Potentialities of social partnership

Last month a Maltese delegation made up of representatives of constituted bodies was in Ireland on a study visit on 'social dialogue'.

The visit was organised by the Workers' Participation Development Centre, of the University of Malta, with the help of John McAdam, an Irish human resources and social partnership consultant.

Finances came mostly from the Freidrich Ebert Stiftung Foundation, which has an office in Malta, administered by Ebba von Fersen Balzan.

The Maltese delegation, who was in Ireland on the day after the referendum, included Professor Godfrey Baldacchino, Saviour Rizzo and Nerissa Sultana (from the WPDC), Alfred Buhagiar and myself (CMTU), Tony Zarb and Emmanuel Micallef (General Workers' Union), Antoinette Caruana and Mario Grixti (Human Resources Development Centre), Joseph Delia and Joseph Farrugia (Malta Employers' Association), and Frank Pullicino and Anthony Azzopardi (Department of Trade and Industrial Relations).

The delegation had a very intensive programme, with 17 relevant places to visit and 23 experts to meet. But the lessons learnt from these meetings are abundant, and all are applicable to Malta because of the stark similarities.

These similarities cannot be found only in the history of the two republics, nor only in the two countries' culture, but also in the situations, economic or otherwise, that exist in Malta today and that prevailed in Ireland before it began to experience its economic boom, by which Ireland earned the nickname of "The Celtic Tiger".

It is arguable whether this progress, which turned Ireland into a modern, pulsating state, is attributable completely to its integration into the European Union. However, it cannot be denied that being a member state in the EU has helped it to attract a huge amount of foreign investment, mostly from the US, which in the past two decades changed the country from the poorest among European nations to the third richest among the EU member states.

Social dialogue

People in Ireland, however, argue that many opportunities which led to the prosperous situation that Ireland basks in today would have been lost had the country not embarked on a very sound system of social dialogue on the workplace and in all strata of society.

In the early Eighties Ireland was plagued by high interest rates, high inflation, an uncontrollable public expenditure, high unemployment, debt burdens and aimless economic policies. It is time to make sincere comparisons, we think. What made Ireland tick and embark on the road to recovery was the nationwide acknowledgement of such situations and the decision by everyone concerned to sacrifice partisan interests, to agree on the top priority of saving a very sick economy to enhance the country's competitiveness in the global context that presents bigger challenges every day.

All the social partners agreed to pull the rope. The political spectrum always gave unconditional support, and implemented every decision reached by consensus between the social partners in the national interest. The Irish government, at one time, did not even shy away from adopting the economic policies of the opposition in Parliament, so that this particular aim could be reached, and the results are palpable enough.

In the early Eighties Ireland had 19 per cent unemployment, a ratio of debt to GNP of 131 per cent, an unsustainable income tax burden, a resumption of emigration, real take-home pay down by seven to 11 per cent, nominal pay rises high in recessionary conditions, and high and frequent industrial unrest.

To manage this crisis and regain competitiveness, the social partners got together and embarked on a series of three-year agreements. The first gave a start to "The Programme for National Recovery" (1987-1990).

Then they agreed on "The Programme for Economic and Social Progress" (1991-1994), "The Programme for Competitiveness and Work" (1994-1996), and "Partnership 2000" (1997-2000). "The Programme for Prosperity and Fairness" (2000-2003) followed, and is still being put into practice.

Results

Working in partnership has proven very efficient. Competitiveness was enhanced, and this led to growth in employment. Because of this tax revenues rose, and Government could reduce direct taxes, which made possible restrained wage increases and industrial peace. This, in turn, enhanced competitiveness to complete a virtuous circle.

Through social partnership Ireland experienced an annual average GDP growth rate of nine per cent between 1990 and 2000, and 28 per cent growth in employment between 1994 and 1999, and 6.5 per cent growth in the years between 1997 and 1999. Unemployment, which reached 19 per cent in 1987, went down to four per cent in 2000. Between 1987 and 1997 the cumulative increase in real take-home pay is 35 per cent. The GDP per capita now is 115 per cent of the EU average.

The main driving forces for this transformation are demography, education and foreign direct investment. In the past 20 years, Ireland experienced a growth in population. Massive emigration was halted; rather, the Irish began to go back to their homeland. This fact, and the 1970s baby boomers led to an increase in the participation of the labour force.

The majority of the population is in the 29-49-year-old range. The labour force in Ireland owes its growth to the increase in male and female participation in the labour market, returned migrants and education.

Investment in education

Ireland invested heavily in education. In 1967 free second level education was introduced, and from the 1970s tertiary education started to be targeted. Ireland embarked on a long-term investment in higher education at all levels (especially in technical areas).

A young, highly educated English speaking and a relatively cheap labour force is, in fact, one of the attractions of foreign direct investment in Ireland.

There are other factors, however, that changed Ireland into one of the richest countries in the world. Among them is EU membership, which gave the republic access to a very huge market. To attract investment Ireland also embarked on a long-term, consistent industrial policy, and a low corporation profits tax.

Ireland's transformation verges on the miraculous, but it also accentuates the unlimited possibilities of the social partners working together. This is the most important lesson that Ireland can impart to us, Maltese. When crisis occurred, the social partners put aside their differences and particular interests to work together in the national interest.

The confederation augurs that we will do likewise when we will be faced with similar situations, or when we admit that such situations as prevailed in the Seventies in Ireland have already overtaken us.

The participants of this visit have taken it on themselves to convince all the other constituted bodies, and all Maltese workers and employers, that there is only one way out of an economic rut and towards progress - a sound system of dialogue involving all the social partners.

Mr Magro is general secretary of the Confederation of Maltese Trade Unions.