thmtg.’,08/09/88,DTA:S25857-H;D/Finance,‘ImplementationProgrammeforNationalRecovery:AreasofResponsibilityofD/Finance’,March1988,DTA:S25858-F
73 CRCdebate,approvalofNDPinCRC,‘SummaryReportof13thmtg..’,13/03/89,DTA:S25857-QNDPfundingin‘GovernmentStatement’,22/03/89,GIS:D/Taoiseach;HaugheyinDáil12/04/89
210
amonitoringroleintheimplementationoftheNationalPlan,similartotherole
it achievedon theCRC in relation to thePNR.ÓhUiginn,underDepartmentof
Finance pressure, demurred. While he conceded that Brussels required a
monitoring system, he for once countered ICTU, warning that an agreed plan
withBrussels involvingpublicmonieswasa “politicalmatter”andpartnership
shouldnotoverreach itselfby infringingonDáil sovereignty.But ICTUhadnot
only other partners’ but also Haughey’s support, and Ó hUiginn relented,
“recommending” to Reynolds, nowMinister for Finance, that he accommodate
theirwishes.Financereluctantlyagreed,establishinga“smallunit”fortheNDP,
reportingtoboththe“CommitteeofMinistersandSecretaries”(CMS)andsocial
partnership’s CRC. As the Commission required a “Committee” for each
programmeanyway,itphilosophised,the“advisorygroups”,onwhichthesocial
partnerswere“heavilyrepresented”,shouldbemergedwiththeplanninggroups
forthepurpose.ThisproposalwasadoptedbyGovernmentinMay1989,placing
asocialpartnershipstructureovertheNDPandeachofitssub-programmes.74
Haughey defined the PNR’s objective as “real convergence [with Europe] in
employment level, incomes and general prosperity”. Structural funds, he told
FiannaFáiltradeunionists,werevital,but“onlyonelegofatripod”:“Inthefinal
analysis, no amount of EC support will compensate for inadequate policies at
home… The fruitful relationship that now exists between social partners and
Government is the key to economic success. I would like to see it firmly
establishedasapermanentstructureforthefuturesothateconomicandsocial
progresscanbeplannedinaconstructiveatmosphere”.75
TheNDP,developedasan“extension”ofthePNR,wasatriumphforHaughey.
Its enthusiastic approval byBrussels andextensivepositivemedia coverage at
homewasfollowedwithinaweekbyhisdecisiontocallasurpriseelection.
74 “integralpart”,HaugheyinDáil26/10/88;ICTUdemandmonitoringroleand“ÓhUiginnconceded”,CRC
‘SummaryReportof14thmtg.’19/04/89,DTA:S25857-R;“counteredICTU”,‘13/3/89’[i.e.h/wnotesfor13thmeetingCRC,13/03/89],DTA:S25857-Q;Haughey’ssupport,O’SullivantoÓhUiginn,‘reAgendaitem4–ConsultativeProcessonMonitoringImplementationofECStructuralFundAssistance’,18/05/89,DTA:S25857-S;“recommendstoReynolds”,ÓhUiginntoReynoldsM/F,28/02/89,DTA:S25857-S;Finance“reluctantlyagrees”,D/Finance,‘CMS166.Revised.MonitoringtheNationalDevelopmentPlan.SuggestedArrangements’,DTA:S25857-S
75 Haughey,‘SpeechtoFiannaFáilTradeUnionConference,Lucan’,07/05/89,GIS:D/Taoiseach
211
Chapter8
Greenshoots:economicrecoveryandpolicyinnovation,1987-89
“Turnaround”:apatternemerges
The 28October 1988CRCmeetingwas the turning point of the PNR,when
what ICTU leader JohnCarroll had called its “gamble”was agreed finally tobe
“working”.DespitetheUS/UKmarketcrisis,anIrish“turnaround”wasoccurring,
withgrowth reviving,new jobsbeing created, “thehaemorrhageof substantial
joblosses…ended”,andagriculturerecovering.AsaseniorFUEofficialputit,the
recovery“mightbemodest”,butonjobs“thetricklewasgainingmomentum”.1
A core aim of the PNR agreement, as Haughey had told Phil Flynn, was to
“restore investor confidence”. The CRC, government and Europe now all
concurred that the PNR was generating a “resurgence of investment by Irish
industry”following“leananddifficultrecentyears”:“thedaysofrealoutputand
jobsgrowthhavereturned”.MacSharryreportedexports rising in1988 to two
thirds of output, compared to just half in 1986, the highest in the EC, while
DelorssaidthePNRhadledtoa“substantialinwardflowofcapital”.2
But rather than a general phenomenon, the recoverywas occurring in very
specificareas.Thesocialpartnershadoverlappingbutdivergentinterests.While
ICTU sought job creation and industrial expansion to reduce mass
unemployment and boost wages, and business a recovery of profitability and
trading growth, Government neededpolitically to achieve both. Thepattern of
industrialrecoveryanditseconomicstructurebecomingapparentbytheendof
1988,whilemirroringtheprofileandtargetsofthePNR,tookaformdifferentto
it,withthethreetargeted“businessareas”performinginamannernotforeseen.
Nevertheless, while external factors, notably early forms of globalisation, and1 D/I&C.’20,000Target…ProgressReportofMid-Year’.August1988,DTA:S25857-G;FUEofficialquoted
inTheIrishTimes27/10/882 HaugheytoFlynn,inHastingsetal2007:31;PNRSectionII(6);[IDA],‘UpdatedProgressonthe
ProvisionofJobsunderPNR’,21/10/88,DTA:S25857-J;McSharry,‘AddresstoGeneralHumbertSummerSchool’,26/08/88,GIS:D/Finance;‘JointDeclarationbytheTaoiseach,CharlesJ.Haughey,TD,andPresidentDelorsontheEconomicandSocialDevelopmentofIrelandwithintheEuropeanCommunity’,28/10/88,GIS:D/Taoisecah
212
inherenteconomicfactors,suchasthenatureoftherationalisation“shake-out”,
were important, sectoral performancewas decisively shapedbypolicy choices
bybothgovernmentandthesocialpartners,notonlyinmacro-economicterms,
but in thespecificsof industries.Thepoliticsof socialpartnership, rather than
exogenousfactors,becamethevitaldriveroftheIrisheconomicturnaround.
Policytested:“indigenous”industry’sunevenperformance
PNRindustrialstrategyprioritisedatake-offofindigenousindustry.TheIDA
described its “central objective” as to “stimulate and assist Irish controlled
companies to be internationally competitive” and “become European market
leaders”. Critics later dubbed this “crony capitalism”, although, as examined in
the introduction to this thesis, state-industry integration was the essence of
“successfulsmallopeneconomy”theory.FDI,whichhadbeenperformingpoorly,
was seen as ancillary, assisting the “central objective” by upgrading industrial
quality and “linkages” with Irish firms. The IDA pursued whatever mobile
investmentitcouldonthisbasis(withanew“specialfocusonJapan”giventhe
US/UK recession), but did not expect a dramatic breakthrough. Its immediate
priority,theDepartmentofI&Creported,wasimprovingexportcapacityamong
the900overseas firms “still in Ireland”. Supporting small start-ups,whichhad
also, despite considerable state investment, shown poor results in the 1980s,
was another secondary objective. Privately, Haughey and his circle were
scepticalofthisorderingofpriorities,havingalreadyidentifiedasubstantialFDI
growthasthekeydriver,butaccepteditintheinterestsofthePNRconsensus.3
In line with PNR strategy, agency supports were re-directed from general
start-up and fixed asset grants to selected larger companies to promote their
presence abroad and modernise their capacity, marketing, company planning
andmanagementtechniques.JohnBrutonclaimedthishadalreadybeen“central
core” coalition policy, citing theGoodman example, but government dismissed
this as having been little more than aspiration. Pádraic White described the
policy re-orientation now underway as the “biggest shake-up in industrial3 IDAIreland,‘ReviewofIDA’sThreeBusinessAreas,1988,’05/01/89,DTA:S25857-N;D/I&C,‘Progress
intheProvisionofJobs’,27May1988,DTA:S25857-E;onHaugheycircle’spreferences,ÓhUiginntoHaughey,n.d.,withmemo,Travers,‘PresentationtoTaoiseachandMinistersforFinanceandLabouronApril27th[1987]onIndustrialPolicy’,DTA-OHP(seealso,chapter4)
213
incentivessincethefoundationoftheIDA”.Thehelptotargetedfirmswasvery
considerable,aDepartmentofI&Cofficialdescribingitasdifficult“toimaginea
greater degree of intervention short of a substantially enlarged State sector”,
thoughalsowarningitwouldbeyearsbeforeitsconcretesuccesswasapparent.4
BothbusinessandunionsacceptedthatthepromiseofthePNRlayinthenew
future sectors it would drive, not old industry. The on-going “shake-out” was
extreme.Mostofmanufacturinginthe1970shadbeenforthehomemarket,and
a third of those jobs had disappeared by 1985, displaced by imports, as the
industrialbaseoftheLemasseracollapsedintheabsenceofanewstrategy.Only
firms innon-tradedsectors, suchas food, survived, thoughstillover-relianton
UKmarkets andwith only an eighth exporting elsewhere in Europe. Ireland’s
EEC “transition” had ended in 1978 with the last protections - apart from a
further4yearsforthecarindustry–removed,precipitatingadecadeofsevere
manufacturing decline. ICTU privately accepted that old-industry loss-leaders
weredoomed.WhengovernmentwithdrewsubventionstoLeinsterPaperMills,
Haughey adamant it could not become “financially involved again”, ICTU
protestedpubliclybut, asÓhUiginnnoted toHaughey, “the fact [they]didnot
raisetheissue[ontheCRC]…suggeststheyunderstandthereality”.5
Besides large-scale exporting, the PNR also hoped for quick employment
dividendsfromservicesandfromsectorssuchastourism,whoseplannedgrant-
assistedexpansionaimedfor25,000newjobsby1993achievedbyapromotion
campaign,upgradingthe“product”andexploitingEuropeanliberalisationofair
transport.AlthoughthistargetwasridiculedbytheDáilopposition,government
established a “Tourism Task Force” whose tax-incentive/marketing-based
strategy was energetically implemented in 1987-88. This fulfilled Haughey’s
prediction of a “bumper year for tourism”,with visitor numbers increasing 15
4 PNRV(11);D/I&C,‘ProposalsforFurtherRe-organisationandSimplificationofIndustrialPromotion
Agencies’,Feb.1988,S25858-E;IDAIreland,YourPartnersinDevelopment,Jan.1988;Bruton,‘SpeechtothelunchofSmallFirmsAssociation’(FineGaelPressRelease),18/02/88;oncoalition“aspiration”,TraversD/TtoPaulBates,D/I&C,25/02/88,DTA:S25858-E;on“shake-up”,IDA,‘IntroductoryCommentsbyPadraicAWhite’,07/04/88,DTA:S25870-C;on“stateintervention”,PaulBates,D/I&C,encl:‘PoorResponsefromPrivateSectortoJobCreation.Mfr./Ind.Policy’,Nov.1989,DTA:S25862-D
5 On“shake-out”,O’Dowd1996:43;NESC1989:515;onPaperMills,DenisMehigan,PvteSecretarytotheTaoiseach,toCassells,ICTU,29/03/89,andInternalD/Tmemo,O’SullivantoSec[ÓhUiginn],‘RepresentationtoTaoiseachfromMrP.Cassells,reLeinsterPaperMills’,06/03/89,withh/wnote,ÓhUiginnforTaoiseach,14/03/89,DTA:S25857-Q
214
percentand5,000“directandindirect”newjobscreatedby1989.TheCRCwas
confidenttargetsforsucceedingyearswouldalsobeexceeded.6
The trawl to increase net employment led to every area of government
activity being scrutinised for its potential. When Foreign Affairs, like all
departments,wasasked to report toCRCon the jobs impactof its activities, it
listed overseas development aid (ODA) as its “contribution”. When the
Department of theTaoiseach queriedODA’s “balance of advantage to Ireland”,
ForeignAffairsdemonstratedhowits£39mbudgethadresultedincontractsfor
Irishprivateandsemi-statesuppliersof£86m,with70percentofallbilateral
aid expended on goods and services from them, producing 1,200 direct and
indirectjobs.ÓhUiginnsolemnlytoldHaugheythatwhiletheCRCwasawareof
the“moralandothernon-economicreasonswhy[ODA]shouldbemaintainedor
increased”, the “flows of contract income” were nevertheless favourable and
apartfromtheirvalue,“perhapsmoreimportantly”,provided“atrainingground
andimagevitaltoincreasingtheflowofincomefromothersources”.7
The uneven development of indigenous large-scale industry under the PNR
was exemplified by the food sector. Ireland had a competitive advantage in
grass-based production and was already Europe’s largest beef producer,
exporting75percentofproductpredominantly toBritainand thirdcountries.
Butproductionwasinefficientandqualitypoor.Thefuture,asboththeNESCand
ministers repeatedly stated, lay in quality processing and away from “volatile”
third-countrymarketstosellinghighvalue-addedproductintoEurope.8
Haugheyexhorted farmers to “wean” themselves fromEEC interventionand
seasonal production,whichwere “constraining” growth, andmove from being
“primarilycommoditytraders…tomarketersof[quality]products”,supplying“a
highly competitive and technologically sophisticated agri-food industry …
competingontheworld’sfoodmarket”.Ontheprocessingside,IDAcollaborated
withtheDepartmentforthefirsttimeindevelopingadetailedindustrystrategy,
two semi-state boardswere founded, Teagasc to drive a professionalization of6 PNRV(27);BordFáilte1988;HaugheyinDáil17/05/88;CRC,ProgressonJobCreation,n./d.[Dec.1988]7 JohnSwift,Asst.Sec.,D/FA,toTravers,D/Taoiseach,13/01/88,DTA:S25858-D;D/FA,untitledmemo,on
‘AidandTrade’(forCRC),n.d.[Sept.88],DTA:S25857-H;Sec.[ÓhUiginn]toTaoiseach,‘BilateralAidProgramme’,Oct.1988,DTA:S25857-J2
8 “volatile”,NESC1986;MichaelO’Kennedy,M/A&F‘Statement…,launchingAnnualReviewandOutlookfortheAgricultureandFoodIndustry’,18/01/89,GIS:D/A&F
215
agricultureandBordGlashorticulturalproduction,andahorseindustrystrategy
wasdeveloped.Ultimate employmentwas forecast in the thousands,withbeef
processing alone targeted to deliver 1,000 by 1993. Selected beef firms –
principallyHibernian andAIBP (Goodman) -were identified and assistedwith
EC-approvedIDAmodernisationplans.Describingthestrategy,Haugheywarned
theDáilitwouldalso“inevitably”involveclosingolderinefficientplants.9
Despite quality challenges and inefficiencies, IDA reported “very significant
progress” in restructuring beef companies, updating production, modernising
management and training farmers during 1988. Rationalisation and plant
closurescreatedbothunemploymentandnewjobs.Thoughby1988therewere
just300moreemployedintheindustrythanin1986,thisexcludedaburgeoning
sub-contractsector.Theindustryfacedmanyproblems,bothinternal, likeslow
productqualityimprovementandfarmerspersistinginseasonalproduction,and
external, like continued protectionist practices in target European markets,
notablyGermany.Toexpandthird-countrytradeinthemeantime,exportcredit
insurancewasrestoredforMid-EastmarketsinJanuary1988.10
In addition to the as yet unanticipateddisastrous Iraqi default of two years
later, this meant newly emerging Far-Eastern opportunities could not be
exploitedasexportcredit insurancewasfullycommitted.But,by leveragingits
newpoliticalcapital inBrussels, IrelandsucceededinhavingGermanyagree in
early1989tofinallyopenitsmarkettoIrishbeef,andtheECalsoestablishedan
intervention “safety net” in the event of a sudden closure of third-country
markets.ButthejointimpactoftheBritishBSEcrisisandUS/UK-led“GulfWar”
in 1990 collapsed beef export trading. The CRC nevertheless remained
optimistic, judging IDA-driven restructuring to be on target to grow quality
9HaugheyinDáil24/10/89;onbeefindustryplan,‘Draft.OutlineoftheCurrentStateoftheIrishBeef
Industry’,n.d.,[1990],DTA:S26694,PNR14;IDAIreland1987:25-31;onotherfoodindustryplans,PNRV(14-21);IDAIreland1987;AnBordGlas(1988);CTT‘FoodIreland’1988;ColinMcCrea,ChiefExecutive,CTT,‘CTTandFoodin1989.SpeechtotheGuildofAgriculturalJournalists,19/01/89,DTA:S25858-O;onIDAplansinHibernianandGoodman,D/I&C,‘ProgressontheProvisionofJobs’,27/05/88,DTA:S25857-E;D/I&C,‘20,000Target...ProgressReportofMid-Year’.August1988,DTA:S25857-G;D/T,O’SullivantoSec[ÓhUiginn],‘BeefIndustry’,14/10/91,DTA:S26694;HaugheyinDáil16/06/88
10 D/A&F(forCRC)‘BeefIndustryProblems’,11/09/90,DTA:S26694;HaugheyinDáil17/05/88;onGermanprotectionismlifted,‘SummaryReportofMeetingonBeefIndustry’,heldWed.,12/09/90,DTA:S26694;O’Toole1995
216
exports to Europe, with ICTU seeing “major opportunities for the creation of
employmentandwealth”.Asinotherareas,realisingthiswouldtaketime.11
A different development pattern emerged in another PNR-target food
industry,dairyprocessing,withdifferentexternalfactorsproducingunforeseen
results.Governmentsawthesector’spotentialconstrainedbytheco-opsystem,
butICOSproposedovercomingthisthroughcapitalisationtocreatea“globalised
industry”. By 1988 IDA-assisted rationalisation had already seen employment
contract over the decade from 10,100 to 7,200, leading the ITGWU, which
organised co-op creameries, to suggest government “approach Brussels” for
“special”supportsanalogoustothatfortheEuropeancoalandsteelindustries.12
An ICOS plan proposed rationalising the fifty larger co-ops into three giant
capitalised companies “to reduce costs and improve product development and
marketing to international competitive levels”. An impressed Haughey had
broughtICOSintotheCRC,andtheIDAtoosupportedtheplan,investing£4.5m
in Kerry Foods, formed in 1988, to assist it “become a major large-scale
international foodcompany”.By late1988theDepartmentof I&Creported the
sector“oncourse”toachieveits2,000new-jobtarget,thoughwarnedthat“some
shakeout”, as already apparent in the newly consolidated Kerry plc., would
probablyresult inanetdeclineof2,000by1992.Thereport,whichÓhUiginn
withheld from the CRC, admitted that “competitive pressures are such that
rationalisation and, as part of this, employment contraction, is inevitable”. Ó
hUiginntoldICTUjobsgrowthdependedonqualityproductdiversification.13
But the strategyworked, ifnot innetemploymentgrowth.New“largescale
indigenous companies” emerged in the dairy sector to become “European
leaders”,diversifying throughquality-upgradedproduct.Haugheypraised their
spectacular success while noting the “disappointing” jobs outcome. The dairy
companies’successfulstockmarketfloatationindicateda“newconfidence”and11 OnIrelandsecuringEC“safetynet”,D/A&F(forCRC)‘BeefIndustryProblems’,11/09/90,andICTU
assessment,Cassells,ICTU,toÓhUiginn,30/08/90,DTA:S2669412 Whelan(ICOS)inh/wnotesCRCSecretariatmeeting10/03/88,DTA:S25857-C;D/A&F,‘Employmentin
theDairyProcessingIndustry’,16/06/89,DTA:S25857-T;ITGWUinterventioninh/wnotesCRC15thMeeting,18/05/89,DTA:S25857-S
13 ICOS1987;KerryFoodsinIDAIreland,‘ReviewofIDA’sThreeBusinessAreas,1988,’05/01/89,DTA:S25857-N;“shake-out”inh/wnotesofCRCmeeting,30/11/88,DTA:S25857-L;jobsdeclineinCRC,‘SummaryReportof15thmtg.’18/05/89,DTA:S25857-S;“competitivepressures”inD/A&F,‘EmploymentintheDairyProcessingIndustry’,16/06/89,DTA:S25857-T;ÓhUiginntoICTUinh/wnotesofCRC15thmtg.,18/05/88,DTA:S25857-S
217
the “market-led approach” would finally “eliminate many of the problems
mentionedintheNESCreport”.By1989anotherfeatureofthenewgrowthwas
manifested when, as a consequence of opening capital markets following the
SEA,thenewdairycorporationsbegantoexpandandearngrowingprofitsmore
throughacquisitionsandinvestmentsabroadthanproductiongrowthathome.It
wasamodeltrendreplicatedinothersectors.14
The “central objective” of PNR industrial strategy – scaling selected
indigenous companies up to “international competitiveness” - was certainly
beingachieved,butitsconsequenceswerenotthoseenvisaged,astechnological
modernisation -what the IDA called “the greatest single influenceon thepoor
overall employmentperformance inmanufacturing” - reducedworkforces.The
DepartmentofI&Creportedthatwhile“intheveryfirstyearofthePNR”allnew-
jobtargetswerebeingachieved,thelogicofrestructuring,togetherwithpublic
service contraction and the on-going “shake-out” in old industry, meant
“disappointing” job results. An industrial take-off was occurring, producing
better quality higher-paying jobs, but the creative “churn” meant net
manufacturingemploymentremained“static”at200,000acrossallsectors.15
Net jobs growth occurred elsewhere, as alreadymentioned in tourism and,
duetothegradualgeneralrecovery,servicebusinesses.Indeed,andcontraryto
expectations, itwas the “small industry sector”,whoseprospectshadnotbeen
rated highly or given PNR priority, which IDA reported showing “surprising
buoyancy” and “running ahead of expectations”, with over ten new start-ups
weeklynationwide,creatingover5,000jobsinthePNR’sfirstyear.Thesewere
inniche industriesandservices,supplyingtogrowthsectors.Buttheemerging
pattern further nudged policy away from the “large indigenous sector”, which
suffered furtherreputationaldamagewhen inMarch1989LabourandthePDs
demandeda“publicenquiry”intofavouritismtowardsthebeefindustry.16
14 HaugheyinDáil24/10/8915 “greatestsingleinfluence”inIDAIreland,‘ReviewofIDA’sThreeBusinessAreas,1988,’05/01/89,DTA:
S25857-N;“disappointing”inPaulBates,D/I&C,encl:‘PoorResponsefromPrivateSectortoJobCreation’,Nov.1989,DTA:S25862-D;“churn”inD/I&C.’20,000Target…ProgressReportofMid-Year’.August1988,DTA:S25857-G
16 D/I&C.’20,000Target…ProgressReportofMid-Year’.August1988,DTA:S25857-G;White,‘ReviewofIDA’sThreeBusinessAreas,1988,’05/01/89,DTA:S25857-Nand‘UpdatedProgressontheProvisionofJobsunderPNR’,21/10/88,DTA:S25857-J;BarryDesmondquotedinRyleDwyer1995:135
218
Growthdrivers:newsectorsandECleverage
ThePNRpromisedamajorexpansionofthejobs-intensivebuildingindustry,
a traditional Fianna Fáil driverwhich had contracted drastically in the 1980s.
Thescaleofurbanderelictionwascompoundedbycontractingpropertyprices
andwidespreadvacancy.ApartfromnewcitycouncilofficesatWoodQuay,nota
singlenew-buildorrestorationhadoccurredonDublin’squayssince1975.The
PNR construction revival was planned to come from the general recovery,
infrastructureplansandespeciallytheregenerationofderelicturbanareas.The
CRC’s partners moved early to establish a tripartite “Construction Industry
DevelopmentBoard”(CIDB)togeneratedevelopmentproposals.17
The Haughey government of 1980-81 and 1982 had begun regeneration
throughsomehigh-profileprojectssuchastheRoyalHospital,andjustbeforeit
fellin1982publishedabill,agreedinthe“GregoryDeal”,establishinga“Dublin
Inner City Development Authority”. This also initiated housing, industrial and
trainingprojects.Afterthefallofthe1982Haugheygovernment,thecoalition,at
theinstigationofRuairíQuinn,anarchitectandurbanplanner,revivedthebill,
finally establishing a “Customs House Dockland Development Authority”
(CHDDA)inDecember1986,amonthbeforeleavingoffice.18
Haughey’s government retained the CHDDA, but also produced a first
programme designating urban districts nationwide for “renewal”, with the
Docklandsproject,reconfiguredaroundtheIFSC,theflagship,butwithprojects
inothercentresalsoqualifyingfortax-incentives.TheCIDBadvocatedablanket
extension of these incentives to all urban renewal areas, a position the CRC
endorsed, as well as time-limiting planning appeals, 100 per cent capital
allowancesoncommercialdevelopments, andre-configuring theCHDDA intoa
semi-state“RenewalAuthority”withpowerstooverridelocalgovernment.When
the new round of EC structural fundswas being negotiated, the CIF and ICTU
urgeditbeusedtoextendtheCHDDAtothewholeofcentralDublin.19
17 PNRV(25);CRCmtgs.,Feb.-May198818 Quinn200519 DermotNally,SectoGovernment,toSec.,D/F,09/08/87–rememoPD118of08/06/87,ÓhUiginn,h/w
noteon‘CruinniúRialtais:FinanceBill1987.AmendmenttoextendDesignatedAreasScheme’,09/06/87,DTA:S25306;TraverstoTeahonandSec.,D/T,03/03/88;h/wonthisbyO’Sullivan21/03/88,DTA:S25857-C;D/Tmemo,O’Sullivann.t.,25/11/88,DTA:S25857-K;h/wnotesofCRCmeeting,26/10/88,DTA:S25857-J2
219
Haughey saw the IFSCas the centrepieceof the largest rebuildingofDublin
since Georgian times. Combining the IFSC’s “high end jobs” with regeneration
would transform the poverty-stricken city core into a “NewBloomusalem” – a
referencetoJoyce’sUlysses.Hehadlongadvocatedreforminglocalauthoritiesto
act as “development corporations”, and the CIF welcomed the new CHDDA’s
“more commercially oriented” structure and “quicker approval procedures”
comparedtobothitspredecessorandlocalgovernmentprocesses.20
But as other planned Dublin projects failed to materialise, an irritated
Haugheysummonedcityofficialstocajolethemtokick-startthem.Teahonofthe
DepartmentoftheTaoiseachtoldtheCRCofHaughey’sfrustrationwithDublin
Corporation and his scepticism that it had the “competence” to drive re-
development. Haughey was also amenable to CRC proposals to extend the
CHDDAtothewholeInnerCity,butrelentedinthefaceofobstinateCorporation
resistance. The CRC supported the CIDB’s advocacy of extending compulsory
purchase, 100 per cent capital allowances and curtailing planning appeals,
thoughhad todrop the latteras “probablyunconstitutional”.DespiteFinance’s
objections that extending tax incentives “greatly weakened” their impact and
that given the limited capital “pool” available “itwould be pointless diluting it
thinlyoveralargenumberofareas”,sixteendistrictswereselectednationwide
for such incentives, including four in Dublin. The strategy of tax-incentivised
developersdrivingDublin’s chronicallyneeded regeneration thus emergednot
through a developer/political nexus as often claimed but rather through a
proposal from social partnership. The general recovery, but especially
regenerationmeasures,sawtheconstructionindustrygrowforthefirsttimeina
decade, commercial construction alone increasing in 1988 by fifty per cent,
creating2,000jobs–atenthoftotalnewemployment-despitethecurtailingof
thePublicCapitalProgramme.21
20 OnbuildingDublin,Haughey,‘Address…atlaunchingofPlanningSchemefortheCustomsHouseDocks’,
04/06/87,GIS:D/Taoiseach;on“Bloomusalem”,Haughey,‘Address…atlayingoffoundationstoneforIFSC’,22/09/88,GIS.D/Taoiseach;on“developmentcorporations”HaugheytoCassellsICTU,20/01/1987,DTA:S25862-F;onCIF,D/Fmemo,‘InnerCityRenewalAuthorities–CIDBandCIIproposals’,DTA:S25857-K
21 HaugheysummonsDublinManager,‘UrbanRenewal:DesignatedAreasScheme.ProgressonMajorDevelopmentProposals.Positionat7November1988’,DTA:S25857-K;onHaugheyfrustrationwithCorporation,h/wnotesCRC-SGmtg.,03/01/89,DTA:S25857-NandN.Callan,D/Env.toO’Sullivan,Sec.toCRC.,24/01/89,DTA:S25857-O;on“relented”,Ec.&SocialPolicyDiv.,D/Taoiseach,‘InternalNoteonly:DublinInnerCityRenewalAuthority’,07/02/89andh/wnotes,SGmtg.,n.d[07/02/89],DTA:
220
The securing of increased EC funding in 1988, thoughmodest compared to
later programmes, was viewed by the Department of Finance as a significant
inputtothePublicCapitalProgramme(PCP),especiallyindevelopingtelecoms,
tourism, cross-border initiatives, roads and other infrastructure. Haughey
exploitedhisalliancewithDelorstoenhancePNRsectoraltargetplansinseveral
key areas. As described in chapter 7, after securing an unprecedented ERDF
front-loading,governmentalsosecuredCommissionagreementtoamendERDF
regulationstoallowprivate investmentas“national funding” forECco-funding
purposesfirstintheroadsprogramme,theninfrastructuregenerally,andfinally
for non-infrastructure programmes, notably forestry, tourism and local
enterprise. These were all PNR target sectors, and this opening to private
investmentwoulddrivetheirdevelopment.
Irishforestry,forhistoricalcolonialreasons,hadoneofthelowestafforested
land ratios in Europe, just 4 per cent compared to over 20 per cent in many
memberstates.Timberwasoverwhelminglyimported.ThePNRaimedtogreatly
expand reforestation and timber production, driving a potentially export- and
employment-rich processing industry. In opposition Haughey had proposed
transforming the Department of Forestry into a commercial semi-state and
opposed the sale of semi-mature forests. Even before the PNR was signed he
establishedCoillte Teo tomanage forestry assets to this end. As in all sectors,
governmentplansdependedonprivatesectorinvolvement,andinpreparingthe
Forestry Bill an Inter-Departmental Group led by Finance evaluated “the
comparative advantages and disadvantages to the State of private and public
investment inforestry, takingaccountoftheneedforahighandstable levelof
plantingandthepresentstateofexchequerfinances”.Unsurprisingly,itstrongly
advisedanemphasisonprivateplanting.In1988governmentsecuredEIBloans
for Coillte and the timber processing industry, enabling “record planting” and
processing expansion through upgraded and new plants that very year.When
S25857-O;CRCsupportforCIDBproposalsandD/Financeviewsinh/wnotesCRC-SGmtg.,03/01/89,DTA:S25857-N,CRC-SG,‘ActionPoints:Updatesarisingfrom11thmtg.’03/01/89,Ec.&SocialPolicyDiv.,D/Taoiseach,‘ExtensiononTimeLimitsandIncreasesinCapitalAllowancesforCommercialDevelopmentinDesignatedAreas’,07/02/89,andN.Callan,PO,D/Env.toO’Sullivan,Sect.toCRC.,24/01/89,DTA:S25857-O;D/FinanceviewsandareasdesignatedinEc.&SocialPolicyDiv.,D/T,‘InternalNoteonly:IdentificationofItemsfornextCRCmtg.’,07/02/89,DTA:S25857-O;ondeveloper/politicalnexus,Connolly,F.2014;jobscreatedinCRC,ProgrammeforNationalRecovery,ProgressonJobCreation,n./d.[Dec.1988]
221
the amended ERDF regulation permitting private co-funding in forestry and
timberwassecuredinMay1989,theNDPincorporatedplanstodoubleforestry
andfurtherexpandprocessingthroughapublic/private/ERDFinvestmentmix.22
Inasimilarprocess,thetourismplanofthePNRwasgreatlyexpandedinthe
NDP following Brussels approval for a similar investment mix. Ireland
reciprocatedBrussels’specialconsiderationbybeingtotheforeinlegislatingthe
liberalisation of competition and capital restrictions, though it had already
decidedtoexploitthisopeningwithadaringlyinnovativestrategy.
Innovation:IFSC“pipe-dream”andtheFDI“surge”
As with many policies Haughey adopted, that for an international financial
servicescentre(IFSC)inDublin’sdocklandswasfortuitous.Suchanideawasnot
new,withanalogousprojectsunderway inLondon,Bostonandelsewhere.The
CIIadvocatedaservicescentrenearDublinairport.ButDermotDesmondhada
novelplantorealiseitinthederelictdocklands,andaftermeetingaFiannaFáil
supporter in a Dublin pub, was brought to Kinsealy to present it to Haughey.
Desmond had tried to interest Bruton, but he, on the advice of Fine Gael
industries spokesman Fergus O’Brien, had dismissed it as a “pipe dream”.
Haughey too was initially sceptical, but this changed when he witnessed the
eager responseof Irish-American financiers toDesmond’spresentation inNew
York.Haugheythenincludeditasaflagshipprojectinhis1987manifesto.23
HaugheycombinedtheideawiththeCHDDA’sregenerationplanstocreatean
entirely new economic sector and simultaneously transform inner-city Dublin.
Describingfinancialservicesas“oneofthefastestgrowingsectorsofeconomic
activity in theworld”,Haugheysaidhisgovernmentaimed“toput Ireland into
themainstreamofthatgrowth”.An“IFSCCommittee”,chairedbyÓhUiginnand
prominentlyincludingmembersofCII’s“FinancialServicesIndustryAssociation”
(FSIA),wasestablishedwithinweeksofthegovernmentbeingformed,todrive
22 ForestryplaninPNRV(22);HaugheyandCoillte,Dáil05/12/89;Inter-Dept.Cttee.,inDermotNally,Sec
toGovernment,toPrivateSec.,M/Energy,29/03/88,encl.aidememoireof25/03/88fromM/Financereestablishingstateforestrycompany,DTA:S25858F;onEIBloans,MinisterMichaelSmith:‘EuropeanInvestmentBankfundsforForestry’,15/12/88,GIS:D/EnergyandDenisMehigan,PrivateSec.[toTaoiseach],toPaulineO’Shaughnessy,D/Taoiseach,‘BriefingmaterialfortheD/TaoiseachforreplytoletterfromP.CassellsregardingLeinsterPaperMills’,06/02/89,DTA:S25857-O;onplansubmittedMinisterAylward,‘ECActionProgrammetoaidIrishforestry’,29/05/89,GIS:D/Forestry
23 OntheeventssurroundingtheinitiationoftheIFSC,Power2009,Reddan2006,Keena2003,FF1987
222
the project and advise on a regulatory/incentive package. A special IDA unit,
headedbyDavidHanna,wascreatedtopromoteit.24
TheCentrewas initiallyrestricted tosecuritiesandbondtrading. Incentives
tolocateinitincludedzerocapitalgainstax,a10-yearratesremissionandfree
capital movement in non-IR£ currencies. The Department of Finance was
instructedtodraftaregulatoryframeworkmodelledonotherEuropeancentres.
GPA,anearly Irish financialmultinationalwhoseboardwould includerecently
retiredECCommissionerPeterSutherland,suggesteda10ratherthan0percent
taxrating,asthatwouldatleast“impl[y]someformofcontrolandsupervision”
andthereforebemoreacceptabletoinvestorsandforeigngovernmentsalike.25
Irish-ownedfinancecompaniesurgedÓhUiginnto“playtoourstrengths”by
using the IFSC as a base to grow the domestic accountancy industry, already
“second tonone in theworld”.Astrategy like “theGoodmanmeat investment”
couldmakethecentrea“launchingpadtoforce…thisresourceintotheexport
business”, transforming conservative Irish stock brokers into global market
traders. But the committee rejected this, remaining firmly FDI-focused. It
targeted “influential and very powerful people in [US] financial circles”,
especiallywith Irish personal or business connections, and arrangedmeetings
betweenthemandtheIDA,orevenwithHaugheypersonally.26
Securing a “big player” proved elusive, however, and with US/UK markets
stalled, potential clients in Germany and Japan were wooed. When Finance
producedabillsettingthetermsforthecentre,ÓhUiginn,asurgedbyNCBand
GPA,suggestedextendingthespecialtaxratetopropertyfundmanagementand
tradewithShannonZonecompanies.ThiswastobothfacilitateandwooGPA’s
partner,Mitsubishi,Japan’slargestbank.ButHaughey,despitebeingurgedthat
24 “fastestgrowing”inHaughey,‘AddressatlaunchingthePlanningSchemefortheCustomsHouseDocks’,
04/06/87,GIS:D/Taoiseach;onIFSCcommittee,OifiganTaoisighS.25150[ÓhUiginn],‘MemorandumforGovernment.EstablishmentofanIFSCCommittee’,30/03/87andDraftofG.20/8,GovernmentMinutes31/03/87,DTA:S25150-A
25 D/Finance,‘PerformanceandotherCriteriarequiredforCertificationofCompaniesintheIFSCattheCustomsHouseDocksSite’[FSC/099],18/06/87,FSIA,‘CustomsHouseDocks,Dublin,IFSC,PreliminaryBrief’,n.d.[June1987],DTA:S25150-A;IFSCCommittee,‘SummaryReporton11thmtg.’,18/06/87,DTA:S25150-A;PeterDenison-Edson,SeniorVice-President,GPACorporateAffairsJapan,toDermotDesmond,11/06/87,DTA:S25150-A
26 AlexSpain,chairman,ZEUS,toÓhUiginn,19/06/87,CII-FSIA,circulartomembercompanies,‘Re.:IFSCDublin’,29/06/87,Spain,chair,CII-FSIA,toÓhUiginn19/06/87,and,onIrish-Americanfinanciers,‘NoteontelephoneconversationwithMrPeterOwens’04/06/87,and“PeterOwens26/6/87”,withh/wnotereFoley,DTA:S25150-A
223
the amendment would “solve the Mitsubishi problem”, did not intervene, and
Finance’sview,whichanywaysuspectedGPAofspecialpleading,prevailed.27
BuildingoftheIFSCcommencedinlate1987,entirelyprivate-sectorfunded,
with surprisingly strong initial interest reported. Desmond, who had since
becomeafriendofHaughey,steppeddownfromÓhUiginn’scommitteetoavoid
accusations of a conflict of interest, but still funded the first IFSC “block”. The
wholeprojectwasnecessarilyoneoffuturepotential,withjust200buildingjobs
involvedatfirst,expectedtoriseto500in1988.TheIDAreportedsecuringover
fiftyfinancialcompaniesinterestedinlocating(its“1988target”),withapromise
of1,300financialjobs,butbytheendof1988thesitewasstillbeingprepared,
thefirstblocknotdueforcompletionuntiltheendof1989,andtheIDAverifying
just23companiesemployingamodest120actuallytradingunderIFSClicenses.
The only “big player” as yet confirmed was AIB’s international branch, which
governmenttalkedupasthestronglocalanchoressentialtosuccess.28
The faltering progress attracted widespread criticism. Michael Lafferty, a
London-based expert commissioned by Ó hUiginn to assess options, reported
thatexperienceofothersmallcountriesindicatedthatawholesale-basedcentre
wouldfailandrecommendedinsteadasecretretailbankingmodelontheSwiss/
Luxembourg model. Cabinet rejected the advice, but did change strategy in a
significant step when new EC single market reforms introduced in December
1988removedrestrictionsonforeignportfolioinvestmentsbyresidents.29
The IFSCnowchanged focus to targetingmobileunit funds, thoughwarned
thatthe10percentCGTratewasproving“arealdisincentive”againstcompeting
Europeancentres.ÓhUiginnurgedazeroCGTrateandtheIDAadvisedincome
on such funds for non-residents also be zero-rated, despite the “risks of ‘tax
27 ‘IrelandanideallocationforJapaneseinvestment–Reynolds’,20/01/88,GIS:D/I&C;AnthonyRyanto
Haughey,‘Personal&Confidential’,15/06/87andTony[Ryan]GPAtoHaughey,22/06/87,DTA:S25150-A;J.CantwellD/TtoSec.[ÓhUiginn],‘TelephonecallfromMrDermotDesmondre.FinanceBillAmendment’23/06/87,DTA:S25150-A;Mullarkey,D/Fin.toÓhUiginn,25/06/87,DTA:S25150-A
28 on“surprisinglystronginterest”,IrishTimes,‘BusinessReview1987’.31/12/87;onDesmond“steppingdown”Reddan2006:16;IDAreportfor‘DraftmaterialonIFSCforinclusioninTaoiseach’s[1988]budgetspeech’,DTA:S25306;IDAIreland,‘ReviewofIDA’sThreeBusinessAreas,1988,’NewsRelease,05/01/89;‘GovernmentStatementofProgresswiththeIFSC’,09/12/88,GIS:D/Taoiseach
29 onLafferty,RonaldBolgerSKCtoÓhUiginn06/02/89,DTA:S25306and‘IFSCcanyield£70mtaxby1992,despitegloomyreport’,SundayTribune05/02/89;governmentresponseandpolicychange,CRC,‘SpecificMeasures…’,03/02/89,Section:‘ECDimension’,DTA:S25899-A,and‘Commentbythechairman,IFSCCommittee.,ontheLaffertyResearchPaperonInternationalPrivateBankingpublishedtoday’,07/02/89,DTA:S25858-P
224
haven’connotations”.Financeopposedthisbecausesuch“haven”criticismshad
alreadyemergedattheOECD:“thefurtheronegoesinextendingtaxconcessions
intheIFSC,thegreater…thedangersofjeopardising[its]acceptability…inthe
internationalarena”.ButcabinetsidedwithÓhUiginnandtheIDA.30
FineGael,whichtauntedgovernmentonitsfailuretosecurea“majorplayer”,
claimedthat“changingtherules…atthisstage”showedthewholeprojectwas
not “going anywhere very fast”. Lafferty joined the criticisms, resurrecting his
retail-banking concept, which Ó hUiginn rejected as a recipe for “criminal
money”.Haughey,themoralityofwhoseownpersonalfinancesatthistimewas
questionable, was nevertheless clear that the public good required a tightly
regulated wholesale model at the IFSC: government would “not permit or
encourageundesirablesecretbankingoranyothersimilaractivities-thehighest
standardsoffinancialprobitywillberigidlyenforcedintheCentre”.31
The tax changes and re-orientation tomanaged fundsproved an immediate
success. The global financial press excitedly reported that the IFSC was now
giving competitor locations “a real run for fundmanagers’money”. An upbeat
IDAannounceditsbestmonthyet,withthirtynewfundsand100newjobsinthe
pipelinebyFebruary.Itconfidentiallypredictedacorporationtaxyieldfromthe
centreof£70mby1992.WhilethecompaniestheIDAhopedtosecureincluded
theoft-chasedMitsubishi,andthelistoffirmsdeclaringaninterestextendedto
ChaseManhattan,Citibank,BruxellesLambertandothers,thecontinuedabsence
ofa“bigplayer”insitumeantthatallpotentialinvestorswereavidlypursued.In
May 1989, a “major player”was finally securedwhenAIG, theworld’s leading
commercial/industrial underwriter, opted to locate to the IFSC, identifying as
keyfactorsIrelandasabaseforaccessingthesinglemarketaswellasits“helpful
Government”andeducated,availableworkforce.32
30 D/Fin.,‘MemoforGovt.-TaxationofFundsunderManagementintheIFSC’,forGovernmentmeetingof
05/12/88,andDermotNally,Sec.toGovernment,toPrivateSec.ofM/Finance05/12/88,DTA:S2530631 Transcriptofinterviews[inc.withO’BrienandLafferty]from‘ThisWeek’,RTÉradio,04/12/88and
‘CommentbyChairman,IFSC,MrPádraigÓhUiginn,ontheLaffertyBusinessResearchPaperonInternationalPrivateBankingpublishedtoday’07/02/89,DTA:S25306;HaugheyinDáil14/02/89
32 Quotinginternationalpress,DavidHanna,FinancialServices,IDAtoÓhUiginn12/02/89,DTA:S25306;IDApredictionsin‘IFSCcanyield£70mtaxby1992,despitegloomyreport’,SundayTribune05/02/89;onMitsubishi,BrendanRussell,FSUnit,IDA,toÓhUiginn,02/02/89,withattachedlistofprojects,“StrictlyConfidential”,DTA:S25306;onbankssecured,CRC:PNP,ProgressonJobCreation,n.d.[Dec.1988]:8;focustoGermany/Japan,‘GovernmentStatementofProgresswiththeIFSC’,09/12/88,GIS:D/TaoiseachandHaugheyinDáil02/05/89;oninvestors“pursued”,‘DraftmaterialonIFSCforinclusionintheTaoiseach’sspeechatlaunchofIrelandChamberofCommerceintheUnitedStates’,n.d.[01/89],
225
Thismodest take-offof the IFSC inearly1989marked the turningpoint for
the centre, though it would take several years before the its viability was
assured. Ithadbeenachievedbyadroitlyexploitingthe liberalisationofcapital
markets following theSEA.Asimilarapproachwouldsoonbeapplied toother
areasofforeigninvestment,involvinganotherchangeofstrategy.
FDIhadcontractedinthe1980s,accusedofbeingunreliableandoverlycostly
per job.Newprojects,astheIDAhadput it,hadslowedtoa“trickle”.ThePNR
hadthereforefocusedonthelargeindigenoussectorandtreatedFDIasancillary.
Inlinewiththis,theIDAwasinstructedbyI&CtomovefromattractingnewFDI
to improving the export capacity of the 900 FDI firms “still in Ireland”. But
Haughey’sWay Forward circle had been sceptical of this re-focusing, and its
planninginearly1987,asalreadydescribed,identifiedFDIastherealpotential
driverofaqualityindustrialtake-off.Haugheyhadsensedthispotentialin1986
when observing the eager reaction of Irish-American financiers to Desmond’s
IFSCproposal.Thesamepolicychangewhichunleashedthe“wave”ofinterestin
theIFSCinJanuary1989nowalsocameintoplayregardingFDIgenerally.The
IDAreportedhowFDI“surged”afterstrategyswitchedtomarketingIrelandasa
“key location… for1992and theSingleMarket”.TheCII, traditionally close to
governmentandtheIDA,hadurgedthischangeattheNESC.LiamConnellanhad
criticisedRoryO’Donnell’sdraftEECreportforportrayingtheSingleMarketasa
“closed economy” with themajor opportunity being industrial exports into it,
rather thanasa lever toaglobalcapitalopening.Heurged theNESC toadvise
liberalisecapitalmovementaheadofcompetitorstatesandexploiting Ireland’s
locationandtomakeit“agatewaytotheSingleMarket”fortheUSandJapan.33
ExecutivesofGPAhadalreadyurgedsuchacourseonHaugheyin1987and
he had seized on the idea, legislating the removal of capital controls and
pursuing mobile investment. With the Single Market identified as Ireland’s
“majoropportunitytocapturefurtheroverseasinvestment”,theIDAnotedhow
Lyons,D/FAtoSec.,D/Taoiseach,14/01/89andPatNolan,D/TaoiseachtoDavidHannaIDA20/01/89-reD/FAnoteonapproachestoIrishAmbassadorinAustralia,DTA:S25306;onAIG,‘AmericanInternationalGroup(AIG)toEstablishinIFSC’,30/05/89,GIS:D/Finance
33“overlycostly”,NESC1982aandb;“newprojects”and“stillinIreland”,D/I&C,‘ProgressintheProvisionofJobs’,27/05/88,DTA:S25857-E;onWayForwardscepticism,seechapter4;onFDI“surge”,IDAIreland,NewsRelease,‘IDAreviewof1988andoutlookfor1989’,05/01/89andMinisterRayBurke,‘PNRRecoveryJobTargetExceededin1988:End-YearStatementonIndustryPerformance’,29/12/88,GIS:D/I&C;ConnellanCIItoDanaher,NESC,29/09/88,‘CouncilMeeting16/12/88’,NESCArchive,Box2
226
it was now “raised by nearly all [US] companies wemeet”, with interest also
stronginJapan,“muchofit…alsoattributedtotheSingleMarket”.TheIDAwas
“specifically exploiting all these opportunities”, promoting Ireland as a “key
location… in preparation for 1992”. Bymid-1989, I&C secretary Noel Dorgan
waspredictingafurther“potentiallysignificantsurge”ininwardinvestment.34
Incontrasttothe“disappointing”jobsgrowthinindigenousindustry,theIDA
reported4,700newjobsthroughFDIbyOctober1988,anet increaseof2,700,
with even existing companies, such as the Shannon-based De Beers, EI and
Molex, expanding despite the imminent end of Shannon’s special tax status. In
governmentplans,theancillaryroleofFDIinthePNRwasquietlydiscarded.IDA
reported that the “criticismof overseas industry”hadproven “misplaced”, and
incentivecostsand“highlevelsofrepatriatedprofits”shouldbeacceptedgiven
the“actualeconomicactivity”and“valueadded”itwasgeneratinginIreland.35
Therewasalsoradicalthinkingingovernmentonanewhigh-riskFDIformula
whichwouldonlyfinallybepursuedin1990.Itwasfirstproposedbyexecutives
of GPA who argued the potential, combined with low tax, to exploit Ireland’s
“networkofdoubletaxationagreementswhichprovideforfavourabletreatment
…ofprofitsaccumulatedinorrepatriatedfromIreland”todriveaninvestment
dynamic.TheCIIalsofavouredthisformula,butitwashighlysensitiveandthe
strategywouldawaitamajoritygovernmentbeforebeingpursued.36
Amixedeconomymodel:Haughey,theunionsandthe“semi-states” NoissuehadgreaterpotentialtoderailthePNRthanstatecompanies.These
hadbeencriticalinIrisheconomicdevelopment,butnowplayedadecliningrole.
Privatisationhadbegununder theFineGaelcoalition in IrishShipping,Ceimici
Teoandsocialhousing,investmentwascutdrasticallyatCIÉandIrishSugar,and
loss-makingbyprivatecompaniesnationalisedbecauseofstrategicfactors,such
34 PeterDenison-Edson,SeniorVP,GPACorp.AffairsJapan,toDermotDesmond11/06/87,DTA:S25150-A;
‘EffectsofInternalMarketinInwardInvestment’enclwithh/wnote,fromLonergan,D/I&C,toÓhUiginn,10/05/89,DTA:S25857-R;IDAIreland,NewsRelease,‘IDAreviewof1988andoutlookfor1989’,05/01/89andMinisterRayBurke,‘PNRRecoveryJobTargetExceededin1988:End-YearStatementonIndustryPerformance’,29/12/88,GIS:D/I&C;Dorganinh/wnotesofmeetingofCRC‘Sub-GrouponJobCreation’,n.d.[h/wnotes1ofmeeting28/06/89],DTA:S26122-A
35 onnewFDIjobs,IDAIreland,‘ReviewofIDA’sThreeBusinessAreas,1988,’05/01/89,DTA:S25857-NandD/I&C.’20,000Target…ProgressReportofMid-Year’,August1988,DTA:S25857-G;onShannon,Bates,D/I&C,toCRC,encl:‘PoorResponsefromPrivateSector‘,Nov.1989,DTA:S25862-D
36 PeterDenison-Edson,SeniorVP,GPACorp.AffairsJapan,toDermotDesmond11/06/87,DTA:S25150-A
227
as ICI, B&I, Irish Steel and Dublin Gas. These issues had made the 1980s a
“traumaticdecade”forthesector,withemploymentfalling25percentto67,000.
Butby1988itstillaccountedfor6percentoftotalemployment,18percentof
investment and19per cent ofGDP (or 10per centGNP).Aer Lingus andESB
werenotonlyIreland’slargestbutalsoitstopindustrialperformers.37
Commercialisation and privatisation of state enterprises was not yet a
dominant trend in a Europe which, apart from the UK, remained wedded to
dirigisme.But ithadbeenadvocatedbytheOECDsince1977,andinthe1980s
monetary crisis the selling of state “assets”, though most extreme in the UK,
increased only slowly across the OECD. The Single European Act nevertheless
foresaw theopeningofnationalmarketsbyending statemonopoliesandstate
aidstobothprivateandpublicindustry,anissuelongtrackedbyBrussels.38
Irish governments since the1960shad sought to increase the “commercial”
dynamicinstateenterprisesbyreformingtheirfinancingstructuresandseeking
outentrepreneurstoheadthem,asinLynch’sappointmentofJeffersonSmurfit
toBordTelecom. In1980-82Haughey changed “boards” suchTelecomandAn
Postintocorporationsandbeforethat,asMinisterforHealth,hadinitiatedsemi-
state consultancies, suchasPARC, todevelophospitals in theMiddleEast, and
joint ventures to co-fund Irish hospital expansion, as at Beaumont in his own
constituency. The Way Forward proposed further such developments. In
oppositioninthe1980sHaughey,notunreasonably,presentedFiannaFáilasthe
party of the state sector, criticising the sale of Irish Shipping (“a furtive act of
nationalsabotage”)andofforests,aswellasunderinvestmentinTelecom,saying
“if this process of dismantling the State sector is brought much further, the
GovernmentwillgettothepointofdismantlingtheStateitself”.“Ourapproach”,
hetoldtheDáil,wouldbe“totallydifferent”.39
Inthe1987electionpartiesadoptedcontrarypositionsontheissue.ThePDs
advocated wholesale privatisation while Labour opposed any. With business
opinion leaders likeMooreMcDowell and BrendanWalsh advocating absolute
37 Sweeney199038 OECD1990;onEECmonitoringstate-aids,Directive80/723/EEC,OfficialJournalOJL195,29/07/8039 Smurfit2014:14Sweeney1990:93-5;FiannaFáil1982;HaugheyinDáilonIrishShipping14/11/84and
forestry14/12/84,and“totallydifferent”14/05/86
228
commercial criteriaand the saleof suitable sectors,FineGaelproposedselling
minority holdings. Fianna Fáil saw semi-states as “essentially national
development corporations”, and undertook to “retain all profitable parts” of
them. Early in the 1987 government, Des O’Malley tested government resolve
with amotion, supported by Fine Gael, to sell companies apart from strategic
ones.Reynoldsrespondedbysaying thatwhileprivatisationhadbecome“very
fashionable”, Fianna Fáil had no “doctrinaire view”. While the motion was
defeated with the help of Labour and Workers’ Party votes, it illustrated the
government’sprecariouspositiononissuesotherthanstrictlymonetarypolicy.40
TheNESC advocated strengthening state companies, though since1980had
alsourgedthey“begivenasoundfinancialbasisfromthestart”.KieranKennedy
of the ESRI, however, doubted that “the political process … is capable of
maintaining the kind of freedom and accountability” this required. Given this
climate,ICTU,whose80,000semi-statemembersformeditsmostpowerfulblock
after thepublicservices,madetheprotectionofsemi-states itscentralelection
issuein1987.Haugheyassureditofhiscommitmenttoan“efficientandeffective
semi-StateSectorasamajorinstrumentofeconomicdevelopment”.HecitedAer
Lingus’ssemi-autonomoussubsidiary,Airmotive,whichhehadopenedin1981,
as“thetypeofdevelopmentwehadinmind”,andassuredICTU“thatFiannaFáil
hasnointentionofprivatisinganysemi-Statebody”.41
Thebusiness interestCIIequivocatedontheissue,notsurprisinglyas ithad
most state bodies in membership. “Ireland is not doctrinaire on nationalised
industry”, it stated, proposing further commercialisation, “value-for-money”
criteria and contracting out of services, though also a new “Development Co-
operation”companytoselltechnicalassistancetoemergingcountries.42
A positive policy on state industry, combining ICTU and CII views, was
included in thePNR.During itsnegotiationHaugheybuilt credibilitywithboth
40 ‘PrivateInvestmentinStateCompanies’,CIINewsletter,27/01/87;McDowell1987;Walsh1987;Fine
Gael1987);FiannaFáil1987;Labour/WPinDáil7-8/04/8741 Kennedy,‘Introduction’toSweeney1990:ii;unionpowerO’Dowd1989:51;ICTU1987aandICTU-EC
meeting18/02/87;HaugheytoCassellsICTU,20/01/1987,DTA:S25862-F42 CII,‘TheComplementaryRolesofPublicandPrivateEnterprise’,CIINewsletter,13/04/82and‘Growth
IndustrieswithEmploymentPotential,CII8thAnnualCareersinIndustryConference’,19/09/86,PowerPapers,ITSligo;CII,‘PrivateInvestmentinStateCompanies’,CIINewsletter,27/01/87;‘ParticipationinStateEnterprise’,CIINewsletter,24/02/87;‘SwedishExamplebacksStateParticipationCase’,CIINewsletter,28/04/87;Power2009:93
229
groups by summoning semi-state chiefs to impress on them “the importance
which Government attached to the developmental potential of the State-
sponsored sector” and “requesting” them to submit plans for expansion, joint
ventures and overseas consultancy contracts to “contribute to the Programme
forNationalRecovery”.A “WorkingGroup”ofexecutiveswas toreport “on the
role and purpose of State-sponsored bodies” and their “developmental
potential”. Haughey also supported rationalising the sector, privately assuring
semi-stateleadershewouldbackthemin“standingfirm”onpayandapproving
thesplittingofCIÉintothreecompaniesinaprocessthatwouldreduceitsstaff
inadecadefrom16,500to11,000.ThePNRincludedvarioussemi-stateprojects
proposedbycompanies,theCIIandICTU,somewithspecificjobstargets.From
early1988,withextensiveIDAassistance,thesebegantobeactivated.43
In1988DavidBegg, leaderof the telecomunionCWU,spoke formanystate
sector unions by declaring that “we favour a centrally-planned and controlled
economyrelyingheavilyonState-ledinvestmenttothesemi-StateCompaniesto
create jobs”.ThePNR“wasacompromise,embodyingsomeoftheseconcepts”.
Butofficial ICTUpolicywas in factmorenuanced, advocating expanding semi-
statesactivityincludingthroughjointventuresandinternationalconsultancies.44
ICTU nevertheless suspected government of having covertly decided on a
course of privatisation. Discussion papers circulating in the civil service
advocateddismantlingIreland’s“extremeversion”ofawelfarestateandforthe
statetowithdrawfromenterpriseentirely.DisputesovermeasureswhichICTU
sawasweakeningstateenterprisecontinuallyaroseontheCRC,suchastheout-
sourcingofcargo-handlingatDublinAirportandtheIDA’srefusalofagrantfor
anexpansionatAirmotive,whichICTUcriticisedas“contrarytothespirit”ofthe
PNR.The IDAhad in fact supported theAirmotiveprojectbut, as if to confirm
ICTU’s suspicions - though it was not informed - this had been over-ruled by
43 Haughey“request”in‘StatementonMeetingofTaoiseachwithChiefExecutivesofState-sponsored
bodies’,22/06/87,GIS:D/Taoiseach;“standingfirm”in‘AideMemoire.MeetingbetweenTaoiseachandConsultativeGroupofChiefExecutivesofStateAgencies,22June1987:MainConclusions’,DTA:S25857-E;splittingCIEinSweeney1990:26;onCIErescueplanTSSAleaderatICTUADC1988:58;onIDAassistance,‘DevelopmentProposals–MechanicalEngineeringSector.NotesarisingfrommeetingatIDAofficeson15February1988’,S25857-C,J.Lloyd,IDA,‘TheEngineeringProposalforSSBsisgoingwell…”,n.d.[April1988],DTA:S25858-GandMalcolmTaylor,D/T&T,toO’Sullivan,D/Taoiseach,‘reAerLingus-Aeroflottalks’andattch‘NoteandAL-AFMemoofUnderstanding’,07/03/88,DTA:S25858-F
44 BegginICTUADC1988:117;ICTU1984;PNRVandAppendix
230
cabinet. The dispute festered,with government protesting disingenuously that
theIDAgrant-aidedsemi-statesonthesamecriteriaasprivatefirms.45
Government was determined tomaintain the option of privatisation.When
Coilltewasestablished,ICTUprotestedatthepowerthebillgavetheministerto
dispose of shares and the absence ofworker representatives on the board, as
alsoatTeagasc.Itinsistedthatthe1983TelecomActbethemodelforallboards,
whichCassellsclaimedHaugheyhadassuredhimofwhennegotiatingthePNR.
But the minister, John Wilson, supported by cabinet, resisted, confidentially
tellingÓhUiginnthatwhilehewouldaccept“participativearrangementsatsub-
boardlevel”asagreedinthePNR,itwas“thestrongviewofGovernment…that
membersof[theCoillte]Boardbeappointedontheirownmeritsandinanon-
representative capacity”. The issue was provisionally resolved at Coillte and
TeagascbyministersacceptingIFAandICTU“proposals”inappointingboards.46
ICTUalso criticised the slowpaceof job creation in semi-states, urging that
companiesbe“pressured”toshowresults,andasitsannualconferenceloomed,
it sought a direct meeting with Haughey. He agreed to appoint a designated
officialfromhisDepartment,answeringtotheCRC,“toco-ordinatedevelopment
projects in the State Sponsored area” and a “Joint Statement” on the state’s
commitment to the sector with a lengthy report on progress with semi-state
initiatives was published. Haughey again met semi-state chiefs to urge “rapid
progresson theirdevelopmentproposals” anda flurryof activityensued,with
theCRCupdatedonarangeofexpansioninitiatives.47
45 OnICTU“suspicions”,AttleyICTUADC1989;on“papers”,DeclanMcDonagh,ConferenceDirector,IPA,to
ÓhUiginn,03/11/88,attch.WilliamANiskanen,Chairman,CatoInstitute,‘TheFailureoftheFabianState’,DTA:S25306;oncargo-handling,NevintoHaughey,21/12/87,‘Urgent’,encl.NevintoM/T&TJohnWilson,21/12/87,‘Urgent’,andBarryMurphy,PrivateSec,Min/T&T,toNevin,20/01/88,DTA:S25858-D,andCRC4thMeeting,Mar1988,DTA:S25857-C;“contrarytospirit”inBates,D/I&CtoO’SullivanD/Taoiseach,21/03/88,S25857-CandCRC,‘SummaryReportof5thmtg.’,28/04/88andD/I&C,‘IDAAssistancetoPublicEnterprises’,26/04/88,DTA:S25857-D;cabinet“overruling”inDraft,O’Sullivan,D/Taoiseach,toPádraicWhite,IDA,May1988,‘ReAirmotiveIrelandLtd.’,withh/wnotes29/04/88byCantwell,DorganandÓhUiginn,DTA:S25857-D;issueatCRCinD/Taoiseach,note,n.d.[forJune1988CRC],‘IDAGrantAssistancetoPublicEnterprises’,DTA:S25857-F
46 OnCoillteboard,h/wnotes.‘SecretariatGroup16/6/88’,DTA:S25857-F;onsuccessfuldevelopmentAirmotive,Sweeney1990:76;onTeagascÓhUiginnCRCtoMinisterO’Kennedy,26/05/88,DTA:S25857-F;onTelecom“model”,CRC,‘SummaryReportof7thmtg.’30/06/88’,DTA:S25857-F;M/ForestrytoÓhUiginninSmithtoÓhUiginn,CRC,07/07/88,DTA:S25857-F
47 ICTUcriticism,CRC,‘SummaryReportof5thmtg.’,28/04/88,and“pressure”h/wnotes‘CRC[5thmtg.]”,28/04/88,S25857-D;“designatedofficial”inHaugheyinDáil24/05/88andJointGovernment-ICTUstatementonjobcreationdevelopmentsunderthePNR’,27/05/88,withattached‘ProgressontheProvisionofJobs’,27/05/88’,GIS:D/Taoiseach;onHaugheyandCEOsofSSBs,CRC,‘SummaryReportof6thmtg.’,26/05/88,DTA:S25857-Eand‘ProgressontheProvisionofJobs’,27/05/88,GIS:D/Taoiseach
231
Haugheyremainedconsistentonpolicy,curbingcostsatstatecompaniessuch
as CIÉ and Irish Sugar while encouraging expanded activities by others and
legislatingtoenableACCbanktolendoutsidetheagriculturalsectorandtheESB
to engage in international ventures. He also established new state bodies,
notably Coillte, though also Teagasc, Bord Glas and FÁS. The ESB launched a
range of new ventures, in fish farming, fuel-ash for cement production, and
international consultancy, securing “sizeable assignments in three new
countries”withinamonth.Apublic-private“OverseasServicesGroup”marketing
consultancywork,asproposedbyCII,wasalsolaunched,reportingtoHaughey.
Liberalisation under the SEA also continued, with government assisting the
establishmentofprivatebroadcasting,airtransportandtelecomcompanies.48
ICTU’s conference in July 1988 proved a stormy affair. Attley countered
hostilitytothePNR“compromise”onpublicenterprisebystatingthatunionsdid
“nothavepoliticalpower”and,whatevertheshortcomingsoftheagreement,“by
andlarge…it[represented]arealattemptbythismovementtogetthepolicies
inwhichitpassionatelybelievesimplemented”.Theonlyalternativegovernment
was an FG-PD coalition of “unfettered Thatcherism”, which would make “this
debate…redundant”.“Isthatwhatyouwant?”UnderthePNR,hesaid,ICTUhad
securedthesemi-statesand“startedtheprocessofstoppingtheirrun-downand
returningthemtowhattheywereintendedtobe,vehiclesforjobcreation”.With
the issueofpaymuted, theexecutivenarrowly securedamandate to continue
withthePNR,notleastonthebasisofprojectsunderwayinstatecompanies.It
succeededinhavingamotionpassedthat“thepublicsectorshouldbedefended,
but not uncritically” and that accepted commercial criteria for semi-states,
thoughopposingfurthercontracting-outofpublicservices.49
Despite the April 1988 agreement with Haughey, ICTU-government clashes
continued. The Turf Industry Bill, which theMinister for Energy described as
“themostfundamentalchangeintheBoard’sremittodate”, incorporatedBord
naMóna and authorised it to expand its activities, particularly in horticulture,48 P.J.Moriarty,ChiefExecutive,ESBtoJ.Cantwell,Secretary,CRC,11/05/88.‘PNR’,DTA:S25857-E;CRC,
SG39:‘OverseasServicesGroup’,n.d.[April1988],DTA:S25857-D;onliberalisingmeasures,GovernmentofIreland,ElectricitySupply(Amendment)Act1988andAgriculturalCreditAct1988;‘The1988closedown:HowalegalloopholeledtoanexplosioninIrishpirateradio’,www.thejournal.ie,29/12/2018;Murphy,G.,2016:85;Smurfit2014:141-52
49 Attley,ICTUADC1989:54,96-7;executivemotiondebateADC1988;ICTUstrategyO’Dowd1989:viii-ix
232
and engage in joint ventures, but also provided for sub-contracting and the
closingofuneconomicactivities.Thisprovoked fury fromunion leaders,as the
companyhadbeenclosingplantsandsheddingthousandsofjobssince1982.Its
chief executive pleaded with Ó hUiginn that its “rescue plan”, which unions
withinthecompanyaccepted,sought,throughredundanciesandout-sourcing,to
put the companyona competitive footing: “far frombreakingany spiritof the
PNR,BordnaMónahasenshrinedthespiritofthePNRinitsplans”.50
Another conflict that arose was over Department of Environment plans for
localauthoritiestocontractoutwasteservices.AnofficialadvisedÓhUiginnthat
“itwouldbeaswelltoavoidanyspecificreferencetothis”attheCRC,butifhe
had to, he could defend it on the basis that “decisions of this nature are the
essence of local democracy” and to sweeten the pill could mention the
involvementoflocalauthorityengineersinoverseasprojects!Concernedfurther
at out-sourcing in the health services, ICTU sought a “central agreement”with
theDepartmentofHealthtoregulateit.ButHealthwarnedÓhUiginntoheadoff
any such suggestion, which would not only be “difficult … and unwieldy” but
would lead to “a clawing back of savings”. Cabinet was intent on further out-
sourcing-widespreadinvoluntaryhospitalsanyway-andhadinstructedhealth
boards to pursue it. Itwas, said theDepartment ofHealth, an issue best dealt
with“locally”,andinsteadofany“centralagreement”ÓhUiginnmightsuggesta
“forum”beestablishedtodiscuss“difficultiesexperiencedontheground”.51
Asstatecompanieswerereviewed,sellingoffpoorlyperformingones,suchas
the Great Southern Hotel Group (GSHG), was increasingly recommended. But
Haughey hesitated to take such a course. The semi-state TV film company,
Telegael,wasrestructuredtoallowforprivatesectorinvolvement,despiteunion
complaints of “privatisation by stealth”. There was also hostility to alleged
government favouring of Ryanair. The struggling airline had secured a license
undertheCoalitionbuthadasyet tosucceed instartingasingleroute inwhat
50 Onturfindustry,RayBurke,‘TurfDevelopmentBill1988’,20/10/88,GIS:D/Energy;ICTUreaction,
CassellstoTeahon,D/Taoiseach,‘re:FutureOrganisationalstructureofBordnaMóna’15/11/88andSeanS.O’Muiri,AS,D/Energy,toTeahon,CRC,16/12/88,DTA:S25858-N;BnMjob“shedding”,Sweeney1990:96-100;BnMresponse,E.O’Connor,MD,BordnaMóna,toTeahon,CRC,23/11/88,DTA:S25858-N
51 On“advised”,D.McKenna,APO,D/Env.toTheSec.,D/Taoiseach,24/11/88,DTA:S25858-M;onICTUand“generalagreement”,JohnHurley,AS,D/HealthtoO’Sullivan,D/Taoiseach,attch.D/Health,‘Confidential:NoteonContracting’,14/04/89,DTA:S25857-Q
233
was a highly protected market. Cabinet agreed to give it one of Aer Lingus’s
Stanstedslots,whichICTUdecriedasfavouritismdamagingthenationalcarrier.
On the CRC,Macra na Féirme attacked ICTU’s position, accusingAer Lingus of
“demolishingRyanair”.TheStanstedslotwasaminorconcession,Wilsonsaying
heonlywanted“tobe fair toRyanair”andgive ita “reasonableopportunity to
establishapresence”.GiventheCRCstand-off,HaugheytriedtoassistRyanairin
otherways,including-unsuccessfully–bytryingtopersuadeMitterandtoallow
it fly into Paris. The whole incident illustrated Haughey’s social-democratic
dirigistepreference-whilegovernmenthadgivenRyanairminimalassistance,it
simultaneouslypursuednewroutesforAerLingus,intoMunichandVienna.52
Despite the privatising zeal of some civil servants and state company
executives, Haughey thus kept government action within the PNR framework.
But from the state’s perspective Ryanair was important and when Ó hUiginn
outlined theCRC’s concerns to theMinister forTransport, the latter replied in
“strictconfidence”thatwhilecabinetwasdeterminedtosupportcompetitionin
airwaysinlinewithECpolicy,itsprioritywastosupportIrishairlinescapableof
withstanding“foreigncarriers”.AfewslotswouldenableRyanairgrow,butAer
Linguswouldalsobeassistedtoexploitanyopeningopportunities.53
As state companies expanded and “commercialised”, it soon emerged, as in
private industry, that this produced asmany job losses as gains. A June 1989
update for theCRCby the“SpecialProjectsOfficer”,whichTeahonsuppressed,
detailed the array of new projects underway, but also restructuring and sub-
contractingplansvirtuallyallinvolvingstaffreductions.ICTU,throughitsunions
inthesecompanies,waswellawareofthisandwhilewelcomingnewprojectsit
complainedthat jobswerebeing“destroyedasfast”,EdBrownelamentingthis
as“contrarytothespiritofthePNR”and“againstthenationalwill”.Strugglingto52 OnGSHG,[Dignam],Ec.&SocialPolicyDiv.,D/Taoiseach,‘DevelopmentProposalsofStateBodies’,n.d.
[June1988],DTA:S25857-G;onunioncomplaints,DonnchaÓhÉallaithe,MeithealOibreTheilefisnaGaeltachtatoCassells,ICTU,20/10/88,DTA:S25858-O;Ryainair“struggling”,Aldous201:104-119,182-4;Stansted“slot”debate,CRC,‘SummaryReport’andh/wnotesof15thmtg.’,18/05/89,DTA:S25857-S;MnFcomments,h/wnotesSecretariatGroupmtg.,10/03/88,DTA:S25857-C;Minister“tobefairtoRyanair”,O’SullivanD/TaoiseachtoÓhUiginn,‘AgendaItem5–AOB,Dublin-Stansted’,18/05/89,encl.D/T&T,‘re:PNR-CRCMtg.,18thMay:NoteforChairman,Dublin-LondonRoute’,17/05/89’,andD/T&T,06/06/89,DTA:S25857-S;‘HaugheyinsistedMitterrandstopoffathishomeforchampagne’,IrishTimes,29/12/2019;Ryanair/AerLingussupports,ÓhUiginn,Chair,CRC,toJohnWilsonTD,MinT&T,04/07/89,JohnWilsonTD,M/T&T,toÓhUiginn,ChairCRC,‘Confidential’,12/07/89,DTA:S25857-V
53 ÓhUiginninCRC,‘SummaryReportof16thmtg.’22/06/89,DTA:S25857-U;ÓhUiginntoWilsonM/T&T,04/07/89,WilsontoÓhUiginn,Chair,CRC,12/07/89,‘Confidential’,DTA:S25857-V
234
maintaincoherenceingovernmentstrategy,MacSharrystressedtoICTUitsPNR
commitment to a “profitable and successful commercial state sector”, but also
that companies “must have flexibility” to reform. “The general question of
privatisation per se is not currently under consideration” but it would be
“unreasonableandunrealistic” to rule itoutentirelyasgovernment “couldnot
subscribe”toanyservice“currentlyinpublichandsremain[ing]soforever”.54
ICTU disingenuously claimed the PNR aimed to maintain and increase
employment, not reduce, it, but it waswell aware that semi-state commercial
success, which it espoused, was incompatible with such criteria. Irish Sugar
(CSET)hadbeenpreventedfromclosinguneconomicplantsinthe1970s,andin
the 1987 election Michael O’Kennedy had campaigned specifically against the
closure of its Thurles plant in his constituency, threatening to prevent it by
appointing directors from the local area. CSET plans required the closure of
Thurles however, and unions had accepted this on the premise of alternative
industrial projects.But theseproved slow inmaterialising, creating a situation
Browne warned was “intolerable … [and] could be explosive”. O’Kennedy
intervenedintime-honouredfashion,forcingthecompany’shandbyexpressing
“surprise” at its decision. As the sole shareholder he “requested” CSET to halt
closure pending examination of alternatives. This remained the situation
throughoutearly1989asalternativeprojectsweresought.55
Thesemi-statesbecameifanythingmorecrucialtoICTUasjob-creationinthe
privatesectorremained“disappointing”.SIPTUarguedthatasthesinglemarket
would mean investment would concentrate at “the centre of Europe in the
absenceofaEuropeanindustrialpolicy”,andwithIrishcompaniesexpandingby
acquisitions abroad rather than throughdomestic investment, state companies
weretheonlyreliablebaseforanindigenous“export-ledindustrialisation”.56
54 ColmRegan,SPO,[“SpecialDevelopmentProjectsOfficer,D/Taoiseach”],‘StateSponsoredBodies’,
16/06/89,withh/wnotetoO’Sullivan,D/Taoiseach,30/06/89[“NotcirculatedatdirectionofAsst.Sec.MrTeahon–P.O’S],DTA:S25857-T;Browneinh/wnotesof14thCRCmeeting19/04/89,DTA:S25857-R;MacSharry,M/Finance,‘Replydated18October1988toMrDonalNevin’,ICTU’,DTA:S25858-M
55 CRC,‘SummaryReportof14thmtg.’19/04/89,DTA:S25857-R;O’Kennedy,“OpenLetter”,09/02/87,quotedinSweeney1990:64;“explosive”inh/wnotes14thCRCmeeting19/04/89,DTA:S25857-R;O’Kennedy“request”,‘ThurlesSugarFactory’,20/01/89,GIS:D/A&F;h/wnotes14thCRCmeeting19/04/89,‘CommercialSSB’,DTA:S25857-R
56 Sweeney1990:204
235
Government held its hand, halting the Thurles closure and in early 1989
talkingupsemi-stateexpansionsuccesses suchasby theESBandAerRianta’s
acquisition of hotel chains and duty-free shops in the Soviet Union. Haughey
refinedhisposition,welcomingthosesemi-statesperforming“impressively”,for
whom“thefuturecanbebrightandrewarding”,whilewarningathisÁrdFheis
thatthiswoulddepend“entirelyontheirabilitytoperformefficientlyand,where
appropriate, profitably”. Non-performing companies could no longer expect
“huge subsidies [from] the hard-pressed taxpayer”, nor the country “afford to
leavelargeamountsofscarceresourcesofcapitalandprofessionalskillslocked
upuselesslyinout-datedstructures”.Itwasastatementofintent.57
Socialpartnershipbothenabledandblockedgovernmentplans inthehighly
politicisedsemi-statesector.Buttheimpassecouldnotcontinue,especiallygiven
problems in distressed companies andHaughey’s intention to release creative
potentialthroughpartialdenationalisation.Hewastofinallyachievearesolution
ending the impasse in1990when,with thestrengthofamajoritycoalition,he
wouldsecureICTUacquiescencetoabroad,flexiblestrategytowardsthesector.
Nevertheless,innoareamorethanthesemi-states,Haughey’sactivismbelies
anysimplecharacterisationofhimasafreemarketdogmatist.Throughvarious
initiativessincethe1960shehadbeentothefore inreformstocommercialise
the sector, but under his 1987-89 government not alone was the widespread
clamour for privatisation resisted, but a near moribund sector facing
remorselessdeclinewasrevivedasakeydevelopmentdriver,withnewagencies
andenterprises founded,companiesrestructuredthroughcommercialopening,
new ventures and international enterprises initiated and private capital input
expanded.Thiscommitmenttoandrealisationofamixed-economymodelwasa
product of the state/business/union alliance of social partnership, without
whichtheventuresoutlinedinthischapterwouldlikelynothaveoccurred.
57 RayBurke,‘Statement…attheofficiallaunchofanewStateIndustrialOverseasConsultancyCompany’,
09/01/89,GIS:D/I&C;BurkeinDáil25/01/89;ÁrdFheis,Haughey1989
236
Chapter9
Thepoliticsofpayandsocialcompensation1987-89Deferringreward:partnershipandthepoliticsofpay
PayhadbeenattheheartofthePNRnegotiations,forunions,governmentand
employersalike,asine-qua-nonfor itssigning, the indispensible“coredeal”on
whichthePNR“consensus”depended.Achieving“industrialpeace”,especiallyin
the public service and wider public sector, was critical to restoring economic
confidenceandimplementingaconsistentmonetaryadjustment.1
The“separate”payagreementsforthepublicandprivatesectorshadsimilar
terms.With inflation falling towards 3 per cent, these involved a first-“phase”
fromJuly1988of3percentonearningsupto,and2percentonearningabove,
£120p.w.,withabasicminimumof£4/p.w,followedbyansimilarsecondphase
in July 1990. Additional “cost increasing claims” were disallowed and
implementationwassubjectto“localnegotiation”andcompanycompetitiveness.
For traditional reasons pay agreements were voluntary and not legally
enforceable, but through the PNRwere linked to quid-pro-quos on tax reform
increasingtake-homepayandonexpandingwelfare.The“phases”paralleledthe
budgetary cycle, followingActsgivingeffect to taxandwelfaredecisions. ICTU
welcomedthe1988/89budgetsasprogressingthepay/taxcommitment.2
Apublicpayagreementwasessentialforgovernment,butnolessforICTU,for
while the public service accounted for just over a quarter of all workers, it
composed over half all union members, forming the most powerful block in
Congress. The agreement’s treatment of “special claims” was crucial, a key
determinantofgovernment/unionrelations.ThePNRrestoredtheC&Asystem
and allowed such claims be heard, though their actual paymentwas deferred.
Governmentwas intent on an initial sixmonth pay pause and reducing public
employmentlevels.AgreementonthefirstphasetakingeffectonlyinJuly1988
1 “coredeal”,interviewswithCassells,Attley,O’Donnell2 Terms,ICTUandFUE-CIF1987;notlegallyenforceable,Kerr2006;‘Statementon1988Budget’,
27/01/88,ICTUAR:223-5;‘1989BudgetandPNR’,ICTUECmeeting30/01/89
237
providedthepaypause–even ifsoftenedbytaxreformstakingeffectearlier -
andthevoluntaryredundancyprogrammeachievedthestaffreduction.Thiswas
barteredagainsta formula for“specialawards”whichdeferredpaymentof the
initial40percentofanysuchawardstoJuly1989,withthebalancetobeagreed
subsequently. In the event of “serious financial or budgetary consequences”,
government and ICTU would “consult” “with a view to arriving at a mutually
acceptablesolution”andtimescaleforpaymentofthebalance.3
The redundancy scheme ended compulsory lay-offs while targeting a
reductionof20,000publicserviceposts.Thecoalition’s“completeembargo”on
recruitment,exceptto“keyposts”,andnon-replacementofstaffexitingthrough
early retirement or career breaks,would remain in place, to be “reviewed” in
1989. The Department of Finance reported the unexpected popularity of the
redundancyschemeandthecertaintyofreachingitstargetbytheendof1989.
Thiswould reduce the civil service to the “more sustainable” figure of 27,000
where ithadbeen “immediatelyprior to the [1977] ‘job creationprogramme’”
(sic),andshouldbe”consolidated”atthatlevel,asshouldtheoverallreduction
of the public service to 197,000. Small issues remained to upset public pay
calculations, suchas the “unavoidable”paymentof thebalanceofa legacypre-
PNRspecialawardtoteachers.Therefusalbythecoalitiontoimplementthishad
been the start of that government’s unravelling. But otherwise government
needed only budget in 1988 for the initial general 2 per cent phase, which Ó
hUiginnhadconfided toHaughey in1987wouldbe coveredbyDepartmentof
Financeover-estimatesnotrevealedtoICTU.Theredundancyschemedelivered
additionalcostreductions,andspecialawardswerenotdueuntilJuly1989.4
Thiscomplexformularesolvedpublicsectorpay,evenifunionshadtoaccept
considerabledeferral.Buttaxreforminthemeantimebluntedtheimpactofthis.
TheLGPSUPresidentdescribedthedealasa“greatstepforwardinthecontextof
the climate that existed in 1987” and as having “returned the Trade Union
3 GovernmentofIreland1987a4 PNRII(11);CRC,‘SpecificMeasures…’,03/02/89,DTA:S25899-A;D/Finance,‘rePoint4ofICTU
document–PublicService’,n.d.[Dec.89],DTA:S25857-Z;McGuire,D/Educ.,toO’Sullivan,D/Taoiseach,14/04/89,attchd,‘CRCQueries:FinancialProvisionforVECColleges’,DTA:S25857-Q
238
Movementtoitsrightfulplacecentre-stageinnationallifefromthepositionfrom
whichithadbeenmarginalisedoverthepreviousdecade”.5
Pay issues in theprivate sectorwere, if anything, evenmore complex. ICTU
hadinsistedontheprivatesectorbeingintheagreementasitwasdeterminedto
reverse the15percentdecline inpost-taxwagessince1980. Its chief concern
waslowpayandithadsoughtastatutoryminimumwagetosetafloortothis,
butemployers,andthereforegovernment,wereadamantlyopposed.Haughey’s
interventionhad ensuredFUEparticipation in thePNR, but only by conceding
conditionality on the minimum rate, and only secured construction industry
participationbypromising“compensation”inpubliccontractsforthePNRwage
costs. In contrast to public service “special claims”, “cost-increasing claims” in
privateindustryabovePNRrateswererigorouslyexcluded.
Theseconditionsweregallingparticularly forworkers instrongprivateand
semi-statescompanies.Bothgovernmentand theFUE feared that suchgroups,
withemployer connivance, couldundermine thePNRby “locally”agreeingpay
top-ups. Government worried that any “divergence from the agreed norms”
would “ultimatelymake itmore difficult to hold the line in the public sector”,
causingthepublicdeal“tocomeapartattheseams”.ItthereforepressuredFUE
toacceptthePNRasa“nationalnorm”,apartfromindistressedcompanies,and
urgedstrongcompaniestoseethe“importancefornationalrecovery”ofholding
tothePNR,“apackageembracingnotonlypaybutalsotaxconcessions”.6
MostintheICTUacceptedthebalanceachieved,thoughanti-PNRunionswith
members in strong firms complained loudly of such employers “hiding behind
thenationalinterest”incontrollingwageswhileenjoyingrisingprofits.Butthey
adhered to the agreement, Ahern declaring that “the great majority of pay
settlements” in 1988 had been “within the terms” of the PNR. Strikes fell to a
tenth of the 1980 level and those that occurred were seldom about pay, but
ratherredundanciesorworkpractices.SIPTUnotedonlyoneintenofcompanies
it organised conceding local terms “over and above”. Cases before the Labour
5 Reporter(LGPSU),June19896 MurphytoMinister(forLabour)‘PayinthePrivateSector’,24/11/87,andtoÓhUiginn,01/12/87,DTA:
S25857-A;Keegan,Sec.D/Lab.toÓhUiginn,04.12.87,‘JointLabourCommittees:PayProvisionsofAgreementbetweenICTU/FUE/CIF’,DTA:S25857-A
239
Court fell from1,000 in 1986 to 708 in 1988 and just 450 in 1990. Industrial
conflict,notjustoverpaybutalsootherissues,wasdecliningrapidly.7
The transition toPNRpay terms in theprivate sectorwasdelayed inmany
companies for several years as pre-PNR agreements ran their course. At least
600suchagreementsweresignedin1987alonepriortothePNR,manyrunning
to 1990 or later, greatly relieving pay pressures. Besides these companies
effectivelystilloutsidethePNR,attheotherendofthespectrumwerenumerous
distressedcompanieswhereunionshadaccepted“rescueplans”involvingactual
paycuts,wherePNRtermswouldthereforenotyetapply.Whenarescueplanin
B&I,asemi-stateferrycompany,cameupforreviewin1989,ICTUevensought
CRCsupportforthecompanydeferringPNRtermsas“spaceneedstobecreated
… to be able to respond in a positive manner to the needs which the unions
genuinely have to keep the show on the road” (sic.). Private companies in a
similar position includedWaterford Glass, where ICTU offered to end a strike
overrescueplantermsbytradingawagefreezeforaworkers’shareholding.8
ICTU’s overriding priority in the private sector were the lower-paid, who
predominated among its membership. In the absence of a National Minimum
Wage, ithadacceptedHaughey’sadamantassurancethatthePNRtermswould
be enforced as a “national norm”. As claims to apply PNR rates began to be
lodgedwith the Labour Court as pre-PNR agreements expired during 1988, a
satisfiedITGWUfounditruling“consistently”againstrecalcitrantemployersand
ordering PNR “norms” to be applied. It equally ruled against unions seeking
above-PNRterms,andinclaimsforincreasesforproductivityorchangedwork
practices,excludedbythePNR,itregularlyadvisedunions“toawaitexpiryofthe
Programme before pressing [such] claims”. The issue of industry-wide
applicationofPNRtermswasalsosoon testedwhena threatenedstrike in the
7 ICTUAR1988:58;Ahern,‘Speech…attheformalannouncementoftheFrameworkAgreementonHours
ofWork’,17/02/89andD/Lab.,‘Strikes,RedundanciesandUnemploymentfellin1989–AnnualReportoftheDept.ofLabour’,30/03/90,GIS:D/Labour;[ManusO’Riordan],‘ReviewoftheProgrammeforNationalRecoveryandtheroleoftheLabourCourt’,ResearchDept.,SIPTU,n.d.[1990],[faxdated23/10/90],ICTUArchive:FolderPN-1
8 ICTU-FUE-CIF(1987);D/TaoiseachreportinCRC,‘SpecificMeasures…’,03/02/89;McGinley(1999):117;[ManusO’Riordan],‘ReviewoftheProgrammeforNationalRecoveryandtheroleoftheLabourCourt’,ResearchDept.,SIPTU,n.d.[1990],[faxdated23/10/90],ICTUArchive:FolderPN-1;O’SullivanD/TaoiseachtoMurphy,D/T&T,andtoO’Gorman,D/Finance,19/09/89,reB&I,attch.StephenMcCarthy,ICTUtoCassells,‘re:B&IWageNegs_’,14/06/89,DTA:S25857-V;ICTUPressStatement04/03/89,LabourComment,29/04/89;onWaterford,Cook1992
240
clothingsector-coveredbyaJLC–causedemployerstoacceptthePNR£4rate
acrosstheindustry.ThiswasfollowedbyasimilarJLCagreementinthecontract
cleaningsector.TheLabourCourtthereafterconsistentlyappliedthe£4national
“norm”across industries.The strongFUE resistanceof1987againstminimum
rates thus evaporated, with the recovering economy doubtlessly lessening
pressuresonmanyemployerswhohadsofiercelyresistedthemin1987.9
Low pay and precarious work, especially among women, was a growing
realityinthe1980s.From1983ICTUpursuedanationalminimumwage(NMW)
to counter it, unsuccessfully seeking its inclusion in the PNR. Some unions
opposedaNMWascreatingalow“floor”andunderminingbargainingpower,as
hadhappenedintheUS.ButtheITGWUinparticular,whichhadpioneeredthe
“flat rate” in pay bargaining to benefit the low paid, now soughtmeasures to
counterwhatDesGeraghtycalled the “NewWave flexibility”.Unionsmustend
their “ambivalence” on “marginal workers’, and rather than rely on industrial
organising“concentrateourenergies”onimprovingtheirpositionthrough“legal
reform,taxreformandsocialreform”.ThisshapedICTUstrategyinthePNR.10
A further concession sought by ICTU for pay moderation and also as an
employment-boostingmeasure,wasreducedworkinghours,thenamajortheme
across the EC.When the FUE resisted this in negotiating the PNR,Haughey in
exasperation threatened a government-union alliance applying it in the public
service that would force them to follow suit. A typical PNR compromise was
achieved, agreeing “discussions” between the social partners and government
“onageneralframeworkwithinwhichtheissue…canbedealt”(sic).11
Aboardroom-typeconflict,oftentypicalofpartnership,eruptedattheinitially
friendly firstmeetingof the “workinghours committee”, chairedbyÓhUiginn.
This had only finally met in October 1988 and when employers proposed a
furtherdrawn-out talksprocess, a furiousAttley changed the “whole tenor” of
themeeting,accusingtheFUE“ofextremefoot-dragging”.TurloughO’Sullivanof
9 LabourCourtRecommendationNo.11940;Reporter(LGPSU),June1989;[ManusO’Riordan],‘Reviewof
theProgrammeforNationalRecoveryandtheroleoftheLabourCourt’,ResearchDept.,SIPTU,n.d.[1990],[faxdated23/10/90],ICTUArchive:FolderPN-1
10 Cordova1986;ICTU1989c;ICTUAR1988:143;AttleyinMcGinley1999:245-6;BlackwellJohnandNolanBrian1989;GeraghtyinICTUADC1988:58
11 McGinley1999:124,135;PNRII(9)
241
theFUEreciprocatedbyrefusingtocontinueuntilÓhUiginnrestoreddecorum.
TheDepartment of Finance, sidingwith employers, reported to cabinet how it
hadacted“tosafeguardExchequer interests”byensuring that“net”hoursonly
werecalculated(“excludinglunchbreaks”)andthat“‘spin-off’claimswould“not
beentertained”.“Anothermostimportantfeature”,itreported,wasthatdespite
ICTU’sdemandforaJuly1989deadlineforthereform,employershad“refused
toconcede”,insistingon“localnegotiation”.Butafterseveralmeetingsanagreed
“General Framework on Working Hours” emerged. This conceded a one-hour
reduction phased in over three years, subject to “local” or JLC sector/industry
negotiationandcompetitiveness “implications”.Launching it inFebruary1989,
AhernstressedtheroleoftheLabourCourtinensuringasmoothintroduction.12
TheDepartmentofFinanceestimated that themeasurewouldcost£24m in
thepublicsectorannually,with themaincost falling in thehealthservicesand
local authorities. But the “budgetary allocations for special pay increases
generally” for 1989 (including the Gleeson report’s “interim award” for senior
officials) includedno provision for this. Government therefore stalled in “local
negotiations”onit,withtalksstillon-goinginmanybodiesinto1990.Withthis
pacesetbygovernment,employersfollowed,withfewprivatesectoragreements
onreducedhoursconcludedbylate1989,coveringjust18,000workers.13
ThecomplexagreementsonpayandworkinghoursonwhichtheentirePNR
depended,howeverdrawnout,neverthelessdeliveredboth“industrialpeace”-a
key factor in economic stability - and reduced budgetary pressures.While the
state and private employers achieved a notable deferring of cost inputs – art
fromtax-until1989,unionssecuredanidealpublicserviceagreement,evenif
subject to considerable deferral and budget conditionality. For private sector
unions,theachievementofminimumPNRratesandworkinghourreductionsas
nationally applicable, and on-going tax, welfare and social policy reforms
12 [O’Sullivan,D/Taois.],‘DraftingGrouponReductionofWorkingHours’,n.d.[Jan.89],DTA:S25858-O;
OfficeofM/Fin.,‘AideMemoireforGovt.Mtg.on10February.FrameworkAgreementonreductioninworkinghours’,DTA:S25858-P;PNR,GeneralFrameworkonWorkingHours,[17]February1989
13 OfficeoftheM/Fin.,‘AideMemoireforGovernmentMeetingon10February1989’,DTA:S25858-P;N.T.O’Gorman,D/Finance,toO’Sullivan,D/Taoiseach,21/11/89:‘Re:ICTUmeetingwithTaoiseach’,24/11/89,encl.‘BriefingNoterereductionofworkinghours’;CRC,‘ReportofBilateralMeeting[Departments]withRepresentativesofICTUon8Nov.1989’,andh/wnotesofthemeeting,DTA:S25862-D;D/EnvironmentfaxtoD/Taoiseach,06/07/90:n.t.,DTA:S25858-Z6;h/wnotes,‘CRC,BilateralMeeting[Departments]withICTU’,08/11/89’,DTA:S25862-D
242
providingincrementalimprovements,benefitedmanyhundredsofthousandsof
workingclassfamilies.Forgovernment,thedeferralofspecialawardpayments,
the continued reduction of public employment and the recruitment embargo,
pending“review”,weremajorbenefits.Theslackprovidedbytheoverlapofpre-
PNRpayagreementsinmanystrongcompaniesmeantunionsintheprivateand
semi-statesectorswererelievedofpressuresfromthePNRbanonlocaladd-on
claims. But these private sector pay and public service pressures were only
deferred, cushioned by tax reforms and pre-PNR arrangements running their
course,andwouldforcefullyreturntothepartnershipagendafromlate1989.
Newparadigms:RuralDevelopmentandLong-termunemployment Already from 1988 the focus of social partnership began to shift from core
economic/industrial policy as the “turnaround” saw thePNR recovery formula
gain wide acceptance. Continued high unemployment and a realisation that it
would not be solved quickly moved centre stage. The integration through the
NDPof theEC structural fundswith thePNR further strengthened the shift to
compensatorysocialpolicy.Twoparticularinterventionstoemergewerefirstly
“integrated rural development” (IRD) and secondly measures to combat what
was identifiedas a “newphenomenon”of long-termunemployment (“LTU”) in
deprivedurbanareas.Thisoccurredasaneweconomywithnewgrowthsectors
rather than a recovering old economy emerged. Compensatory policies on tax
complianceandsocialreformsalsoassumedgreaterprominence.Howinitiatives
intheseareasevolvediscriticaltothere-shapingofpartnershipthatensued.
On IRD, Haughey had long been an advocate of promoting off-farm rural
enterprise, even before CAP reform. Both Macra na Feirme and ICOS had
developedideasonhowlocalinterestsmightdriveaprocessofsocio-economic
regenerationthroughan“IntegratedRuralDevelopment”programme(IRD)and,
with IFA support, pilot IRD projects were included in the PNR. While this
approachmeshedwiththinkinginBrussels,itpre-datedtheECprogrammeand
haddomesticroots.Localinitiativesbuildingonco-operativetraditionshadbeen
supported by government through the Combat Poverty Agency (CPA), for
243
example in North Mayo. Many local development groups campaigned to be
included in the programme. Macra na Feirme saw the potential of IRD to
overcome the “fundamental weakness in our structures” of local government,
especially their impact on socio-economic development. Haughey had been
acerbic in his scepticism of local government having the competence to drive
development inDublin, andwasno less so in relation to rural Ireland.Hehad
welcomedMacra’sproposals, included theirpilot IRDprojects in thePNR, and
hadexpandedthesepilotsintoanationwideprogrammeundertheNDP.14
Inpreparing theNDP,governmenthadasked theDepartmentofAgriculture
for proposals for this IRD programme. When it returned with a plan for a
Department-runschemeof “programmeactivators”overseeing “localeconomic
and social improvement”, Haughey intervened furiously through Ó hUiginn to
scupper it. Ó hUiginn told Agriculture that while it was unprecedented for a
Taoiseach to criticisedepartmentalplans, itwas tonotehisviewson this.The
purposeof IRDwas to generate enterprise in a post-CAP reformenvironment,
withprojectsfocusedondisadvantagedareasandbuildingonexistinginitiatives.
Governmentofficialswouldonly“stifle local initiative”rather thanstimulate it.
Localbodies,bothstateandvoluntary,shouldinsteadbe“mobilised”byoutside
“co-ordinators”to“lead,stimulateandfosterlocalinitiative”ratherthan,“asyou
put it”, oversee “improvement”. ThemodelHaughey “envisaged”was the CPA-
fundedprojectinMayoorthatproposedbytheWestKerryDevelopmentgroup.
TheDelorsPlanwasonlyinpreparation,buthadtheDepartment,heasked,even
sought“advancedrafts”ofitsideas?Ifnotitshoulddoso,andreturnwithfresh
proposalsincorporatingCommission“thinking”andwhatmight“fitinwithit”.15
In 1987Delors had launched a discussionpaperTheFutureofRuralSociety
which, as agriculture minister O’Kennedy put it, rejected the “US model” of
abolishing rural subsidies due to the “intolerable social and economic cost”
involved, promoting instead strengthening the “economic and social fabric in
ruralareas”throughoff-farm,quality localenterprise.Delorsforesawan“area-
14 PNRV(20);DrFergusO’Ferrall,ChiefExecutive,MacranaFeirme,toPatO’Sullivan,D/Taoiseach,
13/09/88,‘Re:StructuralFunds’,DTA:S25857-I;h/wnoteofmeetingSG,05/010/1988,DTA:S25857-Iand‘ActionPointsfromSGmtg.on5October’’,12/10/88,DTA:S25857-J
15 ÓhEigeartaigh,forSec.,D/Taoiseach,toSec.,D/A&F,forattn..DrTedAtwood,15/01/88,DTA:S25858.D
244
focussed”programme to “harness local energies, imaginationandenthusiasm”,
supportedbycentralandlocalgovernmentandtheprivatesector.16
The Department of Finance seized on the focus in draft EC guidelines on
assisting poorer and converting regions and “speeding up” agricultural
adjustment and rural development in anticipation of CAP reform, to propose
structural fund co-financing forprojects involving theprivate sector.Macrana
Feirmesoughttheinclusionofcommunityresourcedprojects,andoncethiswas
achieved,Government“subsumed”itsIRDplanswithintheERDFprogramme,as
achapteroftheNDP.Butvariousagencieshadalreadybeenre-orientedtowards
“localdevelopment”.In1988,forexample,ShannonDevelopment(SFADCo)was
re-directed to support voluntary enterprise groups, community co-operatives
andotherprojectsonacounty“enterpriseplan”basisacrosstheSouth-West,as
wellasinLimerickcity,whereitpartneredwiththeCityRenewalScheme.17
The IRD programme thus emerged organically, but adjusted to “fit in”with
Commissionthinking.WhatemergedinIrelandwouldrapidlybecamea“model”
for how IRDwasdevelopedby theCommission as aEurope-wideprogramme.
Oneofthemostsuccessfulruraldevelopmentprogrammessincethefoundation
of the state thus took form through the integration of the PNR and NDP, and
becameamodelforEuropeanruralregenerationandeconomicorganisation.
Inurbansocialregeneration,auniquemodelalsoemergedtotacklethevery
differentissueoflong-termunemployment.Itwouldbeshapedbyacombination
ofEuropeanpolicy re-think, organic local responses to social crisis, andpolicy
innovationbytheorganisationsoftheCRCunderthePNR.
The social impact of de-industrialisation had led the OECD’s minister-level
SocialAffairsCommitteein1986toidentifya“newphenomenon”of“long-term
unemployment”andproposetargetedmeasuresofspecialeducationand“active
labourmarketpolicy”totackleit.Creatingindustrialjobsandtrainingpeopleto
fill them was seen as no longer functional in addressing this unemployment
16 O’Kennedy,‘Statement…launchingtheAnnualReviewandOutlookfortheAgriculturalandFood
Industry’,18/01/89,GIS:D/A&F;ECCommission,1988a;D/Finance,‘FutureDevelopmentoftheERDF’,14/03/88,S25857-C
17 D/Fin.,‘FutureDevelopmentofERDF’,14/03/88,S25857-C;O’Ferrall,MnF,toO’Sullivan,D/Taoiseach,13/09/88,‘Re:StructuralFunds’,DTA:S25857-I;TomDunne,MD,ShannonDevelopment,‘PartnershipapproachpositionsShannonregionforthe1990s’[PressRelease],03/01/89,DTA:S25857-N
245
givenitsgeographicconcentrationandthetypeofskillstheemergingeconomy
required.Theterm“LTU”wascoinedtorefertopeoplewithobsolescentskills,
overayearunemployedandcaught inacycleof joblessness.A “ratcheteffect”
meant that while LTU increased in recessionary periods, it did not similarly
declinewhengrowthresumed,and thisgroupbecame trapped inadownward
spiral of labourmarket exclusion and disadvantage. Unemployment in Europe
declinedinthe1980s,but long-termunemploymentremainedstubbornlyhigh,
accountedfornearlyhalfofallthoseoutofworkinIrelandby1988.18
The OECD declared the supply-side vocational training solution of the full-
employmentera redundant,promoting insteadanarea-basedapproach toLTU
andlabourmarket“disadvantage”.Themethodologyitproposedwasoneof“re-
orientating” programmes to “particularly disadvantaged groups”, “improving
motivation,lifeskillsandjobsearchtechniques”,compulsorytesting,jobsclubs,
self-employment, “social employment” projects supplying non-economic but
socially useful services, and “additional and still ‘heavier’ forms of aid” for the
“more seriously disadvantaged”. The aim was to re-integrate the unemployed
throughnewservicejobs,ortooccupythemtoproduce“societalbenefitsinthe
formofreducedunsocialbehaviour,lowerlevelsofillhealthetc”.19
ThisOECDpolicywascontroversialandonlyfinallyadoptedin1989,before
theEC.TheEuropeanSocialFund (ESF)hadbeenestablishedby theTreatyof
Rome as a “compensatorymeasure” to assistworkers dislocated by industrial
restructuring to retrain for new jobs. But policy drift saw it increasingly used
fromthe1970stocounteryouth joblessnessandsocialmarginalisation.Bythe
1980s Irish vocational trainingwas fully one-third funded by ESF, the highest
rateintheEC.In1988DelorsquestionedthefitnessofEurope’ssocialprotection
systemstocounterthenewsocialratherthaneconomicphenomenonofpoverty,
“acancergrowingawayinoursociety”thatallowedthenewpoor“slipthrough
themeshesofthesocialprotectionnet”.MeasuresundertheESFspecificallyto
“combatsocialexclusion”,thenanewterm,wereonlyfinallyadoptedin1989.20
18 OECD1988a;Bond1993b:26-919 OECD1988a:34,48,9620 OnESF,ÓCinnéide1993b:14;“financedbyESF”Mangan,I.,1993:64-5;“meshes”Mangan,G.1993d:44;
ESFreg.CounciloftheEC,1989,‘Resolutionof29/09/1989oncombatingsocialexclusion’,89/C277/01
246
AstheseECpolicieshadyettoclarify,thePNRinitiallyadoptedatraditional
approachtounemployment,assumingthatjobcreationwouldgraduallyerodeit
as the collapsed industries of the Lemass-era recovered. It referred to
“disadvantagedareas”onlyintermsofeducationalneeds,andmadenomention
of geographic concentrations or “long-term unemployment”. But as industrial
strategyunder thePNR, forall itssuccesses,hardlydentedunemployment, the
issuebegantodominatetheCRC,especiallyaftertheStructuralFundregulations
appeared proposing investment in “converting regions” affected by industrial
decline and urban concentrations of high unemployment. The ESF was re-
designated“tocombat long-termunemploymentand facilitate theoccupational
integrationofyoungpeople”,withproposalstobesubmittedbyJune1989.21
Following the EC Council’s adoption of the Delors Plan in early 1988, ICTU
raisedtheissueof“unemployment‘blackspots’”ontheCRC,proposingsupports
be “concentratedon… [the] long-termunemployed areas of big cities… rather
thanspreadingthemacrossthecountry”.TheIFAopposedthisonthebasisthat
averageruralincomeswerelowerthanurbanones,butgovernment,sidingwith
theICTU,commissioneda“studyonDublin”fromsuchaperspective.The1988
ICTUconferencewasdominatedbythejobsquestionanddemandedthatsocial
investmentbefocusedon“unemploymentblackspots”.22
The CRC debated the grim prognoses of the OECD’s “LTU report” and its
recommendations.ÓhUiginntoldgovernmentthatconcreteprojectsalongsuch
lineswerenowessentialforICTU,whichwasunderpressureto“showthattheir
membershipoftheCRCisfruitful”.AftertheCommissionunveileditsproposed
“CommunityActionProgramme”to“fostertheEconomicandSocial Integration
of the Least Privileged Groups” in December 1988, Cassells proposed the
establishment of a CRC “Sub-Group on Job Creation” to evaluate job creation
measures and develop proposals to address “the position of the long-term
unemployed”.TheCIIsupportedthisas“alogicalextensionofPNRstrategy”and
governmentreadilyendorsedit.23
21 PNRIV(15)-(17);D/Finance,‘FutureDevelopmentoftheERDF’,14/03/88,S25857-C22 CRC,‘SummaryReport’andh/wnotesof4thmtg.’24/03/88,DTA:S25857-C23 “LTUReport”inCRC,‘SummaryReportof15thmtg.’,18/05/89,“fruitful”inO’SullivantoSec[ÓhUiginn],
D/Taois.,‘JobCreation:ProposaltoestablishGrouptoexamineinitiativestocreateadditionaljobs’,19/05/89inDTA:S25857-S;CommissionproposalinECCommission1988d;Sec.[=ÓhUiginn]to
247
TheCRC “Sub-Group”met twenty timesover sixmonths. It consistedof the
samepersonnelasthe“SecretariatGroup”,whichsuspendeditsactivitiesforthe
duration.ItsobjectivewastoassesslikelyjobcreationunderthePNR/NDPand
propose“feasiblemeasurestoimprovethelevel,andspeeduptheprocessofjob
creation (productive and social) and training, having particular regard to the
position of the long-term unemployed”. It was supplied with material by all
departments,especiallyonwideningeducationaccess,aswellasanalysesbythe
OECD and reviews of pilot projects in other EC countries. The Department of
Labour supported the OECD proposals for “targeting” groups, while ICTU
pressed foranareabased focus.Thegroupconcluded thateven ifPNR targets
weremet, unemploymentwould remain above200,000beyond1992, that the
long-termunemployedwouldbenefitleastfromnewjobsbeingcreated,andthat
well-resourcedsocialprogrammeswerethereforeessentialintargetareas.24
A “Ministerial Committee on Employment” chaired by Ahern adopted
proposalsemergingfromtheSub-GroupandincorporatedthemintoNDPplans.
National regulations were changed to enable educational access for the
unemployed and new education initiatives targeting deprived urban areas,
notablyYouthreach.AhernurgedICTUinthesub-regionalNDPplanninggroups
to“ensuretheneedsofunemploymentblackspotsaretakenintoaccount”.Civil
servants offered some resistance on cost grounds and fearing disincentives to
job seeking, but they also realised the value of suchmeasures in suppressing
unemployment figures, especially given demographic pressures, the need for
widespreadupskillingandtheundeniablyhighrateofyouthunemployment.The
newemployment/trainingagency,FÁS, re-oriented fromtraditional training to
developing“integratedareaplans”thatprioritisedLTUmeasures.25
Taoiseach.‘Subject:Sub-GroupoftheCRCtoexamineinitiativestocreateadditionaljobs’,22/05/89,DTA:S26122-A;O’SullivantoÓhUiginn,D/Taoiseach,‘reAgendaitem2–JobCreation’,18/05/89,DTA:S25857-S;CIIon“logicalextension”inCRC,‘SummaryReportof15thmtg.’18/05/89,DTA:S25857-S;governmentendorsementinCruinniúRialtais23/05/89,DTA:S26122-A
24 CRCSub-GrouponJobCreation’(SG-JC),‘SummaryReportof1stmtg.’,27/06/89,anddocumentationforthe2ndCRCSGmtg.inc.Sexton1988,OECD1988b,ProfKennedy(ESRI)paperonSwedishlabourmarketpolicyandtheCSO1988FinanceSurvey;D/Labourpositioninh/wnotes1stmtg.,‘Sub-GrouponJobCreation’,n.d.[28/06/89],andSG“conclusions”inh/wnotes1stmeeting,allinDTA:S26122-A
25 ‘MinisterialCommitteeonEmployment.SummaryofRecommendationsandConclusions’,n.d.[June1989],DTA:S26122-A;‘GovernmentStatement’[onESFpriorities],22/03/89,GIS:D/Taoiseach;h/wnotesof14thCRCmeeting19/04/89,andD/SW,‘Optionstoallowtheunemployedtoengageineducationcourses’,02/05/89,DTA:S25857-R;onYouthreachandothermeasures,MaryO’Rourke,‘AddresstoTUIConference’,29/03/89,GIS:D/Educ.;onHaugheyurgingICTUinNDPplanninggroups,
248
Thisspeedyresponseandtheraftofnewmeasureslaunchedoccurredinthe
run-up to the “surprise” election ofMay 1989, but nevertheless represented a
strategicre-orientationoflabourmarketpolicyandprogrammereform,andwas
welcomedbytheCRC.Butre-focusingtheCRCtothispolicyareaalsoreflected
there-orientationofsocialpartnership itself fromitsoriginalprimaryfocuson
macro-economicpolicytomeasuresofsocialcompensatoryadjustment.
Thepoliticsof“unemploymentblack-spots”
The PNR had not includedmeasures on long-term unemployment or urban
“black-spots”. But the confluence of the OECD policy departure, the CRC “Sub-
Group”andtheopportunityoftheEC-co-fundedNDPsawthemnowemergeasa
priority.This ledto initiativesbyareceptivegovernmentwillinglyadoptingan
approachurgedonitbyanallianceoftheICTUandanew“communitysector”.
Haughey’sviewoftherelationshipbetweeneconomicandsocialprogresssaw
the economic as primary, as reflected in his interventions on rural and urban
renewalstrategyasalreadydescribed.ÓhUiginnmadethisorderingofpriorities
clear in a clashwith theCHDDA.Whenhis IFSCCommittee criticisedCHDDA’s
rentspolicyfordis-incentivisingfinancefirmsfromlocatingtothedocklands,its
chairman, Frank Benson, responded that his remit was physical regeneration,
funded by rent receipts. Ó hUiginn put him on notice that the IFSC was “the
majorGovernmentconcern in regard to theDocksdevelopment [and]mustbe
seentobetheobjectiveofthedevelopmentandnottheotherwayaround”.26
TheCRCforitspartcriticisedtheCHDDAfromanotherperspective,wanting
itsremitexpandedfromphysicalrenovationtosocialobjectives,andextendedto
the inner city generally while focusing on “employment black-spots”. Unions’
concernforsuchcrisisareaswasduetotheirhistoricrootsandbaseinthem.But
theoldleadershiproleofunionactivistsinthesecommunities,wherelong-term
unemploymentnowoftentopped40percent,wasdisappearing,andreplacedby
anewmovementofcommunityactivists.Someofthenewgroupsstillemerged
NTO’Gorman,D/Finance,toO’Sullivan,D/Taoiseach,03/11/,DTA:S25858-M;onemographicsandyouthunemployment,OECD1988bandPower2009:167;re-directionofFÁS,D/Labour,‘CRCSub-GrouponJobCreation,Informationrequestedat1stmtg.’,27/06/88’,DTA:S26122-A;Ahern‘SpeechatlaunchofFASDublinRegionalPlans’,08/06/89GIS:D/Labour
26 BensontoÓhUiginn[18]/12/88,andÓhUiginntoBenson,04/01/89,DTA:S25306
249
fromthelabourmovement,liketheLarkinandBallymunJobsCentres,butothers
likeTonyGregory’sNCCCAP,theBallyfermotActionGroupandTallaghtWelfare
Societyweremoreoften ledbycommunityorsocialworkers,college-educated
and espousing an “empowerment” philosophy. Thiswas shaped not by labour
movementtraditionsbutUScivilrightsthinkingandsocialpsychologytheory.A
major influencewas Dr. Ivor Browne’s “Foundation for HumanDevelopment”,
which sponsored projects in the city promoting “empowerment” through
community development. The new groups networked through the Community
WorkersCo-op,whichaimed“tobuildontheprinciplesoflocalcommunitylevel
participation”towards“aradicalreshapingofdemocracyatthenationallevel”.27
Despiteunions’ strongattachment to tradition, theunifying class identityof
thelabourmovementwasfracturingwiththeriseofmiddleclasspublicservice
interests in the ICTU and the emergence of aworking class stratum detached
both from regular work and the union movement. In 1987 the Irish National
Organisation of the Unemployed (INOU) was formed on the lines of similar
initiatives of the past, seeking a structured role in the ICTU. But, despite its
aspirationstomassmobilisation,itwassoondominatedbycommunityactivists.
In the 1980s ICTU sought the support of the new community movements to
reinforceitssocialpolicycredibilitywhileresentingtheirencroachmentontoits
territory andencouraging local trades councils,which had lost their industrial
relations function, to revive the movement’s community leadership role by
forming“unemployedactiongroups”and“centres for theunemployed”. Itonly
finally agreed in late 1987 to meet the INOU to discuss “possible links” but
avoided the formal tie-up “envisaged” in the INOU constitution. By 1989 talks
hadadvancedonlyto“consultation”on“issuesofmutualinterest”.28
Given the tensions in this alliance and its state orientation, the ICTU in
proposing how local initiatives in “black-spots” should be organisedunder the
NDP initially foresaw joint “task-forces” solely of social partners and state
27 CRCviewofCHDDA,h/wnotesCRCmtg.26/10/88,DTA:S25857-J2;IrishTimes,27/10/88;onthe
LarkinandBallymunCentres,O’Connor,P.2009andinf.MichaelCreedon;onthe“Foundation”,Browne,I.,2009andRaffertyandMcCarthyeds.2019:27-32;“aspirations”,Larragy2006:383
28 AllenatICTUADC1988:41;ChabanetandRoyall2009:286;onpredecessormovements,Kilmurray1987;onINOUmembership,Int.Monks;INOU-ICTUrelationsalsoChabanetandRoyall2009:273-4andMcGinley1999:158;on“Centres”,ICTUARs1984-8;Royall2009:132;“envisagedinconstitution”ICTU,AR1988:281and“mutualinterest”ICTUAR1990:3
250
agenciessuchasFÁS,localgovernmentandtheVEC.ButsoonHaughey’smuch-
derided“GregoryDeal”of1982,withitsintegratedcommunity-basedapproach
ofschool,communityandsocialemploymentprojects,overseenbyacoalitionof
agencies and community groups, emerged as the preferredmodel. Many such
micro-projectshad survivedwithECpoverty funding, and communityactivists
urgedICTUtosupporttheapproach,whichitdidfinallypromoteontheCRC.29
Haughey immediately responded to this CRC proposal when launching the
Custom House project in September 1988. An “integral feature” of inner city
renewal would be to “provide local employment and help create in the local
communityasenseof involvement…[in]thecreationofthisnewenvironment
in their area”. This “commitment to involving the local community” through
“establishedlocalgroups”wouldextendto“preferentialconsideration”forlocal
residents in job recruitment, and cooperating “with developers and statutory
agencies”toprovide“appropriateeducationandtrainingprogrammes”.30
A range of sub-areas of Dublin, Limerick and other townswere designated
“disadvantaged”onthebasisofunemploymentlevel.Aninitialpilotprojectwas
developed forTallaght,adeprivedworkingclasssuburbdeclareda “socialand
economically disadvantaged area”. In addition to tax-incentivised construction,
includinganew“towncentre”,theprojectinvolvedsocialinterventionsunderan
“IntegratedAreaDevelopmentPlan”deliveredbylocalcommunityorganisations.
At ICTU instigation, the FÁS social employment scheme was re-configured to
combinesocialwithtrainingobjectives,despiteÓhUiginncautioningthattheEC
waslikelytoresistanysuchchangetoasocial-ratherthaneconomicfocus.31
“Integrated”socialplanninginDublinInnerCity,LimerickandTallaghtthus
already began under social partnership in 1988, before their usually assumed
initiation by later EC programmes. The new schemes, like rural development,
had a strong organic origin, mobilising local groups as their driving element.
Ahern articulated thiswhen he described FÁS’s role in the Tallaght plan as to
“provide a flexible response to the pressing needs of the new town” and “co-
29 ICTUproposalsforlocalbodies,Sub-GrponJobCreation,‘ReporttotheCRC,October1989’,DTA:
S26122-E;“GregoryDeal”,Lee1989:508;projectswithECfunding,InterviewwithInnerCityGroup30 Haughey,‘AddresslayingfoundationstonefortheIFSC’,22/09/88,GIS:D/Taoiseach31 ‘Tallaght’,n.d.[Nov.1988],DTA:S25858-M;h/wnotesofCRC15thmtg.’,18/05/89,DTA:S25857-S
251
operatewith all relevant community groups… topromote employment and…
the development of… small businesses”. This, he said, pre-datedECproposals
nowemerging,butwould fit “admirably”with them. In theirearlyyears, these
projectswouldattractwidespreadacclaimfortheirinnovativeimpact.32
Managingdespair:governmentpolicyand“anti-poverty”politics
The beginnings of the integrated local development plans described above
were accompanied by an overhaul of social policy-making at the institutional
level.OneofICTU’smajortacticalaimsinthePNRhadbeentoring-fencewelfare
spending.Whilethiswasachieved,itslargerobjectiveofafundamentalwelfare
state reform proved more difficult. As with its alliance with the community
sector on local development strategy, to overcome how it often found itself
“alone” in social partnership on social policy ICTU formed an alliance with
campaigning poverty groups to force the pace of institutional reform. These
groups had mostly evolved from Church-based charities, traditionally, as
dramatizedinJamesPlunkett’snovel,StrumpetCity,hostiletounions.Butsince
the 1960s liberalisation of Catholic doctrine,many had turned to campaigning
forsystemchangeand“socialjustice”,raisingdemandssimilartotheICTU.33
Ireland’s health and welfare systems involved extensive subcontracting to
voluntary organisations. This gave such groups significant leverage, with the
NESCnotingin1981howwelfareprovisionhadevolvedin“pragmaticpiecemeal
reaction to perceivedneeds, often as advocated by organised interest groups”.
WelfareministerMichaelWoods, a conservative Catholic, commentedhow the
St.VincentdePaulSocietyhad“changedenormously”fromprovidingcharityfor
poor people to “attempting to get to grips with the root causes of poverty”
throughpolicychangeandeconomicprojectsindeprivedareas.Fr.SeánHealy,
headofthe“JusticeOffice”oftheConferenceofMajorReligiousSuperiors(later
CORI),emergedasaprominentadvocateofa“minimumincome”asaresponse
topovertygivenwhathesawastheunlikelyreturntofullemployment.34
32 Ahern,‘SpeechatlaunchofthethreeFASRegionalPlansforDublin’,08/06/89,GIS:D/Labour33 “aloneonsocialpolicy”,InterviewO’Donovan;onCatholicsocialreform,Dorr,D.1992:228-317;
InterviewswithFr.FrankSammonandBillTonerSJ34 Onhealthsystem,Carey2007;NESC1981c;‘SaintVincentdePaultocreate1,000Jobs’,n.d.[05/89],GIS:
D/SW;onHealyand“minimumincome”,Larragy2006:384
252
In1986thecoalitiongovernmenthadestablishedtheCombatPovertyAgency
(CPA)to liaisewithvoluntarygroupsandadviseonwelfarereform.CPAurged
implementation of the Commission on SocialWelfare’s recommendations, and
theintroductionofa“basicminimumincome”anda“nationalanti-povertyplan”.
As the PNR was being negotiated, CPA urged that “the plight of the poor” be
given “equal importance” todebt reductionand jobcreation,and lobbied ICTU
for “closer liaison” between government and the voluntary “sector” in
determiningpolicy.Thesectorwassupportedby theLeft,withWorkers’Party
leader Proinsias de Rossa championing CORI’s objectives and proposing a
“rainbowcoalition”of “progressive forces” to transformwelfarepolicy. Similar
callsweremadebyWP-affiliatedunionfigures,notablyDesGeraghty.35
ICTUhadsoughttheinclusionofCPAproposalsonsocialandbudgetpolicyin
the PNR, and secured a commitment to structured policy consultation with
voluntarygroups.ItspreferencewasforaCPA-ledapproach,givenCPA’sformal
statutorystatusandICTU’schequeredhistorywithvoluntaryorganisations,and
urged that CPAbe given a central role “coordinating” the sector. InNovember
1988thefirst“Pre-BudgetForumonSocialWelfare”underthePNRtookplace,
hostedbyMinisterWoodsandattendedbynineinvitedgroupsfromVincentde
PaultotheINOU.ICTU,inliaisonwithCPA,thensoughtapermanent“advisory
body”, under CPA “auspices”, of “groups concerned with poverty” to advise
governmentonreform.WhiletheCRCsupportedthis,Woodsopposedit,though
agreed to post-budget “dialogue” and instituted the pre-budget “forum” as an
annual event. In what a dissident Labour journal dubbed “a Vincent de Paul
budget”, he also greatly expanded state grants to voluntary groups, cementing
whatwouldbecomeasymbioticrelationshipbetweenthestateandthesector.36
ICTU’s relationshipwith the CPA developed into a firm alliance. Before the
1989budget,itmetwithCPAand“variousgroupsandorganisationsconcerned
35 CPAprogrammeinCPA1987;“equalimportance”inNoreenKearney,CPA,toNevinICTU,09/09/87,in
ICTUArchive:GS-PA-1a,NationalTalks,1987;deRossainDáil…/01/89;GeraghtyinICTUADC1988:5836 PNRIV(6);‘Pre-BudgetForumonSocialWelfare’,25/11/88,GIS:D/SW;ICTUseeks“advisorybody”in
CassellsICTUtoÓhUiginn,28/02/89,DTA:S25857-R;D/SW,‘EstablishmentofanAdvisoryBodyonSocialWelfare’,indocumentsfor14thCRCmeeting19/04/89,DTA:S25857-R;CRC,‘SummaryReportof14thmtg.’,19/04/89,DTA:S25857-R;O’Sullivan,CRC,toColmO’Neill,D/SW,24/05/89,andCRC,‘SummaryReportof15thmtg.’,18/05/89,DTA:S25858-S;ColmO’Neill,D/SW,toO’Sullivan,SecttoCRC,D/Taoiseach,31/01/89,DTA:S25858-O;‘ASt.VincentdePaulBudget!’,LabourComment,04/02/89;onstatefundingofvol.organisations,‘SaintVincentdePaultocreate1,000Jobs’,n.d.[January1989],GIS:D/SWandMangan,I.,1993:79
253
with poverty and low pay” to agree a joint “Anti-Poverty Campaign”. The CPA
coordinated the sector’s input and ICTU brought this to government through
socialpartnership.TheICTUandCPAhostedajointconferenceonpovertyand
unemployment and ICTU’s own budget submission included many CPA
proposalsfortacklingpoverty,includinganationalanti-povertystrategy.37
Aswith thenewcommunity role inurbanregeneration,Haugheywelcomed
the inclusion of campaigning groups in social policy making through social
partnership. While this was the start of this new sector’s role in the system,
reinforcing the shift to a social policy compensatory focus, it also benefited
government by providing new policy input to rectify system dysfunctions. Its
involvement initiated the overhaul of thewelfare state that, through the 1990
PNRreviewprocess,wouldformakeyelementofthefollow-onPESPagreement.
Socialcompensationsandstatemodernisation Besides local economic development and welfare state reform, other PNR
inputswhichcombinedsocialcompensatoryandstatedevelopmentalfunctions
included the reform of tax enforcement, the black economy and business
regulation. Since the 1979 tax revolt, tax reform, as variously interpreted, had
remainedhighonthepoliticalagenda.BesidescorePNRcommitmentsreducing
taxesonworkersandbusinesses, the ICTUandNESChadstressed theneed to
achieve tax “equity” by extending the tax base and combating evasion among
privileged groups such as farmers, the professions and self-employed, and
improving regulatory compliance generally. Finance had disputed many of
ICTU’s demands but government conceded legal reforms, expanded Revenue
powersandnewinstrumentsforcomplianceenforcement.38
The full extent of tax evasion was later revealed, not least widespread
registering by citizens as “non-resident” for tax purposes and use of offshore
accounts. Government surprised many by honouring its PNR commitments,
expanding Revenue’s powers in 1988 and changing regulatory controls to
improve compliance. Systemic tax dysfunction led to MacSharry’s 1988 “Tax
37 ICTUECmtg.15/02/89,item160;Callanetal(ESRI)1989;ICTUbudgetproposals,ICTUSpec.ECmtg.
30/01/89,item1584;ICTU1989b38 PNRIII(3)-(5),(9)-(15)
254
Amnesty”which enabled evaders avoid penalties by settling liabilities, netting
£200m.FarmerswereforthefirsttimemadeliableforPRSIonthesamebasisas
theself-employedandcompanylawondirectors’responsibilitieswasreformed
asinitiallyplannedbythe1980scoalition.Establishingthenewsystemsproved
slow,butacomprehensivereformwasbegun,unionleadersevendefendingthe
amnestyas“vindicate[ing]totally”theirclaimsontheextentoftaxevasion.39
Partnershipshieldedgovernmentpoliticallyinimplementingtheseunpopular
reforms, presented as ICTU’s price for partnership. But the modernisation
process greatly benefited the state both in revenue terms and institutional
credibility.MacSharry,announcingthemeasures,saidthe“scandaloftaxdefault
andtaxevasionmustend”:“Thereisagrowingfeelingofconfidencethatafairer
and more effective system is possible” and “the present year will be seen in
retrospect as a turning point in our efforts to improve our tax system”. The
tougherregulatoryregimewasofakindwithcabinet’srejectionofasecretretail
model for the IFSC. Though the tax system would later be further tightened,
makingitaninternationalmodel,thiswasanotherareawherethedecisiveinitial
stepstowardsreformandmodernisationwereinstigatedunderthePNR.40
ThemodernisingfunctionofthePNRwasalsoreflectedin itstacklingofthe
endemic “black economy”. When the CIF announced its withdrawal from a
monitoringbodysetupunderthePNRforitsindustry,governmentpressuredit
to remain, “in the interests of thePNR”, by threatening to tighten tax rules on
public contracts if it didn’t. TheDepartment of Labour’s inspectoratewas also
strengthenedandparticularlytargetedillegalpracticesinthehospitalitysector.
Therewasconsiderableresistancetothis,“amajorproblem”beingthat“thefull
co-operationoftheemployeeisneededandthisisnotalwaysforthcoming”.The
PNRneverthelessbegantherollingbackofthelargeillegaleconomy.41
Contrary toa commonperceptionofHaughey’sgovernmentas inaugurating
an era of “light-touch regulation” and “corruption”, the PNR in fact heralded a
39 Reporter(LGPSU),June198940 MacSharry‘AddressatlaunchofInstituteofTaxation’s1988/89SummaryBooklet’,20/10/88,GIS:
D/Finance;onIFSCtaxationdebate,seechapter641 OnCIFthreattowithdraw,CassellsICTUtoÓhUiginn,25/04/89,andÓhUiginntoTomReynolds,
DirectorGeneral,CIF,27/04/89,DTA:S25857-R;onD/Labourenforcement,D/Labour,‘NoteonEnforcementofHotelsandCateringEROsandtheProtectionofYoungPersonsEmploymentAct,1977’,attachedbyBonner,D/Labour,toTeahon,D/Taoiseach,08/09/89,DTA:S25857-V
255
turntowardsasignificantlytightenedregulatoryregime.Indeed,asiftodispute
the popular view, ex-Finance Minister Charlie McCreevy, in an injudicious
statementshortlybeforethe2008crash,claimedthatitwasonlyfrom1997that
Irelandmovedfromahighregulatoryenvironmenttoaregimeof“lowtaxation,
light-touchregulationandopenandflexiblemarkets”.42
Irishmodel:astate-dirigistegloballyactivemixed-economy
In summary, by spring 1989 the contours of the emerging “Irish economic
model”werebecomingapparent.Thiswasshapedbyaconfluenceofexogenous
influences, opportunities and constraints and how these interacted with the
policiesofanactivistgovernment,autonomouseconomicdevelopmentandthe
constraints,agendasandconstituencypressuresofsocialpartnership.
TheexogenousopportunitieswerefirstandforemosttheemergenceoftheEC
SingleMarket,thoughuntilmid-1989thiswashesitantanddisputed,withtheEC
Council prevaricating on fully committing to it. The contested Delors Plan
nevertheless calmed markets, halted inflation and stabilised interest rates,
providinganidealenvironmentforanactiveinterventionistIrishgovernment.
The Haughey government early identified the opportunity the European
development presented, not only the potential through EC “convergence”
strategy for infrastructure modernisation, but also by exploiting the putative
singlemarketnotprimarilyforexportsofgoodsandservices–thoughalsothat-
butasalevertopositionIrelandastheprimeentrypointforglobalcapitalinto
it.ItthuspursuedadualstrategyofECinvestmentandpre-emptivelyopeningto
capitalmovement,aligningcloselywiththepro-integrationistpowersatEClevel.
The PNRhad assumed the primary driver of an industrial and employment
recovery would lie in selected large-scale indigenous industries supported to
attaininternationalcompetitiveness.Thetravailsofthebeefindustryhastended
toobscuresuccessesachievedby1989inotherareasofthisstrategy,intourism,
forestryandtimber,thearts,dairyfoods,marine,horticultureandconstruction.
Successful internationally trading indigenous companies emerged for the first
time,thoughgrowingmorebyexploitingtheopportunityofcapitalopening,with
42 “commonview”,e.g.FintanO'Toole,‘ThecorruptionofIrishbankinggoesback30years’,TheIrishTimes,
24/10/2017;McCreavyin‘Foreword’toPower2009:xviii
256
their employment impact “disappointing”. The initially secondary, quality-
driving role envisaged for FDI – of which Haughey’s close circle remained
sceptical – was soon seen to have been “misplaced” as FDI “surged” past
domestic industry in growth and employment. Policy switched to exploit this,
targeting specific FDI sectors. At the other end of the spectrum, small-scale
ventures,initiallynotprioritisedinnationalstrategy,alsoproveda“surprising”
success sector, and by early 1989 policy also began to change to support this.
The third success were the semi-states which, freed to expand commercially,
enjoyedrapidbusiness,thoughalsonotemployment,expansion.
Socialpartnershipprovidedbothastableeconomicenvironmentattractiveto
investors in both its medium-term planning and intangible capital inputs,
establishing historically unprecedented wage certainty and social peace, and
boosting labour quality through a host of state-subsidised social, educational,
labourmarketaccess,regenerationandproductionmodernisationprogrammes.
Theneweconomybeinggeneratedthroughtheconfluenceofopeningglobal
opportunitiesandstateactivismwasamixed-economymodel,characterisedby
anactiviststatesectorandalevelofstateinterventionistdirigismeoftheprivate
sectorwhichanI&Cofficialdescribedashardlyshortofsocialistplanning.The
falloftheBerlinWallinNovember1989andfurtherglobalopeningarisingfrom
itwoulddriveafinaleconomicstrategychangein1990,examinedinchapter11.
But the combination of late-industrialisation restructuring, demographic
labour-forcepressuresandglobalisingexpansionmeant that as the jobsof the
future began to emerge through new-job development in often entirely new
sectors,closures,under-andunemployment,obsolescentskillsandsociallyand
geographically concentrated long-term unemployment presented a growing
challenge. Social partnership responded with social-compensatory strategies.
Ratherthanpassiveamelioration,theunemploymentcrisis,whichwasaccepted
would last several years,was used to initiate innovative programmes in areas
such as welfare expansion and institutional reform, local development, urban
regeneration, community enterprise, educational access and training. A
transformation of the Irish welfare state towards an enabling labour and
enterprise-activatingdevelopmentmodelwasthusalreadybegunby1988.
257
Part4:
Consolidation,1989-92
258
Chapter10
InstitutionalisingSocialPartnership,1989-91Haughey’scommitmenttopartnershipasa“permanentsystem”
During the first 18 months of the PNR, as analysed in Part 3, its principal
stakeholders–Haughey’sWayForwardcircleandtheCII/ICTUpro-partnership
leaders – saw themselves as initiating a radical transformation. Programme
deliveryhadbeenmanagedwhileminimisingconflictthroughtheCRCordirect
political exchange. Major divisions had been avoided as system consolidation
was prioritised. Less committed stakeholders - employers, farmers and some
unionleaders-hadactedmoreininterest-defencethanpolicy-innovationmode.
Thesecond18months,fromtheformationoftheFiannaFáil/PDcoalitionin
July 1989 to the signing in February 1991 of the successor Programme for
EconomicandSocialProgress (PESP), is thesubjectofPart4. Itwasaperiodof
high drama and unionmobilisation, involving no fewer that two ICTU annual
conferencesandthreenational“specialdelegateconferences”.Thepoliticaland
institutionaldynamicsdrivingprogrammedelivery remainedsimilar tobefore,
butaunionrevoltin1990threateningtoendthesystemhadfirsttobecarefully
managed through a programme “review”, ultimately requiring significant
adjustmentstothePNR.Thiswasfollowedbyaconflictoverthefutureofsemi-
state industries which had the potential to derail the agreement. How these
criseswereresolved,andtheirconsequences,demonstratedthatthepriorityof
theprinciplestakeholderswastomaintainandconsolidatesocialpartnership.
During the1989election,FiannaFáilwasheavilycriticised for its “austerity
policies”,particularlyinhealth.LabourandthePDsalsomadea“goldencircle”of
businessmen allegedly corruptly benefiting from public policy through close
association with Haughey a central election issue. This began with Barry
Desmond’s assault on fraud in thebeef industry, though this relatedmostly to
events in theGoodmanGroup thathadbegununder thepreviousgovernment.
259
The favouritism shown particular companies, including Goodman, was also
notablyakeyNESC/PNRstrategy,thoughnowattackedas“cronycapitalism”.1
The Fianna Fáilmanifesto committed to continuing the PNR and upholding
the NESC/CRC system, adding new policies, such as on tackling long-term
unemployment, from proposals that had emerged from the CRC. It advocated
alsofollowingthePNRwithasuccessoragreementandforthesystemtobecome
“apermanentwayofmanagingouraffairs”.Labourproposedanalternative ill-
defined“statutory”systemof“consultative,flexibleandde-centralised”planning,
FineGael“aconcerteddevelopmentprogrammefor1992”,with“arrangements
…toinvolvethemajorpoliticalpartiesandsocialpartners”.Thesewouldconsist
of a “Select Committee” of politicians joined by NESC partners in a “National
Forumfor1992”,whilepaywouldbenegotiatedseparately“inaccordancewith
existing procedures”. Decisions on policy would be solely a matter for
government. Any of these opposition party proposals, if implemented, would
havecollapsedthesocialpartnershipsystemcreatedin1987.2
FiannaFáilreturnedwith77seats,down4,FineGael55,up4,Labour15,up
3,theWorkers’Party9,up6,andthePDsjust6,down8.Withthisoutcome,Fine
Gael,whosepre-electioncoalitionpactwith thePDs lackedsufficientnumbers,
nevertheless declined to renew its “Tallaght Strategy” and Labour declared
againstcoalitionorsupportingaminoritygovernment.TheDáilre-convenedon
29 June and with the PDs fearing extinction in a re-run election, a FF-PD
coalition,clearlytheonlyoption,wasformedaftertwoweeks’negotiation,with
HaugheyagainTaoiseach.ItsProgrammecombinedthetwoparties’manifestos,
withHaugheymakingacontinuationofsocialpartnership,regardlessofthePDs’
declaredhostility to it, his onlynon-negotiable condition.The first pageof the
PfG committed to “fully honour” the PNR, secure a successor agreement and
“buildsocialconsensusintoapermanentwayofmanagingouraffairs”.Thiswas
furtherevidenceofHaughey’soverridingcommitmenttosocialpartnershipasa
permanentinstitutionframingsocio-economicstrategyandpolicy-making.3
1 RyleDwyer1992:135-6;Desmond2000;PDposition,O’Malley,D.2014:178-802 FiannaFáil1989b;Labour1989;FineGael19893 ProgrammeforGovernment,PD1989;PDchoices,O’Malley,D.2014:181-4
260
But social partnershipwas far from achieving institutional equilibrium. The
weekthePfGwasbeingnegotiated,ICTU,meetingatitsannualconference,wasa
housedivided.Withtheprospectofa“right-wing”FF-PDgovernment,anti-PNR
unionsexploitedICTUvulnerabilitytomobilisesentimenttoendthePNR.
ICTUandprogrammedelivery:theleveragingofdiscontent Pro-partnershipunionleaderswereasdeterminedasHaugheytoseethrough
thePNRandestablishpartnershipasapermanentsystem.Giventhe“rightwing”
majority in theDáil and theweaknessof thepoliticalLeft, despite its electoral
advances,theyargued,thePNRwastheonlymeanstoadvancethetax,welfare,
industrial and social policies and protection of state industries themovement
sought.Buttheyalsoproposedanunderpinningofpartnershipthrougharadical
restructuring of unions, with amalgamation into fewer larger organisations, a
strengthenedCongressasits“generalstaff”,biennialpolicyconferencesinplace
oftheusualannualconferenceset-piecesandre-basingunionpoweronworkers’
participation, at national level through the NESC and CRC, and in companies,
forminganewunionismtoreplace“out-dated”confrontationalrepresentation.4
These reform proposals reflected the ICTU’s 1975 Schregle report and
reformsproposedbypoliticaleconomistssuchasHardimanasprerequisitesfor
effectivecorporatism.OutsidethearenaofCongress,preparationsforwhatICTU
calleda“waveofamalgamations”werealreadywelladvanced,especiallyamong
pro-partnershipunions.Conferencenoddedthroughthereformplanwith little
debate but, reflecting wariness at enhancing Congress’s powers, also adopted
motions contrary to its spirit, defending the autonomy of trades councils,
rejectingenhancedpositiveactiontoincreasewomen’sunder-representationin
unionstructures,anddeferringtheproposedmovetobiennialconferences.5
ButitwasrancouroverthePNRthatmoststarklydividedopinion.Theline-
up was the traditional 2:1 divide over confrontation versus cooperation, free
bargainingor“classcollaboration”,withlargelythesameunionsoneitherside.
Specificissues,usuallyofadivisivepoliticalnaturesuchasthewagesstand-still
4 “right-wingmajority”,ICTU1989dandICTUADC1989:45;re-organisationplan,ICTU1989e5 Schregle1975;Hardiman1988;“waveofamalgamations”,ICTUAR1991:2;amalgamationplans,Devine
2009;Maguire1998,2010,2017;motions,ICTUADC1989;ICTU1987b
261
orderof1941or the ITGWUchangingsideson the1976NWA,hadalways the
potentialtoreversethe2:1divide,changingthemajoritypreference.
HavingfailedtopreventthePNR,in1989anti-agreementunionsandtheLeft
mobiliseddiscontentovervariousissuestoachieveacriticalmasstooverturnit.
These ranged from PNR constraints on pay bargaining in strong sectors to its
poor jobs performance and industrial relations and apprenticeship reforms.
Several straight anti-PNR motions were easily defeated, but the British-based
journalists’ union, a rather privileged group, following a similar but failed
“premature”attemptbyitthepreviousyear,proposedatacticallyastutemotion.
With thePDsnow inpower, it argued, a “SpecialConference” (SDC)within six
months should be held to “consider withdrawal” from the PNR should its
commitmentsnotbehonoured.Thisstruckachordwithmanydelegates,being
adoptedby139:125against thepleasof ICTU leaders that suchamovewould
representabreachoftrustandexcludeunionsfromfuturepoliticalinfluence.6
Dáil opposition parties fanned the flames of union discontent, Spring and
Rabbitte taunting Haughey that the vote on withdrawal demonstrated the
“obvious failure”of thePNRandgave the lie to “thisconsensus…he is talking
about”. JustasHaugheywasnegotiatinga coalitionprogramme, theLeft in the
Dáil not only sought to undermine social partnership – in anyother country a
left-wingcause–butalsoCongress’sstrategyandcredibilitywith itsmembers.
But ignoring thisbetrayalby thepoliticalLeft, ICTUcongratulatedHaugheyon
becomingTaoiseachandsoughtanurgentmeetingwithhimtoensuretheCRC
was“retainedandusedtobestadvantage”.Ajointgovernment-ICTUstatement
followedthemeeting,re-affirmingthePNRanditsNESC/CRCgoverningsystem.7
But leveraging its internal dissenters, ICTU turned its conference defeat to
advantagebyusingtheloomingspecialconference,scheduledforearly1990,to
accelerate programme delivery. Whenever government took steps it opposed,
suchas assistingRyanair at the expenseofAerLinguswithout consulting it, it
warnedthatit“willshortlybereviewingitsparticipationintheProgramme”and
“thesedecisionsandthemannerinwhichCongresswastreated”did“notauger
6 ICTUADC1989:50-55;“premature”,Dooley2019:1687 Spring/RabbitteinDáil10/07/89;CassellstoTaoiseach,13/07/89,DTA:S25281-E;‘JointGovernment-
ICTUStatement’,25.07.89,GIS:D/Taoiseach,
262
wellforafavourableoutcometothatreview”.Intherun-uptotheSDC,itbecame
ever more aggressive on the CRC, complaining of government failures on job
creation and obstruction by Finance and other departments. One civil servant,
bewailing ICTU’s truculence,notedhowwhen theCRC JobGroup’sReportwas
beingcompiled,ICTU,“apartfromsuggestinganexpandedroleforStatebodies”,
haddisengagedand“playedonlyaminimalpartinframingtheproposals”.8
ButHaughey’sreputationdependedonthePNR,andministersacceleratedits
delivery to re-assure ICTU. In autumn 1989Ahern finally launched theHealth
and SafetyAuthority, announced a schedule of labour law reform and assured
ICTUofaunion-friendlyagendaundertheIrishECPresidency,anECprogramme
onlong-termunemploymentbasedontheCRC’sproposalsandIrishsupportfor
theEC“SocialCharter”.ButFinance’soppositiontomanyCRCproposalswhich,it
said,“inthespiritofconsensus”ithad“refrainedfromindicatinguptonow”,was
nonethelessreal.Inaninterventionperhapsreflectingamorebullishattitudeat
FinanceunderAlbertReynolds,itssecretary,SeánCromien,upbraidedÓhUiginn
fornotopposingCRCproposals,especiallyonexpandingtheSES,asathreatto
budget discipline, towhich “the response of themarkets [would be] swift and
severe”. The key to jobs growth, he opined, was lower taxes which “in turn
requiresthegreatestdisciplineinpublicexpenditure”.9
Congress took the offensive, telling Haughey that a PNR “mid-term review”
and “Progress Report” were essential to head off opposition at their special
conference.Haugheywillinglyconcededthis,againstressinghisdesirealsofora
successorprogramme.10ICTUusedthepromised“review”toleverageadditional
measures on unemployment, tax and social equity. Cassells told government
8 “shortlybereviewing”,CassellstoÓhUiginn,21/09/89,DTA:S25857-W;‘Sub-GrouponJobCreation.
DraftReporttoCRC.Sept,1989’,DTA:S25857;ICTUinput,CRC,h/wnotesof19thmtg.,19/10/89,and“minimalpart”,D/Taoiseach,internal,O’Sullivan,E&SPolDiv.,toÓhUiginn,‘Re:ReportofSub-GrouponJobCreation’,18/10/89,DTA:S25857-X
9 OnAhern’sinitiatives,‘Ministerannouncespackageofmeasuresforemploymentcreationandhelptothedisadvantaged’,27/09/89,GIS:D/Labour;W;‘AhernlaunchesProgrammeofEventsoftheInstituteforPersonnelManagement’,29/09/89,GIS:D/Labour;Ahern,‘SpeechatlaunchofNationalAuthorityforOccupationalSafetyandHealth’,02/10/89,GIS:D/Labour;‘LongtermunemployedtobepriorityfortheIrishPresidency’,20/10/89,GIS:D/Labour;INOUBulletin,Nov89;ICTUECmtg.20/12/89,item1803;ICTUAR1990:66;Ahern,‘SpeechatSeminar‘UnitedStatesofEurope’,22/09/89,GIS:D/Labour;“refrainedfromindicating”,D/Taois.,O’SullivantoÓhUiginn,‘Re:ReportofSub-GrouponJobCreation’,18/10/89,DTA:S25857-X;CromientohUiginn,28/11/89,DTA:S25857-Y
10 ICTUECmtg.15/11/89,item1776.ICTUArchive,ECminutes;HaugheytoCassells,01/11/89,DTA:S25862-D;D/Taoiseach,O’SullivantoSecretary[ÓhUiginn],08/11/89:‘Re:MeetingwithRepresentativesoftheExecutiveCouncilofICTUon8Nov.,1989’;Haughey,Dáil,24/10/89
263
officialsthatCongress“acknowledgedthesuccessoftheProgrammeinmeeting
the targets agreed” but it was essential to be able to demonstrate that it was
succeeding.Hediscouragedtalkofasuccessorprogramme“atthisstage”,saying
the “review” must include new measures to ensure “soaring profits” were
“translated” into jobs, profit-sharing and further tax reform. Government
concededtherewasscopetoexamine“whatimprovementscouldbemade”.11
BeforemeetingHaughey, ICTU issuedawidelyreported30-pointdocument,
Sharing theBenefits, seeking newmeasures. “Tax reform and the reduction of
povertymustbemovedto thetopof theagenda”, itsaid,andbudgetdecisions
woulddeterminetheoutcomeofitsconference.Reflectinginternalpressureson
localpay,itcriticisedemployer“inflexibility”.Whilenotseekingarestorationof
localbargaining,itsuggestedamendinglegislationonprofitsharingso“workers
couldshareinthe‘enormousprofits’beingmadebysomecompanies”.12
AllayingfearsthatICTUwaslosingitsauthority,ÓhUiginnadvisedHaughey
that “what is in question is a review of progress, not a re-negotiation”, but
governmentshouldconcede “newactionsormeasuresconsistentwithexisting
targets and commitments”. Haughey agreed and Finance conceded it was “of
courseamatterforGovernmenttodecide”.Financewasanequalopportunities
enforcer,havingalsowarnedagainstprojectsproposedbyotherpartners,such
asCII’s internationaleducationproposal.ÓhUiginnremindedHaugheythat“as
positive as possible” a Progress Report would “be a key element in the ICTU
conference on withdrawal” where leaders would “want to be able … to
demonstratemoreprogressonjobsandonthetax/wagerelationship”.Haughey
assuredICTUofhiscommitmentsonthis,andagreedtopressstatecompaniesto
accelerateexpansionplans,expandSESandtrainingprogrammes,discusshistax
and other plans with ICTU before the budget, and not publish the “Progress
Report”untiljustafterthebudgetandbeforeCongress’sSDC13
11 ‘CRC.ReportofBilateralMeetingwithRepresentativesoftheICTUon8Nov.1989’,“forcirculation
officialsideonly”,DTA:S25862-D;‘ICTUrapsfailuretocreatejobs’,CorkExaminer,09/11/8912 Sharing,ICTU1989f;“workerscouldsgare”,II,24/11/89;AlsoITandDailyStar,24/11/89,ICTU‘ANew
PhasefortheProgrammeforNationalRecovery’,PressRelease23/11/89,ICTUArchive,PN-113 Secretary[ÓhUiginn]toTaoiseach.‘Subject:MeetingwithICTU’,23/11/89,D/Finance‘Noteon
AssessmentandCostingofVarious“Employment”ProposalsSubmittedtotheCRCSub-Group’,21/12/89,(Internal)O’SullivantoSecretary[ÓhUiginn],‘AgendaItem5:ReportoftheWorkingGrouponIrelandasanEducationCentre’,20/12/89,DTA:S25857-Y;Connellan,CII,toTeahon,‘CRCJobCreationCommittee’,15/01/90,andCII,‘ProposaltoCreateAdditionalThirdLevelPlacesinPrivateEducationalInstitutions’,DTA:S25857-Z1;“remindedHaughey”,SecretarytoTaoiseach.‘Subject:
264
ICTUandCIIproposalswerenowprogressed,ÓhUiginntellingCromienthat
government was “obliged to consider them”. Employer leader John Dunne,
emboldened by Finance’s stance to initially also oppose the SES proposal,
relented,agreeingtoendorseitonce“theprivatesector[was]notpickingupthe
tab”. Government moved to resolve other issues. An inter-departmental
committeeproposedthatemployersbepressedtomeetICTU“concerns”onlocal
pay “flexibilities” by expanding profit sharing schemes, that the budget amend
regulationsforsuchschemes“inthecontextofbridge-buildingbetweenthePNR
andafurtherProgramme”,andthatGovernment“facilitate”theintroductionof
the39-hourweekinthepublicservice.Theworkinghoursagreement,which,as
has been seen, had stalled in 1988,wasnow implemented, re-framed as a 39-
hourweek,witheventheprivatesectoralsoagreeingtoproceedonit.14
In January 1990 a wave of initiatives followed in industrial policy, tax and
welfare, profit sharing, education, unemployment, joint ventures by state
companies, and construction and forestry contracts. The “black economy”
monitoringgroupwasputonapermanentbasis,employersagreedtoconsulton
“anomalies in private sector pay”, pension and health service reforms were
initiated,andtalksbeganonparent-teacherratios,workerparticipationandthe
rightsofdisabledpeople.Haughey confirmed “Ireland’s full support [at theEC
summit]totheadoptionofthe[Social]Charter”,concededaCRCrequestforNDP
monitoringcommitteestoelecttheirownchairsinplaceofFinanceappointees,
and agreed with Delors a special scheme for Irish semi-states to provide
technicalassistancetoemergingEastEuropeaneconomies.TheCommissionon
theStatusofWomenwasannounced,a“framework”fortheIndustrialRelations
Bill published and the public service reduction programme ended, Haughey
telling the Dáil it had been “a necessary reformwhich is now over”. The CRC
receivedastreamofupdatesongovernmentactiononCongress’s“30points”.15
MeetingwithICTU’,23/11/89,and“Haugheyassured”,ReportofMeetingofTaoiseachandMinistersforFinance,I&CandLabourwithRepresentativesofExecutiveCouncilofICTU’,24/11/89,DTA:S25857-Y
14 “obligedtoconsider”and“pickingupthetab”,ÓhUiginntoCromien,SecD/Finance,28/11/89,andh/wnotesof‘CRCon16/11/89’,DTA:S25857-Y;“Governmentmoved”,‘ConclusionsofInter-DepartmentalCommitteeMeetingon8December1989inrelationtoPoint12inICTU’s30PointPlan’,DTA:S25857-Y;ICTUAR1990:51;‘PNR.CRC.ProgressReport.PreliminaryDraft’,Nov.1989,DTA:S25857-Y;h/wnoteJimO’Brien,FIE,‘Observations[ondraftCRCProgressReport]’,n.d.,DTA:S25862-F
15 PatriciaO’Donovan,ICTU,‘ResponsesfromGovernmentDepartmentstoProposalsintheICTUDocument‘SharingtheBenefits’’,05/01/90,ICTUArchive:PN-1;h/wnotesofInter-Departmentalmtg.of
265
At ICTU’s “confidential” pre-budgetmeetingswith theMinisters for Finance
andSocialWelfare,CassellstoldDr.MichaelWoodsthatICTUdemands“should
beseeninthecontextoftheforthcomingSpecialDelegateConferencetoreview
continued participation in the Programme”, with the budget “an input to that
review”.WoodsassuredhimICTUpositions“wereregardedas‘core’views”and
thathewouldimplementallCommissiononSocialWelfarerecommendationshe
could.Justbeforethebudget,ICTUagainmetthecabinetleaders,stressing“the
link between the Budget and continuation of the Programme”. Reynolds,
expressingthegovernment’sdesiretocompletethePNRandagreeasuccessor
programme,saiditwasessentialthat“successnot[be]thrownaway”.16
The extraordinary pace of government action in response to ICTU pressure
justbeforeitsspecialconferenceshowsthedeterminationofbothunionleaders
and theHaughey government for the PNR to succeed. After the budget,which
satisfied Congress with further improvements in tax, welfare and other areas
while remainingwithinmonetary targets, a succinct PNRProgressReport was
signedoffbytheCRCadaybeforetheICTUconference.Listingprogressonall
commitments,notably40,000newjobscreatedinPNRtargetindustriesin1987-
88followingyearsofcontraction,it judgedthePNRtobeachievingand,ontax
andjobcreation,“overachieving”itsaims,andextolledtheCRCasa“mechanism
uniqueintheEuropeanCommunity”enabling“thesocialpartnerstohaveanon-
going input into Government decision-making on economic and social policy”.
ICTU also published a separate, more critical review of its own, outlining the
PNR’s“Strategy”butalsoits“Shortcomings”,andcirculatingbothitsownandthe
CRCreportstoitsconference’sdelegates.17
04/12/1989,DTA:S25857-Y;ICTUECmtg.17/01/90;HaugheytoICTU,‘SocialCharter’,n.d.(January1990),inICTUAR1990:66;onDelorsinitiative,Haughey,‘Statement’,04/12/89[meetingwithsemi-statecompanies],inGIS:Dept/Taoiseach,andonSCSW,Dáil07/11/89;Ahern,‘IndustrialRelations:FrameworkforthefutureIndustrialRelationsBill1989published’,07/12/89,GIS:D/Labour;D/Finance,‘Point4ofICTUdocument–PublicService’[Nov.89],DTA:S25857-Y;HaugheyinDáil,15/12/89;departmentalresponsestoSharingtheBenefitsinDTA:S25857-Y;‘IndustrialPerformance’,ICTUAR:59-61;D/I&CtoO’Sullivan,13/12/89,‘Reviewofindustrialperformance’,DTA:S25857-Y
16 ‘CRC.SummaryReportof22ndMeeting,16January1990’,DTA:S25857-Z1;‘Confidential.MeetingbetweenMin/SocialWelfareandICTU,18January1990’,DTA:S25862-F;Cassells,‘BriefingNoteforMeetingwithGovernment-23January1990’,ICTUArchive:PN-1;‘’BriefingMaterialforMeetingbetweenTaoiseachandMinistersforFinance,I&CandLabourwithrepresentativesoftheExec.CouncilICTU’,23/01/90,‘PositioninRelationtoICTU30PointPlan’and‘ReportofMeetingofTaoiseachandMinistersforFinance,I&CandLabourwithrepresentativesofICTU,23January1990’,23/01/90,andh/wreport,‘ICTU-Government.meeting’,23/01/90,DTA:S25862-F
17 CRC,PNR.ProgressReportoftheCRC,Feb.1990;ICTU1990b;O’Sullivan,D/Taoiseach,toKieronO’Carroll,Govt.SuppliesAgency,21/01/90,andh/wnote,notitle,n.d.,circulationlist,DTA:S25862-F
266
Who’s“Left”?ICTUanditsrebels
The union divide over partnership was reflected on the ICTU Executive in
conflictsoverhowtoapproachthespecialICTUconferenceof8February1990.
Pro-partnership leadersemployedeverymeans tosave theagreement.Topre-
empt an anti-PNR opposition “withdrawal” motion, the Executive’s “General
PurposesCommittee”(GPC)proposedthattheExecutivepresentamotionofits
own that ICTU remain in the PNR but under instruction to “ensure that
commitments…arefullyimplementedbytheendoftheyear”andauthorisedto
takeappropriateactionshould thisnot succeed.Thestarkdivisionswithin the
ICTU Executive were reflected in a full seven of its 27 members absenting
themselves fromthemeetingdebating thisproposaland in thebitterdivisions
among those present. Of the 20 who attended, just 11 – a majority of those
presentbutaminorityofthefullExecutive-backedtheGPCproposal.18
Having barely secured this mandate to even put a motion to conference, a
furthercrisisarosewhenitemergedthatmajoranti-PNRunionswereplanning
to attend the conference with delegations representing their full North/South
membershipstodefinitelytipthebalanceagainstthePNR.Fewsouthernunions
apart from the ITGWU and INTO had northernmemberships, and those were
quite small, but eleven mostly British-based and craft unions, including the
largest anti-PNR ones, had substantial northernmemberships.While Congress
rulesdidnotprecludeNortherndelegatesattending,theGPCargued,thiswould
breach ICTU traditions of non-involvement in matters relating purely to one
jurisdiction, and threaten to split the movement “at the border”. Following
heated debate on the Executive and attempted tactical amendments, a GPC
motion that unions be “requested” to send delegations representing their
Republic-basedmembersonlywaspassedby13to4,againamajority,but,with
many absentees and abstentions, a minority of the Executive. The GPC had
arguedthatitspositionwasintheinterestsofthe“commongood”ofpreserving
the“national”unityofthemovement,butitalsothreatenedthat“intheeventof
any Union not agreeing to this request” the Executive should consider
postponingtheSDCaltogether.Thata“majority”,howevertight,wassecuredfor
18 ICTUSpecialECmtg.01/02/90,item1830.ICTUArchive:ECminutes
267
this GPC proposition was due to several key Northern leaders who, while
stronglyopposingthePNR,sharedtheCPIperspectivethatprioritisedall-Ireland
tradeunionunityaboveallelse.TheGPCpositionwasahigh-stakesultimatum
that demonstrated the utter determination of SIPTU and the public service
leaderstocontinuewithsocialpartnership.19
Thedaybeforethespecialconference,theExecutivereconvenedinwhatthe
presspredictedwas“settobeastormyaffair”.Cassellshadcontactedtheeleven
relevantunionswiththeExecutive’s“request”,andmosthadcomplied,butfour
with large cross-bordermemberships refusedas, alone among trades councils,
did the “Trotskyist”-ledDerryCouncil.Amotion fromKieranMulvey (ASTI) to
nowpostpone theconferencewasputand lost,butasolutionproposedby the
GPC to bridge the divide succeeded. This suggested that the conference be
opened by John Freeman, leader of the anti-agreement ATGWU but a former
Congress President committed to all-island union unity,who, speaking for the
Executive,wouldformallyrequestNortherndelegatesattendingnottovote.20
HaugheyaddedhisweighttoassistthebesiegedICTUleaders.Describingthe
PNRas “a newand sophisticated formof economicmanagement” as “found in
manyContinental countries”, drivingprogress towards “living standards and a
qualityof lifeenjoyedbymostofour[EC]partners”,hesaid itwas“difficult to
understand…why therewouldbeanyattempt toundermine it”, andmadean
impassionedpleaforitscontinuation.ThePNR’s“outstandingcharacteristic”,he
said, was that “almost all of its objectives have been achieved, something not
very common with national economic plans here or elsewhere”. The press
editorialised in favour of the agreement and reported final concessions by
governmenttoteacherunionsonparent/teacherratios“inabidtosecuretheir
fifteen votes”, and to the public service on a pilot childcare project. Even Dáil
opposition leaders, who had encouraged ICTU’s dissenters before but now
baulkedattheconsequences,urgeddelegatestovotetocontinuewiththePNR.21
19 ICTUSpecialECmtg.01/02/90,item1831.ICTUArchive:ECminutes,andinformationfromformer
NorthernIrelandCPI-affiliatedunionleader20 “stormyaffair”,II,07/02/90;ICTUSpecialECmtg.07/02/90,item1832.ICTUArchive:ECminutes.
North/southdelegationswereMSF,printers(NGA),buildingtrades(UCATT)andbakers(BFWAU)21 “undermineit”,HaugheyinDáil15/12/89;“outstandingcharacteristic”,HaugheyinDáil07/02/90;
“securetheirvote”,II07/02/90;childcareconcession,EH07/02/90;oppositionleaders,Dáil,07/02/90
268
At the conference, the PNR, the press reported, “withstood a massive
onslaught”.Anti-PNRunionssensedafinalchancetoreversepartnershipbefore
it consolidated.Theconfrontationwas rawand,unusually,while recording the
proceedings,ICTUneverpublishedthem.Speakerafterspeakerfromsmall,craft,
andBritish-basedunions,aswellassectionalistonesliketheIMETUandIDATU,
denouncedthePNRasa“sell-out”,advocatingwithdrawalandaresumptionof
“traditional”militancy.While expressed in left-wing rhetoric, their case was a
very material one. “The only solution to low pay is more pay”, achieved by
militancyratherthannationalagreements,arguedone,whileanothercalledfor
“differentials”, “eroded” by central agreements, to be restored. Another
complained that “while … containing wage claims in the private sector”, with
workers “nailed to the cross”, the PNR “provided far greater flexibility in the
Public Service”: ICTU had been “captured” by the public sector, its character
utterly changed. Industrial relations reforms would destroy the basis of the
unionmovement,aswouldremovingcraftunioncontrolofapprenticetraining.22
Pro-partnershipleadersreiteratedtheiressentiallypoliticalcaseforthePNR,
and the need for ICTU to honour agreements. Their own delegations were
mandated to back the motion, though some, not least the then ITGWU, had
supportedthePNR in1987onlybyaslimmajority.But leaderssuchasAttley,
Flynn and Cassells were no less “left-wing” than the PNR’s opponents who
soughttomonopolisesocialistvirtue,andbothsidesarguedtheircaseasinthe
“working class interest”. The PNR, said Flynn, was “modifying the market by
means of a trade union input to social and economic policy”. Attley attacked
sectionalismandan“ideologicalblock”againstpursuinga“nationalconsensus”.
ThePNR’ssocialgainsanditsbenefitsforthelow-paidwereindisputable,with
the tax/pay formula delivering take-home increases of 8 per cent, which for
many could never have been achieved through free bargaining. The ATGWU’s
Mick O’Reilly would later bluntly sum up the “left” position: “Our view of
consensus…isthatweshouldbestrivingforaconsensuswiththeLeft”against
“theconsensusofgovernmentandtheNewRight”.23
22 “massiveonclaught”,IT,09/02/90;quotesfrom40-pp.report,notcirculated,‘SpecialDelegate
Conference.ProgrammeforNationalRecovery,LibertyHall,8February1990’,ICTUArchive:PN-123 ‘SpecialDelegateConference…’08/02/90;“ourviewofconsensus”,ICTUADC1990
269
Freeman’s appeal to Northern delegates attending not to vote was mostly
heeded, crucially in the caseof the largeATGWUandAUE,but thebakers and
MSFrefused.ASocialistWorkeractivistrepresentingtheanti-PNRDerryTrades
Councilurgedall-outopposition to “theTorygovernment” (inDublin!)by “the
organised working-class” but was interrupted mid-sentence by one delegate
asking sarcastically: “is the [northern] delegate speaking on the PNR?” The
Executivemotiontocontinuewiththeagreementonconditionoffulldeliveryby
theendoftheyearwascarried,mainlybySIPTUandthepublicservice,butbya
slim56percentmajority. IfNorthernATGWU/AUEdelegateshadvoted,andif
theCP-ledBelfastCouncilhadattended,itwouldhavebeendefeated.
In oneway, however, the “special delegate conference” (SDC) strengthened
Congress.Despitethedeepdivideoverpartnership,bothwingswerecommitted
tomaintainingunityandnounionleftCongressbecauseofthevote.Therewasa
widespreadifunspokenviewthatthepositionsadoptedbymanyamalgamated
unionswere the result of undemocratic procedures, JohnTierney ofMSF later
admittingtoPádraigYeatesthatmanyofhissouthernmemberswerefrustrated
at the anti-agreement decisions imposed on them. The SDC mandate
strengthenedCongress’sleveragewithinsocialpartnershipandtheinstitutionof
specialconferencesitselfwasreinforcedasademocratic instrument.Following
the SDC, the Executive scheduled another such conference for September to
decideonwhethertoentertalksonafurtherProgrammeand“theissueswhich
shouldbecoveredinanysuchnegotiations”,andyetanotherforFebruary1991
tovoteontheoutcomeof thosenegotiations.ThesystemofSDCsandmember
ballotingrepresentedademocraticparticipationandratificationprocesswhich
Cassellsrightlydescribedas“almostuniqueinEurope”amongtradeunions.24
The February 1990 Special Delegate Conference was the high-point of the
anti-partnershiprevolt,iffarfromtheendofit.Butitconvincedpro-partnership
leaders that if the programmewas delivered the system of social partnership,
withagovernmentcommittedtoitsinstitutionalisation,couldbeconsolidated.
24 ICTUECmtg.21/02/90,ICTUArchive,ECminutes;TierneytoYeates,interview,YeatesPapers;“almost
unique”,ICTUADC1990:33-4
270
Systemconsolidates:localpay,apprenticesandindustrialrelations Themorepragmaticthanideologicalbaseforthewidersupportfortheanti-
PNRLeftrevealedbytheICTUspecialconferencewouldneedtobeaddressedif
socialpartnershipwastosucceed.Somesuchissueswerenot,however,readily
amenabletosolution.Neithergovernmentnoremployerswereyetpreparedto
countenancelocalpay“flexibility”orprofit-sharing,Financewarningthatithad
been the “proliferation” of “so-called productivity agreements” that had
underminedthe1970sNWAs,andtherewasalso“anunderstandablereluctance
amongemployers to introduce…profit-sharing schemes”.Governmentheeded
Finance’s advice, but in its 1990budget did soften the regulations onworkers
redeeming shares under such schemes. More importantly, it also decided to
resolve public pay anomalies and implement the hours-of-work agreement to
counter union discontent. Dates and rates for the deferred phases of special
awardswerenowfinallyset,andimplementationofthe39-hourweekfrommid-
1990wasconcededacrossthepublicservice,withtheprivatesectorfollowing.25
ICTU’spaystrategywastoconsistentlyraiseminimumratesandthroughthe
pay/tax formula achieve income increases sufficient to deflect demands from
strongprivatesectorgroupsforlocal“flexibility”withoutupsettingthisformula.
Italsosoughttodivertlocalunionnegotiatingpowertowardsprofit-sharingand
theobjectivesofthe“newtradeunionism”.CassellsdescribedthisatICTU’smain
conferenceinJuly1990aslocal“flexibility…notjustinanarrow,oldfashioned
sense”, i.e. more pay, but rather participation in company decision-making to
direct profits towards re-investment and job creation”. This “industrial
democracy” approach fell on deaf ears, however, as private sector unions
vehementlyopposedit.Unions,astheysawit,were“losingcredibility”,andwas
localpayflexibilitynotjustthecorollaryof“specialclaims”inthepublicservice?
Companies,theyclaimed,shouldbedividedbetween“profit-makers”and“loss-
makers”, with workers in the former freed to extract greater wages. While
motionsseekingareturntoa“freehand”inlocalbargaining,whichwouldhave
25 On“flexibility”andprofitsharing,D/Finance,‘TreatmentofProfitSharingSchemesunderthePNR’,encl.
withN.T.O’Gorman,D/Finance,toO’Sullivan,D/Taoiseach,21/11/89:‘Re:ICTUmeetingwithTaoiseach’,24/11/89,DTA:S25862-D;onbudgetreforms,publicpayandhoursofwork,LGPSU,DublinHealthServices,BranchBulletin,n.d.[May90],ILHS-Archive:LGPSUBox2;DignamtoSecretary[ÓhUiginn],18/07/90,‘SummaryReportlastMeeting-HoursofWork’,DTA:S25857-Z8
271
ended the PNR,were defeated, several seeking some level of local “flexibility”
within national agreements passed decisively. This was a rejection of ICTU’s
“new unionism” based on “worker participation”, but it was telling that the
desirewas for reform rather than abolition of partnership pay determination.
FutureICTUpaystrategywouldhavetotakethisonboard,anddid.26
IfICTU’srebelswonthisvictoryonpaystrategy,thoughbyreformingrather
thanoverturningit,theylostintwootherareasimportanttosocialpartnership
andnewunionism,whichwonmajoritysupportamongaffiliatedunions.
First was reform of the apprenticeship system from the old craft union-
controlled model towards a Austro-German-inspired systematic state-certified
qualificationsystem.Ahern,withbothICTUandCIIsupportandinput,proposed
a general opening of apprenticeships, certified qualifications instead of “time
served”,thepromotingofwomeninnon-traditionalskills,andsocialpartnership
ratherthanindividualcraftsexercisingoversight.Apprenticeshipshaddeclined
drastically in the 1980s and, after considerable internal rancour, the ICTU
Executivedecidedbyasmallmajoritytosupportthereform.Atthe1990ICTU
conference, craft unions made a last stand, desperately seeking to defend the
indefensible.Followingheateddebate,conferencedecisivelybackedreform.27
SecondwasAhern’sindustrialrelationsreformbill,themostradicalchangein
industrial relations since 1906, designed to eliminate unofficial action and
sectional disputes that closed industries, while strengthening central union
authority. The reformhad been delayed in 1988-89 by government’sminority
position,butAhernnowprogressed it, acceptingmanyamendments suggested
by ICTU.While quibbling overminor points, Congresswelcomed it as amajor
pro-unionmodernisationprovidingthebasisforstableindustrialrelations“well
into the next century” with “none of the extreme characteristics of its British
counterpart”. The proposed conciliation system would prevent disputes
escalatingtoall-outconflict,ICTU’sroleinapprovingall-out-picketswasgivena
statutory basis, and its stipulation of secret ballots for all industrial action
accorded with good union practice anyway. Anti-PNR unions attacked the
26 “newtradeunionism”,ICTU1990g;Cassellsandcritics,ICTUADC1990:45-5727 apprenticeshipplan,FÁS1990;Executivedebate,ICTUECmtg.20/06/90;conferencedebate,ICTUADC
1990:115-8
272
undercuttingofsectionalpower,thecurtailingofpicketingandrequirementsfor
secretballots,andWorkersPartyTDsencouragedoppositionbystokingfearsof
wide-scalecourtintrusionintodisputes,butaswithapprenticeshipreform,they
weredefending the indefensible andwereagaindecisivelydefeated.Claimsby
sectional unions that the bill would “emasculate the collective power of this
movement”byconstrainingsympatheticaction,withworkerssaying“wemayas
well not be in unions”, fell on deaf ears. Itwas certainly true that aswith the
apprenticeshipbill, thereformwoulddestroymuchofthearmouryofsectional
unionism,butitenhancedthepositionofthegeneralworkforceand,apartfrom
notconcedingstatutorytradeunionrecognition,metmostICTUdemands.28
The disruptive power of anti-PNR unions was weakened further by the
Executivedecidingtorestrictvotingonfutureagreementstotherepresentatives
ofmembershipsdirectlyeffected,NorthorSouth,thoughamendedonNorthern
insistencetoreferonly tomattersofpayandconditions.Votingrightsof trade
councils on pay agreements were also curtailed on the basis of preventing
double-voting.Thegrowinghegemonyofpro-partnershipleaderswasreflected
inthefailureofanti-PNRfiguressuchasJohnTierneyofMSFandSeánRedmond
oftheIMETU,bothseasonedleftleaders,tobeelectedtotheExecutive.29
FollowingtheICTU’sFebruary1990specialconference,theCRCresumedits
role as the administrative driver of social partnership, with the “Secretariat
Group” re-formed and the CRC meticulously tracking implementation of
commitmentsbydepartments.Pursuingitsnewmandate,ICTUsoughtameeting
withHaughey“toensurethatcommitmentsarisingfromtherecentreviewofthe
Programme…areimplementedbetweennowandtheendof1990”.ÓhUiginn’s
staffrelentlesslypressureddepartmentsfortime-scalesonvariousinitiativesas
soughtby ICTU, andHaughey reiteratedhis intent todeliveron commitments.
TheCRCalsoresumeditsproblem-solvingroleinoftenfraughtconflicts,suchas
onpensionsreform.ICTUsoughtstatutoryprovisionformembertrustees,which
the FIE (as FUE had been renamed) vigorously opposed, but again, acting as
28 ICTUwelcomeIRBill,ICTUAR199045-6,ICTU1990gandADC1990106-8;“claimsbysectionalunions”,
ICTUADC1991:33;“stokingfears”,RabbitteandGilmore1990;benefits,ICTUECmtg.18/09/90,item1955;alsoGunnigleetal.1999:62-71
29 agreementonnorthernvotes,ICTUSpecialECmtg.09/04/90,item1832;tradescouncils,ICTUADC1990:33-8;TierneyandRedmond,ICTUADC1990appendix,‘ElectionoftheExecutiveCouncil’
273
arbiterforthestate,ÓhUiginnintervened,inthiscaseonICTU’sside,urgingthe
Pensions Board to concede member trustees “on a voluntary basis” until a
reviewinthreeyearsassessedtheneedforstatutoryprovision.FIErelented.30
By autumn 1990, ICTU had consolidated its agenda internally against the
dissident opposition, and through the CRCwas ensuring programme delivery.
The only substantial issue on which it would have to seek a reconfiguring of
partnershipagreementswas somemechanism tomeetprivate sector localpay
flexibility,theoneissuestillgeneratingsignificantsupportforanti-PNRmotions.
Strategicshift:theHaughey/ICTUdealonthe“semi-states” Apart from local pay, the state companies were also an issue of potential
conflictbetweengovernmentandtheunions.WithICTUthestatesector’smain
champion, thePNR, followingmuch contractionunder theFitzGerald coalition,
had agreed expansion through joint ventures, new subsidiaries, international
consultanciesandprivatecapital input,and in1987-9manysuchnewprojects
had been initiated, with Haughey urging companies on in their ambitions.
Existing boardswere incorporated on the Telecommodel and new companies
andstatebodiescreated,includingCoillte,TeagascandFÁS,withothersplanned
forsectorssuchasthemarine.“MyGovernment”,HaugheyassuredtheITGWU,
“believe in the value of a sound, viable State sector … to create employment,
contributetothenationaleconomyandprovideaneffectiveandefficientservice
… Our approach is pragmatic, not ideological”. Itwas amessage he reiterated
throughout 1989. The new coalition, on Haughey’s insistence and despite the
PDs’privatisingzeal,committedtosupporta“viableandprofitablecommercial
semi-State sector”withany changes to “ownership structures” subject toprior
“consultationwiththesocialpartners”.31
30 OnCRCdynamicandHaugheycommitment,O’SullivantoSecretary,‘Subject:MeetingwithMrPCassells
andMsPO’Donovan,ICTU,on2March1990’,01/03/90,and‘ReportofMeetingwithICTUon2March1990’,02/03/90,DTA:S25857-Z4;Onpensionreformdispute,O’SullivantoSecretary[ÓhUiginn],‘Subject:AgendaItem9–PensionsBill–Appointmentofmembertrustees’,25/04/90andD/SocialWelfare,‘PensionsBill1990.IssueofProvidingmemberswithstatutoryrightsinrelationtotheappointmentoftrustees’,20/04/90,DTA:S25857-Z4;‘CRC.SummaryReportof25thMeeting,26April1990’,andh/wnotes25thCRCmtg.,26/04/90,DTA:S25857-Z4;‘CRC.SummaryReportof26thMeeting24May1990’,DTA:S25857-Z6
31 Haughey,‘SpeechatadinnertomarkwindingupoftheITGWU’,29/12/89,GIS:D/Taoiseach;repeatsmessage,Dáil12/12/89;coalitioncommitment,PfG1989
274
Withsweepingde-nationalisationinBritainandthefallofsocialisminEastern
Europe,leadingeconomistsbeganagitatingforwholesaleprivatisation.FineGael
harried Haughey for hesitating on privatisation while UCD Professor Frank
Convery declared it the new “international trend, … an idea whose time has
come”.TheIrisheconomyatindependencehadbeen“dominatedbyarelatively
small,mainly Protestant, business oligarchy”, and state companies had broken
this, “creating a business class among the Catholic community”. Government
shouldunleash thispotential throughprivatisation.Haugheywasnotaverse to
this view, having told his 1989 party Árd Fheis of the need to liberate
“professional skills lockedupuselessly inout-datedstructures”.Even left-wing
economists noted how the state sector was “spawning entrepreneurs”, with
former statemanagers emergingas globalbusiness leaders. Converyproposed
alsoincentivisingworkerstosupportprivatisationthroughemployeeshares.32
Finance’s 1990 budget planning proposed raising “at least” £50m towards
reducingthenationaldebtbyasaleof“stateassets”.ThePDshadchampioned
this, O’Malley’s “catchword” being to “roll back the state”, but Haughey had
ensured this did not feature in the Programme for Government. Senor civil
servants,however,supportedtheidea,withtheproposaltocabinet–inpartto
meetPNRpayandtaxcommitments–theinitiativeofSeánCromien,secretaryof
Finance.ConcernedthatanICTUinitiativeatCRClevelonthestatesectormight
“jeopardise”theplan,heremindedÓhUiginnhowtheyhadbothbeenpresentat
meetingsatwhichHaugheyhimself“onseveraloccasions”had“spokeninfavour
ofassetdisposal for thebenefitof theExchequer,mentioningStatecompanies,
and pressed that the matter be pursued expeditiously”. In fact what Haughey
referredtowereunusedpropertiessuchasCIÉ’sTempleBarsite, forwhichhe
createdapublic/privatejointventuretodevelopasa“culturalquarter”.33
Public opinion was acclimatised to a privatisation offensive by statements
fromministers favouringstatecompaniesbeing included in“assets” tobesold.
This followed immediatelyonthenarrowvictoryof ICTU leaders’at itsspecial
conference.SIPTUdenounced the “speculation”as “entirelyatoddswith… the32 “wholesale”,ConveryandMcDowell1990;FineGael“harried”,Dáil12/12/89;ConveryinSunday
Independent18/03/89;“outdatedstructures”,Haughey1989;“economists”,Sweeney,P.,2004:20-7;33 SeánP.Cromien,Sec,D/Finance,toÓhUiginn,D/Taoiseach,29/02/90,DTA:S25862-F;PDposition,
O’Malley,D.2014:168;“unusedproperties”,‘StatePapers’,IrishTimes29/12/2017
275
PNR”.Reynoldsexacerbatedgrowingdistrustbystatingthatthe“restructuring”
ofIrishLife-theonlysuchcommitmentinthePfG–wouldseethestateretain
only aminority 34 per cent holding as a “golden share” to protect the “public
interest”. Talks were also announced with foreign investors on Irish Steel, to
ensureits“futureandthemaintenanceofitsemployment”.Withingovernment,
and in tune with Convery’s urgings, privatisation proposals often came from
state companies themselves, includingGSH,whoargued that resources to save
andexpanditcouldnotbegeneratedinternally.IrishSugarexecutiveswerepart
ofacommitteethatproposedfloatinghalfthatcompanyandAerLingusleaders
proposedthatitsstructurebechangedto“facilitatefuturedisposal”.34
Finance warned Haughey that “whatever about the past”, state companies
“must operate and plan for the future on strictly commercial lines” and this
shouldnotbedilutedbycommitmentsonemploymenttoICTU.Thefinalbudget
plan,CromientoldÓhUiginn,“assumesthat£62.5millionwillaccrue…fromthe
saleofequityinStatecompanies”,specificallyGSH,IrishSugarandtheTSBand
ICCbanks.Cabinet agreed that these “bedisposedof in suchamannerandon
suchascale”asnecessarytoachievethis.HebelievedICTUwereplanningtoget
theCRCtoseekaWhitePaperonsemi-states,whichwould“puttheentire1990
Budgetstrategyatrisk”.ÓhUiginnmustpreventCRCproposalsthat“jeopardise
Government’sabilitytoraisethesumsreferredto…ordelaytheprocess”.35
CongressdemandedthatthestateretainitsmajorityholdinginIrishLifeand
demanded to meet Haughey on the whole issue of “the future for State
companies”.Decisions shouldbe suspendedpending that, or itwouldbe “very
difficult if not impossible to commence negotiations of a further Programme”.
TheICTUExecutivepublishedapolicyposition,PublicEnterpriseandEconomic
Development, which, while welcoming expansion through joint public/private
ventures and claiming that semi-states could drive a large-scale indigenous
sectorexpansiongiventhefailingsofprivateenterprise,demandedthatthestate
34 EdBrowne,SIPTU,toTaoiseach,21/02/90,DTA:S25862-F;‘Govt.Statement’[notitle,reIrishSteel],
09/03/90,GIS:D/Taoiseach;D/Labour,‘BriefingMaterialonGreatSouthernHotel(GSH)Group’,n.d.(fax26/03/90);D/Finance,‘PossibilityofSaleofcertainStatebodies:presentposition’,n.d.[26/03/90],DTA:S25862-F
35 “FinancewarnedHaughey”,D/Finance,‘StateCompaniesandJobCreation.BackgroundNote’,encl.withN.T.O’Gorman,D/Finance,toO’Sullivan,D/Taoiseach,21/11/89,‘Re:ICTUmeetingwithTaoiseach’,24/11/89,DTA:S25862-D;“finalbudgetplan”,CromientoÓhUiginn,29/02/90,DTA:S25862-F
276
retainmajorityshareholdings,andequitysalesbeexclusivelyforre-investment.
ItproposedtheWhitePaperCromienhadwarnedofand insistedonanendto
“secrettalks”with“bankers,stockbrokersandconsultants”.Ithadthesupportof
theCIIwhich,whilefavouringcommercialisation,hadmanystatecompaniesin
membershipandchampionedthemagainstperceivedstatediscrimination,asin
the case of Aer Lingus/Ryanair. This had led the IFA to accuse CII of being a
“prisonerofthestatesector”andevenofrefusingRyanairCIImembership.36
Cromien urged Haughey to be devious. While being open with ICTU about
plans for IrishSugarandotherbodies towhich theunionswerealreadyprivy,
“they should not know of the possibility in relation to ICC and TSB”. Also, the
statehad toretaina freehand toreduce thenationaldebt throughassetsales.
Consultationwithunionsmustnotmeangivingthem“avirtualvetopower”,nor
shouldhecommittoretainworkerdirectorsin“restructured”companies,asthe
“the state cannot bind other … owners”. Partial privatisation would boost
employmentanyway,andwas“apolicynowbeing followednotonly in theso-
called capitalist countries but in socialist and communist states as well”.
Cromien’smemowassupportedbyextensivedocumentationfromdepartments
arguing for privatisation of “assets” within their remit and discounting ICTU’s
arguments.ThecentralaimofmeetingCongressmustbetousenuancesintheir
position to “advance the degree of acceptance of the principle of privatisation
shownintheICTUdocument”.Congresswasfacingaformidableonslaught.37
Asever,ÓhUiginnwasoptimistic.Onequitysalestoreducethenationaldebt,
he recommended reformulating this as sales “contributing to the growth and
development of the economy”. In general Haugheymight commit to the state
retainingmajorityshareholdings,butsuggestfullsaleswherenecessarytosave
enterprises which would otherwise have to close, such as Irish Steel, and in
“strategic”casesretaininga“golden”share“toprotectthepublicinterestagainst
undesirableownership”.TheoverridinggoalforÓhUiginnwasastrategyagreed36 “Congressdemanded”,CassellstoTaoiseach,14/03/1990,andTaoiseachtoCassellsICTU,16/03/90,
DTA:S25862-F;PublicEnterprise,ICTU1990d;seeksWhitePaper,CRC‘Sub-GrouponJobCreation’,h/wnotes,n.d.[mtg.28/06/89],DTA:S26122-A;position,Power,CII,toÓhUiginn,andtoAhern,‘Re:PRSIExemption’,13/10/89,DTA:S25857-X;refusesRyanair,h/wnotesof18thCRCmtg21/09/89,DTA:S25857-W
37 Cromienmemoanddocumentation,‘SteeringNote’,attch’dwithRobertCarey,[pvte]Secretary[toM/Finance],toO’Sullivan,D/Taoiseach,26/03/90,and“advanceacceptance”,R.J.Curran,D/Finance,toÓhUiginn,D/Taoiseach,27/03/90,DTA:S25862-F
277
withICTU,whichhewasconvincedwasattainable:“Itwouldbepossible,inthe
lightoftheirsubmission,toreachagreement…onprincipleswhichwouldapply
tothesaleofsomeoralloftheState’sholdinginStatecompanies”.38
Themeetingon27March1990–oneofthemostextraordinaryofthePNRera
-was attended by a formidable array ofMinisters, officials and union leaders.
Even JohnCarroll attended, theaustereSIPTUPresidentwhohadnotofficially
metgovernmentsince1987,whenhehadbeeninstrumentalinengineeringthe
PNR with Haughey. ICTU reiterated its core “principles” on state industry,
warning of the “credibility problem” it faced with members complaining that
unilateral stateactionproved “therewasnovalue in the consensusapproach”.
Haugheyrepeatedhisconcernforasuccessfulstatesector,disregardingmuchof
whatCromienhadadvised.HehadnointentionofinterferingwithAerLingus(“a
star performer”) or any successful company. B&I and Irish Steel were special
cases, failedprivateventuresnationalised for strategic reasons,but shouldnot
necessarilyremainso. IrishSugar’s functionwaschangingduetonewCAPand
SingleMarketrulesandwouldrequireanewstructureandpurpose.Hegave“a
solemnassurance”that theIrishLifedecision,necessitatedby legalconstraints
in operating abroad,was neither a “precedent” nor “amodel for restructuring
other State companies”, and agreed that some companies had potential to
become“largescaleindigenouscompanies”,butmonetarystrategydictatedthis
could only occur through private capital involvement. Selling equity to reduce
thenationaldebtwasnotagovernment“aim”, though“lossmakers”shouldbe
considered. Carroll intervened forcefully in Haughey’s support, insisting only
that “essential services” and “strategic” companies remain in state ownership.
Haughey promised full consultation and, to the undoubted horror of Finance,
metICTU’sWhitePaperdemandhalf-waybyproposingthatCRCdraftcommon
“principles” forpolicy towards the sector. ICTUwas greatly relieved, declaring
the “Taoiseach’s pragmatic stance” “comforting”, accepting that Irish Steel and
38 Secretary[ÓhUiginn]toTaoiseach,‘ICTUMeetingonPrivateInvolvementinStateCompanies’,
26/03/90,DTA:S25862-F
278
Verolmecouldbesoldofftosurvive,andwelcomingHaughey’sproposalthatthe
CRCdraftasetofprinciplesforfuturestatepolicyonthesector.39
Financewasoutraged atHaughey’s concessions.Nevertheless, following the
meeting,Congresspubliclyendorsedtheprincipleofsellingequity-apartfrom
“strategicservices”–wherethiswasnecessarytomaintainemployment,enable
expansion or ensure future viability, and in private, as Ó hUiginn reported,
agreed to restructurings commencing “evenwhile the [CRC]Working Party is
sitting”,whichwould“enablesalestogoahead”.Cassells’onlyconditionwasthat
theCRC“principles”befinalisedanagreed“wellinadvanceofnegotiationsona
furtherprogramme”.TheHaughey-ICTU“deal”epitomisedsocialpartnershipas
understoodbybothHaugheyandunion leaders,andCarroll’s interventionwas
keytofacilitatingthecompromise.ICTU’sconcessionsonprivateinvestmentand
equity sales were reciprocated by Haughey’s commitment to retain majority
shareholdings in successful companies and to the CRC setting future policy
principles.IntheDáil,Labourandex-Workers’Partyleaderssuspectedasecret
dealhadbeenreachedtofacilitate“privatisation”,whileFineGaelworriedthata
compromisehadbeenagreedpreventingit.Inasense,theywerebothright.40
TheCRC“workingparty”convenedimmediately,collatingrestructuringplans
from companies and drafting “principles” for policy on the sector. Individual
unionscontinuedtobeinvolvedinrestructuringatBordnaMónaandGSH,and
buyerswerefoundforthedistressedVerolmeDockyard,enablingproductionto
resume and leveraging IDA supports.41Therewas often conflict, as at Bord na
Móna over developing or selling off cut-away bogs, or at Irish Sugar over
alternativeemploymentforworkersinplantsearmarkedforclosure.PlansbyAn
Post led to conflict and even strike action, and in June, just before its annual
39 ‘ReportofMeetingofTaoiseachandMinistersforFinance,I&CandLabourwithrepresentativesofICTU,
27March1990’,andh/wnotesofthemeeting,DTA:S25862-F40 ‘JointGovernment/ICTUStatement’,27/03/90,GIS:D/Taoiseach;Cromien,SecD/Finance,toO’Sullivan,
D/Taoiseach,04/04/90;ÓhUiginn‘Note’[toTaoiseach],30/04/90:‘CRCmeeting26/04/90’;O’Sullivan[toÓhUig],h/wnoteoftel.conversationwithCassells,27/03,andnoteCassells,‘Forattn.PatO’Sullivan:IssuesforinclusioninStatementfollowingmeetingthisafternoon’,27/03/90,DTA:S25862-F;oppositionreaction,Dáil01/05/90
41 ‘WorkingGrouponStateCompanies’,inCRC,‘SummaryReportof26thMeeting,24May1990’,DTA:S25857-Z6;ICTUAR1990:70;D/Labour,‘BriefingMaterialonGreatSouthernHotel(GSH)Group’,n.d.(fax26/03/90),DTA:S25862-F;Dáil08/02/90;Reynolds,‘AddressbytheM/FinancetoannouncesaleofVerolmeDockyardtoDamenShipyardsofHolland’,29/06/90,GIS:D/Finance
279
conference, ICTUevenwithdrew “temporarily” from theCRCWorkingParty in
protestattheBroadcastingBillestablishingcommercialcompetitiontoRTE.42
Anti-PNR unions mobilised against the Executive’s new position, but
partnership leaders robustlydefended it,Attley stating thathehad “absolutely
no doubt” about government’s “hidden privatisation agenda”, but in Britain
obdurateunionoppositionhad failed,andstate industrywasbeingdismantled
wholesaleacrosseasternandevenwesternEurope.“Dowewanttogodownthe
sameroad?” Irish state companieshadbeenhaemorrhagingemployment since
1980 and “ifwe don’t do something theywill simplywither away”. To ensure
semi-states survived as “a vehicle for development and job creation” required
embracingoutside investment,and ifunionsopposedthis, “wewillsimply lose
thedebate”.Theconferenceendorsedthenewpolicybyanarrowmajority.43
Haugheyforhispartheldgovernmenttothe“understanding”hehadreached
with Congress, and privatisation as envisaged by Finance was halted.
Government,hetoldhisparty’sÁrdFheis,wasnot“engagedinanyprogramme
of systematic privatisation”. While there “may” be equity sales to reduce the
“crippling national debt”, such decisions would only be reached if of “overall
benefittothenationaleconomy”,theformulationÓhUiginnhadproposed.44
TheCRCfinaliseditsproposed“principles”onstatecompaniesinSeptember,
recommending continued expansion through subsidiaries, private equity and
export ventures, and allowing distressed companies be sold to secure their
viability. The key criterion was business success and, tellingly, no “majority”
conditiononretainedstateholdingswassought.TherestructuringofIrishSugar
asaprivatised international foodcompany, laterGreencoreplc,proceeded,but
with thestate retaining45percent.ToCongress’s satisfaction,GreatSouthern
Hotelswassold,nottoprivatebiddersbuttoAerRianta,anotherstatecompany,
andICTUagreedaplanwithFinanceforB&ItobesoldtoIrishFerries,aformer
subsidiaryofIrishShipping.A“viabilityplan”forIrishSteelretaineditinpublic
42 ICTUAR1990:70;ICTUADC1990:91-3;RayBurke,‘AddresstoAnnualConferenceofCWU’,Cork,
18/05/90,and‘MinisterurgesCommunicationWorkerstofacechallengesofcompetitionandchange’,18/05/90,GIS:D/JusticeandComm.;‘WorkingGrouponStateCompanies’,inCRC,‘SummaryReportof27thMeeting,21June1990’,DTA:S25857-Z7
43 ICTUADC1990:91-10344 Haughey,‘Taoiseach’saddresstoFiannaFáilArdFheis’,07/04/90,DTA:S25858-Z3
280
ownership, andplans to sell off CIÉTourswere abandoned. The only closures
wereofdefunctentitiessuchastheJointHospitalsServicesBoard.45
When the Irish Sugar planwas announced,TheIrishTimes, no doubt to the
satisfactionofbothHaugheyandICTU,editorialisedthatitwas“nowwellplaced
to become one of the leaders in the food sector”. “With the State as themost
significantshareholderbutwithstockmarketparticipationandscrutiny,amodel
ofpublicandprivatepartnershipmayperhapsdevelopwhichoffersahealthier
basis for promoting national champions” than the “alliance between the state
andaveryprivatecompany”hadproveninthe“problematic”Goodmancase.46
Reynolds, considered a particularly strong advocate of private enterprise,
defended state companies, urgingUS investorsnot to shunbut engage in joint
ventures with them. Selling state companies would only occur where
“warranted” as government saw “the State sector continuing as an important
influence on the Irish economy”. While Haughey had pioneered semi-state
commercialisation, and insisted on commercial criteria, his reputation as a
discipleofprivatisationhasnobasis.Heagreedtothe“principles”producedby
the CRC,whichwere incorporated verbatim into the follow-on agreement, the
PESP,andwouldgovernstatepolicyonthesectorforthenextdecade.47
TherestructuringofIrishSugarinvolvedundoubtedinsidertradingbysenior
executives, leadingtoamajorscandal inwhichHaugheyforcedthemtoresign.
RelatedthoughunfoundedaccusationsweremadeinthecaseofUCD’spurchase
ofCarysfortCollegeandthepurchasebyTelecomofnewheadquarters.Haughey
wasnot involved in these transactions,andpublicly forced those implicated to
resign, but a hostilemedia continued to insinuate his central role in a corrupt
“goldencircle”enriching itselfat thepublic’sexpense.Spring, inanoutburstof
moraloutrage,spokeofan“evilspiritthatcontrolsonepoliticalparty”,a“cancer
… eating away at our body politic” threatening “to corrupt the entire political
system”.The“viruswhichhascausedthatcancer”wastheTaoiseach,CharlesJ.
Haughey. In reality, these various “affairs” were arguably inevitable
consequencesofstate-sectorcommercialisationandthebusinessrelationshipsit45 ‘PublicEnterprise–ProgressReport’:ICTUECmtg.19/09/90,item1986;ICTUAR1991:53-546 IT26/10/9047 Reynolds,‘AddresstotheSheridanCircle’,Washington,25/09/90,GIS:D/Finance;reputation,Sweeney
2004;“Principles”inICTUAR1991:53-4andPESP,SectionV(89-90),1991
281
created, a policy endorsed by all Dáil parties. While Haughey was certainly
acquaintedwithmanyof those involved,notonlyhave figuressuchasMichael
Smurfitcontinuallydeniedunethicalbehaviourandneverbeenprosecuted,but
nodirectinvolvementbyHaugheyhaseverbeenestablished.48
Even if overshadowed by this political theatre, ICTU’s agreement with
Haugheyonthesemi-stateswasamajorachievement,guaranteeingforadecade
astrongroleineconomicdevelopmentforanexpandingstatesector.ICTUhad
few illusions about state companies, and in its planning for a post-PNR
agreementdistinguishedinternallybetweenthe“goodones”andthe“disasters”,
focusing its expansion plans on the former. It combined this realism with a
strategyofdeepeningworkerparticipationatboardandsub-boardlevel,agreat
expansion of which it achieved under PNR/PESP, and established sectoral
networks of worker directors and business management training for them.
AnothernewstrategyfirstfloatedbyCassellstoresolveproblemsatTEAMAer
LingussawICTUtradecooperationinrestructuringforemployeeshareholdings,
astrategythatwouldexpandinthefollowingyears.49
Planningthetransition:towardsanewAgreement Themajor dramas and crises of social partnershipduring1990occurred in
theGovernment-ICTUrelationshipbecause,byandlarge,theotherstakeholders
hadcometotermswiththenewsystem,havingsecuredtheirinterestswithinit.
Foremployers,fearsofunionindisciplineonpayhadprovenunfoundedand
the economic take-off and growing profitability had obviated their previous
obsessive determination to prevent minimum PNR pay rates becoming an
established“norm”across industry.PNRrateswerenowwidelyconceded.The
tax/pay formula had delivered take-home pay increases of over 7 per cent, of
whichoverhalfwascontributedby thestate through taxreform.ThePNRpay
system,TurloughO’SullivanofFIErecalled,hadproventobea“nobrainer”.The
business lobby,CII,enthusiasticallyengaged in theeconomicplanningafforded
48 “scandals”,Ryle-Dwyer1992:152-60;SpringinRyle-Dyer1992:149-5049 “goodones/disasters”,ICTU,h/wnotes,“PayNegotiations”,Oct.1990,ICTUArchive:PN-1;
“participation”,ICTU,‘SpecificareasfordiscussionwithGovernmentonaPESD’,18/10/90,ICTUArchive:PN-2;‘PESD,WorkingGrouponSemiStates1990’,ICTUArchive:PESP-PWG[Folder4050-8];ICTUAR1991:53;Cassellsin‘Conferenceonprofit/gainsharing’,IRNReport,15/11/90;Sweeney2004
282
by partnership, influencing Irish EEC and FDI strategy and co-shaping the
programmes of the NDP through large social and infrastructural programmes,
privatesectorparticipationinstructuralfund-financedprojectsandtheopening
to pursue radical regulatory liberalisation under the Single Market. Liam
Connellan,warningofinternationalpressuresontheeconomyandwithBritain,
“our largest trading partner”, in “near recession” as Sterling “plummeted”,
praised “the consensus” of the PNR for creating “a climate of confidence and
stability”,itsimpact“morepronouncedeachyear”.50
Farming bodies for their part depended on government to minimise CAP
reform at EC level and tax reform at home, and made their peace with
partnership as the framework for pursuing policy goals. With their scope for
manoeuvrethuslimited,Haugheygavesomeoftheirdemandsshortshrift.When
theycomplainedof“inequities”forfarmersinproposedinheritancetaxreforms,
he suggested they “submitdetailsof cases to illustrate theirpoints”, andwhen
theywarned that applying property tax to farms “would raise the question of
IFA’s continued participation in the PNR”, he directed them to the Expert
Committee on local taxes. When they sought the extension of the business
expansion scheme to farms, he retorted that “IFA might consider such farm
enterprises establishing as companies, thus qualifying in principle for the
Scheme”,asmushroomfarmshaddone.TheIFAhadlittleoptionbuttostayand
fightitscornerwithinpartnership.51
Thehigh-pointoftheHaugheygovernmentwasitswidelypraisedPresidency
ofthethen12-memberECinJanuary-June1990.Haugheyusedittopromotethe
Irishpartnershipmodel,whichhedescribedtoECleadersas“asocio-economic
policyconsensus,unique,Ithink,inEurope”,showcaseIrelandasaseriousand
successful state, and pursue the NESC strategy of close alignment with the
Franco-GermanEMUprojectandsocialmodeltomaximiseregional investment
distributionundertheDelorsPlan.Hisrolewasepitomisedinhisleadershipon
50 PNRratesgenerallyconceded,ICTU1990g;“nobrainer”,InterviewTurloughO’Sullivan;CII“workedthe
planningsystem”,Connellan,CII,toTeahon,‘CRCJobCreationCommittee’,15/01/90,andCII,‘ProposaltoCreateAdditionalThirdLevelPlacesinPrivateEducationalInstitutions’,DTA:S25857-Z1;Connellan“warning”,CII,‘AddressbyLiamConnellan,DirectorGeneral,CII,atBrayChamberofCommerce’,23/04/90,PowerPapers,SligoITArchive
51 ‘ReportofMeetingofTaoiseachandMinisters/F,A&FandEnv.withDeputationfromIFA’04/10/89,DTA:S25899-B[folder:‘EECAspect’]
283
German unification, which reaped rich dividends for Ireland. A British TUC
leader,addressingtheICTU,marvelledattheinfluenceIrishunionshadachieved
innationalpolicyandpraisedIreland’sECPresidencywhich,“spurredonbythis
Congress”, hadadoptedaprogressive socialpolicy agenda.Referring toAhern,
shesaid,“Idon’tthinkyoureallyappreciatehowrefreshingitwastobeableto
talk with a person in power with such an awareness of the interdependence
betweeneconomicsuccessandsocialprogress”.52
Despite ICTU’s internalconflicts,Haugheyandhiscircle repeatedlydeclared
their desire to achieve a successor agreement and institutionalise social
partnership: “we need only look to … Germany with its long tradition of
consensustoseethevalueofharnessingallinterests…forthecommongood”,he
toldtheITGWU.Whileaddressingnewissues,anynewdealshouldcontinuethe
“principles”ofthePNR.Socialpartnership,hetoldhisÁrdFheis,was“anational
pearlofgreatprice”which“wemustholdonto”.Ahern,warningthatasa“small
openeconomy…wecannotaffordanydomesticallygeneratedpolicymistakes”,
and,usingICTU’sproposedtitle,advocatedanew“programmeforeconomicand
socialdevelopment”(PESD)continuingthe“basicprinciples”ofthePNR.53
In preparing for the September1990 special conference (SDC) to decide on
whether to enter talks on a successor agreement, ICTU leaders exploited
governmenteagernessforapositiveoutcometohaveoutstandingissuesunder
the PNR resolved and had the CRC issue another Progress Report on the
“achievementsof thePNR”.At the ICTUExecutive they securedadecision that
onlydelegatesrepresentingmembershipsintheRepubliccouldattendandvote.
ICTUidentifieditsprioritiesasfurthertaxreform,theexpansionandreformof
public services, a range of equality policies, a “major assault on long-term
unemployment” and, critically, some limited local pay bargaining. Government
assisted thembymeetingdemandson “unresolved issues”,making last-minute
concessions on teacher recruitment and reformsbenefiting part-timeworkers.
52 “promotespartnership”,Haughey,‘AddresstotheEuropeanRoundTableatDromolandCastle’,
13/05/90,GIS:D/Taoiseach;“richdividends”,EamonDelaney,‘GermansupportforIrishonBrexitispaybacktimetoBritish’,IrishCentral,08/04/19;TUCleader,ICTUADC1990:87-8
53 Haugheyonsuccessorprogramme,Dáil,15/12/89;speechtoITGWU,Haughey,‘SpeechatdinnertomarkwindingupoftheITGWU,29/12/89,GIS:D/Taois;toÁrdFheis,Haughey,‘Taoiseach’saddresstoFiannaFáilÁrdFheis’,07/04/90,DTA:S25858-Z3;Ahern,‘SpeechtoannualconferenceofCPSU,Tralee’,19/05/90and‘SpeechatannualconferenceofMSFUnion’,10/03/90,GIS:D/Labour
284
The SDC gave ICTU a strong 70 per centmandate (218/114) to enter talks. A
furtherSDCinFebruary1991woulddecideontheproposalsthatemerged.54
With thismandate and a government keen for a newprogramme, Congress
draftedanambitiousagenda, stipulated the jointpolicy “workinggroups”with
governmentwhich should be formed and the structures of a new “PESD”, and
sought a meeting with Haughey. The day before this meeting, it published its
plan, Ireland 1990-2000: A Decade of Development, Reform and Growth. This
acceptedacontinuationofthemonetaryandmacro-economicframeworkofthe
PNR, but focused also on “underdeveloped” “social rights” and institutional
weaknesses: “we have a big State but a weak State”. It advocated a 10-year
frameworkwith successive 3-year agreements under it. The aim should be to
achieveECstandardsofliving,a“totalrestructuringofoursocialservices”and“a
modernefficientsocialmarketeconomy…similartoGermany”,atthattimethe
modelEuropeansocialdemocracy,towhichHaugheytooaspired.55
Completingtheblueprint:NESCandthe10-year“PESP”
Negotiations and policy formation for the new agreement progressed
similarlyto1987throughjointpolicygroupsandbilateralgovernment/partner
meetings.Asin1987ICTUinitiatedanddeterminedmuchofthestructure.Butit
wasalsodifferent,instakeholderinputbeingfarmoreorganisedandconcerted,
party political opposition mooted or blunted, and employers, business and
farmers fare more willing to engage. Government proposals to continue the
“principles” of the PNR and its macro-economic/industrial/social policy
structure, though with some new socio-economic aims, was widely accepted.
ICTU established a 17-member “negotiating team” which, unlike 1987, and as
leverage towards securing a local pay clause, included representatives of anti-
54 ICTUECmtg.12/09/90,item1955.ICTUArchive:ECminutes.‘CRC.SummaryReportof28thMeeting
19/07/90’,h/wnotesofCRCmtg.19/07/90,andO’DonovanICTUtoDignamD/Taoiseach,13/07/90,andDignamtoSecretary[ÓhUiginn],18/07/90,re‘Item3–UnresolvedissuesundertheProgramme’,DTA:S25857-Z8;Corr.ICTU/TUI/CRC,inc.ÓhUigtoFitzpatrickTUI6/09,andFitzpatricktoCassels26/09/90,ICTUArchive:PN-1;CRC,‘ProgrammeforNationalRecovery:SummaryofAchievements’,Sept.1990,andAherntoCassells,18/09/90,withh/wnote:“Confidential”,S25857-Z9;ICTU,‘ExecutiveCounciltoseekapprovaltoopentalksonnewProgramme’,n.d.[19/09/90]:ICTUArchive:PN-2
55 ICTUproposals,CassellstoHaughey,28/09/90.ICTUArchive:PN-2and,‘CongresstoseekearlymeetingwithGovernment’,IT27/09/90;Ireland1990-2000,ICTU1990h;
285
PNRcraftunionswhohadbeenoutsidethe1987talks. It formedarangeof its
ownpolicysub-groupsofICTUofficersandtrainerstocompilepolicies.56
Haughey welcomed ICTU’s “concept of a ten-year strategy within which
programmesforaperiodofyearswouldbeagreed”,aswellasitsproposalsfor
thestructure,issuesandevennameoftheputativeagreement.Hemetemployer
groups and farmers too, who, as with ICTU, declared in joint statementswith
government their “general agreement on the importance of a newprogramme
and a commitment to seek successfully to negotiate one”. Though not a
negotiatingpartner,theCIIalsourgedthatanewdealbeachieved.57
AsRoryO’Donnelllaterremarked,anessential“glue”ofpartnershiponwhich
allelserestedwasarealistic,workabledealonpay.TheFIE’sprimaryobjective
wastokeepcoststobusiness low,with“asensiblearrangementonpay”based
oncontinued“taxrelief”.Itwouldacceptanagreement“ontherightterms”,but
anyinitiativeonworkerparticipationincompanydecision-makingmustinvolve
a voluntary framework, and it would accept no restrictions on “contract
workers”. Thiswas a response to ICTUwho again sought a nationalminimum
wage,restrictionsonemployerspressurisingworkerstobecomeself-employed
“contractors”,andaclauseenablingsomedegreeofadditionallocalbargaining.58
Government’s eagerness for an agreement saw it set the pace on pay,
committing early to forgo a pay pause, and agreeing to a similar approach to
“special awards” as under the PNR, though again with certain conditions and
deferrals.Internallyitplannedforapublicpaybillincreaseof9percentin1991.
ICTU, facing “very high expectations” due to the “build up” of special claims,
acceptedgovernment’sphasingproposalslinkedtobudgetaryconstraints,given
itsconcessiononapaypause.Thefinalpackagewoulddependonitstaxaspect,
andonthis theritualbudgetdancewasplayedout,Reynoldswarningof “little
56 ‘MembershipofNegotiatingGrouponaPESD’;‘PESD-FirstMeetingofNegotiatingGroupon02/10/90,
Agenda’,n.d.;‘SpecificAreasfordiscussionwithGovernmentonaPESD’,n.d.;Cassells,‘toEachMemberoftheNegotiatingGroup,Re.MeetingwithGovernmentMonday8Oct.1990’,03/10/90;[Cassells],‘MeetingwithGovernment/BriefingNotesforPresident’,n.d.[formtg.08/10/90];ICTU,‘[Press]BriefingonNegotiationsonPESD’,08/10/90;ICTUArchive:PN-2
57 Haughey“welcomes”,Dáil,31/10/90;meetings,‘JointGovernment/ICTUStatement’,08/10/90,‘JointGovernment/CII,FIEandCIFStatement’,08/10/90;‘JointGovernment/IFA,ICOS,ICMSA,MacranaFeirmeStatement,10/10/90,inGIS:D/Taoiseach,;HaugheytoCassells,03/10/90,ICTUArchive:PN-2;CII,QuarterlyReview,Oct.1990;‘Compensationforoilhikenoton:CII’,IrishIndependent,19/10/90
58 O’DonnellandThomas1998:132;FIEBulletin,Nov.1990;ICTU,internal,‘PayandConditionsofEmployment’,n.d.,ICTUArchive:PN-1
286
roomfor…reductions”,ICTUthreateningthatwithout“radicaltaxreform”there
wouldbe“nopact”,farmingorganisationscomplainingofpubicpayundermining
the national finances, and Haughey intervening to “pledge” “significant” tax
reform. A crucial change was linking public pay to a modernisation process,
introducing performance management that would develop over subsequent
years. Civil service unions welcomed this major structural reform and traded
cooperationwithitforconsultativestructuresand“workplacepartnerships”.59
On private sector pay ICTU noted how local arrangements for “add-on”
bonuses, productivity “allowances”, VHI benefits and service pay were
proliferatinginstrongcompaniesunderthePNRasdirectpayriseswerelimited
under its terms.Thesebenefits tended tonullify thecatch-upeffectof flat rate
increasesforthe lowerpaid inweakeremployments. Itcontinuednevertheless
toseekanationalminimumwageand,shortofthat,anextensionofJLCsanda
“voluntarilyagreed”minimumwitha“LowPayUnit”tomonitorpaylevels,and
unions having recourse to the Labour Court for increases forworkers earning
belowthis. ICTUprioritiseda localbargainingclause,bothtomeetdemandsof
workers in stronger industries and maintain shop-floor union activity. Any
arrangement, it decided internally, should ensure “maximum continuous local
involvementinnegotiationsovertheperiodofthenewprogramme”.Employers,
reversingtheir1987position,weremainlyconcernednottosuppresswagesbut
prevent a costs spiral from local bargaining, and ICTU believed they would
acceptalocalclause“cappedinsomeway”.Governmenthadurgedemployersto
be prepared to concede some local bargainingmechanism. A pay formulawas
finallyagreed,combiningpercentageandminimumflatratesandconditionalon
competitive conditions. It also allowed, “exceptionally”, for one-off additional
localclaims,cappedat3percentofpaycostsovertheperiodofthePESP.Both
59 Plansforpublicpay,O’Sullivan,D/Taoiseach,‘WorkingGroupwithICTUonPayandConditions.’
01/12/90,ICTUArchive:PESP-PWG;ICTU“expectations”,Doc.,notitle,PSEUtoICTU,17/11/90,‘forPublicServiceCommittee’,ICTUArchive:PESP-PWG,‘PublicServicePay.Positionatendofmeetingon05/12/90’,ICTUArchive:PN-1andJohnO’Dowd,CPSU,‘Toeachbranch.Re:PayAspectsofPESD’,16/01/1991,ICTUArchive:PN-2;onReynolds,ICTU,IFAandHaugheyinterventions,‘IFA/ICMSAviewsinrelationtoMacro-EconomicStabilityinthenewPESD’,28/11/90,O’Sullivan,D/Taoiseach,‘WorkingGroupwithICTUonPayandConditions’,01/12/90,ICTUArchive:PESP-PWG;‘Taxreformornopact:unions’,IrishIndependent,19/10/90;‘ICTUwarnstaxreformneededineconomicplan’,IrishTimes,19/10/90;‘Newdealwillincludetaxreformpledge–Taoiseach’,IrishIndependent,22/10/90;on“performance”system,PSEUtoICTU,doc.onpaystrategy,notitle,30/11/90,and‘MemorandumofUnderstandingontheOperationinthePublicSectorofClause[X]oftheAgreementonPaywhichformspartofthePESD’,ICTUArchive:PESP-PWG;PESP,Annex1toAppendixA
287
employers and government rejected a statutory NMW, but agreed to the
Employer-Labour Council investigating acceptableminimum levels, and to the
LabourCourttakingthese“intoconsideration”inassessingclaims.60
Thenon-payaspectsoftheprogrammeweredraftedinjointworkinggroups,
asin1987,withtaxreformagaintothefore.Theirproposalsfedintoa“central
team”,headedbyKirwanforICTUandÓhUiginnforgovernment.TheCIIwere
again active, submitting industrial policy and competitiveness proposals. The
frameworkofthePESP,whileanticipatedinICTU’sDecadeofDevelopment,was
providedbythenewreportagreedbythesocialpartnersattheNESC,AStrategy
fortheNineties.In1989Haugheyhadrequestedittoproduceastrategicstudyas
thebasisforapost-PNRagreement,asits1986ReporthadbeenforthePNR.The
new strategywasdraftedbyNESC economist, RoryO’Donnell, andnegotiating
each chapter dominated the NESC agenda throughout 1990. A consensus
emerged on a 10-year programme continuing the monetary/industrial policy
frameworkof thePNRbutaddinga radicalprogrammeof structural reformto
modernisesocialprovisionandpolicy-makingandservicedeliveryinstitutions.61
In addition to a study to underpin a post-PNR agreement, Haughey also
strengthenedtheNESC,upgradingthecivilservicepresencewhenappointinga
newcouncil in summer1989byhavingdepartment secretaries rather than,as
heretofore,assistantsecretaries,representgovernment. Ina further innovation
he invited the European Commission to appoint an advisory “observer” to the60 On“add-ons”,ICTU,memo,notitle,relowpay/NMW,n.d.[Nov.90],ICTUArchive:PESP-PWG,Barbara
Kelly,SIPTU,toBillAttley,‘Post-PNR(30thRound)Settlements’,17/12/90,ICTUArchive:PESP-PWGandICTUECmtg.18/09/90,item1955;“lowpay”strategy,ICTU,‘WorkingGrouponPayandConditions.LowPay.ProposalsforaNationalMinimumWage’,23/11/90,ICTUArchive:PN-1;“continuouslocalinvolvement”,[Cassells],‘Mtg.withGovernment/BriefingNotesforPresident’,n.d.[08/10/90],ICTUArchive:PN-2;“cappedinsomeway”,‘WorkingGrouponPay/Conditions,BriefingNoteforMeeting’of23/11/90,ICTUArchive:PN-1;“governmenturgesemployers”,‘ConclusionsofInter-DepartmentalCommitteeMeetingon8December1989re.Point12ofICTUPlan’,DTA:S25857-Y;“cappedat3percent”,ICTU,‘MeetingonPayandConditions,17Dec.1990-StatementbyChrisKirwan’,17/12/90,ICTUArchive:PESP-PWGandPESP,AppendixA;“takeintoconsideration”,ICTUAR1991:43
61 ‘Onnegotiationsystemandworkinggroups,‘ICTU.NegotiationsonPESD’-ResponsetoICTUFrameworkforDiscussions,BroadOutlineofIssues,EstablishmentofWorkingGroups,18/10/90,ICTU,‘NegotiationsonPESD.WorkingGrouponTaxReform’,n.d.[Oct.1990],ICTUArchive:PN-1,ICTU,‘NegotiationsonPESD-WGonTaxReform’,n.d.[22/10/90],ICTUArchive:PN-2,ICTUPressRelease,‘NoTaxReform,NoProgramme’,18/10/90;onCIIactivity,CII,papersforWorkingGroupson‘CompetitivenessandEconomicSlowdown’and‘EconomicCohesionandRegionalDevelopment’,ICTUArchive:PN-1,[Cassells],‘MeetingwithGovernment/BriefingNotesforPresident’,n.d.[08/10/90],andPSEU[i.e.DanMurphy]toICTU,‘PNR4–StructureofDiscussions’,15/10/90;Decade,ICTU1990handStrategyforNineties,NESC1990;onO’Donnell’srole,NESCCouncilMinutes,16/06/89and27/07/90and‘CouncilMeeting17/11/89,BriefingforChairman’,NESCArchive:Box3(Correspondence);“consensusemerges”,NESCCouncilMeeting17/11/89,BriefingforChairman’,NESCArchive:Box3(Corr.)and‘UpdateonWorkprogramme’,21/12/90,NESCArchive,Box3c,‘Meetings’
288
NESC.Delorsnominatedafigurefromhisowncabinet,JolyDixon,consideredhis
“right-hand man on EMU”. These moves by Haughey further institutionalised
social partnership by integrating the top echelons of the state with the social
partnersintheplanningstructure.Thealliancebetweengovernmentandsocial
partners, Haughey declared, was “one of the most powerful instruments of
progress this country has ever known”, an alliance “in effect between
government and people”. The significance of thesemoveswas not lost on the
opposition, with John Bruton criticising them in the Dáil, especially the
appointment of Dixon and departmental secretaries who would now have to
answertothebodyasinbreachoftheCouncil’sownconstitution.62
TheNESC’s470-pageStrategyfortheNinetieswascompletedinOctober1990.
It advised continuing the monetary/fiscal “principles” of the PNR, with some
refinement, as well as the industrial strategy of growing selected large-scale
indigenouscompanies,especially inthefoodsector, targetinghighvalue-added
FDI and supporting start-ups. As Cliff Taylor noted, in this the NESCwas “re-
visitingterritoryoverwhichithastrampedmanytimesbefore”.OnEuropeitre-
iterateditsrecommendationsinIrelandintheEECforaclosealliancesupporting
rapid integration, with large scale regional transfers to ensure “balanced”
growth, rapid implementation of policy changes required for EMU, and the
defenceofnationalinterestsinareassuchasfarmingandVATharmonisation.63
The novel aspect of Strategy for theNineties,however, was its far-reaching
proposals for structural reform, to be implemented over a decade, enhancing
state planning capacity and service delivery. Its proposals included a semi-
autonomoushealthexecutiveagency(later theHSE),re-structuringtheCentral
Bank to broaden its representational base, and a board to plan the national
finances(later theNTMA),aswellasstructuralchangesto improvethequality
and delivery of educational, industrial, social, labour market and local
government systems. It listed its policymodernisation and social equity goals
andproposedkeepingtaxcutsmoderatewhileshiftingfocustowideningthetax
base.Italsosupportedastrengthenedroleforsemi-stateindustries,withfurther
62 OnJoly,en.wikipedia.org/wiki/Joly_Dixon(accessed20/03/19);“mostpowerfulinstruments”,Haughey,
‘SpeechatCáirdeFáilPresident’sDinner’,04/12/1990,GIS:D/Taoiseach;BrutoninDáil,30/01/9163 TaylorinIrishTimes26/10/90;NESCviewinNESC1989
289
commercialisation, and privatisation where appropriate, and “area based
strategies”totacklelong-termunemploymentandpoverty.Italsorecommended
strengthening “consensus-forming arrangements” to underpin partnership and
vitiate “populist policies”, and appealed for Ireland to look to successful small
states such as Austria, Denmark and Finland for appropriate models of
institutional reform, re-focusing “policy-learning and development towards
them,andawayfrommoretraditionalpointsofcomparison”,i.e.Britain.
With theNESCreportas the framework, theworkinggroupsofgovernment
and social partners fleshed out the details of a “Partnership for Economic and
SocialProgress”(PESP).Theresultwasbulkierandnearlythreetimesaslongas
the PNR. As well as macro-economic principles and industrial strategies, it
coveredtaxreform,employmentandtraining,agriculture,combatinglong-term
unemployment, and legislative reform. It continued the PNR target of 20,000
new jobs per year, further tax compliance and enforcement measures, and
programmes to combat theblackeconomy, expand thewelfare system, reform
thehealthservice,andprovidefordisabledpeople.ItalsopromisedaChildCare
Bill, improvedpatientandconsumerrights–aPDpriority–aswellascontrols
ondrugcosts,expandededucationalprovision-especially in furthereducation
and access for disadvantaged groups - expanded youth services, parental
involvement ineducation,measuresonhomelessness, increasedsocialhousing
(including through “innovative”housingassociation), travelleraccommodation,
strengthenedprivaterentedtenants’rights,reformofthelegalsystem,overseas
aid, a second Council for the Status of Women, amendments to employment
equality legislation, a childcare initiative, a roads/transport plan, tourism,
marine development, an environmental action programme, arts and culture
initiatives,newapprenticeshipschemes,horticultureandforestrystrategiesand
rural development. It also included a special section on the semi-states,
incorporatingtheCRC“principles”draftedfollowingthehistoricHaughey/ICTU
dealofMarch1990,achapteronthe“ECDimension”,andtheestablishmentof
localpartnershipcompaniesforhigh-unemploymentareas.64
64 “fleshoutdetails”,workinggrouppapersandnotesofdiscussions,inICTUArchive:PN-1,PN-2andPESP-
PWG;“finalform”,PESP1991
290
ThePESPwasanextraordinarilydetailedprogramme,farmoresothaneither
thePNRortheProgrammeforGovernment.UnlikethePNR,itincorporatedthe
draft pay agreements, but maintained the mechanism of the Central Review
Committee (CRC) and committed to await the NESC’s review of partnership
institutionsbeforeproposingchangestothestructuresofparticipativeplanning.
ICTU strengthened its hand in the talks by again joining forces with the
CombatPovertyAgencyand,withthesupportofother“poverty”NGOs,issuinga
joint programmewith CPA for “an all out effort … to wipe out the scandal of
povertyinIrelandbeforetheendofthedecade”.ThiscentredonCommissionon
Social Welfare recommendations, a national minimum wage, a National Anti-
Poverty Strategy and a “major assault on long-term unemployment” through
“area-based strategies” and a “Community Development Programme”. All of
thesewouldultimatelybeachieved,by1997,thoughsomealreadyinthePESP.65
ICTUalsoattempted,lesssuccessfully,tobuildpoliticalsupportforthePESP.
While Fine Gael expressed support for “the overall approach outlined by
Congressasabasis fordiscussion”, itsoughtreformofthepartnershipprocess
itself, especially “some format… to involve the Parliamentary Opposition as a
normal feature of this process” so that agreed strategies could continue
“regardless of changes of government”. This at least indicated that while Fine
Gaelsoughtstructuralreforms,itnolongeropposedsocialpartnershipperse.66
The ICTUExecutiveendorsedthe finaldraftandrecommended it in January
1991ballotingbymemberunions.A special conferenceon21Februarywould
decideitsfinalposition.Whileendorsementproceduresvariedbetweenunions,
withsomecraftgroupsrelyingsolelyonanexecutivedecision,thelargegeneral
and public service unions organised secret ballots. The executive of the new
60,000-memberpublicserviceunion,IMPACT,formedbyafusionoftheLGPSU
and UPTCS (and later the IMETU), agreed by large majority to recommend
acceptanceof thePESPas itoffered the “bestachievable” terms,preserved the
65 OntheICTU-CPAalliance,PressRelease,‘ICTUmeetsCombatPovertyAgencyonGovernmentTalks:
BroadAgreementonwhatisneededtotacklepoverty’,09/10/90,ICTUArchive:PN-2,ICTU,h/wnotes,‘PESD’,n.d.(Oct.1990),ICTUArchive:PN-1,‘ICTU.SpecificareasfordiscussionwithGovernmentonaPESD’,18/10/90;ICTU,‘WorkingGrouponJobs,MeetingwithGovernment,24Oct1990’,ICTUArchive:PN-2,andICTU,‘WorkingGrouponSocialServices-Health,MeetingwithGovernment,23/10/90.Agenda’,‘NegotiationsonaPESD,WorkingGrouponSocialServices,31/10/90’,ICTUArchive:PN-1
66 JimMitchellTDtoCassells,17/10/90;ICTUArchive:PN-2
291
“freedomtopursuegradeclaims”andprogressedmany“TradeUnionsocialand
economic aspirations”. Its members voted by over 70 per cent in favour, a
majority replicated in other public sector unions. In often difficult-to-organise
workplaceorunionhallballots,SIPTUmembersvoted60:40percentinfavour
ona50per centpoll.The largestunions thus committed to the ICTUposition.
OppositionunionssuchastheATGWUurgeda“no”voteontraditionalgrounds,
craftunionsrejectedit,anda“grassroots”movementalsoralliedopposition.67
IntheDáil,andinsomecontrasttowhenthePNRfirstfacedunionballotsin
1987anda special conferenceon continuingwith theprogramme inFebruary
1990, this timeopposition leaders,whilequibblingwithgovernmenteconomic
policyandaspectsofthepartnershipsystem,calledforthePESPtobeendorsed.
Labour’sRuairiQuinn, thoughnothisparty leader,DickSpring,whoremained
silent,urgedsupportforboththeNESCplanandthePESP.Againincontrastto
1987and1990,theICTU,atitsspecialconferenceinFebruary1991,achievedan
overwhelmingmajorityof224:109,ornearly70percent,forthePESP.68
A last minute hiccup, as always, provided for some final drama. In
recommending acceptance of the PESP, ICTU made this conditional on “a
satisfactory outcome” to a stand-off with the CIF over the application of the
PESP’s local bargaining clause in the construction industry. Building industry
leaderscomplainedof ICTU’s “mostextraordinarydecision”whichput it in the
“invidiousposition”ofbeingresponsibleforthefateoftheentireagreement.As
withtheCIF’ssimilarlastminutehesitationin1987,itfinallyrelented,however,
andaspecial“memorandumofunderstanding”betweentheICTUandCIFonthe
applicationofthelocalbargainingclausewasappendedtothePESP.69
67 ICTUrecommendation,ICTUSpecialECmtg.17/01/91,items2059-61,ICTUPressRelease,‘Programme
forEconomicProgress[sic]:ICTUExecutiveRecommendsAcceptance’,17/01/91,andCassells‘ToEachAffiliatedUnionintheRepublic’,‘NoticeofSpecialDelegateConference,Thursday21February1991’,21/01/91,ICTUArchive:PN-2;IMPACTandpublicserviceposition,‘MinutesofMeetingofJointExecutives(LGPSU/UPTCS)’,16/01/91,‘MinutesofInauguralMeetingofCEC’,04/02/91,‘MinutesofSpecialMeetingofCEC’,18/02/91,and‘IMPACT:BallotonPESP_’,n.d.[January1991],IMPACTArchive:MeetingsoftheCEC;SIPTUballot,Croke,‘TradeUnionMembershipParticipationinCollectiveBargaining’,IRNReport,14.01.1993;oppositionunionsand“grassroots”movement,M.O’Reilly,Secretary,ATGWU,‘ToallMembers,Branch11/90’,04/02/91,andanon.,‘TradeUnionistsandUnemployedAgainsttheProgramme’[leaflet],08/12/90,ICTUArchive:PN-2
68 RuairiQuinnintheDáil,19/02/91;ICTUvote,ICTUAR1991:48-969 ICTUPressRelease,‘ProgrammeforEconomicProgress:ICTUExecutiveRecommendsAcceptance’,
17/01/9,ICTUArchive:PN-2;ThomasReynolds,ManagingDirector,CIF,toPeterCassells,21/01/1991,ICTUArchive:PN-2;ICTU-CIF“memorandumofunderstanding”,PESP,Annex2toAppendixA
292
Chapter11
Metamorphosis:EconomicandpoliticalconsequencesofthePNR/PESP
PrototypeTiger:towardsan“economicmiracle” Apre-planned transformationof the Irisheconomywas implementedunder
the Haughey governments of 1987-92, establishing the essential features,
trajectoryandmuchofthedetailoftheeconomyofthefollowingdecade.Asin
the previous critical transitions of the 1930s and 1960s, a maturing policy
consensus was adopted, adjusted and implemented by an activist Fianna Fáil
leadership. National economies can be steered by government policy, but will
necessarilybeco-shapedbysemi-autonomousfactorssuchasinheritedfinancial
andagricultural structures,orexternalevents suchas changes in international
traderules.Thiswasnolesstruein1987-92thanintheearliertransformations.
ThePESP,agreedduringthedramaticeventsimmediatelyfollowingthefallof
the Berlin Wall, re-committed to the PNR economy model, adding a 10-year
frameofstructuraltransformation.Giventhenewglobalturbulenceitstatedits
“overridingprinciple”tobereducingthedebt/GNPratioto75percentoftheEC
average and “closing the gap” with EC living standards by 2000. Consistent
progress towards these goals, it said, would boost business, consumer and
market “confidence”, driving investment. Ambitious infrastructure expansion
wouldbeassistedbothbytheECandtheprivatesector.ItbackedspeedyEMU,
thoughbalancedbypoliciesto“suitIreland’ssocialandeconomicneeds”.
Theemergingglobalenvironmentimpactedimmediatelyonthe“Irishmodel”.
Ministers, including from thePDs,now fully in supportofHaughey’s economic
strategy,urgedfirmsto“grasptheimmediateopportunities”openinginEastern
Europe, especially through joint ventures with the mostly German companies
active there but, as Reynolds presciently noted, EMU might “well prove even
moremomentous”.MinistersportrayedIrelandastheECstatemostsupportive
of“expediting”EMU,insistingthatthe“GermansituationnotdelayEMU”,theEC
“speedup…integration[to]provideastableenvironmentinachangingworld”,
293
andurgingthatglobaltradebarriersbedismantled:“Asasmallandtotallyopen
economy”, Irelandneeded “continuinggrowth inworld tradeand theon-going
integrationofnationaleconomiesintotheglobaleconomy”.1
Monetary policy reduced the exchequer borrowing requirement (EBR) in
1990toafifthofits1986peak,andinitiallytheindustrialpolicyfocusofthePNR
wasmaintained.“ThemainfocusandobjectiveofIndustrialPolicy”,Industryand
Commerce,nowledbyPDministerDesO’Malley,reiterated,“istobuildstrong,
internationally-tradingindigenousindustries”.Despitethechangesof1988-89,it
stillsawFDIasancillarytothisobjective,providinghigher-valueproductionand
“linkages”toIrishfirms.Start-ups, thoughonlywithexportpotential,wouldbe
supportedandsemi-states,thoughonlyifprivatecapital-led,assistedtoexpand.2
Butexpandingindigenousexportindustries,the“mainobjective”ofthePNR,
becametheSorgenkindofnationalpolicy,asdescribedinchapter8,evenwhere
itwasdeliveringsuccesses.Despite“avastrangeofincentivesandprogrammes”,
an internal analysis concluded, “the lack of innovation, limited management
capability and absence of good projects were constraining development”. It
would be “some years” before growth in the food sector would deliver
employment dividends. The Department bluntly titled another report “Poor
ResponsefromPrivateSectortoJobCreation”.Theproblemsbesettingthebeef
industry,describedinchapter8,werefurthercompoundedin1990bytheBSE
crisis and theGulfWar.Government securedEC concessionsonmarket access
and emergency intervention to prevent the industry collapsing,while the CRC
established a crisis group on the industry, inducing government to provide
“workingcapital”andincreaseagencysupportstocompaniesfacinginsolvency.3
1 “graspopportuntities”,DesO’Malley,‘SpeechataForumonEconomicandTradeLinkswithEastern
Europe’,01/03/90and“moremomentous”,Reynolds,‘AddresstoIMINationalManagementConference,Killarney’’,28/04/90,GIS:D/I&C;“expeditingEMU”,Haughey,‘SpeechbytheTaoiseachatthepresentationoftheSundayIndependent/UlsterBankBusinessoftheYearAwards’,15/02/90,GIS:D/Taoiseach;D/Finance,‘Address…totheCommitteeonEconomicandMonetaryAffairsandIndustrialPolicyoftheEuropeanParliament,DublinCastle,28/02/90,GIS:D/Finance,Reynolds,‘AddresstoETUCatBrussels’,05/03/90,GIS:D/Financeand‘AddresstoAnnualMeetingofIMFandWorldBankatWashington’,26/09/90,GIS:D/Finance.
2 Nationalborrowing“peak”,Reynolds,‘AddresstotheclosingdinneroftheAnnualConferenceoftheCII’,23/02/90,GIS:D/Finance;industrialpolicy,‘BriefforTaoiseach’smeetingwithICTU23/1/1990,‘ICTUPlan,SharingtheBenefits-MajorReviewofIndustrialPolicy’,DTA:S25862-F
3 “vastrangeofincentives”,D/I&C,‘BriefforTaoiseach’smeetingwithICTU23/1/1990-MajorReviewofIndustrialPolicy’,DTA:S25862-F;“poorresponse”,PaulBates,D/I&C,toD/T,encl.:‘PoorResponsefromPrivateSectortoJobCreation’,Nov.1989,DTA:S25862-D;CRConbeefindustry,CassellstoÓhUiginn,30/08/90,and‘SummaryReports’oftheCRC“WorkingGroupontheBeefIndustry”,Sept.-Oct.1990,
294
AfurtherproblemforthePNRstrategywastheunanticipatedformexporting
industriestookinexploitingtheopeningglobaleconomy.FewIrishglobalfirms
hadexistedbefore1987butmanynowemerged,notablyindairyfoodsthrough
thenewlyincorporatedco-ops,inmanufacturingthroughfirmslikeSmurfitand
Glen Dimplex, in construction through CRH and Sisk, and a range of others in
services. But, contrary to national strategy, and despite unprecedented state
supports, these new companies, as described in chapter 8, were tending to
expandthrough“restructuring”athomeand,byexploitingnewcapitalopenings,
throughprofit-“off-shoring”andacquisitionsabroad.Whilecontributingtovalue
growth, they were delivering little new employment. The sector also suffered
growingreputationaldamagefromaccusationsofa“culture”ofcorruption.What
hadbeenacoreNESCstrategyofpreferentialstatebackingforpromisingfirms
wasincreasinglyunderattackas“cronycapitalism”.4
In this context of uneven performance, government examined its policy
options.Haugheyadmittedinlate1989thatdependingonlarge-scaleindigenous
industry,whilesuccessfulincontributingtogrowth,hadproved“disappointing”
increatingjobs.AstheIDAhadalreadynotedthepreviousyear,itwasmorethe
neglectedsmall industrysector,mostlynewservice-focusedstart-ups, thatwas
demonstrating a “surprisingbuoyancy” and “runningaheadof expectations” in
bothexpansionandnew-jobcreation,accountingforaquarterofalljobsgrowth.
The presence in cabinet of the PDs, champions of small business, assisted a
return tosupporting thesector,not least reformingcompany law in its favour.
But itwas the previously downplayed FDI sectorwhich, following several key
governmentpolicychanges,wouldre-emergeastherealdriverofgrowth.5
Asalreadynoted,FDIhadperformedpoorlysince1980,evencontracting in
themid-decade for the first time since the 1950s. As the NESC and ESRI had
concluded in 1982, from reports such as Telesis produced under Haughey’s
NationalUnderstandingofthetime,thiswasduetothelaissez-faireFDIstrategy
D/A&F,‘CRC-BeefIndustryProblems’,11/09/90,andD/A&FNote,‘Draft-OutlineoftheCurrentStateoftheIrishBeefIndustry’,D/A&F.‘OutlineofPaperonBeefIndustry’,n.d.(Sept.1990),andOifiganAireTalmhaiochtaagusBia,‘MemorandumforGovernment-FarmIncomeSituation’,12/09/90,and‘SummaryReportofSecondMeetingonBeefIndustry’,19/09/90,allinDTA:S26694
4 “culture”,O’Toole19945 “disappointing”,HaugheyinDáil24/10/89;IDAassessment,White,‘ReviewofIDA’sThreeBusiness
Areas,1988,’05/01/89,DTA:S25857-N;PDeffect,O’Malley,D.2014:184-6
295
oftheWhitakererahavingrunitscourse,withbasic-productionfirmsattracted
duringthattimewithdrawingasprotectionistbenefitsended.Telesisdescribed
these FDI firms as having proved costly, unreliable and unsustainable, and
advocatedthestrategychangeto“pickingwinners”inthedomesticsector.With
newFDIslowinginthe1980stowhattheIDAcalleda“trickle”,the1986NESC
reportadoptedTelesis’sproposals,andthePNRasaconsequencefocusedonthe
potential of large indigenous industry, treating FDI as an ancillary element
thoughtargetingittohigh-endsectorstodriveproductionqualityandlinkages.
In linewith thePNR focus, I&CunderReynolds initially scaled back attracting
newFDIinfavourofimprovingexportcapacityamongthe900FDIfirms“stillin
Ireland”.AdominantviewofFDIasvolatilepersisted,andafterEasternEurope
“opened” in1989,many feareda furtherexodus, this timeeastwards,with the
CIImakingthecaseforincreasedbusinessincentivestocounterthethreat.6
HaugheyandtheWayForwardgroup,however,hadneverbeenconvincedof
this“ancillary”viewofFDIandwhilefosteringlarge-scaleindigenousindustries,
continuedin1987tochampionFDI,muchtotheIDA’srelief.FDIrevivedin1988,
the EC attributing a new “substantial inward flow of capital” to the policy
stabilityprovidedbythePNR.Besidessmallstart-ups,FDIsoonprovedtheother
majornew-jobcreator,with the IDAreporting4,700new jobs in thesectorby
October, a net increaseof 2,700,with even existing companies in the Shannon
Zone expanding despite the imminent end of its special status. The IDA told
governmentthatthe“criticismofoverseasindustry”hadproven“misplaced”and
Haugheyleveragedhis“partnership”withDelorstosecureCommissionapproval
to replace the zero export tax ratewith a low 10 per cent corporation tax on
manufacturedexports,applicableatleastto2000,andtoapplythesamerateat
the IFSC. It was the immediate success of the changed focus of the IFSC to
managed funds in late1988,exploitinganearlyreform incapitalopening, that
proveda turningpoint.While the IFSC, lampoonedbypolitical opponents as a
6 onTelesisand1980sstrategiesseechapter7;“trickle”and“stillinIreland”,D/I&C,‘Progressinthe
ProvisionofJobs’,27/05/88,DTA:S25857-E;CIIdemands,CRC,‘SummaryReportof24thMeeting’12/03/90’,h/wnotesofCRCmeeting12/03/90,andIDA,‘DevelopmentsinEasternEurope–ImpactonMobileIndustrialInvestment’,forCRC,25/04/90,DTA:S25857-Z4
296
”whiteelephant”,stillonlyinvolvedafewfirmsemployinglessthan200,itnow
begantogrow,achieving2,000employeesandfundsofover£20bnby1992.7
ThedebateonEECstrategyattheNESCin1988furtherdrovepolicychange.
TheCIIarguedthatwhileEMUopenedopportunitiesforexportingindustries,it
couldgeneratemuchgreaterFDIifIrelandpositioneditselfas“agatewaytothe
Single Market” for mobile investment, incentivising it through low taxes and
profitrepatriationfacilitatedbydouble-taxationrules,andbyliberalisingcapital
movement ahead of competitor states, an approach Tony Ryan of GPA had
alreadyurged in1987.Haugheyhad sensed thepotential of sucha strategy in
1986 when observing the reaction of Irish-American financiers to Dermot
Desmond’sproposalfortheIFSC.Thesamepolicychangeinlate1988whichled
to the “wave” of interest in the centre in early 1989was now also applied to
generalFDIpolicy,withtheIDAsoonreportinghowFDI“surged”inresponseto
itpromotingIrelandasa“keylocationinpreparationfor…theSingleMarket”.
Bymid-1989,I&Cpredicteda“potentiallysignificantsurge”ininwardcapital.8
In the critical year to early 1990, as the global economy opened, the IDA
broughtinarangeoftopFDIcompaniesonthebasisofwhatReynoldscalledthis
“uniquesellingpoint”,includingFujitsu,MotorolaandIsotec.Butitwasafurther
policychangeproposedbyinwardinvestorsthemselvesthatcompletedthenew
government FDI formula.When Apple, the first US computer firm to locate in
Ireland,employing1,500workersandcontractorsinCork,butnowstrugglingto
survive against rivals, threatened in 1990 to relocate to Singapore as the zero
exportrateexpired,Haugheyandhisofficialsstretchedregulationstotheirlimit
7 “neverconvinced”,seechapter6;“IDA’srelief”,interviewPádraigWhite;ECview,‘PresidentDelorson
theEconomicandSocialDevelopmentofIrelandwithintheEC’,28/10/88,GIS:D/Taois.;onnewFDI,IDAIreland,‘ReviewofIDA’sThreeBusinessAreas,1988,’05/01/89,DTA:S25857-NandD/I&C.’20,000Target…ProgressReportofMid-Year’,August1988,DTA:S25857-G;onShannon,Bates,D/I&C,toCRC,Nov.1989,DTA:S25862-D;“misplaced”,‘ReviewofIDA’sThreeBusinessAreas,1988,’05/01/89,DTA:S25857-NonECapprovaloftaxrate,D/I&C,‘ReviewofIndustrialPerformance1990’,n.d.[Nov.1989],DTA:S25862-DandDavidHanna(IDA)inh/wnotesofCRCmtg.26/05/90,DTA:S25857-Z6;onIFSC1988“turnaround”,seechapter7,andpost-1989IFSCgrowth,Reddan2008
8 “gateway”,ConnellanCIItoDanaher,NESC,29/09/88,‘CouncilMeeting16/12/88’,NESCArchive,Box2,also‘AddressbyLiamConnellan…atBrayChamberofCommerce’,23/04/90,DTA:S25857-Z6;“doubletaxation”,ConPower,‘USTaxandInvestment,FourKeyIssues’,CIINewsletter,03/10/89;GPAproposal,PeterDenison-Edson,SeniorVP,GPACorp.AffairsJapan,toDermotDesmond11/06/87,DTA:S25150-A;FDI“surged”,IDA,NewsRelease,‘IDAreviewof1988andoutlookfor1989’,05/01/89andMinisterRayBurke,‘PNRRecoveryJobTargetExceededin1988:End-YearStatementonIndustryPerformance’,29/12/88,GIS:D/I&C;singlemarketstrategy,‘EffectsofInternalMarketinInwardInvestment’enclwithh/wnote,fromLonergan,D/I&C,toÓhUiginn,10/05/89,DTA:S25857-R;“significantsurge”,SeánDorganinh/wnotesofCRC‘Sub-GrouponJobCreation’,28/06/89,DTA:S26122-A
297
to retain thecompany.Theyagreed tocombine low taxandprofit repatriation
with Apple investing its intellectual property (IP) in a “parent company” in a
non-taxjurisdiction.Profitscouldbe“repatriated”tothisentityandIProyalties
offsetagainsttax.ApplewouldremaininIreland,quadruplingitsworkforceover
the following decade, and the same package was offered to other technology
companies, laying the basis for the sector’s European base concentrating in
Ireland.Government,AherntoldtheCII,alsosecuredalooseningofECdouble-
taxation rules “against considerable resistance fromstateswith concerns”, and
convincedtheUStodefertaxrepatriationreformforadecade.9
The new strategy was soon vindicated following an EC-US agreement that
removed restrictions on microchip wafer technology transfer when the IDA
securedits“biggesteverinvestmentinIrishelectronics”,byglobalmarketleader
Intel, with the promise of 2,500 jobs. The sector surged after this, andwould
soonspawnIrishoffshoots.By1993,100,000orhalfofallmanufacturing jobs,
andtwo-thirdsofcorporationtaxincome,wasaccountedforbytheFDIsector.In
tandemwith thenewFDI focus and to complement it, thePESP inaugurated a
radicalexpansionofthirdleveltechnicaltrainingandawideningofaccesstoit.
In1990HaugheyboastedhowtheWorldCompetitivenessReport“ratedIreland
first amongdevelopedcountries in its readyavailabilityof skilled labour”.The
valuechainbegan tochange,withemployment insoftwareexceeding5,000by
1991,fivetimesits1985level,andalreadyaccountingforIR£600minexports.10
ICTU was not uncritical of this development, demanding that government
curblow-taxprofitrepatriationandoff-shoringbyIrishcompanies.ButtheIDA
warnedgovernmentthat incentivecostsand“highlevelsofrepatriatedprofits”
shouldbeacceptedgiventhe“actualeconomicactivity”and“valueaddedwithin
Ireland” they generated. Ó hUiginn therefore urged Haughey to resist ICTU’s
demands,sayingFDIwasnowthebesthopeforgrowingcorporaterevenue,and
9 new1989FDIcompanies,CRC1990;“sellingpoint”,Reynolds,‘AddressataseminarontheDublinIFSC
organisedbytheFSIAandIDAinTokyo’,14/05/90,GIS:D/FinanceApple“deal”,CliffTaylorandIanKehoe,‘Applegottaxdealin1990’,SundayBusinessPost,26/05/2013;‘Adealmadein1991pavedthewayforApple'scurrenttaxissue’,BusinessInsider,30/08/2016;IrelandlobbiesEC,Ahern,‘AddresstoNationalCouncilLuncheonoftheCII’,12/09/90,GIS:D/Labour
10 OnIntel,HaugheyintheDáil15/12/89,Ahern,‘SpeechtoDublinChamberofCommerce’,24/01/90,GIS:D/Labour,O’Malley,‘Inteltocommence£200mmicrochipwaferfabricationplant’,07/06/90,and‘BiggesteverinvestmentinIrishelectronics’,03/10/89,GIS:D/I&C;“ratedIreland”,‘SpeechbytheTaoiseachatpresentationoftheSundayIndependent/UlsterBankBusinessoftheYearAwards’,15/02/90,GIS:D/Taoiseach;valuechainandsoftware,Power2009:198
298
“everymodernopeneconomyhastoaccepttheproblemof internationalprofit
flows…Allthatcanbedoneistoremovedomesticimpedimentstotheretention
ofsuchprofitsand…encouragedomesticinvestment”.11
AsIrishindustrynowbegantomoveupthe“valuechain”,drivenbyFDIfirms,
basicproductioninthesector,suchasatDell,ImpactandDigital,wouldmoveto
Asia or Eastern Europe, but such “losses”were compensated by higher value-
addednewFDIanddomesticenterprises.Thisprocessalsodrovearapidgrowth
ofR&DinbothFDIandindigenouscompanies,risingfrom38to85percentof
theEUaveragebetween1985and1995,surpassingeventheNetherlands.Irish
long-term FDI strategy had thus essentially been put in place and already
deliveringdividendsby1991.Apre-Keynesianeconomywasbeingsuccessfully
re-engineeredasafinancialisedoneattheforefrontoftheglobaleconomy.What
wasoccurringwas,inConPower’sword,nothingshortofa“metamorphosis”.12
The Industrial Policy Review sought by ICTU during the PNR review and
agreed in the PESP in 1991would result in the CullitonReport of 1992, often
portrayedasaPDinitiativeasitappearedunderDesO’MalleyasMinisterofI&C.
But, with FDI policy now set, the PD influence certainly strengthened the re-
orientationofstrategyinCullitontowardssmallbusinessstart-ups.Thechange
offocuswouldleadtoaspittingoftheIDA,withindigenousindustry,start-ups
andexportinghivedoff to “Enterprise Ireland” and its local enterpriseboards,
andtheIDAre-structuredtofocussolelyonattractingfurtherFDI.13
Theaccord reachedbyHaugheywith ICTUonstate industry inMarch1990
incorporatedthatsectorintothenewstrategy,likewisesettingthepatternofits
development.Privatecapitalinputledtoexpansions,successesandfailures.No
actualstatestrategyofprivatisationwasadopteduntilthe1997FF-PDcoalition,
in again changed global conditions, opted for such a course. Haughey, and
Reynoldsafterhim,keptstrictlytotheagreementreachedwithICTUin1990.
11 ICTUdemands,ICTU1989f;IDAon“repatriatedprofits”,on“repatriatedprofits”,IDAIreland,‘Reviewof
IDA’sThreeBusinessAreas,1988,’05/01/89,DTA:S25857-N;ÓhUiginnopposesICTUdemands,‘BriefingMaterialforMeetingbetweenTaoiseachandMinistersforFinance,I&CandLabourwithExecutiveCouncil,ICTU,23/01/90-PositioninRelationtoICTU30PointPlan’,DTA:S25862-F
12 OnR&Dexpansion,Barry,BradleyandO’Malley1999:54;“metamorphosis”,Power200913 Culliton1992;“PDinitiative”,O’Malley,D.2014:184;onIDA/EI,IDAAR1993
299
Thisemergentneweconomyhadmanyconsequences forsocialpartnership.
IntelwasthefirstmajorFDIfirmtoinsistonanon-unionpolicy,andwithnew
servicestart-upsalsooutsideof traditionalunionterritory, themost important
sectorsoftheeconomyweredestinedtodevelopwithout littleunionpresence.
Thisacceleratedthetrend,alreadyidentified,fortheroleofsocialpartnershipin
economicpolicyco-determinationtodeclineinfavourofwelfarestatebuilding.
In 1990 Haughey told his Árd fheis how the Irish recovery was being
“increasingly spokenof internationally as aminor economicmiracle”, and told
hispartyelitethatasaresult“wehaveearnedanewrespectandstatusforour
country among the nations of Europe and the world”. “Our achievements in
economicmanagement and success in transforming the economic outlook are
constantlyacclaimedabroad”.FiannaFáilshouldtakecreditforthisand“speak
out loudly about the miracle their Government brought about”. Given the
absenceofasupportivemedia,thiswouldproveaforlornhope14
TemplateforaSocialandDevelopmentalState Theenduringeconomicmodelthattookshapein1989-91wasaccompanied
by,andinterdependentwith,thestartofatransformationofthewelfarestate.
The PESP was unprecedented in its breath of policy goals across all socio-
economicareas.Nocomparableall-encompassingsocialpartnershipprogramme
existedelsewhereinEurope,apartperhapsfromtheinitialagreementsin1930s
Sweden and post-WW2 Austria. European “neo-corporatist” bargaining was
largely confined to pay and related aspects of economic and welfare/labour
policy. The PESP set the trajectory of the whole of Irish social policy
development forageneration.Theexpansionof the institutionalstate initiated
underthePNRwasspecifiedindetailinthePESP,settingprinciplesofequality
of access, quality development and citizen empowerment within a public-
private-voluntarydeliverymodel,inafurtherconceptualbreakfromtheBritish
Beveridgemodel.Even localgovernmentreform,usually identifiedwitha later
period, extending local competences andmobilising civil society participation,
was initiated in thisperiod, through the “AdvisoryExpertCommittee”of1990.
14 “minoreconomicmiracle”,Taoiseach’saddresstoFiannaFailArdFheis,07/04/90,DTA:S25858-Z3;
“newrespect”,‘SpeechattheCáirdeFáilDinner’,04/12/1990,DTA:S25858-Z10
300
Though not specified in the PESP, it would develop in tandem with it. The
restructuringofthewelfarestateandthebeginningsofaNationalAnti-Poverty
Strategy, asproposedbyCPAand ICTU, alsobeganunder thePESP, asdid the
performance-management and open-recruitment model in the public services.
Aspects of the sweep of institutional reform agreed in the PESP were to
experience bottlenecks and delays, such as the HSE, NTMA, NRA and social
housingmodelsitproposed,butmostwouldeventuallyberealised.15
That comparative studies of European partnership systems view the Irish
modelasapuzzle in itsmultipleoutliercharacteristics, ishardlysurprising,as
partnership was always about much more than purely economic or labour
market management. It organised the “factors of production” to initiate a
transformation of the economy, with incomes as a central “glue”, but also
transformingthewelfarestatetoanenablingfactorineconomicexpansion.The
PESPstateditsobjectiveasto“transformIrelandby…2000intoaneconomyof
anadvancedtypeprovidingsignificantlyhigherstandardsof livingandgreater
economicandsocialequity”,withthesemutuallyinter-dependent.ThePNRand
PESP expanded welfare state transfers, but also reformed it profoundly. As
HaugheyandCassellscorrectlyassertedinthisregard,the“Irishmodel”wasnot
only“uniqueinthehistoryofthestate”but“probablyinEurope”.16
The 1990 NESC report underpinning the PESP critiqued the debilitating
effects on institutional development and long-term planning of “populist”
politics. Indeed, political scientists had long identified the electoral system as
facilitating an avoidance of unpopular decisions and an obstacle to policy
innovation. Dermot McCarthy, long-time Director and later chair of the NESC,
regardedpartnershipasprobablyanecessitygiventhe limitationsof“electoral
parliamentarism”,asitenabled“amuchwidersetofstakeholders”tobeengaged
in shaping andmanaging the “economic, structural and social change” Ireland
urgentlyrequiredbuthadbeenpreventedfromachievingduetothe“limitations
ofthe…traditionalrubricofparliamentarygovernment”.Haughey’simpatience
withbureaucraticatrophyandpoliticalpopulismwasintheradicalFiannaFáil15 Onlaterlocalgovernmentreform,Dept.Environment199616 Multiple“outlier”,BaccaroandSimoni2006;welfarestate,Carey2007;“glue”,O’DonnellandThomas
1998;“transformIreland”,PESPVIII(9);CassellsinICTUADC1990:33-4andHaugheyin‘AddressbyTaoiseachtotheEuropeanRoundTableatDromolandCastle’,13/05/90,GIS,D/Taoiseach
301
mould.PRhad,afterall,beenimposedbythehostile1920GovernmentofIreland
Acttopreventstronggovernmentemerging.DeValera,LemassandHaugheyhad
allchampioneditsreform.ThePNR/PESPpartnersregardedsocialpartnership
asessentialtoovercometheseandotherinheritedinstitutionalweaknesses.17
Thusfar…:settinglimitstopartnershipinstitutions Inreviewingtheirrespectiverolesin1988,theNESCandCRChadconcluded
that a benefit of consensus policy-making by the NESC was that it gave the
political sphere options which it could take or leave. But finalising the NESC
report,StrategyfortheNineties,asthebasisforthePESPwasdelayedbyafailure
bytheCounciltoreachconsensusontwokeypoints.Onewaspropertytaxesand
theother,ironically,partnership’sown“futureinstitutionalarrangements”.18
TheNESC’sStrategyfortheNinetieswasreportedindetailalmostalonebythe
IrishTimes,whicheditorialisedthatasaconsensusstrategybygovernmentand
social partners, itwould, “like a newProgramme forDevelopment”, “be looked
backoninyearstocomeasasignificantstepforwardinpolicyformation”.Italso
praised the “radicalism of theNESC” in “contemplating” a land tax to increase
landuseinsteadoftrying“tomaintainthemaximumnumberofholdings”.19
It was the report’s section on tax, a draft of which was leaked before
publication,thatdominatedwhatÓhUiginndescribedasthemedia’s“distorted”
coverage.TheIndependent,withaneditorialentitled“WrongTax”,declared“the
daythetaxburdenislightenedwillbealongtimeincomingiftheNESCadviceis
heeded”. Appealing to populist sentiment, it further opined: “The kind of tax
reformmostpeoplearelookingforissimple:itisonewhichwouldleavepeople
with enough of their own earned incomes to dispose of as they wish”. The
influentialBusiness&Finance,describingtheNESCas“theofficialtalkingshopof
economicpressuregroups”and the reportasa “returnof thespending lobby”,
17 “populistpolicies”,NESC1990:459andMurphy,M.2006:92;McCarthyinMcCarthy,D.2006:76;
Haugheyonmultiple-seatSTVsystem,interviewHaughey200518 “options”,CRC,‘Functions,MembershipandWorkProgrammeoftheCRC,SDCandNESC’,n.d.[Sept.
1988],DTA:S25857-I;“institutionalarrangements”,NESC199019 “LikeanewProgramme”,ITeditorial26/10/90;“radicalismofNESC”,ITeditorial13/10/90
302
demanded radical income tax cuts funded by further reductions in spending,
suggesting“perhapsweshouldstartbyabolishingtheNESC”.20
Dáiloppositionleaders,capitalisingonHaughey’sweakeningpositionascrisis
rocked the presidential election, denounced what they misrepresented as
NESC’s, and hence government’s, back-peddling on tax reform. In response,
variousministersrushedtodisowntheNESC“proposals”,denyinganyplansfor
property taxes and describing service charges as amatter for the new expert
committeeonlocalgovernment.InfacttheNESCdidnot“propose”suchreforms
butsimplysuggestedtheybediscussedasinstrumentsforwideningthetaxbase.
When launching the report, Ó hUiginn explained that recommendations to
restraintaxcutsandwidenthetaxbase,includingthroughproperty/landtaxes,
income-adjustedlocalchargesandtheabolitionofmortgageandVHIreliefs,had
beendroppedduetooppositionfromfarmingbodiesandthebuildingindustry.21
ThePESPtherefore,whilecontinuingwithincometaxcuts,extendingthetax
base and improving compliance, did notmention property taxes, and tellingly
committedto“promotingowneroccupationasthe formof tenurepreferredby
most people”. When in 1987 cabinet had discussed the most radical cuts, a
property/land tax had been raised but, with Finance advice on its doubtful
impact, had dismissed it as politically inopportune. The controversy over the
NESC report nevertheless demonstrated that however interdependent the
structural reforms proposed by NESC, party politics would determine their
selectiveuse.Theoppositionbyinterestsandpartiestopropertyandlandtaxes
and tax reliefs meant that reforms that might have shaped a very different
evolutionofpropertymarketsoveradecadelater,werepreventedatbirthbya
political/media“consensus”fullyindependentofsocialpartnership.22
Another telling incident was ICTU’s failure to achieve NESC consensus on
developingpartnership structures. In 1987,withÓhUiginn’s – i.e.Haughey’s -
support, ICTUhadsuggestedastudyof “comparative institutions” inEuropean
countries that accounted for their socio-economic success. Its own view, later
20 “distorted”,NESCminutes,23/11/90;“WrongTax”and“kindofreform”,IrishIndependent13/10/90;
“talkingshop”,Business&Finance01/11/9021 Oppositionattacksandministers’denials,IrishIndependent13/10/90,IrishTimes16/10/90;“ÓhUiginn
explained”,IrishTimes26/10/90;originalNESCproposals,ICTUAR1991:5522 “owneroccupation”,PESPIV(79);1987cabinetandD/Financeview,‘StatePapers’,IT29/12/2017
303
outlined inDecadeofDevelopment,was that Ireland should replicate countries
such asGermany, Austria and Finlandwhich had “more developed economies,
higher living standards and lower unemployment, achieved through National
Programmes agreed centrally but implemented with a high level of worker
participation and involvement at the level of the individual company”. ICTU’s
aim,withwhichHaugheysympathised,wastoachieve“amodernefficientsocial
marketeconomy…similartoGermany”.23
“Institutionalism”wasmuchdiscussedbytheNESC,withKatzenstein’sviews
heavilyinfluencingits1986report.Asalreadyseen,thequestionof“appropriate
institutions” for Irish partnership had already dogged that report, with
employersunwilling to support strongspecific recommendations.Whenanew
council was being appointed in 1989, NESC’s secretary suggested that J.J. Lee,
about topublishhismajor ifpessimistic institutionalist study, Ireland1910-85,
beconsideredforappointment.Intheeventhewasn’t,andfortuitouslyperhaps
ashewastoemergeasaprominentcriticofsocialpartnershipforits“holdover
the next government” and its “emasculation of the Dáil”. But the suggestion
illustratedtheprominencegiventoinstitutionalthinkingbytheNESC.24
The study now proposed by ICTU was suspected by employers and civil
servantsasaunionstratagemtocommittheNESCtoAustrian-stylecorporatism,
andthecouncilbecameboggeddownwranglingoveritstermsofreference.The
study, “The Irish Economy in Comparative European Perspective”, was finally
allowedproceed,contractedout toNorwegianpoliticaleconomist,LarsMjøset.
ItsfindingsweretohaveinformedaPESPsectiononpartnershipstructures,and
tomollifycritics,NESChadevenagreedthatbesides“corporatist”states,italso
studySwitzerlandasa“liberalbusiness”model.Butthestudywastobedelayed
bydisagreementsofinterpretation,andwouldnotappearuntil1992.25
NESC’s report to underpin the PESP, Strategy for theNineties, reflected this
stalemate,suggestingsimplyaneedforstrongerinstitutionstoredressIreland’s
“very poor system of innovation”. It noted that institutions in successful23 ICTU1990h24 Lee1989;proposedforNESC,Danaher(Sec.)toChairman[=ÓhUiginn],28/07/1989,NESCArchive:
‘IrelandandtheEEC’,Box3;Leeonpartnership,SundayTribune19and26/01/9725 Mjøset1992;debatedatNESC,DanahertoNESCmembers,26/09/90,NESCArchive:Box3c‘Meetings’;
NESCCouncilMinutes,17/11/89;‘UpdateonWorkprogramme’,21/12/90andDanahertoNESCmembers,26/09/90,NESCArchive:Box3c,‘Meetings’;NESCCouncilMinutes,01/10/90
304
countries had evolved in specific socio-political contexts that could not be
“transplanted” to Ireland, andproposed that further considerationof the issue
awaitMjøset’sstudy.ICTUdidhoweversucceedinhavingthetermsofreference
for the Mjøset study included in the PESP, with a commitment to review its
findings. The question of “appropriate” institutions would remain unresolved,
andMjøset’sreportwouldprovetobealargelyacademicexercise.26
TheinabilityoftheNESCtoagreeonfutureinstitutionsatthisformativestage
meant that the structures of social partnership would develop in an ad-hoc
ratherthanplannedmanner,withsignificantinitiatives,suchasthefoundingof
theNESFin1993andthelaterbroadeningoftheNESC,theresultmoreofparty
politicalandgovernmenttinkeringthanconcertedinstitutionbuilding.Mjøset’s
reportwhen it appeared ironically did find that the source ofmany countries’
successwasindeedtheir“corporatist”“consensus”-seekinginstitutions.
Aneedfordeeperpartnershipstructuresthusremainedthepreferenceofone
partner,theICTU,ratherthanaconsensusofNESC,andon-goingdisputesover
“worker participation”, central to ICTU strategy, would continue to dog social
partnership.Throughitsalliancewithgovernment,ICTUsecuredaconsiderable
extensionofsuchstructuresinthesemi-stateandpubicsector,butintheprivate
sector employers continued to resist any intrusion into management or
shareholderprerogative,concedingonlytalkson“voluntaryparticipation”.27
ICTUhopedthatDelors’“SocialEurope”wouldprovideleverageonthisissue,
especiallygivenacommitmentintheSEAtoreviveEC-level“socialdialogue”as
partoftheSingleMarketproject.ThisledDelorstoestablishanEC-levelunion/
employer“steeringgroup”ontrainingpolicyin1989,thefirstsuchcooperation
inadecade,butitmadelittleheadway.HaugheyandAhernpromisedICTUthat
Ireland would support the “Social Charter” but, following a meeting with
Mitterand,Haugheyalsostatedthatmemberstatesshouldbefreetoapplyitas
in accordancewith their own traditions. He alsomet ICTU requests to confer
withtheETUCandAherndeliveredmajorsocialpolicyinitiativesundertheIrish
EC Presidency. But, noting that differences between member states meant an
intendedCommissiondirectiveonworkerdirectorswasunlikelytoproceed,the26 “awaitMjøset’sstudy”,NESC1990,Ch.15;TermsofReference,PESP,X;remainsacademic,Begg201627 PNRVI(4)
305
Department of Labour advised government that while it might proceed with
participatorystructuresasagreedforthepublicsector,itshouldmeetemployer
objectionsbysupportingonlya“voluntaryandagreed”approachtoparticipation
inprivateindustry,aswasthenagreedinthePESP.28
Asa result, followinga reviewbyahigh-level “Civil ServiceEfficiencyAudit
Group” involving the state, unions and business leaders, and with Reynolds’
support, a performance management/pay system and open recruitment were
trialledandAhern“fullycommitted”tosupport“participativecouncils”inpublic
servicebodies.UnderthePNR,workerdirectorswereelectedinadditionalsemi-
statecompaniesandsub-boardcouncilswereestablishedin24of36bodies.But
therewas littleprogress inprivate industry.ThePNR“AdvisoryCommitteeon
Worker Participation” of ICTU, FIE and experts from the IPA and IPC,
recommended “enabling legislation” for worker representation in larger
companieson theGermanmodel,but theFIEdissented, insisting inaminority
reportona “purelyvoluntaryapproach”onan individual companybasis. ICTU
usedthePNR“review”ofJanuary1990toagainprogresstalksontheCommittee,
arguingthatparticipationwouldenhancecooperationincompetitiveness.Ahern
sidedwith the ICTU,urging “a changeof attitudeon thepartofmanagement”:
“The demand for greater employee involvement is undoubtedly growing
throughout industry, and unless it is met, this motivation will not be
forthcoming”. He assured ICTU he was “fully committed to the principle” and
wanted “theconsensusapproachatnational level translated to the levelof the
enterprise”, but advised “a voluntary rather than legislative approach”. InMay
1990herevivedtalksonparticipationintheprivatesectoronthisbasis.29
28 SEA,Art.118b;ETUC-UNICE“steeringgroup”,O’Dowd1992;FajertagandPochet1997;Governmenton
“SocialCharter”,D/Labour,‘BriefingforTaoiseach’smeetingwithICTUon24Nov.’,and‘ECCharterofFundamentalSocialRightsofWorkers’,DTA:S25862-D;Haughey’spreference,Dáil,24/10/89;Haughey/Aherncommitments,ICTUECmeeting.21/02/90,item1851;D/Labouradvice,D/Labour,‘CRC,ICTUItemno.28:WorkerParticipation’,[Nov.1989],DTAS25857-Y
29 System“trialled”inpublicservice,Reynolds,‘AddresstoIMINationalManagementConference’,28/04/90,GIS:D/Finance,and‘SpeechatthelaunchofTheCivilServiceObservedbyDrCHMurrayattheIPA’,07/06/90,GIS:D/Finance;publicsectorboards,ICTUAR199156;Ahernposition,‘SpeechatannualconferenceofthePSEU’,27/04/90,GIS:D/Labour;on“AdvisoryCommittee”report,ICTUAR1991:55;PNR“review”,CRC1990,ICTU1990h;Ahern“sideswith”ICTU,‘ConferenceinKilmainhamonprofit/gainsharing’,IRNReport,15/11/90;“fullycommitted”,‘Meeting[MinisterandD/LabourwithICTU]30March1990’,DTAS25857-Z4;Ahern,‘SpeechatannualconferenceofPSEU’,27/04/90,GIS:D/Labour;“revivedtalks”,Ahern,‘SpeechatannualconferenceofMSF,10/03/90,GIS:D/LabourandICTUECmeeting.16/05/90,item1921
306
ICTUinpublicdescribedtheachievementof“workplacedemocracy”asoneof
itsmainpriorities,complainingthat“Irishemployers’attitudes…lagfarbehind
the practice inmost European countries”. But it faced amajor obstacle in the
widespread indifference to the subject in its own ranks,which a leading study
described as “marked by apathy”. Debates at its 1990 conference on pay
bargaining,andthepurelyformaladoptionofthe“newtradeunionism”strategy,
hadshownthatpayandsectionaladvantageremainedthemainconcernsofboth
pro- and anti-PNR unions, for all their left-wing rhetoric. Talks on “voluntary
participation” continued in the negotiations on PESP, with one of ICTU’s first
inputs a proposed “Framework Agreement” for an evolutionary process,
extending to shareholdings. Cassellswarned that an agreement “would not be
worthhavingwithout this”.Employersheld toamenuofdifferentapproaches,
including new “corporate cultures” motivating employees through individual
autonomy and share options rather than formal European-style participative
structures.ThePESPagreedthat“participativearrangements”betrialledinthe
public sector, in combination with performance systems, and, for the private
sector,a“JointDeclaration”byICTU/FIEmerelyoutliningamenuofoptions.30
The outcomeof these conflicts on land tax, future institutions andworkers’
participationincompaniesrevealedthepoliticalconstraintspreventingadeeper
partnershipsystem.Theinstitutionsofpartnershipwouldremainprovisional,or
expandedonlythroughadhocmeasuressuchastheNESForcommitteeswithin
theNDP.Asimilarrestrainingoutsideinfluenceontheinstitutionalconsolidation
ofsocialpartnershipwasthecriticalroleofpartypoliticalconflict.
Partypolitics:the(partial)demiseofanti-corporatism Post-WW2 governments involving Fine Gael were notable for their
discontinuationoftripartitestructures.Socio-economicplanningwasinvariably
returned “in house” and tripartite bodies side-lined or down-graded to an
advisory role. Elite socio-economic policy bodies, notably the ESRI, were
preferred. Labour, which might have been expected to champion tripartitism,
30 ICTUcomplaint,ICTU,CongressNews,No.2,July1990;“markedbyapathy”,Gunnigleetal.1999:316;
“Cassellswarns”,‘DraftFrameworkAgreementonWorkerParticipation’in‘StaffMeeting’22/10/90-PESD’,ICTUArchive:PN-1;“notworthhaving”,CassellsinIRNReport,43:90,15/11/90;employerviews,‘IndustrialRelationsConference’,FIEBulletin,Nov.1990;PESPcompromise,PESPIX(7)-(10)
307
waseverwaryofunionpower,preferringstatistplanningwithadvisorysocial
partnerinput.Itwasinstrumentalinestablishingmanyagencieswithatripartite
element, but each government involving Labour ended in bitter party/union
conflict. More left-wing parties, such as Clann na Poblachta and later the
Workers’ Party, tended to promote community participation rather than
tripartite policy-making,which they criticised as undemocratic. In the decades
from1945,FiannaFáilremainedthesolechampionofaradicaltripartitism.
Fine Gael and Labour opposed the PNR in 1987 but, following its role in
stabilisingtheeconomyanditsgrowingpublicacceptance,accommodatedtoit.
In1989FineGaelundertookifelectedtocontinuethePNRbutmodifiedtode-
couplepolicy-making frompaydetermination, and governmentpolicyprimacy
over the NESC. Tripartite forums would be made “transparent” through Dáil
oversight and party political involvement. Labour proposed replacing the PNR
with a traditional statist approach, though now described as “participative
planning”.EitheroptionifimplementedwouldhavecollapsedthePNRsystem.31
The 1990 “left” revolt in the ICTU threatening withdrawal from the PNR
forced a further change in opposition party positions, as they urged union
members to vote to maintain the agreement, though continued to propose
“reforms” to it. The government’s successful European strategy, reflected in
Brussels’supportfortheNDPandasuccessfulIrishPresidency,consolidatedthe
system and reinforced its public acceptance, and this was reflected in the
enthusiasticendorsementofthePESPbyallofitspartners,notleastthe70per
cent union vote accepting it. Opposition critiques became muted, reduced to
minorproposalsforadjustments.GarretFitzGerald,acommentatoragaininThe
IrishTimes, criticised partnership for usurping parliamentary government and
whilethePESPwasbeingnegotiatedDukesagaindemandedarolefortheDáilin
theprocess.JimMitchellcalledfortheNESC,andeventheCRC,tobeexpanded
withgroupsrepresentingyouthand“thepoor”,whohad“asmuchrighttobeat
theconferencetableasthefarmers,unionsandemployers”.32
31 FineGael1989;LabourParty198932 FitzGeraldarticlesquotedinMcGinley1999;DukesonrolefortheDáil,Dáil19/06/90;Mitchellonyouth
and“poor”,Dáil28/11/89;“atthetable”,Dáil14/03/90
308
Haughey’sauthoritywasdamaged in thePresidentialelectionof1990ashe
washumiliatinglyforcedtosackhisTánaistewhilecontinuingtosupporthimas
candidate. He was further weakened by Lenihan’s subsequent defeat. His
positionwasfinallyfatallyunderminedastheGoodman“affair”escalatedanda
successionofrealandconstruedscandals insemi-stateboardsensued.Hewas
soonaTaoiseachonsufferance,finallybeingforcedtoresigninFebruary1992,
whenhedepartedquotingOthellothathehad“donetheStatesomeservice”.33
WhenNESC’skeyreportappearedinOctober1990,ithadbeenlaudedbythe
IrishTimesasadepartureonaparwithLemass’sProgrammesforDevelopment.
But with the presidential election crisis instigated by a faux pas by Lenihan,
opposition leadersused thereport toattackHaughey,denouncingaspectsof it
andquestioningthelegitimacyoftheNESCitself.ThefuroreovertheNESC’stax
“proposals” has already been described. Ó hUiginn complained of “distorted”
press coverage and of the launch of the council’s report being eclipsed by the
“controversialpoliticaleventstakingplaceatthetimeofitsofficialrelease”.34
JohnBruton, nowa contender for the FineGael leadership, demanded from
the NESC how it had arrived at its property tax proposals, and challenged its
study of consensus institutions: “In a democracy legitimacy ultimately stems
from the ballot box” and a “consensus” that excluded “elected political
representatives”wasnot“agenuineconsensus”.Programmesthatextendedover
the electoral cycle eroded parliamentary autonomy and bound incoming
governments.NESC’smandateshouldbetrimmed,andthecouncilexpandedto
include politicians “as full members or observers”. In the Dáil he attacked
Haughey’s appointment of an EC “observer” and department secretaries as in
breach of the NESC constitution, and repeated FitzGerald’s criticism that
partnershipthreatenedthe“sovereigntyofparliament”,presentingit“withafait
accomplinegotiatedoutsidethishouse”.OtherfrontbenchFineGaelTDswarned
that partnership had become “a Fifth Estate or third house”, “more influential
thantheelectedHouses”andpre-ordainingtheirlegislativefunctions.35
33 HaugheyinRyle-Dwyer1993,Maume200734 ITeditorial,IT26/10/90;ÓhUiginninNESCCouncilMinutes,23/11/9035 BrutontoSecretary,NESC,01/02/91,TonyMcCashin,ActingSec.,NESC,toBruton,01/02/91,and
BrutontoMcCashin,11/02/91,in‘AdditionalMaterialRelatingtoCorrespondencewithMrJohnBrutonTD’,NESCArchive:Boxes3and3c;Bruton,JimMitchellandAlanShatterintheDáil30/01/91
309
Bruton’s critique formed themost substantial and sustained criticismof the
partnershipsystem.Preparingthegroundforanalternativegovernmentmoved
Labour tore-align towardsFineGael’spositionandbothparties torefine their
critique. Quinn, closest among the Labour leadership to ICTU and chair of the
ICTU-PLP “LiaisonCommittee”, had applauded theNESC report and supported
union endorsement of the PESP. But he now demanded that partnership be
movedawayfrom“secretive”meetingsin“smokefilledrooms”.Ratherthanthe
CRC,aDáilCommittee,“subjecttodemocraticscrutiny”,shouldoverseedelivery
of agreements. When the Industrial Relations Bill was being debated, he
criticised as “a negation of the functions of this house” talks on amendments
“behindcloseddoors”withsocialpartners.HedemandedthataDáilcommittee
oversee andgive thePESP “somedemocraticunderpinning”. FineGael andex-
Workers’PartyleadersrushedtosupportQuinn.Brutonsuggestedhisproposed
DáilCommitteealsobeinvolvedinnegotiatingprogrammes,asotherwisethese
wouldtiethe“legislativeoutputofthisHouseintoaconcordatinwhich[it]has
nopart”.Rabbittesupportedthisidea,evensuggestingtheCRCberestructured
toincludepoliticiansto“allowforamorepublicappraisalofprogress”.36
This emerging joint opposition position, whether opportunist or idealistic,
prefigured reforms later attempted by various coalitions.While further bodies
such as the NESF would be established by the Rainbow government and the
NESC expanded under a later FF-PD coalition, paywould stubbornly remain a
centralpartofagreementsandideasforinvolvingpoliticiansintheoversight,let
alonenegotiationofagreements,wouldcometonaught.37
Haughey defended the system against its critics. He concededmore groups
mightbeinvolved,thoughonlyifagreedbytheexistingsocialpartners,andwas
notaversetoaDáilCommitteediscussing,thoughnotnegotiating,programmes.
Normalgovernment involvedproposals to theDáiloften formedbeforehand in
discussionwithconcernedinterests,hesaid,andTreatiesalsoonlycamebefore
theDáil for ratificationwhen alreadydrafted. TheNESCwasnot a negotiating
bodyand its reportswerepublic.Partnershipagreementswere subject toDáil
ratification, as were legislative measures proposed in them. Negotiations,36 QuinnapplaudsNESC/PESP,Dáil19/02/91;“democraticunderpinning”,Dáil06/02/9137 “glue”,O’DonnellandThomas1998
310
already “complex enough”, would be “quite impossible” if Bruton’s “additional
politicaldimension”wereadded.Ifthathadbeenattemptedin1987“wewould
never have got an agreement”. As if to illustrate his point, the Dáil thereupon
descendedintoadisorderlytumult.38
As Haughey’s authority waned, ministers began to revert to pre-1987
practices, “requesting” the NESC to undertake minor or politically sensitive
studies on their behalf, such as a review of a postal service viability plan. But
Haughey’sdefenceofpartnershipemboldenedthesystemandatICTUinsistence
the request from the minister for An Post was rejected by the NESC as
“undermining” the purpose of the Council. The council proceeded to adopt a
programmeofwork focusedsolelyonstrategic issues. ItalsorejectedBruton’s
criticisms,respondingthattheNESCdidnotinfringeparliamentaryautonomyas
“theCouncil as such isnot involved innegotiationswhich lead toProgrammes
suchasthePESP”.Forittobeaneffectiveforum,itrequiredconfidentiality,and
would“notwelcomeparticipationbyrepresentativesofpoliticalparties”.39
TheNESCthusweatheredthecrisesthatprecededHaughey’sresignation,and
wouldsurviveuntil1997withoutbeingrestructured.Butpartyconflictinvolving
much point-scoring and pedantry weakened the political legitimacy of social
partnership. Despite converging pragmatic cross-party acceptance of it, the
critiquesaccusingitoflackingdemocraticlegitimacyshowedthattherewaslittle
political appetite outside Fianna Fáil’s leadership circle for any further
embedding of a “corporatist” system. These conflicts also demonstrated the
continuedprimacyofpartypoliticsindeterminingtheremitofthesystem.
Socialpartnershipandequalitypolitics:acasestudy
The PESP presented social partnership as themechanism for a decade-long
structural make-over of the state and economy,mobilising stakeholders in its
implementation. It was all-encompassing, extending to areas few would have
regarded as concerns of “collective bargaining”. This was Garret FitzGerald’s
38 HaugheyinDáil30/01and06/02/9139 OnNESCwork-programme,D.McCarthy,Director,NESCtoCouncilMembers,22/02and20/03/91,
CassellstoMcCarthy,05/03/91andMcCarthy‘NESC’sWorkprogramme’,15/03/91,NESCArchive:Box3c‘Meetings’andCouncilMinutes,15/03/91;NESCrejectsBruton’scriticisms,TonyCashin,secretaryNESC,toBruton15/03/91,CouncilMinutes15/02/91,NESCArchive:Box3c
311
casus belli in his criticisms of the system. In contrast, Haughey suggested the
socialpartnersextenditsparametersevenfurther, includingtoproposals from
the Law Reform Commission (LRC) established to tackle contentious areas of
socialpolicysuchasfamilyplanning,equality,children,andmaritalbreakdown.
ICTUwelcomedthesuggestion,butotherpartnersweremorecautious,andthe
PESPincorporatedonlya fewLRCrecommendations,suchasonprisonreform
andchildren’srights.Butadeliberatelyvaguely-wordedsectionofthePESPleft
openawayforpartnershiptoplayaroleinenablingsocialreform.Thissection
examinesthisinitsroleinthebeginningsofreformtowardsgayrights.40
TheprogressiveliberalisationofIrishsocietyon“socialissues”fromtheearly
1960swas abruptly halted in 1981 by awell-organised conservative counter-
offensivetargetingthedivisiveissuesofabortionanddivorce,butinfactaimed
at reversing what it called the entire “liberal agenda”. The vulnerability of
politiciansunderthePR-STVsystemwasexploitedtocowerandsilencethem.41
Haugheyhadregardedliberalisationasacorollaryofmodernisation,reflected
inhis1960sreformsbenefittingwomen,hisestablishingofthetwoCommissions
on the Status of Women and even his “Irish solution” partially legalising
contraception in 1979. Fianna Fáil had been a liberalising party in the 1960s
until Fine Gael adopted a more liberal stance, culminating in FitzGerald’s
“ConstitutionalCrusade”of1981.FiannaFáilalsoretainedacertainanti-clerical
appeal, deriving from the time of the Treaty conflict. Lemass once said that
however devout the electorate, he found a “political advantage in having a
certainanti-clerical tinge”, something towhich Haugheywasalsonotaverse to
appealing.Whena FineGaelTDdemanded the inclusionof the “Conferenceof
MajorReligiousSuperiors” insocialpartnership,Haugheyretorted thathewas
“alwaysabitdoubtful”ofanygroupwith“‘major’and‘superior’initstitle”.42
The abortion/divorce conflict and the way it was framed presented Fianna
Fáil, then struggling to retain its “dominant party” status, with a dilemma,
leadingHaugheytoalignwiththemajorityanti-reformposition.Thepartywas
40 OnpartnershipandtheLawReformCommission,Haughey,‘SpeechattheCáirdeFáilPresident’sDinner’,
04/12/1990,GIS:D/Taoiseach;ICTU,‘MeetingonPayandConditions,17/12/90,1990-statementbyChrisKirwan,President’,ICTUArchive:PESP-PW
41 OnthePLAC/SPUCcampaigntargetingTDs,seeO’Reilly199242 LemassinatapedinterviewwithDermotRyan,UCDArchiveP311;HaugheyinDáil14/03/90
312
not innately “illiberal”, and had enactedmany liberal reforms, but by 1985 its
illiberal image had reached a nether with its rejection of Barry Desmond’s
contraceptive reform bill, precipitating the founding of the PDs. The law on
homosexuality,whileopentoabusebytheGardaí,hadneverbeenenforcedasin
Britain and Fianna Fáil’s approach to public sensitivities had been reflected in
PresidentChilders’gestureatthefuneralin1978ofpopularactor,MicheálMac
Liammóir,when,asRichardDunphydescribesit,he“verypubliclyaccorded”his
lover,HiltonEdwards,“therespectsduetoawidow”.Inthelate1980s,Haughey
soughtanescapefromFiannaFáil’sentrapmentastheilliberalparty.Heviewed
the LRC as amechanism for further cautious liberalisation free from fractious
political divisions, and believed this could be assisted by the “consensus” of
social partnership. Mary Robinson’s presidential victory demonstrated the
substantial public desire for liberal change if framed in equality terms and
Haughey,whenappointingtheLRC,excludedclericalinterestsentirelyfromit.43
Gayrightsreformintheearly1990spresentsaninterestingexampleofhow
politics, social partnership and liberal reform interacted. Gay rights first
achievedwidepublicattentionwhentheEuropeanCourtin1988upheldDavid
Norris’s case that the Irish courts, in defending the 1867 act criminalizing
“homosexual acts” on the basis of the Constitution’s “Christian values”, had
breachedhishumanrights.TheLawReformCommissionproposedgivingeffect
to the ruling by abolishing the act rather than reforming it as in Britain, and
legislating for legal equality. Haughey, welcoming this, committed in 1990 to
implement the recommendation, as “Fianna Fáil are sensitive to the changing
needsofourmodernsocietyandreadytorespondsensitivelytothem”.44
In the event, with his authority waning, the reform was deferred as the
Catholic-conservative faction supportingReynolds’ bid for the leadership came
totheforeinFiannaFáil.ItwaseventuallyenactedbyGeogheganQuinnin1993
under Reynolds’ Fianna Fáil-Labour coalition. The reform was shaped by an
assiduouscampaignledbyactiviststhroughtheunionsandsocialpartnership.
43 “dominantparty”,McGrawandO’Malley2018;“precipitatePDs”,O’Malley,D.2014:149-55;MacLiammóir
funeral,Dunphy1997:261;Robinsonstrategy,Finlay1998;“illiberal”imageandLRC,Dunphy1997:25444 LRCproposals,Dunphy1997:253;Haugheyresponse,‘SpeechbyTaoiseachatCáirdeFáilPresident’s
Dinner’,04/12/1990,GIS:D/Taoiseach
313
The gay community had been an invisibleminority, and the opprobrium in
which elite circles held it was such that that perpetrators of homophobic
violence,includingmurder,wereoftentreatedlightlyby“understanding”judges.
Publiclygayactivistswerefew,buttheyincludedaleftwingcirclewhowerealso
tradeunionists.Thefirst“NationalGayConference”washeldinCorkin1981in
theITGWU’sConnollyHall,typically,intermsofIrishsocialbonds,becauseGer
Philpott, the son of Cork ITGWU leader Taghd, was “himself amember of the
[GayRights]Collective”.Thiseventmarkedacoming-outofthecommunity,and
established the unions as an ally in securing their rights. Kieran Rose, a
pioneeringactivistandLGPSUmember,urgedthecommunitytopursuereform
through ICTU’sadvocacyof socialequalityand theequal treatmentofworkers
and citizens, rather than as a separate identity. This won over the LGPSU
president,TomBrogue,a“leftwingCatholichugelysympathetictous”,and“the
greatfixer”PhilFlynn,whosympathisedwithgayliberation.45
TheLGPSUwasthefirstuniontoaddresstheissue,adoptingin1982Rose’s
motion to amend employment law to include “sexual orientation” among the
groundsofdiscrimination.WiththesupportofFlynnandBrogue,andfromtwo
otherunions,wherefellowactivistshadalsowonsupport,RosehadtheLGPSU
positionadoptedbyICTU,whereaspeechbyFlynnsecureditsacceptance.46
Manyunionleadersremainedcautiousbutin1985FlynnconvincedtheICTU
Executivetoactionitspolicywithaworkshopongayequality,whichledtowhat
Dunphy calls the “radical” policy, Lesbian and Gay Rights in the Workplace:
GuidelinesforNegotiators, the firsteveronsuchan issue.This initiative ledthe
EEAandtheICCLtonowalsotakeuptheissueofemploymentequality.ICTU’s
equalityofficer,PatriciaO’Donovan,promotedtheGuidelineswithunionsandin
1988UPTCSsecuredafirstagreementunderitprohibitingdiscriminationinthe
civilserviceonthebasisofsexualorientation.Thiswasfollowedin1990bythe
IncitementtoHatredAct,thefirstlawtoinclude“sexualorientation”initsterms,
andtotheLRCproposingthatthisbeextendedtoemploymentlawgenerally.47
45 Interview,KieranRose46 LGPSUinitiative,Rose,www.linkedin.com/pulse/lesbian-gay-right-work-1-kieran-rose;LGPSUCork
conference,IrishIndependent,CorkExaminer14/05/82;Flynnspeech,RoseInterview47 “radicalpolicy”,Dunphy1997:252;Guidelines,ICTU1986;O’Donovamnrole,O'Donovan,ICTU,to
D/Labour,26.11.1986,O'Donovantoaffiliatedunions,05.01.1987;onEEA,Meehan(EEA)toRose,
314
Rose’sactivistshadformedthe“GayandLesbianEqualityNetwork”(GLEN)in
1988toadvancethisagenda,workingcloselywithICTUontheGuidelines.Italso
convinced the FIE to concede the principle and declare that employerswould
welcome “legal clarity”. The equality approach was boosted by the Robinson
Presidentialcampaign,whichhadbeenbuiltaroundthethemeofsocialequality.
These developments formed the background to Haughey’s suggestion to
negotiators that they include Law Reform Commission proposals in the PESP.
Continued de jure criminalisation, however, meant civil servants cautioned
against a “partnership” approach and the eventual equality provisions in the
PESP only focused on women and disabled people. But a brief clause was
includedwhichopenedthewayforageneralreviewofequalitylegislation.48
Theissuewasprogressednotonlyatsocialpartnershippolicylevel,butalso
in its practice. Gay activists secured for an SES project, “Gay Health Action”,
addressingHIV.Asaprojectsponsorrecalled,DepartmentofLabourofficialshad
advised against it after forceful intervention “at the highest level” from the
DepartmentofJusticeopposingitasstate“endorsementofhomosexuality”.But
attheSESmonitoringcommittee,whichincludedsympatheticunionfigureslike
theITGWU’sDesGeraghty,Ahern“toldthecivilservantstogetreal,andnomore
washeardofoppositiontothe[project]beingapproved”.49
Thisprogress throughpartnership ledLabour, strongly lobbiedbyGLEN, to
re-frameits1991EqualStatusBilltoinclude“sexualorientation”.Whenthis,as
anoppositionbill,failed,ICTUcomplainedtoministersofthe“inordinatedelay”
inlegislatinggaylawreformsincetheECHRruling.Progressfurtherstalledafter
Haughey’s departure when Reynolds, embroiled in renewed conflict over
abortion,resistedGLEN/ICTUlobbyingtotakeactiononit.50
But change came the following year with the Fianna Fáil-Labour coalition.
While Labour’s equality agendawas an important factor, thosewho reformed
08.05.1986,RoseArchiveandRose2018;oncivilserviceagreement,InterviewKieranRoseandCivilServiceCircular12/88,RoseArchive;LRCrecommendation,Dunphy1997:253
48 FIEstatementinGLEN,‘ResourceMaterialsonLesbian/GayLawReform’1992,RoseArchive;PESP“review”,PESPIX
49 CathalKerrigan,email18/03/1950 OnLabourbill,Rose,www.linkedin.com/pulse/equal-status-bill-1990-kieran-rose/;“inordinatedelay”,
CassellstoM/Justice,24.05.1991,RoseArchive;Reynold’sinaction,PhilFlynntoM/LabBrianCowan,reUnfairDismissalsAct,08.04.92;GLEN,‘ResourceMaterialonLesbian/GayLawReform’1992andGLEN,‘UnfairDismissalsAct’,1992;UPTCS,‘UnfairDismissalsActResourcePack’1992,inRoseArchive
315
labour,servicesandhomosexualitylawweretwowomenoriginallyappointedby
Haughey,MaryO’RourkeattheDepartmentofLabourandGeogheganQuinnat
Justice.O’Rourke immediately initiateda “sweepingupdate”ofequality law,as
proposedunderPESP,adding “sexualorientation”asa “ground” inall relevant
laws.GeogheganQuinnfollowedsuit,andaftermeetingaGLENdelegationthat
included the mother of a gay man who made an emotional appeal for full
equality, opted, to the “amazement” of activists and public alike, to abolish
homosexuallawentirelyinfavourofsexualequality,withouttheconstraintson
privacyandageofconsentintroducedinBritain.ThisoccurredafterGLENurged
hertoignorethe“puritanBritish”approachandlegislate“atrueIrishsolution”.
This“nationalist”approachappealedtoFiannaFáil,easingthepathtoreform.As
oneactivistnoted,“twoIrishmothershaddecidedtheissuebetweenthem”.51
Gay politics would continue to progress through social partnership, first
throughrecognitionofgaysocio-economicdisadvantagethroughapartnership-
endorsed CPA project and then through the Equality Authority andNESF. The
development of the Irish “equality”-based social state initiated through
partnership had resulted in progressive gay rights reform, leading to other
progressive social reforms that would transform Ireland into a European
equalityleader.Theissueillustratesthecomplexinter-relationshipthatevolved
from1988betweenpolitics,partnershipandreform,replicatedinmanyareas.52
Unrulyoffspring:partnershipandthepoliticsofpoverty CommunitygroupsandcampaigningNGOsweretoachieveasignificantrole
in partnership politics, making the 1990s a “golden era” of “community
development”.Chapter8describestheiremergenceasplayersunderthePNRin
1987-8throughICTU’salliancewiththesectorandHaughey’sacceptanceofitas
adriveroflocalinstitutionalchange,pilotinglocalpartnership-typeinitiativesin
1988.Thisrolewas institutionalised in thedraftingphaseof thePESP through
initiatives under the EC co-funded NDP, and strongly legitimised by Mary
Robinson’s election as President. The “community and voluntary” sector was51 O’Rourke’s“sweepingupdate”,interviewKieranRose;“trueIrishsolution”,ChrisRobson,‘Whatwe
reallywantfromMáireGeogheganQuinn’,GayCommunityNews,April1993;“twoIrishmothers”,quotedinDunphy1997:255-6
52 OnGLENprojectsandNESF/EAinvolvement,interviewRose,emailfromEoinCollins,01/04/19,O'CarrollandCollins1995,EqualityAuthority2002andNESF2003
316
without parallel in Europe, reflecting inadequacies of inherited institutions in
Ireland. The PESP further institutionalised the sector, through the welfare
budgetforums,extendingpilotIRDprojectsandinitiatinglocal“partnerships”.53
WhatemergedwasaninstitutionaldeparturewhichwouldinfluencelaterEC
policy,theIRDprojectsbecomingamodelforits“LEADER”Programme.In1990,
beforethePESP,DelorshadsupportedaninitiativeproposedbyAhernunderthe
IrishPresidency fora “generously funded”additionalEC“Special Initiative” for
projectstocombaturbanunemployment,with“alargedegreeofdiscretion”for
“localoperators” indesigningand implementing them.Ahernalso launchedan
ECresearchprogrammeonlocaldevelopment.AmongtheIrishprojectsselected
under “Poverty3”wasPAUL inLimerick, chairedbyProfessor JoyceO’Connor,
which combined statutory and community groups, including the local ICTU
Centre, in a programme of “integrated measures to tackle poverty”. Ahern
described“thebasisofthestrategy”asa“concertedintegratedeffort”by“local
groups[working]inpartnershipwithStateagencies”.54
Under the PESP, local “area based partnership companies” were piloted on
this basis, encompassing welfare, education, employment, SES and enterprise
projects. Boards representing communities, state agencies and social partners
were established, assisted by a national co-ordinating body meeting in the
Department of the Taoiseach. If successful, the initiative would be rolled out
nationally. Following ratification of the PESP, Congress sought their speedy
establishment and the CRCmet community bodies to form the national body.
Twelve such partnership companies – including PAUL in Limerick and three
consortia in Dublin - were established, with Paddy Teahon of the Taoiseach’s
Departmentco-ordinatingtheinitiative.55
OfficialbodiesresistedconcedingauthoritytosuchgroupsandevenICTUhad
initiallynotenvisagedcommunity-ledprojects,butratherconsortiaofagencies,53 “goldenera”,SeánaiLambe,ininterviewwithDublinInnerCityGroup;“pilotprojects”,SectionVI/1954 Roleof“Poverty3”,KelleherandO’Neil2018;onDelorsandAhern’sinitiatives,‘ConclusionofECSocial
AffairsCouncilmeetinginDublin’,02/03/90,GIS:D/LabourandGerardCollins,‘AddresstoEuropeanParliament’,16/01/90,GIS:D/Finance;“researchprogramme”,Ahern,‘SpeechtoopenLedaProgrammeConference’,21/03/90,Ahern,‘SpeechatopeningofERGOSeminaronactiontocombatlong-termunemployment’,15/05/90,and‘ECCouncilofSocialAffairs,Brussels’,29/05/90,GIS:D/Labour;onPAULalliance,Woods,‘MinisterlaunchesLimerickECPovertyProjecttotackleunemployment’,10/01/90,GIS:D/SocialWelfare;“basisofthestrategy”,Ahern,‘SpeechtoopenLedaProgrammeConference’,21/03/90,GIS:D/Labour
55 “replicated”,PESPVIII;ICTUinitiatives,ICTUAR1991:14,51
317
public servicesandsocialpartners,with the “community” representedby local
ICTU representatives.TheDepartmentof theTaoiseachensureda community-
led structure, however, and used Brussels’ interest in a “high degree of local
involvement” to force agency cooperation, with Teahon, at meetings with the
Commission,oftenbackinglocalleadersagainstcivilserviceresistance.Haughey
was also involved directly, coaxing authoritative figures to take on board
chairmanshipstoensureleveragewiththestateagencies.TheseincludedMark
HelyHutchinson,retiredceooftheBankofIrelandwhohadpreviouslyheaded
theEnterpriseGroupunderthe1981“Understanding”,atDublinInnerCity,and
Pádraic White, just retired from the IDA, at Dublin Northside. Community
activists rather than officials were recruited as managers, and put on senior
salaryscalestoenhancetheirauthorityindealingwithpublicofficials.56
The partnerships were to have a chequered history and their effectiveness
wasimpairedwhenofficialresistancein1992successfullyreversedthepooling
ofagencybudgetsunderthemenvisagedinthePESP.Buttheyprovedsuccessful
in mobilising communities and combining local groups and agencies in many
innovative projects tackling social problems. Many significant innovations
reforming welfare and labour market services, such as income disregards,
women’s programmes, back-to-work schemes and the Local Employment
Service, would emerge from them. They enhanced social inclusion in
marginalised communities, and an OECD evaluation described them as
pioneering a form of “participative democracy” of “potentially international
significance”.Fromthemid-1990stheywereextendednationwide,contributing
totheintroductionoflocallydeliveredservicesandlocalgovernmentreform.57
ICTU again worked in alliance with campaigning organisations, notably the
CPA, innegotiatingthePESP,withtheHierarchyassistingbypromisingICTUa
“PastoralonSocialJustice”.Catholicsocialtheoryremainedapowerfulinfluence,
withArchbishopKavanaghofDublin,whosebrotherhadbeenanFWUIofficial,a
strongadvocateofpartnership.Governmentcontinuedthepre-andpost-budget56 InitialICTUconcept,CRCSub-GrponJobCreation,‘ReporttoCRC,October1989’,DTA:S26122-E,
CassellstoTeahon,12/01/90,DTA:S25857-Z1andICTUADC1990:56-7;leveragingBrusselsinsistenceon“localinvolvement”,h/wnotes18thCRCmtg.21/09/89,DTA:S25857-W;TeahonatCommissionmeetings,DavidConnolly,ininterviewDublinInnerCityGroup;Haugheyinterventions,InterviewswithPádraigWhiteandDublinInnerCityGroup
57 Localpartnershipachievementsand“participativedemocracy”,McCashin,2004:211,Sabel1996
318
consultative “forums” initiatedunderPNR,and instituted thesystematicgrant-
aidingofvoluntarybodies.AtEC levelministersshow-cased the “unique” Irish
State/NGO collaboration in “delivering social services and combating poverty”
andthePESPcommittedtofurthersystematisethisrelationshipthoughaWhite
Paperonthesector,aninitiativeoftenwronglyattributedtoalaterperiod.58
The ICTU-NGO alliance had its tensions, as noted in chapter 8. While it
strengthened Congress’s hand with government, ICTU remained wary of the
sector’s growing influenceand some ideasgaining favourwithin it, notablyFr.
Healy’s“basicincomeforall”asanalternativetopursuingfullemployment.ICTU
rejectedthis“post-industrialdefinitionoflabourandwork”andafuture“world
withoutwork”.Healy’s“SocialJusticeOffice”andyouthorganisationssuchasthe
NYCI,withFineGaelsupport,demandedarole inpartnershipnegotiationsand
evenontheCRC.ÓhUiginnadvisedHaugheytoresistthis,asICTUwasadamant
that partnership not be “diluted” and the CRC remain confined to the “main”
socialpartners.ThechangessoughtbyHealyandtheNYCIwerepartlyconceded
by later governments, resulting, as ICTU leaders saw it, in social partnership
becoming “swamped”, with hard-headed policy debate at the NESC and other
forumsbeingdisplacedby“idealisticspeechesandimpossiblistdemands”.59
As the unemployed organisation, the INOU, also gained momentum, it too
soughta“voice”inpartnership,proposinga“NationalForumonUnemployment”
similar to the New Ireland Forum. Union leaders lent support publicly to the
conceptbut,againfearing“dilution”andanother“talkingshop”,andsuspecting
the INOU of not being an “authentic” voice of the unemployed, urged that the
forum be confined to parties and the “main Social Partners, i.e. trade unions,
employers and farmers”, with “views” being elicited from other “interested
groups”. The Haughey governments therefore resisted the proposal, though it
was laterrealised inweaker formintheNESFestablishedundertheReynolds-
Labourcoalition.Haughey’sgovernmentinvolvedthenewsector inotherways
short of a direct role in partnership, through Woods’ consultative forums,58 ICTU-CPAalliance,ICTUandCPA1990e;“pastoral”,ICTUAR1990:59;Kavanaghrole,Interviewwith
JohnSweeney;grant-aidingvoluntarysectorandWhitePaper,Ahern,‘AddresstotheETUCPressGroup’,28/06/90,GIS:D/Labour
59 Healyand“minimumincome”,Ward1997:247-8;ICTUposition,ICTUADC1989:44-5;seekroleonCRC,MitchellinDáil14/03/90;ÓhUiginnadvice,‘Briefing’forTaoiseachforrepliestoPQs,14/03/90,DTA:S25858-Z2;“swamping”,interviewswithICTUleaders
319
Ahern’sappointmentof INOU figures toprojectboardsand thesector’s role in
the local partnerships. Irish NGOs became sector leaders at EC level, where
Ireland came to be regarded as pioneering an innovative form of state-NGO
interaction.ThisgrowingprestigesawtheINOUtotheforeinfoundingboththe
EC-wide “European Network of the Unemployed” and the “European Anti-
Poverty Network”. Both were given a rare and much coveted policy
“consultative”statuswiththeCommissionbyJacquesDelors.60
ICTUalsohoped,conversely,toreviveitsfadinglocal-levelinfluencethrough
its NGO alliance, urging trades councils and ICTU unemployed centres to be
activein localcampaignsandonthenewlocalpartnershipboards.Whilesome
activists tookup this challenge, this ICTUambitionwasnever realised,despite
theLeftdominatingtheunionmovementat this level.Despiteenormousunion
memberships, the pool of officials and activists interested in such local
involvement proved small, and even the unemployed centres soon faded from
the prominent local role ICTU had envisaged for them. Indeed, Left
oppositionismcontinuedtodogthemovementlocallyaswell.WhileICTUatCRC
level sought a significant expansion of the SES programme, it was to be
embarrassed by left-wing unions blocking schemes in Cork and Dublin city
councils.This involvedthestronglyanti-PNRunion,theIMETU,whichopposed
SESas threatening jobdisplacementdespite amonitoring committee involving
ICTUoverseeingit.EvendirectinterventionsbyAhernwithDublinandCorkcity
managersandCassellswiththeIMETUfailedtoendtheimpasseuntil1992.61
The local partnership and community development structures would face
similarpoliticalhostilityastheoverallpartnershipsystem,especiallyfromTDs
jealous of their intermediary role between constituents and the state being
usurped by the new local institutions. But government’s fostering of the
communitysector,whichinitiatedtwodecadesofinnovativelocaldevelopment,
transformed local public services, inevitably leading to the sector ultimately
being formally included in social partnership, a processmuch analysed in the60 INOU“forum”,Allen,M.1998:288-92;ICTUproposals,ICTUADC1990:43-4;“inauthentic”,interview
O’Donovan;INOU’sECrole,INOUBulletin,June1990,alsoinformationfromRobinHannan,TonyMonks61 Exhortingalocalunionrole,DesGeraghtyinICTUADC1989:60-1;onineffectivenessandfadingofunion
localinvolvement,interviewswithInnerCityactivists;onIMETUblockingSES,h/wnotes‘CRCon16/11/89’,DTA:S25857-Y,‘EmploymentSchemerunsintoTradeUnionflak’,Business&Finance,03/05/90andD/Labour,‘GovernmentActiononEmployment’,27/09/89,DTA:S25862-D
320
literature.Butthebasisforthesector’sgrowthandtheEurope-wideprestigeit
attainedhadbeeninstigated,withICTUsupport,bytheHaugheycirclealreadyin
1987-88andsystematisedby1990,withhehimselfofteninterveningdirectlyin
shaping it. A movement with its origins in a community challenge to state
institutionaldysfunctionwasthuschannelledthroughsocialpartnershiptohelp
achieve institutional reform. Despite its often stormy relationship with that
system, the sector played a key role in the re-formatting of Ireland’s social
servicesandlocalgovernmentsystem.62
Thischapterhasattemptedtodemonstratetheconstraineddynamicsofsocial
partnership as it began to consolidate as a new institutional paradigm. It also
demonstrates the comprehensive societal impact of the new institutions, from
shapingeconomicpolicyandthestructuresofthesocialstatetoinfluencingthe
emergent equality revolution thatwould become central in Irish politics. The
economy would not finally take-off in terms of a radical expansion of
employmentuntilafter1993,butthetrajectoryofthattake-offandthestructural
transformation of the welfare state that would follow was already clearly on
courseby1991.
62 “TDsusurped”,KelleherandO’Neill2018;onthecommunitysectorinpartnership,Adshead2011and
sourcescitedthere
321
Conclusions This thesis contends that the social partnership system initiated in 1987
proved a key institutional factor enabling the transformation of the Irish
economyfromoneofWesternEurope’spooresttooneof itstopperformers in
little over a decade. This was a policy paradigm shift, as profound as that of
1959-63, recasting the economywithin a few years to a newmodel, its future
characteristics clearly established by 1991 and the economic take-off on that
basis indisputable from 1993. Charles Haughey was the central figure in that
transformation, the political innovator who oversaw a socio-economic
turnaroundthroughtightcontrolofgovernmentandaworkingalliancewithkey
socialforces.Amodernisingnationalist,in1987-91hefinallyrealisedastrategic
approachhehaddevelopedovertwodecadesinconjunctionwithbusinessand
unioncirclesandhadseveraltimespreviouslyattemptedtoachieve.
Thisthesisfillsanimportantgapintheliteratureonsocialpartnership.Many
studieshaveappearedon specific aspectsof it, andanextensive literaturehas
appeared in relation to its later role in policy making. There have been
comparative studies with European models of “corporatism”, whose main
conclusion,however,hasbeenthemultiple“outlier”qualityofwhatoccurredin
Ireland, requiring explanation in the specific domestic cultural-political factors
thatshapedit.Intheabsenceofadetailedhistoryofpartnership,manystudies
have been hampered by an inadequate evidential base on its inception, pre-
history and formative early years. This study seeks to provide, on the basis of
rarelyexaminedsources,adetailedtracingofthepoliticsofpartnershipandthe
roleofhumanpoliticalagencyinitsevolution.
The thesis refers to academic theories onwhat explains paradigm shifts in
institutions, and how innovative forces achieve – or fail to achieve - profound
institutionalchangeatmomentsofcrisisanduncertainty.Thesevereeconomic
situationofthe1980swasnot,ultimately,thecoreproblembeingaddressedin
the 1987 departure but rather the contingent event that enabled a long-pre-
planned institutionalparadigm tobeaffected in socio-economicpolicy and the
structuresofpolicymaking. In suchprocessesof radical change, agent-centred
theoriesaremoreappropriate thanstructuralistanalyses,whileprecedingand
322
subsequentinstitutionsinequilibriumarearguablymoreamenabletostructure-
centredpathdependencyapproaches.Itisthereforetheinnovativeprocessthat
is traced in this thesis, as the multiple streams of policy-making, social force
interactionandpoliticalinnovationconvergedatamomentofcrisis.Itidentifies
howplausibilityforamajorpolicydeparture–especiallywithcautiousopinion
leaders among business and unions, political parties and the media – was
achieved in this case by a policy innovator securing authoritative government
power.ItwasHaughey’sconvincingcontroloverparty,governmentandthestate
apparatus in 1987 that accounts forwhy the radical institutional departure of
socialpartnership, forwhichtherewasonlyweakprecedent,achievedsuccess,
incontrasttohisearliersimilarinitiatives.
The thesis explores the corporatist/anti-corporatist dichotomy that shaped
alternategovernments in Ireland inaconsistentpattern fromthe1920s to the
2000s. The particular form in which Irish party/social interest relationships
developed pre-dated the foundation of the state. But political factors
surroundingthebirthoftheFreeStatedeterminedthatwhilethetwodominant
partiesthatemergedcannoteasilybecharacterisedonaleft/rightbasis,aclear
socio-economic divide nevertheless soon separated them. A developmental
allianceofruralandurbansocialforcesformedthebaseofone,FiannaFáil,with
itshighrisk-takinginstinct,whileareactiveallianceofmoreconservativeforces
formedthatoftheother,whatbecameFineGael.AsmallLabourParty,founded
by the Irish Trade Union Congress before the statewas established, espoused
“socialdemocracy”.But,breakingfromtheunions,Labourdevelopedapeculiar
butpersistenthostilitytocorporatismasamereFiannaFáilpropagandaploy.Its
focus instead, usually in Fine Gael-led coalitions, would centre on expanding
statewelfare provision, rather than economic strategy. In this it differed from
social democratic parties elsewhere, which championed corporatism, an
anomalymainlyexplicablebyIrishLabour’selectoralmarginality.
AsaministerandTaoiseach,Lemassportrayedbusiness,unionsandfarming
bodies as productive forces in their own right to be “harnessed” in a national
economicendeavour.FineGaelontheotherhandviewedthemasmere“interest
groups” to be contained, and when in power downgraded and marginalised
323
tripartiteplanningbodiessuchastheNESC,minimisedcentralbargainingto,at
best, pay agreements, and restored policy-making to the sole preserve of
government. While accepting consultative input from “social partners”, Fine
Gael/Labour repeatedly dispensed with systems of structured cooperation,
preferringforpolicyguidancetheinputof“independent”economicexperts,but
withoutachievingnotableeconomicsuccessasaresult.FiannaFáilremainedthe
sole champion of a radical corporatism, though itselfwas consistently divided
betweencorporatistminimalistsandmaximalists.
Therewere also importantdivisionswithin social interests. Inbusiness, the
strong-sector lobby,CII,whichhadevolved fromthe1930sstate-orientedFIM,
inheritedacloserelationshipwiththestate,andwasoftenawillingparticipant
incorporatist strategies.OlderAnglo-Irishcommercial/financial interestswere
more detached and a recurrent problem for state policy, while strictly
“employer” organisations, representing the mass of small businesses and
domesticorBritish-marketdependentexporters,werescepticalorevenhostile,
oftenhavingtobecajoledbygovernmentintotripartitearrangements.Farming
bodies, while opposed to union influence over state policy, ultimately needed
government as an ally to contain EEC or other policy threats, and tended to
comply,howeverreluctantly,withtripartitismwhenitwasintheascendant.This
pattern of state/interest relations also illustrates how the state, rather than
majoreconomicinterests,formedthemaindriveroftheIrisheconomy.
Trade unions, which in European terms organised a high proportion of
workers,werealsodivided,againalongahistoricfault-line.Intheircaseitwas
one between nationalist/republican-aligned general and pubic service sectors
versus a more British-socialist oriented sectional, craft and Left wing that
regardedcorporatismasanunwelcomeregimentationof labourmarketpower
and, ideologically, as “class collaboration”. Though both sides portrayed their
approach in socialist terms, i.e. as in the general working class interest, the
conceptual fault-line remained a fundamental one, producing an almost
monotonouslypredictable2:1divideon the issue, thoughatmomentsof crisis
thisratiocouldinverse.Unresolvedaspectsofthelargernationalquestioncould
alsointervene,inanasymmetricmanner,toexacerbatethisinternaldivisionor
324
underminecooperationwithgovernment,ashappenedtherelationshipbetween
thehegemonicnational-orientedunion, the ITGWU,and theLynchgovernment
following the latter’s volte faceonNorthern policy inMay 1970. This factor is
central tounderstandingseveral turningpoints inthestate/unionrelationship,
notleastthepowerfulpositionoftrustHaugheyachievedwiththeunions.
Haughey,apoliticalratherthanbusinessinnovator,wasthecentralfigureina
nationalist modernising circle espousing a specific socio-economic approach
from the late 1950s. This led in 1982 to the “WayForward” plan that laid the
basisfortheultimatelysuccessfulsocialpartnershipof1987.Althoughthisplan
represented a departure for Haughey in that it initially proposed a unilateral
statestrategy,hewasconvincedbyGermansocialdemocraticchancellor,Helmut
Schmidt,withwhomhewasalliedatEClevel,topersuadehiscircletoembedit
inasocialpartnershipframework,ashehadhispreviousinitiatives.
Analyses of Haughey’s role in Ireland’s economic modernisation have been
overshadowed by an excessive focus on his personal finances, and how his
“lifestyle” was supported by donations from a few wealthy people. Haughey’s
closerelationshipwithsomeentrepreneurialcircleswascertainly important in
influencinghis private-sectordriven approach to economicmodernisation, but
little evidence, as opposed to inferences, has ever emerged to support a claim
thathewaspolitically“corrupt”, i.e.providedpolitical favoursforthispersonal
financial support.This thesis contends thathispersonal financial relationships
wereof littleconsequencetohissocialpartnershipagenda,andarereferredto
only where relevant. There are also other aspects of Haughey’s politics only
briefly touchedon, such as, apart from their ECdimension thatwaspertinent,
innovationsbyhiminforeignpolicy,orinotherareas.Thethesisfocusesonhis
role inshapingthemajorsocio-economicdepartureofhisera,which it finds is
quiteadequatelyexplicableinpoliticalandpolicydevelopmentterms.
The1987ProgrammeforNationalRecovery (PNR)wasakeyevent initiating
bothapartnership systemand the subsequent economic take-off. It integrated
budgetstrategy,socialreform,industrialdevelopmentandpaydeterminationfor
thefirsttimeinatightlyinterdependentstructure.Byprovidingrealwage-value
growththroughitspay/taxformula,expandingwelfare,legislatingforindustrial
325
relations and other reforms to establish industrial peace and promote labour
quality,promotingaprivatesectordynamicinitseconomicstrategies,exploiting
opening opportunities such as in capital liberalisation and involving the social
partners in core policy-making and economic management, it generated
intangible capital strengthening total factor productivity and enabling the
economictake-off,aswasimmediatelyrecognisedbyboththeOECDandEC.The
thesis contends that these TFP factors played a far greater role than hitherto
recognisedinproducingthe“Irisheconomicmiracle”.
Haughey, together with pro-partnership union and business leaders, was
determinednot only that thePNR succeed, but that it be institutionalised as a
“permanentway ofmanaging our affairs”. His sole precondition in negotiating
his1989coalitionwiththe“neo-liberal”PDswasthatthePNRbecontinuedand
partnership become an enduring system. Structures initiated under the PNR
wererefinedandcompletedfirstinadramaticPNRreviewprocessin1990and
then in the successor Programme for Economic and Social Progress (PESP) of
1991. The PESPwas a 10-year plan which in addition to fine-tuning the PNR
model, initiated an institutional transformation of the social state, consciously
conceived as a convergence towards the “Germanmodel”. This arose from yet
another NESC strategy report Haughey had initiated. Subsequent 3-year
agreements in the 1990s, while introducing new elements, were essentially
subsetsofthe10-yearPESPplan.After1992thesystemwouldbetweakedand
tinkeredwith,sometimeswithnegativeeffects,butnotchangedfundamentally.
The“socialpeace”orpaybargainingaspectofpartnershiphastoooftenbeen
narrowlyinterpretedasitscentralfeature.Thethesiselucidatesthekeypower
shift that occurred within trade unionism from sectional to general interests,
which came toahead in conflictsoverapprenticeship, industrial relationsand
otherinputreformsthatlaidthebasisforageneralworkingclassbenefitinthe
subsequent economic expansion. The industrial relations aspect, described by
critics as a “Faustian bargain”, was important in the political exchange of
partnership,butnotitsprimarydriver.Thethesiscontendsthatprimarydriver
tohavebeenacommonprojecttoovercomeadeepproblemofbothsocialand
economic“underdevelopment”, itsaimsframedasachievingstandardsof living
326
and services equal to those of the best-performing small open European
economiesasaresultoftheirpost-wardevelopmentaltransformation.1
Thethesisrevealsthe3-stageplanofHaughey’scircle in1987torealisethe
1982 Way Forward strategy. This entailed an initial half-year free hand to
achievearadicalmonetaryadjustment, followedby industrialpolicy initiatives
pre-empting the PNR but tailored to facilitate a partnership agreement, and
finally thatpartnershipagreement itself, the “PNR”, framing the immediatebut
alsotheplannedlonger-termgoalsandgovernanceofthestrategy.The3-stage
planwasalmostidenticaltowhathadbeenattemptedin1982buthadfaileddue
toHaughey’sinsufficientcontrolovergovernmentandpolicyformation.
Haughey’sstrategywasahigh-riskpoliticalgamble,hisreputationdependent
on its success. It required in turn themembershipsofpartnerorganisations to
ratify it - far from a foregone conclusion. Successful ratification was barely
achievedandwouldremainaprecariousandunpredictablevariableforseveral
years.The intensepolitical exchangewithin socialpartnershipduring1987-91
was reflected in the extraordinary policy output of government and partner
organisations–especiallytheICTUandCII–andinthenolessthansevenhighly
chargedICTUnationalconferencesandtheintenseDáilconflictofthoseyears.
Thepartnershipallianceof1987,asnoted,wasnotbasedprimarilyonsolving
immediate economic problems, but rather addressing problems which the
Lemass-erainitiativesultimatelyhadnotresolved.Anambitious,internationally
tradingbusinessclassanda functionalpolicysystemhadfailedtoemerge,and
many foreign assembly industries attractedunder1960-80planningwithdrew
in the 1980s. The brief Haughey governments of 1980-82 initiated a policy
revolution targeting these structural deficiencies, reconfiguring the National
Understanding, centralising policy power in the Department of the Taoiseach
andrevivingtheNESCasastrategy-makingbody.EvenJ.J.Lee–noadmirerof
Haughey–wasimpressedbytheresultingpolicyoutput,“thefirstseriousdebate
on industrial policy for more than twenty years”. The focus of Haughey’s
strategy,includingtheworkoftheNESC,wastoresolvethehiatusinwhichthe
economyfounditselfaftertheLemass-eradeparturehadrunitscourse,withthe
1 “Faustianbargain”,D’ArtandTurner2011
327
aimoffindingacoherentstrategytoreplaceit.Thishademergedby1982,asThe
WayForward,butcouldonlybeimplementedfrom1987.2
Thestrategicagendaofsocialpartnershipgaveititsdeeplypoliticalcharacter.
This can be summarised as the oft-repeated achieving of “average” European
standardsoflivingandinstitutionalandeconomicsuccesscomparabletothatof
other “small European open economies”. The institutional aspect included
structures to reproduce “concerted” policy-making as in those states, i.e. a
systemof integratedstate/economystrategy-production. Itwas this consensus
goal,thethesisargues,ratherthanthepay/taxbargainingformula,thatprovided
the real “glue” of social partnership, and it is noteworthy that this consensus
begantodissolveandpartnershiptoloseitscommonsenseofpurposeprecisely
asthatprimarygoalwasover-achievedbytheearly2000s.
Thestructuresandpoliciesofpost-1987socialpartnershipwereremarkably
similartowhatcertainpoliticalandinterestcircleshadproposedsincethelate
1940stodriveaneconomicandindustrialdevelopment.Theseinvolvednational
strategybeingagreedbystateand industry interests througha central council
(latertheNIEC/NESC),acentralisedcoordinatingroleforgovernment,anagreed
fiscal/monetary framework, integratedmedium-termplanning,sectoralgrowth
strategies, an enabling – rather than passive - welfare state, business/labour
economicpower-sharingandagreementonresourceallocation.In1987-91such
an institutional departurewas finally achieved through thePNR,with strategy
formation by the NESC, policy coordinated centrally in the Department of the
Taoiseach, and monitoring of implementation by a tripartite “Central Review
Committee” (CRC). The Lynch/O’Donoghue First National Understanding had
lackedallofthese,despitetheunionsseekingthem.Buttheyhadbeeninherent
in Haughey’s first 1970 initiative and more fully in his attempted 1980-82
departure.Howtheconcepts,managementstructuresandpoliciesimplemented
from 1987 were realised and how opportunities presented by the critical
junctureof1987-91enabled their realisation form theheartof this study.The
issueof labour/capitaleconomicpower-sharingisalsoexamined,anditswilful
preventioninindustryidentifiedasacriticalinstitutionallimitation.
2 Lee1989:504
328
Haughey’sECstrategywasinspired,combining-asurgedbytheNESCthough
alreadyinherentinhisown1980-82plan-amaximalistEuropean-integrationist
position aligned to the core pro-integration powers, particularly Germany.
DisparateECStructuralFundinputswereframedinanovelformasa“National
Development Plan”, itself an innovation in EC terms, integratedwith the PNR,
andsubordinatedtothePNR’ssocialpartnershipsystem.ThisenthusedDelors,
at that time facing strong anti-integration opposition, and resulted not only in
Irelandsecuringthehighestrateandpercapita levelofstructural intervention
butalsoarangeofregulationexemptionsenablingtheIrishprivatesector-ledor
co-funded PNR model to be substantially expanded. The Ireland-Commission
allianceformedtodrivetheNDP,describedbyDelorshimselfas“uniqueinthe
history” of the EC, would become the model for EC assistance to emerging
membereconomies.Haugheycementedthealliancethroughseveralimaginative
personal-political initiatives, notably on German unification during the 1990
IrishPresidency,itselfahigh-pointofhisyearsasTaoiseach.
AdistinguishingfeatureofIreland’ssocialpartnershipwashowitintegrateda
liberal-economic but state-dirigiste mixed-economy model with substantial
social-state expansion and social reform. This integrated linkage was insisted
upon by ICTU in particular, but was in fact integral to Haughey’s essentially
socialdemocraticphilosophy.ThroughthePNRof1987,amodeldeepenedand
completedby thePESPof1991, a long-termprogrammeof social/institutional
transformation, strategic planning innovation, employment growth, expanded
private and state enterprise, a remodellingof social/educationalprovisionand
an equality-based approach to social reform was set in train. The combined
economic/socialpolicystrategy,withamixedeconomydevelopingbyexploiting
the global opening, high-regulation, and an expanding enabling welfare state,
wasconsciouslyconceivedasarealisableanswertoIreland’schallengesarising
from late industrialisation. It was also conceived as an alternative route to
modernityandgrowthtothe“monetarist”orsocial-statecontractionstrategies
adopted elsewhere and espoused in Ireland by many opposed to social
partnership and still wedded to aWhitaker-style state-guided but laissez faire
developmentparadigm.Despitesignificantbutultimatelyminorityoppositionto
thestrategywithinbusinessandunioncircles,thekeyinstitutionsofpartnership
329
– the NESC and CRC – ensured its structural viability, long-term policy
perspectiveandthedeliveryofitsprogrammes’commitments.
Thegovernment/partnershipstrategyprovedflexibleandopentoinnovation,
quickly evolving to exploit opportunities for industrial restructuring, new
policiesatEClevelinsupportoftheSingleMarketand,especially,opportunities
presenting through a newly global financial system. Problems in the domestic
industrial sector were overcome by the state-dirigiste policy system changing
priorities and direction. The thesis establishes many of the details of the
emergingeconomicmodelandhowessentialsectoralandothermodificationsto
itwereengineeredduringthedecisive1987-91period.
As the economicmodelwasproving successful andbeginning to assumean
autonomousdynamic, especially from late1990,but job creationhadasyet to
overtakeattritionindecliningindustriesanddemographicpressurescontinued
toexpandthelabourforce,socialstateinnovationbecameanevermoreurgent
concernof partnership.High skills loss through emigration and geographically
concentrated deprivation emerged as singular challenges to state and society.
The shiftof focus to theseareasandaway fromcoreeconomic strategywould
inaugurate a certainmission drift that would later becomemore pronounced.
Nevertheless,many novel initiatives developed in response to the social crisis
through thedual economic/social strategyof socialpartnershipwouldbecome
oneofitsdefiningcharacteristics,makingitamodelofinternationalsignificance.
Thiswasparticularlysoassocialpartnershiphadseemedsocounter-intuitiveat
a time when other states were retreating from or dispensing entirely with
“corporatism”,letalone,asinIreland,ambitiouslyextendingitsfunctions.
This thesis contends that the establishment of social partnership in 1987
represented an institutional rupture, and that the economic transformation
achievedinthe1990s“Irishmiracle”cannotbeexplainedwithoutunderstanding
the key role social partnership played in enabling it. It does not argue that
partnershipperse,oralone,causedtheeconomictake-off,butdoescontendthat
the twoprocesseswere inextricably interlinkedandmutually reinforcing,with
key elements of the latter enabled through the frameworks provided by the
former. It also argues that in the short period of 1987-91 virtually all major
330
economicandsocialpolicyaspectsofthelater“CelticTiger”wereinitiated,their
course,trajectory,andevenmanyoftheirdetails,clearlyestablished.Inarguing
this, thethesisrevealskeypolicy-makingeventsshaping initiativessuchas the
IFSCandurbanrenewalprogrammes,theinspiredstrategyadoptedtowardsthe
EU, aswell as key changes in sectoral policy towards indigenous industry, the
semi-states and FDI that drove the ultimate take-off. It also traces parallel
decisionstakenthatshapedthesocialstatethatemergedthroughpartnership.
The thesis, in theoretical terms, identifies the multiple streams in politics,
politicalandinterestrelations,historicalandculturalprecedents,andexogenous
and domestic factors that converged to enable the institutional departure in
economicandpoliticalpolicyofsocialpartnershipin1987-91.Itestablishesthe
primacy in that institutional rupture of political agency, i.e. the critical role of
dominantfiguresandleaders.Whiletheanalysisofpoliticsandpoliticalprocess
canbepursuedscientifically,politicsitself,andespeciallyleadership,is,asHans
Morgenthaufamouslyputit,“anart,andnotascience,andwhatisrequiredfor
itsmasteryisnottherationalityoftheengineerbutthewisdomandthemoral
strengthofthestatesman”.Thethesischartstheroleofpoliticalleadershipand
even statesmanship, alongside that of the “engineers” as well as structural
factors,inshapingthedepartureof1987-91.3
The thesis contends that Haughey’s role in the economic and social
transformation initiated in 1987-91 was comparable to that of Lemass in the
previousdecisiveparadigmshiftof1959-63.YetwhileLemass’sProgrammesfor
Expansion are accorded near iconic paradigm-changing status in the dominant
historical, political and economic literature, the transformativeProgramme for
National Recovery and Programme for Economic and Social Progress agreed
underHaughey’s leadership areunjustifiablypassedover as largely irrelevant.
The findings of this thesis challenge this, and in doing so also fundamentally
challengedominantnarrativesexplainingboth the “Haugheyera”and the Irish
economictake-off.
3 Morgenthau1946:introduction
331
Addenda
AppendixA:MembershipoftheCRC,1990 332
AppendixB:CRCattendanceunderthePNR,1987-90 333
AppendixC:Payroundsandpartypreference,1945-91 337
Acronymsandabbreviations 338
References:
Archivalsourcesandprivatepapers 344Interviewswithandinformationfromwitnesses 346Presssources 347Bibliography 348
332
AppendixA
MembershipoftheCentralReviewCommittee,1990(ThefollowingwasthemembershipperFeb.1990.Therewereonlyminorchangesduring1987-92,traceableintheattendancerecordinAppendixC)1
GovernmentDepartments
Chair: PádraigÓhUiginn,Sec.D/TaoiseachAgricultureandFood: ThomasArnold,ChiefEconomistFinance: NoelT.O’Gorman,Asst.SecretaryIndustryandCommerce: SeánDorgan,Asst.SecretaryLabour: KevinBonner,Asst.SecretaryTaoiseach: PaddyTeahon,Asst.Secretary ColmRegan,SpecialDevpt.ProjectsAdvisor
ConfederationofIrishIndustry(CII)LiamConnellan,DirectorGeneralConPower,DirectorofEconomicPolicyDr.AndrewO’Boyle,DirectorofIndustrialPolicyConfederationofIrishIndustry(CII)ThomasReynolds,ManagingDirectorGeorgeHennessy,EconomistFederationofIrishEmployers(FIE)JohnDunne,DirectorGeneralJamesO’Brian,DirectorIrishCo-Op.Org.Society(ICOS)JohnTyrrell,DirectorGeneralSéamusO’Donoghue,Director
IrishFarmersAssociation(IFA)AllanGillis,PresidentMichaelBerkery,GeneralSecretaryMancranaFeirme(MnF)LarryFallon,PresidentTonyGarahy,ChiefExecutive
IrishCongressofTradeUnions(ICTU)WilliamAttley,ICTUExec.&JointGen.Pres.,SIPTUEdmondBrowne,ICTUExec.&Pres.,SIPTUPhilFlynn,ICTUExec.&Gen.Sec.,LGPSUGerryQuigley,ICTUExec.&Gen.Sec.,INTOPeterCassells,GeneralSecretary,ICTUPatriciaO’Donovan,Asst.Gen.Sec.,ICTU
CRCSecretariatPatrickO’Sullivan,DepartmentoftheTaoiseachDerekDignam,DepartmentoftheTaoiseach
1 Membershipfrom:CentralReviewCommittee1990:25-6.Firstnameshavebeensubstitutedforinitials
intheoriginal
333
334
335
336
337
338
Acronymsandabbreviations
ACOT AnChomhairleOiliúnaTalamhaíochta[AgriculturalTrainingCouncil]AEU AmalgamatedEngineeringUnionAFF AnForasForbartha[ResearchandDevelopmentAgency]AFT AnForasTalúntais[LandsAgency]AGEMOU Automobile,GeneralEngineeringandMechanicalOperatives’UnionAHSC AssociationofHigherCivilServantsAIA Anglo-IrishAgreement(1985)ALCE AdultLiteracyandCommunityEducationSchemeAnCO AnChomhairleOiliúna[NationalTrainingCouncil]AR AnnualReportASTI AssociationofSecondaryTeachersinIrelandASTMS AssociationofScientific,TechnicalandManagerialStaffsATGWU AmalgamatedTransportandGeneralWorkers’UnionAUEW AmalgamatedUnionofEngineeringWorkersBATU BuildingandAlliedTradesUnionBFWAU BakeryandFoodWorkersAmalgamatedUnion B&ICO BritishandIrishCommunistOrganisationBJIC BritishJournalofIndustrialRelationsBSE BovineSpongiformEncephalopathy[“MadCowDisease”]C&A ConciliationandArbitrationServiceCAP CommonAgriculturalPolicy-- CommunityActionProgrammeCBF CórasBeostoicagusFeola[=IrishLivestockandMeatBoard]CBI ConfederationofBritishIndustryCHDDA CustomsHouseDocklandsDevelopmentAuthorityCIDB ConstructionIndustryDevelopmentBoardCIÉ CórasIomparÉireann(=IrishNationalTransportBoard)CIF ConstructionIndustryFederationCII ConfederationofIrishIndustryCIO CommitteeonIndustrialOrganisationCIU CongressofIrishUnionsCIU-CC CongressofIrishUnions–CentralCouncilCMS CommitteeofMinistersandSecretariesCORI ConferenceofMajorReligiousSuperiorsCPGB CommunistPartyofGreatBritainCOIG ChurchofIrelandGazetteCORI ConferenceofReligiousofIreland
339
CPA CombatPovertyAgencyCPI CommunistPartyofIrelandCPNI CommunistPartyNorthernIrelandCPSSU CivilandPublicServicesStaffUnionCRC CentralReviewCommitteeCSET ComhluchtSiuicreEireannTeo[=IrishSugarCo.]CTT AnCórasTráchtála[IrishExportBoard]CUI CommunicationsUnionofIrelandCYTP CommunityYouthTrainingProgrammeD/ DepartmentofDDA DublinDiocesanArchiveDEPD DepartmentofEconomicPlanningandDevelopmentDept.I&C DepartmentofIndustryandCommerceDept.T. DepartmentoftheTaoiseachDFA DepartmentofForeignAffairsDL DemocraticLeftDSP DemocraticSocialistPartyEBR ExchequerBorrowingRequirementEC EuropeanCouncil-- EuropeanCommunity-- ExecutiveCouncil(ICTU)EDD EconomicDevelopmentDivision(formerlyBranch),Dept.FinanceEEC EuropeanEconomicCommunityEETPU Electrical,Electronic,TelecommunicationsandPlumbingUnionEFTA EuropeanFreeTradeAssociationEIB EuropeanInvestmentBankELC EmployerLabourConferenceEMS EuropeanMonetarySystemEMU EuropeanMonetaryUnionEPA EnvironmentalProtectionAgencyERDF EuropeanRegionalDevelopmentFundERO EmploymentRegulationOrder(LabourCourt)ERP EuropeanRecoveryProgrammeERU EnvironmentalResearchUnit(Dept.oftheEnvironment)ESB ElectricitySupplyBoardESF EuropeanSocialFundESRI EconomicandSocialResearchInstituteETU ElectricalTradeUnionEU EuropeanUnion
340
FÁS AnForasÁiseannaSaothair(EmploymentandTrainingAuthority)FDI ForeignDirectInvestmentFF FiannaFáilFIM FederationofIrishManufacturersFIE FederationofIrishEmployersFII FederationofIrishIndustriesFT FoirTeoranta(IndustrialRescueAgency)FUE FederatedUnionofEmployersFUGE FederationUnionofGovernmentEmployeesFWUI FederatedWorkers’UnionofIreland(also:WUI)GDP GrossDomesticProductGIS GovernmentInformationServiceGLEN GayandLesbianEqualityNetworkGNP GrossNationalProductGS GeneralSecretaryGSO GovernmentStationaryOfficeH&WExec.HealthandWelfareDivisionalExecutive(LGPSU/IMPACT)IAOS IrishAgriculturalOrganisationSocietyIBOA IrishBankOfficials’AssociationICEU IrishCustomsandExciseUnionICMSA IrishCreameryMilkSuppliersAssociationICOS IrishCooperativeOrganisationSociety(FarmingCoops)ICTU IrishCongressofTradeUnionsICTU-ADC ICTU:ProceedingsoftheAnnualDelegateConferenceICTU-AR ICTU:AnnualReportoftheExecutiveCouncilICTU-EC ICTUExecutiveCouncilIDA IndustrialDevelopmentAuthority(IDAIreland)IEA InstituteofEuropeanAffairsIEC IrishEmployersConfederationIFA IrishFarmers’AssociationIFSC InternationalFinancialServicesCentreIFUT IrishFederationofUniversityTeachersIHSB IrishHospitalServicesBoardII TheIrishIndependentIIEA InstituteforInternationalandEuropeanAffairsIIRS InstituteforIndustrialResearchandStandardsILHS&A IrishLabourHistorySocietyLibraryandArchiveIMETU IrishMunicipalEmployeesTradeUnionIMI IrishManagementInstitute
341
IMPACT IrishMunicipal,ProfessionalandCivilTradeUnion INO IrishNursesOrganisationINOU IrishNationalOrganisationoftheUnemployedINP&DTU IrishNationalPaintersandDecoratorsTradeUnionINPC IrishNationalPetroleumCorporationInt. InterviewINUVGATAIrishNationalUnionofVintners,GrocersandAlliedTradesAssistantsINTO IrishNationalTeachersOrganisationIP TheIrishPressIPA InstitutionofPublicAdministrationIPC IrishProductivityCentreIPS IrishPoliticalStudiesIPU IrishPrintUnionIR IndustrialRelationsIRA IrishRepublicanArmyIRD IntegratedRuralDevelopmentIRNR IndustrialRelationsNewsReportIT TheIrishTimesITGWU IrishTransportandGeneralWorkers’UnionITUC IrishTradeUnionCongressJLC JointLabourCommittee(LabourCourt)JSSISI JournaloftheStatisticalandSocialInquirySocietyofIrelandLEADER LiaisonEntreActionsdeDéveloppementdel'ÉconomieRurale[=EC
ruraleconomicdevelopmentprogramme]LGExec. LocalGovernmentDivisionalExecutive(LGPSU/IMPACT)LGPSU LocalGovernmentandPublicServicesUnionLRC LabourRelationsCommission[ofLabourCourt]-- LawReformCommissionLS LimerickSocialistLTU Long-termunemploymentMNF MacranaFéirme(YoungFarmers’Movement)MPGWU MarinePortandGeneralWorkersUnionMSF Manufacturing,ScienceandFinanceUnionNABCO NationalAssociationofBuildingCo-operativesNADCORPNationalDevelopmentCorporationNAI NationalArchivesofIrelandNBU NationalBusmen’sUnionNCCAP NorthCityCentreCommunityActionProgrammeNDC NationalDevelopmentCorporation
342
NDP NationalDevelopmentPlanNEC NationalExecutiveCouncilNEETU NationalElectricalandEngineeringTradeUnion[?]NESC NationalEconomicandSocialCouncilNGA NationalGraphicalAssociationNIEC NationalIndustrialandEconomicCouncilNMW NationalMinimumWageNPB NationalPlanningBoardNUJ NationalUnionofJournalistsNUT&GW NationalUnionofTailorsandGarmentWorkersNWA NationalWageAgreementOECD OrganisationforEconomicCooperationandDevelopmentOEEC OrganisationforEuropeanEconomicCooperationOPW OfficeofPublicWorks[ofD/Finance]P2000 Partnership2000forInclusion,EmploymentandCompetitiveness.PAYE PayAsYouEarn(PayrollTax)PCW ProgrammeforCompetitivenessandWorkPDs ProgressiveDemocraticPartyPEP PoliticalandEconomicPlanning,LondonPESP ProgrammeforEconomicandSocialProgressPLAC Pro-LifeAmendmentCampaignPNR ProgrammeforNationalRecoveryPPF ProgrammeforProsperityandProgressPRSI PayRelatedSocialInsurancePSEU PublicServiceExecutivesUnionPSMD PublicServiceManagementandDevelopmentSection,Dept.LabourPTR Pupil-TeacherRatioPTWU PostalandTelecommunicationsWorkers’UnionPUTUO ProvisionalUnitedTradeUnionOrganisationRTC RegionalTechnicalCollegeRTÉ RadioTelefísÉireann(=IrishNationalradioandTelevision)SDLP SocialDemocraticandLabourPartySEA SingleEuropeanAct,1986SES SocialEmploymentSchemesSFADCo ShannonForeign…DevelopmentCompanySFWP SinnFéinTheWorkers’PartySIPTU Scientific,Industrial,andProfessionalTradeUnionSME SmallandMediumEnterprisesSPUC SocietyfortheProtectionoftheUnbornChild
343
SRTC SligoRegionalTechnicalCollegeSSBs State-SponsoredBodies/Semi-StateBodiesST TheSundayTribuneSWM SocialistWorkersMovement T2016 Towards2016.Ten-YearFrameworkSocialPartnershipAgreementTASS TransportSalariedStaffAssociationTCD TrinityCollegeDublinTFP TotalFactorProductivityTUC TradeUnionCongressTUI TradeUnionInformation(IrishCongressofTradeUnions)UCD UniversityCollegeDublinUCATT UnionofConstruction,AlliedTradesandTechniciansUCD UniversityCollegeDublinUNICE UnionofIndustrialandEmployers’ConfederationsofEuropeUPTCS UnionofProfessionalandTechnicalCivilServantsVEC VocationalEducationCommitteeVET VocationalEducationandTrainingVPTP VocationalPreparationandTrainingprogrammesVTOS VocationalTrainingOpportunitySchemeWCL WaterfordChrystalLtd.WG WorkingGroupWP TheWorkersParty(formerlySinnFéinandSFWP,subsequentlyDL)WUI Workers’UnionsofIreland(also:FWUI)
344
References
ARCHIVALSOURCESANDPRIVATEPAPERS
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charlesjhaughey.ie HaugheyfamilywebsitearchiveCookPapers PapersofSenanCook,formerlyATGWU,WaterfordGlassDCA DublinCityArchive:
CPI RecordsoftheCommunistPartyofIreland
DCU DublinCityUniversityArchive:B&ICO British&IrishCommunistCollection
DDA DublinDiocesanArchive:AB8-B PapersofArchbishopJ.C.McQuaid
DTA DepartmentoftheTaoiseachArchive1984-97:OHP PádraigÓhUiginnPrivatePapersS25150-A IFSC.Development.Feb.-June1987S25281-DtoEPNR.Development,1987 S25306 IFSC.Development.1987-91S25857-AtoZ9PNR-CRC,mtgs./secretariat,1987-90S25858-AtoZ9PNR,Follow-Up,Oct.1987–Jan.1991S25861-A PNR1987.Prep.:TalkswithFarmOrgs.S25862-A PNR1987.Rev./Mon.Cttee.ICTU.Dec.‘87S25862-D Govt.officialsmtg.withICTU,08.11.1989S25862-E Taoiseach-ICTUmtgs.,Nov.-Dec.‘89S25862-F Taoiseach-ICTUmtg.23.01.1990S25862-G Taoiseach-ICTUmtg.27.03.1990S25865-AtoC PNR.StateSponsoredBodiesS25870C Mtg.w.ICTU18/5/1988,27/5/88S25871 PNR1987.Prep.:Mtgs.Govt.-ICTUonPayS25874and-75PNR.Prep.:Mtgs.Govt-CII-FUE,1987S25899-AtoCPNR.CentralReviewCttee.-EECAspectS26122-AtoFCRC.Sub-GrpJobCreation1989S26462 CRCSub-GrpUnemploy.PersonsDisability
345
S26694 CRCWkngGrp/BeefIndustry,Sept-Dec.‘90
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EC MinutesofICTUExec.Councilmtgs.,1987-
GS- RecordsoftheGeneralSecretary:PA-1a PayAgrmt.,NationalPayTalks–Pay.
1987PA-1b PayAgrmt.,inc.SDC17/11/87PA-1d PayAgrmt.,PNR1987-90PN1-2 PartnershipNegotiations,1987-2000PESP-PWG PESPPay/ConditionsWrkng.Group,
1990ILHSArchive IrishLabourHistorySocietyLibraryandArchive:
O’Shannon CathalO’ShannonPapersCardiff PaddyCardiffPapersLGPSU- RecordsofLGPSUinc.mins.CEC,Exec.
Board,H&WandLGDiv.Execs.,1970-90IMPACTArchive ArchiveofIMPACTTradeUnion(nowFórsa):
CEC MeetingsofCentralExec.Cttee.1991-99NAI NationalArchivesofIreland:
CIU CouncilofIrishUnions,CentralCncl.,Boxes105-6PUTUO Prov.UnitedT.U.Org.,CentralCncl.,Boxes105-6ICTUEC ICTUExecutiveCouncilmtgs.,1959-87.(Boxes
106-11,G4/82/44-49–G4/84/1)TAOIS. RecordsofDepartmentoftheTaoiseach
NLI NationalLibraryofIrelandIQA IrishQueerArchiveO’Brien Papers,WilliamO’Brien,ITGWUgen.sec.1916-59
NESCArchive NationalEconomicandSocialCouncilArchive:Boxes1-14 Correspondence,records,Councilminutes(inc.
h/wnotes)andpapersofNESC,1976-99RoseArchive PapersofKieranRose,formerdirectorGLENSIPTUArchive SIPTUCollegeArchive:
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346
UCDArchive UniversityCollegeDublinArchiveP150 DeValeraPapersP175 WhitakerPapersP176 FiannaFáilPapersP180 TonyHeffernanPapers(Workers’Party)P311 Lemassinterviewsw.DermotRyan,1967-9
WikiLeaks www.wikileaks.org,onlinearchive:USdiplomaticcables,Ireland1966-2014.
YeatesPapers Records/interviewsofPádraigYeates,historian,onpartnership
INTERVIEWSWITHANDINFORMATIONFROMWITNESSES
[Noteoninterviews:Interviewsarereferencedinfootnotessimplyby“Int.”or“Interviewwith”,andinterviewees’names,withfirstname/initialwhereneeded.Someanonymousinterviewswereheldandtheseareidentifiedas“anon.”]
Ahern,Bertie Interviewof12.02.2016.FormerMinister,leaderofFiannaFáilandTaoiseach(1997-2008)
Attley,Bill Interviewof26.06.2015.FormerGen.Sec.,FWUI,SIPTU,ICTUPresident,memberofLabourParty,NESC,EESCetc.
Begg,David Interviewof…..2016.FormerGen.Sec.,CWUandICTU,ceoConcern,BoardmemberCentralBankandIrishTimesTrust
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Broderick,Larry StatementatICTUseminar,Nov.2016.Gen.Sec.,IBOA,FinancialServicesUnion,ICTUECmember
Bruton,John Telephoneconversationof.Formerleader,FineGael,Taoiseach(1994-96),EUAmbassadortotheUS
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Connolly,David Interviewof21.02.2018.FormermanagerDublinInnerCityPartnership,formerSIPTUorganiser
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Geraghty,Des Interviewof19.04.2013.FormerNat.Sec.ITGWU,PresidentSIPTUandICTU,Workers’PartyMEP
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madeavailabletotheauthor
347
InnerCityGroup Groupinterviewof21.02.2017withDavidConnolly,SeánieLambe,KathleenO'NeillandMickRafferty
McCarthy,DermotInterviewof28.05.2013.FormerSec.Gen.,D/Taoiseach,Sec.toGovt.,2001-12,Director(1991-01),Chair(2001-16)NESC
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348
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