The impact of the eurozone crisis on Irish social partnership: A political economy analysis

Aidan Regan’s new paper is here, it’s obviously dated by the putative Haddington Road agreement, but well worth a read for context.

By Stephen Kinsella

Senior Lecturer in Economics at the University of Limerick.

11 replies on “The impact of the eurozone crisis on Irish social partnership: A political economy analysis”

Page 11

The publication of a report in September 2009 by the Economic and Social Research Institute (see McGuiness et al., 2009) played a significant role in shifting the politics of labour relations to unit labour costs in the public sector. The report found that public sector workers earn, on average, 22 per cent more than their counterparts in the private sector,
after taking into account age, experience and education. The report was central to a coordinating policy discourse that resulted in increased politicization of labour relations in the Irish public sphere. Whilst many economists supported the report’s conclusions, it was not without its critics. Industrial relations scholars argued that it was too simplistic to statistically compare a homogenous public sector to a homogenous private sector when there was such significant sectoral and occupational differentiation both within and across these sectors (see Geary, 2010). This challenged not the politics of wage coordination in the sheltered sectors of the economy but the methodological complexity of measuring unit labour costs in a heterogeneous economy.

Where were these “industrial relations scholars” when benchmarking was being rammed through precisely on the basis of headline comparisons of public-private wage differentials?

The social partnership was irrefutably strengthened by the crisis. The amoral professional ascendacy running Ireland have seized and maintained their wealth and power, while passing all of their costs to the oridinary people who are once again forced to emigrate — and probably starve the way things are going.

And to think, people in this country used to blame the British for the Famine.

Thanks for linking to this article Stephen.

@ Frank

Most scholars were probably not in a position to challenge the precise comparisons of Benchmarking given that the data was never released. Most of the analysis at the time was focused on wages catching up with an overly inflated economy – primarily driven by procyclical fiscal policies and a house price boom. Benchmarking was ultimately a political exercise to keep the unions aboard this bonanza. But this does not mean that the process of benchmarking pay (when done properly) is in-itself a bad idea.

There’s an error on page 14:
“Social security and employment protection
Headline social welfare payments rates have not been cut in Ireland, despite an austerity package that after six years will amount to more than 16 per cent of GDP.”

Headline social welfare rates were cut twice, excluding State pensions. The main rates of JB/JA were cut from 204 to 196, and then to 188. Same goes for disability payments / OPF payments, etc.

@ Aidan R

Appreciate the response.

Looking back at those 2008-09 pay negotiations, the air of unreality about it all in the light of subsequent developments is bizarre. Here’s my favourite from a quick news search —

The Tánaiste’s comments came as bank workers were expected to press ahead with their claim for an increase of 10% in their pay over the next two years.
The Irish Bank Officials Association is to meet in two week time to discuss the claim.
The Association’s General Secretary, Larry Broderick, said his union lodged its pay claim six months ago and that workers could not afford a pay pause.

That was August 2008.

@ Aidan R,

I’m afraid I’ve only had time to give a cursory reading to your interesting paper at this point. However, it strikes me that if you plan to develop it further, reference to Hardiman (ed.) (2012) ‘Irish Governance in Crisis’ OUP and chapters by Adshead.M and others in O’Malley and MacCarthaigh (eds) (2012) ‘Governing Ireland’ Dublin: IPA on social partnership in Ireland should be of interest and complement your analysis.

One of the oddities of the Irish experiment in social partnership that always strikes me is that while it was born out of crisis, political and economic, the foundations it established within the infrastructure of governance were so shallow that it perished in the onset of the current financial crisis. Adshead observes: “Two decades of experience of social partnership did not irrevocably change the architecture of the state or of government. When it collapsed in 2009 … the vacuum was quickly filled by a strong government executive” and “within government the balance of power shifted back from the Department of the Taoiseach to the Department of Finance.” (Adshead, 2012) It was dismantled as easily as it was established in the first place. The question then is, why does it leave so little trace?


Obviously I should have been paying more attention to the co-authors of the relevant chapter in the O’Malley book. Mea culpa!

Thanks for the link to your earlier paper and yes, I would be interested in your forthcoming book. I hope it goes well for you.

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