Ireland The Changing Role of the

National Economic & Social Council

Rory O’Donnell

Directorrory.odonnell@nesc.ie

www.nesc.ie

National Economic Social Council NESCNESC

Late development

Industrial strategy

Social Partnership

Ireland is interesting because

Late development

Industrial strategy

Social Partnership

Ireland is interesting because

19thC de-industrialization & population collapse

Protection, 1922-1960, failed because of small, poor, peripheral, home market

Remarkable convergence 1987-2008

Late development

Industrial strategy

Social Partnership

Ireland is interesting because

Since 1960, industrial development with activist public agencies

focus on:•exports•inward investment•European integration•S&T and innovation

‘Networked Developmental State’

Late development

Industrial strategy

Social Partnership

Ireland is interesting becauseInherited sterling & UK industrial relations

From 1987 to 2008 used social partnership institutions & agreements to manage key macro, wage & supply-side issues

Crisis since 2008: unilateral government action & collapse of national partnership

NESCNESC

1. The role of an ESC reflects the national development challenges & is often shaped by crises in strategy & politics

2. The institutional design and organisation of the ESC matters

3. Traditional forms or 'representation' & 'participation', such as ESCs, face challenges

Three main propositions

NESCNESC

•Established 1973, without statutory basis

•Initial membership: employers, trade unions, farm organisations, academic experts & 5 govt departments (including Finance)

•Chaired by Secretary General of PM’s office

•Meets monthly, in plenary not working groups

•Serviced by small Secretariat (economists and social policy analysts – PhD & masters-level)

Basic description of NESC

NESCNESC

•Seeks consensus on analytical reports prepared by Secretariat or consultants, no voting

•Not involved in legislation or mediation

•Focus mostly on strategic issues and principles

•Widened to social NGOs in mid-1990s

•Widened to include environmental NGOs in 2011

Basic description of NESC continued

NESCNESC

1. Composition: employers & trade unions OR inclusion of social NGOs & others

2. Relationship to government: independent of government or close to government system

3. Focus and conduct of work: medium-term issues & principles OR immediate, concrete, issues; plenary OR working groups

4. Nature & goal of discussion: talk OR consultation with each other & government OR dialogue with goal of agreement or consensus

ESCs differ on several dimensions

NESCNESC

1. Composition: widened to include agriculture organisations, social NGOs & environmental NGOS

2. Relationship to government: close to government system because chaired by PMs department

3. Focus and conduct of work: traditionally medium-term issues & principles, not hard business of social partners with government

4. Nature & goal of discussion: evolved from consultation to search for agreed analysis & basis for agreements with government, and recently back to consultation

Ireland's NESC on these dimensions

Characterising Councils & Dialogue

Dialogue& consensus

Dialogue

Consultation

Talk

Govt&business

Govt, business,unions, ag. groups & academia

Govt., business,unions, agriculture, academia & social NGOs

Govt., business,unions, agriculture social NGOs, academia & environment

Characterising Councils & Dialogue

Dialogue& consensus

Ireland1986-96

Ireland1996-2008

DialogueIreland 1973-86

ConsultationIreland1963-73

Ireland2009-11

Ireland2011-13

Talk

Govt,business& unions

Govt, business,unions, agriculture & academia

Added social NGOs

Added environmental pillar

NESCNESC

1. 1973 to 1985:Prepare analysis of specific policy issues &

advise government

2. 1986-2008:Prepare agreed analysis to underpin three-

yearly social partnership agreements

3. 2009-2013:Prepare studies to assist government in

crisis management & explore basis for consensus

Three phases in the role of NESC

From initial growth to crisis

• Opening & activist policy started growth 1960s• Through FDI, trade, public investment, EU

but • Indigenous industry lost in free trade• Social need & expectations rose• Sterling context meant inflation/instability• Industrial relations conflict 1970s-80s• US Foreign Direct Investment fell in 1980s • Crisis prompted discussion in NESC 1986

Orthodox economic view 1979-86: fiscal and wage indiscipline

undermined business success

Decline of inward

investment and failure of indigenous business

Excessive spending,

public borrowing and wage growth

NESC analysis yielded wider view 1980-86: problems of stabilization,

distribution and development are connected

Business damaged by

fiscal and labour

problemsAlso reflect developmental challenge of

a regional economy

Fiscal crisis has a

developmental element

Macro pressures & debates also

crowd out supply-side

issues

•Social Partnership System

1987 to 2008• A three-yearly NESC Strategy report on

economic and social situation & challenges

• Negotiations then conducted in PM's department

• Written 3 year partnership programme • Mechanisms for monitoring & review – in

PM's department, not NESC• 8 Partnership programmes 1987 to 2008• Remarkable economic & social progress

NESCNESC

1. articulated a shared understanding of key economic and social mechanisms

2. aligned partners to consistent and competitive actions: macroeconomic, distributional & supply-side.

3. provided framework for strategic government policy.

Role of negotiated partnership programmes 1987-2008

NESCNESC

•Joint observation of evidence, both pleasant and unpleasant

•Analysis that reframes a problem in a way that allows actors to see new possibilities for agreement and action

•Allowing a combination of bargaining, solidarity & deliberation

NESC's role & method in partnership period

1987-2008

NESCNESC

1. 1986: basis for agreement on fiscal correction & development

2. 1989: European integration3. 1990: analytical foundations for a

partnership approach to macroeconomic, distributional & structural policy

4. 1996: enterprise-level partnership5. 2005: The Developmental Welfare

State6. 2006: immigration & labour

standards

Examples of NESC's reframing analysis

Networked Developmental State & Developmental

Welfare State NDS

The long-term strength of

the economy now depends

on industrial & effective

social policy

DWSSocial policies

must share responsibility for economic performance

and participation

2000-2007: growth, politics & partnership yielded

• Opportunist tax cuts & pro-cyclical fiscal policy

• Pressure for housing supply• Insufficient public sector reform: training,

education, health, childcare, welfare, housing, social services & transport

• Bargaining focus on labour standards• Wage growth ahead of EU rates• Unresolved issues glossed over by

revenue & spending increases

Segmentation in Ireland's Social Pacts

NESCNESC

1. To achieve deliberation & reports/advice that go beyond the lowest-common denominator & facilitate problem solving

2. To pitch the work at the right level: between high-level strategy/principles & the hard business that social partners do with government

3. To maintain relevance in the face of both 'new governance' and 'permanent austerity'

Three basic challenges for ESCs

NESCNESC

'New governance'• Governments engage stakeholders

directly• Policy thinking closer to policy

implementation• Economic, social & environmental issues

interact, needing inter-disciplinary analysis

• Policy cause & effect more uncertain'Permanent austerity'

• Unilateral government action & Troika direction

• More zero-sum & less win-win possibilities• Social partners focus on bi-lateral relation

with government • International instability & uncertainty

Challenge of maintaining ESC relevance

NESCNESC

1. O'Donnell, R., Damian Thomas and Maura Adshead (2011) 'Ireland: Two trajectories of Institutionalisation' in Avdagic, S. Martin Rhodes & Jelle Visser eds. Social Pacts in Europe: Emergence, Evolution and Institutionalisation, Oxford University Press,

2. Devlin, Robert & Graciela Moguillansky (2010) Alanzias Public-Privadas Para Una Vision Estrategica Desarrollo, Santiago: CEPAL & SEGIB

References