irish model
TRANSCRIPT
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The Irish Experiment in Social Partnership
Paul Teague
Professor Paul Teague holds the Martin Naughton Chair at the School of Management andEconomics, Queen’s University, Belfast.
Paper presented at the International Institute of Labour Studies, Geneva on the 10th February2002. I would like to thank the Royal Irish Academy’s Third Sector Programme for financialsupport for this research.
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Introduction
MacDonalds, the fast food chain restaurant, has an outlet just off O’Connell Street, the main
thoroughfare, in Dublin. In 1987, it advertised part-time vacancies and within a day a huge
queue had formed composed of different strata of people all sharing the common desire of
getting employment. Fast-forward a decade and the scene is radically different. Traffic in
Dublin city centre is grid locked and the huge amount of construction activity alongside the
hustle and bustle of people are evidence of the new prosperity in the country. Even if we set
aside unhelpful metaphors such as the Celtic Tiger, it is difficult not to reach the conclusion
that the economic (and social) transformation experienced by the Republic of Ireland1 in the
nineties was nothing less than spectacular. The country has switched from being a basket case
to one that enjoys virtual full employment. A national framework for social partnership has
been in place during the economic upturn period. It would be excessive to argue that social
partnership was the main driver behind the economic revival. A multitude of factors,
positively interacting with each other, fuelled the high growth rates. At the same time, social
partnership has made an important contribution to economic transformation.
This paper assesses the Irish experience of social partnership. We pay particular attention to
what type of coordination was promoted by the various national social agreements. A number
of overlapping arguments are advanced. One is that social partnership in Ireland is a multi-
dimensional framework, some parts of which echo traditional ‘corporatist’ practices and
procedures while others are more innovative in character. We suggest that the social
partnership framework is not exactly a model of coordinated decentralised and is better
described as an open method of labour market co-ordination. A second argument is that while
1 The terms “Republic of Ireland is used in this instance. However throughout the paper the terms “Ireland” and“Irish” are referring to the Republic of Ireland and does not include Northern Ireland which has a much differentsystem of employment relations.
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the Irish experience of social partnership holds important lessons for other countries, claims
that it represents a new model of labour market governance should be treated with caution.
Irish social partnership is a combination of old and new employment relations practices
customised to suit domestic economic and political conditions. Third, whether social
partnership has fully secured its declared purpose of promoting a form of economic
development that combines competitiveness and fairness remains an open question.
The paper is organised as follows. The first section develops our meaning of co-ordinated
decentralisation and situates its relevance to Irish social partnership. Then a number of
contextual points are developed to set the scene for our discussion of social partnership. Next
the wage bargaining element to Irish social partnership is set out and evaluated. After this
assessment, the discussion turns to the theme of enterprise partnership and shows how this
concept has grown in importance in recent years. The conclusion brings together the various
arguments of the paper and makes some observations about the future of the social
partnership framework.
Co-ordinated decentralisation and the Irish employment relations system
A popular argument is that national employment relations systems in Europe are gravitating
in one way or other towards a coordinated decentralised model of employment relations. Co-
ordinated decentralisation is usually interpreted in two different ways in the literature. One
fairly narrow perspective is that it involves the ‘loosening’ of centralised or sector-level
collective bargaining systems. On this view, tightly integrated extra-firm bargains are no
longer sustainable in the face of a variety of economic and social transformations that are
encouraging greater economic decentralisation. The new competitive environment is no place
for tight institutional constraints. Organisations must be permitted to make emergency
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deviations from established industry or national pay rates. Alternatively the centralised
bargaining machinery must only produce framework agreements that set indicative guidelines
(as opposed to binding rules) for pay rises and improvements in working conditions. The
second view of co-ordinated decentralisation is more expansive in outlook. It is a story of
how the complementarity and fit between decentralised institutions can produce highly
coordinated labour markets. On this account, co-ordinated decentralisation gives rise to
systems of national institutional comparative advantage, leading to high grade, yet distinctive
forms, of economic performance (Soskice, 1999).
The evolving system of Irish social partnership approximates to neither perspective on co-
ordinated decentralisation. On the one hand, it amounts to more than defensive adaptations to
employment relations institutions to counter the dissolving effects of globalisation,
technological innovation and social change. On the other hand, Ireland does not possess
tightly integrated, complementary labour market institutions, which have given rise to a
specialised institutional pattern of comparative economic advantage. In the Irish context,
achieving close institutional fit between different parts of the employment relations system is
neither seen as possible nor particularly desirable. Addressing market (and institutional)
failures, the main motivate for seeking co-ordination in the first place, is still considered
important, but it is done by what we call the open method of co-ordination.
The theoretical inspiration behind this method is derived from a number of interrelated
sources. One is the ‘pragmatic’ school of political philosophy that was influential, mainly in
the USA, in the early part of this century. The writings of John Dewey are representative of
this tradition. According to Dewey most of what we know and conclusions we derive from
‘facts’ and ‘evidence’ are fallible and provisional and will be moderated in one way or
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another in light of experience. This standpoint leads him to argue for a ‘pragmatic’ approach
to public policy which emphasises adaptive problem-solving. Thus for Dewey
experimentalism, iteration and dynamic adjustment are the hallmarks of good governance.
Another overlapping influence is what political scientists call deliberative democracy which
stresses the importance of ‘collaboration’ and ‘reasonableness’ to economic and political
governance. This approach has an impressive historical lineage. Its imprint is unmistakable in
the writings of the founding fathers of American federalism such as Maddison and Jefferson.
Connections with Rousseau and the early Greek philosophers such as Plato are also evident.
Deliberative democracy sees governance largely about the identification and resolution of
policy problems through informed debate and preference-changing dialogue. The collection
and interpretation of evidence to monitor and evaluate the effectiveness of individual social
and economic programmes are also conferred key strategic importance by this approach.
Thus deliberative democracy focuses on how political and social institutions can promote
collaborative action that aims to mobilise effort and knowledge to advance widely supported
economic and social priorities. All in all, the two mainstays of the open method of co-
ordination are flexible-decision-making structures and consensus-building activities.
The open-method of coordination as developed in Ireland has five properties. First, the
governance of wage determination remains the core function of the social partnership
arrangement. This is the social glue that holds together the entire system. On carrying out this
function, Irish social partnership embodies the same tensions and dilemmas associated with
more established ‘corporatist’ methods of wage-setting. A second and more distinctive
attribute of Irish social partnership has been the emphasis placed on producing a procedural
consensus, as opposed to building complementarities, between employment relations actors
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to guide the search for solutions to identified problems. Complementarities between labour
market institutions smack too much of seeking a ‘static equilibrium’ within a social
partnership arrangement, causing them to be too fixed and rigid in what they do. A
procedural consensus, on the other hand, assumes a greater capacity on the part of institutions
to change over time so that they are more able to keep pace with fast-changing business and
labour market conditions.
The third feature of open coordination is that decision-making inside the social partnership
framework does not solely involve tough bargaining to reach an accommodation between
competing employment relations interests, but also ‘deliberative’ type interactions which rely
more on evidence-based and reasonable discussions to advance policy ideas. In old-fashioned
employment relations language, social partnership should be as much about integrative
bargaining as distributional bargaining. The motive behind this development is to challenge
adversarial attitudes and behaviour that have been longstanding features of Irish employment
relations and encourage cooperative forms of management and employee interactions. Thus
much is made of terms such as ‘shared understandings’ and joint action in social partnership
circles.
Fourth and notwithstanding the early observation about the centrality of the wage bargain,
open coordination has sought to widen the scope of social partnership agreements so that they
include public policies designed to promote social inclusion. In concrete institutional terms,
this has lead to ‘new’ social groups, such as those representing the unemployed, gaining entry
into the negotiating process to conclude social partnership deals. Fifth, open coordination
places less emphasis on traditional methods of labour market regulation that use constraining
rules to tie employers to particular employment practices. More prominence is given to
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designing ‘enabling’ or supportive public programmes that would advance the competitive
performance of organisations while ensuring that employees enjoy decent working
conditions.
This open method of coordination that guides Irish social partnership raises a wide range of
fascinating questions. For example, can civil associations be integrated into a social
partnership arrangement in a manner that confers upon them the same ‘public status’ enjoyed
by employers groups and trade unions? What type of social inclusion programmes have been
produced by the social partnership agreements and how do they relate to the pay deals? We
have not the space to address properly all these questions despite their obvious importance.
Our focus is primarily on the evolution of managerial-employee interactions under social
partnership. In addressing this matter we will be concerned will traditional employment
relations issues – how has the social partnership agreements effected labour market
outcomes, what has been the fate of the unions and so on. At the same time, we try to shed
light on the import of some of the proclaimed innovatory aspects to social partnership in
Ireland. In particular we assess whether social partnership is promoting new credible
commitments between Irish employers and trade unions and whether the social agreements
have balanced equity and efficiency in labour markets. But before we get on to these topics a
number of preliminary remarks are required to explain the dynamics of Irish employment
relations.
Management-Employment Interactions in Ireland: Some Preliminary Remarks
Adversarialism and voluntarism have been long time features of Irish employment systems.
To a large extent, this is an administrative legacy of British rule in Ireland. The organisation
and behaviour of employers and trade unions had a strong ‘British’ voluntarist feel to them.
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With regard to organised labour, its most pronounced feature was its fragmented structure.
Every occupational segment, no matter how small, seemed to have its own trade union
organisation. Moreover, in many cases, trade unions competed for similar type workers. A
second feature of trade union organisation was its decentralised orientation. On the one hand,
the authority of the Irish Congress of Trade Unions (ICTU), the federal body for organised
labour, was carefully circumscribed so that is main role was one of co-ordination. On the
other hand, local shop stewards, enjoyed considerable autonomy thereby ensuring that they
were frequently the pace setters on employment relations matters. Employer organisations
displayed many of the fragmented organisational characteristics of trade unions. In addition,
national employer organisations were relatively weak bodies with little capacity to drive an
employment relations agenda from the centre. Both employer and trade unions had a
predilection for decentralised employment relations relatively free from legal and government
interference. Both sides preferred to take their chance in a free collective bargaining tussle
rather than allow government regulate employment relations through legal procedures and
rules.
Before the current social partnership regime, which started in 1987, the Irish system of
collective bargaining system lacked order. The institutional level of collective bargaining
differed across the economy. In the public sector, bargaining was centralised: wage rates and
most terms of employment were set by national negotiations. Some local bargaining did take
place, but this was usually limited to matters such as working conditions, the availability of
overtime or changing job rules. In some spheres of the market economy, most notably in the
construction industry, sector level bargaining prevailed. Again, a certain amount of
supplementary enterprise bargaining took place. Overall, decentralised, enterprise-level
bargaining was the norm in the private sector. Various efforts were made to bring order to
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this fragmented bargaining system by promoting centralised incomes policies but without
much success (Hardiman 1988).
Unlike some ‘continental’ European countries, Ireland has no legal extension rule that
ensures that all ‘relevant’ workers are covered by a collective agreement. No reliable data
exists on collective bargaining coverage, but the consensus view is that sector-level
agreements had the biggest spread effect. Where enterprise bargaining was the norm, the
picture appears patchy: a going-rate of sorts emerged in some industries but was absent from
others. A minimum wage was only introduced in 2000. Before then low paid workers
received a certain level of protection from two wage fixing mechanisms, the Joint Labour
Councils (JLCs) and the Joint Industrial Councils (JICs). These two bodies established a floor
for pay and working conditions in certain low-wage sectors. Since the early eighties a notable
trend has been the steady growth of a non-union sector. An important driver behind this
development has been the arrival of new multinationals companies in the country,
particularly those from the USA. All in all, before the mid-eighties Irish employment
relations was voluntarist in character and the structure of collective bargaining fragmented.
Another important contextual point to note is the extreme openness of the Irish economy. In
its formative years, Irish Governments sought national self-sufficiency through a strong
programme of protectionism (Lee, 1989). This policy was a wholesale failure. In the fifties,
the political and administrative elite engineered a complete policy reversal and introduced a
regime of unfettered economic openness. Generous tax incentives were created to attract
foreign direct investment and many multinationals, particularly from the USA, took up the
offer. The result is that foreign companies now dominate the tradable sector in the country.
Economic openness was advanced by Irish entry into the European Union in 1973. Deeper
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economic integration with the rest of Europe exposed many parts of Irish indigenous industry
for the first time to international competition. The process of economic openness has
continuously increased ever since. As a result, Ireland is probably the most exposed EU
economy.
This has led to two powerful dynamics, one of constrained discretion and the other of
learning, guiding economic policy-making. Placing such an emphasis on attracting foreign
companies to advance industrial development has encouraged governments to act in a self-
restraining manner. For example, an unwritten assumption is that the labour market cannot be
regulated too much as it might discourage multinationals moving to the country. At the same
time, public policy has been designed to maximise the positive spillover effects that can be
derived from foreign direct investment. A case in point is the range of programmes developed
to build ‘backward linkages’ between foreign and domestically owned companies. This
policy mix of constrained discretion and learning has left an imprint on Irish employment
relations. On the one hand, the adversarial orientation of the ‘British’ model of industrial
relations sits uneasily with efforts to project Ireland as a warm home for multinationals. On
the other hand, the disorganised character of the employment relations system may hold back
the capacity of organisations to ‘appropriate’ new ways of doing things.
The Social Partnership Experiment
Context
While the above contextual remarks provide the necessary background to discussing the
evolution of social partnership, it is important to stress the contingent nature of the birth of
this arrangement. Social partnership owes a great deal to the election of a new Fianna Fail
government in 1987. The political hue of this political party is right-of-centre. Nevertheless,
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it was strongly committed to tackling the dire economic and social situation prevailing in the
country through a programme of social consensus (Manseragh 1986: Fianna Fail, 1987). A
national pay deal was seen as the centrepiece of this economic strategy. Both trade unions
and employers were supportive of this move towards a centralised wage agreement. For the
trade union movement, national pay determination was a way of avoiding a Thatcher-like
offensive, which was causing big damage to organised labour in the UK. For employers,
centralised bargaining held out the promise of stable employment relations. Moreover, they
did not want to be seen standing apart from a ‘national effort’ to pull the country back from
the economic abyss2 (MacSharry, 2000). In addition to dealing with the country’s domestic
economic difficulties, the social partners and political parties were of the view that a
consensus-based employment relations system would better place the country to become a
member of a European monetary union. (Teague, 1995; MacSharry, 2000). Thus a variety of
pressing internal and external economic pressures pushed employment relations actors
towards national wage setting.
Altogether there have been five separate national agreements. The process got under way in
October 1987 with the Programme for National Recovery (PNR). The PNR was followed by
further agreements in 1990 (Programme for Economic and Social Progress- PESP), 1993
(Programme for Competitiveness and Work- PCW), 1996 (Partnership 2000) and 2000
(Programme for Prosperity and Fairness- PPF). The first three agreements more or less
replicated centralised wage agreements as practised elsewhere. The key representatives of
employers and trade unions- the Irish Congress of Trade Unions, the Federated Union of
Employers, the Construction Industry Federation, the Confederation of Irish Industry- and
2 This was a dominant theme throughout the country at the time to the extent that the period also saw a bipartiteapproach to economic policy from the two main political parties.
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four agricultural organisations (three for the PNR in 1987), negotiated the terms of these
agreements.
After the negotiation of the PCW in 1993, the institutional complexion of social partnership
changed. In particular, a fourth community pillar was introduced into the social partnership
framework. The bodies included the National Women’s Council of Ireland, the Irish National
Organisation for the Unemployed (INOU) and the Council of Religions in Ireland (CORI).
CORI and the INOU are highly vocal on the theme of social exclusion. Nominally these
groups participated with full social partner status in the negotiations that produced in 1996
the fourth social agreement, Partnership 2000. But the trade unions, employers and
government negotiated the core element of the agreement, the pay deal, alone.
The civil associations had greatest influence on the ‘social wage’ component of the national
agreement. Like other ‘corporatist’ wage deals in Europe, the Irish government make a
number of commitments on public expenditure and taxation to embed the pay deals
concluded by the employers and unions. In the literature, these commitments are referred to
as the corporatist quid pro quo. A feature of these commitments is that the design,
implementation and evaluation of the public expenditure commitments usually remain an ‘in-
house’ concern of the relevant government department. Bringing civil associations into the
social partnership framework opened up this relatively closed form of public policy-making.
A new deliberative form of policy-making was introduced allowing civic associations a more
active role in the decision-making cycle. The hope was that these associations would improve
the quality of public programmes as they would possess greater knowledge of the various
dimensions to a particular social problem. (O’Donnell and Thomas, 1998). Unfortunately no
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convincing research has been completed which assesses whether this initial expectation has
actually been realised.
Wage Bargaining and Irish Social Partnership
The Terms of the Pay Deals
Since 1987 wage bargaining has been the mainstay of the various social partnership
agreements. Table 1 sets out the basic terms of the wage settlement contained in each
agreement. It shows that all five agreements have contained relatively low increases to
nominal wages in Ireland. A feature of all the wage deals has been the link between the pay
awards and projected economic growth rates. In addition to these basic terms, three of the
agreements, the PESP, Partnership 2000 and the PPF, included local bargaining clauses.
Under the PESP and Partnership 2000, these local bargaining clauses were capped: a ceiling
was placed on what pay increases an employer could give at organisational level over and
above the pay award set out in the national agreement. A hallmark of the PPF, the latest
agreement, is a significant move towards pay decentralisation. No cap was placed on the level
of pay increases that an enterprise could give to its workers: they only organising principle
laid down was that such increases should reflect productivity improvements.
Figure 1 suggests that some wage drift, particularly with regard to the manufacturing sector,
occurred during the life span of the various agreements, but it never got out of control. Since
1990 the correlation between the pay increases recommended in the agreements and actual
manufacturing wages increases are relatively close. The two years that witnessed the greatest
degree of drift were 1996 (the final year of the PCW) and 1999 (the final year of Partnership
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2000). However these figures should be read with caution as official Irish wage statistics are
not always accurate.
The various pay agreements have delivered real product wage moderation. Figure 2 shows
that for most of the nineties productivity increases outstripped wage rises, causing unit labour
costs to fall. This is supporting evidence for those who claim that the social partnership
agreements helped produce a super-competitive economy in Ireland. Falling unit labour costs
amounts to a real depreciation of the Irish wage system vis-à-vis other economies,
particularly those of the EU, thus allowing the country to steal a march on their rivals. At the
same time, real wages have increased for Irish workers as shown in Figure 3. Although the
figure shows that some categories of workers have fared better than others during the lifetime
of the partnerships nearly all groups of workers have experienced substantial improvements
in their living standards. All in all, under social partnership wages have been increasing
above inflation, allowing real take-home-pay to improve, but at the same time have not been
keeping pace with productivity improvements, thereby contributing positively to economic
competitiveness.
A debate has flared in recent years about the distributional effects of the pay agreements.
There are two overlapping parts to this argument. One is that while the share of profits in
GDP has increased significantly, the wage share has fallen. Figure 4 plots the course of the
wage share in GDP for Ireland and UK as well as for the EU as a whole. The picture that
emerges is that since the start of 1987 the general trend has been for the share of wages in
national income to decline across Europe. But the fall appears to have been sharper in Ireland
than elsewhere, particularly since the mid-nineties. Even the UK, one of the homes of neo-
liberalism, has not experience such a marked shift from wages to profits. These figures
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should be treated with caution. Ireland has a low rate of corporation tax for multinationals -
the lowest in the EU. Some foreign companies with operations in the country tend to register
profits in Ireland but shortly afterwards repatriate them to the ‘home’ country. Transfer
pricing policies of this kind inflate GDP figures and thus distort the proportion of wages (and
profits) in this set of national account calculations. Nevertheless, even allowing for these
shadowy accounting practices, the trend tarnishes the claim that the social partnership regime
is producing an equitable distribution of the fruits of economic growth. Workers have
experienced real improvements in living standards during the lifetime of the present
agreements, but employers appeared to have fared better. This should be a cause for concern.
The second part of the argument is that wage inequality has increased under social
partnership. It is widely accepted that income inequality increased during the 1990’s, but this
is also true for wage inequality (Barret et al, 1999; Cantillon et al 2001). A popular argument
normally made about ‘corporatist’ wage bargaining systems is that they insert a floor and a
ceiling into pay structures, thereby compressing wage differentials. The national pay deals
appear not to have produced such solidaristic wage outcomes. This trend has been used to
support the argument that social partnership as practised in Ireland is essentially neo-liberal
in character (Allen, 2000). This argument is an overstatement. The Irish labour market has
not followed an ‘Americanised’ path characterised by impressive job generation performance
alongside stagnant real wage growth for many low-income workers. As figure 3 shows most
workers have experienced an appreciable increase in wages: there has been a rising tide of
economic prosperity.
Nevertheless, rising wage inequality is a troublesome development, but whether it is regarded
as one in policy circles is a moot point. This observation is an important point for it touches
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upon a critical debate on the economic and social content of ‘Third Way’ European social
democracy. Supporters of this approach are coy on the matter of wage inequality, but there is
a suspicion that they regard it as acceptable for some workers to receive higher wages than
others, provided that everybody is progressing up the wage curve. Increased wage
differentials between employees is interpreted as a sign of the new diversity in occupational
structures brought about by the growth of service industries and an indication that
meritocracy and effort are being rewarded in the economy. Not everybody is happy with this
approach: social democrats of a more traditional orientation suggest that to accept increases
in wage inequality is to abandon commitments to social justice. This debate is likely to
continue for some time in Ireland and indeed in other EU countries. Our assessment of this
debate in the Irish context is that the increase in wage inequality is a matter of concern as it
threatens the survival of the entire social partnership framework.
Social Partnership and Labour Market Performance
At the start of the present round of social partnership, the Irish economy faced two major
problems: high public debt and high unemployment. In 1987, public debt stood at 118.2% of
nominal GDP and unemployment was at 16.8%. Pursuing traditional Keynesian expansionary
policies in the seventies was the main reason why the country got into an economic mess. Of
the two problems identified, the poor fiscal state of the country was seen as the priority for
remedial action. Over a fifteen-year period, due first to an austere stabilisation programme
and then a prolonged period of revenue enhancing economic growth, Ireland has paid its
public sector overdraft. In fact, Ireland was able to enter EMU in 1998 with a superior fiscal
performance than any of the other participating countries with the exception of Luxembourg.
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When social partnership was initiated in 1987, unemployment stood at 16.8%. In addition,
emigration was running at a frightening high level as people left the country to secure a better
life elsewhere. This situation has been dramatically turned around. In 2002, unemployment
stood at 4.0%, half the EU average. Moreover, to relieve labour market shortages, Ireland has
started ‘importing’ labour to the extent that immigration now exceeds emigration. Behind this
big fall in joblessness has been a hugely impressive employment generation machine. To the
extent there has been a miracle of any description in the country it has been on the
employment front. As Figures 5 and 6 show, since 1987 Ireland has been one of the EU’s star
performers in terms of job creation. Market or business related services have been the main
source of the new jobs.
Ebbinghaus and Hassel (2000) argue that a motivation behind many of the recent social pacts
in Europe has been to bring about welfare state reform. Countries like Germany and Italy are
seen as financially over-committed in terms of pension provision and other social benefits. As
a result, social partnership agreements are being used to reduce the fiscal demands made by
these social protection systems. But this has not been an issue in the Irish context as the
country never really developed a Swedish or German type welfare system. Rather a feature of
successive national agreements has been a trade-off between wage moderation and tax
reductions. The focus on tax cuts has been designed to improve the take home pay of
workers. In 1987, the lower tax rate was 35% whereas those in the upper tax bracket paid
48%. In 2001 these figures had dropped to 20% and 42% respectively. At the end of 2002
those earning the national minimum wage will have been taken out of the tax net completely.
One argument gaining ground is that too much emphasis has been placed on tax reductions
and in the future social and health provision need expansion by increasing public expenditure.
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Employment Relations under Social Partnership
The fate of the trade unions
Since 1980, the trade union movement in the Republic of Ireland has undergone large-scale
reorganisation due mainly to mergers. Between 1981 and 1999, the number of trade unions
fell from 86 to 46. A merger in 1989 created Ireland’s biggest union called SIPTU. In 1999
this union had a total membership of 226,659, which amounted to just over 45% of the
membership of trade unions that hold negotiating licences. The top three unions, SIPTU
IMPACT and MANDATE, have 59% of total trade union membership while the ten largest
unions make up 86.4% of total union membership. Figure 7 shows that the absolute numbers
of those in employment and belonging to a trade union have increased over the past few
decades. Yet when we turn to trade union density levels the figure are less comforting for
organised labour. Since the mid 1980s, Irish trade union density levels, as demonstrated in
figure 8, have been declining, from a high of nearly 48% in 1983 to just over 35% in 1999. If
the period of social partnership is specifically examined, trade union density has fallen from
43.8% to 35%.
Although social partnership cannot be said to have been disadvantageous to organised labour
it clearly has not been as supportive as some would have wished. Two different views exist
about the cause of the decline in trade union density. One view is that the decline is due to
employer union avoidance and substitution strategies (Gunnigle, 2000: Gunnigle, O’Sullivan
and Kinsella, 2001). The other view is that trade union membership has simply not been able
to keep pace with the quite spectacular increases in employment. Trade union recognition
has been a hot issue during the social partnership period. One argument is that trade union
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recognition procedures are too weak and favour employers. Ireland’s heavily reliance on
inward investment is seen as source of this problem (Gunnigle, 2000). Many trade union
activists point to a deep paradox in successive governments’ employment relations strategies.
On the one hand, governments have promoted social partnership, thereby giving trade unions
unprecedented access to national economic and social decision-making. On the other hand,
they have adopted policies that have made it difficult for trade unions to recruit at company
level. All in all, the social partnership years have not been entirely blissful for trade union
organisation
The role of employers
Important changes have occurred to the organisational structure and role of employer bodies
under national social partnership. Traditionally, employer interests have been represented by
a wide number of bodies. But as a result of a number of mergers and reorganisation one
strong body, known as the Irish Business and Employers Confederation (IBEC), has emerged
as the effective voice for employers. IBEC is an effective organisation. First of all, it has
carried out efficiently the ‘encompassing’ functions normally associated with employer
groups in a corporatist wage regime: it has policed the various national pay deals very
effectively. Second, it is a highly disciplined organisation. Rarely, do you find internal
disagreements spilling out into the public arena. In fact, it is very difficult to gain an insight
into the internal debates and workings of IBEC. Third, the organisation is highly pro-active
and forward-looking in developing a public policy agenda that coincides with the interests of
its members. Thus, for instance, IBEC has been willing participants in public programmes to
advance enterprise partnerships as it has calculated that such action will reduce the demand
for legislation on employee involvement. Overall, IBEC has played an important in
sustaining the current social partnership regime.
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Employment disputes
Social partnership has produced a stable employment relations environment. Figure 9 outlines
the number of days lost due to industrial action since 1960. As can be seen, the period since
1998 has been by far the most stable since 1960. When the current phase of social partnership
is compared with the previous round of centralised agreements in the seventies and early
eighties, we find that that the current regime has experienced fewer employment disputes.
Actually the most peaceful years during the early regime (1971, 1972,1973 and 1975) just
about compare with the worst years of the current phase of social partnership (1990 and
1999). Admittedly, such comparisons are crude, nevertheless it gives some indicator why
there is such strong support for the continuation of social partnership in Government. This
story of high stability under the recent social partnership agreements is corroborated by the
figures on the numbers of days per year lost due to employment actions over the past 4
decades. Two features stand out from the data provided in Table 2. First, the decade with the
highest number of annual days lost due to industrial action was the 1970s. Second, the 1990s
is the best decade experiencing a lower number of annual days lost due to industrial action
than any of the three previous decade: for example the average loss of days was just over
100,000 in the 1990’s, compared to over half a million days during the 1970s.
A mixed picture emerges from this overview of employment relations outcomes during the
recent period of Irish social partnership. The scorecard reads full marks on employment
performance but could do better on the equity front. One of the consequences of these
ambiguous employment relations trends is that ample ammunition has been provided for
those eager to develop either excessively optimistic or pessimistic accounts of Irish social
partnership. Those who promote the optimistic view point to remarkable employment growth
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rates and the durability of the national partnership deals (Sweeney, 1999). Others seeking to
paint a darker portrait invariably focus on the falling share of wages in national income and
rising income inequality (Allen, 2000). Against the evidence set out in this paper both
positions seem too partial. It is simply inappropriate to write-off Irish employment relations
as neo-liberalism disguised by a social partnership façade or to promote it as a model that
other countries should rush head-long to emulate. Although not particularly flamboyant, the
most accurate conclusion lies somewhere between these two extremes.
Promoting Social Partnership at Enterprise Level
The first two national agreements were mainly concerned with macro economic matters such
as securing fiscal consolidation and advancing Irish entry into European monetary union. By
the mid-nineties, however, trade unions had become increasingly anxious that a narrow focus
on macro-economic targets was leading to the neglect of social partnership at enterprise-level
(NESC, 1996: Roche, 1997: Teague, 1995). To address this worry, the third agreement,
Partnership 2000, established a framework for the fostering of enterprise partnerships. A
rather loose and open-ended definition was used to foster such arrangements. The Agreement
stated that enterprise partnership should be viewed as
“an active relationship based on recognition of a common interest to secure thecompetitiveness, viability and prosperity of the enterprise. It involves a continuingcommitment to improvements in quality and efficiency; and the acceptance byemployers of employees as stakeholders with rights and interests to be considered inthe context of major decisions affecting their employment.
Partnership involves common ownership of the resolution of challenges, involving thedirect participation of employees/ representatives and an investment in their training,development and working environment”. (Government of Ireland, 1996:62)
The Programme for Prosperity and Fairness built on this definition by identifying nine areas
as being “particularly relevant” to the partnership approach. These are
22
• Competitiveness, adaptability, flexibility and innovation in the enterprise
• Better systems of work organisation
• Training and development which is linked to lifelong learning
• Measures to promote equality of opportunity and family friendly working
arrangements
• Problem solving and conflict avoidance
• Occupational safety, health and safety issues including physical environment
of partnership and improvement
• Information and consultation
• Time off, facilities and training for staff representatives: and
• Financial forms of involvement.
This 'open' approach to enterprise partnerships rests on two key assumptions. One is that such
arrangements cannot be imposed, legally or otherwise, on organisations but have to be
‘owned’ by the various constituencies of the enterprise. The other is that public policy has an
important role in providing managers and employees with knowledge on how to embed
partnership activity inside organisations. The public support framework, which is largely
organised by the National Centre for Partnership and Performance, has four overlapping
components. One is the sponsorship and co-ordination of learning networks so that
companies setting up partnerships can connect with one another and share experiences. These
networks are closely monitored so that more useful diagnostic instruments and training
modules can be developed. The second is the promotion of research and dissemination. A
variety of focused research projects have been sponsored to deepen understanding of the
partnership process in action – the extent to which employee and management attitudes
change with the introduction of collaborative employment practices for example.
23
A third function is building verification and assurance focal points outside the organisation.
Very often employees and managers inside organisations seek assurance from external
agents, usually national trade unions and employer associations, that meaningful value-added
activities will emerge from developing an enterprise partnership. To facilitate this demand,
IBEC and ICTU, the national employer and trade union bodies respectively, have developed
a number of important projects and advisory services. These initiatives are important as they
guarantee organised labour a central role in the supportive framework for enterprise
partnerships. In addition, the National Centre for Partnership and Performance, also acts as an
external verifier. In essence, this role involves the Centre giving its imprimatur to various
training agencies and experimental actions which organisations and trade unions regard as a
quality standard. The fourth function can be called experimental public policy. For the most
part, this involves the NCPP co-ordinating new joint action by different arms of government
and semi-public bodies to advance partnership at enterprise level.
It cannot be claimed that enterprise partnerships have spread widely across the Irish
economy. At the same time, interviews with trade unions, employers and public officials who
are actively involved on this matter as well as some selective case-studies suggest that the
enterprise partnerships that have been established approximate to the following institutional
design. It is important to stress that this design operates as a referential which employment
relations actors touch base with when setting up partnerships.
-Figure Ten about here-
A number of the institutional features of enterprise partnership are worthy of more detailed
comment. Enterprise partnership is normally set up by an agreement involving management
24
and employees (normally represented by a trade union). This agreement sets down the
institutional character of the envisaged arrangement. It is normally signed only after
management and unions have carried out a lengthy diagnostic review. A diagnostic review is
a set of procedures which organisations conduct to give management and unions a better
understanding of the type of partnership agreement an organisation can 'hold' in prevailing
commercial circumstances. Furthermore, it is an opportunity for employees and management
to forge a consensus about the shape and character of a prospective partnership deal. A
partnership agreement is less an elaborated model of how the organisation should be and
more the institutional expression of the consensus reached by management and employees
during the diagnosis review. At the same time an agreement usually sets up a company-wide
partnership forum or committee. Invariably, the partnership forum established is an
overarching, open-ended, arrangement charged with the responsibility of initiating, co-
ordinating and reviewing partnership activity.
To advance these objectives, partnership committees frequently establish sub-groups or
projects. Case-study evidence suggests that well functioning sub-groups are the engine room
of a successful enterprise partnership. Project groups work on matters such as reforming the
company pension scheme, devising a new financial participation arrangement, and
establishing the ground rules for the introduction of new employment practices such as team-
working. By working on specific tasks, or attempting to invent solutions to agreed problems,
these bodies drive purposeful joint action between management and employers. Sub-groups,
which encourage management and employees to search for superior ways of doing things,
make enterprise partnership simultaneously process and task driven: the boundary between
process and outcome becomes blurred. Enterprise partnership is thus a distinctive trust-
creating institution in that the search for greater fairness and co-operation is placed in the
25
context of working life. It is at least tacit recognition that matters relating to fairness at work
can only be agreed, analysed and changed in the context of addressing concrete problems.
The operating assumption is that a shared understanding between management and workers
can fulfil its promise only if it can be translated into practices that guide actual behaviour.
The emerging ‘model’ of enterprise partnership stands apart from, but nevertheless is
associated with, both the ‘works council’ and ‘HRM’ approaches to employee involvement
and participation. These two established approaches use distinctive and contrasting practices
and procedures to organise the employment relationship. First, work councils are
representative and indirect forms of worker participation, and thus epitomise collective
employment relations. In contrast, HRM approaches espouse decentralised forms of
involvement that tend to focus on the individual. Thus it lays greater stress on direct forms of
involvement. Second, whereas work councils cover strategic matters as well as operational
and implementation matters, HRM tends to concentrate on the last two matters. Third, an
important function of work councils, at the least in the German model, is to oversee the
implementation of substantive and procedural rights proscribed in German labour law
whereas the HRM model is about solving problems that arise in the day-to-day running of the
business or productive system. Fourth, work councils are mandatory institutions in the sense
that managers are obliged by law to follow a proscribed list of rules and procedures when
consulting with employees. HRM, on the other hand, is an instrument of management which
leaves the depth and scope of any employee involvement scheme more or less in the hands of
the managerial team. Fifth, the ‘value system’ underpinning works councils is integrative
bargaining whereas HRM is heavily orientated towards ‘empowerment’ and performance (see
Muller-Jentsch 1995).
26
The ‘Irish’ version of enterprise partnership contains elements of each approach, but cannot
be considered a full-blown version of either. It is a ‘borderland’ institution that interfaces
with both approaches. It is fully compatible with new employment practices such as direct
participation or team-working, total quality management and job rotation. At the same time,
there is a collective and strategic dimension to its activities. Thus, for example, projects or
sub groups of the enterprise partnership have the potential to deal with matters that are once
removed from the immediate operation of the business and have far-reaching implications for
the organisation as a whole – a new pension scheme or a new system of work-sharing for
example. To properly design and introduce such work innovations requires managers to share
information of a strategic kind with employees. All in all, the value system of the Irish
version of enterprise partnerships is a hybrid of the work councils and HRM approaches as it
seeks improved organisational performance and competitiveness through procedures and
relationships closely associated with integrated bargaining. If this model of enterprise
partnerships is implemented in full then the distinction is blurred: between direct and indirect
participation; between operational and strategic matters; between expertise and authority;
between process and outcomes; between bargaining and co-operation.
The case-study evidence suggests that few partnerships have all these attributes. This is
hardly surprising as many studies find a gap between the stylised model of a workplace
innovation and the configuration of the arrangement actually introduced –how many fully
autonomous teams have been introduced by organisations? A number of other findings
important findings emerge from the (patchy) evidence. First of all, enterprise partnerships
still face a big ‘buy-in’ problem. On the one hand, managers are reluctant to engage with
social partnership at organisational level as they fear it might undermine their authority. On
the other hand, trade unionists on the shopfoor fear that workplace partnership might weaken
27
collective bargaining.
Second, partnerships are mostly found in organisations where there has been a history of
employment relations difficulties: partnerships are used to improve manager-employee
interactions in cases where they have become embittered. This is very worthwhile activity,
but it does mean that the employment practices associated with the partnership arrangement
tend not to be particularly innovative. Third, most of the enterprise partnerships focus on
operational matters and only intermittently deal with matters of a strategic kind. Fourth,
enterprise partnerships that have established meaningful projects sometimes do not y connect
them properly with the wider employee involvement system. As a result, the projects tend to
become a working party consisting of an elite group of employees and managers albeit doing
a worthwhile task.
Thus advancing social partnership at organisational level has not been problem free. The
negative externality associated with promoting cooperative management-employee
interactions seems to at play. Freeman and Lazear (1995) suggest that employees and
employers may not engage in mutually advantageous co-operative interactions even if it is in
the self-interest of both parties to do so. This is because a range of negative externalities,
mostly in the form of information asymmetries, prevents the creation of adequate incentives
to install institutionalised forms of employee involvement. On the one hand, management
will vest them with too little power. On the other hand, workers will demand more power
than is considered optimal by managers. As a result a type of market failure arises that is
difficult to reduce. Highlighting the problems that have emerged with advancing enterprise
partnership is not a side-swipe at either the national agreements or at efforts at promoting this
organisational model. But it does suggest that there is no automatic correspondence between
28
the emergence of shared understandings about social partnership at national level and the
diffusion of the same principles at organisational level. The lesson is that only through
sustained public support will a new consensus emerge between managers and employees about
cooperation at the workplace.
Conclusions
The evolving system of Irish social partnership bears some resemblance to traditional
continental European neo-corporatism, and indeed earlier tripartite agreements in Ireland.
The narrow process of centralised wage bargaining is not particularly innovative. For its
success, it has relied on traditional features of corporatist wage bargaining, most notably the
ability of emcompassing trade union and employer organisations being able to effectively
police the negotiated pay deals. At the same time the social partnership framework stands
apart from corporatism of the past both in terms of content and process. We called this
approach the open-method of co-ordination. The open method of co-ordination is distinctive.
It is not like most HRM models which seeks to internalise the governance of the employment
relationship inside an organisation. HRM assumes that there is little need for an active public
policy regime to help shape and guide enterprise-level employment practices. The open
method of co-ordination emphasises that a public framework for employment relations is
essential not least to address labour market (and institutional) failures. But it departs from the
traditional social democratic model of labour co-ordination, which relies heavily on
constraining laws and procedures. Open co-ordination emphasises support structures over
constraining rule, pragmatic problem solving over distributional bargaining; social consensus
over adversarial mobilisation.
29
Despite its innovatory character, the open-method of coordination has not lead to an easy-to-
call pattern of enployment relations development in Ireland. To be begin with, it has proven
all but impossible to identify the exact contribution social partnership has made to the high
economic growth rates experienced by the country since the mid-nineties. Second, although
real wages along with general living standards have risen significantly and the growth in jobs
has been nothing short of spectacular, the undeniable increase in income inequality is a
disturbing trend. Third, even though trade union membership is at its highest ever level, the
continuing fall in density rates must be a serious cause for concern for organised labour.
Fourth, although great stress is made of building shared understandings and cooperative
relations between management and unions there is ample evidence to suggest that a ‘them-
and-us’ attitude still prevails in the employment relations system. Thus Irish employment
relations is characterised by old and new procedures, benign and malign features sitting side
by side with one another.
One key lesson from the Irish experience is that it is hard to reconcile social partnership and
economic openness. For instance, there have been occasions when the government has been
obliged to put the country’s image as an attractive site for inward investment before social
partnership considerations. For example, the Irish Government opposed the adoption of the
recent EU Information and Consultation Directive even though it sees itself as an active
supporter of enterprise partnerships. The Government wishing to signal to US multinationals
that it will not unilaterally pursue policies that excessively intrude on their operations in
Ireland explains this apparent paradox. Economic openness places constraints on the
regulatory dimension to social partnership. Another uncomfortable lesson from the Irish
experience has implications for the unfolding debate about ‘third-way’ employment relations
within European social democracy. The ‘open-method’ of labour market co-ordination may
30
create superior policy-making procedures, but in themselves these may not check adverse
employment relations outcomes.
Squall clouds are beginning to gather over Irish social partnership. The problem of
institutional maturity that was a plight on more orthodox forms of corporatism in the past is
beginning to raise its head. Creating and sustaining co-operative employment relations
systems is an energy-sapping procedure and after a time a certain fatigue sets in. Key players
lose their innovative dynamic while others get restless with what have become established
arrangements. A further problem, looming ever larger, is whether the current pattern of wage-
setting is compatible with European monetary union. The argument is that efforts to more or
less fix pay increases over a two or three year period may out of step with the need for greater
labour market flexibility inside Euroland. Thus social partnership in Ireland is facing multiple
pressures and it is not at all certain that current arrangements will survive. But then again it
may get another lease of life by reinventing itself once again.
31
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Barrett, A, Callan, T and Nolan, B (1999) “Rising Wage Inequality, Returns to Education andLabour Market Institutions: Evidence from Ireland” British Journal of Industrial RelationsVol 37:1 p 77-100
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Freeman, R. B. and Lazear. E., P. (1995), “An Economic Analysis of Works’ Councils.” inJ Rogers and W., Streeck (eds), Works Councils: Consultation, Representation, andCooperation in Industrial Relations, Chicago: University of Chicago Press
Geary, J (1999) “The new workplace: change at work in Ireland” International Journal ofHuman Resource Management Vol, 10(5) p 870-890
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Gunnigle, P (1998) “More Rhetoric than Reality: Industrial Relations Partnerships in Ireland”Economic and Social Review 28:4:179-200
Gunnigle, P (2000) “Paradox in policy and practice: Trade unions and public policy in theRepublic of Ireland”; IBAR, Vol. 21: 2; p 39-54
Gunnigle, P, O’Sullivan, M and Kinsella, M (2001) “Organised Labour in the New Economy:Trade Unions and Public Policy in the Republic of Ireland” Paper Presented at the IrishAcademy of Management Conference, Derry
Hardiman (1988) Pay Politics and Economic performance in Ireland, 1970-1987 Oxford:Clarendon press.
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`Lee (1989) Ireland 1912-1985: Politics and Society Cambridge: Cambridge University Press
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Mjøset (1992) The Irish Economy in a Comparative Institutional Perspective NESC Reportno. 93: Dublin: NESC
NESC (1986) A Strategy for Development 1986-1990 NESC Report no.83: Dublin
NESC (1996) Strategy into the 21st Century NESC Report no. 98: Dublin
NESF (1997) A framework for Partnership: Enriching Strategic consensus throughParticipation Dublin: National Economic and Social Forum
O’Donnell, R and Thomas, D (1998) “Partnership and Policy Making” in Healy, S andReynolds, B Social Policy in Ireland, Dublin: Oak Tree Press
O’Donnell, R and Teague, P (2000) Partnership at work in Ireland: An evaluation ofProgress under Partnership 2000 Dublin: Department of An Taoiseach.
Roche, W (1997) “Pay Determination, the state and the politics of Industrial relations” inMurphy T. V. and Roche W. K.(eds) Irish industrial Relations in Practice: Revised andExpanded Edition, Dublin: Oak Tree Press.
Soskice, D 1999: Divergent Production Regimes. Coordinated and Uncoordinated MarketEconomies in the 1980s and 1990s. In: Herbert Kitschelt, Peter Lange, Gary Marks and JohnD. Stephens, eds., Continuity and Change in Contemporary Capitalism. Cambridge:Cambridge University Press, 101-134.
Sweeney, P (1999) The Celtic Tiger: Ireland’s Economic Miracle Explained” Dublin: OakTree Press.
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Walton, R and McKersie, R (1965) A Behavioral theory of labor negotiations : an analysis ofa social interact. New York and London : McGraw-Hill
33
Tables and Figures
Table 1: Basic Pay Terms of National Pay AgreementsYear Basic Pay
IncreasesOther pay and Tax Features
I: Programme For National Recovery, 1988-90 inclusive1988 2.5% Special pay awards for public servants delayed.1989 2.5% Tax cuts of £225 million promised by
government over three years.1990 2.5% “Special consideration” for low paid workersII: Programme for Economic and Social Progress, 1991-931991 4.0% “Floor” weekly pay rises in year 1, 4.25 in
year 2 and 5.25 in year 3 for the low paid.1992 3.0% Local Bargaining for “exceptional” increases
of 3% permitted over the Agreement’s term.1993 3.75% Up to £400 Million in tax cuts promised.III: Programme for Competitiveness and Work, 1994-96/7
1994 2.0%* Public service pay deal: 3.5 years: 5 monthpause; 2% in year 1; 2% for year two; 1.5% fornext four months; 1.5% for next three months;1% for final 6 months.
1995 2.5%* Tax cuts unquantified but to be focussed onlow and middle earners.
1996 2.5% for first sixmonths*1% for next sixmonths*
“Floor” increases for low paid in both publicand private sectors from year 2.
IV: Partnership 2000, 1997-20001997 2.5% Public service pay deal: Phase 1: 2.5% of First
£220 basic for nine months, then 2.5% of thebalance of full basic pay for 3 months. Afterfirst year, as private sector.
1998 2.25% Provision for local negotiation of further 2%rise in years 2 (private sector) and 3 (publicsector).
1999 1.5% for 9months,
1.0% for 6months.
“Floor” cash increases to aid low-paid fromyear 2 onwards.£1 billion on full year cost basis to be madeavailable for tax relief.
V: Programme for Prosperity and Fairness 2000-20022000 5.5% Local bargaining allowed in line with
productivity increases2001 5.5% Public service pay issue to be resolved by
benchmarking body: 4% to be allowed forsubstantial change in public sector organisation
2002 4% for the nextnine months
Further tax cuts; National minimum wageestablished to have reached £5 per hour by theend of the PPF
*Private sector excluding construction.
34
Table 2: Industrial Disputes in Ireland
1960-1969 1970-1979 1980-1989 1990-1999Average dayslost per year
420498 585103 31140 109722
Figures from the Department of Labour and Central Statistics office- various years
Figure 1- Manufacturing Wage increases
Figures from the Various agreements and CSO Economic series (various years)
Figure 2- Relative Unit Labour Costs
Figures from European Economy (2001)
Manufacturing wage increases compared to agreements
012345678
1987 1989 1991 1993 1995 1997 1999 2001
Year
% C
hang
e
Increases peragreement
Actualmanufacturingincreases
Nominal Relative Unit labour Costs
60
70
80
90
100
110
120
130
1980 1985 1990 1995 2000 2005
Year
USD
; 199
1= 1
00
UK
Ireland
Netherlands
Germany
35
Figure 3- Comparative wage growth across sectors
Figures from Central Statistics office- various years
Figure 4- Wage Share of total economy
Figures from European Economy (2001)
Comparison in wage growth since 1985
80
100
120
140
160
180
200
1984 1986 1988 1990 1992 1994 1996 1998
Year
Inde
x, 1
985=
100
Metal
food
drink
chemicals
clothing
Clerical in manufacturing
Adju s te d W a ge s h are o f th e Econ om y
50
55
60
65
70
75
80
85
1958 1963 1968 1973 1978 1983 1988 1993 1998
Ye ar
% a
dju
sted
wag
e sh
are
Ireland
UK
EU
36
Figure 5- Employment Growth
Figures from European Economy (2001)
Figure 6- Unemployment
Figures from European Economy (2001)
Employment
-4
-2
0
2
4
6
8
1982 1984 1986 1988 1990 1992 1994 1996 1998 2000
Year
% C
hang
e
Ireland
EU average
Une m ploym e nt Ra te s
02468
1012141618
19821984
19861988
19901992
19941996
19982000
Ye ar
% u
nem
ploy
ed
Ireland
Eurozone
EU 15
37
Figure 7- Union membership
Figures from the Department of Labour (now the Department of Enterprise Trade and Employment) and the LabourRelations Commission
Figure 8- Union Density
Figures From the Labour Relations Commission and the CSO
Transitions in Trade Union membership in Ireland, 1980-1999
460,000
480,000
500,000
520,000
540,000
560,000
580,000
1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000
Year
Tra
de U
nion
mem
bers
hip
Series1
Trade Union Density in Ireland
30.00
35.00
40.00
45.00
50.00
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000
Year
Em
ploy
men
t Tra
de U
nion
de
nsity Trade
UnionDensity inIreland
38
Figure 9- Days lost due to industrial action
Figures From the Labour Relations Commission and the CSO
Figure 10 – (Loose) Design Features of Enterprise Partnerships
Days lost due to industrial action
0100000200000300000400000500000600000700000800000900000
100000011000001200000130000014000001500000
1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000
Year
OverarchingPartnershipCommittee
HighCommitmentHRMpolicies
ProjectsDirect Participation
CollectiveBargaining
1
Deliberation and Enterprise Partnerships
Paul Teague
Queen’s University Belfast
I would like to thank the Royal Irish Academy’s Third Sector Programme forfinancial support for this research.
2
Abstract
This paper develops analytical arguments to highlight three distinctive attributes of enterprise
partnership. First of all, the literature on the theory of the firm is used to suggest that enterprise
partnership represents a credible alternative to the dominant ‘leadership model’ of organisational
change. Second, it highlights the organisational features of enterprise partnerships that transcend
particular national or economic settings and suggests that these allow partnerships to be
interpreted as a procedural consensus between management and employees to develop pathways
to advance fairness and performance at work. Third, it suggests that the diffusion of enterprise
partnership requires the support of extra-firm institutional frameworks. The paper is both a
literature review and theory building exercise.
Keywords: organisational change; partnership; theory of the firm; workplace innovation
3
Introduction
An emerging theme in the comparative employment relations literature is that labour market
institutions are in a period of transition. Economic and social transformations have caused
established rules and procedures that incorporate people into the world of work to lose economic
functionality and social coherence: they are unable to perform the tasks they were put in place to
do (Osterman et al 2001). But while established institutions may not be operating effectively,
new arrangements to govern employment relations have yet to reach maturity. Thus, a
governance gap prevails in many national labour markets: some employment relations
institutions are not fully in tune with unfolding workplace practices or wider labour market
patterns. This situation has encouraged new forms of public policies for the labour market as
well as innovations to organisational-level human resource management regimes. These reforms
are diverse, but many share the common property of seeking to re-connect employer demands for
high business performance with employee demands for meaningful and decent work.
Social partnership is a fertile field of employment relations innovations. A big debate has opened
about the meaning and significance of this development (Heery 2002). This paper seeks to
contribute to this discussion in four ways. First it reviews a variety of the sub-strands of the
literature on partnership to identify the strengths and weaknesses of this literature. Second it
develops the argument that enterprise partnership should be seen as an alternative to the
‘leadership’ model of the organisation that dominates discussions on change management. Third,
it sets out in stylised form the organisational characteristics of enterprise partnership and
suggests that in many circumstances they seek to build a procedural consensus between
management and employees so that organisations are better positioned to address unanticipated
market and technological challenges. On this view, enterprise partnerships are considered to be
an attempt to promote a process of guided evolution inside the firm so that managers and
4
employees can adopt an open and idiosyncratic approach to balancing the needs of the workforce
and the business. Fourth, it highlights how countries have used soft institutional frameworks to
assist the development of partnership at the workplace and evaluates the potential and limits of
this approach. The paper is both a literature review and an exercise in theory building.
Studying enterprise partnership: existing theoretical approaches
Patterns of Partnership
Enterprise partnership means different things to different people. As a result, a number of strands
have emerged in the literature on this topic, which are by no means in collision with one another.
One part of the literature, which is in line with a long methodological tradition in employment
relations, has sought to develop different ‘patterns’ or ‘categories’ of enterprise partnerships. The
clearest example of this approach is Guest and Pecci (2001) who develop a five-fold taxonomy
of partnership set out in box 1.
<Box 1 about here>
The purpose behind a classification of this kind is to stand back from the peculiarities of a
particular situation so to ascertain the common influences driving an enterprise partnership, find
out whether any shared institutional properties are emerging and investigate how generally
perceived tensions or problems associated with such a development are being addressed. While
this approach has merits, not least in terms of avoiding over-description in research, it can also
have shortcomings. One danger is that categories or patterns of enterprise partnership may
become 'iron-cages', encouraging a fixed view of the attributes these arrangements should
possess. If an organisation is deemed not to have these attributes it is discarded as being deviant
or sub-optimal. The result may be that some potentially significant development could be
dismissed as unimportant.
5
A further problem is that hard and fast distinctions between enterprise partnerships may be
difficult to sustain in practice. To take the categories developed by Guest and Pecci for example:
when is a new deal partnership not a new deal partnership? Where exactly is the demarcation line
between full and employee-orientated partnership? Thus developing patterns of partnership may
trigger a search for organisational examples of such arrangements where all the identified
attributes exist in pristine form. Often such a search proves elusive. Given the strong
evolutionary pattern of enterprise partnerships it may be unwise to use rigid categories to study
their development (Eason 2003 and Marks 1998). An open-ended approach that captures the
relative immaturity of many of these arrangements holds out more promise. This view chimes
with the evolutionary view of organisational change and innovation. (March 1994).
Enterprise Partnership and Organisational Complementarity
<Box 2 about here>
Another strand of the literature concentrates more on developing rules to guide the diffusion of
enterprise partnerships and similar type experiments. Kochan (1999), for example, suggests six
guidelines that should influence the diffusion of new forms of work organisation such as
enterprise partnerships. These are set out in Box 2. Kochan argues that enterprise partnerships
that incorporate these six attributes are more likely to be sustainable. Individually, some of these
guidelines have appeal. For example, guideline four, which suggests that enterprise partnerships
may not reach their full potential if there is not ‘buy-in’ from all constituencies inside
organisations is a very important insight. Overall, the approach is guided by a prominent idea
from the field of the economics of organisation which emphasises the need for complementarity
between structures, practices and procedures in organisations (Milgrom and Roberts 1992)
6
The thinking behind this idea is straightforward enough: organisations where a strong ‘fit’ exists
between different practices are more likely to steal a competitive march on rivals. Organisations
with mutuality reinforcing employment practices achieve superior performance as their
collective impact is greater than the sum of individual measures. Aoki (1994) used this approach
to deepen understanding of the dynamics of the Japanese firm. The thinking has also made a
strong imprint on the literature examining the diffusion of high performance HRM practices
(Huselid, 1995). This literature argues that new work practices have to be introduced in bundles
before they can have a discernible impact on the performance of the enterprise. A similar train of
thought lies behind the approach adopted by Kochan and others to enterprise partnership - a
series of interdependent and mutually reinforcing changes are considered necessary to properly
embed these arrangements inside organisations. Enterprise partnership, in other words, involves
large-scale transformative organisational change (Appelbaun et al 2000).
Intuitively, this argument is persuasive and in some instances captures the experience of
particular organisations. The Saturn factory developed by GM motors is one example
(Rubenstein and Kochan 2000). But the Saturn experiment is an exception and does not reflect
the way enterprise partnership is introduced in most organisations. The general experience, as it
will be argued below, suggests that introducing partnership rarely involves root and branch
organisational transformations. Most enterprises opt for a gradual mutation pathway where
established routines and procedures are ‘recombined’ in one way or another with new practices
to form the basis of the partnership arrangement (see Nelson and Winter 1982). As a result, there
may be too much emphasis on complementarity in the theoretical literature. In this context, it
may be over-demanding to expect an enterprise partnership to display at any one time all six
attributes of Kochan's classification. Only an enterprise partnership that has reached full maturity
can be expected to possess all these features. To insist on all six attributes being present would
7
result in a very short list of ‘actual existing’ enterprise partnerships. Perhaps Kochan's six ‘rules’
are best treated as loose guidelines rather than preconditions for the successful diffusion of
partnerships at organisational level.
The Constitutive Elements of Partnership
A third strand of the literature is less preoccupied either with developing different categories of
partnerships or rules for their diffusion. Instead, it is more concerned with setting out the
employment policies and practices most closely associated with these new organisational
arrangements. Guest and Peccei (1998 and 2001) have done the most useful work on this issue.
They suggest that six key benchmark principles underpin the 'mature' partnership organisation
and these are set out in Box 3. This is the strand of the literature that has most appeal, not least
because it reveals the employment practices on which some advances need to be made should an
organisation be considering setting up a partnership arrangement. Thus the six benchmarks
together can play the useful function of being an aide memoir for human resource managers and
trade unions when working together on the matter.
< Box 3 about here>
But again this approach has limits for it is open to doubt whether developing a checklist of
employment practices associated with partnership will permit a close examination of the quality
of management-employee interactions associated with such arrangements. Without such an
analysis the worry is that a series of taken-for-granted, but erroneous, assumptions, may hang
over discussions about enterprise partnerships. Consider the matter of trust building inside
partnership companies. One view is that partnership, especially at the formative stage, needs to
be kept away from the commercial ‘front-end’ of the organisation so that management and
workers can develop sufficient confidence in each other to face jointly the vagaries of business
life (Brown 2000). This is a ‘process’-driven approach to fostering as it sees partnership not
8
being tied to any hard and fast performance targets or outcomes. The difficulty with this view is
that many organisations have neither the time nor resources to engage in purely trust creating
activity (Gambetta 1988). In most commercial circumstances, organisations make a trade-off
between trust and time and to exempt enterprise partnership from this standard practice would
undermine the credibility of such an arrangement in the eyes of management. Thus the formation
of trust must be linked with aspects of business performance (Kern 2000).
On this view, partnership should be involved, even at an early stage, in activities directly
connected to business performance such as problem-solving (O’Donnell and Teague 2000). The
underlying assumption is that for credible commitments to emerge between management and
workers they must engage in activities that translate shared understandings into practices that
guide actual behaviour: the boundary between process and outcome becomes blurred. More
studies are required of how partnerships actually blur this divide and to what extent it involves
changing attitudes, identities and behaviour at the workplace. Whether creating links between
particular employment practices and enterprise partnership, like those set out by Guest and
Peccei (2000), allows an investigation into such matters is open to doubt. This is not to suggest
that drawing such connections is invalid, but only to suggest that they are not the full story.
To sum up, the employment relations literature that seeks to give meaning to enterprise
partnerships has many admirable features. Yet it also contains blemishes. Some parts of the
literature are too prescriptive, setting down overly fixed and rigid boundaries for what does or
does not constitute an enterprise partnership. This approach is hard to square with the increased
diversity of business life that is fragmenting taken-for-granted organisational forms. Developing
neat ‘patterns’ of partnership courts the danger of hindering understanding about how such
arrangements evolve and can be made sustainable. Other parts of the literature are too
9
programmatic laying down rather detailed guidelines, even pre-conditions, for the diffusion
enterprise partnership. The great play about the need for ‘complementarity’ between practices
appears to sit uneasily with the wider organisational literature which suggests that change is an
incremental process (Lovas and Ghostal 2000). Furthermore, the emphasis in the literature on
transformative change so that a partnership arrangement can be a sustainable organisational form
(Kochan and Osterman 1994) is also questionable. Case-studies suggest that enterprise
partnerships adapt new ways of doing things through a process of guided evolution whereby new
practices are introduced incrementally and tried and tested procedures mutate (Lucio-Martinez
and Stuart 2002 and Eaton et al 2003)
The Theory of the Firm and Enterprise Partnership
The rest of the paper develops an alternative account of how to view enterprise partnerships. This
begins by using the theory of the firm to show that partnerships are an attempt to align incentive
and learning activities inside organisations. Then it argued that this alignment is normally sought
through the forging of a procedural consensus between management and trade unions. The
purpose of a procedural consensus is to ensure that corporate strategies are fashioned in a manner
to incorporate both matters of fairness and performance (Favereau 1997). The idea is that
enterprise partnership allows for the organisation to evolve and mutate through internally agreed
incremental changes. Enterprise partnership functioning in such a way is set out in figure one
below.
< Figure one about here>
Two dominant perspectives on the theory of the firm are the resource-based view and the new
10
institutional or transactions costs view. Although different in approach, both can be used to
advance our understanding of the development of enterprise partnership. For the most part, the
new institutional account of the firm focuses on governance aspects of the firm: the institutional
rules and procedures used to reduce opportunistic behaviour such as shirking or free riding on
the one hand and information, decision-making and bargaining costs on the other hand
(Williamson 1985). By contrast the resource-based view of the firm pays greater attention to the
learning and knowledge aspects of the enterprise. This view was probably most fully developed
first by Edith Penrose (1959), but during the past decade it has inspired a wide range of
management research on the knowledge-based firm, the innovation process in organisations and
the diffusion of new employment practices in enterprises. This diverse literature emphasises the
importance of organising internal competencies and capabilities to obtain competitive success
(Teece et al 1997). On this view, why one firm performs better than another may be traced to
differences in ability to generate and use tacit knowledge. – getting employees to share
information more widely, organising more effectively the interactions between people and
machines, lowering Chinese walls between organisational divisions and so on. These attributes
allow employees to problem-solve more effectively or adjust quickly in response to
unanticipated market events (Ichniowski, C. and K. Shaw 1995, Lester 1998)
Normally these two accounts are treated as alternative approaches to the organisational design of
firms (Winter 1991). An interesting part of the literature suggests that the differences between
the two approaches should not be overblown for in practice organisations have to address
simultaneously the twin challenges of controlling opportunism and advancing knowledge
(Langlois and Foss 1999). Yet, at the same time, it is recognised that these activities are not
easily combined either in theory or on the ground. This observation has given rise to the view
that the most successful firms not only ‘learn how to govern’ but also ‘learn how to problem-
11
solve’ (see Coriat and Dosi 1998). The extent to which an organisation can connect governance
and problem-solving activities is normally attributed to the entrepreneurial attributes of the firm
or managerial leadership (Foss and Foss 2000). This view is in line with the popular argument
that the role of leadership is decisive in determining the level of performance enjoyed by an
organisation.
In contrast, this paper suggests that enterprise partnership should be regarded as potentially a
more effective means to harness governance and problem solving functions within the firm. On
the one hand, partnership obliges management to accept that ensuring good standards of
employment and decent treatment of employees are integral to high organisational performance.
Without strong management engagement on these matters, employees are less likely to share
information and knowledge about the practical aspects of business operations or participate in
purposeful problem-solving (Walton, Cutcher-Gershenfeld and McKersie 2000). At the same
time, partnership encourages employees to engage with the business problems of the enterprise
and to accept new collaborative ways of working with managers. By mediating between
employee wishes for decent work and managerial efforts to upgrade performance, partnership
can be the conduit to improve organisational competitiveness.
A further argument this paper wishes to advance is that partnership can most effectively carry
out this mediating function by managers and employees forging a procedural consensus at the
level of the enterprise that makes transparent the manner in which fairness and competitive
matters are to be advanced. Enterprise partnership as a procedural consensus is predicated on the
idea that business life has become diverse which requires organisations to have the ability to
customise such arrangements so that they are sensitive to idiosyncratic commercial
circumstances . Thus enterprise partnerships are likely to take on different characteristics and
12
develop at different speeds. At the same time, enterprise partnership must display two core
properties. One is that there must be some recognition that partnership is not the same as
cooperation (Easton et al 2002). There must be an acceptance by all parties that the interests of
managers and employees will not always be contiguous. The other property is that forging a
procedural consensus requires a process of negotiation or problem-solving. But how does
enterprise partnership allow firms to lower transaction costs and deepen learning at the same
time and why is the procedural consensus important for this process?
Reducing transaction costs through enterprise partnerships
Enterprise partnership is about promoting collusive behaviour between managers and employees
to advance corporate strategy. From a transactions costs perspective, the goal of such joint action
is to push opportunistic behaviour to one side and achieve superior performance. At the same
time, this view argues that collusive behaviour is unlikely to rise voluntarily as the interests of
managers and employees are not automatically contiguous. This is because employees and
managers are considered to be bi-lateral monopolies inside the firm as they enjoy certain
proprietary advantages (see Wachter and Whyte 1990). In many organisations, for example,
employees have greater knowledge about the operational aspects of the business than managers.
On the other hand, managers have privileged access to strategic information, such as market or
financial trends, which is not always shared with employees. As the assets possessed by each
party are complementary, the basis exists for mutually advantageous trading. But as both sides
will be anxious not to sell themselves short it cannot be assumed ex ante that collusion will
emerge easily or without cost (Alchian and Demsetz 1972). Enterprise partnership can help
reduce this transactions costs problem.
Financial participation is the most common instrument used to encourage collusive behaviour.
13
The use of an employee share or profit scheme or gain-sharing plan is closely associated with
enterprise partnership (Coupar and Stevens 1999). By introducing a financial participation plan,
particularly if it is a profit-sharing or share options arrangement, the organisation is seeking to
reshape the risk burden between managers and employees so to create a ‘common fate’ between
them (see Gomez-Mejia, et al 2000). A sceptic could argue that financial participation could be
introduced without an enterprise partnership agreement. But as frequently pointed out in the
literature, design problems stand in the way of using ‘stand alone’ pay innovations as an
incentive measure to promote collusion between managers and workers (Cox 2000). One is
establishing the variable component in the pay package at a level that will have an appreciable
impact on attitudes and behaviour without over-exposing employees (and managers) to excessive
risk. Another is to ensure that if bad commercial times arrive there is not a hostile backlash from
employees as they experience a fall in the variable component of pay. Potentially enterprise
partnership can help organisations meet both challenges.
Consider the first problem. No easy formula exists to use a financial participation measure to
connect the incentive system of an organisation with employee motivation. Even a rule of thumb
guide appears unsuitable. For example, McKersie (1996) has argued that an ESOP needs to
provide employees with a 12 per cent stake in the company before any discernible change in
their expectations and behaviour can be realistically expected. While this may be appropriate for
some sectors it may not be feasible in others. To apply this rule to parts of the petro-chemical
industry, for example, would turn employees into multi-millionaires overnight. Thus, no golden
formula exists to guide the instalment of pay innovations like ESOP. Diffusion can only come
about through a process of negotiation and deliberation inside the company (Pfeffer 1998).
Enterprise partnership facilitates this process for its raison d’etre is to prompt collaborative
14
management-employee interactions that lead to organisational innovations. It can also be used as
a procedure to monitor and evaluate the ESOP or whatever financial measure may be in place.
Finally, it can act as the arena for the settlement of disputes that may arise about the operation of
a financial participation arrangement. Thus partnership is a piece of employment relations
machinery that speaks to the diverse objectives of agents inside the organisation. It sets in train
active procedures and relationships that continually challenge management and employees to
modify their behaviour in a manner that benefits both parties (Rabkin and Avakian 2002). The
desired outcome is the embedding of reward systems that balances fairness and performance
inside the organisation.
Developing capabilities through enterprise partnerships
The resource-based view of the firm views people as a core competency of an enterprise and
seeks to improve organisational performance through enriching the skill levels and work
experience of employees. The connection with enterprise partnership should be self-evident.
Enterprise partnership can advance the learning dimension to an organisation by reducing the
negative externalities that are associated with skill formation. Mainstream theory tells us that
creating well functioning skill formation systems is a complex, even hazardous task (Soskice
1999). A key problem is that enterprises for a number of reasons have a tendency to under-
invest in skill formation. For example, enterprises are frequently reluctant to invest in general
skills - those skills recognised through an economy-wide certification procedure - either because
the company will have to pay the employee the going rate for the job or because they may quit.
Paying employees the market wage reduces the incentives for employers to make the initial
investment in training. This is because it would be cheaper to hire workers with the necessary
skills from the external labour market or to poach them from another firm.
15
An alternative route open to firms is to invest in company-specific training. Certainly such a
system has its advantages since it can fine-tune worker skills to the particular needs of the
company. In addition, it insulates the company from the threat of poaching since the skills
acquired by employees are not transferable. But company focused training systems have a
downside. On acquiring skills, employees become more indispensable to the company - in
economic terms they become a quasi-fixed factor of production. In such a situation, a firm is
exposed to rent seeking by employees - an attempt may be made to pursue wage claims that
exceed productivity performance. Enterprise partnership can help address these problems by
creating credible commitments between management and employees. Credible commitments
arise when one party provides an assurance about its own behaviour and gains a reciprocal
assurance from the other party (Greenhalgh 2000). Predictable and stable interactions of this kind
create an organisational environment that facilitates the deepening of competencies among the
workforce. Thus enterprise partnership strengthens the tacit knowledge of the enterprise by
operating as a trust-building institution (Mohrman and Lawler 1998) .
The above discussion throws into sharper relief the meaning of enterprise partnership producing
a procedural consensus. In essence, it is about how co-ordinated action can take place inside
organisations without specifying in advance what needs to be done in every situation (Mc Kersie
2001). It is about controlling opportunism and advancing knowledge through building a
procedural justice arrangement inside the organisation. Thus enterprise partnership is not simply
the aggregate sum of discrete work practices but more a kin to series of algorithms to deal with
conflicts of interest and interpretation. On this view, organisational rules and routines are never
fixed, but are continuously evolving. Enterprise partnership is about creating a framework for
deliberation inside the enterprise that allows management and employees to explore possibilities
and devise solutions that are beyond the reach of either acting unilaterally. It is about both parties
16
giving a guarantee to behave reasonably and to commit to a form of decision-making based on
reasoned and informed discussion. Enterprise partnership does not simply involve particular
institutional arrangements inside the enterprise, but also is concerned with the creation of
identities and attitudes based on cooperative behaviour (NESF 1997).
Viewing enterprise partnership as producing a procedural consensus is at odds with certain
elements of the existing partnership literature. First, it departs from the ‘holistic’ approach to
partnership (Roche and Geary 2000). This approach only truly acknowledges a radical
transformation of the firm to transplant partnership practices, and thus sets a high admission fee
for an enterprise to join the partnership club. Firms falling below the ‘fee’ are not seen as
engaging with ‘genuine’ partnership work practices. This approach is excessively prescriptive
and exclusive (European Foundation for the Improvement of Living and Working Conditions
1997). The assumption developed here is that enterprise partnerships have different starting
points and develop at different speeds and thus must be seen first and foremost as institutional
procedures and practices that deepen management and employee co-operation (Charny 1999).
The second point of departure from the ‘mainstream’ literature is that complementarity is not the
normative framework used to evaluate the diffusion of partnership practices in organisations. If
anything the view adopted is that partnership deepens through the existence of asymmetries and
discontinuities arising between different work rules and practices. For the most part, a procedural
consensus is not used to achieve agreement on the implementation of an integrated bundle of
practices, but managing the misalignment caused between different aspects of an organisation’s
structures and practices as it tries to combine fairness and efficiency (Teague 2001). Partnership
is about enriching problem solving activity between management and employees to address
instances of organisational disequilibrium in a manner that embodies the interests of both parties
17
(Sabel 1994). Action of this kind encourages new work roles and identities. Mutuality and co-
operation take shape among employees and employers in the context of jointly analysing and
developing remedies to problems. This procedure evolves and strengthens over time as iteration
between management and employees deepens (Marks et al 1998). Of course this approach should
not be taken too far as big tensions, or what Boxall and Purcell (2000) call ‘deadly
combinations’, between employment practices, can lead to self-blockage inside organisations.
The Institutional Design of Enterprise Partnership
A reading of case-studies on enterprise partnerships in different countries suggest that enterprise
partnerships develop along similar institutional lines (O’Donnell and Teague 2000, Easton et al
2002). An agreement establishing an enterprise partnership is normally signed after management
and unions have carried out a lengthy diagnostic review. This is a procedure used by
management and unions to arrive at a view about the type of partnership agreement the
organisation can 'hold' in prevailing commercial circumstances. Furthermore, it is an opportunity
for employees and management to forge a consensus about the shape and character of a
prospective partnership deal. A partnership agreement is less an elaborated model of how the
organisation should be and more the institutional expression of the consensus reached by
management and employees during the diagnosis review. At the same time an agreement usually
sets up a company-wide partnership forum or committee. Invariably, the partnership forum
established is an overarching, open-ended, arrangement charged with the responsibility of
initiating, co-ordinating and reviewing partnership activity.
To advance designated objectives, partnership committees frequently establish sub-groups or
projects. Case-study evidence suggests that well functioning sub-groups are the engine room of a
successful enterprise partnership. Project groups work on matters such as reforming the company
18
pension scheme, devising a new financial participation arrangement, and establishing the ground
rules for the introduction of new employment practices such as team-working. By working on
specific tasks, or attempting to invent solutions to agreed problems, these bodies drive
purposeful joint action between management and employers. Sub-groups, which encourage
management and employees to search for superior ways of doing things, make enterprise
partnership simultaneously process and task driven: the boundary between process and outcome
becomes blurred.
The emerging ‘model’ of enterprise partnership stands apart from, but nevertheless is associated
with both the ‘German’ works council and ‘American’ HRM approaches to employee
involvement and participation. These two established approaches use distinctive and contrasting
practices and procedures to organise the employment relationship. First, work councils are
representative and indirect forms of worker participation, and thus epitomise collective
employment relations. In contrast, HRM approaches espouse decentralised forms of involvement
that tend to focus on the individual. Thus it lays greater stress on direct forms of involvement
(Marchington and Grugulis, 2000). Second, whereas work councils cover strategic matters as
well as operational and implementation matters, HRM tends to concentrate on the last two
matters. Third, an important function of work councils, at the least in the German model, is to
oversee the implementation of substantive (and procedural rights) proscribed in German labour
law whereas the HRM model is about solving problems that arise in the day-to-day running of
the business or productive system. Fourth, work councils are mandatory institutions in the sense
that managers are obliged by law to follow a proscribed list of rules when consulting with
employees. HRM, on the other hand, gives management the prerogative to determine the depth
and scope of any employee involvement scheme. Fifth, the ‘value system’ underpinning works
councils is integrative bargaining whereas HRM is heavily orientated towards ‘empowerment’
19
and performance (see Muller-Jentsch 1995).
In practice, enterprise partnership contains elements of each model but cannot be considered a
full-blown version of either (Bacon, and Storey 2000). It is a ‘borderland’ institution that
interfaces with both approaches. It is fully compatible with new employment practices such as
direct participation or team-working, total quality management and job rotation. At the same
time, there is a collective and strategic dimension to its activities (Marks 1998). Thus, for
example, project or sub groups of the enterprise partnership have the potential to deal with
matters that are once removed from the immediate operation of the business and which have
potentially far-reaching implications for the organisation as a whole – a new pension scheme or a
new system of work-sharing for example. To properly design and introduce such work
innovations requires managers to share information of a strategic kind with employees .
Most American enterprise partnerships are nearer to the HRM model when we consider the
matter of mandatory rules. But this is less the case with such arrangements inside the EU given
the recent adoption of the new EU Directive on information and consultation rights of
employees. Although this law falls short of the German co-determination legislation, it
nevertheless establishes a broad legal framework for employee involvement. Management has no
longer a unilateral prerogative on this matter in any of the member-states. But overall enterprise
partnership represents a hybrid of the work council and HRM approaches. Thus enterprise
partnerships set out to blur the distinction: between direct and indirect participation; between
operational and strategic matters; between expertise and authority; between process and
outcomes; between bargaining and co-operation. Progress is envisioned happening through an
open-ended and evolutionary process.
20
A controversial and as yet unresolved matter is the relationship between enterprise partnership
and collective bargaining. Perhaps the dominant view is that partnership and collective
bargaining should be kept apart. Two arguments are normally made in support of this view. One
is that the scope of collective bargaining activity may be reduced if partnership – related activity
gets too close. On this account enterprise partnership may undermine the role of organised labour
at the workplace and this is why trade union representatives inside an organisation are at times
suspicious of such a development. A second view suggests that the partnership process might get
corrupted if it overlaps too much with collective bargaining. The concern here is that deliberation
within a partnership arrangement may get disfigured by the adversarial behaviour that is often
connected to collective bargaining, particularly bargaining of a distributive kind (i.e. negotiations
over wages and working conditions) (Walton and McKersie 1965). The case-study evidence
suggests that there is no precise boundary delineating collective bargaining from partnership
activity. In some cases, the relationship will be complementary while in others it will be the
source of conflict.
Analytically enterprise partnership must be considered to be different from collective bargaining
(Kelly 2001). Promoting enterprise partnership can be seen as an exercise in deliberative
democracy. This stresses the importance of actors behaving in a ‘collaborative’ and ‘reasonable’
manner inside a decision-making forum. It stands apart from the instrumental bargaining
approach to decision-making, which emphasises the role of side-payments and roll-logging in
forging agreements between competing interests. This view has dominated the literature on
collective bargaining. Deliberation sees the resolution of policy problems or the forging of a
common position between competing interests arising through informed debate and preference-
changing dialogue. The collection and interpretation of evidence to monitor and evaluate the
effectiveness of policy choices play an important role in this approach. Thus deliberative
21
democracy focuses on how organisations whether in the political, economic or social spheres can
promote collaborative action that aims to mobilise effort and knowledge to advance widely
shared objectives. This approach has an impressive historical lineage. Its imprint is unmistakable
in the writings of the founding fathers of American federalism such as Maddison and Jefferson.
Connections with Rousseau and the early Greek philosophers such as Plato are also evident
(Dewey 1929).
The benefits of a deliberative approach to decision-making inside enterprise partnership are
fourfold (Elster 1998). First, deliberation reveals more information about the strengths and
weaknesses of existing methods of doing things. Second, it improves the legitimacy of corporate
strategies amongst all organisational constituencies. Third, partnership should weaken the
traditional boundaries between management and workers and permit them to develop new
collaborative relationships. Fourth, employees should gain improvements in working conditions
as the relationship between competitiveness and fairness inside the enterprise should be made
more transparent. Dynamic adjustment is another trait of deliberative decision-making. Shared
understandings and collaborative action that arise from deliberative decisions are usually
considered to be fallible and provisional which will have to continually re-visited (O’Donnell
and Thomas 1998).
All in all, the deliberative approach places greater emphasis on developing enterprise
partnerships that have flexible-decision-making structures and consensus-building activities.
This is unlike collective bargaining where adversarial engagement between management and
unions is more evident. Thus in the majority of cases partnership and collective bargaining
activity is kept separate (Beaumount and Hunter 2003). But it is hard to see how this position can
be sustained in the medium to longer term. As joint activity between management and employees
22
progresses, matters that normally fall within the remit of collective bargaining are likely to
become more open to partnership arrangements (Easton et al 2003). Thus as a partnership
matures some level of co-mingling will occur between this process and collective bargaining.
The quality of the procedural consensus established by the partnership arrangement will
determine how successful these interactions will be managed
Promoting Enterprise Partnerships: Legal Rules or Soft Regulation?
The above commentary raises the intriguing question that if partnership holds out promise for
managers and employees alike why have more organisations not adopted such arrangements?
Lazear and Freeman (1995) provide a theoretical answer to this question. They suggest that a
range of negative externalities may impede managers and employees engaging in mutually
advantageous co-operative interactions such as partnerships even if it is in the self-interest of
both parties to do so. These negative externalities mostly take the form of information
asymmetries and prevent the creation of adequate incentives to install institutionalised forms of
employee involvement. On the one hand, management will vest them with too little power. On
the other hand, workers will demand more power than considered optimal by managers. As a
result, a type of market failure arises which is unlikely to be redressed by the parties themselves.
Most of continental Europe has attempted to resolve this matter by introducing mandatory legal
rules that oblige organisations to adopt some form of employee voice arrangement.
Other countries with a less juridification approach to employment relations (USA, UK, Ireland
and Canada for example), which tend to be at the forefront of the enterprise partnership
movement, have been grappling with the negative externality identified by Freeman and Lazear,
although it normally goes under the less imposing term ‘buy-in’ problem. A multitude of
distorted expectations and perceptions are seen as slowing down the diffusion of enterprise
23
partnerships. Some managers, at both senior and middle level, see partnership as a threat,
encroaching on their prerogative to make unilateral decisions (Roche and Geary 2002). For their
part, many trade unionists frequently see enterprise partnership as the direct descendant of the
worker democracy movement of previous decades and thus should involve a decisive transfer of
power and authority from management to employees. Any arrangement falling short of this
expectation is dismissed as an ‘incorporation’ ploy by management (Kelly 1996). Thus muddled
expectations and perceptions have fuelled a ‘buy-in’ problem – managers and employees are
uncertain about what partnership entails and as a consequence are reluctant to embrace fully such
a development.
Most ‘Anglo-Saxon’ countries have not responded to this problem by introducing mandatory
rules on employee involvement. Instead, the common approach has been to put it place a public
policy programme to help develop and promote partnership at organisational level. These
programmes normally seek to carry out four tasks. One is the sponsorship and co-ordination of
networks among companies that have partnerships so that they can share experiences and learn
from each other. These networks are closely monitored with a view to creating diagnostic
instruments and training modules. The second is a research and dissemination function. Research
projects normally are ‘action orientated’ and seek to deepen understanding the dynamics of
partnership. A third function is building verification and assurance focal points outside the
organisation. Very often employees and managers inside organisations seek assurance from
external agents, normally in the form of national trade unions and employer associations, that
meaningful value-added activities will emerge from embarking upon the partnership road. To
facilitate this demand, national employer and trade union bodies respectively normally create a
number of important projects and advisory services. These initiatives are important as they
guarantee organised labour a central role in the supportive framework for enterprise partnerships.
24
The fourth function can be called experimental public policy which aims at bringing together
different arms of government to provide some form of support for enterprise partnerships.
The public support frameworks that have emerged for enterprise partnership emphasise the use
of ‘soft’ regulation to diffuse the principles of social partnership inside organisations and in the
process reduce the problem of distorted expectations and information asymmetries (see Ogus
2000). These depart from the traditional social democratic model of labour co-ordination, which
relies heavily on constraining laws and procedures. They normally provide first rate skill and
training programmes that build up the capabilities of employees and management in partnership
fora. Yet probably more needs to be done to ensure that the ‘circumstances of impartiality’, to
use Brain Barry’s (1995) phrase, exists between management and employees inside the firm.
Circumstances of impartiality ensure that those engaged in deliberation have the best possible
information to engage fully with the exercise and that all parties are bound to outcomes and
agreements. If management uses greater power resources to confine partnership discussions to
topics that simply reflect its preferences then the development of such arrangements will remain
stunted. The adoption of the EU Directive on Information and Consultation has gone some way
to improve the circumstances of impartiality conditions inside the EU. Deliberation inside
enterprise partnerships across most member states is now done in the shadow of the law. This
strengthens the position of employees, but whether the circumstances of impartiality have been
established remains an open question.
Conclusions
This paper argues that enterprise partnership is about adapting the management of the
employment relationship to the changing character of economic and social life. It is about setting
25
out principles and procedures that should be used by organisations when adjusting internal
incentive and learning structures to improve performance and advance fairness. Enterprise
partnership falls short of the institutional and political features of economic democracy
envisioned in Britain and other European countries several decades ago. At the same time, the
principles of equity and fairness are not forsaken by enterprise partnership. Thus a case exists for
trade unions to engage positively with this development (Ackers and Payne 1998). Partnership
offers a credible alternative to other more popular models of organisational design in the
management literature. A heavy emphasis is placed in this literature on the role of leadership or
an elite group of managers in bringing about organisational change.
Whether this is an entirely problem-free view of the management of change is open to doubt. A
number of distortions can be produced by such approaches. First of all, over-ambitious managers
eager to stamp their presence on organisations may find the 'vision thing' too enticing and inflict
major upheavals on enterprises which may not have been warranted in the first place.
Furthermore, managers, trying to display leadership qualities, may engage in cavalier delegation
practices that cause resentment and disengagement amongst employees. In these circumstances,
active participation and information sharing by employees, which are indispensable to improving
performance, become unlikely. Managerial unilateralism of this kind is challenged by enterprise
partnership as it encourages a more encompassing, more inclusive approach to the change
process. For this reason alone, trade unions should welcome, not fear, this new departure in
employment relations.
Management too may fine it in their self-interest to embrace enterprise partnership. Nearly
everybody accepts that markets and technologies are moving faster than at any time before. Thus
the ability of organisations to continually redesign capabilities and incentives in light of
26
unanticipated events is now a mainstay of business life. But this on-going process of renewal is
likely to be of a higher quality if it has the consent and active involvement of employees.
Consider the matter of innovation. This can only occur when employees are willing to share
information and knowledge about the practical aspects of a business operation. The motif of
enterprise partnership is to secure a high level of cooperation between management and
employees so that such problem-solving is more purposeful and effective. Such arrangements
help management recognise that people are the core competency of most organisations. Potential
pitfalls associated with a purely ‘market driven’ style of management, which include employee
apathy, disillusionment and disengagement, can be avoided. In a nutshell, enterprise partnership
holds out the promise of a superior route to improved performance.
Government too is challenged by the emergence of enterprise partnerships. Because these are a
relatively novel organisational form, public support programmes are needed to help management
and employees acquire the confidence and competencies to ensure their successful diffusion.
New institutional frameworks will be required to promote enterprise partnership. Developing
such public innovations will allow governments to signal that it has a responsibility of
government to uphold good employment practices. The notion of the ‘good employer’ must drive
public policy for the labour market. Action of this type contrasts with the ‘American’ HRM
model which seeks as far as possible to insulate the management of the employment relationship
from government intervention. Government’s role in the development of enterprise partnership is
about promoting an employment relations agenda that is not exclusively defined by corporatist or
HRM principles, but contains elements of both. It is about refashioning the relationship between
economic efficiency and social equity in a manner that reflects the dynamics of modern labour
markets.
27
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Box 1: Categories of Enterprise Partnerships
Box 2: Diffusion ‘Rules’ for Enterprise Partnerships
• Managerial partnerships are essentially about employers diffusing enlightened humanresource management practices with or without trade unions.
• Employee-orientated partnerships place trade unions at the centre of the arrangement bybuilding on collective bargaining or by introducing an indirect representative form of workerconsultation such as a works council.
• New deal partnerships ground management- employee interactions on the principle ofmutuality. They seek to reach a balance between the interests of employees and management.Thus for example, increased employee flexibility is off-set by greater job security. Implicit inthis model is that partnership is a winning, mutual gains, formula for both management andlabour.
• Full partnerships are those organisations that do not follow any of the three partnershipapproaches listed above yet devise arrangements that embody the ethos or values of each.Thus, for example, the information structure of the organisation contains co-determination,consultation and communication elements in a manner that reflects ‘pluralist’, ‘middle-way’and ‘unitarist’ employment relations.
• No partnerships arise when the employment system of the organisation remains untouchedby the values, principles and practices of the ‘partnership approach’ to employee relations.Adversarial industrial relations or managerial unilateralism normally prevails.
[1] transparency: the objectives and boundaries to the partnership arrangements should be openlyand clearly defined.
[2] scope and depth: the partnership arrangement should cover both strategic and operational mattersso that employees enjoy greater empowerment at their place of work and have a voice in corporatedecision-making.
[3] credibility: if the partnership arrangement is to secure the trust of employees then it should becomplemented by a range of supporting employment policies.
[4] organisational commitment: a partnership arrangement is more likely to be sustainable if : (a)senior management demonstrates a clear commitment to the initiative (b) the human resourcemanagement function has important status inside the organisation; (c) trade unions, if they are present,are not adversarial in their approach to employment relations.
[5] the incorporation of ‘outside’ stakeholders: where people outside an organisation are directlyand immediately affected by proposed operational changes, the partnership system should seek toreconcile the often competing claims of ‘internal’ and ‘external’ stakeholders.
[6] internal evaluation: the partnership scheme should be regularly evaluated to ensure that themanagerial and workforce commitment to mutual interdependence is not faltering and to assess itsrelationship to overall corporate performance .
33
Box 3: Constitutive Elements of Enterprise Partnerships
• Commitment to business success involves employees identifying with the business goals tothe extent that they get actively involved in the search for improvements to workorganisations and routines.
• Employment security involves employers making a commitment to avoid redundancieswherever possible and to develop attractive career plans for employees.
• Employee voice involves all levels and dimensions to information and consultation – fromdirect operational matters at the person’s work station to more strategic concerns that arenormally considered the sole preserve of the Board or senior management.
• Sharing the success of the organisation with all employees normally involves some formof financial participation scheme such as profit sharing as well as progressive humanresource practices aimed at promoting fair and equitable treatment of all employees
• Training and development covers matters relating to deepening the human capital of theorganisation by enhancing the skills and competencies of the workforce.
• Flexible job design and direct participation relates to measures aimed at improving jobrotation by ending employment demarcation. It also involves making workers multi-skilledso that they can positively contribute to a team or group working environment.
34
Figure 1 Enterprise Partnership as a Procedural Consensus
Objective function (combiningcompetitiveness and fairness)
Enterprise socialpartnership as aninternal agent ofchange
Activity Topics(Financialparticipation, teamworking)
Sources of variation(organisational sub-units-different human capitalneeds of employees)
Administrative System of theenterprise (formal structure,incentive system,organisational routines etc)
35
36
Paul Teague is the Martin Naughton Chair of Management at the School of Management andEconomics, The Queen’s University Belfast. He holds a PhD from the London School ofEconomics and has been a Fulbright Scholar at the University of Massachusetts. He has writtenwidely on the theme of the employment relations consequences of deeper European integration.More recently, he has added the theme of organisational innovations to his research interests.
1
Deliberation and Social PartnershipSome Lessons From the Irish Experience
Paul TeagueQueens University Belfast
I would like to thank the Royal Irish Academy’s Third Sector Programme forfinancial support for this research.
2
Abstract
This paper suggests that the Irish experience of social partnership does not fully overlap with
mainstream employment relations literature on the topic. Three features in particular distinguish
the Irish case. One is the importance attached to a procedural consensus that allows advances to
be made on partnership at work without full agreement between employers and unions about the
substantive elements of this employment relations innovation. Another is the stress placed on
experimental action in the development of these arrangements: for the most part, enterprise
partnership is not seen in terms of a big transformative model of organisational change,
involving the immediate diffusion of complementary bundles of high performance work
practices. A third characteristic is the use of an essentially non-legalistic public support
framework to foster and guide the evolution of enterprise partnerships. This paper develops
theoretical arguments to highlight the distinctiveness of the Irish experience and to show why it
should be treated as an important departure by the employment relations academy.
3
Introduction
Social partnership is a fertile field of employment relations innovations. A big debate has opened
about the meaning and significance of this development. This paper contributes to this debate by
putting forward ideas about how to understand enterprise-based partnerships. The paper is
organised as follows. The first section sets out in stylised form the institutional character of
enterprise partnerships in Ireland. The following section identifies the key sources of the
mismatch between the Irish experience and the wider employment relations literature. The third
part of the paper outlines the development of a public support framework designed to foster
partnership programmes in the absence of constraining legal rules. The conclusions develops a
number of arguments about the how the Irish experience is advancing fairness at the workplace.
The Institutional Design of Enterprise Partnership in Ireland
Since 1987 an innovative institutional structure has emerged for social partnership in Ireland. In
the past, so-called corporatist economies were characterised by fairly centralised, encompassing
employer and trade union organisations negotiating and implementing collective labour market
deals. By giving the representatives of labour and capital a privileged position in economic and
social policy-making, governments secured industrial relations stability. This in essence was the
quid pro quo at the centre of the corporatist bargain. Ireland has departed from this traditional
approach. In particular, a model of social partnership has been developed that allows a wider
range of social groups to be involved in economic and social governance (O'Donnell and
Thomas 1998). The result has been the weakening of the special public status conferred on
organised labour and employer groups and a change in the style of economic and social policy-
making. Agreements emerge not simply from tough negotiations between the ‘two-sides’ of
industry, but also through a high-level process of analysis and deliberation (preference-changing
dialogue), involving a wide range of civil associations. Problem-solving as much as bargaining
4
shapes the national social partnership framework in Ireland. By reconciling the competing
demands and needs of economic and social actors in a series of interconnected policies, Irish
social partnership has fostered a shared national understanding of the key opportunities and
constraints shaping the country’s prosperity (NSF 1997).
In the mid-nineties, concern emerged that the formation of shared understandings focused too
heavily on national public policy and not enough on the activities of enterprises and
organisations. Thus replicating the sustained ‘shared understanding’ ethos characteristic of
national social partnership inside enterprises has been given a greater priority in the more recent
centralised agreements. Creating enterprise partnerships is seen as holding out much promise for
organisational performance. Fostering shared understandings between managers and employees
is viewed as a way of promoting organisational flexibility and continuous improvement while at
the same time, modernising the procedures through which fairness and equitable treatment are
assured at the workplace. Consensus-orientated organisational strategies of this kind thus have
the double-barrelled objective of rewriting the social contract at work and improving the
competitive position of the enterprise (Government of Ireland 1996 and 2000).
An open-ended definition has been used to define enterprise level partnership in various
agreements. The 1996 and 2000 national social partnership agreements viewed enterprise
agreements as
“An active relationship based on recognition of a common interest to secure thecompetitiveness, viability and prosperity of the enterprise. It involves a continuingcommitment by employees to improvements in quality and efficiency; and the acceptanceby employers of employees as stake holders with rights and interests to be considered inthe context of major decisions affecting their employment.”
5
“Partnership involves common ownership of the resolution of challenges involving thedirect participation of employees/representatives and an investment in their training,development and working environment” (1996, p.62, 2000, p.14).
Institutional Attributes of Enterprise Partnerships in Ireland
The extent to which partnerships have been created in either the private or public sectors has yet
to be researched properly. But interviews with trade unions, employers and public officials who
are actively involved on this matter as well as some selective case-studies suggest that the
enterprise partnerships that have been established approximate to the following institutional
design
-Figure One about here-
A number of the institutional features of enterprise partnership are worthy of more detailed
comment. Enterprise partnership is normally set up by an agreement involving management and
employees (normally represented by a trade union). This agreement sets down the institutional
character of the envisaged arrangement. It is normally signed only after management and unions
have carried out a lengthy diagnostic review. A diagnostic review is a set of procedures which
organisations conduct to give management and unions a better understanding of the type of
partnership agreement an organisation can 'hold' in prevailing commercial circumstances.
Furthermore, it is an opportunity for employees and management to forge a consensus about the
shape and character of a prospective partnership deal. A partnership agreement is less an
elaborated model of how the organisation should be and more the institutional expression of the
consensus reached by management and employees during the diagnosis review. At the same time
an agreement usually sets up a company-wide partnership forum or committee. Invariably, the
partnership forum established is an overarching, open-ended, arrangement charged with the
responsibility of initiating, co-ordinating and reviewing partnership activity.
6
To advance these objectives, partnership committees frequently establish sub-groups or projects.
Case-study evidence suggests that well functioning sub-groups are the engine room of a
successful enterprise partnership. Project groups work on matters such as reforming the company
pension scheme, devising a new financial participation arrangement, and establishing the ground
rules for the introduction of new employment practices such as team-working. By working on
specific tasks, or attempting to invent solutions to agreed problems, these bodies drive
purposeful joint action between management and employers. Sub-groups, which encourage
management and employees to search for superior ways of doing things, make enterprise
partnership simultaneously process and task driven: the boundary between process and outcome
becomes blurred. Enterprise partnership is thus a distinctive trust-creating institution in that the
search for greater fairness and co-operation is placed in the context of working life. It is at least
tacit recognition that matters relating to fairness at work can only be agreed, analysed and
changed in the context of addressing concrete problems. The operating assumption is that a
shared understanding between management and workers can fulfil its promise only if it can be
translated into practices that guide actual behaviour.
The emerging ‘model’ of enterprise partnership stands apart from, but nevertheless is associated
with, both the ‘works council’ and ‘HRM’ approaches to employee involvement and
participation. These two established approaches use distinctive and contrasting practices and
procedures to organise the employment relationship. First, work councils are representative and
indirect forms of worker participation, and thus epitomise collective employment relations. In
contrast, HRM approaches espouse decentralised forms of involvement that tend to focus on the
individual. Thus it lays greater stress on direct forms of involvement. Second, whereas work
councils cover strategic matters as well as operational and implementation matters, HRM tends
to concentrate on the last two matters. Third, an important function of work councils, at the least
7
in the German model, is to oversee the implementation of substantive and procedural rights
proscribed in German labour law whereas the HRM model is about solving problems that arise in
the day-to-day running of the business or productive system. Fourth, work councils are
mandatory institutions in the sense that managers are obliged by law to follow a proscribed list of
rules and procedures when consulting with employees. HRM, on the other hand, is an instrument
of management which leaves the depth and scope of any employee involvement scheme more or
less in the hands of the managerial team. Fifth, the ‘value system’ underpinning works councils
is integrative bargaining whereas HRM is heavily orientated towards ‘empowerment’ and
performance (see Muller-Jentsch 1995).
The ‘Irish’ version of enterprise partnership contains elements of each approach, but cannot be
considered a full-blown version of either. It is a ‘borderland’ institution that interfaces with both
approaches. It is fully compatible with new employment practices such as direct participation or
team-working, total quality management and job rotation. At the same time, there is a collective
and strategic dimension to its activities. Thus, for example, project or sub groups of the
enterprise partnership have the potential to deal with matters that are once removed from the
immediate operation of the business and have far-reaching implications for the organisation as a
whole – a new pension scheme or a new system of work-sharing for example. To properly design
and introduce such work innovations requires managers to share information of a strategic kind
with employees. At first blush, the Irish model is nearer to the HRM model when we consider
the matter of mandatory rules. But this is less the case now with the recent adoption of the new
EU Directive on information and consultation rights of employees. Although this law falls short
of the German co-determination legislation, it nevertheless establishes a broad legal framework
for employee involvement. Management has no longer a unilateral prerogative on this matter in
any of the member-states. All in all, the value system of the Irish version of enterprise
8
partnerships is a hybrid of the work councils and HRM approaches as it seeks improved
organisational performance and competitiveness through procedures and relationships closely
associated with integrated bargaining. Thus if functioning properly enterprise partnerships blur
the distinction: between direct and indirect participation; between operational and strategic
matters; between expertise and authority; between process and outcomes; between bargaining
and co-operation.
Enterprise partnership does not substitute or supplant established collective bargaining
procedures. Frequently they sit check-by-jowl with each other. It is not the case that once an
enterprise partnership arrangement is created then management and unions completely abandon
tried and tested mechanisms for governing the employment relationship. The evidence from
Ireland is that it is wise to keep emerging partnership activity separate from conventional
bargaining procedures largely because it is not possible to identify a correct boundary between
the two. Nevertheless, the unspoken expectation is that partnership will sooner or later modify
the approach all sides take to employment relations negotiations, replacing conflictual and
adversarial approaches with problem-solving and co-operative approaches: in Walton and
McKersie (1965) terms from distributional to integrative bargaining. Thus the relationship
between collective bargaining, new employment practices and partnership procedures differs
from organisation to organisation: sometimes the interactions are complementary, in other cases
they are not. This characteristic reflects the customised nature of enterprise partnerships. Overall,
the core organising principle behind the development of partnerships in Ireland is that such
arrangements should be rooted as far as possible in actual developments in co-operative
employment relations and be ‘owned’ by the various constituencies of the organisation.
The Mismatch Problem
9
This idea of enterprises partnership functioning as ‘borderland’ institutions dismantling chinese
walls that divide alternative procedures and thinking about how to organise work systems fits
uneasily with the existing employment relations literature on partnership. There are four key
dimensions to this mismatch problem. One is that whereas the wider literature searches after a
definition or categories, the Irish experience virtually celebrates the open-ended character of
partnership at work. Developing neat ‘patterns’ has been regarded almost as a hindrance to
understanding such arrangements and certainly as an obstacle to taking positive developmental
action. Second, while the literature makes a great play about the ‘complementarity’ between
practices, the Irish case attaches greater importance to experimentation. Third, in Ireland,
partnerships are seen as developing through a process of guided evolution whereby new practices
are introduced incrementally and tried and tested procedures mutate. In the wider literature more
emphasis is given to the notion of transformative change so that a partnership arrangement can
be more sustainable from the outset (Kochan and Osterman 1994, Roche and Geary 2000).
Finally, the Irish experience sits at odds with some of the literature that emphasises the
importance of mandatory or legal rules to make meaningful progress on the theme of enterprise
partnerships. Thus the existing employment relations literature on enterprise partnerships and the
Irish experience are at odds with one another. Essentially the enterprise partnership model
unfolding in Ireland seeks to establish a procedural consensus between management and unions
which allows them to. The next section seeks to explain why this procedural consensus model
holds out much promise.
Understanding Enterprise Partnership in Ireland
The ‘Whose Interest?’ Question
The competing perspectives of pluralism and unitarism have been the source of the most
enduring theoretical debates in employment relations. But neither of these approaches captures
10
the drive towards the new mutuality and interdependence between employees and employers
sought by enterprise partnerships. On the one hand, the unitarist perspective, which encourages
the view that enterprise partnership is a form of ‘benevolent co-operation’ between employees
and employers, is too naïve if not inaccurate. On the other hand, the pluralist argument that a
balance or an accommodation of interests between employees and employers can only be
secured if the former enjoys some form of countervailing power is too restrictive an
understanding of enterprise partnership. Partnership at the workplace is not a surrogate for
collective bargaining and as such must be analysed in a different way. The still not fully
developed concept of mutuality goes some way to understanding the organising principle of
enterprise partnership. It is an attempt to go beyond the dichotomous and binary thinking behind
the unitarist/pluralist divide and suggest that management-employee interactions involves an
overlapping combination of co-operation and rivalry. To develop this observation involves
stepping outside the discursive framework of the employment relationship and entering the
parallel sphere of the theory of the firm.
Transactions Costs, Competing Interests and Enterprise Partnership
Mainstream economics no longer treats the firm as a black box: the old Cobb-Douglas
production function is no longer so prominent. In the past twenty years or so, a rich and diverse
body of literature has developed that throws greater light on the economic nature and behaviour
of enterprises (Blair 1995). Two ‘alternative’ approaches to the theory of the firm, the resource-
based view and the new institutional or transaction cost perspective, can be used to advance our
understanding of the development of enterprise partnership in Ireland. For the most part, the new
institutional account of the firm focuses on governance aspects of the firm, the institutional rules
and procedures to reduce opportunistic behaviour such as shirking or free riding and to promote
high performance. By contrast the resource-based view of the firms pays greater attention to the
11
learning and competencies aspects of the enterprise. In the theoretical literature on the theory of
the firm these two approaches are frequently treated as alternatives, if not in collision with one
another (see Coriat and Dosi 1998). Harnessing both approaches to shed light on enterprise
partnership suggests that the divide between the two may not be wide as often portrayed.
The transactions cost view of the firm can be utilised to show how the mutuality principle behind
enterprise partnership has an important bargaining dimension, thus highlighting that the interests
of managers and employers are not automatically contiguous but have to be negotiated. More
specifically, the notion of ‘equilibrium contacting’ can be usefully employed for our purposes
(see Wachter and Whyte 1990). This concept treats employees and managers inside the firm as a
bi-lateral monopoly, as they enjoy certain proprietary advantages over certain aspects of the
enterprise. In many organisations employees have greater knowledge about the operational
aspects of the business than managers. On the other hand, managers have privileged access to
strategic information, such as market or financial trends, which is not always shared with
employees. Clearly, it is in the interests of both parties to collude as they have complementary
assets. At the same time, collusion cannot be assumed ex ante as neither side will want to sell
themselves short. Thus unlike the unitarist perspective, which sees co-operation between
managers and employees emerging spontaneously, partnership assumes that the terms of
collaboration have to be bargained. The nature of this bargaining game is to create an incentive
system inside the organisation to ensure that information flows freely and is processed more
effectively. Thus enterprise partnership is about promoting collusive behaviour between
managers and employees to advance corporate strategy by changing the governance structure of
the enterprise. The goal is joint action between different constituencies inside the organisation to
push opportunistic behaviour to one side and achieve superior performance.
12
Financial participation is the most common instrument used to encourage collusive behaviour.
The use of a employee share or profit scheme or gain-sharing plan is closely associated with
enterprise partnership, at least in Ireland. Internal files of Ireland’s largest trade union – SIPTU –
suggest that about 80 per cent of the enterprise partnership agreements signed by the union
involve a financial participation plan. By introducing a financial participation plan, particularly if
it is a profit-sharing or share options arrangement, the organisation is seeking to reshape the risk
burden between managers and employees so to create a ‘common fate’ between them (see
Gomez-Mejia, 2000). A sceptic could argue that financial participation could be introduced
without an enterprise partnership agreement. But as frequently pointed out in the literature design
problems stand in the way of using ‘stand alone’ pay innovations as an incentive measure to
promote collusion between managers and workers. One is establishing the variable component in
the pay package at a level that will have an appreciable impact on attitudes and behaviour
without over-exposing employees (and managers) to excessive risk. Another is to ensure that if
bad commercial times arrive there is not a hostile backlash from employees as they experience a
fall in the variable component of pay. Potentially enterprise partnership can help organisations
meet both challenges.
Consider the first problem. No easy to apply formula exists whereby a financial participation
measure connects incentives to motivation. Even a rule of thumb guide appears unsuitable. For
example, McKersie (1996) has argued that an ESOP needs to provide employees with a 12 per
cent stake in the company before any discernible change in their expectations and behaviour can
be realistically expected. While this may be appropriate for some sectors it may not be feasible in
others. To apply this rule to parts of the petro-chemical industry, for example, would turn
employees into multi-millionaires overnight. Thus, no golden formula exists to guide the
instalment of pay innovations like ESOP. Diffusion can only come about through a process of
13
negotiation and deliberation inside the company.
Enterprise partnership facilitates this process for its raison d’etre is to prompt collaborative
management-employee interactions that lead to organisational innovations. It can also be used as
a procedure to monitor and evaluate the ESOP or whatever financial measure may be in place.
Finally, it can act as the arena for the settlement of disputes that may arise about the operation of
a financial participation arrangement. Thus partnership is a piece of employment relations
machinery that speaks to the diverse objectives of agents inside the organisation. It sets in train
active procedures and relationships that continually challenge management and employees to
modify their behaviour in a manner that benefits both parties. The desired outcome is the
embedding of reward systems that balances fairness and performance inside the organisation.
The Resource-Based View of the Firm and Enterprise Partnership
The neo-classical theory of the firm is not solely challenged by transaction costs or new
institutional economics, but also by the resource-based view of the firm (Penrose 1958). The
resource-based view of the firm treats the organisation as a nexus of competencies (as opposed to
a nexus of contracts which is the transaction costs perspective). From this standpoint, why one
organisation performs better than another is attributed to the internal alignment of intangible,
hard-to transfer, competencies. Thus the resource-based view of the firm is primarily about the
mobilisation of learning and knowledge capabilities inside the organisation rather than the
formation of contracts and incentives. The connection with enterprise partnership should be self-
evident for both assume that people are the core competency of an enterprise and seek to
improve organisational performance through enriching the skill levels and work experience of
employees.
14
Thus enterprise partnership has an important learning dimension. But mainstream theory tells us
that developing skill formation strategies at organisational-level is fraught with problems. It is
well understood that creating well functioning skill formation systems is a complex, even
hazardous task. A key problem is that enterprises for a number of reasons have a tendency to
under-invest in skill formation. For example, enterprises are frequently reluctant to invest in
general skills - those skills recognised through an economy-wide certification procedure - either
because the company will have to pay the employee the going rate for the job or because they
may quit. Paying employees the market wage reduces companies’ incentive to make the initial
investment in training because it would be cheaper for them to hire workers with the necessary
skills from the external labour market or to poach them from another firm.
An alternative route open to firms is to invest in company-specific training. Certainly such a
system has its advantages since it can fine-tune worker skills to the particular needs of the
company. In addition, it insulates the company from the threat of poaching since the skills
acquired by employees are not transferable. But company focused training systems have a
downside. On acquiring skills, employees become more indispensable to the company - in
economic terms they become a quasi-fixed factor of production. In such a situation, a firm is
exposed to rent seeking by employees - an attempt may be made to pursue wage claims that
exceed productivity performance. Enterprise partnership can help address these problems by
creating credible commitments between management and employees. Credible commitments
arise when one party provides an assurance about its own behaviour and gains a reciprocal
assurance from the other party. Predictable and stable interactions of this kind create an
organisational environment that facilitates the deepening of competencies among the workforce.
Thus enterprise partnership strengthens the tacit knowledge of the enterprise by operating as a
trust-building institution.
15
One view is that partnership, especially at the formative stage needs time away from the
commercial ‘front-end’ of the organisation so that management and workers can develop
sufficient confidence in each other when facing the vagaries of business life. An uneasiness
exists about this view in Ireland, largely because it is seen as an overly ‘process’-driven approach
to partnership development. The suspicion is that enterprises have neither the time nor resources
to engage in such trust creating activity. In most circumstances enterprise partnerships make a
pragmatic trade-off between trust and time. Thus a preference has emerged for enterprise
partnership to link trust formation with ‘hard’ tasks associated with business performance. A
‘surfeit’ of trust is not seen as necessary to make enterprise partnership meaningful. (Kern 1998).
This is why ‘projects’ are such an important feature of enterprise partnership. These essentially
problem-solving arrangements foster a shared understanding between management and workers
by ensuring that credible commitments can be translated into practices that guide actual
behaviour: the boundary between process and outcome becomes blurred. This view is in line
with the theoretical literature that argues trust between economic or social actors can depleteif it
is not tested (Gambetta 1988). But in adopting this view means deviating from established
thinking on how to install enterprise partnerships.
An influential idea in the economics of organisations is that enterprises should strive for
complementarity between structures, practices and procedures. (Milgrom and Roberts 1992) The
thinking is straightforward enough: organisations where a strong ‘fit’ exists between different
competencies are more likely to steal a march on rivals. Complementarity allows the collective
impact of competencies to be greater than the sum of the individual parts. Aoki (1994) used this
approach to deepen understanding of the dynamics of the Japanese firm. The thinking also has
left a strong imprint on the literature about the diffusion of high performance HRM practices. A
16
feature of this literature is the assumption, even belief, that it is more advantageous to introduce
new work practices in bundles. This thinking has made its way into the literature on enterprise
partnership. Thus for any arrangement of this ilk to be robust and properly ‘embedded’ it must
involve a series of interdependent and mutually reinforcing changes. The significance of this
approach is that introducing enterprise partnerships must involve transformative organisational
change.
Intuitively, this argument is persuasive and in some instances captures the experience of
particular organisations. The Saturn factory developed by GM motors would be an example
(Rubenstein and Kochan 2000). But the Saturn experiment is an exception and does not reflect
the general pattern of organisational change. Many organisations introduce change
incrementally. Root and branch transformations are seldom involved as organisations mainly opt
for the gradual mutation pathway where established routines and procedures are ‘recombined’ in
one way or another with innovatory practices (see Nelson and Winter 1982). This is true for
partnership as it is for total quality management or business process re-engineering or even the
diffusion of high performance work practices. Thus the big play made about complementarity in
the theoretical literature appears not to be reflected in organisational practice. As a result, it
might be inappropriate to conceive enterprise partnership as tightly integrated bundles of
employment practices. One could even go further and suggest that the pragmatic character of
enterprise partnership development in Ireland calls into question the usefulness of
‘complementarity’ as a normative framework to explain organisational change (Favereau 1994).
If the Irish case is anything to go by experimentalism and disequilibrium are more appropriate
metaphors. The evidence, such as it is, suggests that partnership deepens through the existence of
asymmetries and discontinuities arising between work rules and practices.
17
Thus the envisioned pathway to partnership is that organisational disequilibrium promotes
problem-solving between management and employees (Sabel 1994). In turn, such deliberative
action encourages new work roles and identities based on mutuality and co-operation to take
shape among employees and employers in the context of jointly analysing and developing
remedies to problems. This procedure evolves and strengthens over time as iteration between
management and employees deepens. This approach should not be taken too far as big tensions,
or what Boxall and Purcell (2000) call ‘deadly combinations’, between employment practices,
can lead to self blockage inside organisations. Nevertheless, the notion that partnership inside
companies can be driven by misalignment in organisation structures and practices has merit.
These ideas are at odds with the ‘holistic’ approach to partnership. This approach only truly
acknowledges a radical organisation transformation of the firm, and thus sets a high admission
fee for an enterprise to join the partnership club. For example, it is an approach that has
encouraged exchanges about the relative merits of the Totoya and Scandinavian models of
teamworking (see for example European Foundation 1997). The latter is seen to more worker-
friendly than the former. But for an organisation’s team-working arrangements to be deemed
‘Scandinavian’ it must fulfil a testing list of conditions. Firms falling below the threshold are not
seen to be experimenting with ‘genuine’ partnership work practices. This approach is excessively
prescriptive, not least because recent research suggests that these contrasting models of team-
working are converging on one another thus making hard and fast distinctions between the two
difficult to sustain (Pils and MacDuffie 1994). Thus driving a wedge between different varieties
of the same employment practice by developing categories is hard to sustain in a faster moving
competitive environment.
This view of the development of enterprise partnership also sits uneasily with a lot that has been
18
written about how to make the process sustainable. A common argument is that partnership is
more likely to be sustainable if it involves big changes to the overall administrative system of the
enterprise. Powerful signals are sent out that the organisation has changed its identity to embrace
the organising principles of social partnership. As a result, the durability of the innovation is
more likely to be permanent. This thinking is not flawed in principle. But again the Irish
experience does not fully chime with this argument. It envisions a process in which enterprise
partnership changes the identity of organisations by gradually amending the governance and
learning functions of the enterprise. Greater stress is placed on an enterprise partnership
installing a value or belief system in the organisation. An enterprise when faced with external or
internal challenges can respond in a number of equally viable strategic ways. Enterprise
partnership encourages the organisation to choose the alternative that promotes competitiveness
and fairness. Thus partnership is about reshaping the attitudes, behaviour and roles of people
inside the organisation. On this view enterprise partnership becomes more sustainable when it
acts as an internal change agent guiding the evolution of the organisation. The assumption is that
enterprise partnerships have different starting points and develop at different speeds and thus
must be seen first and foremost as institutional procedures and practices that deepen management
and employee co-operation. Thus sustainability is tied up with the process of embedding
partnership inside the organisation and not so much with whether big transformations occur at
the start of the process (Charny 1999). This idea of enterprise partnership as guided evolution is
set out in the figure below.
< Figure 2 about here>
Beyond Mandatory Rules and Open Coordination
A common argument in the employment relations literature is that without legal rules
organisations fight shy of establishing institutionalised bodies such as works councils that seek to
advance representative relationships between management and employees. But this begs the
19
question, seldom asked by industrial relations scholars: if institutional arrangements such as
works councils are so beneficial why are laws required obliging firms to set them up? Surely if
they were so advantageous, organisations would create them voluntarily? Freeman and Lazear
(1995) seek to provide a theoretical answer to these questions. They suggest that employees and
employers may not engage in mutually advantageous co-operative interactions even if it is in the
self-interest of both parties to do so. This is because a range of negative externalities, mostly in
the form of information asymmetries, prevents the creation of adequate incentives to install
institutionalised forms of employee involvement. On the one hand, management will vest them
with too little power. On the other hand, workers will demand more power than is considered
optimal by managers. As a result a type of market failure arises that cannot be credibly reduced
on a voluntarily basis. This is a tidy argument given plausibility by the evidence that where there
are no mandatory rules representative institutions promoting employee involvement tend not to
exist.
The negative externality identified by Freeman and Lazear plays a prominent part in the debate
about enterprise partnerships in Ireland, although the problem goes under the less imposing term
‘buy-in’. A multitude of distorting expectations and perceptions are seen to exist about enterprise
partnerships, slowing down their diffusion (O'Donnell and Teague 2000). Some managers, at
both senior and middle level, see partnership as a threat, encroaching on their prerogative to
make decisions unilaterally. For their part, many trade unionists have unrealistic expectations of
such arrangements. Frequently enterprise partnership is seen as the direct descendant of the
worker democracy movement of previous decades and thus involve a decisive transfer of power
and authority from management to employees. Any arrangement falling short of this litmus test
is dismissed as an incorporation ploy by management. Perhaps the most prevalent tendency is
widespread misunderstanding, among managers and trade unions alike, about the meaning,
20
purpose and outcomes of enterprise partnerships. These muddled expectations and perceptions
have fuelled a ‘buy-in’ problem – managers and employees are uncertain about what partnership
entails and as a consequence are reluctant to fully embrace such a development.
From the standpoint of Freeman and Lazear this is a situation in need of legal rules obliging
firms to create some type of employee involvement arrangement. Yet in Ireland using the law to
advance employee involvement has never been seriously countenanced, largely for contextual
reasons. Extending the information and consultation rights of workers through legislation is seen
as putting the attractiveness of Ireland as a site for inward investment in jeopardy. The extreme
openness of the Irish economy has led Irish governments, irrespective of political hue, to
exercise self-restraint in the sphere of labour market regulation. There is ample evidence
indicating that social partnership plays second fiddle to the country’s overall economic strategy
of encouraging mobile investment projects to locate in Ireland. At the same time, there is wide
recognition that if enterprise partnerships are to become the dominant method of managing the
employment relationship at enterprise level a comprehensive public support system must be
created that provides high grade facilitation and training. This is because many managers and
employees have not got the competencies to engage in meaningful partnership activity.
Thus as a substitute for mandatory rules an extra-firm public programme has been developed to
promote partnership at organisational level. This has four overlapping components. One is the
sponsorship and co-ordination of learning networks which involves companies setting up
partnerships connecting with one another to share experiences and to gain knowledge about how
to solve problems associated with partnership building. These networks are closely monitored
with a view to creating diagnostic instruments and training modules. The second is a research
and dissemination function. A variety of focused research projects have been sponsored to
21
deepen understanding of the partnership process in action – the extent to which employee and
management attitudes change with the introduction of collaborative employment practices. A
third function is building verification and assurance focal points outside the organisation. Very
often employees and managers inside organisations seek assurance from external agents,
normally in the form of national trade unions and employer associations, that meaningful value-
added activities will emerge from embarking upon the partnership road. To facilitate this
demand, IBEC and ICTU, the national employer and trade union bodies respectively, have
developed a number of important projects and advisory services. These initiatives are important
as they guarantee organised labour a central role in the supportive framework for enterprise
partnerships. In addition, the main agency charged with promoting organisational partnerships,
the National Centre for Partnership and Performance, has increasingly taken on the role of
external verifier. In essence, this role involves the Centre given its imprimatur to various training
agencies and experimental actions which organisations and trade unions regard as a quality
standard. The fourth function can be called experimental public policy. For the most part, this
involves the NCPP co-ordinating new joint action by different arms of government and semi-
public bodies to advance partnership at enterprise level.
All in all, the public support framework that has emerged for enterprise partnership can be
labelled an open method of co-ordination . The emphasis is on the use of ‘soft’ regulation rather
than hard law to build a supportive public framework for installing the principles of social
partnership inside organisations (see Ogus 2000). The open method of co-ordination is
distinctive. It is not like most HRM models which seeks to internalise the governance of the
employment relationship inside an organisation. HRM assumes that there is little need for an
active public policy regime to help shape and guide enterprise-level employment practices. The
open method of co-ordination emphasises that a public framework for employment relations is
22
essential not least to address labour market (and institutional) failures. But it departs from the
traditional social democratic model of labour co-ordination, which relies heavily on constraining
laws and procedures. Open co-ordination emphasises support structures over constraining rule,
pragmatic problem solving over adversarial bargaining social consensus over militant
mobilisation.
This approach to public policy for the labour market is not the product of a master plan for Irish
employment relations, but emerged largely as the unintended consequences of a series of
decisions and practices. At the same time, having reflected and learnt from these unintended
consequences it is fair to say that key policy-makers do have a coherent vision of the open
method of co-ordination and how it should influence labour market governance. The theoretical
inspiration behind this method is derived from a number of interrelated sources. One is the
‘pragmatic’ school of political philosophy that was influential, mainly in the USA, in the early
part of this century. The writings of John Dewey are representative of this tradition. According to
Dewey most of what we know and conclusions we derive from ‘facts’ and ‘evidence’ are fallible
and provisional and will be moderated in one way or another in light of experience. This
standpoint leads him to argue for a ‘pragmatic’ approach to public policy which emphasises
adaptive problem-solving. Thus, for Dewey experimentalism, iteration and dynamic adjustment
are the hallmarks of good governance.
Another overlapping influence is what political scientists call deliberative democracy which
stresses the importance of ‘collaboration’ and ‘reasonableness’ to economic and political
governance (Elster 1998). This approach has an impressive historical lineage. Its imprint is
unmistakable in the writings of the founding fathers of American federalism such as Maddison
and Jefferson. Connections with Rousseau and the early Greek philosophers such as Plato are
23
also evident. Deliberative democracy sees governance largely about the identification and
resolution of policy problems through informed debate and preference-changing dialogue. The
collection and interpretation of evidence to monitor and evaluate the effectiveness of individual
social and economic programmes are also conferred key strategic importance by this approach.
Thus deliberative democracy focuses on how political and social institutions can promote
collaborative action that aims to mobilise effort and knowledge to advance widely supported
economic and social priorities. All in all, the two mainstays of the open method of co-ordination
are flexible-decision-making structures and consensus-building activities. These are the two
underlying principles guiding the still unfolding governance regime for enterprise partnership.
Conclusions
This paper contains many arguments that depart from the established employment relations
literature on social partnership at enterprise level. Most of this literature has been inspired to
ensure that the principle of equity is not forsaken by organisational strategies seeking change and
improved performance. Thus it may be appropriate by way of conclusion to offer some remarks
about how the Irish model advances fairness at work. Probably, the most significant aspect of the
Irish experience is that it promotes a distinctive approach to the matter of organisational change.
In the management literature, heavy emphasis is placed on leadership models of organisation to
guide such change. Some of these models place too much emphasis on the actions of an elite
group of managers to bring about such things as continuous improvement. A number of
distortions can be produced by such approaches. First of all, over-ambitious managers eager to
stamp their presence may find the 'vision thing' too enticing and inflict major organisational
upheavals on enterprises which may not have been warranted in the first place. Furthermore,
24
managers, trying to display leadership qualities, may engage in cavalier delegation practices that
cause resentment and disengagement amongst employees. In these circumstances, active
participation and information-sharing by employees, which are indispensable to improving
performance, become well nigh impossible. Managerial unilateralism of this kind is challenged
by enterprise partnership through encouraging a more encompassing, more inclusive approach to
the change process.
Second, the novel institutional framework to promote enterprise partnership is potentially a
useful vehicle to advance fairness at work. To be sure, the open method of labour market co-
ordination downgrades the special status of trade union as the core guarantor of economic
citizenship. The manner in which people are incorporated into the world of work relies on a
wider range of institutions. At the same time, trade unions have a crucial role to play in ensuring
the new framework does realise its full potential. The more pro-active and constructive the trade
unions are in institutions of open co-ordination the more likely they will be able to agenda-set on
the matter of fairness at work. But this will be a challenging political and organisational task.
Like all organisations in the enterprise partnership game, trade unions are operating with
imperfect and variable knowledge and understanding. Thus to affect change inside the new
institutional machinery they will also have to undergo change. To identify, understand and adapt
practices that advance social justice at work may require internal trade union reform. They will
have to forge new external organisational alliances and adopt new internal procedures. Under a
labour market regime that emphasises the fallible and thus provisional character of labour market
rules and procedures, trade unions will have to continuously renew and modernise the ways they
do things. Flexible organisational structures are at a premium. To be sure, the Irish experience
does not provide all the answers about how to combine fairness and competitiveness in the one
labour market, but it has generated important new thinking and procedures which require careful
25
deliberation from the employment relations academy.
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Figure 1
Figure – (Loose) Design Features of Enterprise Partnerships
OverarchingPartnershipCommittee
HighCommitmentHRM policies
ProjectsDirect Participation
CollectiveBargaining
30
Figure 2 Enterprise Partnership as an Agency Structure
Objective function (combiningcompetitiveness and fairness)
Enterprise socialpartnership as aninternal agent ofchange (Projects)
Activity Topics(Financialparticipation, teamworking)
Sources of variation(organisational sub-units-different human capitalneeds of employees
Administrative System of theenterprise (formal structure,incentive system system,organisational routines)