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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

ReferencesAllen (2000) “The Celtic Tiger: The Myth of Social Partnership in Ireland” Manchester,Manchester University Press

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

Cantillon, S, Corrigan, C, Kirby, P and O’Flynn, J (2001,eds) Rich and Poor: Perspectives onTackling inequality in Ireland Dublin: Oak Tree Press/ Combat Poverty Agency

Ebbingbus, B and Hassel, A (2000) “Striking deals: concertation in the reform of continentalEuropean welfare States” Journal of European Public Policy Vol 7:1 p 44-62

Fianna Fail (1987) Programme for National Recovery (Election Manifesto)

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

Government of Ireland (1987) Programme for National Recovery Dublin, GovernmentPublications Office

Government of Ireland (1990) Programme for Economic and Social Progress Dublin,Government Publications Office

Government of Ireland (1993) Programme for Competitiveness and work Dublin,Government Publications Office

Government of Ireland, 1996 Partnership 2000 Dublin, Government Publications Office

Government of Ireland, 2000 Programme for Prosperity and Fairness Dublin, GovernmentPublications Office

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

McSharry (2000) in McSharry and White The making of the Celtic tiger Cork :Mercier Press

Manseragh (1986) The Spirit of the nation: the speeches and statements of Charles J.Haughey. - Cork : Mercier

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.

Teague, P (1995) “Pay Determination in the Republic of Ireland: Towards SocialCorporatism” British Journal of Industrial Relations 33:2: 253-273

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)