Return to Recent Articles menu

Partnership and pay restraint

The economic foundations of the nurses pay deal

25 February 2019

Mechanisms of social partnership have been in place for over 30 years, regulating the pay and conditions of public  sector workers and of the workforce as a whole. In this environment the nature of Irish trade unionism has changed significantly. Many bureaucrats have never seen a strike and on the rare occasions that strikes take place they are followed almost instantly by a deal.

However the most extensive changes occur in the committees and boards jointly staffed by bosses and bureaucrats; the PSSA, the public sector pay review committee, the implementation committee, the workplace relations committee, the labour court and so on.

There is a change in vocabulary: equity and social justice are not discussed. The new agenda involves recruitment, retention and parity of different pay grades. The discussion is purely technical - can pay and conditions be kept within budget without leading to a flight of key workers?

The temptation is to denounce the collaboration of the union bosses and the sellout of the workers. We should avoid this sort of moralism and instead try to understand why the bureaucrats do what they do and the consequences of their current strategy.

It's useful to say exactly what trade unions are as opposed to what we wish them to be. They are not forerunners of revolution, rather they are institutions within capitalism trying to adjust the price of labour power in favour of workers both for individual trades and for the class as a whole. When the workers are advancing they are active in the unions and winning reforms in society. In retreat the unions become more heavily bureaucratised and oversee retreats where workers conditions worsen.

In many advanced capitalist societies in times of boom the unions built social democratic parties and won reform. The time of capitalist boom is long gone. Social Democracy is in decay. The unions go along with austerity in the hope that capitalism will recover and the good times will come again. This process is particularly acute in Ireland, where the decades of formal partnership with bosses and government and subordination to imperialist domination of the country have locked the unions with capital in endless offensives on the workers.

The processes faces major contradictions that are becoming more acute.

The first is the limitations of recovery in Ireland. It is hard to be exact about the Irish economy. We have been through the period of “leprechaun economics” when the offshoring of a few U.S. firms appeared to boost the growth rate to over 26%. This weird figure reflected the dominance of transnational capital over the native economy - a dominance so great that a new economic measure, GNI*, has had to be invented to arrive at any rough approximation of economic activity. Increasingly the influx of capital is purely financial as Ireland’s role as a tax haven begins to dominate.

When some transnational activity is stripped away Ireland’s position is dire. A claimed income of €330 billion in 2018 is reduced to €190 billion under GNI*. national assets minus outgoings gives a figure of minus €438 billions. The debt per person is calculated at €105,000, the highest in Europe. The banks are still not secure despite an €80 billion subsidy and are busy shedding under-performing mortgages into the hands of vulture capitalism. Debt repayment is fueled by a firesale of public property through the NAMA agency and today by the forced selloff of public land.

However the real problem lies with the budget. The 2018 tax income was €43.4 billion. Debt repayment stood at €20.5 billion, almost 50% of income. These are the figures that, alongside ECB restraints, create a constant pressure on public sector pay and services. Fully funded public services would involve the Irish government defying the European Central Bank and international financial institutions.

Just how likely is this revolt by Irish Capital?

In the three decades before 2016 the proportion of wealth held by the top 10% of the population rose from 42% to 54%. At the same time the share of wealth held by the bottom 50% of the population had fallen from 12% to 5%. The concentration of wealth at the top has continued unabated.

The explanation for this process is self-evident. Rather than being victims of imperialist rapacity alongside Irish workers, Irish capitalism acts as local agent for the banks and bondholders, extracting wealth from the population. A good example of this process can be seen in the current housing crisis. The law has been changed to allow local and transnational capital to come together to form REITS (Real Estate Investment trusts) - financial instruments for the super-exploitation of mortgage and rental income.

The process of wealth extraction in Ireland has been fantastically successful. The unit cost of labour is the lowest in the Eurozone and labour productivity is the highest. Since the credit crunch Irish capital has squeezed blood from the stone. The nurse’s strike shows we are reaching a limit - very little blood remains. Wages and services are constricted while open season in housing profiteering drives rents and mortgages up and up.

It is in this environment that we have to view discussions between bosses and union bureaucrats in the PSSA, bearing in mind that public sector pay, once the  lower limit on a living wage, is now seen as an anchor holding down overall pay rates. We are now at a point where keeping skilled workers and hiring new ones in both the public and private sector is a mayor problem as wage rates are outstripped by living costs.  This is so acute that inability to import skilled workers in the construction industry is a serious bottleneck to further expansion. The same process in the health service means that it is unlikely that the nurses pay deal will be enough to retain nurses - the issue of the decay of the health service is not addressed.

Ireland is an extreme example example of a long attempt at capitalist recovery. That experiment is coming to an end. Brexit will run alongside economic weakness in Europe and across the world.

Where will Ireland stand? Irish capitalism has exhausted austerity. Resources have been sold off. Services are lined up for privatisation.

What reserves has Ireland now? Will workers remain within the narrow confines of a failed social partnership? Will they continue to stand behind a failed trade union leadership?

The crisis is not just economic.  It is political. Long ago the trade unions found that strike action is severely constrained. The individual employer is joined by employers as a class and the armed bodies of the state line up against the workers. In response the unions helped found parliamentary parties to gain governmental power and win reforms. Because of the division of the country and the weakness of the working class Irish labour never filled that role. The unions collaborated in a nationalist alliance with Fianna Fail, the precursor of later social partnerships. Labour served as a conduit in government when the far right Fine Gael formed coalition governments.

This was the case in the most recent coalition government, but the level of austerity was so great that labour, instead of acting as a cushion for the working class, became a battering ram against them and demanded criminal charges against protesters. As a result the party was decimated in the elections.

The union leaderships are left without any political clothes. The major unions, led by SIPTU, have a project of reviving labour. The left unions looked towards a ”broad left” party based around Sinn Fein.  This project collapsed, but Sinn Fein are now orienting towards the left bureaucracy with TUNUI (Trade Unionists for a New and United Ireland) . The various electoral projects look towards a populist rights based approach - a “new republic” or an ” Irish commonwealth". The unstated assumption is  that wealth taxes can reverse austerity without a need to repudiate the sovereign debt or confront the ECB and the vulture funds.

And this is the crisis for the working class. The old political structures have failed and there is an urgent need for a party that represents their needs. However that party should be founded on the need for the revolutionary overthrow of capitalism rather than its repair. In addition we should recognise that solutions will not be found within the narrow confines of a partitioned Ireland or under the thumb of imperialist economic control. A new workers party would of necessity reach out to the oppressed workers of Europe and to the oppressed across the globe.

Return to top of page