DublinCityUniversitySchoolofLawandGovernment

AVeryPoliticalProject:CharlesHaughey,SocialPartnershipandthepursuitof

an“Irisheconomicmiracle”,1969-92

By

PhilipO’Connor

ThesiscompletedunderthesupervisionofProf.GaryMurphyin

fulfilmentoftherequirementsforthedegreeofDoctorofPhilosophy

DublinCityUniversity,SchoolofLawandGovernment

January2020

Declaration I hereby certify that this material, which I now submit for assessment on

theprogrammeofstudyleadingtotheawardofDoctorofPhilosophyisentirely

myownwork,andthatIhaveexercisedreasonablecaretoensurethatthework

is original, does not to the best ofmyknowledge breach any lawof copyright,

andhasnotbeentakenfromtheworkofotherssaveandtotheextentthatsuch

workhasbeencitedandacknowledgedwithinthetextofmywork.

Signed:________________(Candidate)DCUID:54160707Date:6thJan.2020

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TableofContents

TableofContents 3

Acknowledgements 6

Abstract 7

Introduction 8

Chapter1:Theoreticalcontentionsandcompetingliteratures

Contentions 14Thepoliticaleconomyofpolicychange 15Policyandpartnershipintheeconomictransformation 19Ireland’ssocialpartnershipincomparativeanalyses 22Otherliterature 24

Part1:Leaps,BoundsandReversals,1945-86 29

Chapter2:Thequestforsocio-economicorganisation,1945-70Irishpoliticsandeconomicinterestsbefore1945 30Fitsandstarts:Irish“tripartitism”1945-56 36Lemass’seconomicinstitutionalism1957-63 40Systemstresses:fromexpansiontodissolution1963-69 45Spiritofthe‘60s:socialchangeandindustrialcrisis1967-69 49“Orderpluckedfromthreateningchaos”:Haughey’s1969-70initiative53Lynch’sretreattominimalism:the1970WageAgreement(NWA) 56Haughey,theITGWUandthesuspensionoftripartitism 59

Chapter3:Thepoliticsofretreatandrevival1970-81Asymmetricimpact:tripartitisminthe1970Northerncrisis64Corporatistminimalism:theNWAsystem,1971-76 66Fromtripartiterevivalto“NationalUnderstanding”,1976-79 72NewDeal:Haugheyrecaststhe“Understanding”,1980 81Fromimplementationtocrisis1980-81 88

Chapter4:Partnershipandautonomousgovernment1981-86BreakdownundertheFineGael-Labourcoalition,1981-82 92RevivalinanotherHaugheyinterlude,1982 97Policyconsensus,ideologyandpartyconflictinthe1980s 105Autonomousgovernment:economiccrisisandpolicychoice 108Unbridgeabledivide?–Employers,unionsandthestateinthe1980s 114

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Part2:Genesisandconstructionofthe“PNR”,1984-87 121

Chapter5:Policyrevolution:thepoliticsoftheNESCplanInception:ÓhUIginn,Flynnandthegenesisofanidea 122Partingoftheways:theLabour/unionpolicysplit 126StrategyrevolutionattheNESC 128“Palacecoup”:theICTUsecuresamandate 134The“HaugheyFactor”againdecisive 136Partnershiponprinciple:FiannaFáilinthe1987election 141

Chapter6:Longhaul:thedramaticroadtothe“PNR”,1987Governmentchoiceandpolicypositioning 143Firststep:Haugheyengagesthesocialpartners 144Blunttalk:Haughey’sthree-stagestrategy 149Broadbase:mobilisingsocialpartnerinput 153Payandplanningagendas:craftingtheagreement 157“Tothestrainsof‘MiseEire’”:thepoliticalsymbolismofaplan 162ThePNR:aplanforsocio-economictransformation 163Politicalhighstakes:therockyroadtoratification 166

Part3:Implementation,1987-89 177

Chapter7:Thestrategyanddynamicsofpartnership,1987-89Kick-startingthepartnership“system”,December1987 178Institutionaldrivers:CRC,NESCandtheState: CRC:a“mechanismuniqueintheEuropeanCommunity” 181NESC:the“appropriatebody”fornationalstrategy 186

Politicaldynamic:partnershipatthe“politicallevel” 190PartnershipasmobilisationofTotalFactorProductivity 194LeveragingEurope:the“NationalDevelopmentPlan” 200PartnershipandtheHaughey-Delors“alliance” 204

Chapter8:GreenShoots:recoveryandpolicyinnovation,1987-89“Turnaround”:apatternemerges 211Policytested:“indigenous”industry’sunevenperformance 212Growthdrivers:newsectorsandECleverage 218Innovation:IFSC“pipe-dream”andtheFDI“surge” 221Amixedeconomymodel:Haughey,theunionsandthesemi-states 226

Chapter9:Thepoliticsofpayandsocialcompensation1987-89Deferringreward:partnershipandthepoliticsofpay 236Newparadigms:“RuralDevelopment”,“Long-termunemployment” 242Thepoliticsof“unemploymentblack-spots” 248Managingdespair:governmentpolicyand“anti-poverty”politics 251Socialcompensationsandstatemodernisation 253Irishmodel:astate-dirigistegloballyactivemixed-economy 255

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Part4:Consolidation,1989-92 257

Chapter10:InstitutionalisingSocialPartnership,1989-91Haughey’scommitmenttopartnershipasa“permanentsystem” 258ICTUandprogrammedelivery:theleveragingofdiscontent 260Who’s“Left”?ICTUanditsrebels 266Systemconsolidated:localpay,apprenticesandindustrialrelations 270 Strategicshift:theHaughey/ICTUdealonthe“semi-states” 273Planningthetransition:towardsanewagreement 281Completingtheblueprint:NESCandthe10-year“PESP” 284

Chapter11:Metamorphosis:EconomicandpoliticalconsequencesofthePNR/PESP PrototypeTiger:towardsan“economicmiracle” 292TemplateforaSocialandDevelopmentalState 299Thusfar…:settinglimitstopartnershipinstitutions 301Partypolitics:the(partial)demiseofanti-corporatism 306Socialpartnershipandequalitypolitics:acasestudy 310Unrulyoffspring:partnershipandthepoliticsofpoverty 315

Conclusions 321

Addenda 331AppendixA:Membershipofthe“CentralReviewCommittee”,1990 332AppendixB:CRCattendanceunderthePNR,1987-90 333AppendixC:Payroundsandpartypreferences,1945-91 337Acronymsandabbreviations 338References:

Archivalsourcesandprivatepapers 344Interviewswithandinformationfromwitnesses 346Press 347Bibliography 348

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Acknowledgements This thesis would not have been possible without the encouragement and

supportofProfessorGaryMurphy,whosupervisedit. Itwashewhoconvinced

me, after I completed an MA in 2014, to pursue the historical study of social

partnershipIwishedtoundertakethroughtherouteofaPhD,focusingonitas

anessentiallypoliticalprojectcentraltothehistoricIrisheconomicturnaround

achieved in the 1990s. DCU provided generous support through a 4-year

scholarshipandstudygrant.Myworkbenefittedfrommanyconversationswith

Gary,whoiscurrentlycompletingwhatwillbeadefinitivebiographyofCharles

Haughey.IamalsogratefultoDr.EileenConnollyofDCU,andtotheinternaland

externalexaminers,Dr.EoinO’MalleyofDCUandProfessorSeánÓRiainofNUI

Maynooth,fortheirthoughtfulcomments,suggestionsandencouragement.

MythanksarealsoduetoMartinFraser,secretarygeneraloftheDepartment

oftheTaoiseach,who,attherequestofShayCody,gavemegenerousaccessto

theextensiverecordsof theCentralReviewCommitteeofsocialpartnership in

thatDepartment,andtoarchivist JosephGoudeforhisunfailingassistanceas I

worked through them. Iwould also thankDavidBegg for similar access to the

recordsoftheICTU,Dr.RoryO’DonnelltothoseofNESCandShayCodythoseof

Fórsa. Thanks also to Seán Haughey TD, VincentMcBrierty, Manus O’Riordan,

DavidConnollyandmanyotherswhoassistedwithideas,accessingsourcesand

convincingkeywitnessestotalkwithme,aswellastheintervieweesthemselves

for their time and candidness. I also thank Jean Kennedy at SIPTU College,

PádraigMannionatILHS,andthestaffsofallotherarchivesconsulted,including

UCD,SligoIT,NLIandNAI.AspecialthanksalsotoPádraigYeatesforproviding

hisownresearchandinterviewpapers,andtoPhilFlynn,DesGeraghty,Kieran

Roseandotherswhomadeprivatepapersavailable.

FinallyIwouldliketothankbywifeandlifelongpartner,HelenLahert,fornot

aloneenduringbutencouragingmeinthisproject,andtofamilyandfriendsfor

theirsupportandon-going,oftenamusing,accompanyingcommentsthroughout.

Needless to say, none of thosewho assistedme bear any responsibility for

viewsorjudgementsexpressedinthestudy,whichareentirelymyown.

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Abstract

AVeryPoliticalProject:CharlesHaughey,SocialPartnershipandthepursuitofan“Irisheconomicmiracle”,1969-92ByPhilipO’Connor

The social partnership model initiated in Ireland in 1987 was a key factorenablingthetransformationoftheIrisheconomyandsocietyfromoneofWestEurope’spooresttooneofitstopperformersinlittleoveradecade.Thispolicyparadigmshift,asprofoundasthatof1959-63,recasttheeconomywithinafewyearstoanewmodel,itsfuturedefiningcharacteristicsestablishedby1991.

The strategy involved exploiting emerging opportunities, particularly globalfinance, todrivea transformation,butalsoencompassedcomprehensive socialand institutional reform, employment growth, state industries, and a radicalremodelling of social and educational provision. The combined approach wasconsciously conceived as an alternative route to economicmodernity to solely“monetarist”orsocialstatedismantlingapproachesadoptedelsewhere.

Social state innovations under partnership, however, rapidly became itscentralconcernasjobcreationfailedtokeeppacewiththeattritionindecliningindustries.Butthedualsocial/economicstrategyofpartnershipmadeitamodelofinternationalsignificance,notleastinbeinginstitutedjustasmoststateswereretreatingfrom“corporatism”orabandoningitaltogether.

CentraltotheIrishtransformationwasacircleledbyCharlesHaughey,whoengineereditthroughtightcontrolovergovernmentandaworkingalliancewithkeyforcesamongthesocialpartners.InthisHaughey,amodernisingnationalist,realisedalong-conceivedpolicyapproachhehadpreviouslyattempted.

Social partnership was neither primarily an emergency response to theimmediatedebtcrisisnoraconformingtoasupposedEuropean“norm”.Ratherit was a strategy, long conceived by key groups, to resolve fundamentalinstitutionalproblemsattherootofIrisheconomicunderdevelopment.

Socialpartnership,establishedin1987-92,enduredwithsomemodificationsforovertwentyyears,duringwhichIrelandunderwentitsmostdramaticsocio-economic transformation in a century. Partnership was only partially andformally dissolved in 2010, many of its practices and legacy institutionscontinuingtoshapeIreland’ssocio-economicdevelopmentadecadelater.

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Introduction This thesis focuses on the political dynamic of social partnership, and in so

doing fills an important gap in the literature. What studies of comparable

systemsacrossEurope invariablyconclude is that themany featuresunique to

Ireland’s“socialpartnership”makeitadifficult-to-categorize“outlier”andthatit

isthedomesticpoliticalfactorsaccountingforthis“exceptionalism”ratherthan

similaritieswithpatternselsewherethatrequireelucidation.1

StudiesofIrishpartnershipoftenfocusonindustrialrelations–animportant

butfarfromitsonlyaspect–orstructuralaspectsorinterestconflictswithinit

in its later period. As regards its origins, there is a near consensus that it

emerged in1987due to the immediatedebt crisis.This thesis contends that it

wasneitherindustrialrelationsnortheimmediatecrisisthatprimarilyaccount

forit.Ratheritresultedfromacoalitionofforcesunitedbyalong-termstrategy

to overcome the fundamental problem ofwhat Jim Larkin jnr. called Ireland’s

“underdevelopment” in relation to the standards of living and development of

othersmall,economicallymoreaffluentEuropeanstates.Fewstudiesanalysethe

profoundly political project it was, or its pre-history or the dynamics of its

implementation in its critical formative period, 1987-91. Many erroneous

conclusionsaredrawnduetothepaucityofthehistoricalevidentialbaseused,

whichthisthesisseekstoredress,muchfromsourceshithertolittleexamined.A

core contention is that the immediate economic crisiswas less a cause than a

contingenteventprovidinga“windowofopportunity”toeffectamajorandlong

advocatedinstitutionalchangeinIrishsocio-economicgovernance.

Thisthesisarguesthatsocialpartnershipin1987representedaninstitutional

rupture in how policy-making had hitherto occurred, and that the dramatic

economic transformation achieved in the 1990s “Irish miracle” cannot be

explainedwithoutthekeyroleplayedbysocialpartnershipinenablingit.Itdoes

notclaimthatpartnershipperse,oralone,causedtheeconomictake-off,butdoes

contend that the two processes were inextricably interlinked and mutually

reinforcing, with key elements of the latter enabled through the framework

1 ThesalientliteratureisassessedinChapter1

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providedbytheformer.Italsoarguesthatintheshortperiod1987-91virtually

all major socio-economic policy innovations of the later “Celtic Tiger” were

initiated, their course, trajectory, and even many of their details, clearly

established. In arguing this, the thesis reveals key policy-making events that

shaped initiatives suchas the IFSCandurban renewalprogrammes, theastute

strategytowardstheEU,aswellasthepolicydecisionsshapingtheindigenous

and FDI industries that would drive the take-off. It also traces how the social

state formed through partnership was an essential corollary of its economic

aspect.Withthesecontentionsthethesischallengesmanyorthodoxies.

Followingthe3-yearProgrammeforNationalRecovery(PNR)of1987-90,the

1991 successor Programme for Economic and Social Progress (PESP) set a 10-

year framework – as agreed at the NESC - that was largely successfully

implementedover the followingdecade throughaseriesof3–yearagreements

subordinatetoandderivativeofit.Partnershipinstitutions,socontendedatthe

time of their establishment and continually challenged up to 1991, were thus

successfully consolidated, only being tweaked, refined or tinkered with

thereafter.Thepolicyinnovationsof1987-91setIrelandoncoursetobecomea

comparativelyrichnationincontrasttowhatithadbeen,doublingitsworkforce,

creatingaprogressivedevelopmentalsocialstateanddrivinglivingstandardsto

well above EU averages by 2004. A strategy of European “catch-up” was

successfully over-achieved. Fatal policy choices by governments after 1997

wouldmagnify the impact of the2008global financial crisis but, as this thesis

asserts, thesewere not inherent in the policy paradigm of 1987-91 but arose

fromdeparturesfromthatparadigminkeypolicyareasafter1997.

Politics, i.e.history,develops ina linearprocessofcauseandeffect.Leopold

vonRanke,thefatherofmodernsource-basedhistory,arguedthatthepurpose

ofhistoricalanalysisistoestablish“whatexactlyhappened”.Thisthesisadoptsa

multiple-streamsnarrative-historicalapproachtotracetheorigins,development

andpoliticsofthevariousstrandsoftheeconomic/socialpartnershipidea,from

its emergence in the 1940s, several attempts to realise it up to 1982, its final

adoptionin1987,andtheconstraintsanddynamicsofthesystemthatemerged

by1991,bywhenitsfuturecontourswereclearlyestablishedanditachieveda

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certain equilibrium. It identifies the factors that converged in 1987-91 that

allowedtherealisationofahithertofrustrateddevelopmentprogramme.2

Atthecentreofthe1987-91socialpartnershipprojectwasagroupofpolicy

innovators who on several occasions previously had sought unsuccessfully to

realiseit.ThecentralfigureofCharlesHaugheyloomseverlargerthecloserthis

processisexamined,notonlyinattemptsfromasearlyas1969to1982,butalso

whenin1987-91asTaoiseachheprovidedthecentralpoliticalfactordrivingthe

strategy,interveningeventoshapemanyofitsdetails.Hisroleintheeconomic/

partnership transformation initiated from 1987 was comparable to that of

Lemass in theearlier1958paradigmshift. YetwhileLemass’sProgrammesfor

Expansion enjoy a near iconic paradigm-changing status in the socio-economic

literature,theequallytransformativeProgrammeforNationalRecoveryandPESP

are ignored.LemassandWhitakerarecreditedas the innovatorsof theearlier

departure, but no such credit is accorded to Haughey, Ó hUiginn and others

centraltothe1987paradigmshift.Thisthesisargueswhythisshouldchange.

Haughey drove the 1987 paradigm shift and there was a considerable

consistency in his views since the 1950s onwhat an economic take-offwould

entail, including a partnership concept similar to that eventually achieved in

1987-91. In political terms Haughey portrayed himself as the third significant

activistFiannaFáilTaoiseach.Ashe toldhis firstÁrdFheisas leader,whilede

Valera had definitively established Irish national sovereignty and intellectual

independence,Lemasshadcreatedthestate-buildingandpolicyinstrumentsto

achievethesocio-economicsuccessthatwasthesubstanceofthatindependence.

Haughey’sownrolewouldbetofinallyrealisethepotentialofthestructuresand

instrumentsLemasshadcreated.Heoncesaidthatpoliticswouldhavebeenless

attractiveforhimifthestatehadnotfacedthatdevelopmentchallenge.3

Haughey’sviewswere formedbyadopting reformproposals fromeconomic

andsocialinnovators,notablyamongbusinessandunioncirclesandlike-minded

nationalleaderselsewhere,whichdecisivelyshapedtheconceptimplementedin

1987-91, and this thesis traces this process of communication and strategy

formationfromthe1960s.Centraltoitwasaconceptoftheproductivepotential2 “wieeseigentlichgewesenist”,vonRanke18863 ÁrdFheisspeech1980,inMansergh,ed.1986:327;“hadnotneeded”,Keena2001:6

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notonlyofentrepreneursbutalsooforganisationssuchastradeunions,asnot

primarily negative factors to be contained – a then predominant view – but

rather as productive forces in themselves if enabled to pursue their interests

withinacommonnationalstrategy.WhatunitedtheallianceHaugheyassembled

wasinessenceanationalistprogrammeforsocio-economicmodernisation.

Haughey wrote no memoirs and gave few legacy-building interviews. It is

thereforenotablethattheoneissueonwhichheinsistedinrecordinghisviews

insomedetailbeforehisdeathwassocialpartnershipasthekeyenablingfactor

inthesubsequenteconomictake-off,providing“theessentialbedrockonwhich

soundpublicfinancesandprogressivefiscal,socialandeconomicpoliciescould

befirmlybased”.Inhisviewitprovidedtheframeworkforanessentiallysocial

democratic transformation strategy, basedon the economicplandevelopedby

hiscloseplanningcirclein1982,TheWayForward.Heextolledthecentralrole

playedbycreativeexchangeattheNESC,producingtheconsensusbetweenthe

socialpartners,andpraisedboththecoordinatingroleattheDepartmentofthe

Taoiseachandas chairof theNESCofPádraigÓhUiginnand the “decisivebut

difficultrole”ofunionleaders.HealsocitedtheinfluenceonhisviewsofGerman

social democratic chancellor, Helmut Schmidt, his closest political ally, at

Europeanlevel.ThisthesisconfirmsHaughey’sassertionsonmanysuchpoints.4

HaugheyisacontroversialfigureinIrishpolitics.Heleftofficein1992inhis

late sixties but was soon again a centre of attention as state tribunals

investigatedhisratherbizarrepersonalfinances.Apopularhistoricalliterature,

includingmemoirsbypoliticalopponents,beganto imputethemajordecisions

of his career to allegedly corrupt relationshipswith somewealthy individuals,

but few if any such policy linkages have ever been convincingly established.

Speculationon this issuehas led toa seriousdearthofobjective studiesofhis

politicalroleandimpact.Evenacademicanalystshavesuccumbedtosuchviews,

Aiden Regan claiming that the 1987-92 governmentswere “dominated by the

political-economicinterestsofseniorFiannaFáilministers,particularlyCharlesJ

Haughey”,andattributinginnovativepolicyshiftsoftheperiodtocivilservants.

4 Haughey2014

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This thesis disputes such assertions. But it does not interrogate Haughey’s

personalaffairs,thoughnordoesitexplorehisotherpolicyinnovations,suchas

inforeignandNorthernaffairsorthearts,exceptwhererelevanttothecentral

themeofhispolicyonsocial/economicpartnership.This, it finds, isquite fully

explicableinpoliticalprocessandpolicydecision-makingterms.5

The thesis also traces the fundamental divide over corporatist approaches

characterisingthedominantpoliticalparties,FiannaFáilandFineGael,andthe

competingexperimental/conservativesocialdemocraticmodelsofdevelopment

theyoffered.Italsoseekstoaccountforthepeculiarhostilityto“corporatism”of

the Labour Party,whichmade it an outlier among its sister parties in Europe.

This forced the national-oriented element of the trade union leadership, who

otherwisehadasocialistorientation,intodowngradingtheirlinkstothepartyin

favourof analliancewithHaughey, aspreviouslywithLemass.The thesisalso

reveals the stark divide in economic policy between the Haughey and Lynch

factions within Fianna Fáil, never previously satisfactorily elucidated. This

explainsboththefortunesofHaughey’svariouspartnershipinitiativesbetween

1970 and 1987 as well as the collapse of cooperative institutionalism in the

1960-70s due to Lynch’s institutional conservatism, which allowed minor

sectional conflict in industryescalatewithdisastrousconsequences.The thesis

also explores the conflicts over corporatist cooperationwithin themain social

interests,establishingtheirpoliticalratherpurelyinterest-drivencharacter.

Whilefocusingonthepoliticsandpoliticaleconomyofsocialpartnership,and

restoring the role of political leadership and agency to it, this thesis does not

discount structural or other co-determinants. The economy and social factors

had powerful autonomous dynamics of their own. But agency remains a key

variable,andthetendencyintheliteraturetogrosslyunderstateitischallenged.

Economists explaining the take-off of the 1990s often do so without even

mentioningHaughey,thepolitical-socialalliancehecreated,oranyotheraspect

ofpoliticalagencyasinanywayimportant.Thisthesischallengesthiseconomic

primacy,re-assertingthecentralityofpoliticalagencyandpoliticsitself.6

5 ForpersonalfinancesdeterminingHaughey’sdecision-making,esp,Connolly,F.2014andO’Toole2009;

relevantmemoirsincludeQuinn2005andBrady,C.2005;quotefromRegan,A.2012:1156 TheseanalysesareexaminedinChapter1

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The thesisbuildson lengthy interviewswith leadingactors fromtheperiod,

including two former Taoisigh, aswell as public servants, union and business

leaders andothers.While these are only sparsely referenced,mostly for space

reasons, they provided insights into the period and into what central players

believed they were doing. They also helped clarify events and illuminate

relationships, agendas and conflicts. Such retrospective subjective testimony

mustnecessarilybetreatedwithcautionandemployedonlyinanancillaryrole.

Itisthereforeextensivearchivesources,manyneverbeforeaccessed,aswellas

contemporarymedia, that form the thesis’smainsource-base.Thesewere first

and foremost the comprehensive records of the “Central Review Committee”

(CRC)ofsocialpartnership,PádraigÓhUiginn’spapersandothermaterialinthe

DepartmentoftheTaoiseacharchive.Besidesminutesofmeetings,thesecontain

much internal correspondence, government communications and extensive

hand-writtennotesofmeetings,phonecallsandevents.Similarlyricharchivesof

theNESC,ICTUandotherbodiesnotpreviouslyusedwerealsoexamined.Older

recordsweresourcedfromtheNationalArchivesandothercollections,anduse

wasalsomadeofsomeprivatepapersmadeavailable.

Finally, the current writer’s own experience of social partnership since the

1980s through both political and trade union involvement and as director for

fourteenyearsofalargepartnershipproject,DublinEmploymentPact,meanthe

hadanacquaintancewithmanykeyfiguresinvolved,whichfacilitatedaccessto

recordsandintervieweesandhelpedinformjudgementsreachedinthisthesis.7

The thesis reveals much never before considered regarding the origins,

establishmentanddevelopmentnotonlyofthesocialpartnershipsystem,butof

thedecisionsthatshapedthe1990seconomictake-off,theforgingofaradically

new relationship with the EU in 1988-90, and the emergence of the Irish

developmental state. In sodoing it hopes tomakea significant contribution to

understanding the paradigm shift that occurred in Ireland’s socio-economic

governanceandfortunesinthecrucialdecisionsmadeinthe1987-91period.

7 OnDublinEmploymentPact,www.dublinpact.ie;forapreviousnon-academicassessmentofsocial

partnershipbythecurrentwriter,O’Connor,P.2007

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Chapter1Theoreticalcontentionsandcompetingliteratures

Contentions

Themaincontentionsof this thesis, its sourcesand itsmethodology,areset

out in the Introduction. It is a controversial thesis, challenging common

assumptions and academic orthodoxies regarding the subject it is treating. It

asserts thatsocialpartnershipwasakey institution intheeconomicandsocial

transformationofIrelandthatoccurredfromtheearly1990s,andidentifiesthe

drivingroleinthatofkeypoliticalandinterestleaders.Insodoing,itarguesthe

primacyofpoliticalagency, leadershipandideas inthatparadigmshift, though

without neglecting structural and exogenous factors and also without

overstatingwhatmightbemisconstruedasa“greatman”interpretation.

This chapter firstly seeks to locate the contentions of the thesis within the

literatureanalysingpolitical-economicparadigmshifts,orinstitutionalruptures,

whichitassertsthe1987-91periodinIrelandrepresented.Italsoarguesforthe

detailed linear historical-narrative approach it takes to elucidate the various

strandsofcause-and-effectexplainingwhatledtothatparadigmshift,aswellas

itssocio-economic,politicalandinstitutionalconsequencesanditsdynamicsasit

consolidated as an altered policy-making system. This multiple-streams

approachilluminateshowspecificfactorsconvergedin1987toenablethepolicy

paradigm shift, which had been unsuccessfully attempted on several previous

occasionsandofteninvolvingtheverysameactors.Itestablishestherolesinthis

process of the failure and success of innovative pro-active leaders on the one

hand,andconservativeorreactiveleadersontheother.

Thechapterthenexaminesthemaincontentionsoftheexistingeconomicand

politicalliteratureontheorigins,establishmentandimportance–orotherwise-

ofthesocialpartnershipdepartureinIreland,challengingorthodoxiesinrelation

to it. Italsoreviewsthewidercomparative literatureonEuropeanpartnership

systemswhichhasattemptedtolocateandaccountfortheIrishdevelopmentin

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that framework. By identifying the endogenous political drivers of Ireland’s

socialpartnership,thethesispresentsmuchnewmaterialtoassistfuturestudies

moreaccuratelylocatetheIrishcasewithinsuchacomparativeframework.

Thepoliticaleconomyofpolicychange

Thecentralcontentionofthisthesis,thatsocialpartnershipandgovernment

policy decisions of 1987-91 represented an institutional paradigm shift that

enabled the economic transformation achieved in the 1990s, challenges a

dominant narrative that emphasises external factors - such as pressures to

conform toECpolicyorglobalisation– inexplaining the1990s take-off. In the

literature the turning point accounting for the transformation largely remains

indeterminate and the roles of political agency - particularly of the Haughey

governments-andofinstitutionalinnovation-particularlyofsocialpartnership

–are largely ignoredas irrelevant.TheOxfordhistorianof Ireland,RoyFoster,

articulatedawidespreadviewwhenhewrotethat“theIrish”simply“gotlucky”.1

Political scientists grapplewith policy and institutional “paradigm shifts” in

democracies.TheIrish institutionalupheavalof1987-91certainlyrepresentsa

testcaseforthis.Theycontendthattheinstitutionsofdemocraticstatestendin

“normaltimes”tofollowanincremental,structure-determinedcourse,butwhen

a crisis induces institutional “uncertainty”, at whatever level, various factors

combine inadjusting the system to thenewcircumstances, resolving the crisis

andrestoringequilibrium,ornot,asthecasemaybe.

Positivists argue that institutions respond to crisis, or sudden uncertainty,

through an “objective” process of “risk reduction”, with institutional “supply”

increasingtomeetinstitutional“demand”,as“agents”actto“realizetheirgiven

interestsinariskyenvironment”.MarcBlythecountersbyshowingthatattimes

ofcrisisandhencepolicyuncertainty,whenfullknowledgeofitsdetailscanonly

beavailableinretrospect,influentialactorscannotknowhowbesttheirinterests

areservedandhavelittletoguidetheminidentifyingthoseinterestsapartfrom

ideas.Boththediagnosisofa“crisis”asacrisis,aswellastheprofferedsolutions

are necessarily constructed ideas vying for plausibility. During non-crisis

1 Lee,J.1989,Barry,F.ed.1999,FitzGerald,J.2000,Garvin2004,“gotlucky”,Foster2007,alsoDavid

McWilliams,‘ThefalloftheBerlinWallledtotheriseofIreland’,IrishTimes,09/03/19

16

periods,ideastendtoamundanereflectionofperceivedinterestbutatmoments

of “institutional uncertainty” they can emerge as “causal factors”, as “causally

powerfulconstructionsthatallowagentstodefineacrisisasa ‘crisis’andboth

plan and politic their way forward”. Where such ideas prove successful, they

achievehegemonyandformtheequilibriumofanewinstitutionalparadigm.2

Baumgartner and Jones similarly explain how “stability is the rule formost

issues most of the time”, with the equilibrium of relatively autonomous

subsystems and the defensive actions of powerful, constructed interests,

reinforcingsysteminertiaandactingagainstprospectiveinnovatorstomaintain

thestatusquo.Policies inperiodsofequilibriumare“framed”byan“image”of

coherenceandplausibility,foundedultimatelyonbelief.Butinperiodsofcrisis

thatequilibriumisdestabilised–or“punctuated”-andalternativepoliciesmust

gainplausibilityandbe“framed”inanewcoherent“image”.Thisoccursthrough

attritional “conflict expansion” as opposing parties and interests, in seeking to

shape and frame a new consensus, mobilise the actors “discontented” by the

crisisuntilacritical-massconstituencyisformedforadominantsolution.3

Ideas, however, can also be wrong. Extrapolating from Polanyi’s Great

Transformation, Blythe contends that how institutions are constructed and the

external pressures under which they arise determines why some states were

able to adopt successfully to the 1920s Great Depression by an institutional

paradigm shift towards “embedded liberalism”, as in the US “New Deal” or

Swedish social democracy, while others stagnated or opted for the ultimately

destructivecourseofmilitaristfascism.WhileBlythewasexamininganepochal

ideational conflict, his insights are nevertheless relevant to our case. Scholars

argue that authoritative ideas that achieve plausibility involve many political-

historical factors such as institutions’ historical formation, constructed social

interestsandproblem-solvingpropensitiesunderthepressuresof internaland

externalconstraints,inon-goingcompetitionforinfluenceandhegemony.4

Innovativeideasorpolicies,inwhateverinterpretation,arenotdisembodied

causal forces, but are introduced at moments of uncertainty by political

2 Blythe20023 BaumgartnerandJones19934 Polanyi1944;“ideas”,Bythe2002;“autonomousconstructs”,Zehfus2002;“criticalrealists”,Archer

2003;“influence”,PhillipsandJorgensen2002;“hegemony”,Gramsci1971

17

innovatorswhobuildcredibilityandplausibilityforthem.Attimesofcrisis,the

process of change through the interaction of structure and agency becomes

acute,withinstitutionalchangetraceablethroughboththisinterplayandthatof

contending narratives for resolving crises of uncertainty.5As noted, analysing

institutional change can be differentiated from analysing how preceding and

resultinginstitutionsaresustained.Systemsinequilibriumfollowamore-or-less

path-determined course, whose dynamic, as Pierson put it, is “amenable to

structural explanations”, while at crisismoments the intervention of “political

entrepreneurs”proposingnewideasisdecisive,withsuchcriticaljuncturesbest

examined through an agent-centred approach. At times of significant change,

therefore,politicalagencyandideasplayacriticalrole.6

This thesis establishes how the social partnership idea, with an economic

transformationratherthanamereindustrialrelationsoreconomiccrisis-solving

formula itscentralpurpose,hada longgestationintheIrishpolitical-economic

system. From first being proposed by policy innovators in the 1940s, through

severalattemptsatrealisingit-interspersedbyperiodsofreactive-conservative

dismantling and withdrawal from it - it was finally implemented successfully

from1987.Thequestionarisesastohowthisprocessshouldbestbeobserved.A

case study might apply innovation theory or a “diffusion of innovation”

approach, or apply a “multiple streams framework” as proposed by Kingdon,

whichoffersgreaterscopefornarrativeconflictandsocialpowerfactors.7

In Kingdon’s model, an identified problem in any policy system results in

variedproposalstosolveit,withthedominantsolutionemergingandachieving

criticalacceptancewhenthepolicyinnovatorhasorganisedthepoliticalfactors

necessary to implement it. This occurs when a contingent event, or “crisis”,

provides a “window of opportunity” for the innovator, who has assiduously

aligned those political factors, to implement the proposed solution. The

convergence of these elements of problem, solution and political organisation,

withthewindowofopportunityprovidedbyacontingentevent,thusenablesthe

resolving of the problem, whereafter a new system equilibrium results. The5 On“policyinnovators”,HallandThelen2009andHoganandFeeney2012;ontheinterplayofstructure

andagency,BergerandLuckmann1966,Zehfus2002,JørgensenandPhillips2002,WeissandWodak,eds.2007,Wendt1992,1999,OnufandKlink1989,andKratochwil1991

6 PaulPiersonquotedinBennettandEllmann2006:4647 “diffusion”,Rogers2010;“multiplestreams”,Kingdon2003

18

timingandflowofpolicyactionsiscritical.Resistancetotheideaoralternative

solutionsmustbeovercomeorcompromisedwith,thoughwilloftencontinueto

operateinpolicy“sub-systems”impedingordelimitingthesubstantivechange.

Thismultiplestreamsperspectiveallowsthecriticalelementsandprocesses

ofadvocacy,trial,contestation,setbacksandultimatesuccessofamajorpolitical

project to be traced and evaluated, explaining, in our case, why what finally

succeeded in1987-91hadnot inpreviousattemptsover thepreceding twenty

years.ItalsoaccountsforhowCharlesHaughey,asahighrisk-takingratherthan

reactive political leader, first secured the cautious buy-in of opinion-forming

allies by tailoring his project to their policy preferences and, once the

contingencyof theeconomic crisis lentplausibility to theproposed solution, it

was the securing of meaningful political power that assured the project’s

plausibility. Such an analysis also accounts for the political factors that

undermined itsplausibility inpreviousattempts.Through thisperspective, the

counter-tendenciesofalternativepolicyconcepts,systemresistanceandinertia,

conservative or reactive competing leaders and interests, political constraints

and other factors that accounted for earlier defeats and that impeded the

economicparadigmshiftuntil1987-91,canalsobeidentified.

It is of interest that Haughey himself – the key political innovator, among

several, in the central thesis of this study - viewed his finally achieving

convincingcontrolofgovernmentandthestateapparatusin1987astheturning

point that assured the plausibility and success of his economic/social system

proposal.Herecalled1987-88asthe“happiest”and“mostrewarding”yearofhis

politicalcareer.Politicswouldhavebeenoflessinteresttohimhadthechallenge

ofIreland’sunderdevelopment,whichhadnotbeenresolvedbytheLemass-era

reforms,notpresented itself.Decisivegovernment, andpower itself, he stated,

restedlessinpartyorbackbenchmajorities,whichcanbeincoherent,thanina

cabinetunited,ledanddeterminedonasingularpolicycourse.Thishadevaded

hisandothergovernmentspreviously,butheachieveditin1987.8

Inapaperjointlyauthoredwithhisformergovernmentsecretary,PádraigÓ

hUiginn,ayearorsobeforehisdeathfromcoloncancer,Haugheyidentifiedthe

8 Haugheyon1987andcabinetgovernment,interviewHaughey2005;“oflessinterest”,Keena2001:6

19

economicagenda,TheWayForward, compiledbya tightly-knitpolicygrouphe

formedin1981-82,coordinatedbyÓhUiginn,astheprogrammethatunitedhis

1987cabinet.CharlieMcCreevyoncedescribedÓhUiginnsomewhatcolourfully

as “the smartest civil servant I ever met …, his role was at least equal to

Whitaker”. This thesismakes an analogous claim in relation toHaughey as an

innovator and political leader of a similar significance to Lemass. The Way

Forwardformedthetransformative“idea”inourstudy,thoughonlyhalfofit,the

othercriticalelementbeingitsframingthroughasocialpartnershipsystem.9

ThatjointpaperwithÓhUiginnalsoidentifiedthedebtcrisisof1986asthe

immediate “near-disastrous” contingency, or window of opportunity, enabling

the departure, but the deeper structural “development” problem of the Irish

economysince1970asthefundamentalissuebeingtackled.InHaughey’swords,

thedebt crisis provided the “stimulus andneed” for thedeparture.This thesis

tracesHaughey’slongadvocacyofsuchaneconomicdepartureandofaalliance

withbusinessandunioninterestsasthepoliticalmeanstoachieveit.

In2005Haugheysaidsocialpartnershiphadplayedacentral,integralrolein

theeconomictake-off.While“otherfactorsassistedthattransformation,…social

partnershipfromitsinceptionandfor20years…providedtheessentialbedrock

on which sound public finances and progressive fiscal, social and economic

policiescouldbefirmlybased.”Thisthesisteststhishypothesisthroughaclose

analysisofmanyofthefactorssocialpartnershipcontributed.10

Policyandpartnershipintheeconomictransformation

ThataparadigmshiftoccurredinIreland’seconomicfortunesinthe1990sis

notdisputed.Agrowthandemploymenttake-offisclearfrom1993,continuing

foradecade todoubleGDPandemploymentandeliminateunemploymentby

2003.Apatternofweakperformancehadcharacterisedthepreceding1970-86

period, punctuated by growth spurts and turbulence through “creative

destruction” in the 1970s and bymanufacturing and FDI decline in the early

1980s causing the mass closure of many Lemass-era industries. In 1985-86

export growth began to revive to its modest pre-1980s level. This partial

9 “paper”,Haughey2013;“jointlyauthored”,interviewÓhUiginn;McCreevyquotedinHastingsetal.:3410 “mostadmired”,interviewwithMartinMansergh

20

recovery in growth - though not employment - was assisted by deflationary

fiscalpoliciesoftheFitzGeraldcoalition.11

So what was the identifiablemoment of qualitative policy and institutional

changeaccountingforthe1990stake-off?Thisthesiscontendsthatitoccurred

in1987.Withinayear,growthsurpassedtherecovered1980-levelof1986by5

percentand,whileslowingin1991-92duetotheMaastricht/currencymarket

crisis, surged from 1993 in a upward trajectory. The new growth was less a

“recovery”thanthetake-offofaneweconomywithnewgrowthdrivers.While

unemployment would remain high into the 1990s, new-job creation of ca.

20,000jobsp.a.occurred,inlinewithPNRtargets,withthenewjobsstrikingin

that they were almost wholly in new-sector areas. Although this pattern is

widely accepted for the 1990s, the precise policy turning point is rarely

identified,thetake-offmostlybeingattributedtopost-1990inputfactors.12

KleinandVentura’s trackingofGDP/outputgrowthdata from1980to2005

indicates thedepressionandmodestrecoveryof1980-86,andan initial surge

from1988thatslowedintheMaastricht/currencycrisisbuttookoffagainfrom

1993.Theyascribethistoachangedpolicy-inputparadigmfrom1988:

“GDPperworking-ageadultinIrelandmorethandoubledrelativetotheUSin25

years,increasing115percentfrom1988to2005”.13

Thisthesisnotonlyagreesthatthedecisivepolicy-inputturningpointwasin

1987-88 but also demonstrates that all essential elements of the economic

11 “growthfrom1993”,Kennedy,K.2001,Barry,F.ed.1999,BielenbergandRyan201212 “widelyaccepted”,e.g.Barry,F.ed.1999;Kennedy,K.(ed.)1997;FitzGerald,J.1999andKennedy,K.

2001;13 KleinandVentura2019

21

transformationof the1990s, in termsbothofpolicyandeconomic inputs,had

occurredby1991.Capitalopeninghaslongbeenidentifiedasakeyfactorinthe

take-off,thoughfartoooftenasitssingularsource.OthersmallopenEuropean

economies benefitted from the same EC market opening without achieving a

remotelycomparableresult.Thisrequiresexplanation,andthisthesiscontends

that the answer lies in the series of policy choices developed through social

partnershipandimplementedfrom1987.Theseincludeddecisionstopre-empt

andexploitsinglemarketreforms,almostbeforetheyoccurred,togetaheadin

thenascentcompetitiveEuropeaneconomy,andastrategyofalliance-building

in Europe to exploit EC structural funds as a lever to development. A further

factorwasadeferralofinputcosts–alsoprovidedbysocialpartnership-which

enabledadramaticcapitalinflowandasurgeofnewsectors,evenbefore1990.

Asserting a central role for social partnership in the economic turn-around

contradicts what many studies assume, that it was peripheral. This thesis

contendsthat,whilenotnecessarilythesingularcause,itprovidedtheessential

frameworkforanegotiatedopeningoftheeconomy,tracingtheprocessesthat

brought the opening about. It also ensured that government’s tightmonetary

adjustment was accompanied by expansive industrial policy, mixed-economy

initiatives and a substantial reshaping of the welfare state. These strategies

wereframedwithinadebt/GDPratio-reductionformulathatincludeddeferring

socialandwagecoststhoughoffsettingthembyawage/taxapproachgrowing

real incomesandprogrammesofsocial investment. Itwasthissetof formulae

thatsoongaveIreland’ssocialpartnershipitsinternationalsignificance.

Socialpartnershipalsoprovidedarangeof“intangiblecapital”inputssuchas

wageandpolicy certainty, industrialpeace throughbothpay/tax strategyand

institutional reform, co-ordinated mid-term planning systems across

departments andnewhuman resourceprogrammes inwelfare, educationand

socialpolicy.Theseinputsdeliveredvaluegrowthinthehumanresourcefactors

criticaltothereconfiguredhigher-valueeconomicmodelbeingpursued.These

variousfactorsenhancedwhatistermedtotalfactorproductivity(TFP),forming

thecriticalinputthisthesisgroupsasthesocialpartnershipeffect.Indeed,even

without the opportunities exploited in global economic opening, some studies

contend a less dramatic but nonetheless substantial economic improvement

22

would still have been achieved due to the 1987-91 policy departure.What is

also seldom realized is the paradigmatic quality of the second partnership

agreement, the PESP of 1991, which involved a template for an institutional

transformation towards a developmental state, framed as a 10-year reform

programmeasadvisedbytheNESC.Subsequentagreementsofthe1990swere

merelysubsetsofthisoveralldecade-longframework.Thisagainillustratesthe

formativequalityofthepolicychoicesofthe1987-91period.14

Ireland’ssocialpartnershipincomparativeanalyses

StudiesofIrishsocialpartnershipoftenanalyseitintheframeworkoftrends

in European systems of state/capital/labour industrial relations and economic

policy coordination, commonly referred to as “neo-corporatism”. While such

systems had their origins in the command economies of WorldWar One and

evenoldercorporatisttraditions,theyaremostlyexaminedintheirroleduring

theso-called“Keynesianconsensus”of1945-75,a“goldenage”ofunprecedented

economic growth, cooperation andwelfare expansion. The Irish system is also

sometimes compared with howmany of these systemsmutated as they were

down-graded,oragainrevived,reconfiguredas“competitivecorporatism”,inthe

economicallylessoptimisticperiod1993-2005.Butinsuchparadigms,thevery

initiation of Irish social partnership represents an outlier, in that it occurred

preciselybetweenthese two“classic”periodsofEuropeancorporatistsystems.

The same applies to the Irish pattern of economic performance,which during

theseperiodsrandirectlycountertothatoftheusualcomparatorcountries.15

During the Keynesian era, different models of neo-corporatism evolved in

differentstatesandgroupsofstatesalongaspectrumofwhatiscalled“varieties

of capitalism”, the variations determined by differing economic structures and

theirendogenouspolitico-culturalandeconomic-institutional traditions.By the

1980s, party political exchange in most states determined much of the

redistributive dynamic, with corporatist systems – increasingly commonly14 Keyroleof“TFP”factors,KleinandVentura201915 OnWW1commandeconomiesandstate/industry/labourcoordination,e.g.fortheBritish“Whitley

system”,ILO1973,andGermany,Feldman1966.Forliteratureon“neo-corporatism”,McGinley1998;onrevived“competitive-corporatist”pactsofthe1990s,Ebbinghaus2002,EbbinghausandManow2004,GroteandSchmitter1999,DonagheyandTeague2005,BaccaroandSimoni2008,Avdagic,RhodesandVisser2011,Compston2003,andNataliandPochet2009;on“competitivecorporatism”alsoRhodes2001,Hemerijck2013,Kirby/Murphy2011

23

referred to as “social partnership” - largely confined to wage determination,

industrialrelations,andlabourmarketandsocialsecuritypolicy.16

The Irish social partnership system established from 1987 combined both

redistributiveandcompetitivepolicyelementsandentailedafargreaterpolicy

range than comparable contemporary European systems, encompassing

monetarystrategyandEUintegration, industrialpolicyand industrialrelations

reform, tax policy, welfare state configuration, liberal-social reform and a

transformation of local development structures. In its pre-determining of

Programmes forGovernment itwasevenaccusedby itsdetractorsofusurping

parliamentarydemocracy.Thepower-sharingelementof itentailedseniorcivil

servantsandotherstateofficials,forthefirsttimeinthestate’shistory,havingto

answertoandcollaboratewiththeinterestcoalition.Itsestablishmentin1987

thus representedbyanystandardamajor institutional innovationandhistoric

departure,intermsbothofdomesticpolicyandcomparableEuropeanpractice.

Social Partnership presents something of a puzzle for historians, political

scientists and political economists alike, in that it was counter-intuitive at a

number of levels: it was instituted with only a minimal prior history of

corporatist governance, by an ostensibly “centre-right” government, while

corporatistarrangementselsewherewerebuilton long-standingtraditionsand

wereinitiatedmostlybyandidentifiedwiththepolitical left; itwasintroduced

as corporatism was being discarded elsewhere across the OECD; it combined

monetaristadjustmentwitharedistributivestrategy,acombinationconsidered

contradictory; and it remained highly contested asmuch in the party political

sphere, thecivil serviceandgeneralexperteconomicopinionasbysubstantial

minorities within the interest organisations themselves. Despite its unifying

elementasastrategyforconsensuspolicydevelopment,apoliticalconsensuson

it as anew system for socio-economic governmentwould continue to elude it.

The conclusions invariably drawn in comparative studies is that the

“exceptionalist” domestic political factors shaping or impeding Irish social

16 Hall1997;Lehmbruch1984;HallandSoskice2003;HallandGingerich2009

24

partnership, and characterising its divergence from European “norms”, rather

thanitscompatibilitywiththem,arewhatrequireelucidation.17

As the formative period of Irish social partnership presents such an

asymmetric pattern to contemporary developments elsewhere, a comparative

study based on partnership “norms” could not but fail to identify meaningful

events determining it. In identifying the ideational development, relationship-

building,agency/structuredynamicandpoliticalconflictthatshapedit,thiscase

study therefore adopts a deep-description narrative-historical approach. This

allowsthelinearprocessesofcauseandeffectandthecausalchainsexplaining

the institutional innovation of 1987-91 to be traced, and the agency/structure

interactionsshapingthe1987-91institutionaloutcomestobeidentified.18

Later periods of Irish social partnership, after it had achieved institutional

equilibrium,arecertainlyamenabletostudyinaframeworkbasedonthenorms

ofotherestablishedsystems.Butthatseemsaninappropriateframeworkforits

formative period in 1987-91, onwhich this study focuses. Future comparative

studies might usefully compare this formative period with similar formative

rather thanequilibriumperiodsofcomparablesystems,suchasearlypost-war

Denmark or Austria, or West Germany in 1949-54, when a unique political

departure, combinedwith the dramatic contingent events of theMarshal Plan

andtheKoreanWar,similarlyframedaradicalsocialpartnershipinitiativefew

woulddisputewasakeyelementinGermany’ssubsequent“economicmiracle”.

Otherliterature

Many studies of the dynamics of the Irish partnership “model” focus on its

later period as a “hybrid”, “advocacy coalition” or “networked” policy system.

Many examine particular aspects, such as unions or industrial relations, the

autonomyoftheeconomy,thewage/taxbargainingformula,theroleofthethird

sector,oritsinstitutionalweaknessasapolicyvehicleinthe2008crisis.Evenas

it was being instituted in 1987, informed opinionwas highly sceptical. Niamh

Hardiman, a respected and sympathetic analyst, was just one of many who

17 BaccaroandLim2007;onIrelandasaEuropeancorporatist“outlier”,alsoBacarroandSimoni2008and

Carey2007;onIrish“exceptionalism”,Mjøset1992,Breen,HannanandRottman199018 On“thickdescription”historicalcasestudiesandcausal-processobservations,Box-Steffensmeier2008,

Gerring2006,Clifford,G.1973;Mahoney2010,BennettandElman2006

25

doubtedthatIrelandhadthe institutionalprerequisites for it tosucceed.There

arefewstudiesofthepoliticsbehinditsformation,onlyonepartial,journalistic

historyofithaseverappeared,andthemotivationofthosewhoconceiveditor

the strategies thatunderlay it are seldomexamined.There is also a consensus

that itappearedin1987asacrisisstrategyinresponsetoanimmediatedebt/

unemployment problem, or, less benignly, as a cynical stratagem to exploit a

crisis“opportunistically”forpoliticalgain,viewsthisthesischallenges.19

Butinmostanalysesfromwhateverperspective,Irishsocialpartnershiphas

tendedtobestrippedofitsideationalhistoryandidentity.Somegosofarasto

dismissitasmerelyalocalexpressionofadominantpolicyapproachatEClevel,

evenDavidBegg,aleadingunionfigure,concludingthatitwas“notacoincidence

that it followed hot on the heels of Delors’ 1986 institutionalising of social

dialogue as part of the Single Market construct”.But this thesis contests this,

arguing that partnership was primarily a product of domestic politics and a

political project which, although influenced by events elsewhere, preceded

Delors’ initiatives which of themselves were limited in their achievement and

influence. Itwas for this very reason of an absence of “models” to follow that

Irishpartnershipassumedaformanddynamicuniquetoit.20

InfluentialeconomicstudiesoftheIrisheconomictake-offalreadyreferredto

makelittleornoreferenceatalltosocialpartnership,oronlytodismissitasa

coincidental,peripheralor inconsequentialoccurrence.Theyequallyrefer little

to any role of political agency in engineering the turnaround, in particular

avoidingattributinganypositiveroleinittoHaughey,althoughasTaoiseachhe

presidedoverwhat this thesis identifiesas thecriticalperiodofpolicychange.

ThedestructionofHaughey’sprevious reputationas a giftedandablepolitical

innovatorinthequasi-judicialtribunalsof1996-2006enabledthisdepoliticised

19Oninstitutionalinnovation,O’Donnell2001,Hardiman2002,2006,ÓRiain2004;“thirdsector”,Kirby

2002,Adshead2011;onlaterinstitutionalweaknesses,AvellanedaandHardiman2010;“prerequisitestosucceed”,Hardimann1988;Apartfromtheoreticalstudies,theonlyactualhistoryofsocialpartnershiptoappearisthejournalistictreatmentbyHastingsetal.2007.Onthe1986debtcrisisprecipitatingpartnership,interaliaRegan2012.Onthe1987partnershipagreementasan“opportunistic”politicalmanoeuvre,Roche2009.

20Begg2014

26

framing of the Irish economic “miracle” to persist into later studies, which

remainweddedtofunctionalistinterpretations.21

Evenwhere political agency is allowed for, it sometimes assumes a formof

near caricature. A 2009 study by leading industrial relations scholar, William

Roche, dismissedHaugheyas a “political adventurer”who in1987, “more as a

political opportunist than a monetarist or corporatist visionary”, adopted

monetaryadjustmentonlybecauseexperteconomistspressedtheneedforiton

him,and“embraced”socialpartnershipbecauseaseniorcivilservanturgedhim

todo soas ameans toquiet theunions.This thesis challenges thisdismissive,

indeedcontemptuous,viewofHaughey’srole.22

The fact is that Haughey staked his political reputation and career on

achievinganeconomicturnaroundframedbyasocialpartnershipsystem.This

was an extremely high-risk political strategy, as the dramatic processes of

ratifyingthePNRbythepartnerorganisationsin1987demonstrated.Following

nearly a year of intense political exchange, the PNR barely survived these

multiplechallenges.Ifevenone“partner”hadwithdrawn,asseveralnearlydid,

the strategy would have collapsed, fatally undermining Haughey politically.

Haughey benefitted from the acquiescence of the political opposition to his

monetary adjustment, but that accommodation did not extend to his social

partnership initiative, which they, including the Labour Party, vociferously

rejected. Haughey’s high-cost pursuit of a partnership agreement – while

alternativestrategieswereconstantlyurgedonhim–isthusaclassicpuzzle,but

atleastitclearlyestablisheshowforhimtheeconomicstrategyandpartnership

structureshewasdeterminedtoestablishformedanindivisiblewhole.

Misinterpretation of the origins of social partnership is compounded by

misinterpretationsastoitspurpose.Contemporarypoliticianswholaudedit,or

wereinvolvedinitsdevelopment,werewonttopraiseitratherpatronisinglyfor

having delivered “social peace”, thus contributing something to economic

success. This has misled analysts to over-emphasise its purely industrial

relationsaspectas theproblem itwasaddressing.Somewhohaveapproached

21Kennedy,K.1991;FrankBarryed.1999;Nolan,O'Connell,andWhelan,eds.2000;FitzGerald,J.1999

and2000;Sweeney,P.1999;Hardiman2000;Honohan1999;Kirby200222 Roche2009:194-5

27

partnershipfromacriticaltheoryaspectadditionallyseeitasamereconforming

toglobal“neo-liberal”capitalismcamouflagedwithaveneerofanillusorysocial

democracy.EventhenuancedstudybyAidanReganpostulatesitasprimarilyan

adaptation toglobalisation, althoughhe then reaches somesimilar conclusions

to this thesis.Thesenotably include identifying the centralisingof government

power in the Department of the Taoiseach under Haughey to achieve it, and

elevatingthepartnershippolicybody,theNESC,asamechanismforformulating

solutions to dysfunctionalities of the Irish electoral system and the “silo”-

structurednatureofpublicpolicy-making.23

An important corrective to apolitical analyses is provided by Baccaro and

Simoni,whoestablishthatcorporatistsystems–includingIreland’s-cannot

“simplybeascribedtotheindustrialrelationssystem,but[are]aneminently

political phenomenon that needs to be framed against the backdrop of the

structuralandstrategicconfigurationofthepoliticalsystem...Approachingit

throughtheprismofstructuralinterestgrouporindustrialrelationstheories,

ashasoftenbeendone,mayimplymissingmostoftheaction.”24

This thesis argues that Irish social partnershipwas conceived as a solution

neithertoindustrialrelationsnorimmediateeconomicproblems,butratherthat

thewindowofopportunitytheseproblemspresentedwasusedtoimplementa

long-developedstrategy toaddressadeepercompoundproblem, thatof socio-

economic“underdevelopment”,ofwhichrepeatedcriseswereonlysymptoms.In

thisitwasahighlypoliticalproject,engineeredbyapoliticalallianceratherthan

aconfluenceofinterestgroupsengagedinsimple“collectivebargaining”.

RocheandHardiman,amongothers,admittoasignificantpre-history,butare

handicappedbyafocusonindustrialrelationsandinterestgrouppressures.This

thesisarguesthatthe1987partnershipformulahaddevelopedinthemindsof

key actors over several decades. Many involved in 1987 had experienced

Haughey’s initial attempt at such a departure in 1969-70, which had been

derailedbythe“armscrisis”,itselfaneventrevealingtheasymmetricimpactthe

Northern conflict henceforth exercised on many aspects of Irish politics,

including social partnership. But the key question that remains is why, if the

23 Kirby2009,2010;KirbyandMurphy2011;Allen,K.1997,2000;Regan201224 BaccaroandSimoni2006:19

28

1987 socio-economic formula, including its partnership aspect, proved

successful in resolving a widely accepted underlying problem of

underdevelopment,didittakesolongtogainpoliticalacceptance?25

Theideationalaspectofsocialpartnershipandtheroleofpoliticalagencyin

initiating it at a pivotal moment of crisis are of central importance. A central

contention of this thesis is that its specific goals, which gave it its common

purpose, were to overcome structural underdevelopment through a sustained

industrial strategy, an expansive and transformedwelfare state,monetary and

political convergencewith the core EU integrationist powers, and an on-going

processof liberal-social reform.Theseaimswereoftensuccinctlyexpressedas

the achievement of both “full employment” and “average European” levels of

developmentandstandardsofliving.Irelandshouldbecomea“successfulsmall

open European economy” like others. Each partnership agreement reiterated

theseprimarygoals,recordinghowmuchcloserIrelandhadcometoachieving

themunderthepreviousone.Someastuteanalystshavedescribeditscoredeal

onpay and tax as the “glue” of the system.But this thesiswould contend that

while the pay/tax/welfare aspect was important in the political exchange of

socialpartnership,itsreal“glue”wasthatbroadercommonpoliticalaimuniting

itsplayers.Thoughbeyondtheboundsofthisstudy,itcanbeobservedthatonce

the coreproblem– “underdevelopment” – hadbeen resolved and “averageEU

standards”notonlyachievedbutsurpassed,i.e.after2002,partnershipbeganto

becomeincoherentasitscommonpurposewaslost.26

25 Roche2009;Hardiman200126 “averageEuropeanlevels”,NESC1986,1990,1992;“eachpartnershipagreement”,Governmentof

Ireland,1987-1998;pay/tax“glue”,O’Donnell,R.andThomas1998

29

Part1

Leaps,BoundsandReversals,1945-86

30

Chapter2Thequestforsocio-economicorganisation,1945-70

Irishpoliticsandeconomicinterestsbefore1945

The“exceptionalism”ofIreland’ssocialpartnershipsysteminEuropeanterms

arisesinpartfromthedistinctiverelationshipbetweenpartypoliticsandinterest

organisations. This party/interest relationship differed from then mainstream

WestEuropean left/rightpatternsandwasalsodistinct in that therelationship

tookshapeinitsessentialfeaturesevenbeforetheestablishmentofthestate.An

extensive literature has appeared seeking to account for these party/interest

relationsandtheconsequentpartypoliticaldynamicinIreland.1

TheIrishParliamentaryParty(IPP),focusedontheprimaryHomeRuleissue,

combiningdiverseinterestsacrossaleft/rightspectrum,asdidtherivalUnionist

Party,withparticularMPsandfactionsidentifiedwith“conservative”or“liberal”

approachestoland,housing,business,socialorlabourpolicy.TheUnionistParty

predominated in the North East and the IPP elsewhere. No unified, cohesive

bourgeoispartyemergedintheareaofIPPdominance,astherelativelysmallbut

politicallypowerfulbanking, large-farmingandbig-businesselitesweremostly

unionist and remained aloof from it, while rising Catholic business, farming,

trading,professionaland labourgroups formed itsbackbone.The landreforms

andmodernisation/democratisation of the 1890s Balfour era created a small-

propertyowningdemocracy,with the introductionofelected localgovernment

generatinginterestorganisationsthatwouldlatershapetheFreeState.

AnevolutionofthefactionswithintheHomeRuleandUnionistblocksintoa

conservative/liberal or conservative/labour party divide, asmany expected to

followHomeRule,failedtomaterialise,apartfrominareasofMunsterin1910-

14, as the Home Rule Crisis, partition and the Great War saw Unionism

consolidateintheNorthandledtotheeclipseelsewhereoftheIPPbySinnFéin1 Amongthemostnotable,inalargeliterature,beingMair1979,1992;Chubb1982;McGrawand

O’Malley2018;Dunphy1995;Puirséil2007,2018;Gallagher1985;GallagherandMarsh2004;GirvinandMurphy2005;Murphy,G.,2009

31

onwhattheLordLieutenantidentifiedin1917asthe“singularlyfrankissueof

self-GovernmentwithintheEmpireversusanIndependentIrishRepublic”.2

SinnFéin itselfsplit in1922overtheTreatyandbecameseparateparties in

theensuingconflict.Thesplithadlittlesocio-economiccontent,againbeingona

“singularlyfrankissue”,ofDominionHomeRuleora“sovereignRepublic”.Anti-

TreatyRepublicanismpredominatedwhereSinnFéinhadbeenstrongest.Butin

the course of the Treatywar, the party division increasingly assumed a socio-

economicform.AswellastheIRBelementoftheIRAloyaltoCollins,formerIPP

“notable”circles,thechurches,andbusinessandunionistinterestsralliedtothe

Treatyparty,CumannnanGaedhal,asaforcefororderor lesseroftwo“evils”.

The Catholic Church declared the Free State the “constitutionally established

authority” and excommunicated Republicans, while southern Unionists

supported it as preventing “anarchy” and theTreaty as at least enabling them

“remainBritons”.3

FollowingtheRepublicandefeat,CumannnanGaedhalconsolidated itsbase,

restoringpre-conflictjudicialandotherinstitutionswhilecleavingtoorthodoxy

onsocialandeconomicquestions.ItmovedfromCollins’sviewoftheTreatyasa

temporary “stepping stone” toO’Higgins’ viewof it as a settled framework for

sovereignty.Apartfromsomelandreformandindustrialinterventionmeasures,

notablytheESB,itdefendedtheexistingsocio-economicorder.Republicans,on

the other hand, sought the replacement of the “Treaty State” by a Republic,

appealing to small-holders, the “landless”, potential entrepreneurs and urban

workers with an alternative “Republican” platform of state interventionism,

protectionist industrialisation and land, labour and welfare reform. A party

divideemerged,oforthodoxyversussocio-economicradicalism.Whileimpatient

radicals on the Fianna Fáil side tended to defect to the left, to the Republican

Congress,ClannnaPoblachta,theIRAorevencommunism,defectionsfromFine

Gaeltendedtobetotheright,toauthoritarianparamilitarismandevenfascism.4

To contend that Irish politicswas dominated thereafter by two “competing

versionsofnationalism”withan“absence”of“classpolitics”isthusagrossover-

2 Wimbourne’sreporttoCabinet,14/07/17,inMacLysaght19783 “remainBritons”,ChurchofIrelandGazette09/12/214 Regan,J.1999;O’Connor,E.2004;Manning,M.1970

32

simplification,areductioadabsurdumofgovernmentssinceindependenceasan

illusory,non-ideologicalalternationbetween“tweedledumandtweedledee”.The

realitywasaclearsocio-economicdivisionwhich, ifnotalongstraight-forward

left/rightlines,representedrivalconstitutional/socio-economiccombinations.5

Interest groups developed alongside this party reconfiguration. Business,

professionalandindustrialinterestshadconsolidatedorganisationallysincethe

1890s in their modern form, in chambers of commerce, employer federations

andprofessionalassociations.GiventhedivisioninsuchcirclesoverHomeRule,

they remained largely neutral during 1919-21 conflict, though tending to a

conservativeunionism.Theirsubstantialbase,nevertheless,wasreflectedinthe

support of up to twenty per cent achieved by “ratepayer” and “independent”

candidates in the 1920 urban district elections against the 80 per cent

nationalist/republican block. In 1922 and 1927, ratepayer and farmers’ party

candidateswonmoreseatsthanLabour,thoughwerelaterabsorbedbyCumann

nanGaedhalinresponsetotheperceived“communist”threatofFiannaFáil.

TheconservativenatureofCumannnanGaedhal–andFineGaelintowhichit

later evolved –was due to its dominance by these strands,whether ex-IPP or

unionist.ButitsFenian-RepublicanoriginsintheIRBandsupportamongGreat

War and Civil War-era National Army veterans limited its purely bourgeois

character.While generally hostile to unions – employing brute force to break

themontheShannonSchemeinthe1920s-CumannnanGaedhalingovernment

nevertheless accepted and negotiated with unions in the pubic services,

developedarbitrationsystems forresolvingdisputesandeven legalisedaright

tostrike inthepostofficewhenthiswasstilloutlawedinBritain.ThoughFine

Gaelwouldneverhavemorethanamarginalpresenceintheunions,itretained

theloyaltyofanotinsignificantworkingclassfollowing.

Formaltradeunionismin itsmodernsensealsotookshapeinIrelandinthe

late19thcentury,initsBritishform,andwithinaBritishparentstructure,though

confinedtolargertownsandcities,especiallyBelfast,ortonetworkssuchasthe

railways, at a time when urban Ireland accounted for less than a fifth of the

population. The historical attention trade unionism attracts exaggerates its5 “competingnationalisms”,Breenetal1990,Ferriter2005,Begg2016;“tweedledum/tweedledee”,recent

IrishTimescommentariesbyFerriterandO’Toole

33

significanceatthetime.The1913Dublinconflictshockedpublicopinion,which,

outsidetheNorthEast,hadhithertoregarded“classconflict”asaminoraspectof

politicallife,especiallycomparedtothelandstruggles.

General, or so-called “unskilled”, labour only organised after 1900 again

largelythroughBritishunionsuntiltheemergencein1909oftheinitiallysmall

but militant Irish Transport & GeneralWorkers Union (ITGWU), which broke

from the British-oriented structure on a nationalist basis. The largest labour

organisation in nationalist Ireland was in fact outside the formal trade union

fold. This was the Land and Labour Association (LLA) which, beginning in

Munster andwith links to both left-wing IPP circles and Fenianism, organised

agriculturalandotherlabourersinruralIreland–thelargestcomponentofthe

working class – to agitate for housing, direct council employment andplots of

landforself-sufficiencytosurvivetimesofunder-employment.From1914,and

particularly during1919-21, the ITGWUwas transformed as it absorbed these

local groups, expanding from a hitherto urban force of about 15,000 into a

nationalandpredominantlyrepublicanruraloneofover120,000.6

ITGWUmemberswereprominentinthe1916Risingandtheensuingconflict,

providingmanyleadingSinnFéinandRepublicanLabouractivistsandlaterIRA

volunteers. Its influencewasapparent in the labour-friendlyprogrammeof the

FirstDáil–laterdisparagedbyO’Higgins-andintheundergroundDepartment

ofLabourwhich,withConstanceMarkieviczasMinister,ranindustrialcourtsto

resolvedisputesandoverseeofficialrecognitionofunionsand“directlabour”in

republicanlocalauthorities. ITGWUleaderWilliamO’Briendescribedhisunion

as “the industrial wing of the national movement”. In addition, IRB activists,

commanded by Collins, organised the separation of craft and public service

unionsfromBritishparentassociations.Thehithertostaidall-islandIrishTrade

UnionCongress(ITUC),whichwassimultaneouslytheLabourParty,experienced

theriseofthisrepublicanlabourmovementasaninstitutionalusurpation.7

TheITGWU’sRepublicanismdifferedbothfrommainstreamSinnFéinandthe

ITUC in espousing James Connolly’s “Workers’ Republic”, i.e. a republic in the

SinnFéinsense,butwithsocialistinstitutions.Itsupportedandhelpedbuildthe6 Bradley1988;O’Connor,E.2011;Lane1993;Devine20177 Onlabourinthenationalstruggle,Codyetal.1986;O’Brien,W.1969;Yeates2008,2014,Mitchell1974

34

LabourPartyasavehicleforthis,butinbothpartyandITUCoftenclashedwith

the more British-socialist oriented majority outlook. An added division in the

1920s was theWorkers Union (WUI), founded by Jim Larkin as a communist

breakawayandtemporarilydisplacingtheITGWUinDublin,.Tensionsbetween

unions shaped by British traditions and republican unions such the ITGWU

formedaconstant fault-linethatwouldcontinuetocharacterise themovement

downtothesocialpartnershipera.8

The Labour Party was established by the ITUC in 1912 to represent the

“labour interest” both in local government and in the anticipated Home Rule

parliament. But the extent of labour movement involvement with Sinn Féin

limited its scopewhile partition,which removed itsmajorNorthern industrial

base,furtherhandicappedit.Itstruggledtoestablishitselfagainstrepublicanism

as the country’s specifically “social democratic” strand. Occasionally, as on an

“anti-militarist”platformduringtheCivilWar, itwouldenjoywhatwould later

becalleda“SpringTide”inprotestatthemisdeedsofthetwomainparties,but

suchpeakslackedanorganisationalbasisandprovedtransitory.

Nevertheless,aslongasRepublicanswereexcludedfromtheDáil,theCumann

nanGaedhal/Labourdivideassumeda conservative/labour form.Although the

stillabstentionistSinnFéinandthenFiannaFáilassiduouslycultivatedanurban

base,intheJune1927electionLabourincreasedits14seatswonin1923to22.

ButtheillusoryqualityofthisbecameapparentafterFiannaFáilenteredtheDáil

in 1927, restoring a central Republican/neo-Redmondite conflict narrative. In

addition, in a concerted campaign managed by Lemass, Fianna Fáil targeted

Labour’svote,especiallyinDublin,accusingLabourofambiguityonthe“national

question”andurgingtradeunioniststoseeFiannaFáilastheirtruechampions.

LabourrespondedbyattackingFiannaFáilasinsincereinitssocialpoliciesand

ofbeinginan“unholyalliance”with“thecommunists”.Italsorefusedacoalition

offerfromdeValeraandwouldwatchfromtheside-linesasheconsolidatedhis

governmentinpartonthebasisofLabour-typepolicies.9

8 O’Connor,E.20159 IngeneralDunphy1995,Puirséil2007;Lemasscampaign,‘IrishLabourPartyStandsforImperialism’,The

Nation02/04/27and,ontradeunionists,‘ANewPoliticalParty?’TheNation,03/08/29;Labourresponse,“unholyalliance”and“CommunistsandFiannaFáilCombine’,TheIrishman12/04/30

35

Protectionisminthe1930swonforFiannaFáilanenduringbaseamongnew

industrialists. A new managerial and entrepreneurial class emerging in the

protectedprivate and state industries led to the founding of the Federation of

IrishManufacturers(FIM),whichdevelopedacloserelationshipwiththeState.

The simultaneous expansion of welfare, public housing and industrial

employmentquicklyalsoconsolidatedtheparty’sworkingclassbase.

FiannaFáil’sworkingclass supportwouldproveconditional andvolatile, as

whenin1943,thelate1940sandagaininthe1980s,asignificantproportionof

it,discontentedwithgovernmentsocialpolicy,switchedintemporaryprotestto

Labour or left-republican parties. Fianna Fáil therefore cultivated its relations

withtherepublicanwingofthetradeunions.Inthe1930s,withITGWUsupport,

itconsideredlegislatingtoendBritish-basedunions,thoughdecidedagainstthis

to avoid sparking a Dublin working class revolt and also for wider political

reasons. Lemass compromised, licensing such unions once they credibly

separatedouttheir“Irishregions”withlocalheadquartersandleaderships.10

Trade unions enjoyed a significant revival in the de Valera period, growing

fromalowof60,000ITUC-affiliatedmembersin1929–thoughthatnumberis

likely exaggerated - toover110,000by1944.By1960,320,000workerswere

organised, or55per centof theemployedworkforce, a ratehighbyEuropean

standards.Themovementretained its incongruous32-countystructureaswell

asincluding“British-based”unionsintheRepublic,andsplit in1944alongthis

British/Irish, Labour/Nationalist fault-line into the ITUC and CIU (Congress of

IrishUnions).TheITUCretainedmost“Irishregions”ofBritishunionsandsmall,

sectionalandcraftunions,aswellasLarkin’sWUI,whiletheCIUcomprisedthe

ITGWU and nationalist-oriented groups. This division would continue in

subduedbutpersistentformwithinthere-unifiedICTU,formedin1959.11

Theorganisationsofbusinessandemployers–animportantdistinction–also

changedunder protectionism.Different strands of business remained separate

until the 1970s. While elite commercial circles, still largely Anglo-Irish,

continuedtorelatecloselytosimilarBritishcircles,manufacturingdevelopeda10 OnFFandLabour,Dunphy1995,Púirséal2018;on“Britishunions”conflict,McCarthy,C.197711 Membership,Nevined.1994:372-73;“exaggerated”–againstITGWU’s“official”20,000membersin

1931,itsleaderWilliamO’Brienrecordedanactual12,677inhisdiary–Morrisey2007:278;“Britishunions”conflict,McCarthy,C.1977:118-34;229-90

36

dependencyonthestate.TheFIM,anationallyorientedgroupformedto lobby

the Department of Industry and Commerce for licenses and protectionist

advantage,aroseasaprimarylobbyanditscloserelationshipwithgovernment

would endure. Employers, organised separately as employers in response to

union pressures, tended to associate more with Fine Gael. In the absence of

national-level industrial relations institutions, numerous industry-specific

employergroupsformedtodealwiththerevivingunions,thelargestinsectors

such as provisioning,manufacturing and construction. These disparate groups

coalescedintheFederatedUnionofEmployers(FUE)from1942.12

The de Valera governments, through Lemass, conferred regularlywith both

industrialistandunion interestsandestablishedanumberof jointstatebodies

with them. Fianna Fáil confronted union power only oncewhen, under tightly

disciplinedwartimeconditions,itfacedarevoltofDublinlabouroveritswages

“standstill”orderof1941.Thiscostitdearlyinthe1943election,alessonwell

learnedandnot repeated.Lemass is reported tohavequippedat the time that

Labour,infailingtocapitaliseontherevolt,hadmissedamajoropportunity.13

Fitsandstarts:“tripartitism”1945-56

Witheconomicdirigisme,thewelfarestateandtripartitismderigeurinAllied

statesandtheirplanningforpost-warEurope,deValeraandLemassdiscusseda

similarcourseforIreland.Evenbeforethewar,theyhadtakenakeeninterestin

“tripartitism” as initiatedby IrishmanEdwardPhelan at the ILO inGeneva, an

institutionwithwhichIrishgovernmentsengagedfromitsfoundation.Whenthe

BeveridgePlan–theblueprintforthepost-warBritishwelfarestate-appeared

in 1942, Irish government circles studied itwith a view to a similar initiative.

Allied plans for a stimulus programme to rebuild a shattered Europe – the

EuropeanRecoveryProgramme(ERP)–combinedaspectsoftheAmerican“New

Deal”,BritishwartimeindustrialplanningandEuropean“corporatist”traditions,

in part, as with the ILO, to counter the attractions of Soviet communism. De

Valera’s alleged “isolationism”hasbeenmuchexaggerated, ashehadbeen the

12 Onuniondevelopment,McCarthyC.1977,andbusiness/employersChubb1992,Hardiman198813 OnFiannaFáilandbusiness/labourinterests,Murphy,G.2005,2009andEvans2011:207;Lemass

quotedinMcCarthy,C.1977:246

37

leadingadvocateofcollectivesecurityintheLeagueofNationsasPresidentofits

General Assembly. It was the League’s refusal, at great power insistence and

against his urgings, to intervene against Japanese and Italian aggression that

determinedhimtoensureIrishneutralityinthe1939war.BeforeWW2ended,

he again orientated Irish policy to connect with the new post-war order,

preparingtoapplyformembershipoftheUNdespitedistrustingitsgreat-power

domination. The government also sought engagement with the ERP, Lemass

urgingthat“wemakecertainweparticipate[init]whenitcomes”.14

Lemass endorsed the tripartite aspect of ERP as an institutional departure

Irelandshouldembrace,tellingtheITUCin1945,beforeitsplit,the“increasingly

importantpart”hesawunionsplayingin“nationallife”in“ademocraticstate”,

“notmerelyasaguardianoftheworkers’interests,butasanessentialpartof

themachineryofindustrialorganisation,acceptingtheresponsibilitieswhich

relate to its real power, and proceeding from the stage of negotiating

particularagreementswithprivateemployersto…formulatingandcarrying

intoeffectageneralpolicyforthefurtheranceofthelong-terminterestsofthe

workersasaclass”.15

TripartitismwasnotforeigntoIrishindustrialpractice,withinheritedwage-

setting structures surviving since the 1920s through a government labour

inspectorate,wagesboardsinsomeindustriesandthearbitrationsysteminthe

public service, but Lemass, who initiated Ireland’s ERP application, also

embraced its tripartite agenda. He viewed his 1946 Industrial Relations Act

establishing the Labour Court as just the first stage towards such a system. A

leading left-wing tradeunionist called it the “most revolutionarydeparture” in

Irishindustrialrelationshistory,asitwasnotjustacourttoresolvedisputes,but

established“JointLabourCommittees”(JLCs)ofemployerandunionnominees,

with an “independent” chair, to set wages across sectors, legally enforceable

through “Employment Regulation Orders” (EROs). Lemass had envisaged

statutorypowersfortheCourtitself,but,apartfromtheEROs,thiswasopposed

bybothbusinessandunions jealoustodefend“voluntarist”bargainingandthe14 OnLemassandPhelan,prefaceandintroductiontoILO2019;onIrishstateandBeveridge,Carey2007,

McCashin2004;politicalstrategyofERP,Angster1999;deValeraandneutrality,McCullagh2018;deValeraandUN/BrettonWoods,DorrN.2010;LemassquoteinGarvin2004:85

15 McCarthy,C.1977:572

38

unions intentonensuringan “abstentionof the law”,which,with considerable

justification,theyregardedasinherentlyclass-biased.16

Lemass proposed incorporating price-and-incomes setting, economic policy

making and “JointDevelopment Councils” in industry, using the price surge of

the post-war imports boom and revival of wage bargaining following the

removal of wartime controls to initiate national talks on wage/price

management.This ledtothefirstevernationalagreementonbroad“Principles

tobeObservedintheNegotiationsfortheAdjustmentofWages”.Oncivilservice

advice, the initial 1948 application to ERP made no reference to a tripartite

approach,butwhentheunionsprotestedLemassincorporatedthem.17

UndertheInter-Partygovernmentthisnascenttripartitewage/policysystem

lapsed, only the Labour Court and the ERP involvement surviving. Fine Gael,

whosedalliancewith“corporatism”inthe1930shadbeensolelywithitsfascist

form, was hostile to union involvement in policy as an intrusion into state

authority.Labour,despitemanyof itsTDsbeingunionofficials,hadbroken its

formal link with ITUC in 1930 specifically to escape “union control” and was

equallyunenthusedbytripartitism,focusingingovernmentonexpandingsocial

provision.The ITGWU-linked“NationalLabour”TDs,whohadbroken fromthe

LabourPartyin1944,alsodidnotrevivetheidea,beinghostiletotheITUCand

preferringareturntoFiannaFáilgovernment.Governmentdidhoweveractona

proposalfromITUCleaderandLabourTDJimLarkinjnr.,tofoundtheIDA.18

Despite the Inter-Party government’s disinterest, Larkin, son of the 1913

Lock-out leader, promoted tripartitism as a central ITUC strategy. A former

communist, he was unusually well versed in the debates of the international

labourmovementandin1949usedhisspeechasITUCPresidenttoadvocatean

economy-widetripartitesystem.Heurgedthatunionsmovebeyondtraditional

bargaining to negotiated “productivity”-driven industrial expansion and

managed incomes growth within the parameters of a planned economy,

16 “radicaldeparture”inInt.JohnSwift;conflictoverLabourCourt,CIUCentralCouncilmtgs.,24.09-

26.11.48,NAI:CIUandCIUAC1946;“abstentionofthelaw”Hardiman1984:8417 Lemassplans,Hardiman1988:45,Girvin1994:123;“import-drivenboom”FitzGerald1968:7-8;

‘PrinciplestobeObserved…’,D/I&C1948;“permanentinstitution”O’Brien,J.1981:9;incorporationofunions,CIUNCmtgs.24.09-26.11.48,NAI:CIU

18 Labour/ITUCseparation1930,constituencyfocus,and;“NationalLabour”,Mitchell1974,Puirséal2007andMcCarthy,C.1977;LarkinandIDA,O’Riordan2001

39

participationincompanymanagement,andtripartitenationaleconomicpolicy-

settingtodriveagrowth-orientedeconomytoprovidehigherqualityworkand

wages. He proposed that the ITUC adopt a strategy on wages based on a

resources/expenditure/productivity formula, anticipating the later central idea

of social partnership, and defended Irish involvement in the ERP against left-

wingcriticsasa“developmentofcollectiveeffortcompletelycontrarytothevery

basisofcapitalism”.Hisideasformedthestrategicperspectiveofthemovement

for those leadership circles that thought beyond immediate wage conflict, his

speech,unusually,beingpublishedandwidelydisseminatedinthemovementas

anauthoritativestatementofunionstrategy.19

There was otherwise considerable policy continuity between governments.

The Inter-Party government was no less internationalist than its Fianna Fáil

predecessor, joining the Council of Europe, where Seán MacBride was

instrumental in shaping theConventiononHumanRights, andalso considered

NATOmembership. It participated in ERP,which, through theOEEC, drove an

upgrading of national industrial planning, though given the innovations of the

1930s-40s period Bielenberg’s contention that this represented “in some

respects … the first exercise by an Irish government in economic planning”,

seems exaggerated. De Valera returned to power in 1951, and throughout the

early 1950s the ERP brought government officials, employers and workers

togetherwithAmericanandEuropeancounterparts throughexchangevisitsas

well as industrialmodernisation projects at home, which saw the founding of

someenduringtripartitebodiessuchastheIPA,IPCandIIRS.20

De Valera also revived Fianna Fáil’s tripartite plans, encouraging Lemass

against conservative opponents in cabinet to seek an “Agreement on Wages

Policy”for1952-54,whichsetparametersforwagebargainingratherthanactual

wage rates, and in reviving Lemass’s 1947 proposals for sectoral Industrial

Councils.ButtheseinitiativespredictablylapsedwhenFiannaFáillostpowerto

19 “YoungJim”,Desmond2009:273-83;speechITUC1949,onimpactO’Riordan200120 MacBrideandECHRandNATO,Keane2007;“firstexercise”,BielenbergandRyan2013:17;

implementationofERP,Murray2009

40

anewInter-PartyGovernmentin1953,whichreturnedtoorthodoxdeflationary

measurestocounterthedeepeningeconomicrecession.21

Lemass’seconomicinstitutionalism1957-63

The road to “opening” the economy is much debated. A “world economy”

hardly existed before the emergence of the OECD, EEC and EFTA in 1957-58,

withtheonlyoptionfor“internationalisation”thepoliticallyunacceptableoneof

re-integrationwiththeBritisheconomy.Europeslowlyre-emergedthroughthe

ERPandKoreanWarboom,andIrishpolicymakersengagedwithboththeOEEC

and OECD, aligning economic policy with their prescriptions. The key dispute

wasnotoverwhetherbuthowtoeffectanopeningtofreetrade.Thiswasgiven

addedurgencybytheseverityoftheIrishdepressionthatfollowedtheEuropean

downturn on the ending of the Korean War, with record unemployment

provokingsocialunrest.Thedeepeningcrisisdidnotcausethechangeofpolicy

direction,butconcentratedmindsonitsurgency.22

In1956thecoalition’s“CapitalInvestmentProgrammeCommittee”proposed

a gradual opening combinedwith supports for export-led industrial expansion

and inward investment. But such ideas remained theoretical as government

wrestled with the monetary and balance-of-payments crisis through

contractionary budgets. Lemass in opposition followed the international

economicdebate,havinghisson-in-law,CharlesHaughey,purchasebooksonit

for him he had seen reviewed in the press. When the EEC/EFTA opportunity

arose in1957/58, itwaspursuedvigorouslybygovernmentwith littledissent

internallyorfromtheopposition.Lemassinhiseconomicplanninginopposition

envisagedtripartitestructures,welcominganindustrialplanproposedbyITUC-

draftedlargelybyLarkinandDonalNevin-whichproposedsuchaframework.23

21 “Agreement…”,D/I&C1952;“resurrect”,Carey2008;“DevelopmentCouncils”CIUCentralCouncilmtg.,

28/03/52,NAI:CIU;22 Onthebalance-of-paymentscrisis,FitzGerald1968:8-9;1950s“discourse”and“keydispute”,McCarthy,

J.1990:40,FitzGerald,G.1968:54-5,Finn2012,Fanning1990,Daly,M.andLitton1997,andBielenbergandRyan2013;on1950ssocialprotests,Kilmurray1987

23 Haugheybooks,McCarthy,John,1990:67;Lemass-uniontalks,PUTUO1956,Desmond2009:273-83;onLarkin/Nevinrole,PUTUOECmtg.14.10.1957,NAI:PUTUO,andMcCarthy,J.F.:69;Lemass’sresponsetounionproposals,PUTUOECmtgs.1956passim;Horgan1997:174

41

On Fianna Fáil’s return to power in 1957 on a programme of industrial

expansion,LemasshadDepartmentofFinance secretaryT.K.Whitakerpublish

his memo, ‘Economic Development’. This synopsised the “open economy”

discourse, though assumed an agriculture-driven growth and contained many

proposalsgovernmentneveraccepted,suchaswithdrawingfrom“unproductive

investment” in areas such as housing and health to fund industrial expansion.

Lemass had government endorse it, though suggested publication under

Whitaker’s name to “get its acceptance over political boundaries”. He

simultaneously again concluded a “Joint Agreement on Guiding Principles

relating toWages Claims and the Present Economic Situation”with employers

andthejointITUC-CIUbody,PUOTO,providingforwagedevelopmentin1957-

59withinanoverallexpenditure/productivityassessmentoftheeconomy.24

CivilserviceplanningfortheProgrammeforEconomicExpansion,launchedby

Lemass asTaoiseach in1959, didnot include interest group involvement. It is

oftenclaimed,bysomewhatsleightofhand,thatWhitakerinitiatedthetripartite

structuresthatfollowed,buthisoriginalmemoforesawonlyanadvisorycouncil

ofofficials,agencyleaders,industrialistsandeconomic“experts”.ItwasLemass,

whohadmaintainedcontactwithunionleadersandencouragedtheformationof

a united ICTU, who sought out their views on structures to accompany the

Second Programme, specifically “the best means of securing the maximum

degree of co-operation between the various interests concerned with the

progressof theNationaleconomy”. ICTUsuggesteda tripartite “nationalpolicy

council”andrevivingthesectoralcouncilshehadproposedinthelate1940s.25

The“CommitteeonIndustrialOrganisation”(CIO)finallyestablishedin1961

to oversee the adaptation of industries in preparation for free trade and EEC

accession was initially composed as advised by Whitaker, without union/

employerinput.ICTUprotestedandLemass,againstcivilserviceadvice,invited

not only ICTU but also the employer body FUE (as distinct from the already

involvedFIM)ontoit. ICTUappointeditsmostseniorofficials, includingLarkin

andITGWUleaderJohnConroy.24state-industrysectoral“AdaptationCouncils”

24 Whitaker1958;“getitsacceptance…”Fanning1990;“JointAgreement”,O’Brien,J.198125 Whitaker/tripartitism,BewandPatterson1982:145(whogivenosourcefortheassertion),Roche2009:

196;Whitaker’sactualproposal,Whitaker1958:III:10;“bestmeans”,LemasstoICTUECmtg.06.07.59

42

were established to report into the now tripartite CIO, with Lemass requiring

them, on ICTU’s proposal, to cooperate with parallel “Trade Union Advisory

Committees” it had established for each sector. With the experience of

cooperation on ERP bodies, and despite the EEC application falling with de

Gaulle’s veto on British accession, the CIO and Adaptation Councils were

retained,largelyprovingeffectiveagentsofindustrialmodernisation.26

Lemass also proposed upgrading wage determination from “guidelines” to

actualpayagreements,establishingan“Employer-LabourConference”(ELC)on

a statutorybasiswithan independent chair as thenegotiating forum,with the

stateparticipatingaspublicsectoremployer.TheELCwasalsotobetaskedwith

negotiating a fundamental industrial relations reform. When the next “wage

round” began in 1963, Lemass made what James O’Brien called “a fairly

sustainedefforttopersuadeCongressand…employerstonegotiateatnational

level” through the ELC, setting wages, as he told the Dáil, “on the basis of an

intelligent understanding… of the national interest rather than procedures of

horse-tradingandstrikes”.27

TheoverallsystemLemassenvisagedwassetoutinaWhitePaper,Closingthe

Gap, which described a widening discrepancy between labour costs and

productivitygrowth.Thiswentfurtherthanpreviousplans,suggestinginvolving

thestate,beyonditsroleaspublicemployer,inundertakingabiennial“objective

tripartitereview”inajointplanningbodyasthebasisforwagedeterminationat

theELC.Theonlyalternative,itstated,werestatutorywage/pricecontrols.28

Theinstitutionthatemergedforthe“objectivereview”Lemassproposedbuilt

onICTU’ssuggestionofanationalcouncil.Itwasfinallyestablishedinlate1963

as the “National Industrial and Economic Council” (NIEC) tasked “to prepare

periodic reportsonprinciples tobeappliedbygovernmentand theEmployer-

LabourCouncilforthedevelopmentofthenationaleconomyandtherealisation

andmaintenance of full employment at adequatewageswith reasonable price

stability”. Whitaker, as Department of Finance secretary and head of the civil

26 FormationandpurposeofCIO,Murphy,G.2005:36-8;ICTUprecipitateICTU/FUEinvolvement,

FitzGerald1968:56-7andICTUECmtgs.28.07and01.12.61;ICTUappointees,ICTUAR1962:94-6;effectivenessof“AdaptationCouncils”andTUcommittees,FitzGerald1968:57-67

27 O’Brien,J.1981:10-1128 D/Finance1963b;O’Brien,J.1981:37-38

43

service,was appointed chair, thoughonly after the original nominee, diplomat

F.H. Boland, declined due to private sector commitments. Whitaker did not

initiate theNIEC, and indeed had acted in 1960 on his own preference by co-

foundingaprivatesector-funded“EconomicResearchInstitute”(latertheESRI),

initiallyunderSSISIauspices. Itsboard includedaminorityofemployer/union

figures,butappointedonapurelyindividualratherthanrepresentativebasis.29

ICTU/FIM objections to NIEC’s purely wage-guideline function enabled

Lemasstacitlyexpandittoamuchwideroneof“supervisionandreview”ofthe

Second Programme itself. Garret FitzGerald, then an FIM economist, described

howtheNIECassumedownershipoftheThirdProgrammeas“itsownfromthe

outset”. Lemasswelcomed the NIEC asserting itself, gladly conceding to it the

roleofdevelopinga“consensus”betweenthestateand“themainsectorsofthe

community”toensurethat“measurestakentoimplementtheProgrammehave

thefullsupportofallsectionsoftheCommunity”.Larkin,statingthat“allofour

basiceconomicandmanyofoursocialproblemsstemfromthesameweakness,

economic underdevelopment, both in industry and agriculture”, declared the

NIECtobe“planningaswehaveconceivedit”.30

LikemanyIrishinstitutions,theNIECresembledcomparablebodiesemerging

elsewhere, but its structure and functions were shaped by organic factors. A

“NationalEconomicDevelopmentCouncil”had justbeenestablished inBritain,

modelledinturnontheFrenchbody,andIrishofficialsvisitedandstudiedboth.

ButtheNIECdevelopedalonglinesofitsown.TheBritishCouncil,forexample,

includedministers aswell as industry, union and civil service representatives

and,underHaroldWilson,waschairedbythePrimeMinisterhimselfand later

linkedtoanetworkofsubordinatesectoralcouncils.ThisencouragedtheICTU

also topressLemass to revive the sectoral councils hehad suggested in1947.

NIECwas shaped by participants’ experience of the “Adaptation Councils” and

CIO and, unlike in Britain, deliberately excluded politicians to minimise

clientelist pressures. Its first report formed the basis for the “National Wage

29 NIEC1966;onWhitaker,theNIECandESRI,FitzGerald1968:71,157-9,alsoChambers2014:155-630 LemassinNIEC1966:14;Larkin“allofour…”,WUIADC1963:11-17;“conceivedit”,Girvin1994:127-8

44

Recommendation”agreedin1964,whichseta12percentwage“guideline”for

theperiodto1966whichnegotiatingbodieswereurgedtofollow.31

NIEC had 29 members, nine from Government and ten each representing

unions and the employer/business interest. State representation, headed by

Whitaker andDepartment of I&C Secretary J.C.B.McCarthy, camemainly from

Finance’s“EconomicDevelopmentDivision”(EDD)andagenciessuchastheIDA

and IAOS.TheEDDhad itselfbeenan institutional innovationasboth the first

specific civil service economic planning unit, but also, in theNIEC, the first to

servea “non-government”body.TheEDDhadbeencreated to fill the strategic

planning policy gap identified during the First Programme and would later

evolve into the Department of Economic Planning and Development. The

absence of farming representatives (apart from IAOS) was not deliberate, but

due to divisions among farming bodies preventing agreement on their

representation. Such divisions were a phenomenon plaguing all interest

representationsduetothefragmentednatureoftheeconomy.32

Theemergingcollaborativeapproachenthusedallinterests,withtheITGWU,

for example, even proposing that individual companies pursue growth targets

agreed through a joint business-union effort, and that a network of Regional

Technical Colleges be established to train professional workers, a goal later

included in the Third Programme. Union enthusiasm was further reflected in

ICTU support, against marginal dissent from some craft and British-based

unions, for IrishEECaccession. ICTUdefendedthisontheoptimisticbasis that

cooperative planning in such a context would enable declining industries be

replacedbynewindustriesandworkersfromweakersectorsre-trainedfornew

jobs. Larkin dismissed asmisguided left-wing criticswho rejected tripartitism,

Lemass’sProgrammesandtheNIECas“politicalbaits…toensnareandenmesh

tradeunionistsinthepoliticalelectionmanoeuvringsofFiannaFáil”.33

31 BritishNEDC(“Neddy”)system,Dell1997;Irishstudyvisits,earlyNIECand“exclusion”ofpoliticians,

FitzGerald1968;“WageRecommendation”,O’Brien1981:10-11,37-3832 FitzGerald1968:158-64;onfragmentation,Hardiman1988:48;onfarmers,ICTUECmtg.,28.02.196433 “workingconvergence”,Murphy,G.2009;Horgan1997:228;ICTUandstatecompanies’role,ICTUAR

1962:64-5;ITGWUproposals,ITGWUADC1962:72-3,98-99;“defendedonthebasis”,ICTUADC1962:227-30;ICTUandEEC,Murphy,G.2003;“politicalbaits”LarkininBulletin(WUI)Sept.-Oct.1963

45

Systemstresses:fromexpansiontodissolution1963-68

From1963Lemass,absorbedwithotherissues,tookanincreasinglybackseat

in relation to the tripartite institutions he had initiated, leaving them to the

ministersresponsible.Until1966theindustrialrelationsbodiescameunderJack

Lynch asMinister for I&C, and then Patrick Hillery at the new Department of

Labour,while theNIEC remainedunder Finance and its energetic and capable

minister, James Ryan. Like Lemass, of whom he was a close ally, Ryan was a

veteran of the independence struggle and drove implementation of the ever

moredetailedProgrammesforExpansionwithconsiderableenergy.

During1963-66,theNIEC,underRyan’sguidanceandwithWhitakeraschair,

flourished, pursuing the mandate it had assumed in relation to the Second

Programme and preparing the parameters for its successor. Despite its tight

representational base and lean bureaucracy – henceforth hallmarks of Irish

social partnership – its output was prodigious and authoritative. Its reports

includedannual economic reviewsaswell as studiesof individual sectors, and

alignedstrategywiththeinternationalpolicyframeworkssetbytheOECD.The

CIO’s1965SurveyofIndustryprovidedthebasisfortheNIEC’spreparationsfor

theThirdProgramme.Thisidentifiedmajorconstraintsonexpansionsuchasthe

“backwardness”of Irish industry, inefficiencies,small firmsize, lowinvestment

ratios,limiteddiversificationandpooruseof“modernmanagementtechniques”.

Itsetanambitiousnationalaimofovercomingthesetoachievebothcompetitive

advantage and a steady increase in real incomes through a productivity-based

formula for price/wage growth in 1966-68, a national prices commission and

redistributive equity through progressive taxation. It urged that the Third

Programme include sectoral “adaptation” plans to be implemented through

tripartite “Industrial Development Councils”, cooperative structures within

companiesandathoroughreformofindustrialrelationspractices.34

But concrete initiatives by Departments to progress NIEC proposals were

often weak and ineffective. William Roche describes Lynch at I&C as an

“industrial relations conservative in sharp contrast to [Lemass]”.While paying

“lip service” to tripartiteplanning, he saw littleneed to change “theprevailing34 “prodigious”,FitzGerald1968:158-63;“Survey”,CIO1965;initialconclusions,NIEC1965:Pt.IV,paras.

50-61,andstrategyproposals,NIEC1965,1966a,1966c

46

system of collective bargaining”, preferring these continue autonomouslywith

“minimum interference from the State”. He ignored suggestions for reforms

towardswhatRochedescribesasa“Dutchsystem”ofworkscouncilsandsocial

partnership as “outside the realmof practical politics”. It is notable that up to

1965alldecisive interventions, includingthose initiatingwageagreementsand

establishingtheCIOandNIEC,wereLemass’sown,withLynchcontributinglittle

discernible. But Lemass was in declining health and these initiatives now

depended on Lynch, who failed to secure a successor “National Wage

Recommendation” at the end of 1965. A central agreement was not to return

until1970.AlthoughICTUshowedawillingnesstoreturntosuchaframework

bysettingitsown“maximumguideline”andseekingequalisationofemployment

conditions - which Lemass welcomed as the basis for an agreement - wage

determinationrevertedfrom1966underLynchto“localbargaining”.35

The drift back to free collective bargaining at a crucial stage in industrial

expansion was to prove disastrous, as the lack of regulatory reform saw

industrialconflictescalatetoanationalcrisis.Therehadbeenagradualincrease

in conflict – examined in the next section – but up to 1966 this had been

manageable,withELC-agreedwage“guidelines”generallyimplementedandthe

1965 CIO Survey judging industrial relations to be “fairly good” apart from

“restrictivepractices”inafewsectors.Lemassmadeafinalinterventioninearly

1966 before retiring,warning of an urgent need to reform industrial relations

which had remained essentially unchanged since 1906. Hillery at the

DepartmentofLabourdraftedaTradeUnionBilltoreducethenumberofunions

and strengthen Congress authority over “unofficial action” and ICTU gladly

cooperated in this initiative. But when Hillery circulated the heads for an

Industrial Relations Bill in June 1966, proposing the outlawing of unofficial

strikesandgivingtheLabourCourtstatutorypowerstoenddisputes,ICTUwas

outragedandthegovernment-ICTUtalksonreformsstalledforthreeyears.36

With these ominous failures by Lynch andHillery, thewhole framework of

tripartite institutionalism frayed. The Adaptation Councils floundered, NIEC

35 OnLynch,Roche2009:190;failureofwageagreement,O’Brien1981:12-13;Lemasshealth/retirement,

Horgan1997:326-3;ICTUpositionandLemasswelcome,ICTUADC196636 LemassIRreforminitiative,McCarthy,C.1973:184-98;Hilleryproposals,ICTUECmtgs.,21.06.1965,

25.02and06.05.1966;reactiontoIRBill,Hardiman1988:47

47

lamentingthepoorlevelof implementationoftheirproposalsat industrylevel,

the CIO was disbanded and the “Industrial Development Councils” never

materialised, formally because of FUE’s refusal to countenance sectoral union

involvementbutprincipallybecausegovernmentshowedlittleinterest.Progress

onindustrialrelationsreformcametoahalt,thejointworkinggroupceasingto

meet in1967,andneitherHillery’s initialproposalsnoranyalternatives,apart

from a 1969 bill modifying secondary Labour Court functions, were enacted.

RelationsbecamesostrainedthatICTUaccusedHilleryoflyingtotheDáilwhen

heclaimedtohavereceivednorequestsfromICTUtoconsultonit.37

Even the NIEC became fractious. Following 17 unanimously agreed reports

since 1963, a major study, Planning for Full Employment, begun in 1965, was

delayedfortwoyearsoverWhitaker’sinsistenceonincludingacompetitiveness

principle of maintaining incomes below British levels, by statutory means if

necessary.ICTU,whichclashedcontinuallywiththebullishNIECchair,accused

himoftryingtoimposea“one-sided”incomespolicy,andonlyacquiescedtothe

report’spublicationonceitsdissentonitswageformulawasformallynoted.38

WithanewMinisterforFinance,CharlesHaughey,justestablishinghimselfin

office after already being embroiled in conflict with the farmers’ association

(NFA), government disengagement from the council continued as the civil

servicere-asserteditsautonomy.ButHaugheysoonbegantomakehispresence

felt, reviving engagement with the NIEC. Larkin described the 1967 full

employmentreportasreflectingarevivaloftheNIECaftertwo“difficultyears”.

Another NIEC report, which used an OECD critique to propose a radical

expansionofsecond-leveleducationalaccess,wasopposedbytheDepartmentof

Education until its own Minister, Donogh O’Malley, intervened in its favour,

leading to his famous initiative freeing secondary education to general access.

Yet another report, which proposed replacing Social Welfare’s antiquated

“labourexchanges”withasemi-statemanpowertrainingagency,wasrejectedby

37 declineofCouncilsandCIO,FitzGerald1968:66;“lamenting”,NIEC1966c;IRworkingGroup,ICTUEC

mtg.,25.08.67;1969bill,Hardiman1988:47;“lyingtotheDáil”,Murphy,G.andHogan2008:1338 FullEmployment’delay,FitzGerald1968:216;ICTUdissentatNIEC,ICTUECmtg.13.01.67

48

a civil service committee, though NIEC influence at least ensured a semi-

autonomousserviceoverseenbytheDepartmentofLabourdidemerge.39

ThedecayoftripartitismwascompoundedbyLabourPartynegativity.Larkin,

whohad affiliated his union, theWUI, to the party in 1964not least to create

somepoliticaldistance togovernment, faultedLabourpoliticianswho “in their

naturalanxiety to criticiseandexpose the faultsand failingsof theFiannaFáil

government…appearedtobeinoppositiontothewhole…[tripartite]exercise”.

Heregrettedtheir“coolanddetachedinterest”intheNIEC,theirdismissalofit

asmere“FiannaFáilpropaganda”,andtheirfailureto“make[its]reports…the

basisofacontinuingpositivecriticismofgovernmentpoliciesand failings”.He

pleadedwiththeparty to“distinguishbetweentheNIECandtheFiannaFáil…

government” andwork “to strengthen thewhole concept of planned economic

development and the leading role of the state in its realisation”. Calling on

Labour to support theProgramme, he said its seven-yearplanandcentral role

for the NIEC would have seemed like “an election slogan of the labour

movement”justafewyearspreviously.DespiteLabour’sadherenceto“national

planning”, its wariness of tripartitism as a Fianna Fáil “three-card trick”, as

Larkindescribed theirnegativeviewof it,was resonantof their resentmentof

FiannaFáilusurpingtheirpositionsincethe1920s,andwouldpersist.40

The flowering of tripartite institutionalism under Lemass thus went into

reverseunderLynch.Insteadofbeingconsolidated,theNIEC/ELCplanningand

wage guidance system collapsed, sectoral councils disappeared, industrial

relations reform was shelved and the NIEC weakened, its policy consensus-

building function side-lined as civil service policy primacy returned. Lemass’s

tripartitismhasbeendescribedas “neo-corporatism”,but itsnascentquality is

better captured by Gary Murphy’s description of it as “proto-corporatism”.

Lynch’snon-interventionismbecamedominantfrom1966.Oneexceptiontothis

trendwas NIEC’s revival in 1967,which occurred under the newMinister for

Finance,CharlesHaughey,adiscipleofLemassandanadvocateofwhatwould

laterbetermed“socialpartnership”.Butanindustrialrelationscrisisaroseinthe

39 Larkinview,O’Riordan2001:34-5;NIECeducationreport,NIEC1966b,andD/Educ.opposition,

FitzGerald1968:175;fateof“manpower”report,FitzGerald1968:17440 “naturalanxiety”and“threecardtrick”,speechatWUIAR1968,inO’Riordan2001:35;“electionslogan”,

Bulletin(WUI)Sept.-Oct.1963,quotedinO’Riordan2001:31

49

institutionalvacuumcreatedbyLynch’snon-interventionism,culminatinginthe

industrial “chaos” of 1968-69. There were simply no institutions in place to

channelthegrievancesthatundelayittowardsaproductiveresolution.41

Spiritofthe‘60s:socialchangeandindustrialcrisis1968-69 Up to 1961, average annual workdays lost in disputes was about 170,000,

higher than most North European corporatist countries but modest for the

“Anglo-Saxon” liberal-voluntarist world. In the pre-1960 closed economy,

externalcompetitivenesshadnotbeenadecisivefactorbutthischanged.Wage

bargaining, characterised by what Lemass called “procedures of horse-trading

andstrikes”,wasdrivenbythreetendencies,ofworkerswithnegotiatingpower

pressing their advantage to secure better pay, expanding industries “buying

peace”byconcedingincreases,andmostbarelyprofitableenterprisesrelyingon

suppressingwages.Mostwage settlements up to 1965 nevertheless remained

within agreed national “guidelines”. But 1968-70 witnessed an “upheaval” of

industrialconflictwhichwascompoundedbystateinstitutionalminimalism.42

Astheeconomyopened,strike-daysrose,to450,000in1964,552,000in1965

and 784,000 in 1966. These arose from long disputes involving relatively few

workersinseveralspecificindustriesratherthanapatternofconflictacrossthe

economy,and inmanycases involvednon-ICTUunionsornon-FUEemployers.

80per centof strike-days in1964were in the construction industry, ina long

dispute not over wages but a 40-hour week, which employers refused to

concede. The union concernedwas the breakawayMPGWU,whose pickets, by

uniontradition,otherworkersrefusedtopass, thusclosingdownthe industry,

whileon theemployersideconstructioncompanieswerestilloutsideFUEand

sought topreventan industry-wideconcessionwhichFUEactually favoured.A

similardynamiccharacterisedtheprintstrikeof1965,whichaccounted for66

percentofall strike-days,withsmallcraftunions forcing theclosureofa then

largeindustry,andthebankandpapermillsstrikesof1966,againcraft-driven,

whichthatyearsimilarlyaccountedformoststrike-days.Thebankstrikeagain

41 Onemergenceoftheterm“neo-corporatism”,McGinley1998;on“proto-corporatism,GirvanandMurphy

2005;on“stakeholdercapitalism”,Hutton199642 Strikedays,McCarthy,C.1973;Lemassquote,O’Brien1981:10-11;“mostwage”,CIO1965;“upheaval”,

McCarthy,C.1973

50

involved employer andworker associations outside FUE or ICTU and Ryan at

Financeendeditwithastatutorybanksalariesorder.Thesedisputeswereseen

at the time as arising fromweak institutions andpoor employment standards,

withLarkinontheunionsiderecognizingtheneedforpicketingreformsothat

generalworkers’interestswerenotabusedtobenefitsectionalcraftdemands.43

Industrial unrest spread more generally after 1966 as economic expansion

reversedemigration,generatingwhatCharlesMcCarthycalleda“moodofrising

aspirations”. There was also a wider social restlessness reflecting the US civil

rightsmovementandculturalrebellionamongyoungpeople.Whilethesurgein

workermilitancyreflectedaninternationaltrend,itsscaleinIrelandwasgreater

thanelsewhere,with strike-days treblingby1968 to1,405per1,000workers,

comparedtojust4per1,000inWestGermanyand489intheUK,andin1969

topped theEuropean leagueapart from Italy.Thiswas clearly a crisisofweak

institutions, as at the heart of Ireland’s strike figures were small groups of

craftsmenwithvetopowerinkeysectorsorofemployersstubbornlyrefusingto

concede reforms otherwise widely accepted. ESB craftsmen shut down power

generationin1968and3,000picketing“maintenancecraftsmen”locked35,000

general workers out for six weeks in 1969 in what James O’Brien called “the

worststrikeinthehistoryofthestate”,closingmuchofIrishindustry.44

Theexampleofcraftunionsandtheweaknessofstateinstitutionsencouraged

“breakaway”unionstoformandexploitpicketingtraditionsandweaklawtobid

for members in a spiral of competitive militancy. British-based unions also

exploitedtheseopportunitiestogrowattheexpenseofestablishedforcessuch

as the ITGWU, introducing a rousing left-wing rhetoric rejecting “class

collaboration”.Britishunionstrategywastobuildautonomousshop-floorpower

and brought the institution of the “shop steward” to Ireland, where it was

hitherto little known, spreading even in the ITGWU where local officials had

previously managed industrial relations. The success of union militancy also

encouragedpublicserviceofficialsandwhite-collarworkers,whohadpreviously

stayedalooffromtheproletarianCongress,toaffiliatetoit.Thestrikewavewas

beyondeither theLabourCourtor ICTU tomanage,with theCourt as early as43 Strikedata,Nevined.1994:396;disputes,McCarthy,C.1973;Larkin1962,inO’Riordan2001:26-744 “risingaspirations”,McCarthy,C.1973:25;statisticsinICTUAR1969:253andNevin1980:172;details

ofstrikes,McCarthy,C.1973;“worststrike”,O’Brien1981:15

51

1963lamentingthe“remarkable…numberofoccasionsonwhich…strikeaction

wastakenorthreatenedbeforetheLabourCourtwasaffordedanopportunityof

either arranging a conciliation conference or investigating the matters in

dispute”.By1969nearly60percentofallstrikeswere“unofficial”,i.e.occurring

withoutofficialunionhead-officesanction.45

Mainstream unions had engaged with Lemass’s original industrial relations

reform process, with ICTU proposing “industrial democracy” along European

lines as an alternative to confrontational relations. The ITGWU advocated the

German system, which an ICTU document described as “probably the most

advanced formof industrialdemocracy inanycapitalistcountry”.Similar ideas

werepromotedbyCharlesMcCarthy,teachers’unionleaderandICTUPresident,

and also, though more as an alternative to unions, by Jeremiah Newman, a

leading Catholic theorist and sociology professor. Basil Chubb, a prominent

political scientist and later chair of the ELC, argued that industrial democracy

was an inevitable reform that should be conceded. Such ideas had interested

Lemass,butLynchdismissedthemas“outsidetherealmofpracticalpolitics”.46

Theriseofunionmilitancy,perceivedbymanyasdueto“British” influence,

revived the old basic divide in the movement. Left-wing militants, often from

British-basedunions,disparagedICTU’s“industrialdemocracy”proposalsasthe

“co-option” of workers in the running of capitalism, and inter-union disputes

over membership “poaching” increasingly dominated the ICTU agenda, at one

pointcausingtheITGWU,themaintargetof“poaching”,toconsiderdisaffiliating.

Maintaining leadership legitimacy against member impatience was not a

challengefacedonlybyunions,butalsobyemployergroups,whosemorehard-

linememberscomplainedofgovernment“leniency”inthefaceofunionpower.47

But the 1968/69 crisis led to some institutional innovation by unions and

employers as well as by government. Craft union power, said Larkin, was

ultimately not that of a powerful “lone wolf” “hunting alone”, but relied on

45 Int.Geraghty;Int.O’Raghallaigh;“rhetoric”e.g.ICTUADC1969;LabourCourt,McCarthy,C.1973:25;

“competitivemilitancy”e.g.McCarthy,C.1973,“unofficialstrikes”,Hardiman1988:95-6;“whitecollar”affiliations,Maguire2009

46 ICTUadopts“industrialdemocracy”,ICTUADC1967;ITGWUonGermansystem,Liberty,passim1967-8;“probablythemostadvanced…”,ICTUADC1968:165-70;Newman1953,1966;McCarthy,C.1966;Chubb1969;LynchquotedinRoche2009:190

47 “British”influence,Newman1966;left-wingoppositionto“industrialdemocracy”,ICTUADC1968;ITGWU“disaffiliation”,ITGWUADC1971;employerposition,FitzGerald1968:208-9,Hardiman1988

52

general workers’ loyalty in observing pickets. The “go-it-alone” approach of

someemployergroups,suchasintheconstructiondispute,similarlyweakened

the FUE. After heated debates, and fearing statutory controls, ICTU in 1970

instituted the discipline of a “Group of Unions” approach to joint and binding

bargainingwithcompanies,andin1971adoptedrulesrestrictingpicketing,with

workers henceforth obliged only to observe ICTU-approved “all-out-pickets”.

Similarly, employers consolidated in 1969 as the Irish Confederation of

Employers (ICE), incorporating the FUE and various individual associations,

specifically “to counter… leap-froggingwage claims… [and] the playing off of

one industrialgroupagainstanother”.Both ICTUandICEwererelatively loose

associations, if democratically structured, their constituent organisations

jealously guarding their autonomy. But despite rebels in both camps,whether

“bloody-minded”sectionalunionsor industry leaderswhorejecteda “common

good”,themeanpreferenceamongbothwasforbothstrengtheningtheunityof

purposeontheir“side”andfororderlystate-business-unioncooperation.48

Therebelliousspiritofthe1960swasexperiencedinIrelandinitiallythrough

amodernisingofCatholicisminthewakeofVatican2andtheriseofaCatholic

“left”onthebasisofPopeJohnXXIII’scommitmentto“social justice”.Thiswas

reflectedintheadoptionbyFineGaelofaprogramme,“TheJustSociety”,often

wrongly described as “liberal”, and in the emergence in the Labour Party in

Dublin,whichhadbeenreducedtoasingleTDinthepersonof theRepublican

ITGWU official Michael Mullen, of a group of liberal-socialist intellectuals,

developingfromabaseinTCD,whowouldbeelectedTDsin1969.Liberalisation

was also a strand in Fianna Fáil in the later Lemass years, epitomised in the

unbanning in 1966 at the stroke of a pen by Brian Lenihan of nearly 10,000

booksprescribedby thepuritanical censorship regime installedbyCumannna

nGaedhalin1929.AharderbutmorefringeLeftalsoemergedinthelate1960s

connectedwiththewaveofunionmilitancy,bothingroupssuchastheIWL,ICO

and others connected with the union conflicts and involving many returned

militant emigrantworkers, aswell as studentmovements such as the reform-

minded “Students for Democratic Action” and the more fundamental Maoist48 LarkininO’Riordan2001:28;on“GroupsofUnions”andICTUpolicy,ICTUADCs1970-72,Int.McCarthy,

S.;ICEand“leap-frogging”,Hardiman1988:162-5;weakcentralbodies,O’Brien1981:14;employerattitudes,FitzGerald1968:206-10

53

‘Internationalists’.Buttheserepresentedanessentiallyculturalrebellionrather

thanasocietalletalonerevolutionaryone.49

Union/employermilitancywaseconomicallydrivenandthusdidnotsignifya

deeper intractablepolarisationofsociety.Thiswasshownin the1969election

bytheunexpectedlypoorshowingofbothLabourandFineGael,whichhadboth

sought to capitalise on it from opposite sides. Fianna Fáil, winning a large

majority,includinginDublin,wasagainreturned.Buttheindustrialconflicthad

neverthelessgraphicallyexposedhowstate institutionshadfailedtokeeppace

withtheexigenciesofindustrialmodernisation.50

“Orderpluckedfromthreatingchaos”:Haughey’s1969-70initiative In March 1969, just as the maintenance workers’ dispute was ending, an

initiative at the NIEC revived discussion of both an agreed prices/incomes

framework,dormantsince1966,and industrial relationsreform.Thisreflected

aninternationaltrendasOECDpromotedareturntosuchanapproachtomaster

inflationarypressures,whilenewLeftgovernmentsacrossEurope,appealingto

the expectations of the 1960s, were elected on platforms of expanding liberal

freedoms, workers rights and industrial-democratic institutions. In Britain,

Labour Secretary Barbara Castle recommended a similar course, her famous

proposals,InPlaceofStrife,publishedinJanuary,beingdiscussedattheNIEC.51

NIEC’s policy revival occurred following what the Irish Times called an

“unprecedented” intervention by Haughey, who in response to the wave of

strikes proposed a novel event, a pre-budget meeting between government

“economicministers”andICTU’sfullExecutiveCouncil.WhileHilleryandothers

attended, ICTU’sminutesmake it clear thatHaughey dominated, proposing an

agreedpay“guideline”andarevivaloftheNIEC’sstrategicpolicyrole.Haughey

had a frosty but business-like relationship with Whitaker, his department

secretary,whoasaresulthadretiredprematurelyinDecember1968totakeup

thethensubordinateroleofGovernoroftheCentralBank,thoughremainedon

as NIEC chair. The council had become fractious andmoribund, producing no

49 Quinn2005;Thornley,Y.(ed.)2008;Thornley,D.1964;Puirséil200750 1969election,Puirséil200751 Maintenancedisputeoutcome,O’Brien1981:16;OECD,Hardiman1988:34;Castle1969;NIECdiscusses

Castle,McCarthy,C.1973:229-31

54

major reports in 1968, but now, encouraged by Haughey, it revived both its

shelved1965plansforaprices-and-incomesstrategyandforindustrialrelations

reform.Haugheymaintainedcloserelationswithbusinessandunioninterests,in

thelattercaseespeciallytheITGWU,anditwasonitsproposalthattheNIECin

March1969agreedtorevivetheseplansasHaugheyhadurged.52

This initiative coincided with publication of the Third Programme for

Economic and Social Development which included a Department of Finance

instruction that income increases should, while incrementally improving the

relativepositionofthelowerpaid,trackproductivitybutremain“slower”thanin

the “main competing countries” (i.e. Britain). The confluence of the ITGWU

initiativeattheNIECandtheFinancestatementintheThirdProgrammewasnot

coincidental.Themeetingbetween“economicministers”andCongress,andthe

NIECinitiativewhichsucceededthem, followedcontactsbetweenHaugheyand

the ITGWU. Freed by Whitaker’s retirement, Haughey, described by the Irish

Timesasthe“dominantpersonalityintheGovernmentparty”,tooktheinitiative

torecovercontrolofeconomicrelationslostsinceLemass’sdeparture.53

Haugheystrengthenedhispositionwiththeunionsbyincludinginhisbudget

thatmonthmeasureshehaddiscussedwithITGWUtobenefitthelowerpaidso

as to enable “an orderly policy in relation to wage and salary agreements” to

evolve,withapotentialnationalagreementheralding “awholenewera in this

field”.Healsoincorporatedwelfarereformsand“envisaged”aseriesofnational

agreements “inwhich budgetarymeasureswould play a vital role”. Both ICTU

and FUE welcomed the initiative and during the June 1969 election Haughey

calledthis“oneof themosthelpful thingsthathashappened… inmanya long

day”,theresponseoftheunions“magnificentinitsresponsibilityandmaturity”.

“Order”,heannounced,hadbeen“pluckedoutofthreateningchaos”.54

FollowingtheelectionandtheHaugheyinitiative,ICTUconferencesdecisively

rejected opposition to a national agreement, adopting ITGWU-sponsored

motions proposing a “full-scale NIEC Report on all aspects of income

52 “unprecedentedintervention”ITeditorial,15.03.1969;Haughey-ICTUmeeting,ICTUECmtg.26.03.69,

item3844;Haughey-Whitakerrelationship,Chambers2014:180-2,190-2,217-223;ITGWUinitiativeatNIEC,IT15.04.69

53 ThirdProgramme1969:143-9;“dominantpersonality”,IT,30.05.6954 “wholenewera”/“pluckedoutof…”,Haughey,‘Electionmeeting’06/06/69,inManserghed.1986:111;

“pivotalrole”,Dáil07.05.69

55

distribution”anda“pricesandincomespolicy”.AjointFUE/ICTUcommitteewas

establishedinJuly1969tostarttalksontermsforanagreement.Haugheymet

with ICTU the following November, accepting their internal “Note on a Wage

Negotiation System”, undoubtedly revealed to him by ITGWU, proposing a

complementaryNIEC/ELCarchitecture.Withincabinet,hecriticisedWhitaker’s

by-passingof him in advisingLynch to opt for statutory “corrective action” on

wages,andinJanuary1970,againaftermeetingITGWUleaders,hemetCongress

to suggest that the forthcoming “pay round” upgrade negotiations to a full

“tripartite agreement” embracing wages, economic policy and reform of both

statutoryandvoluntaryaspectsofindustrialrelations.AlthoughacautiousICTU

insistedthetalksbedescribedasyetonlyas“consultations”,Haughey’sinitiative

ledtotheNIEC’sground-breakingreportthefollowingmonth.Thisproposeda

broadtripartitesystemaswellasaPricesCommissionandanadjudicatingrole

fortheLabourCourtoverdisputesundertheproposedagreement.55

Employerswelcomed the breakthrough and theNIEC exploited its restored

prestigetopropose itsownreconstitutionasanup-graded“NationalEconomic

Council”.Haughey,alongwithLynchandotherministers,metwithICTUandFUE

inaformal“tripartiteconference”inApril1970,whichagreedtothedraftingof

enhanced terms of reference for the revived ELC to cover industrial relations

reform.AstheESRI,abodyco-foundedbyWhitakerandcautiousoftripartitism,

latercommented,“itdidseemasifthemachineryforaneweraoforderlywage

adjustmenthadfinallybeenpiecedtogether”.56

At themomentof this imminent achievement, on5May1970Haugheywas

sackedfromcabinetbyLynchfollowinganapproachbyoppositionleader,Liam

Cosgrave, claiming, on thebasisof ananonymousnote fromSpecialBranchor

British sources, a “plot” involving military intelligence and some ministers,

includingHaughey, to importarms“foruse inNorthernIreland”.Withinweeks

of Haughey’s removal and arraignment for what amounted to treason, the

nationalwageagreement initiativewouldcollapse.Hewouldbeacquittedbya

55 ITGWUmotions,ICTUADC1969:394-410;FUEinitiative,O’Brien1981:17;HaugheyonICTU‘Note’,

ICTUECmtg.12.11.69item4102;criticisesWhitakerproposal,Chambers2014:219-20;Haugheymtg.ITGWUleaders,Manserghed.1986:141,andCongress,ICTUECmtg.28.01.70;finalreport,NIEC1970

56 FUE/ICEposition,O’Brien1981:41-2;NIECproposalsfor“NEC”,NIEC1970,ICTUECmtg.04.70,item4195,McCarthy1973:179-81andIT17.04.1970;Haugheyand“tripartiteconference”,IT17,18.04.1970,O’Brien1981:19;ESRIquotedinO’Brien1981:19

56

jury convinced he had implemented government policy but, while avoiding

imprisonmentandretaininghisDáilseat,hewasexcludedfromcabinet.57

Whether Haughey’s initiative would have succeeded cannot be known.

Industrialrelationsatthetimewereinturmoil,thecountrygrippedbyastrike

by the IBOA - a non-ICTU union - closing the banking system for six months.

Haughey was also only a mere minister, even if at Finance, under a cautious

Taoiseachindisposedto“intervening”inthesocialrelationsoftheeconomy.

Lynch’sretreattominimalism:the1970“NationalWageAgreement”(NWA) Just prior to the arms crisis, the ICTU, againstmodest internal dissent, had

accepted theNIEC’sproposedvoluntarist framework. Ithadalsocooperated in

the plans to reconstitute the NIEC as a “National Economic Council”, which it

itselfhadproposed.Itacceptedtheinclusionoffarmingbodiesonitbutrejected

Whitaker’sproposalsdilutingthetripartiteformulabyadding“consumers”and

the professions. Wage agreement talks had commenced and ICTU had even

suggestedre-conveningtheNIECtosetimmediateguidelinesforthem.But,after

Haughey’s sacking, the ITGWU caused a major surprise when its leaders

announced that while they supported the “principle” of a national agreement,

theydoubtedtheadvantagestoworkersofwhatwasproposedandgovernment

sincerity on price controls. At the ICTU conference the followingweek, at the

start of July, the ITGWU took an even harder line, amazing other unions by

calling for ICTU’s support for the proposed NIEC/pay system to be “referred

back”, i.e. shelved, pending clarification on how it would work. The ITGWU’s

derailing of ICTUwage strategy,which it had largely itself engineered, caused

publicdismay,theESRIcallingit“thistotallyunexpectedsetback”.58

With the ICTU’s position in tatters,Whitaker and influential commentators,

suchasGarretFitzGerald,warnedthatawage/priceinflation“spiral”threatened

and called for wage controls. The Irish Times, commenting on the collapse of

tripartitism and endorsing FitzGerald’s view, opined that British experience57 CosgravenoteinClifford2009:73-4.Thereisalargeandcontradictoryliteratureonthearmsconspiracy

trialwhichisoutsidethescopeofthisthesis58 NECdisagreement,ICTUECmtgs.20and31.07.70;FUEinvitationandICTUcallforNIECmeeting,

O’Brien1981:19and41-2;ITGWUleadershipstance,ITGWUADC1970andICTUAR1971:99-120;publicamazement,IT10.07.70,Hardiman1988:50;“unexpectedsetback”,O’Brien1981:19;

57

showed that voluntary agreements were “ignored as blithely as speed limits”,

whiletheindustrygroup,CII–theformerFIM-briefedagainstpricecontrolsas

“unconstitutional”. Whitaker, although NIEC chairman, urged a statutory pay

“pause”untilthenewNEC/ELCsystemcouldbeestablished,andFitzGerald,once

a champion of the NIEC, now attacked its report as a “fudge” showing the

“limitationsofconsensus”andadvisedunilateralgovernmentaction.59

The NIEC polarised, with ICTU, under ITGWU pressure, refusing to accept

statutory guidelines or a paper by Whitaker, ‘The Need to Control Inflation’,

which argued for wage control. Lynch supported Whitaker, saying if unions

would not engage at the ELC, government, regardless of the NIEC’s proposed

role,would unilaterally impose controls. Congress responded by threatening a

return to aggressive bargaining and to review “the whole question of

participatinginbodiescounsellingtheGovernmentoneconomicmatters”,i.e.the

NIEC itself. The new Finance Minister, George Colley, introduced a statutory

prices/incomes bill, which reached its second Dáil reading before Lynch

relented,meetingtheICTU–whichhehadseldomdoneintwoyears-toagreeto

suspend the bill if ICTU returned to the Employer-Labour Conference (ELC).

Colley,inwithdrawingthebill,confirmedunionsuspicionsbynowadmittinghe

hadneverseriouslybelieveda "price freeze”was “apracticalproposition”.But

the talkswere saved, as the ITGWU required an agreement for itsmajority of

lower-paidmembers, and the first “NationalWageAgreement”was concluded.

The ELC had been re-established at Haughey’s initiative - with Basil Chubb, a

championof industrialdemocracy, its chair - as akey “institution”of theNIEC

system.Despiteitscollapse,thetalksleadingtotheNWAtookplacethroughit.60

The NWA became an enduring system, but it was a minimalist form of

tripartitism compared to what Haughey had envisaged and ICTU/FUE had

agreed in May 1970. It simplified bargaining, setting common wage increases

over 18 months for all workers. But government participated solely as pubic

sectoremployer,withoutanywiderpolicyinput,andtheNIECwasnotinvolved

atall.Thewageformulacombinedpercentageand“flatrate”increasesassought

59 “spiral”,IT01.08.70;“blithely”,ITeditorial01.09.70;CIIbriefing,IT08.10.70;FitzGeraldinIT01.08.7060 ICTUrefusestoendorse,ICTUAR1971:135;LynchthreatandICTUresponse,ICTUECmtg.10.70,item

4443;ColleyinDáil,IT26.11.70;“industrialdemocracy”,Chubb1969

58

byICTUintheinterestsofthelow-paid.TheNWAalsoleftscopefor“above”and

“belownorm”payadjustmentsundervariousheadings,including“productivity”

and protecting “differentials” between grades of worker, and accorded the

Labour Court an “interpretation” role. It also aimed to gradually equalise

working conditions through working hours, holiday and sick pay norms, with

implementationnegotiated“locally”.61

The NWA did not link to budget policy, a wider incomes/prices policy or

overall economic strategy. Lynch praised the tripartite approach, extolling the

“newrole”ofunions throughvarious “consultativeordeliberativebodies”, but

he dismantled it as a central economic policy approach.What remainedwere

some formal bodies, which Roche describes as “bolted onto” an unreformed

wage-bargaining system. Neither government nor the Department of Finance

were henceforth centrally involved, with the NWA the responsibility of the

Department of Labour as a purely “industrial relations” matter. This

conservatism contrasted with developments in Europe where wide-ranging

reformsexpandingcooperativeinstitutionsatnationalandcompanylevelssaw

the late-1960s wave of militancy abate. In Ireland, industrial and inter-union

disputes remainedhighdespite theNWAs,with strikesand industrialdisputes

invariablyatthetopoftheOECDleaguethroughoutthe1970s.62

Following Haughey’s removal and the collapse of his wider pay/policy

strategy,theNIECitselfdisintegrated,its“immediateplans”,asCharlesMcCarthy

lamented, “in ruins”. Its proposed “Incomes and Prices Commission” failed to

materialise and plans for a wider “Economic Council” stalled after ICTU

withdrewinprotestfirstoverLynch’swagesorderandthenWhitaker’sadamant

insistencethat“consumers”beincludedonit.Itwouldre-surfacein1973inabill

for a “National Economic and Social Council” (NESC) with a narrow advisory-

consultativeremit,whichfinallyconvenedunderthecoalitionin1974.63

While theLynchgovernment’s institutional conservatismexplains thedecay

of tripartitism from 1965, with disastrous consequences in industrial conflict,61 ELC197062 NWAnowiderlinkages,ELC1970;O’Brien1981:42-8;Lynchonunionparticipation,IrishPress,20.10

70;“boltedon”,Roche2009:188;Europeanreformsandunrest“abating”,Frieden2007:350,367-9;strike“league”,Nevin1980:172

63 “inruins”,McCarthy,C.1973:180;PricesCommission,Hardiman1988:49;Whitakerproposals,ICTUAR1971:135;establishmentofNESC,NESC1974

59

andalso itsacceptanceofaminimalNWAframework following theremovalof

Haughey,thevolte-facebytheITGWUprecipitatingtheendofHaughey’sNIEC/

ELC project after his sacking from government had a further aspect,

demonstratingthewiderimpactofpoliticsonthefortunesofIrishtripartitism.

Haughey,theITGWUandthesuspensionoftripartitism Haughey’srelationshipwiththeunionswasthroughtheITGWU,forwhomhe

represented, in the Lemassian mould, both Fianna Fáil’s technocratic social

democratic wing and its republicanism, or popular nationalism. For ITGWU

leaders,theseformedacontinuum,threatenedbytheeventsofMay1970.

TheITGWU/HaugheybondmightseemtoconflictwithHaughey’simageasa

wealthyman, theoriginsofwhosewealthhisconstituencyadversary,Labour’s

ConorCruiseO’Brien,firstmadeaboneofcontentionin1969.O’Brienattacked

himforhisroleinfund-raisingforFiannaFáilamongbusinesscircles,andforhis

fortuitous purchase of a run-down country house with land in Raheny, near

where he grew up, which had reaped a dividend. But many contemporaries,

including Irish Times editor Douglas Gageby, dismissed these attacks as mere

political sniping. Haughey was at the centre of a group of businessmen and

reformingFiannaFáilpoliticianswhosawthemselvesas“modernisingIreland”,

andhadbeenentrustedbyLemasswithdeveloping“Taca”toraiseparty funds

frombusinesscircles.Chargesofhavingacceptedmoneytofundanextravagant

lifestyle were to be levelled against him in later years, but acquaintances

described his pursuit of wealth as driven more by a desire to achieve status

among society leaders.He also combinedhis closeness towealthy circleswith

impatience with and disdain for the shoddiness of much of “backward” Irish

industry,famouslyderidingBenDunneforthe“drip-dryshirts”hedisplayedata

NewYork trade fairwith the remark “where do you think you areDunne, the

fuckingIveaghMarket?”PropertydeveloperPatGallagherdescribedHaugheyas

determinedtomoderniseIrelandbycreatinga“national”businessclasscapable

of operating on the world stage, and he cultivated relations not only with

“national” entrepreneurs but alsowithwealthyAnglo-Irish circles, such as the

Guinnesses,CongrevesandHely-Hutchinsons.Throughhispatronageofthearts,

60

and initiatives such as ROSC, he aspired to raise the cultural horizons of the

nouveauricheproducedbyLemass’sindustrialisation.64

Haughey’s social democratic tendencywas apparent - even before Lemass’s

firstProgramme–inhis1957maidenspeechintheDáil,inwhichheadvocated

an expansionist industrial policy, opening to foreign trade, shifting the public

service towards economic activism, and providing a capital budget for a

“dynamic programme of investment”. Ronan Fanning described him as “the

personificationofFiannaFáil’s commitment toplanninganddevelopment”.He

critiqued the “Left” for its propensity for confrontation, not its aims, as he

favoured improving wages and welfare and a national role for unions. As

Minister for Justice he institutedmany reforms, especially benefittingwomen,

and attempted to initiate an inquiry into Church-controlled reformatories. At

Agriculture he confronted farmers over poor productivity and grant-seeking,

provoking a revolt by proposing to change farm subsidies from incomes to

investments,thoughalsoboostedthe“farmers’dole”tocounterruralpoverty.At

Finance he combined advocacy of industrialisation with financial discipline,

separatedoutthecapitalbudgetandproducedabalancedbudgeteachyear.65

Haughey was also a champion of EEC accession, accompanying Lynch on a

tourofcapitalsin1967toadvanceIreland’scase.InParishepressedthisonthe

French foreign minister, despite de Gaulle’s continued hostility to British

membership. Against thosewho claimed the economic restructuring accession

wouldentailruledoutIrishmembershipwithouttheUK,hearguedthattheEEC

wouldbeobliged to support Irishmodernisation.TheEEC leaderhewasmost

drawntowastheGermansocialdemocratparexcellence,HelmutSchmidt.66

Haughey’s republicanism was unexceptional in Fianna Fáil tradition. The

party had been founded on a platformof completing sovereignty and giving it

substancethroughstate-driveneconomicdevelopment.ThiswashowdeValera

64 OnHaughey’swealth,Keena…andRyleDwyer…;onO’Brien,Arnold2006;GagebyIT30.05,06.12.69;

ondevaluationaccusation,,Chambers2014:183-4;onwealthasstatus,Maume2007,Cronin1997andtribunalcommentsbyfriendsinKeena;“IvyMarket”inSmyth1997,GallagherinKeena2001;onHaughey’srelativewealthandhisartsinitiatives,alsoCronin1997andMaume2007

65 Haugheymaidenspeech,Dáil14/05/57;“personification”,Fanning1990:103;asM/Justice,Manserghed.4-7andMaume2007;proposalsonAgriculture,Dáil05/01/66

66 onIrelandjoiningEECwithoutBritainandEECaidforrestructuring,Dáil26/07/67;ondinnertalkwithdeGaulle,notebyWhitakerondraftarticlebyJoeCarrolloftheIrishTimes,11/09/89,UCD:P175/096;onHaugheyandSchmidt,interviewwithMartinMansergh

61

could describe Lemass’s 1959 Programme as the embodiment of the party’s

founding principles. Both of Haughey’s parents had been active in the

independence struggle and he was reared in very modest circumstances,

educated through scholarship by the ChristianBrothers and atUCD,where he

excelled,comingfirstinIrelandinaccountancy.Hestruggledtoestablishhimself

electorally,butwasassistedbyministerandveteranIRAleader,OscarTraynor,

whose ministerial assistant he became. Traynor, a social radical, had been

instrumentalinbringingDublin’sworkingclassrepublicanbasetoFiannaFáil.67

ButHaughey’s republicanismwas also distinctive in that hewas personally

acquainted,throughfamilyties,withconditionsintheNorth.Inthe1950shehad

co-drafted a partypaper onNorthern strategy, often interpreted aspromoting

insurrection.Infactitdescribedarevoltasinevitablegiventheconditionsunder

whichCatholicslived,andproposedthatthestatepreparetointervenewhenit

occurred to channel it towards reformunderDublin direction. AsMinister for

Justice he justified de Valera’s wartime suppression of the IRA as essential to

defendNeutralityandin1960dealtwiththeIRAbordercampaignwithspecial

courtsandinternment.Hisallegiancetothestatewasunequivocal,hispolitical

raisond’etre,asreflectedbytheminimalistdefencehemountedinthearmstrial,

leaving themilitary defendants to argue the substance of the case and voting

confidence inLynchafterhisacquittal.Hewasno“subversive”,andduring the

somewhat illusory Lemass/ O’Neill détente, Agriculture, while Haughey was

minister,wasoneoffewareaswhereadegreeofcross-bordercooperationwas

achieved. But that he was a serious nationalist is undoubted. In late 1969 he

startledBritishofficialsbyconfidentiallysuggestingtothemthatStormontwas

unreformable,arenewed“Lemass/O’Neil-typehoneymoon”a“foolishidea”,and

theonlysolutionajointBritish-IrishgovernmentdealwhichcouldinvolveIrish

concessionsincludingevenmilitarybasesorNATOmembership.68

Haughey had grown up in Donnycarney, a working and lowermiddle class

districtonthecity’sthennorthernfringe,withastrongtradeunionpresence.By

backgroundhedidnotdiffergreatlyfromleadingDublinunionleaders,suchas

67 DeValeraonLemassprogramme,McCarthy,J.F.1990b:53-4;Haugheybiography,Maume200768 on1950smemo,ÓBéacháin2010:234-5;“falselyinterpreted”,Kelly2016:29-36;Haugheyonwartime

executions,UCD:P176/347;North/Southagriculturalcooperation,ÓBéacháin2010;on“minimalist”armstrialdefence,Clifford,A.2009,andsuggestionstoBritish,FOreportsinibid.:661-3

62

the ITGWU JohnCarroll, also a scholarship-enabledChristianBrothers boy.He

builtabasefirstfromthelocalGAA,inwhichhehadexcelledasaplayer,andthe

part-time defence forces, the FCA, in which he was a local officer. He did not

share in popular moralising at the “irresponsibility” of striking workers or

protesting activists, describing these as a “symptom of success”, as people

seekingtobettertheirlotinthenewwealthandexpandingfreedomsofthetime.

He advocated resolving industrial conflict through institutional reform,

worker/employercollaborationinexpandingnationalwealth,andstatefunding

ofunionandmanagementorganisationstomoderniseandprofessionalisethem.

He cultivated relations both with business and union leaders, especially the

party’s natural allies in the ITGWU. Haughey regarded himself as a political,

rather than business, entrepreneur, and recognised a similar trait in such

leaders.TheserelationswereofatypewiththosefosteredbyLemass,butwhich

Lynch,fromanon-republicanCorktraderbackground,neverachieved.69

These relationships help explain how Haughey’s sacking and arraignment,

which were part of the general disorientation of Irish politics due to the

Northern crisis, nearly collapsed tripartitism too. The Haughey-ITGWU

relationshiphadbeenpivotaltoitsre-emergence,andhisremovalfataltoit.

The ITGWUwas themost republicanunion in the ICTU.Republicanismwas

still a strong force inworking class culture andhence in the ITGWU’soutlook.

Haughey’s main contact with the ITGWU was its powerful general secretary,

MichaelMullen,anex-LabourTDwhohadservedtimeforIRAactivities.Mullen

hadtacitlysupportedpre-“Troubles”IRAsocialactivism,whichhadincludedan

incendiary incident at EI, General Electric’s Shannon-based Irish subsidiary, in

support of a seminal union recognition dispute. This action had nipped in the

budplansbysomemultinationals,thenjuststartingtoinvestinIreland,toavoid

unionisation,andledtothe“sweetheart”agreements,especiallywiththeITGWU,

arrangedbytheIDAwith incomingcompaniesthereafter.TheITGWUwasalso

the only “southern” union, apart from the INTO, to organise among Northern

Catholic workers. Many of its Northernmembers, such as Belfast “Republican

69 onFCAandGAAnetworks,interviewswithKateNugentandEoinBrettandmaterialontheHaughey

familywebsitewww.charlesjhaughey.ie;Haugheyonsocialunrestandunions,‘TheFutureoftheLeft’,speechatTCD08/03/61,inManserghed.1986:3-4,‘ProteststemsfromProgress’,22/05/69,ibid.109-10;onenterprisingunionleaders,Haughey2014

63

Labour”MPandITGWUofficialPaddyDevlin,wereprominentintheCivilRights

MovementandthemilitarydefenceofCatholicareasin1969-70.Somebecame

earlyvictimsoftheconflict.Duringattemptstobringsupport,includingarms,to

besiegedNortherncommunities–aspubliclydemandedbyDevlinandothers-

Mullen liaised with the government’s “Distress Committee” managed by

Haughey.ABelfastITGWUexecutivememberwasarrestedonarmschargesand

Mullen himself prosecuted for possession of a gun. He was later involved in

secretcease-firetalkswiththeBritish,andwhenhediedin1983hisfamilyhad

HaugheyunveilhismemorialintheRepublicanPlotinGlasnevin.70

ThearmscrisisandLynch’svolte-faceendedgovernmentinterventioninthe

Northern crisis, stabilising the state by disentangling it from the conflict. This

retreatwouldpropeltheCatholicrevoltintoautonomouschannels–asHaughey

hadwarnedadecadepreviously–butinsulatedtheRepublicfromit.According

toMartinO’Donoghue,LynchembracedtheEECtoavoidthe“Republicantrapof

theNorth”,andhis1977electionmanifestodevotedjusttwoparagraphstoit.71

Lynch’sabandonmentofaNortherninterventionpolicyandhissacrificingof

Haughey and others to achieve it destroyed the ITGWU’s willingness to

cooperatewithhisgovernment.Theunioncontinuedtourgedirectsupportfor

theNorthernminority, includingwithinICTU,andtoopposesecuritymeasures

directedagainstrepublicansbybothLynchandthesucceedingcoalition,though

some in the ITGWU dissented from this. Mullen lost the Labour whip in the

SenatebyvotingagainsttheEmergencyPowersAct,asdidlateranotherITGWU

Senator,ChrisKirwan,forasimilarreason.TheITGWU’sdiscontentwithLynch’s

changeofNorthernpolicywasthusasignificantfactorinitsJune1970endingof

ICTU’spolicycooperationwithgovernment,includingontheNIEC,whichwasno

longerunderHaughey’sdirectionbutthatofColleyandWhitaker.72

70 OnMullenandEIincident,and“sweetheart”deals,Inf.fromthelateConorLynch,atthetimeaCorkIRA

activist,alsoAllen,K.1997:129,Roche1994:139,Devine2009:523,532,605,649;ITGWUvictimsofNortherncrisis,Libertypassim1969-72,Devine2009:602,701;MullenandHaughey’sCommittee,Devine2009:517,1094;ITGWUNCmemberimprisoned,Devine2009:599;Mullencharged,IrishTimes,27.02.1971;Mullenintrucetalks,Puirséil2007:296;Glasnevin,Haughey,‘TributetoMichaelMullen’06/11/83,inManserghed.1986:784-5

71 “autonomouschannels“,Walsh,P.2016;O’DonoghueinBegg2016:164;“manifesto”,FiannaFáil197772 ITGWUurgesintervention,ICTUECSpecialMeetings18.08and03.09.71;ITGWUmembersdissentonNI

position,Allen1997:146-50andDevine2009:599,641-3;Kirwanloseswhip,Horgan1986:137

64

Chapter3Politicsofretreatandrevival1970-81

Asymmetricimpact:tripartitisminthe1970Northerncrisis The context of the ITGWU’s abrupt about-turn on national pay strategy

followingHaughey’ssackinghadotherrepercussions.TalksbetweentheITGWU

andWUIonamalgamation,whichwerenearingfruition,brokedownafterWUI

leadersdenouncedHaugheyasthecentreofa“bourgeois”conspiracytorevive

“the decaying Nationalism of the North” and divide workers along “sectarian

lines”.Theunionhadbeenfoundedonsocialistprinciplesinthe1920sasasplit

from the ITGWU, and by the 1960s its leaders regarded republicanism as a

nationalistdistractionfrom“classpolitics”.PriortotheNortherncrisis,withthe

nationalissuenotprominent,commonleft-wingviewshadbroughttheWUIand

ITGWUcloser,revivingamalgamationtalksandleadingbothtore-affiliatetothe

LabourParty.Buttheoldriftnowre-opened,withtheNorthernconflictcentral.

This was reflected in a new but bitterly personal animosity between anti-

RepublicanWUIleaderFrankCluskeyandMichaelMullenoftheITGWU.1

ThecrisisalsoreinforcedITGWUhostilitytoBritish-basedunions,whichhad

been challenging it industrially through competitivewagemilitancy butwhich

nowalso,withtheirlargemembershipamongNorthernprotestantworkersand

despitetheCP-inspiredoutlookofmanyoftheirleadersandactivists,theITGWU

and others accused of tacit complicity in discrimination against Northern

Catholics. Of the elevenmembers of ICTU’sNorthern Ireland Committee (NIC)

justone– though thechair -wasaCatholic, andof78 full timeunionofficials,

just16wereCatholics,almostallin“Catholic”unionsliketheITGWUorINTO.An

activist later prominent on the NIC, Andrew Boyd, recalled the influence of

Freemasons even in themilitantAEU, andhowwhen startinghis career as an

officialhehadbeenadvisedtojointhemifhewishedto“geton”.2

1 “bourgeoisstrategy”,WUIADC1970,IrishTimes11.05.70andHanleyandMillar2009;onthenew

Cluskey/Mullenantagonism,Horgan1986:1372 ITGWUsuspicionsofATGWUintheNorth,Merrigan1991;NICandofficials,CampaignforSocialJustice

1969;Boydand“Freemasons”,O’Connor,E.2019:99

65

ICTUhadover90affiliatedunions,thegreatmajoritysmall,craftorsectional

ones. British-based unions accounted for less than 15 per cent of total

membership,basedmainlyintheNorththoughrapidlyexpandingintheSouth,

whilethetwogeneralunions,theITGWUandWUI,accountedtogetherfor30per

cent. On wage policy there was a block of about 20 per cent, mainly public

service unions, supporting central agreements, especially on public pay, while

British-based,craftandsectionalgroups,whichwereonprinciplecommittedto

“free”,i.e.non-centralised,collectivebargaining,hadacombinedtotalof25per

cent.Howthetwolargegeneralunions“swung”wasthusdecisive,andaslongas

theyfavouredacentraldeal,therewasagivenmajorityforit.ButtheITGWU’s

turnafterHaughey’ssackingcreatedanICTUmajorityagainstpolicycooperation

withgovernment,thoughacceptingthepurelypay-orientatedNWA.

Anexampleofthemovement’schangedpoliticalorientationundernationalist

pressure arising from the Northern revolt was ICTU’s change of policy on the

EEC. A decade previously, and despite reservations and left-wing and British-

union opposition, ICTU had backed the government’s application,with ITGWU

support decisive. In 1967 the ICTU, again with ITGWU support, backed the

renewedapplication.Butinmid-1970,attheheightofthearmscrisis,theITGWU

suddenlychangedtostridentoppositiontobothgovernmentanditsEECpolicy.

Leaders who previously had supported accession now vigorously opposed it,

many, like the risingDublin firebrand and ITGWUVice-President John Carroll,

adopting theargumentsofpreviouslymarginal left-nationalistanti-EECgroups

suchastheWolfeToneSociety,SinnFéinandtheIrishWorkersLeague.3

The ITGWU’s change of position had wide ramifications, not only for its

relationshipwith Fianna Fáil. In the pre-“Troubles” 1969 election Labour, like

theunions,hadnotcampaignedagainstEECmembership.Thisnowchangedas

Labour politicians, influenced by the ITGWU to believe in a growing working

classdisenchantmentwith theEEC, cameout inmid-1970 tooppose it.Newly

electedTDsJustinKeating,ConorCruiseO’BrienandDavidThornley,backedby

party-leaderBrendanCorish,issuedananti-EECmanifesto,co-signednotonlyby

3 ICTUposition1961,Murphy,G.2009:171-235;initialITGWUposition,ITGWUAR1962:67andICTU

1962:227-30;1967position,ICTUAR1968;MullenandKennedyatICTUADC1971;ontheleftgroupsandITGWUsupport,Treacy2012andO’Halpin2012

66

traditional anti-EEC union figures but now also by prominent ITGWU leaders.

Keatingdeclaredthat“theoriginsoftheEEClieinHitler’sNewOrder”andBarry

Desmond, a former ICTU officer later prominent in the European Movement,

castigated it as a “neo-colonial trading block” dominated by a “cartel ofmulti-

national companies”. Within two years Cruise O’Brien, Keating and Desmond

wouldbeamongthemostardentchampionsoftheEECingovernment.4

Themedia were taken by surprise when the ITGWU conference in January

1971,whichwascharacterisedbygeneralattacksongovernmentacrossmany

areas, including theNorth, voted “virtuallyunanimously” to opposeEECentry.

Carroll became a regular speaker at anti-EEC rallies, and the new ITGWU

position, to the dismay of many even in Congress, ensured that ICTU’s own

conference two weeks later adopted the same stance. Lynch retaliated by

rejectingICTU’srequestforarepresentativeontheIrishnegotiatingteam.Inthe

eventtheelectoratevotedby83percenttojointheEEC,thoughapollshoweda

lowerthoughstill60percentmajorityofITGWUmembersfavouringaccession.5

ITGWU friction with the Lynch government fromMay 1970 thus had deep

rootsbeyondmereindustrialrelations.Theseinformeditsnegativestanceinthe

EECreferendum,whichHaugheywouldcertainlynothaveshared.Nevertheless,

ITGWU leadersmaintained their linkswith him, inviting him in October 1970

immediately following his acquittal to address the full union Executive, an

honourunprecedentedfora“capitalist”politician.6

Corporatistminimalism:theNWAsystem,1971-76

Despite the disruption of the Northern conflict, the minimalist NWA that

survivedfromHaughey’smoreambitious1970tripartiteplanproveddurable,a

seriesofsimilar12to15-monthagreementsfollowingupto1978.Government,

nominallyinvolvedonlyasanemployer,continuedwiththestructureasatleast

providinganelementoforderinadisorderlywagessystemandespeciallyasa

4 on1969housingdemonstrations,ÓBéacháin2010:278,IT22.01.69;changeofLabourpolicymid-1970,

Puirséil2007:297,300-1,O’Halpin2012:143-4andCollins,S.2012:155-6;LabourEEC“Manifesto”,IrishTimes19.09.70;KeatingquotedinCollins,S.2012:156-7andDesmondinICTUAR1971:380-411;“mostardentsupporters”,Collins2012:158-9andO’Halpin2012

5 “virtuallyunanimously”,IrishTimes24.01.1971;ICTUconferenceposition,ICTUAR1971:381-425;Lynchresponse,ICTUECmtg.July1971item4480;ITGWUvoteandpoll,Devine2009:629

6 Haugheyinvite,Liberty,Nov.1970andspeechatmeeting,Manserghed.1986:141

67

framework for pubic pay. Minimal tripartitism survived through secondary

bodies, but neither Lynch nor his coalition successors sought any return to

Haughey’swiderframework.TheNIEChadbeendisestablishedandHardiman

describes itsweaker reincarnation as theNESC as differing “in function from

the earlier body”, its reports “informative policy-oriented documents rather

than consensus-building exercises”, with dissenting opinions “frequently

appended”. Aswith Lynch, the Cosgrave coalitionwas strongly influenced by

CentralBankgovernor,T.K.Whitaker,who in1974urged it against "allowing

theunionstosetthetoneofthenegotiations"."Itshouldbeforthegovernment

to take the initiative in securing, either by agreement or, failing that, by

statutory enforcement, a limit on income increases”. Unions should be made

“agreetothiscourseofactioninadvanceofanyconcessions…inthebudget”.7

The1970seconomywashitbytheglobalmonetary,inflationandoilcrises,

the growth of the 1960s replaced by stagnation. But the turbulence of an

openingeconomycontinued,acceleratedbyEECaccessionin1973.The“Third

Programme”,drivenfrom1972bythestate’sfirstrecoursetodeficitbudgeting,

initially continued, driving an expansion ofwelfare state and social spending.

Liberalised trade led the workforce to expand, accelerated migration from

agriculture into industry and improved industrial performance, with output

risingoverthedecadeby62percentandexportsincreasingto40percentof

output,mainly through foreign firms.But industrialdevelopmentwasuneven,

withnew,mostlyFDI-financedplantsincreasingemploymentin“lessdeveloped

regions” by 57 per cent while traditional industries closing saw employment

contract,mostlyinthecities,byover20percent.Joblossesinolderindustries

rose from 4,000 in 1970 to 19,000 in 1975, with an “unprecedented rate of

change”seeing92,000newindustrialjobscreatedby1980thathadnotexisted

in 1973 while 81,000 older ones disappeared. Multi-national employment

expanded,mainly in new centres,while indigenousmanufacturing contracted

from155,550to128,500,inarelentlessprocessof“creativedestruction”,butat

acostofrisinguniondiscontent,especiallyinDublin.8

7 “providingorder”,MurphyandHogan2008:27;Hardiman1988:62;WhitakerinChambers2013:240-18 Programmeexpansionism,BielenbergandRyan,2103:31,andexports/output,83-87;IDAjobfigures

O’Riordan1976:101-14andWhite1983:51-72;“creativedestruction”Whelan,WalshandQiLi,2007

68

In this turbulent economy, the NWAs enabled a generally orderly wage

development, particularly in thepublic sector. They grantedpercentagewage

increasestrackinginflation,thoughweightingby“flat” increasesimprovedthe

relative position of the low-paid. But as inflation often surpassed these rates,

successive agreements were often only narrowly agreed by unions. Varying

scope was provided for top-ups based on improved “productivity” through

clausesopentointerpretation,andtheseprecipitatedthemajorityofdisputes.

Employers indistressed firmscouldclaim“inability topay”,adefaultposition

often pleaded by them at the Labour Court. The NWAs were poorly co-

ordinated,witha“bewilderingarray”ofstartandenddatesacrosssectors.9

Higher-wage multi-nationals drove wage expectations across the economy

andthemomentumofplant-levelsupplementary“productivity”claimsdrovea

steep35percentincreaseinunionmembershipoverthedecade,to527,000or

65 per cent of the workforce. Wages “chased” inflation, and while NWAs

maintainedakindoforder,productivity claimsdroveopportunistbargaining,

with the incidenceof strikes, oftenunofficial, remaininghigh.These averaged

500,000work-days a year, a strike rate surpassing even that of Britain in its

1978“winterofdiscontent”andsecondonlytoItalyinEuropeby1979.10

Thesestrikes,thoughnumerous,involvedrelativelyfewworkers,onaverage

just 40,000 annually. Inmost of industry, wherewages averaged just 70 per

cent of British rates and employers sought to suppress these low wages to

maintain“competitiveness”,workersreliedontheNWAstograduallyimprove

theirbasicposition.Buttheleewayforlocalbargainingmeantthatinstronger

industries the NWAs were remembered by employers as having “failed

miserably to keep wage growth in check”, an opinion shared by some union

leaders. Exaggeratingmore than a little, Phil Flynn later conceded the NWAs

were “more honoured in the breach than the observance” and Bill Attley

recalled“theheadydaysoftheseventies”when“theonlyissue...confrontingus

waswhether...[to]takethemoneycentrallyorattheleveloftheenterprise”.11

9 O’Brien1981;alsoGunnigleetal.1999:113,194-910 MNCsandwages,O’GormanandCarroll1987:150;unionmembers,Nevin1994:393,strikefigures17211 strikefigures,Nevin1994:395-97;employerview,Hardiman1988;Flynnview,Hastingsetal2007:28;

AttleyinICTUADC1986:221

69

The turbulence in industry was thus again largely a consequence of weak

institutions,whichwasnaturallyexploitedbyworkerstoimprovetheirposition

in theabsenceof alternativeoptionsor legal rights.Thiswas compoundedby

sociologicalfactors.IndustrialtransformationbroughtsocialchangeasIreland

moved from amainly agricultural to an industrial society. Conflict wasmore

commonlessintraditionalsectorswithlong-unionisedworkforcesthaninnew

industrialplants,oftenlocatedinpreviouslynon-industrialtownsandinvolving

newworkers,“manyruralandnewtounionisation”,intownssuchasAskeaton

and Fermoy. British shop-floormilitancywas an added influence, brought by

thousands of emigrants returning to take up the new jobs at home, Ford’s

expandingmega-plantinCorkbeingacaseinpoint.Theinstitutionofthe“shop

steward”,hithertounknownoutsideDublin,spreadrapidly.12

Weak institutions also facilitated debilitating inter-union disputes and

membership “poaching”, especially in the expanding engineering andbuilding

sectors where labour shortage and competitive militancy drove wages,

strengtheningtheanti-centralagreementforcesinCongress.Thephenomenon

wasepitomisedbythedisputeattheDutch-ownedFerenkaplantinLimerick.It

finally closed despite efforts by the ITGWU to achieve a compromise through

the traditional route of the LabourCourt and government intervention,when

the sectional break-away MPGWU exploited what it ridiculed as ITGWU

“moderation”to“militantly”outflankitontheshopfloorwithhigherdemands.

This dynamic across industry assisted marginal sectional and amalgamated

unions togrowat theexpenseof traditionalones.Membershipof theBritish-

based ATGWU in the Republic trebled to nearly 20,000, as did that of the

“maverick” AGEMOU and MPGWU, while the ITGWU, despite a growing

workforce,grewonlymodestlyfrom162,478to185,566overthedecade.Shop

stewardscommittees,anewinstitution,emerged,whichcompanies,tomaintain

production, had to engagewith, rather thanwith official structures. By 1977,

12 workers’options,McCarthy,C.1966;“ruralandnew”,Devine,2009:684-5,alsoWickham1980;“British”

influence,Int.ÓRaghallaigh;“shopstewards”,Int.Geraghty

70

nearlyhalfofallstrike-dayslostwerein“unofficial”disputesas“management

abdicateditsresponsibilities”,asonecompanystudylamented.13

A parallel phenomenon of the 1970swas a large expansion of thewelfare

stateandhenceofemploymentineducation,health,welfareandstateagencies,

and the effective nationalisation of working relations in formally voluntary

bodies such as hospitals.Women entered theworkforce, particularly through

thesepublicservices,afterthe“marriagebar”wasliftedandequalitylegislation

introduced followingEECmembership, soon accounting for 40per cent of all

unionmembers.Thoughpublic sectordisputeswere constant, especiallyover

“relativity”claims,the1976upgradingoftheConciliationandArbitration(C&A)

service - an exception as an institutional innovation in this period - enabled

most“specialclaims”tobemanagedwithoutresorttostrikes.14

BarbaraCastle’sInPlaceofStrifehadinfluencedHaughey’s1969-70initiative

proposing a “tripartite system” encompassing pay, industrial relations reform

and industrial policy. Escalating conflict in British industry saw further

initiatives,notablyHeath’s1971IndustrialRelationsActwhichwasdefeatedby

aminers’strike,andWilson’sBullockCommissionof1975,whichwouldreport

in 1977 recommending a continental-style “industrial democracy” solution.

Reforms in many European countries widening worker participation ended

widespreadindustrialconflict,andin1975theEuropeanCommissionproposed

thatcompanylawbeamendedacrossEuropealongsuchlines.15

But neither Lynch nor the succeeding coalition undertook any comparable

reforms,FinanceMinisterRichieRyandisparagingeconomicplanningin1975as

basedon“irrelevanciesinthepast,hunchesastothepresentandclairvoyanceas

tothefuture”.OneexceptionwasthetransposingintoIrishlawofEECequalpay

andequalityprovisionsin1974,andMichaelO’Leary’sWhitePaperof1976on

worker directors in state industries. But these were minimalist reforms, with

governmentdisappointingICTUonworkerdirectorsandseekingtodeferequal

13 sectionaldisputesandanti-agreementtendency,ICTUARs1972-78andHardiman1994:151-3;

“Ferenka”,ICTUECmtgs.,1977passim,LimerickSocialist,6,1977:10andDevine,2009:614-9;membershipfigures,Nevin(ed.)1994:435-6andDevine2009:684;unofficialstrikerate,Hardiman1988:221-2,andingeneral,Int.Geraghty;Waterfordmanagement,Cooke1990

14 Onwomen,Daly,M.1994;white-collar,HaroldO’Sullivan,‘OpeningaddresstoSeminarorganisedbyDublinBranchesLGPSU’,17/10/1980,ILHS:LGPSU-2

15 CastleseeChap.2;alsoBullock1977;Europeanreforms,Frieden2007:350,367-9;Eur.Comm.1975

71

pay.EvenwhenthiswasrejectedbytheEuropeanCourt,itwasimplementedin

suchawayastoprovokefurtherdisputestoclarifyit.Equalpaywasonlyfinally

concededwhenICTUthreatenedtowithdrawinprotestfromtheNWAitself.16

TheNWAdidevolvesomewhat,withgovernmentconcedingsomelinkageto

budgetprovisions,assoughtbyICTU,tosecureanagreementduringthe1975

inflation crisis. It expanded food subsidies as a counter-inflationary measure

and a quid-pro-quo for a moderate settlement, and some in ICTU hoped to

exploitthisasalevertowardsareturntoawidertripartitism.Governmentalso

expandedtheC&Asystemin1976tomollifypublicsectorunions.ButwithFine

Gael intent on government autonomy and Labour, ever suspicious of

tripartitism, focused onwelfare state expansion, neither, as one study put it,

wereinclinedtomovetowards“aScandinavianstylecorporatiststate”.17

TheICTUitselfwasfarfromunitedonstrategy.Thedynamicofcompetitive

militancy and scope forwage expansion through local bargainingmeant that

many unions – especially sectional and amalgamated groups – sought an end

even to themodestNWAs.Leading ICTUofficialswerealsoambiguouson the

meritsofNWAs.GeneralsecretaryRuairiRoberts,andhislatersuccessor,Donal

Nevin, “careful, thoughtful men” from civil service backgrounds, had been

formedbytheFabiansocialismofLabour’s“CentralBranch”.Theirpreference

wasforunionbargainingfreedomandaLabourPartylegislatingaBritish-style

welfarestate.TheydistrustedtripartitismasaFiannaFáil-ITGWUstratagemto

decouple the unions from Labour and basically preferred the state’s role in

NWAstobeconfinedtothatofthepublicsectoremployer.18

Unions however were also “modernizing” in a form that increased their

preference for tripartitepolicyparticipation.Theyprofessionalised,with ICTU

developing an extensive training/advisory service. Through this its state

fundinggrewtoexceeditsunionaffiliationincomebyathird,andthisexpanded

capacity greatly enhanced its formerly meagre four-man full-time team. The

non-bureaucraticand loosecoordinatingroleof the ICTU iswell illustrated in16 RyanquotedinO’Riordan1976;O’LearyWhitePaperandequalpaycontroversy,Int.O’Donovanand

documentationinILHS:LGPSU-217 “lever”,O’Brien1981,Roche1994:158,Hardiman1988;C&Asystem,H.O’Sullivan,‘RevisedSchemeof

ConciliationandArbitration(nowinforce)’,n.d.[1976],ILHSArchive:LGPSU-2;“Scandinavian”,MurphyandHogan2008:27

18 Horgan1986:139-43:“publicemployer”,Inf.O’Riordan

72

themulti-taskingby this small coreofofficials.DonalNevin, assistantgeneral

secretary, produced ICTU’s main publication, Trade Union Information, “with the assistance of his wife Maura and daughter Anne”. From 1972 theITGWUbuiltaresearch/trainingcapacityofitsown,whattheunion’spresident,

FintanKennedy,calleda“brainbank…ofdedicatedexperts”.Manyofficialsin

these services had a university education, a rarity in trade union circles a

decadepreviously, orweremembers of left-wing intellectual groups.Another

modernising influence was the rapid growth of white-collar unionism and

professionalorganisationsaffiliating to ICTU,suchas taxofficials, civil service

technicians and evenmiddle management groups.While on the other “side”,

employer bodies eschewed state funding, the state subsidised management

trainingheavily,enhancingtheroleandinfluenceofbodiessuchasIMI.19

Interaction at EEC level had a further “modernising” effect. Irish business

organisations, particularly CII, engaged enthusiastically, opening an office in

BrusselsandbecomingactiveinEEClevellobbying.Irishunionshadpreviously

had few systematic international contacts beyond attending conferences, but

aftertheETUCwasfoundedin1974, ICTUbegantoengageenthusiasticallyat

EEClevel.TheroleofEEClegislation,suchasonequalpay,workers’rightsand

company law, convertedmany previously sceptical trade unionists to amore

benign view of the community. ICTU employed a “European Officer”, Patricia

O’Donovan, funded by an EEC grant, to explain and transmit European

directives,andETUCpoliciescametoplayanincreasingrole inICTUstrategy.

ButthisEuropeaninfluenceshouldnotbeexaggerated,astheETUCwasitselfa

divided house, still excluding many, mostly communist inclined, national

federations,anditsconsultativeroleatEEClevelwasasyetminimal.20

Fromtripartiterevivalto“NationalUnderstanding”,1976-79

ICTU,withthegeneralunionstothefore,adoptedapolicyin1974,proposed

bytheITGWU,advocatingareturntotripartite“democraticeconomicplanning”.

TheFWUI,nowheadedbyPaddyCardiff,supportedtheproposal, thoughurged19 Congressstaffandincome,ICTUAR1985:46;“sometimeswiththeassistance”,Nevinobituary,IT

22/12/2012;“brainbank”,Devine2009:63520 OnCII,Power2009,Int.PowerandO’Sullivan;EECprogressive”,O’Donovan:1999,McCarthy,S.2013

andIntO’Donovan;ETUCinfluence,Dølvik1999:43-76

73

that theNESCbeupgraded from itscurrent “purelyconsultativerole” toa “key

role in the actual formulation of the plan”. ICTU hosted a “summer school” in

1976,addressedbyunionleaders,includingITGWUeconomistManusO’Riordan,

aswellasCIIofficialsandformertopcivilservantT.K.Whitaker.EchoingLarkin,

O’Riordan argued a sophisticated case for tripartite “economic and social

planning”.Industrialstrategyneededtobalanceincreasedemploymentandliving

standards against “proper proportions of national output” being “allocated

between consumption, investment and public expenditure”. With a growing

population, 30,000 new jobswould need to be created annually to achieve full

employment,andmanymorehigher-qualityjobswouldbeessentialiftheaimof

achievingaverageEECstandardsofliving,asstatedintheAccessionTreaty,was

toberealised.Withlivingstandardscurrentlyjust45percentofthat,aplanfora

wholesale industrial restructure and upgrade was needed. Deciding priorities

was critical given that the current rate of public expenditure growth, which

exceeded that of GNP, could not continue, and financing it through increased

taxation only depressed living standards and consumption. Planning required

agreementonresourceallocation, includingwagesandpublicexpenditure,with

unionsneedingto“prioritisethestateexpenditure…crucialtomeetemployment

targets” and agree managed wage growth compatible with these targets. The

NESCwastheappropriatebodytobetaskedwithformulatingsuchaconsensus.21

TheICTUmajorityforsuchastrategyinthe1970swasnarrow,with leaders

cautiousof returning topolicycompromisesandunions tradingoncompetitive

militancyopenlyhostile.But itwas supportedby the leadersof generalunions

thathadbeenat theheartof theLemassiansystem,theITGWUandFWUI,who

alsosoughtinstitutionalreformsalongthelinesproposedbytheBritishBullock

Commission. Civil service unions too supported such an approach, as did the

LGPSU,thelargestforceinthepublicservice.O’Riordan’sformulaforatripartite

strategytradingwagemoderationforarole inplanning industrialdevelopment

andresourceallocation,withtheNESCatitscore,becameICTUpolicyin1976.22

21 O’Riordan1976:51-6622 PromotingBullock,Liberty1974-6andO’Riordan1976b;onLGPSU,O’Sullivan,‘IndustrialDemocracy-

WorkerParticipationinDecisionMaking’,13/01/76,ILHS:LGPSU-2;ICTUpolicy,ICTU1976b

74

Following the 1975NWA,which included a cautious andminimal linkage to

budgetpolicy,ICTUpressedforawideningtoafulltripartiteagreement.In1976,

indecidingonthelatestNWA,severalunionsonlyaccepteditunderprotest,the

LGPSU proposing it be rejected “in its present format” and seeking a wider

frameworkcoveringjobprotection,welfare,taxreformandlow-paysecurity.The

ITGWU,whenballotingonit, forthefirsttimerejectedanNWA,by70percent,

with the “sticking point” ostensibly employers’ increasing resort to pleading

“inabilitytopay”.Buttherealreasonwasthattheleadershiphadrecommended

rejectionasameanstoforceawideningoftheNWAtoa“aco-ordinatedpolicy

approachoverthewholefieldofsocio-economicissues”.TheNWAprofferedby

government was finally accepted by an ICTU conference by 240 votes to 215,

againsttheITGWU’sblockvote,duetomanysmallerunionsusuallyopposedto

central agreements panicking at the consequences and voting in favour! The

followingyear theLGPSUproposeda return to freecollectivebargaining in the

absence of awider plan andbecause of the “ever increasing restrictiveness” of

NWAs.ICTUconcludedafinalNWAwiththecoalitioninMarch1977,thoughonly

onconditionofaccompanyingtripartitetalks“oneconomicandsocialmatters”.23

ThisoffensivebytheICTUforarestorationoftripartitism,andparticularlythe

ITGWUrevolt,didnotoccurinavacuum.Sincethearmstrial,Haugheyhadused

his“wildernessyears”torebuildapoliticalbase,withinandoutsideFiannaFáil,

notthroughfactional“clientelism”alone,asoftenclaimed.HemadewhatConor

Lenihandescribesasan“extraordinaryeffort”towinbusinesstobackarevivalof

theeconomicpolicyapproachhehadchampionedatFinanceandalsocultivated

union leaders, especially the ITGWU’s Michael Mullen as well as its Vice-

President,JohnCarroll,whomheregularlymet.TheseimpressedonhimITGWU’s

ideas for a return to tripartitism, which Haughey eagerly adopted, requesting

copiesofanynewarticlesbyO’Riordan.Hecombinedthisalliancebuildingwith

businessandunionswithrepeatedattacksongovernmentborrowingforcurrent

expenditureratherthancapitalinvestment,andalsodirectedcriticisminternally,

criticisingColley’sabandoningofbalancedbudgetsandtheparty’sexpansionist23 “underprotest”,ICTUAR1977,Roberts,ICTU,‘Toallaffiliatedunions.:ProposedInterimPayAgreement.

Draftencl.ECrecommendation’,22/07/76,“enshrine”,“ToBranchSecretaries,DocumentsforNECmtg.:ProposedInterimNWA’,09/08/76,ILHS:LGPSU-2;“stickingpoint”Devine2009:609-11;“restrictiveness”,O’SullivantoBranchSecretaries,‘DocumentsforNECmeeting-ResolutionsadoptedatAnnualConference’,09/08/76,ILHS:LGPSU-2;“proviso”,Devine2009:610

75

1977manifesto,writtenbyO’DonoghueandO’Malley, fromthe launchofwhich

he and Lenihan “silently absented themselves”. Though still excluded from the

innerleadership,Lynchhadhadtore-appointhimtothefrontbenchin1974.24

Onhisreturntotheshadowcabinet,Haugheyusedaninvitationtoaddressa

conferenceoftheDublinCharteredAccountants–abodyhehadhelpedfound-to

set out his ideas for a private sector-based, government-managed, industrial

transformationwithinafiscallycontrolledframework.InLemassiantradition,he

proposed that this be developed through a “consensus” of government and the

majorsocialinterests.These,hesaid,couldpursuetheirrivalinterestsseparately

or their power couldbeharnessed in a commonnational economic endeavour.

EchoingLemass’sdescriptioninhis1945addresstotheITUCofsocialinterests

asproductiveforces,andcleavingtoITGWUpolicy,Haugheydescribedmanaging

thewage/productivityrelationshipasthekeytoindustrialgrowth:

“Trade union power is a socio-political fact which no legislation can

diminish…Itisnousesimplypreachingtothetradeunionmovementthatthe

containment ofwage claims is essential to future survival… If the planning

processdoesnotpermittradeunionpowertobeexercisedindevelopingthe

economic system we must not be surprised if it seeks its own ends

independently…Thevehicleforthateffortcanonlybeparticipativenational

economicplanning”.

Suchplanningrequired,“asanessentialpartofitsoperation”,“aconsultation

framework” inwhich “the short term interestsof all groupswouldbe thrashed

out in the context of the overall growth of the national income” and common

“outcomepoliciesandgoals”agreed.Thesewerenotperspectivesadvocatedby

LynchandColley,butaccordedwiththosesetoutbyManusO’Riordan.25

Fianna Fáil returned to power in 1977 on an expansionary programme. Tax

cuts and the abolition of domestic rates were to fuel consumption, which,

togetherwithincreasedborrowing,wouldfinanceastate-drivenindustrialdrive

toachieve“fullemployment”.CalledbyRocheIreland’s“Keynesianinterlude”,it

24 “clientelism”,Garvin1981;Lenihan2015:82;CarrollandHaughey,Hastingsetal2007;“copiesof

articles”,Int.O’Riordan;Haugheyoncoalitioninvestment,Dáil03/02/77;opposesmanifesto,Lenihan2015:87-8,alsoWhelan,K.2011:194

25 co-foundsassociation,Inf.SéamusLantry;‘SpeechtoDublinSocietyofCharteredAccountants’,05/11/75,inManserghed.1986:204-6

76

wasdoomedfromthestartasKeynes’formulaappliedtoclosedeconomiesand

wasdysfunctionalinavulnerableopeneconomysuchasIreland’s.Themanifesto,

inwhichHaughey played no part,made no reference towage agreements and

onlyreferredto“tripartitism” in itsproposal foran“EmploymentActionTeam”

with business, unions and “community organisations” to develop “suitable

employment schemes for school leavers and other young people”. Actual

economic planning would be strictly in-house, as recommended by Whitaker,

under a new Department of Economic Planning and Development “consulting”

withsocialinterests.MartinO’Donoghue,aTCDeconomicsprofessorandanother

Lyncheconomicpolicyadvisor,wasappointedMinister.26

Whitaker’sviewsontheseissuesheavilyinfluencedLynchandO’Donoghue.As

CentralBankgovernorhehadmadeclear to theCosgravecoalition in1974his

hostilitytoICTUattemptstolinkbudgetpolicyandwagebargaining.Government

mustinsiston“securing,byagreementor,failingthat,bystatutoryenforcement,

alimitonincomeincreases”andunionsmustagreetothisinadvanceofbudgets.

He set out his views on planning and tripartitism at the same 1976 ICTU

conference atwhichO’Riordan had presented the union case for a partnership

system.Whitakerarguedthatplanningwastheprerogativesolelyofgovernment,

not“socialpartners”.Itshouldproposeaplanandthenelicitcommentsthrough

“consultation”, with budgets serving as a “rolling” process of review and

adjustment.Plantargetscouldnotbepre-agreedandshouldinvolve“indicative”

rather than “prescriptive” goals. “Democratic principles are not fully served by

consulting only the major organised interests” which were “not necessarily

coincidentwiththegeneralcommunity interest”.Wageregulationwasessential

to investmentplanningbuttoensurerestraint“ratherthan link[ing]bargaining

about pay rounds with the annual budget”. As regards “the consensus issue”,

while consensus was useful for any plan, “the theory that people are always

reasonable … is not always valid”. “No Minister for Finance could expect the

advanceagreementofdrinkerstoan increasedtaxondrink”and“there iseven

26 Roche2009;FiannaFáil1977:33

77

fainterhopeoftradeunionsagreeinginadvancetoatemporarypaypauseorpay

restraint”.Hispreferencewasclearlyforstatutorywagecontrol.27

ICTUexpressedsupport forFiannaFáil’sexpansionistmanifesto,particularly

itscommitmentto“fullemployment”,whileLabour-affiliatedunionsopposedany

renewedcoalitionwithFineGaelbecauseofitsbudgetarypolicies.Apollafterthe

election showed that 65% of organised workers had voted Fianna Fáil, with

supportamongskilledworkersrisingsince1969from40to54percentasthose

whohadvotedLabourabandonedit.Otherissuesalsointruded,withITGWUalso

opposing the coalition’sNorthernpolicy andMullen resigning theLabourwhip

overtheCriminalLawJurisdictionBill.As theLabourPartyvotecollapsed, left-

wingfactionsbrokeawaytoformashort-lived“SocialistLabourParty”(SLP).28

Followingtheelection,ICTUreiterateditscallfor“participativeplanning”and

“theextensionof collectivebargainingand industrialdemocracy”,urgingLynch

to“pushthefrontiersof…bargainingbeyondthefieldofwagesandconditions”.

But Lynch, as when previously Taoiseach, embraced neither ICTU’s nor

Haughey’s advocacy of a return to tripartitism, and retained the NWA system,

while O’Donoghue’s department developed industrial strategy autonomously.

ICTUmeetingswithGovernmentcontinuedtobestrainedandinconclusive.29

O’Donoghue’s plans appeared in 1978 in the form of two “Green Papers”,

NationalDevelopment1977-80andDevelopmentforfullEmployment.Whilethese

had a Keynesian flavour, neither had involved union or NESC input, and the

limitedtripartitismproposedwasalongthelinesoftherolling“consultation”or

“politicalexchange”Whitakeradvised.GovernmentaskedNESCto“comment”on

theplanswhentheywerealreadyfinalised,and,unsurprisingly,NESC’sresponse

thereforefocusedonlyonminutiae,avoidingreferencetogovernancestructures.

While Lynch’s planning conformed to the rather vague “social partner

consultation”recommendedby theEEC, itwasconsistentwith theapproachhe

had pursued in government previously. O’Donoghue’s post-1977 expansionary

plansappearedinitiallytobeardividends,withinflationhalvingintheirfirstyear

27 WhitakerandCosgravecoalition,Chambers2014:240;atICTUconference,Whitaker197628 Post-electionpoll,Allen1997:150;MullenresignationandSLP,Horgan1986:131-229 “Participativeplanning”,ICTUAR1977;“pushthefrontiers”,ICTUmotionsinNAI:Taoiseach/2009/135

/132/2;“strained”ICTUAR:318-29andICTUAR1979:163-65

78

to7.5percent,theeconomygrowingby9percent,andrecruitmentofthe20,000

promisednewpublicsectorjobsbegun.30

As the expiry of the coalition’s last NWA approached, the new government

proposedasimilarsuccessoragreement.ButtheITGWUagainsoughta“broader

package”encompassingsocialandeconomicplanningandataspecialconference

inOctober1978ensuredthatICTUvotedbylargemajorityonlytodiscussadeal

thatincorporatedjobcreation,EMSconditionsandtaxreform.ICTUpressedthis

agendaongovernmentatameetinginNovemberwithLynchandhis“economic

ministers”.Butwhileoffering“consultation”,Lynchrefusedtogobeyondhisoffer

ofalimitedNWA.Themeetingendedwithlittleprogressbeingmade.31

Whatchangedthepowerbalanceinthisstand-offwasapopulartaxrevoltthat

began in early 1979, and how ICTU used it to leverage a broader tripartite

agreement. The disproportionate and growing burden of income tax borne by

PAYEworkershadbeenasimmeringissuethroughoutthe1970sandadriverof

wageinflation.From71percentofallincometaxin1975,PAYEhadgrownto87

per cent by 1979. The trade union and left-wing press increasingly contrasted

thiswiththeneartaximmunityenjoyedbyfarmersandprofessionalsandothers,

withtheSFWPemergingasanelectoral forceforthefirsttimenot leastonthis

issue. Spontaneouswalk-outs by unionmembers inDublin firms in reaction to

Colley’s capitulation to the IFA bywithdrawing a proposed 2 per cent levy on

farming incomes in January1979sparkedgrowingdemonstrationscoordinated

by Dublin Trades Council.While union leaderswerewary of “political strikes”

andICTUofficials,aswellasBarryDesmond,aformerLabourminister,criticising

the movement, groups such as the B&ICO, which included ITGWU economist

ManusO’Riordan,andtheSFWP,whoseinfluencewasgrowingintheunions,saw

therevoltasare-awakenedclasspoliticsandurgedICTUtouseittosecureafull

“economicandsocial”pact.WhenITGWU’snationalexecutivedecidedtosupport

the tax movement, protests grew, culminating in a one-day national stoppage

involving700,000workers,thefirstsince1922,inadvanceofthe1980budget.32

30 D/EPD1978a-b;NESC1978;plan“success”andcost,Whelan,K.2011:195,Foster2007:1731 “broaderpackage”,Liberty,Aug.1978;ICTU-Lynchmeeting,ICTUAR1979:43432 OnSFWP,Walsh1994,HanleyandMillar2009;left/unionpressontax“burden”,Liberty(ITGWU)and

IrishPeople(SFWP)1977-9;“walk-outs”andtaxrevolt,Devine:613,778-9;onB&ICO,IrishCommunist,March1979;onSFWP,HanleyandMillar2009,SFWP1978;ICTUAR1979:268-80

79

In this atmosphere, ICTU’s special pay conference in March 1979 rejected

Lynch’s proposed NWA, deciding to accept nothing short of a wide-ranging

tripartitepay/policyagreement.Itproducedcounter-proposalstoO’Donoghue’s

National Development, proposing a pay agreement incorporating an industrial

plan with specific job-creation, tax and social reform targets. Under pressure,

Lynch agreed to a joint “Working Party”, chaired by O’Donoghue, to develop a

joint document, with sub-groups drafting sections on education, tax reform,

employeeparticipation,employment,andhealth.Thisappearedon23Aprilasa

draft “National Understanding for Economic and Social Development”. But the

ITGWU’s block vote ensured this was rejected as inadequate by an ICTU

conference in September,Mullen saying it failed to concretely link pay and tax

reform, granted “pointless” “paper money” increases, much of which would

returnto“governmentandtherich”intaxandpriceincreases.Whileitmarked“a

significantstepforward”,specifictaxandjobtargetswereessential.33

Despite his large Dáil majority, Lynch’s authority was fading from January

1979,with themediadescribinghimas “tired”andhisEuropeanPresidencyas

his “lap of honour”, and he himself publishing memoir-like reminiscences in

Magill. Following Colley’s budget debacle and with the tax protests escalating,

FiannaFáil supportplummeted. It lost twoCorkby-electionsandpoled just35

per cent in the first European election, its worst electoral performance since

1926.Withgovernmentauthorityfading,unofficialindustrialdisputesmultiplied,

making1979theworststrikeyearonrecord.Lynchrespondedwithpredictable

threatsofwagecontrols,buthadlittleoptionbuttoofferanimproved“National

UnderstandingMarkII”,withsomebudget-linkedtaxreformasICTUhadsought.

Ruairi Robertswelcomed his “effort… tomeet the trade union point of view”,

enablinganagreementsuchas“wehaveneverinhistoryseen”.34

The“NationalUnderstanding”,effectivefromOctober1979,hadseparatepay

andnon-payaspects(“Parts1and2”),asconstitutionallawprescribedtheformal

autonomy of both collective bargaining and budget policy. Pay, negotiated

separately at the Employer-Labour Conference as had the NWAs since 1970,33 ICTUAR1979:268-80,NUtextinibid.:257-66;“workerparticipation”,D/Labour1980(March);“paper

money”,Devine2009:613;CarrollinICTUADC1979:28634 IrishTimesquotedbyManserghed.1986:316;ingeneral,Keogh2008;“lifeandtimes”,Magill,3/21979;

electoralperformance,Lee1989:492-5andWhelan,K.2011:193-8;RobertsinICTUADC1979:434

80

providedforinflation-linkedincreasesover12months,witha“no-strike”clause

andonlylimitedscopeforextraproductivityorpublicservice“specialclaims”.On

policy,“Part2”,negotiatedwithO’Donoghue,wasconceivedas longerterm,not

confinedtothe12-monthpayframework.Itincludedincrementalreformsintax,

working hours, worker participation and education, a Tripartite Committee on

Employment,SectorIndustrialCommittees,aCommissiononindustrialrelations

reform,andNationalEnterpriseandEmployment/Trainingagencies.35

Butthe“NationalUnderstandingMarkII”didnotincludeeitheranintegrated

wage/growth formulaora tripartitepolicy system,nordid it establisheithera

deliveryorcoordinationmechanism,oranystrategicpolicyrolefortheNESC.It

was thus a compromise between a consultative and a tripartite system,wrung

from a reluctant government under electoral pressure led by a vacillating

Taoiseachwithlittleenthusiasmforanysocialpartnership-typedeparture.

ButICTUwasoptimistic,inNovembercirculating120,00copiesofaReviewof

Progress. This declared: “the concept of the National Understanding is a trade

unionconcept;itconceivesofasocietydedicatedtosocialends;itisforthetrade

unionmovementtoensurethattheobjectiveisfullyanduniversallyunderstood”.

On ICTU insistence, the “Tripartite Committee” was quickly convened, and by

Decemberhadmettentimesand“commencedtheworkofseeking,sortingand

selectingsuitableprojects”forits£20menterprisesupportfund.ICTUoptimism

was reflected inRuairiRoberts’ statement that the tradeunionmovementnow

wielded“influenceandpowerfargreaterthanatanytimeinourhistory”.36

Buttheoptimismprovedpremature.Byearly1980ICTUwascomplainingthat

theEnterpriseAgency,whosecompositionandstructurehadbeenfinallyagreed

inNovember,was“notonewhitfurtheradvanced”,theSectoralCommitteeswere

“inthesamestate”,otherpromisedbodieshadyettoappear,andtherehadbeen

noprogressonthe“GreenPaperonWorkerParticipation”orpromisedinitiatives

in education. By the time Lynch resigned in early December 1979, little of the

“Understanding” had in fact been implemented, with civil servants using the

35 TextinICTUAR198036 ‘Review’inICTUAR1980:120;“TripartiteCommittee”,ICTUADC1980:231-47,393

81

interregnum of the Fianna Fáil leadership contest to disengage from a process

manyofthemseemedtoregardasinappropriateifnotwhollydistasteful.37

NewDeal:Haugheyrecaststhe“Understanding”,1980

Haughey had returned to national prominence in 1978-79 as Minister for

HealthandSocialWelfare.Hetransformedthattraditionallydullministry–his

appointmenttowhichtheUSAmbassadorandothersassumedwasintendedto

endofhiscareer- intoapowerfulpoliticalbasebymodernisingitsstructures

andservicesandundertakingmany low-costbutpopularreforms.Within two

yearsheinitiatedsemi-commercialactivitiesthroughagenciessuchasPARCto

exporthealthexpertisetotheMiddleEast,upgradedhospitalservicesthrough

public-private partnerships, introduced new welfare measures, particularly

favouringwomenand theelderly, legalisedcontraceptionwithaprescription-

based “Irish solution”, and revamped contributory social insurance (PRSI) as

soughtbyICTU.Hisreformswerewidelyseenas“progressive”,includingbythe

ICTU. The “Understanding” contained little on health and welfare as ICTU

regardeditsdemandsintheseareasasalreadylargelymetinthebudget.38

Haughey used the popularity his new position conferred to intervene to

resolve a major Dublin postal strike, although as minister for health he was

responsible neither for the post office nor industrial relations.Hemediated a

solutionwithhisally,MichaelMullenof the ITGWUwho,althoughtheITGWU

was not involved in the dispute, was influential with Dublin trade unionists.

Haughey secured cabinet acquiescence for his intervention, whichmust have

been galling for Lynch and his circle. It nevertheless showed the powerful

positionHaugheyhadachievedlongbeforeLynch’sretirement,andpresageda

newapproachagovernmentledbyhimwouldbringtoindustrialrelations.39

Haughey had no involvement in the first “National Understanding”, which

O’Donoghue,LynchandColleyhadnegotiated,anditwasunclearatfirstwhat

heintendedforitonbecomingTaoiseach,especiallyashesignalledhispriority

37 ICTUAR1980:124;civilservicedisengagement,interviewswithanon.D/FinanceofficialandAttley38 Appointedminister,Lenihan2015:87,Whelan,K.2011:196-7;USview,DubEmbtoSecretaryofState

20/02/75,UScable75-Dublin-1828,wikileaks;reforms,ICTU1978:201-04,ICTU1979:172-5,Devine2009:631,RyleDwyer,‘WhyHaugheynowdeservessomecompassionateunderstanding’,IrishExaminer,10/06/2006;onPRSI,ICTU1978201-2;S/WbudgetandNU,ICTUAR1979:160,172-9

39 OnstrikeinterventionIT06.11.2014andcabinetacquiescence,Lenihan2015:92

82

as cutting the budget deficit and, to Congress’s alarm, immediately abolished

O’Donoghue’sDepartment.LynchhadresignedexpectingColleytosucceedhim,

but to public surprise a backbench landslide saw Haughey become leader.

Althoughencumberedwithahostile,Colley-loyalcabinet,Haugheyimmediately

signalledpolicy reversals inkeyareas, abandoningKeynesianism for financial

discipline (“living way beyond our means”) and restoring an interventionist

policyonNorthernIreland(“afailedpoliticalentity”).Healsosignalledradical

changeinsocio-economicpolicy,movingtheplanningsectionsofO’Donoghue’s

abolished department, which had evolved from Finance’s old EDD, to the

DepartmentoftheTaoiseachasits“EconomicandSocialPolicyDivision”,along

with the NESC, merged the Departments of Public Services and Labour and

announcedaninitiativetoestablish“orderlyindustrialrelations”.Thesemoves

indicatedanintentiontorestructuretheNationalUnderstandingbyintegrating

a tripartite approach to economicpolicy, combiningpublic andprivate sector

pay,andinitiatingaprocessofindustrialrelationsreform.40

Haughey’sfirstperiodasTaoiseachwasdoggedbythehostilecabinethehad

inherited. Some openly plotted a reversal of the leadership election outcome

andColleyhimselfexpressedonlyconditionalloyaltytohimasleader,hisdeep

hostility extending to leaking details of cabinet discussions to antagonistic

journalists.Thedivisionswerepresentedbythepressasaclashof leadership

valuesandpolicy,especiallyontheNorth, thoughalso,asthesecondoilcrisis

tookhold,oneconomicpolicy.O’Kennedywastheonlycabinetmembertohave

votedforHaugheyasleader,beingrewardedwiththeDepartmentofFinancein

place of Colley who refused to continue in the role. The new minister

immediately announced that Government had an “open mind” on whether it

wouldcontinuewiththeNationalUnderstandingatall.41

Haughey’s links to business and unions served as a counter-weight to his

precarious political position, but his decision to revive and restructure the

failing“Understanding”wasalsoconsistentwithhislong-heldpositiononhow

national bargaining should be shaped. Hemet the ICTU Executive in January

40 Congressalarm,ICTUAR1980:121;onaimsandD/EPD,Dáil11and13/10/79and‘BroadcastbyAn

Taoiseach’,RTÉTV,09/01/80,inManserghed.1986:316-2641 Oncabinetalliancesandevents,Whelan,K.2011;“openmind”,Dáil31/03/80

83

1980 both to assure it of his “full” commitment to the agreement once pay

discipline was maintained and develop it beyond the uncoordinated Lynch/

O’Donoghue model. In a veiled reference to events in Britain under its new

premier, Margaret Thatcher, who had dramatically declared breaking union

powerherprimarygoal,hecommittedtotacklethe“radical…deteriorationof

theeconomicsituation”not through“deflationary”methodsbutbycombining

“prudent” financial management with industrial expansion. He favoured “in

principle”anewUnderstandingastheframeworkforthis,thoughone“different

fromthecurrentone”.Inparticular,andtellingly,heurgedICTUtomovefrom

employmenttargetstoagrowthformulaasthebasisforagreedstrategy.42

HaugheyunderpinnedhistalkswithICTUthefollowingmonthbytellinghis

Árd Fheis - towhich, tomuch annoyance in anti-Fianna Fáil union circles, he

waspipedinbytheITGWUbandwith‘ANationOnceAgain’–thatheintended

developingtheNationalUnderstandinginto“anewtypeofpartnershipbetween

workers, employers and Government … a better way of doing things” which

“couldshowtheoutsideworldthatwehadatlastfoundthewaytohandlethis

difficult,complex,butvitallyimportantaspectofournationallife”.43

When the budgetwas published, Congress, while criticising its lack of any

reference to “full employment”, agreedwith the need for spending discipline

anddescribeditstax/welfareprovisionsasconsistentwiththeUnderstanding.

But,alarmedbyO’Kennedydeclaringthatgovernmentmightdispensewiththe

agreement, ICTU sought anothermeetingwithHaughey, atwhichCarroll told

himthatdespitehisassurances,little“progressoncommitments”hadoccurred.

For this he blamedDepartment of Finance hostility and theMinister himself,

whohad ignoredrequests forameeting,andsuggested thatresponsibility for

theagreementbetransferredtoHaughey’sownDepartmentgivenhowitsrole

hadnowbeen“enhancedsignificantlyintheEconomicandSocialarea”.44

Haugheydidnot immediatelyactonCarroll’sproposal, initiallymoving the

agreement from Finance to the new Department of Labour and the Public

42 Thatcher,‘SpeechtoConservativePartyConference’,12/10/79,ThatcherArchive:CCOPR1059/79;

HaugheymeetingwithICTU,reportinICTUAR1980:121-243 ITGWUband,‘ITGWUbandtogreetSoldiersofDestiny’,IT15.02.1980andManserghed.1986:327;

Haughey,‘PresidentialAddress,49thFiannaFáilÁrdFheis’,16/02/80,inManserghed.1986:33044 ICTUECmtg.11/04/80;ICTUAR1980:131-41

84

Service,buthesimultaneouslybolsteredthesocio-economiccapacityofhisown

Departmentby transferringNESC to itsnewE&SPolicyunit underPádraigÓ

hUiginnandappointingdepartment secretary,NoelWhelan, to chair it. These

moves were part of a general radical expansion of the Department from its

previousminor role as a government secretarial office, as he also transferred

Northernpolicy,theartsandhisotherprioritypolicyareastoit.HetoldICTU

that despite the Department of Labour and Public Service’s remit on the

UnderstandingtheyshouldtreatWhelanastheirchannelfordirectcontactwith

government.Healsoactivatedthestalledinstitutionsoftheagreement,suchas

theTripartiteEmploymentCommittee,theManpowerandEnterpriseAgencies

and various agreed educational initiatives. A renewed confidence among the

unionswasreflected in the largemajority ICTUvote inMay forentering talks

withgovernmentonanewandmore“integrated”NationalUnderstanding.45

Modestexpenditurecutsin1980/81begantoreducethecurrentdeficits,as

it appeared at first the public expenditure crisis could bemastered.Although

unemploymentcontinuedtorise,itwasbelievedtheeconomywasrecovering.

Haughey implementedUnderstanding commitments, approving thebalanceof

the agreed public service jobs promised under it. New FDI continued to be

secured,notablyincludingApple,thefirstmajorUScomputerfirmtoinvestin

Ireland, which opened a plant in Cork. Haughey innovated with economic

initiativeseveninforeignpolicy,securingbothhealthandengineeringprojects

forsemi-statecompaniesandincreasedbeefsalesintheMid-East.Heassisted

thiswiththe“BahrainDeclaration”whichalignedIrishpolicywithArabopinion

ontheMid-Eastconflictand,asthefirstEECstate,recognisedthePLO.Withthe

optimismofanimminentrecoveryandtheeconomicbounceofthesestimulus

measures,industrialdisputesdeclinedtotheirlowestlevelinfiveyears.46

The EEC played a part in Haughey’s plans to reconfigure the National

Understanding.HehadlongbeenanadvocateoftheEECandin1978,backto

prominenceincabinet,stronglysupportedEMSmembershipandbreakingwith

Sterling, which a wavering cabinet had ultimately decided to do against the

45 ICTUECmtgs.22/01and11/04/80;ICTUAR1980:124-31,143,24746 Reducesdeficit,Lee1989:502-3;‘BahrainDeclaration’,O’Connor,P.2012;“optimism”Bielenbergand

Ryan2013:31-2;disputes,Nevin(ed.)1994

85

oppositionofFinanceandtheCentralBank,itsformergovernor,T.K.Whitaker,

warningLynchitwouldbea“quixoticgesture”.DespiteaviewthatBritainwas

inpermanentpost-imperialdeclineandthatcontinuanceofthelinktiedIreland

toaweakeconomy, itwasastatementbyaFrenchministercastingdoubton

Ireland’s economic independence fromBritain that tipped the scales. “Ireland

facedaclearchoice”,thenCentralBankgovernor,MauriceO’Connell,latersaid,

“to go with Britain or Germany: we finally opted for Germany”. After 1979

Irelandwithin the EMS invariably supported German proposals, ensuring the

IR£ closely tracked the DM. At the European Council in Dublin in November

1979,atwhichThatcherfirstraisedherfamousdemand,“Wewantourmoney

back!”, Haughey met Helmut Schmidt, with whom he was immediately

impressedandwouldformaclosepoliticalalliance.47

AlthoughtheUnderstandingrantotheendof1980,Haugheymovedearlyto

preparethegroundwithICTUforanewand“different”,“integrated”successor

agreement.HealignedhispolicywithECpriorities,whichhadanewurgency

sincethestartofEMSandtheadoptionof“policycoordination”in1979under

it. TheEuropeanCouncilwas divided over how to tackle themonetary crisis,

butinJune1980,anddespiteBritishopposition,proposedthatmemberstates

preparemonetaryadjustmentin“consultationswithemployersandlabour”and

in December recommended that in implementing “structural adjustments” to

meet EMS requirements “a combined effort by Governments with the

collaborationofemployerandlabourorganisationsisessential”.Thiscoincided

withHaughey’spreferredapproachanyway,butfurtherreinforcedhiminit.48

KeyunionfiguressharedHaughey’sviewsontheshapeasecondagreement

shouldtake.PubicservicesleaderHaroldO’Sullivanwarnedthatwhileprevious

expansionary policies had greatly grown the public service, this had meant

increasedborrowingwhichinturnhadcausedthecrisisinthepublicfinances.

Unionswerepartlyto“blame”,hesaid,byhavingfailedto“expandanddeepen

dialogue with Government” and for a tendency to see “the Understanding as

little more than an NWA in new clothes” instead of a negotiated strategy of47 DecisiononEMSandFrenchstatement,HonohanandMurphy2010;“gesture”,Chambers2015:190;“opt

forGermany”,Int.O’Connell;“trackDM”,Lee1989:492,James2012:146-80;Thatcher,‘PressConferenceafterDublinCouncil’,30/11/79,ThatcherFoundation;HaugheyandSchmidt,Int.Mansergh

48 EuropeanCouncil,1980(June)and1980(Dec.)

86

socialandtaxreforminsensiblemonetaryparameters: “Ifmonetaristpolicies

aretobeavoided,someconsensuswillbeneededwithGovernmentonthis”.49

WithICTUsupportandECCouncilencouragement,Haugheyofferedtalkson

aSecondUnderstanding.Whilepaywouldbenegotiated through theELC, the

“non-wage” aspect was to be negotiated with the E&S unit of his own

Department, with he himself, as Taoiseach, playing a central role. If Lynch’s

Understanding had been a “redistributive” expansionary plan, his would be

basedonaconsensuseconomicstrategyforarecessionarycontext.50

While on ICTU insistence, and against Haughey’s preference for a growth

formula,thenewUnderstandingretained“fullemployment”asitsprimarygoal,

it accepted the principle of expenditure controls. The pay deal combined the

NWApercentage-plus-“flat-rate”approach,providing forabout17percent,or

roughly equivalent to inflation, over15months.Budget linkagewasprovided

throughwelfarebenefitandPAYEreformcommitments.Thepaydealsimplified

thespreadofdatesunderthepreviousUnderstanding intoasingletwo-phase

schedule, tied to “industrial peace” through a pledge signed by unions and

employers in eachworkplace, though allowed for some “local” bargaining on

limitedspecificissuessubjecttoLabourCourtadjudication.Thesecondphase,

duefromJune1981,couldberevisitedifinflationexceededprojections,andthe

recourse by employers to “inability to pay” was replaced by a company-by-

companyapproachfordistressedfirms,withthedecisiononwhetherviability

oremploymentwereactuallythreatenedreservedtotheLabourCourt.51

Harold O’Sullivan, chair of the ICTU’s powerful Public Services Committee,

said thenewUnderstanding“dissipated the threat”ofa “monetarist”strategy,

having combined, as recommended by the EC, wage moderation, financial

discipline and budgetary targets within EBR goals, while protecting

employmentandagreeingmeasuresonindustrialstrategy,health,welfare,tax

and supports for the unemployed and deprived. Improving public service

efficiencyanda“rootandbranch”reformofindustrialrelationswereincluded

49 O’Sullivan,‘OpeningaddresstoSeminarorganisedbyDublinBranchesLGPSU’,17/10/1980,ILHS:

LGPSU-2,Exec.Boardpapers50 ‘MeetingwithTaoiseach’inICTUAR198151 ICTUAR1981:210-23;Power2009:52-4

87

with further provisions promoting employee participation in companies at

boardandlocal,plant,level.52

Other non-pay elements included employment-boosting commitments on

IDAadvance factory completions, central and local government infrastructure

investment,housebuilding,industrialtraining,a£79mEnterpriseAgencyfund,

the ring-fencing of welfare, a £10m joint government/employer-financed

“EmploymentGuarantee Fund”, youthwork-experience/training programmes,

expanded worker consultation and other measures. Talks were promised on

fundamental industrial relations reform, paid maternity leave, anti-poverty

measures,education,child-care,labourandwelfarereform.Tripartiteworking

groupswouldbeestablishedtodraftdetailedproposalsforeacharea.53

Despitelateraccusations,notablybyCharlieMcCreevy,thatthispackagewas

a negation of Haughey’s promised counter-expansionary policy, the EBR

parameters, conditionality of the second phase and restrictions on additional

claims in fact locked the agreement into a controlled spending framework, as

HaroldO’Sullivanstressed.ICTUrecommendedacceptanceofthepackageand,

with anti-agreement unions subdued by Thatcher’s offensive against union

power inBritain, itwasoverwhelminglyendorsed.Notonlydida77percent

majority in the ITGWU accept it, but so did a majority of members of the

traditionallyanti-collaborationATGWUwhoignoredtheirleaders’calltoreject

it.PublicserviceunionsoverwhelminglysupporteditandtheICTUconference

on23Octoberendorseditbyan80percentmargin.JohnCarrolloftheITGWU

declared:“ifthetradeunionmovementweretoldtomorrow,‘youtakeover’,the

typeofprogrammetheywouldseektoimplementwouldbe,almostlineforline,

assetoutintheProposalsforaSecondNationalUnderstanding”.54

This extraordinary endorsement by ICTU unions, with Haughey’s special

relationshipwiththeITGWUatitscore,contrastedwiththedividedbusiness/

employercamp,which,influencedbyeventsinBritain,soughtastrictcounter-

52 O’Sullivan,‘OpeningaddresstoSeminarorganisedbyDublinBranchesLGPSU’,17/10/1980,ILHS:

LGPSU-2,Exec.Boardpapers53 GovernmentofIreland1980(July)54 McCreeveyinterview,SundayTribune,27.12.1981;O’Sullivan,‘OpeningaddresstoSeminarorganisedby

DublinBranchesLGPSU’,17/10/1980,ILHS:LGPSU-2,Exec.Boardpapers;unionballots,Devine2009:705;publicservicevote,ExecutiveBoardmtg.,26/04/79,ILHS:LGPSU-2;ICTUconference,ICTUAR1981.:75-9,240,246;Carrollinibid.,240

88

inflationary strategy instead.While the industry lobbyCII decided to endorse

the Understanding for both the stability and involvement in planning it

promised,FUEdemurred.Inacharacteristicintervention,Haugheyforcedtheir

hand in an “unscheduled and unprecedented visit … to their headquarters”

whentheirGeneralCouncilwasinsession,arguingthemeritsofconsensusover

confrontational“monetarism”.Whileavowing“prudentfinancialmanagement”,

heconcededthatsome“slippageonborrowing”wasprobably inevitablebuta

price worth paying to prevent the “economy collapsing”. He undertook to

includebusiness-friendlyreforms inhis1981budgetbutalso indicatedthat if

employers still rejected an agreement hewould conclude a public sector one

anywaythatwouldsetabenchmarkfortheprivatesector.TheFUEreluctantly

endorsedtheagreement,whilelistingitsvariousreservationsaboutit.55

Fromimplementationtocrisis1980-81

Implementationof thesecondUnderstandingbegan in late1980. Industrial

disputes continued to decline andmany of the agreed initiatives commenced.

Working parties on education and social reform were formed and the

Enterprise Agency and Sector Industrial Committee established, the former

chaired byMarkHely-Hutchinson, a leading figure in Guinness’s and Bank of

Ireland,andthelatterbyDepartmentofTaoiseachsecretary,NoelWhelan,with

aremittostimulateentrepreneurialandproductivecapitalinvestmentprojects,

bothstateandprivatesector-led.TheEmploymentGuaranteeFund,co-financed

byanemployer levy,eventually funded33projectscreating2,800whole-time

jobs.FinalpaytermshadbeenagreedinOctoberandthefirstphaseincreases

paid..Onworkers’participation,a“JointParticipationCommittee”pilotedinthe

IIRSwasjudged“reasonablysatisfactory”anditwasagreedtoextendthemodel

tolocalauthorities,HealthBoardsandotherstateagencies.56

ThenewUnderstanding lacked an overall joint coordinationbody, but this

didn’t cause noticeable dissent. Government shared the European Council’s55 CIIposition,Power2009:53-4;Haugheyintervention,Power2009:54andMurphyandHogan2008:

587,591;“unscheduled”,Allen,K.1997:160,‘Haugheyrulesoutdeflation’,IT18.10.80and‘Haughey’sroleinFUEtalks’,IT21.10.80;“slippage”,Dáil21/10/80;“benchmark’threat,Hardiman1988:212;FUEdecision,FUEBulletin,Nov.1980

56 Implementationandchairs,ICTUAR1981:120-27and‘Sectoralcommitteemeets’,IT15.05.81;EGFprojects,Power2009:53;firstphase,LGPSU,‘LG&PBDiv.Exec.Mtg.’07/11/80and‘ReportonAgendaLGPSUExec.Board’,14/11/80;“JointParticipation”,LGPSUExec.Boardmtgs.28/05,05/06,14/08/81

89

optimism that with EMS stabilising interest and exchange rates, strategies

involving “intense consultation with the social partners” and combining

“prudent monetary policies, healthy budgetary management, and the

reorientation of public and private sector expenditure in the direction of

productive investment”, wouldmaster the crisis. Haughey told the ICTU that

EMSdeficittargetscouldbeachieved,whilefundsaccumulatingdomesticallyas

aresultofEMSwouldfundpublic/privatecapitalinvestmentwithoutaneedfor

recoursetoincreasedforeignborrowing.Headdedthatheplannedto“setthe

target for infrastructural development as high as possible”. His 1981 budget

reducedcurrentspendingandtheexcessofactualoverprojecteddeficit,while

increasing short-term welfare benefits, modestly reducing PAYE taxes and

committing£1.5bntothecapitalprogramme.HetoldhisApril1981ÁrdFheis

thatthenewNationalUnderstandinghadhelpedrestoredisciplinetothepublic

finances,reducedindustrialdisputestotheirlowestlevelinyearsandaverted

thesocialconfrontationwidespread“elsewhere”,meaningBritain.57

Inamoveofparticularimportance,Haugheyalsorevivedthelong-neglected

NESC,assoughtby ITGWU,requesting ithenceforth to“report togovernment

through the Taoiseach”. He asked it to prepare proposals regarding its own

future strategic role. In responding in February 1981, NESC, emphasising its

uniquerolecombiningthemajorsocial interests,policymakersandeconomic

experts, requested amandate to develop a consensus approach on “strategic

policy issues” and review government socio-economic policy, instead of as

heretofore commenting on individual policies at government request. It had

firstintervenedonnationalstrategyin1978wheninresponsetoagovernment

request ithad issued“Comments”onO’Donoghue’sFullEmploymentplan.But

nowsoughtapro-activestrategy-proposingrole.Haugheyimmediatelyagreed,

andthisresultedinaprodigiousoutputthatveryyear,withreportsonIreland’s

socio-economic position in the EEC and “Aims and Recommendations” for

nationalsocio-economicpolicy.InJuly1980Haugheyhadalreadysuggestedit

develop a comprehensive review of industrial policy,whichwould eventually

result in the ground-breaking October 1982 report, Policies for Industrial

57 ECCouncil1981(March);HaugheyatmeetingwithICTUEC,ICTUAR1981:120-1;budget,Lee1989:

502-3;Haughey,‘PresidentialAddress,50thFiannaFáilÁrdFheis’,11/04/81inManserghed.1986:469

90

Development,which J.J.Lee laterdescribedasawatershed, initiating “the first

seriousdebateonindustrialpolicyformorethantwentyyears”.58

Buthopesforeconomicrecoverybegantoevaporatefromearly1981asGDP

acrosstheECcontractedby1percentandunemploymentrose.Thedeepening

recessionwas due to the continued instability of the globalmonetary system

sincetheUShadabandonedthegoldstandard,towhichEMSitselfhadbeena

response.Theoptimisticforecastsof1980gavewaytoadmissionsofstructural

recession,which the Commission nowdescribed as “much deeper,wider and

morepersistentthanhadbeenanticipated”.Irishinflationagaintopped16per

cent, unemployment rose and exchequer figures showed a deficit 40per cent

higherthanpredicted.DespiteevenmoreradicalexpenditurecutsintheUK,its

inflation also soared, to 18 per cent, with unemployment reaching 2m,while

Germany entered its first sustained post-war recession. It was now accepted

that the economic slowdownwas no temporary reversal due to the latest oil

pricehikes,butadeeperstructuralcrisisandmonetarypolicyfailure.59

Inresponsetothesuddeninflationrise,ICTUsoughtanadjustedincreasein

thesecondpayphasewhilecountycouncilspleadedtheneedtodeferpayment

ofspecialawards.Privateemployerscalledforafreezeonallpayincreasesand

agreed to discontinue contributions to the Employment Guarantee Fund.

Government froze all spending commitments and promised tax reforms. The

MinisterforFinanceapproachedCongressfortalksondeferringspecialawards

given “the community’s inability to find the resources tomeet further special

increaseswithoutrisktojobsandtheviabilityoftheeconomy”.Internally,ICTU

leadersacceptedthatcompromiseontheseissueswouldbenecessary.60

InMarch1981Haugheydiscussedthecrisis,ECpolicyco-ordinationandthe

“UK problem” with Helmut Schmidt, telling him Europe needed an economic

policy.HetoldhisÁrdFheisthattheNationalUnderstandingwouldhavetobe

reconfiguredinlightofthecrisis,thoughnotabandonedassomeofhiscabinet

58 Newrole,NESC1981a;“firstintervention”,Hardiman2002:8;1981reports,NESC1981b-d;Haughey

andIndustrialPolicy,NESC1982;Lee1989:50459 USmonetarycrisisandEMS,Frieden2007,James2012;“muchdeeper”,‘Recessiondeeperthan

expected’.IrishTimes,27/03/81;situationinEurope,EuropeanCouncil1980(Dec.)and‘FromBadtoWorse’(editorial),IrishTimes,02/04/81

60 ‘Unionsseeknewtalksonpay’,IrishTimes,19/03/81and‘ICTUrelationswithemployersworsen’,IrishTimes,23/03/81;“internally”,LGPSU,‘ReportonAgenda,LG&PBDiv.Exec.Cttee.Mtg.’10/04/81

91

opponentsproposed.HedecidedonageneralelectioninMay,hopingtosecure

the overall majority polls indicated he could attain and finally establish his

authority.Butrenewedcrisis in theNorth ledtothe interventionof“H-Block”

candidateswhodenouncedhishandlingofthehungerstrikes.Thesemobilised

considerablesupport,withJohnCarrolloftheITGWUprominentintheDublin

H-Block movement, and denied Haughey the majority he sought, again

illustratingtheon-goingimpactoftheNorthernconflictonsouthernpolitics.61

Haughey’sweakenedpositionledtoincreasingpublicattacksontheNational

Understandingby farmingandbusiness interests,whodemandeda12-month

pay/pricefreezeas“partofanall-outGovernmentcampaigntocurbinflation”.

WhileICTUcalledforcommitmentsandC&Arulingstobehonoured.employer

claims for thesecondphase increases tobedeferred through localagreement

were increasingly upheld by the Labour Court, keen to avert a formal FUE

withdrawal from the agreement. Government criticised the “precipitative

deflationary action” sought by employers as it would only serve to dampen

demandand couldprovoke “widespread industrial and socialunrest”, but the

media increasingly portrayed this position as that of a Taoiseach who now

foundhimselfaprisonerof“interestgroups”and“fearfulofunpopularity”.62

Union leaders’acceptanceof theneedtoadjust theNationalUnderstanding

tocounterrecessionarypressuresandthecontinuedifweakenedpreferenceof

businessintereststoremaininvolvedwithgovernmentmighthavesufficedfor

asuccessfulrestructuringof theagreement tobenegotiated.ButHaugheydid

notgettheopportunitytoattemptthisashelosttheelection,tobesucceeded

byanewFineGael/Labourcoalition.Thenewgovernmentinitiallydeclaredits

intentiontocontinuewiththeNationalUnderstanding,butbyre-structuringit

byseparatingpay,budgetarystrategyandindustrialpolicy,andrevertingtoits

publicservice-centredapproachofthemid-1970s,itwouldensureitsdemise.

61 ‘Confidential.MeetingbetweenTaoiseachandChancellorHelmutSchmidtinBonn’,31/03/81,NAI:

2012/90/926/3;Haughy,‘PresidentialAddress,50thFiannaFáilÁrdFheis’,11/04/81,inManserghed.1986:466;“opponents”,McCreeveyinterview,SundayTribune,27.12.1981;1981electionMurphy,G.2016andWhelan,K.2011;CarrollinEnglish2004:203

62 “NU”crisis,ICTUAR1981:75-9;“urgedparties”,‘ReportonAgendaforExecutiveBoardmtg.’28/05/81and05/06/81;“rejectsprecipitativeaction”,‘Observations…onCIIpointsaselementsofafive-yearindustrialprogramme’,n.d[May1981],for‘informingareplybyMichaelWoodstoLiamConnellanoftheCII’,UCD:P176/183;‘Haughey:fearfulofunpopularity’,IrishTimes,25.05.81

92

Chapter4:Partnershipandautonomousgovernment1981-86

BreakdownundertheFineGael-Labourcoalition,1981-82

The minority coalition government formed in June 1981 and headed by

GarretFitzGeraldwouldfallwithineightmonthsoveracontentiousbudget.The

samecoalitionpartnership,under themoreconservativeCosgrave leadership,

hadsuccessfullymanaged thewageagreementsof the1970s, evenexpanding

them, however reluctantly, to incorporate minimal budget and social policy

aspects in the 1975-76 inflation crisis. The FitzGerald government claimed

initially to favour retaining theUnderstanding framework, butwithinmonths

haddiscarded it.Thisdecision, and the retreat toanarrowerpay framework,

againdemonstratedthecorepartypoliticaldivergenceoncorporatistsolutions.

FitzGerald,fromtheurbanliberalwingofFineGael,sawhimselfasa“social

democrat”.Heclaims thatwhenstartingout inpoliticshehadconsideredbut

decidedagainsttheLabourParty,principallybecauseofits“dependenceonthe

tradeunionmovement”.HehadneverthelessbeenanenthusiastforLemassian

economicplanning.Asaministerinthe1970scoalitionhehadoftensidedwith

Labour on social policy issues against his party colleagues and supported the

broadeningof theNWAin1975,evenpraising theNESC’srole inachieving it.

But while favouring pay agreements he remained essentially hostile to

“consensus” policymaking, having argued in 1970 thatwhile a body like the

tripartite NIEC might recommend an approach, it was compromised by the

“limitations” of “consensus”. Government shoulddeterminepolicy. But during

the1981electioncampaignhecriticisedFiannaFáil’s1980taxconcessionsonly

fornothavingformed“partofalessinflationarynationalunderstandingdeal”.1

Labourunexpectedlylostseatsin1981initspoorestelectoralperformance

since 1957, reducing its bargaining power in the coalition. Major affiliated

unionsopposeditcoalescingwithFineGaelandsomeDublinTDsadvocatedan1 FitzGeraldonLabourPartyandNESC,FitzGerald1991:67,295-304;“limitationsofconsensus”,

FitzGerald,‘NIECreportonincomesandpricesshowsbackwardprogress’,IT15.04.1970and‘Wage-pricespiralcanleadtoeconomicstagnation’,IT01/08/70;“lessinflationary”,‘Governmenthandlingofincomespolicycriticised’,IT04.05.81

93

arrangementwith Fianna Fáil instead. But, as ever, amajority prioritised the

exclusionofFiannaFáilfromgovernment.Labouralsostatedapreferencefora

nationalpayagreementbutwitheconomicplanningreturnedtogovernment.2

Thenew“ProgrammeforGovernment”proposedtocontinueprudent fiscal

managementwithaneventualreturntoexpansionarypolicy.Besidesarangeof

socialreforms,ring-fencingwelfare,extendingprovision,andsometaxreform,

it pledged to avoid pay freezes and honour arbitration awards in the public

sector.Economicpolicyprioritised“gettinginflationdowntoEEClevels”,with

wage determination through “free central wage bargaining” within pay/price

“guidelines” toberecommended“byan independentbody”– i.e. theESRI - to

maintain“competitivenessathomeandabroad”.Industrialpolicywouldbethe

remitofanew“NationalPlanningBoard”(NPB)composedof“thekeyeconomic

and social Ministers” and “representatives” of unions, employers, farmers,

youth,consumersand“publicagencies”,“presidedoverbytheTaoiseach”.This

woulddrafta “four-yearplan”, tobe implementedbyaMinister forEconomic

PlanningandDevelopment.Theproposedapproachwasareturntoside-lining

theNESC,separatingpayandeconomicpolicy,andpost-hoc“consultation”on

government-drivenplans,ashadalsobeenWhitakerandLynch’spreference.3

FitzGerald appointed an “independent expert body” in the form of a

Committee on Costs and Competitiveness. This consisted of three academic

economists - Professors Brendan Walsh (UCD), Dermot McAleese (TCD) and

TerenceBaker(ESRI)-dubbedthe“ThreeWiseMen”afterasimilargroupingat

EC level. Their role was to recommend price/incomes “guidelines” and in

August 1981 they proposed an incomes freeze, a public sector employment

embargo, increased indirect taxes and drastic cuts in foreign borrowing.

FitzGerald accepted the advice, alarming ICTU by declaring that while a

“nationalwagesagreement”was“vital”,itmustbewithintheseguidelines.4

ForLabour,BarryDesmond,aformerICTUofficial,concededtheneedfora

“temporary pay pause”, but championed a new National Understanding as a

2 ITGWU/FWUIrejectcoalition,IrishTimes22.06.81;DublinTDs,FitzGerald1991:359;LPmanifesto19813 OnPfGcommitments,LGPSU,‘ReportonAgenda,LG&PBDiv.Exec.Cttee.mtg.’10/04/81and‘FineGael

andLaboursetoutaimsforgovernment’,textofprogramme,IT29.06.814 ‘Living10percentabovemeans–FitzGerald’,IT15.08.81;EuropeanCouncil1979(Dec.)and1980

(Apr.);ICTUAR1982:132

94

“prerequisite”forafairapproachto“economicandsocialplanning”.Otherwise

the “weak, those on low incomes and the unorganised” would “lose out”. To

softentheprescriptionsofthe“ThreeWiseMen”,heproposedthattheNESCbe

“incorporated” intotheNPB.Butthiswouldhavenegatedboththepurposeof

theNESCand thepay/policy continuumof theUnderstanding. In essence, his

positionreflectedcontinuedLabourantipathytoFiannaFáilcorporatism.5

But with the public finances in a worse condition than anticipated, and a

weakenedLabourPartyinlittlepositiontodictatepolicy,FitzGeraldrevertedto

traditional Fine Gael solutions, i.e. deflationary price/income controls, tax

increasesandexpenditurecuts.HesoughtNESCendorsementforhisapproach,

whosechairman’sdraftreplywasleakedbeforethecouncilconsideredit.This

supported the proposals of the “Wise Men” adding only that controls should

extendtoallincomes,notjustwages,andwascertainlyinfluencedbyWhitaker,

the dominant “expert” on the council and advisor to FitzGerald. ICTU’s NESC

representatives dissented, querying government’s ability to control non-wage

incomes or prices. Pat Rabbitte of ITGWU described the leaked proposals as

intendedtoundermineanychanceforanewagreement,andeventheFUEsaw

themas“moretheoreticalthanpractical”.6

Withinweeksofthecoalition’sformation,anddespiteelectioncommitments,

any potential for a new National Understanding had evaporated. Employers

backedgovernment’spreferenceforapaypause,addingthatthepolicyaspect

ofpreviousUnderstandingshadbeenagreedbetweengovernmentandunions

without their input. Fine Gaelministers declared that while “social partners”

mightbeconsulted,theyhad“norighttodecideimportantsocialandeconomic

policy”, and matters “such as education and maternity leave, which bear no

directrelationshiptoincomes…shouldnotbethesubjectofbargaining”.7

This separation of pay bargaining and economic planning led FitzGerald,

despitetherecedinghopesforfruitfulpaytalks,tomeetICTUanywaytodiscuss

thethree-year“nationalplanforeconomicandsocialdevelopment”hehopedto

publish “before end of year”. Some institutions of the Understanding were5 ‘Desmondagainstwagefree-for-all’,IrishTimes18.08.816 ‘FitzGeraldseekstocontrolallincomes’,IrishTimes24.08.81;‘NESCcallsfor18-monthfreezeonincome

rises’,IrishTimes27.08.81;ICTUAR1982:200-1;RabbitteandFUEquotedinIrishTimes28.08.817 IrishTimes28.08.81

95

retained,suchastheSectoralDevelopmentalCommittee,or,liketheEnterprise

Agency, abolished on the promise that their functionswould reappear in the

planned “National Development Corporation”. While still aspiring to a “new

National Understanding”, unions adopted to the new situation, with an ICTU

conferenceinSeptember1981voting3-to-1to“explorethepossibility”ofapay

agreementwithemployersonlyand“negotiateseparatelywithGovernmenton

…tradeunionpolicyonsocialandeconomicmatters”.8

FitzGeraldagainmetand “consulted” ICTU inDecember1981, encouraging

themtopursueaprivatesector“centralagreement”withemployers.TheNESC

position when published, while amended from the leaked August draft, still

advocatedapaypauseandincomes/pricecontrols,andICTUrefusedtosignit.

Union disillusionment at the ending of tripartite wage/policy bargainingwas

apparentinabitterITGWUappraisalwhichdeclared“theword[had]failedto

becomeflesh”,theinstitutionsestablishedinApril-May1981havingprovedto

beaFiannaFáilelectoralployandstallingbycivilservantshavingenabledthe

Coalition dispense with them “with contempt”. But ICTU President Paddy

Cardiffmournedthedemiseof theNationalUnderstandings, “abrave,original

andcreativeattempttobroadenthescopeofcentralisedbargaining”.9

Abandoningtripartiteplanningdidlittletoenhancestatecontrolofincome/

pricedevelopment.Governmentitselfratherabsurdlypleaded“inabilitytopay”

to justify a proposed 18-month pubic service deal which, despite inflation of

over10%,would freezepay forayear, followedby increasescappedat7per

cent,andwiththeprivatesectorexpectedtofollowsuit.Privatesectortalksat

theEmployer-LabourConferencecollapsedwhenemployersinsistedonholding

tothis“governmentguideline”andunionsonmaintainingwagevalues.Pressed

byLabour,FitzGeraldaccededtoa15-monthpublicpaydealmatchinginflation

andweightedtothelow-paid,thoughfreezingspecialclaims.ICTUdeclinedto

recommenditbutitswearypublicsectormembershipballotedtoaccept.10

8 “beforeendofyear”,ICTUAR1982:114;institutionsretained,ibid.205-6;“aspiring”,LGPSUExec.Board

mtg.25/09/81;unionvote,ICTUAR1982:1279 FitzGerald-ICTUmeetings,ICTUAR1982:127-30,179;NESC1981d:91-94andICTUAR1982:201;

ITGWUresponse,Liberty,Nov.1981;CardiffquotedinDevine2009:76310 ‘Governmenthasnotbrokenpact–Kavanagh’,IrishTimes11.09.81,‘Governmentwillnotinterveneto

savepaytalks’,IrishTimes02.11.1981,andICTUAR1982:131;ELCbreakdown,ICTUAR1982:129-30;agreement“wearily”accepted,LGPSU,‘ReportforAgenda,H&WDiv.Exec.’22/01/82

96

Nosidewascontent,farmersaccusingthecoalition,“likeitspredecessor”,of

“abandoningitsanti-inflationprogramme”,theCIIdecryingthedealforsetting

“anutterly unreal example” for private industry, and the FUE condemning its

renegingonthepaypause,“ignor[ing]theimplicationsfortheprivatesector”.

Settlementsintheprivatesectorneverthelessmostlyfollowedthetermsofthe

public deal, though few of those without bargaining power received any

increases.Government,whichCongressaccusedofseeking“toruntheeconomy

bydiktatandeconomic lecture”, resorted to increasinglydraconianmeasures,

cutting spendingand increasing taxes that severely reducedwagevalues, and

embargoingathirdofpublicservicevacancies.Itdispensedwithpublicservice

“specialclaims”bysimplynotre-appointingtheArbitrator.Strikedaysroseby

a third in 1981 while the budget deficit climbed to 7.3 per cent. While

“discarding”theNationalUnderstandingsitendedupwitharancorousold-style

publicpayagreementthatantagonisedunionsandemployerswhilealienating

expert economicopinion.TheCoalition fell bya singlevote inFebruary1982

overabudgetimposingVATonchildren’sclothesandshoes.11

InoppositionHaugheyhadcontendedthathisgradualistapproachtocurrent

expenditure reduction and capital investment, with a recovery of revenues

through revived growth, was the only way “to avoid serious economic

disruptionandgreaterunemployment”.Havingeschewedatripartiteconsensus

in favour of deflation, the FitzGerald government also failed to achieve an

electoral consensus, and lost the February 1982 election, being replacedby a

further minority Haughey administration. On Haughey’s threatened return,

Whitaker resigned from NESC, reminding its chair both of his opposition to

socio-economicplanningbeingmoved fromFinance to theDepartmentof the

Taoiseach-whichFitzGerald,whilealsocriticisingthemove,hadnotreversed-

and his belief in the need for “effectivemeans of keeping incomes and costs

from rising faster in relation to real output than in countrieswithwhichwe

compete”,i.e.statutorywagecontrols.12

11 “farmers”,‘FUE,unionsconsidernewwagetalks’,IrishTimes17.12.1981;CIIview,‘Employergroup

condemnspaydeal’,IrishTimes17.12.1981;FUEview,‘EmployerschallengeGovernmentpayproposals’,IrishTimes22.12.81;“settlements”,ICTUAR1982:125-6;“diktatandlecture”,IRN,30.10.1981

12 HaugheyinDáil21/10/81;WhitakertoNoelWhelan,NESC,10.02.1982,NESCArchive:Box3

97

RevivalinanotherHaugheyinterlude,1982 ThefirstbudgetofthenewHaugheygovernment,inMarch1982,retainedthe

coalition’sspendingcutsandintroducedadditionaldeficitcuttingmeasures.But

whileunionscomplainedthatthe“savagecutbacksrepresentanattack…onthe

poor”,Haugheyincludedleft-wingmeasureswhichensureditwaspassed.These

includedhissecuringofIndependentDublinTDTonyGregory’svotebyagreeing

with him a radical social plan for the inner city, brokered by ITGWU general

secretary Michael Mullen, and ensuring the abstention of the three Workers

Party TDs by ring-fencingwelfare benefits. He alsomaintained the basis for a

returntotripartitismbyre-activatinginitiativesunderthe1980Understanding,

paying the first phase of FitzGerald’s pubic service agreement and intervening

directlytosettlevariousfesteringindustrialdisputes.UnlikeforFitzGerald,none

ofthesemeasuresrepresentedanideologicalcompromiseforHaughey.13

What is notable in retrospect about this short-lived8-month government is

howmuchitscoreapproachtosocio-economicpolicyandattemptstoorganise

these politically would be replicated in 1987. He revived key elements of the

NationalUnderstandingapproachabandonedbyFitzGeraldbutbylatesummer

1982 remodelled it into a new paradigm pre-figuring the 1987 departure. He

revived other innovations of his 1980-81 government, in the arts, third-level

technical education,Northern and foreign policy, semi-state commercialisation

andurbanregeneration. In industrialpolicyherevivedhis formulaofacapital

investment/welfare expansion/growth rather than “full employment” model,

restored the NESC to a central strategic role, re-asserted the primacy of

monetarypolicy,andcentralisedpolicymanagementinatightteamcoordinated

inhisDepartment.Finallyhepursuedasocialpartnershipstrategyfirstwiththe

unions and then other forces, notably the CII. Why was this strategy, almost

identicaltotheparadigmshiftheengineeredin1987,notsuccessfulin1982?

13 “savagecutbacks”,‘AnnualConference,LGPSUH&WDivision’,13/05/82,ILHS:LGPSU-1;onGregory,

Gilligan2011,withtextof‘AgreementreachedbyCharlieHaugheyTDandTonyGregoryTD’,196-223,andonWP,HanleyandMillar2009;“stoke”,JoyceandMurtagh1983;revives“Understanding”initiatives,ICTUAR,1983andManserghed.1986:617;implementspaydeal,LGPSU,‘ReportonAgendaforLG&PBDiv.Exec.’,16/04/82andD/Env.circularE14/82;onsettlingdisputes,GerConnollyTD,‘Addressto…annualconference’LG&PBDiv.,13/05/82and‘AnnualConf.,LGPSUH&WDivision’,13/05/82,ILHS:LGPSU-1

98

Having attacked FitzGerald for “abandoning” the National Understanding,

Haughey announced his intention to develop a “comprehensive plan” in

consultation with unions, employers and “economic and social research

institutions”, i.e. both the NESC and ESRI. Despite Congress scepticism arising

fromitsbruisingexperienceswiththeunravellingoftheNationalUnderstanding

in1981, ITGWUleader JohnCarrollagain liaisedwithHaugheyandhisunion’s

Executive welcomed his proposals. It called for the suggested talks to begin

immediately between the “social partners” on a “national economic and social

plan”to“maximizethecountry’sresources”,acceptedtheroleofpayrestraintin

“securing economic recovery” and proposed a state-sector-driven industrial

policyand“majorextensionoftheprincipleofindustrialdemocracy”astheway

toachieveit.Haugheymetbothemployersandunions,pressingonbothhiswish

on the expiry of the pay round in December 1982 to conclude a national

agreementcoveringpayandtaxaswellas“appropriate[tripartite]structuresfor

longtermeconomicandsocialplanning”.AshelatertoldtheDáil:

“Therearethosewhothinkeconomicpoliciescanbepursuedonthebasis

ofconfrontationwiththetradeunionmovement.Wedonotsubscribetothat

…Wealsomaintainfullconsultationwithemployerorganisations,againon

the fundamental principle that in a small community such as ours the

confrontationpolicieswhich theOpposition seem to favourwill only bring

dissensionanddivision.Oureconomicplanwillprovideabasisforunitingall

economiceffortandinterestsinaconcertedprogramme,tobuildupamore

competitiveandbetterstructuredeconomy”.14

Againprefiguringeventsoffiveyearslater,Haugheysimultaneouslyconvened

an inner cabinet group headed by Finance Minister Ray MacSharry, which he

taskedwithproducingwithinthreemonthsa4-year“economicandsocialplan”

toformthebasisforaprogrammetobeagreedwithemployers,unions,farmers

and “economic and social research bodies” to transform the economy

fundamentallyandgrowitoutofrecession.This,hetoldtheDáil,would firstly

14 “abandoning”Haughey,‘BudgetspeechJanuary1982’(notdelivered),inManserghed.1986:589;also

‘Cabinetfailedonpaytalks,saysHaughey’,IrishTimes13.11.81;“comprehensiveplan”,Haughey,‘SpeechtotheEconomicClub,NewYork’,15/03/83,inManserghed.1986:604and‘Plantorighteconomypledged’,IrishTimes16.03.82;ITGWUresponse,‘UnionwantstomeetHaughey’,IrishTimes25.03.82;Haugheyproposal,ICTUECmtg.21.04.82;“therearethosewhothink”,Dáil01/07/82

99

identify the “measures and sacrifices” needed to tackle the immediate deficit

problem and then drive an industrial take-off. The Enterprise Agency, IDA

schemes and other initiatives of theNationalUnderstandingwould be revived

and state industries, if operated efficiently, would have an enhanced role.

Followingan initialperiodofradical financialadjustment,anagreementwould

besoughtwiththe“socialpartners”onthedetailofthelonger-termplan.15

Planning by the MacSharry group, coordinated by Ó hUiginn through the

DepartmentoftheTaoiseachincloseliaisonwithHaughey,involvedatightcircle

ofministers, civil servants, agency leaders (notably PádraicWhite of the IDA)

and economists (notably KieranKennedy of the ESRI). Inwhatwould prove a

politicalmistake,however, itwasnotcoordinatedwithasimultaneousprocess

with the socialpartners atNESC.Tensionsarose inAprilwhenamootedPRSI

increase led ICTU to threatenrenewed taxprotests,but thiswasreversedasa

critical Dublin by-election loomed. On 31 July, within Haughey’s deadline,

MacSharry announced his financial plan to “progressively” but “prudently”

reduce the deficit through spending cuts while protecting lower incomes and

avoiding tax rises. Industrial policy initiatives being developed by Ó hUiginn’s

groupwould follow,withthe jointmonetary/industrial/socialstrategy forming

thebasisforaprogrammewiththesocialpartnersbeforetheendoftheyear.16

The as yet speculative industrial strategy and partnership agreement were

notenough todeflectunionshockatMacSharry’s31 Julystatement,whichnot

onlydrasticallycutalldepartmentbudgetsandextendedthepublicrecruitment

embargo,butdeferredfor18months,into1983,paymentofbothpublicservice

special awards and, even more critically, of the final 5 per cent phase of the

current public service pay deal. Haughey suggested that MacSharry’s pay

deferralformastartingpointforwidertalkswithICTU.Buthehadnointention

ofrescindingit,andatthesametimeinstructedthemeasurealsotobeenforced

in the array of contracted non-state agencies delivering health services. ICTU

denounced MacSharry’s plan as an “arbitrary breach of a freely negotiated

agreement”,warninggovernmentto“desistfromthecourseofconfrontationand

15 HaugheyinDáil02/05/8216 Planning,MacSharryandWhite2000:53-5;notconsult,‘TheWayForwardtoWhat?’Liberty,Nov.1982

100

conflict” which would “end any possibility of a constructive dialogue on

economicpolicy”.17

Haughey responded bymeeting the ICTU on 17 August and proposing that

while thepaydeferralhadtostand, itcouldbe incorporated intoawiderpay/

policyagreementthat includedelementsoffsetting itsuchascompensatorytax

reductions andothermeasures. In Septemberhe further eased tensionsby re-

appointing the Arbitration Board suspended by the coalition, which health

unionsweresoonreportingwas fairlyadjudicatingspecialclaims,even if their

eventual payment was deferred. But the public pay crisis dominated ICTU’s

agenda, one union noting “all else in the period [was] overshadowed by the

shockannouncement”.ICTUthreatsofprotestsandstrikesrecededasHaughey

againofferedtoencompassthedeferralofthepaymentphasewithinawider18-

monthpublicpayagreementthatcouldencompasscompensatoryelements.18

In fact Haughey already realised his mistake in not accompanying the

MacSharry financial adjustmentplanwith a social partnershipprocess and in

deferring the latter until after the former was achieved. After an EC Council

summit in Brussels in June he had had a “chat”, which he “vividly” recalled

twentyyearslater,withhismainECally,HelmutSchmidt,whomheadmiredas

the quintessential European social democratic leader. He met him again two

weekslaterinBonn,discussingeconomicpolicyandindustrialrelationsatboth

meetings. When he casually asked Schmidt what he planned to do after the

council,theGermanleaderrepliedthat“thisweekendisthemostimportantone

in my annual calendar - I meet with the employers and the trade unions to

hammeroutanagreementontheratesofpayandsalariesappropriateforthe

comingyearinthelightoftheeconomicsituationanticipated”.Haugheyrelated

howhewas“immediatelystruckwiththiscommon-senseapproach”andhow“I

began, inmymind,asI listenedtoChancellorSchmidt,todevelopandexpand

the concept [of social partnership].” This statement, just two years before his

death, in a paper he co-drafted with Ó hUiginn, might be misconstrued as17 BudgetplanandHaugheyproposal,‘Governmentstatement:PublicExpenditurePolicy’,30/07/82,GIS;

instructiononhealthbodies,LGPSU‘ReportonAgendaforExec.Boardmtg.’06/08/82encl.AlbertReynoldsTD,circular,“toallDepartments”,30/07/82;CongressreactionICTUAR1983:146-7

18 HaugheymeetsICTU,ICTUAR1983:148-51;re-appointsArb.Brd.,‘StaffPanel[HealthService]’mtg.07/09/82,ILHS:LGPSU-1;“allelseintheperiod”,LGPSU,‘ReportonAgendaforH&WExec.Cttee.’27/09/82;Haugheyoffer,ICTUAR1983:148-51

101

Haugheyadoptingapartnership strategyafter these “chats”, but thatwasnot

the case. What Haughey took from Schmidt was the need to integrate his

monetary/industrialstrategy fromthestart inapartnershipprocess,securing

buy-intoitsessentialoutline.Itwasamistakehewouldnotrepeatin1987.19

Once the deficit strategywas announced, theÓ hUiginn-coordinated group

finalisedits industrialandeconomicplans.Theclaimthatthiswasaninternal

civilserviceinitiativeinwhichHaugheyplayedlittlepartisnotsustainable.Not

only did Haughey form the group and personally appoint its members, but

KieranKennedy,recallingHaughey’sregularinputstoit,waslaterreportedas

saying he had “never encountered a person with such an incisive mind and

intellectasHaughey”,whoasTaoiseach,“unlikesomeothers,…listenedtohis

suggestions”.ÓhUiginn,whilenaturallystressinghisownrole,similarlyadmits

discussingtheplanwithHaughey“virtuallyonadailybasis”asitdeveloped.20

Thefinalplan,TheWayForward,publishedinOctober1982,wasnotsolely

the product of the tight group that compiled it, as it in turn built on key

strategies produced by the tripartite NESC after it had been upgraded by

Haughey in1980 fromasubordinatepolicy function toastrategic role.These

reports included a pro-integration EEC strategy, a sector-focused industrial

strategyandareport-bytheUSconsultancy,Telesis,alsocommissionedbythe

NESC - advising a radical reconfiguringof FDI andpreferential state supports

forpromisingindigenousexportingcompanies.Thesereportshaddevelopedin

parallelwithTheWayForward,involvingmanyofthesamepersonnel.21

TheWayForwardproposedbotheliminatingthenationaldeficitinfiveyears

and simultaneously driving an economic transformation through “productive

investment” in export sectors and aggressively increasing foreign inward

investment, though shifting fromWhitaker’s now collapsing laissez faire FDI

model to a targeting of selected high value-added hi-tech sectors

complementing indigenous development. In addition, as advised by Telesis,

19 “greatlyadmired”,InterviewwithMartinManserghandHastingsetal.2007:33;“chat”Haughey2013

andbackgroundmaterialinNAI/Taoiseach/2012/90/926,‘Brief:Taoiseach’smeetingwithChancellorSchmidt,Bonn,13July1982’;“co-drafted”,interviewwithÓhUiginn

20 “oftentouted”,e.g.Roche2009,Regan2012;KennedyquotedinCharlesLysaght,‘Wherearetheynow?’,SundayIndependent17/09/06,similarlyinterviewwithPádraigWhite;“dailybasis”,int.ÓhUiginn

21 WayForward,FiannaFáil1982;onitsdevelopment,MacSharryandWhite2000;NESCplansNESC1981aandb,and1982aandb

102

promisingindigenousfirmsweretobeselectedforstateassistancetogrowtoa

globally competitive scale. New industries should be created, in ICT, marine

technology and other areas, and access to technical education radically

expanded.Theeconomicturn-aroundshouldbeaccompaniedbyanewNational

Understanding agreeing the stages of industrial transformation, ring-fencing

welfare anddelivering industrial peacebyoffsettingpaymoderationwith tax

cutsboostingrealpayat lownetcosttoindustry.Acceptingthisshift inprofit

distribution,thoughsubsidisedbyworker-friendlyfiscalreform,wasregarded

as themajorcontributionsocialpartnershipcouldprovide.Therecessionwas

to be “out-grown” while stability was assured and confrontation avoided.

Revenueswouldexpand throughcorporation taxesandabroadened taxbase.

Whenaccusedofapolicyvolte-face,HaugheycrypticallytoldTheIrishTimes:“I

don’tintendtobeaprisonerofmypast,andyoushouldnotbeeither”.22

Haughey,ashelaterrecalled,nowapproachedunionsandemployersformally

and informallywithTheWayForward “to see if their agreementwith thePlan

could be obtained”. But despite “exchanges of views” an agreement “did not

prove possible”. He told the ICTU the plan was as significant a departure as

Lemass’sProgrammesandhadbeenwelcomedbyemployers,farmersandtheEC

Commissionandsuggesteda “socialpartnership” thatexcludedstatutorywage

controls“atthisstage”andbasedona“newpermanentstructureforeconomic

and social planning”. But ICTU equivocated, still reeling from the public pay

“shock” and reluctant following its1981experience to yet again enter awider

dealwithagovernmentwhosestabilitywasbecomingincreasinglyprecarious.23

UntilAugust1982,theHaugheygovernmenthadappeareddetermined,stable

andunited,withanimpressedmedialargelysupportive.Butaseriesofbizarre

mishapsfromlatesummer,eagerlyseizeduponbysensation-hungryjournalists,

notably,despiteitsHaughey-friendlyeditor,inTheIrishTimes,underminedhim,

revivinganinternalpartyoppositionintentondisplacinghim.Haugheybelieved

that successfulgovernmentpowerdependedonaunitedcabinet committed to

delivering specific goals rather thanparty or backbench support,whichwould

22 FiannaFáil1982;“laissezfaireFDI”,O’Riordan2019,Pt.7‘BeyondourKen!’;“profitshare”,Kennedy,K.

2001;“prisoner”,IrishTimes22.10.8223 “seeiftheiragreement”,Haughey2013;proposalstoICTU,ICTUAR1983:148-51;

103

follow when these existed. But this unity was now collapsing. Nevertheless,

despitehiswaningauthority,diminishinghisplausibilityasanegotiatingpartner

for social interest leaders, “intense negotiations”with ICTU produced a public

payagreementinOctober,withHaugheyagreeingtophasinginincreasesrather

thanoutrightdeferral,andconcedingonotherissuessuchastop-upproductivity

bargaininginstateenterprises.24

Agreementonpublicservicepaywasaprerequisiteforabroaderpartnership

agreement, but, to demonstrate its distance fromgovernment, the ICTUpublic

services committee that negotiated it put it to membership ballot without

recommendingacceptanceorrejection.IntheDáilHaugheypleadedwithpublic

serviceunionmembers,traditionallyFiannaFáilvoters,toacceptitas“thelimit

ofwhattheExchequercanbear”,addingthathehopedbargainingintheprivate

sectorwouldfollowbasedon“unitwage-costcompetitivegain”.25

Unions distancing themselves from Haughey as his authority collapsed

included even the ITGWU, which now castigated the Way Forward as “the

greatest expression of blind faith in unbridled capitalism issued by any Irish

Governmentfortwodecades”andan“exercisein ‘Reaganomics’”asifdesigned

tomakeanagreementimpossible.ICTUhadnotinfactsetitsfaceagainstanew

NationalUnderstanding,butitsExecutivewasdeeplydividedandstillarguingits

positionwhen thegovernment fell on28October asGregoryand theWorkers

Party,opposingMacSharry’scuts,supportedamotionofno-confidence.26

Intheevent,thepublicpaydealwasacceptedbyunionmembersballotingin

Novemberduring theelectioncampaign.Followingmuchwrangling reflecting

deep internal divisions over a return to an Understanding strategy, the ICTU

Executivenarrowlyagreeda10-pointpolicystatemententitled ‘TheRealWay

Forward’, which advocated a partnership agreement that accepted monetary

retrenchment anddebt reduction if combinedwith an expansionist industrial24 “sensation-hungry”,JoyceandMurtagh1983,andcontemporarycolumnsinTheIrishTimesbyHaughey’s

oldadversary,ConorCruiseO’Brien;onGagebyandHaughey,Whittaker2006andBrady2005;Haugheyviewsonpower,interviewHaughey2005;“intensenegotiations”,LGPSU,‘ReportonAgendaforLG&SBExec.Cttee.’13/10/82;‘DraftProposalsforamendingtheAgreementonPublicSectorPaybetweentheMinisterforthePublicServicesandthePublicServicesCommitteeoftheICTU’,inLGPSU,‘ReportonAgendaforLGPSUExec.Board.’22/09/82

25 “laterrecalled”,Haughey2013;“socialpartnership”,IrishTimes22.10.82;“limitofwhatexchequer”,Haughey,Dáil27/10/82;“unitgain”,Dáil22/10/82

26 ITGWUposition,‘TheWayForwardtoWhat?’,Liberty,Nov.1982;“arguing”,ICTUECmtgs.Oct.-Dec.1982;fallofgovt.,Manserghed.1986:706

104

policybasedonNESCpolicies,paymoderationoffsetbytaxreform,andunion

participationin“allfacetsofeconomicandsocialplanning”.Itsredlinewasthat

realwageandwelfarevaluesbemaintained.ThePlanappearedbeforeanew

governmentwasformed,andHaugheyrespondedeagerlytoeachofitspoints,

claiming their compatibility with his own concepts and even intimating his

willingnesstoformacoalitionwithLabourasabasisforrealisingthem.27

TheWayForwardandHaughey’sproposedsocialpartnershipframeworkhad

someparallelsinpost-Keynesianrecoverystrategiesbeingpursuedbyotherleft-

of-centre governments with which Haughey was aligned, notably Schmidt’s in

Germany andMitterand’s in France.Many social democratic governments lost

power in Europe in this period, being replaced by right-of-centre alternatives

committed to austerity and monetary adjustment or, as in Mitterand’s case,

survivingbyabandoningwhathasbeentermedhisexperimentin“Keynesianism

inonecountry”andpartlyadaptingsuchacourse.ButtheWayForwardwasalso

differentfromtheseinalsobeingalong-termplantoaddressdeeperstructural

problemsofIrisheconomicunderdevelopmentand“lateindustrialisation”.28

At EC Council level, differing approaches to monetary adjustment led to

increasingdisunity.InMarch1982amajorityontheCouncilhadstillfavoureda

consensus approach and “convergence” of national policies along such lines,

recommendingthatmemberstatestacklethe“majorstructuralcrisis…affecting

every country” by reducing inflation and controlling production costs, but

simultaneously increasing “productive investment” in the public and private

sectors,in“industriesofthefuture”andinyouthtrainingandemployment.But

thisEECcouncilconsensushadcollapsed,givingway toseveralyearsofpolicy

disunityandCommunityinaction,oftentermedtheperiodof“Eurosclerosis”.29

DespitesuchexogenousfactorsandthepolicydisunityatEClevel,Haughey’s

1982governmentpoliciesandthefateofits“socialpartnership”initiativewere

primarily determined by domestic factors. Inmanyways his 1982 corporatist

formula,developedfromhisfirstNationalUnderstandingof1980-81,aswellas27 Paydealaccepted,LGPSUExec.Boardmtg.07/10/82;Reporter(LPGSU)Dec.1982;“wrangling”,ICTUEC

mtgs.Oct.-Dec.1982;‘TheRealWayForward’,ICTUAR1983;Haugheyresponse,‘SpeechtoDublinNorth-CentralComhairleDáilcheantair’,09/12/82;onLabour,ManserghinManserghed.1986:716-8

28 “parallelsinothercountries”,IrishTimes22.10.82;“Keynesiasminonecountry”,Dølvik1999;“lateinustrialisation”,Hardiman1988

29 EuropeanCouncil1982(March)and1982(June);“Eurosclerosis’,Meenan,1999

105

thepoliticalprocesstorealiseit,wouldberepeatedin1987,butwiththecritical

factorsofearlypartnerengagementandconvincingcabinetauthorityresolved.

Policyconsensus,ideologyandpartyconflictinthe1980s Ireland’spolitical turmoil in1980-82wasmulti-facetted,butat its corewas

disarrayovereconomicpolicy,commontomostcountriesasvyingformulaefor

apost-KeynesianordercausedpoliticalturbulenceanddivisionacrosstheOECD,

paralysingeventheECCouncil.By1982aconsensusconsolidatedinIrishpolicy

circleson aneed to combinemonetarist adjustmentwith a stimulus industrial

strategytoovercomestructuralunderdevelopment.Whatwasdisputedwasthe

combinationandframeworkinwhichtheseshouldoccur.30

NESC reports commissioned under the Haughey government of 1980 and

completedin1982,aswellasFiannaFáil’sownWayForward,setoutaspectsof

this dual strategy.While how to resolve themonetary challengewas taken as

given – by reducing both inflation and government consumption – the major

policychallengeofhowtoovercomeindustry’sfailingtoadapttofreetradeand

revive on a development path remained contended. Companies that had

prosperedunderprotectionwereoftensubsidiariesofforeignfirmsengagedin

basicassemblyandexploitingremainingprotections,butthesewerenowclosing

as those benefits ended. Indigenous firms had neither the scale, skills nor

capacitytoexploitfreetradecompetitivelyandbecametheprimaryvictimsofit.

Foreigninvestmenthadbeenamajordriver,buttheFDIsectorstalledasfirms

withdrew,itslegacyofunreliabilityandhigh-costperjobmuchcriticised.Aview

emerged at policy level advocating supports be redirected to indigenous firms

withthepotentialtobecomeinternationallycompetitiveplayers.31

The IDA opposed this policy turn, Pádraic White vigorously defending FDI

whileadvocatingitbere-focusedtowardsselectedhigherquality-addedsectors

in place of the hitherto laissez faire approach, though also “picking winners”

amongindigenousfirmsand“scalingthemup”tohighervalue-addedtrading.A

primaryweakness in the indigenous economy he identifiedwas the dearth of

investmentcapital–an issue thathaddogged the Irishstatesince the1920s–

30 Emergingconsensus,O’GormanandCarroll198731 NESCreports1982a,1982b;Kennedy,K.1984;“dualstrategy”Lee1989:504

106

withtraditionalfinanceweddedtounproductive“rentseeking”,especiallyinthe

Londonbondmarkets,andanaversiontoproductiveinvestmentathome.Inits

absence,anactiviststatewouldagainhavetodriveproductivedevelopment.The

NESC additionally identified reforming archaic institutions and how best to

exploittheeducationalexpansionofthelate1960sasfurtherpriorities.32

A concept that rapidly gained traction inpolicy circles, early identifiedby a

risingeconomist,ColmMcCarthy,wasaneedforaninstitutionaltransformation

toemulatemoresuccessful “smallopenEuropeaneconomies”.Anewtheme in

the international economic literature identified how states, by “concerting”

government, agencies and business in a “consensus” strategy, had successfully

pursuednicheforeignmarketadvantage.ButtheIrishcasewas“exceptional”not

onlyinitsunderdevelopedinstitutions,butalsoinwhatNiamhHardimancalled

thechallengeofa“lateindustrialising”countryundergoing“astructuralshiftin

economic composition of quitemajor proportions”. Agriculture, Ireland’smain

economicresourceuntilthe1960s,had,despitetheCAPboom,failedtoexpand

significantly in the absence of a strong food industry. On the other hand, new

manufacturing and services firmswere emerging in place of collapsing 1960s

industriesinaprocessof“creativedestruction”athighsocialcost.33

Theconsensusona“smallopeneconomy”developmentformulawasreflected

inthequitesimilareconomicagendasproposedincompetingpartymanifestos.

Thegoalswerenot contested,onlyhowthe transformationmightbeachieved.

Opinions differed on the prioritising of financial adjustment or developmental

innovation,howtheycouldbecombinedandtheformthisshouldtake.

Astrident“NewRight”economics,thoughnotyetuniversallyascendant,and

epitomised by the new Thatcher and Reagan governments in the UK and US,

aggressivelypromotedanewcapitalistgrowthparadigmofcontrollinginflation

throughmonetarist discipline, “unshackling” business from the state, restoring

share-holder hegemony, curbing union power and “restrictive practices”, and

abolishing capital controls. Even the OECD, hitherto a guardian of Keynesian

orthodoxy,begantochallengetheprimaryemploymentcreationroleofthestate,

andacrossEuropenewgovernmentswereelectedadvocatingvaryingdegreesof32 White,P.1983;NESC1982b33 McCarthy,Colm1979;NESC1982a,1982b;“literature”Katzenstein1985;Hardiman1988:4-8;

agricultureandFDI,Whelan,C.etal,2007

107

the paradigm. A new right/left divide emerged over how to respond to the

monetarycrisis,whetherthroughgreatercapitalautonomyandliberalisationor

aconsensusrestructuring.ThepolicyparalysisatEClevelreflectedthisschism.34

While electoral democracies involve much rhetorical polarisation masking

underlying policy agreement, the paradigm shift in international economic

thinkingrevived“conservative”policyimpulsesinFineGaelwhileweakeningthe

Keynesian ones in Fianna Fáil. Social democratic tendencieswere strong in all

parties, but Labour, which claimed to embody them, dissipated its social

democratic appeal by an obsessive opposition to Fianna Fáil less on socio-

economicgroundsthanforbeinga“nationalist”, “corrupt” forcetobeexcluded

frompower.ThisLabourviewofFiannaFáil–determinedbyLabour’selectoral

marginality - had been present since the 1920s and been strongly revived by

CruiseO’Brien in the late 1960s. Itwas re-articulated by Frank Cluskey in his

evisceratingspeechonHaughey’selectionasTaoiseachin1979.Itwasamoral

position that not only bewildered many working class voters but restricted

LabourtothesolegovernmentoptionofcoalitionwithFineGael.Italsoshaped

Labour’scontinuedsuspicionoftripartitismwhich,asLarkinhadtriedtoargue,

wouldanywhereelsehavebeentheessenceofalabourmovementprogramme.35

Thepartydivideofthe1980sthusremainedthatbetweenvarietiesofsocial

democracy, with Fianna Fáil, Fine Gael and Labour differentiated not least by

theirconflictingapproachestocorporatistplanninganddevelopmentstrategy.

Autonomousgovernment:economiccrisisandpolicychoice The coalition of 1982-87 had little opportunity to pursue development

strategies as proposed by the NESC or other bodies, as it faced a deepening

economiccrisis,oneoftheworstinthestate’shistoryandasdestructiveasthat

of the mid-1950s in its social effects. Although primarily a subset of another

global crisis, it impacted in Irelandonaneconomyalready strugglingwith the

challengesof“late”industrialisationasits1960sindustrialmodelre-structured

autonomously and drastically to free trade conditions. Employment fell nearly

7%from873,000to816,000between1982and1986while,withthepopulation

34 “NewRight”,GrahamandClarke1986;onOECD,McCracken1977;“paralysis”,Meenan,199935 CruiseO’BrienseeChap.2;CluskeyinDáil11/12/79,alsoMcGinleyed.:224-231

108

growing,unemploymentdoubledtoanunprecedented250,000or18percentof

theworkforce,toppingtheOECDleague,andwouldhaverisenfurtherbutforthe

return of high emigration. The decline was starkest in manufacturing, with

employment falling 20 per cent to 204,000. Government responded primarily

with deflationary measures to maintain competitiveness, cutting spending,

raisingtaxesandcontainingwelfare,whileseekingtominimisecutstoservices.

While successfully reducing inflation to5per centby1986, social expenditure

increased due to rising unemployment, reaching 75 per cent of GNP, and the

nationaldebttrebledto148percent.Theinflation“success”wasnotcombined

with productive investment or expansion, and hence contributed to deflating

economicactivity. Investment fell,byacatastrophic37percent in1984alone,

andFDIcontractedforthefirsttimesincethe1950s.Apovertycrisisemerged,

concentratedinurbanareasofpreviouslyrobustindustrialemployment,witha

growing welfare-dependent population suffering severe social decline and

persistentpoverty.Forthoseinworklivingstandardsalsofell,withrisingtaxes

reversing earlier improvements, after-tax real wages falling 15 per cent and

wage costs to employers rising 10 per cent. Housing policy encouraged

occupants with means to vacate public housing, exacerbating poverty

ghettoizationandcrime,andgeneratingadrugscrisisneverbeforeexperienced,

asFiannaFáilhighlightedinopposition.36

Focusedonmonetarypolicy,governmentsawfewopportunitiestoundertake

industrial expansion. In October 1984 it finally published its growth strategy,

Building on Reality, but its development policies, based on supporting SMEs,

relied on deflation reducing interest rates to generate growth, and economic

historians judgeitashavingsimplyfurtherdepressedactivityanddemoralised

entrepreneurs. Within eighteen months, economic performance lagged far

behindtheplan’sprojections,with73,000feweratwork,emigrationfourtimes

theprojectedlevel,andunemployment40,000abovetheplan’s“stabilised”level.

FitzGerald, regretting not having implemented his stimulus measures earlier,

laterclaimedthatbythetimeheleftofficetheplanhadnothadtimetoproduce

results, pointing out that by 1986 not only had inflation fallen, but output,36 FiguresinHardiman1988:222-8;FDIcollapse,IDAIreland1986;fallinwagevalue,OECD1985:38;

housingpolicy/drugscrisis,Gilligan2011,MickRafertyinInt.InnerCityGroup;“highlighted”,Haughey,‘TheCrimesCrisis.PresidentialAddresstoArdFheis’,30/03/85,inManserghed.1986:932-4

109

exportsandforeigninvestmentwererecovering.Thisiscertainlytrue,aslower

inflationassistedtheprocessof“creativedestruction”andrevivedsomeoutput

and productivity growth, which increased 30 per cent by 1986 despite falling

employment. ButBuilding onReality lacked an overall industrial strategy, and

deflation-drivenchoicesalienatedwidesocialgroups.37

TheFitzGeraldgovernment’sadherence todeflationwasreflected in itsEEC

orientation. Apart from continuing the traditional CAP-defensive policy and

initiatingsomeimaginativeusesofECSocialFundsfortraining,communityand

youthschemes,italignedwiththecentre-rightintheECCouncilpolicydivide.In

1984FitzGeraldappointedasIreland’sCommissionertheattorneygeneral,Peter

Sutherland, who epitomised the private-educated Fine Gael patrician with a

strong free market outlook. At his request Fitzgerald secured for him the

competition rather than agriculture or social policy portfolio. Although the

EuropeanChristian-democraticmainstreamwasnotaversetotripartitismandin

many cases had initiated it, such governments were now retreating from it.

Sutherland became central in the Single Market project and while impressed

with President Delors’ leadership, saw him as “not a natural deregulator” and

was hostile to his state-dirigiste tendencies and attempts to “impose” social

constraintsontheemergingsinglemarketconstruct.38

In domestic socio-economic policy, FitzGerald, while struggling to expand

socialprovision, continuedhis1981anti-corporatistdirectiononplanningand

pay.Hebelievedcircumstancesallowednootheroptionand,despitehis social

democraticinclinations,optedforatraditionalFineGaeldeflationaryapproach.

In November 1982 the party had won its hitherto greatest number of seats,

thoughconsiderablybehindFiannaFáil,whileitscoalitionpartner,Labour,had

beenweakenedandhadtoacceptaverysubordinaterole incabinet.The1981

coalition had initially sought to continue the National Understanding but had

donesoinsuchawayastoendit,andtherenewedcoalition,reflectingatrend

among right-of-centre governments elsewhere, simply dispensed with it. But,

unlikeThatcher,FitzGerald, inWilliamRoche’s judgement,wasnotdisposedto37 “depressedactivity”andhistorians’views,BielenbergandRyan2012:32-3;projections/performance,J.

Travers,D/Taois.,‘Possiblesupplementary’PQbyMichaelKeating’,DTA:DTA:S25858-A;governmentchoices,FitzGerald1991

38 AppointmentofSutherland,FitzGerald1991:615;onhiscareer,FintanO’Toole,‘TrumpandBrexitareproductsofSutherland’ssuccess’,IT09/01/18;onDelors,Sutherland1999:289-90

110

“breaking unions” and was not adverse to consulting with them. He had long

been sceptical of policy “consensus”, hadbeen critical of Lemass’s “vocational-

bureaucratic system of government”, and was generally “unwilling to regard

collectiveactors,andespeciallytradeunions,asmorethan‘lobbyinginterests’”.

Other senior ministers, notably John Bruton, were more stridently hostile to

tripartitism. The coalition resumed its 1981-2 strategy though, on Labour

insistence, also continued funding union and management bodies and

established a National Development Corporation (NDC) to develop industrial

strategy.ItalsomaintainedafewinitiativesinheritedfromtheUnderstandings,

such as public service “worker participation” projects and bodies like the

SectoralDevelopmentCommittee,thoughtreatingitsreportsasephemeral.39

TheNDCwhenitemergedin1983,farfromthe“planningagency”promised,

wasapurely“advisory”bodywithlimitedresources,composedofcivilservants

andeconomicexperts,alongwithafewbusinessandunionofficialsselectedby

the Taoiseach rather than representatives nominated by those interests.

FitzGeraldsaw theNDCreplacing the tripartiteNESC in the role the latterhad

acquiredunderHaughey.ThisfollowedadvicefromWhitakerandLoudenRyan,

replicatingtheirpreferenceforacivilservice-led,purelyadvisoryforum.40

FitzGeraldintimatedtoICTUhiswillingnesstoconsiderwhathebundledasa

“National Understanding/Wage Agreement”, though strictly separated from

budget and economic policy, a formula which negated the very idea of an

Understanding.Publicserviceunionsfoundthemselves“awaitingtheoutcomeof

thesediscussions,includingthepossibilityofcentralisednegotiations”onanew

Understanding,beforedecidingontheirstrategy.TheMarch1983budgetclearly

revealedgovernment’sdeterminationonadeflationarycourse.Governmentalso

announceditspreferenceforastand-alonepublicpayagreement,consistingofa

six-month pay freeze and single figure increase thereafter, followed by “free”

bargaining in private industry. The FUE responded approvingly, suggesting a

similar “guideline” on pay terms for the private sector, while a resigned ICTU

instructed unions in both sectors to get on with individual claims for a

39 “scepticalofconsensus”,seeChapter2;“vocational-bureaucratic”,BewandPatterson1982:66;

“unwilling”,BacarroandSimoni2007:9;BrutoninRoche2009:196;onNDC,FitzGerald1991;onworkerparticipationinitiatives,LGPSU,‘ReportonAgendaforExec.Boardmtg.’11/01/85

40 Chambers2014:227,240-1;onWhitaker’spreferencesseealsoChapter3

111

“substantialgeneralincrease”tocounterbothinflationandthereductionofreal

wagevaluesbytaxincreases.Theloomingthreatoffragmentedbargainingand

widespreadindustrialconflict,especiallyinthepublicsector,forcedgovernment

tonegotiateapublicagreementdifferenttoitsstatedpreference,concludingitin

late 1983 on terms very similar to what Haughey had proposed to ICTU in

autumn1982,whiletheprivatesectorrevertedtolocalbargaining.41

Withde-industrialisationandhighunemployment,privatesectorunionshad

littleleverageandwagesstagnatedorcontracted.Disputeswerepredominantly

inthepublicsector,becomingendemic,withstrike-daysrisingagainto412,000

by 1985. Recruitment embargoes and service cuts in health, local government

andeducation led towork-to-rules,boycottingofvacantposts,demonstrations

and threatened strikes. LGPSU’s central council repeatedly rejected

government’sproposedpay terms, thoughwhencivil serviceunionsvoting for

themformedamajorityonICTU’sPSC, itsbranchesgrudginglyacceded.Aone-

daygeneralpublicservicestrikeinOctober1985followedagovernmentrefusal

– the first since 1935 – to implement Conciliation Board and Labour Court

awards,andfurther longerstoppagesplannedfor1986wereonlyavertedbya

last-minutecompromise. InSeptember1986governmentrefusedtore-appoint

the arbitrator, froze public pay and extended the recruitment embargo. A

teachers’strikefurtherunderminedpublicdisputeresolutionsystemsandatthe

end of 1986 LGPSUdecided to “black all public representatives” and refuse to

implementrentandhousingschemes,andstrikesoverlocaldisputesmultiplied.

GovernmentrelationswiththepublicserviceshadcollapsedbyJanuary1987.42

In1983FitzGeraldsetouthisplansfortheNPBplantoasceptical ICTU.He

envisagedtheNPBsubmittingproposalstohis“TaskForceofMinisters”onhow

to “maximise output and employment in competitive conditions”, a “public

works” scheme for the unemployed, and welfare reforms “to reconcile social41 FitzGerald“willingness”,ICTUAR1983:142;publicserviceunionsawaitoutcome,LGPSU,‘Reporton

AgendaforExec.Boardmtg.’04/03/83;ICTUandFUEpost-budgetdecisions,LGPSU,‘ReportonAgenda’and‘Exec.Boardmtg.’04/03/83andICTUEC,‘StatementbyExecutiveCouncilonPay’,16/03/83,inICTUAR1983;publicpayagreementandprivatesector,ICTUAR1984:139-43

42 Publicserviceresistance,LGPSU,‘ReportonAgendaforExec.Board.SpecialMtg.’28/01/83,‘ReportonAgendaforH&WDiv.Exec.Cttee.’29/07/84and‘ReportonAgendaforLGPSUExec.Board’12/02/85;branchesaccede,LGPSUH&WDiv.Exec.mtg.16/12/83,LGPSUExec.Boardmtgs.09/12/83and18/07/86;one-daystrike,‘ReportonAgendaforExec.Boardmtg.06/09/85encl.‘GovernmentStatementonPay’;furtherstrikesplanned,teachers’strike,Exec.Boardmtgs.Sept.1985-Jan.1986;“blackallrepresentatives”,LGPSUExec.Boardmtgs.,Oct.andNov.1986

112

equityandtheefficientuseofpublicresources”.NPBinputswouldformonlya

peripheral element of the plan, Building on Reality, notably reforms in public

servicedelivery,incometaxchanges,DIRT,theFarmAdvisoryServiceandroad

investment,butitsproposedpublicworksprogrammewasrejectedas“notvery

realistic”. FitzGerald later conceded the NPB had proven ineffective, failing to

impacton“thepermanentadministrativestructurefordecisionmaking”ormake

“asenduringamarkonpublicadministrationasIwouldhaveliked”.43

Having established the NPB, FitzGerald reframed the purpose of the NESC.

TheCouncilwasdueforre-appointmentin1984andheusedtheopportunityto

dilute its functions and reduce it from 47 to 23 members, five each for

employers, unions and farmers, along with seven Government-appointed

economists, politicians and other figures. The Department of the Taoiseach

continued to chair it, but would no longer provide expertise, research or

secretarial supports,which transferred to the NPB. The new task of the NESC

wasdescribedasprovidingreportsasrequestedbyministers.Thusemasculated,

NESC was busied until 1986 with projects on secondary issues such as the

criminal justice system, local authority finance and profit sharing.Building on

RealitywascompiledwithoutNESCinputand,unsurprisingly,thecouncilhardly

featuresatallinFitzGerald’smemoirs.ICTUprotestedthisdown-gradingofthe

tripartite NESC and its subordination to the NPB. When it was being re-

constituted, it requested that civil service representatives be at least secretary

grade,objected to the inclusionofnewgroupsandpleaded toberestored toa

strategicrole,butwasignoredonallcounts.Resignedtothedown-gradingofthe

NESC,Congressnominatedsecond-tierrepresentativesontoit.44

WhenBuildingonRealityappeared,ICTUcriticiseditsdiffusecontentandlack

of consultation with the NESC in its preparation, and the LGPSU produced a

hostilecritiqueofit,StarkReality.Amongstotherinitiatives,theplanestablished

theSocialEmploymentScheme(SES)toprovidepart-timerolesforunemployed

peopleincommunityorganisations,schoolsandpublicservices.ICTUobjectedto

thisas“agimmick”andtoitbeingusedtodotheworkofpublicjobsunfilleddue

43 PlansforNPB,ICTUAR1983:186;FitzGeraldaimsforNPB,FitzGerald1991:449,roleinBuildingon

Realityand“notrealistic”,Ibid.:450-144 Govt.announcementreNESC,‘PressStatement’,20/07/1984,GIS;“busied”,ICTUAR1985:219;

FitzGerald1991;ICTUappointeestoNESC,ICTUECmtgs.20/06and19/09/84

113

to the embargo, but internally, fearing the “public perception of an attempt to

take it head-on”, moderated its stance, insisting only that it not be used to

replace“realjobs”anddemandingatripartitemonitoringcommitteetooversee

it. While government conceded this, it was yet another occasion where prior

consultationmighthaveavoidedill-willandarancorousdispute.45

The secondaryministerial projects entrusted toNESCwere often politically

divisive ones. John Bruton requested a study of employee shareholdings to

promote“cooperationintheworkplace”,whichneitheremployersnorunionson

the NESC favoured, if for opposite reasons. Employers opposed worker

encroachments on managerial or shareholder power while the report’s

consultantbemoanedhisdifficulty“engagingtheunions”duetoICTUantipathy

to “employee shareholding” as a “New Right” strategy for de-unionisation. A

report on local government financing through “consumer” service chargeswas

equallydivisive,beingnaturallysupportedbybusinessbutviewedwithhostility

byunions,whoopposed them in the absenceof tax reformor incomeoff-sets.

LGPSUstaff“boycotted”servicechargeschemes,theunionthreateningtoexpel

memberswhocooperated in them.Bothprojects lingeredon theNESCagenda

untilfinallybeingshelvedunderthenew1987government.Otherprojectsfared

littlebetter,rejectedbyICTUorthereportspublishednotingtheirdissent.46

Abandoning pay/policy tripartitism and allowing its institutions erode was

essentially ideological,with governmentdetermined to restore its “autonomy”,

buttolittleobviousbenefit.Itsouredrelationswithpublicservants,undermined

staffcooperationandincitedwidespreaddisruption,whilesquanderingplanning

assetssuchastheNESC.AnITGWUleadercriticisedgovernmentforabandoning

“emerging arrangements” for cooperative planning and conflict resolution. It

“put nothing in planning terms in their place”, facing “the worst employment

crisisinthehistoryofthestatewithoutanysenseofdirection”.47

45 ICTUonBuilding,ICTUECmtg.17.10.84andICTUAR1985:181;‘StarkReality’,LGPSU1984andLGPSU

Exec.Boardmtg.06/12/84;“gimmick…publicperception”,ICTUpositioninLGPSU,‘ReportonAgendaforExec.Boardmtg.’08/03/85;ICTUcircular,n.d.[1985]“SocialEmploymentScheme”

46 Onemployeeshareholdings,BrutontoDrNoelWhelan,chairNESC,29/01/1984,NESCArchive:Box3b,andNESC,‘CouncilMeetings’,16/10and26/11/1986;onlocalgovernmentfinancingandlocalcharges,LGPSU,‘AGMofLG&PBDiv.’of17/05/84and18/05/85,and‘ReportsonAgendaforLG&PBDiv.Exec.’,27/05and22/07/83,20/07/84;LGPSU,‘ReportonAgendaforExec.Board’,20/7/84;“lingeronagenda”and“shelved”,NESC,‘CouncilMeeting’19/12/86inc.draft:‘EmployeeShareholding’;“progresslittle”andICTUdissent,NESC,‘CouncilMeeting’01/03/87andattchd.‘Workprogramme’

47 ICTUADC1986:102

114

Government could and did comprehensively “walk away” from tripartitism

though,evercourteous,FitzGeraldregularlymetwithICTU.Herecalledhowthe

unionshadhad“aneasytimeofitwithFiannaFáil”andhowhismeetingswith

theICTUwere“formal,oftentense,andonthewholeunproductive”.JohnCarroll

recalled how FitzGerald “lectured us when we met him; he told us about the

economy;wemadenoprogress”,whilecivilserviceleaderDanMurphysaidthat,

whilenot“unsympathetic”,FitzGeraldcouldn’tsee“unionshavinganyparticular

role” in economic policy. Another ITGWU leader said FitzGerald “had no

intention whatever of consulting with us” let alone “engaging in a search for

consensus”. “We were told there was no alternative to the Coalition view of

reality”. Bill Attley of the FWUI regarded Fine Gael in general and especially

FitzGerald as unable to grasp the potential of a national agreement either to

mobilisebusinessandunionsinacommonendeavourorinitssocial-integratory

function:“asanorthodoxeconomisthejustcouldn’tgethisheadaroundit”.48

Despite FitzGerald’s social-reformist inclinations, the coalition in effect

reverted to the pattern of previous coalitions in deflationary economic policy,

interestgroupdisengagementandrelianceonbusinesseconomistsforadvice.

Unbridgeabledivide?–Employers,unionsandthestateinthe‘80s

WhenThatchercametopowerinBritainin1979,oneofhercentralmessages

was that union power was throttling the economy and the remedy was its

disestablishment and the restoration of market forces. Tripartitism in Ireland

hadariseninadifferentcontexttotheriseofunionpowerinBritain.Whilethe

disruptivepotentialofunionswasafactor, itwasasecondaryone,andLemass

andHaughey in pursuing a tripartite paradigm had regarded it as ameans to

“harness”unionsandotherinterestsascreativeforcesratherthantoneutralise

them,therebyexpandingthesocial-institutionalbaseofeconomicdevelopment.

Manyinotherparties,inthecivilserviceandeveninFiannaFáilopposedthis

Lemass/Haughey perspective. In 1984 Whitaker noted that “no-one twenty

years ago would have believed the amazing strength which trade unions,

employersandfarmersnowpossesscomparedwithpoliticalparties”.Thiswas

48 “walkaway”,MurphyandHogan2008;“easytimeofit”,FitzGerald1991:453-4;“lecturedus”,ICTUADC

1986:226;MurphyinHastingsetal.2007:16;“noalternative”,ICTUADC1987:98;AttleyinInt.Attley

115

nowbeingreversedinBritain,hewrote,andFitzGeraldshouldforegotripartite

experiments and rely insteadon theDepartment of Finance, economic experts

and “independent” economic institutions. FitzGerald followed his advice.

WhitakerhadbeenappointedanNESCmemberbyFitzGerald,butresignedfrom

itinFebruary1982whenthecoalitionfellandareturnofHaugheyseemedlikely.

Onhisresignation,hewrotethatsocio-economicpolicyshouldneverhavebeen

transferredtotheTaoiseach’sDepartmentandshouldbereturnedto“theclear

responsibility”ofFinanceassistedby“planningunitsinotherDepartments”.49

Unions in Irelandorganisedhalf amillionworkers, 55per cent of the total.

This was not evenly distributed across the economy but concentrated in

particular areas, including over 90 per cent in the public service and state

enterprises,and, in theprivatesector, instrongervocationalgroupsand larger

enterprises.Asahistoricalinheritancetherewereover70unions(comparedto

12inGermany),manyevolvedfrompre-industrialeraguilds.Over85percentof

unionmembersweregrouped ina few largegeneralandpublicserviceunions

andaboutfivecraftandsectionalones.Whilethereweremilitantgroups,anda

significant socialist sub-culture, most members were passively engaged, with

unionmembershipasecondaryaspectevenoftheirworkinglives.50

Ontheemployerside,overhalf, includingall thelargestandstrongest,were

also organised, in groups combined in the Irish Confederation of Employers,

thoughmanysmalleremployersstayedalooffromthese:

Growthandconcentrationofunion/employerorganisations1970-8351TradeUnions(ICTU)(Republiconly) EmployerOrganisations(ICE)

1970 1983 1965 1981Membership>20,000

UnionsMembers2 181,400

UnionsMembers3 235,053

OrganisationsRetail,Grocers(RGDATA)

Members3,000

Members1,350

10-20,000 3 45,000 3 49,992 Fed.UnionEmployers(FUE) 1,630 2,5635-10,000 9 60,600 7 53,522 Construct.Ind.Fed.(CIF) 750 2,1661,500-5,000 27 75,300 23 62,518 PharmaceuticalUnion 1,061 1,402<1,500 54 24,500 35 19,966 MotorIndustry(SIMI) 945 1,119 LicensedVintners 560 676 Elevenotherminorassocs. 1,306 1,193TOTALICTU 95 386,800 78 498,900 TOTALmembershipICE 9,252 10,469

49 WhitakerinHardiman1988:205;viewsonBritainandadvicetoFitzGerald,innotesforRadioSenate,

RTÉRadio,01/09/93,quotedinChambers2014:241;FitzGeraldtakesadvice,FitzGerald1991:449,Chambers2014:227,240-1;NESCresignation,WhitakertoNoelWhelan10/02/82,NESCArchive.Box3

50 Gunnigleetal.1999:111-3951 FiguresfromtablesinHardiman1988:131,163

116

Unions and the ICTUhad been subsidised by the state in their training and

advisoryfunctionssincethe1950s,andwhileemployerorganisationseschewed

state funding, many ancillary bodies, such as the Irish Management Institute

(IMI),wereequallyheavilysubsidised,aswasin-companytraining.Asindustrial

relationsweredeterminedbyconstitutionalandcommonlaw,umbrellabodies–

theICTU,FUE,CIIetc.–werevoluntaristleaderships,withonlydirectivepower

totheextentconcededbyaffiliates.Whilesmallandloose, forthatveryreason

they had to lead and reproduce their legitimacy through considerably more

democraticpracticesthanwascommonamongtheirEuropeancounterparts.52

Employers,farmingbodiesandbusinessopinionleadersgenerallysupported

FitzGerald’s deflationary policy as a prerequisite for recovery. But they also

jealously defended grants for industry and subsidies to agriculture, while

advocatingreductionsinotherpublicspending,ininputcosts–includingtaxes-

and in “red tape”. As they were reliant on linkages with the state, they also

remainedactivewithincooperativepolicybodiessuchastheNESC.53

After being cajoled by Haughey into the 1981 National Understanding, the

FUE, influencedbydevelopments inBritain, adopteda strategy -PayPolicyfor

the1980s –with the aimof ending centralised bargaining. Influencedby “new

right”economics, thisalso reflected realities inaneconomybeing transformed

byindustrialchange.Asconditionsbetweenproductiveanddecliningindustries,

individualfirmsandthepublicandprivatesectorsradicallydiverged,itwasheld

to be increasingly counter-competitive to enforce national pay standards or

industry-specificpay“norms”.Firmsshouldbargainseparately(“locally’),based

on competitiveness and productivity gain, trading pay for new technology

acceptanceandflexibilisationofworkpractices,andgraduallymovefromgroup

bargainingaltogethertoindividualised“humanresources”management.54

Intheabsenceofanational framework, thisnewemployer ideology ledtoa

fragmentation of industry agreement patterns and timeframes, with FUE

triumphantly declaring in 1986 “the wage round has ceased to exist”. When

NESC’s 1986 Strategy for Development tentatively proposed a national52 Onlegalframe,McCarthy,C.1977:482-523,andvoluntariststructuresHardiman1988:138-41,171-453 Hardiman1988:21854 PayPolicy,Fogartyetal1981;“graduallymove”,‘SixPrioritiesfor1986:PolicyStatementbytheNational

ExecutiveCouncil’,FUEBulletin,Jan.1986

117

agreementframeworkforarecoverystrategy,theFUE,whichhadresistedthisat

NESC,reluctantlyagreedtoparticipateinexploringsuchacommonstrategybut

stressed “there was hardly any support” among its members “for a return to

national agreements or understandings”. The ICTU believed employers feared

thatnationalbargainingwouldonlyserveto“breathelifebackintotheunions”.55

Employers per se often differed from the more strategically-orientated

businessgroup,theCII,which,havingdevelopedfromtheFIMandrepresenting

largecompanies,valuedclosestate-businesscollaboration.Butinthe1981crisis

it convergedwith FUE thinking, highlighting the “unsustainable level of public

expenditure”, sought radical income/business tax cuts and blamed Labour’s

influenceingovernmentforthe“unsustainable”levelofsocialspending.Usinga

popularmonetaristphrase, itaccused thecoalitionofhavingbeen“seducedby

BigGovernment”.In1981ithadurgedendingtheUnderstandingandfrom1983

unreservedlysupportedFineGael’sadvocacyofadeflationarypolicy.56

But the CII also became frustrated with FitzGerald’s government for its

ineffectual industrialpoliciesasbusinessactivity contracted.AsNESC’sTelesis

Reportshowed,theprogrammesofthe1960s-70shadnotproducedadynamic

indigenoussector,withvirtuallynointernationallytradingperformerssurviving

by1984.Financeinstitutionsremainedriskadverse,weddedtosafeinvestments

inBritishor Irishbondsandhideboundbywhat the IDA termedunproductive

“rent-seeking”.Themassindustrialclosuresoftheearly1980sresultedfromthe

unwillingness or inability of the type of industry generatedbyWhitaker’s free

trade formula to adjust to open competition, tending to close once protective

advantage was withdrawn. This was exemplified in such high-profile 1980s

closuresasFord,Dunlop,Semperit,Talbot,Parsonsandmanyothers.Asregards

indigenous industry, Albert Reynolds, when he became industries minister in

1987, lamented to a CII audience that the very “survival” of the economy

dependedonbuildingexportcapacity,but thishadyet tomaterialiseas “many

55 “ceasedtoexist”,FUEBulletin,Oct.1986;FUEresponsetoNESCreport,FUEBulletin,Dec.1986;“breathe

lifeback”–DanMurphyquotedinHastingsetal2007:1056 “seduced”,Power2009:38;supportsFG,Int.Power;Int.O’Sullivan

118

seniorIrishmanagerswereeducatedandgainedtheirformativeexperienceina

protectedenvironmentwheremarketcompetitionwasnotasignificantfactor”.57

Theretreattodecentralisedorevennon-bargaining,encouragedbythepolicy

preferencesoftheFitzGeraldcoalition,canbeseeninretrospectastheexception

rather than rule for the post-war period. The dismantling of tripartitism and

reversion to local bargaining alsoweakened business associations such as the

FUEandCII.Newer -notonlyUS - firmsevadednotonlyunionsbut even the

supportservicesofemployerorganisations, takingthese“in-house”.Bargaining

wastheraisond’etreofemployerassociations,withFUEhavingdescribeditself

on its foundationasacoordinatinggroup“similar to theTradeUnionCouncil”,

while concerted planning was that of the CII. Employers had participated in

national “wage rounds” since the 1950s, andmanagement training at IMI and

business collegeswas still imbuedwith Catholic sociological views of a “social

order”towhichorderlyrelationswithtradeunionswereintegral.58

Trade unions faced different but not unrelated challenges. While public

servicecutsandrecruitmentembargoesledtopublicsectorunionmembership

contracting, intheshrinkingprivatesector,de-industrialisation,fallingincomes

and rising unemployment precipitated an even greater decline. This followed

twodecadesofgrowthand increasingworkerempowerment.Membershiphad

peakedat524,000in1980–56percentoftheworkforce–butfellby1984to

501,000,mostnotablyinmanufacturing.Amalgamationsincreased,withsmaller

unionsabsorbedbylargerones.Themembershipdeclinewasnumericallysmall,

butamoremarkedphenomenonwasthedropinactivity.Despitethereversion

to localbargaining,workermilitancyandshopstewardpowerfelldramatically

astherebelliouswaveofthe1960s-70sreceded.CasesbeforetheLabourCourt

declined,withstrike-daysthroughunofficialaction-46percentofallstrikesin

1977-fallingto12percentin1985andjust6percentin1986.Inarecessionary

economycompetitivepaymilitancylostitsraisond’etrewhilelabourlawreform

eroded traditional grounds for conflict. Sectional unions like the MPGWU and

AGEMOU shrank dramatically and where disputes occurred these were57 CIIcriticisms,Power2009:58-9;economicmodelincrisis,Telesis,NESC1982a,1982b,Kennedy,K.

1984;“rent-seeking”,White1983;tendencytoclose,Whelan,C.etal.2007;Reynolds,‘Speech…attheAnnualLunchoftheCII’,13/05/87,GIS:D/I&C

58 “in-house”,Hardiman1988:167,RocheandLarragy1987;“newerfirms”,Turneretal2013:216;“similartotheTUC”,FUEBulletinAug.-Sept.1983,quotedinHardiman1988:163;onIMIseechapter2

119

increasinglyovertermsforcompanysurvivalorredundanciesratherthanwages

or productivity. These factors and a related fall in income led to redundancies

among union staffs themselves, not least in the ITGWU. Even the “militant”

ATGWUfounditselfwith“staffsurplustorequirements,ifnottotallyredundant

thenunderloaded”,asitsleader,MattMerrigan,putit.59

Disputes were increasingly in the public service, where unions that still

exercised veto power fought recruitment embargoes, the suspension of pay

awardsandworseningconditions.But theprivatesectordeclineandendingof

tripartitism caused a crisis for unions regarding their future role. ICTU

conferencesbecamecircularset-piecedebatesinvolvinganageingcoreofafew

hundred officials, as an internal ICTU report concluded, and with growing

memberapathy,delegatesmostlythesamelong-termexecutivemembersorfull-

time officials pre-mandated to vote on agenda items. Leaders like Attley and

Carrollsawthemovementfightingtopreventitsthreatening“marginalisation”.60

An inner circle in the ICTU strove to reverse this threat by maintaining a

commitment to a National Understanding, as in the lastminute initiativewith

Haugheyat theendof1982.Theyrecognised thatwithrelations inproduction

changingunderthe“newcapitalism”,shop-floormilitancyandvetopowerwere

phenomenaof a passing era. They looked toworkerparticipation in economic

planningandinpartnershipatcompanylevel–vigorouslyopposedbytheLeft-

as a new strategy for the movement. The ICTU based its case for a revived

tripartitismnot solelyon thepayaspectbut ratheras abasis for an industrial

and particularly employment recovery. This case was articulated in ‘The Real

Way Forward’ of December 1982 and in a pamphlet by three “socialist

economists”,JobsandWages,which,influencedbytheriseoftheWorkers’Party,

markedaturnbytheLefttoastate-orientatedtripartiteindustrialstrategy.61

Thecase foranautonomous industrial strategybasedonaunion-employer-

government partnership was further reinforced by disillusionment with the

Labour Party. Following the first FitzGerald coalition, an ITGWU officialwrote

59 “empowerment”,Wickham1980;unofficialstrikesandLabourCourt,Hardiman1988:221-2;issuesin

disputes,IRNR1982-6;Devine2009:794;unionredundancies,RocheandLarragy1987;inITGWU,Devine2009:692-3;“underloaded”,MerriganatICTUADG1985:7

60 ICTUreportinICTUAR1987:8-9;“marginalised”,ICTUADC1987:5-12andHastingsetal2007:1061 “ageingleft”,Merrigan2014:163-5;newICTUstrategy,ICTUADC1986:206-9;GroupofSocialist

Economists1983;

120

that “in the Irish context, the trade union movement has a particular

responsibilitytoarticulatetheaspirationsofworkers,giventheabsenceofany

real effective political party to do so”. Unions looked to north-European

corporatismforinspiration.ICTU’spowerfulpublicservicescommitteedeferred

itspaystrategyin1983until itwasclearthatFitzGeraldwouldnotentertaina

return to an Understanding-type agreement. “Organised labour”, Phil Flynn, a

rising LGPSU leader, told a 1984 ICTU conference, had been “on a hiding to

nothing”.“Ourcredibilityisontheline”astheunemployedandtheyoungwere

“callingintoquestiontherelevanceoftradeunions”.Unionshadnochoicebutto

prepare an industrial plan, “mobilise around a set of social and economic

demands”andinsistonarecoverystrategyasthebasisof“thenextpayround”.62

Thecoalition’sendingof tripartitismandside-liningof its institutions,while

intunewithaglobaltrend,were,apartfromacertainfreeingofbargaininginthe

private sector, increasingly regarded by many on both sides of industry as a

regressive development, especially as the employment and development crisis

deepened.Withthisrealisation,particularlyontheunionside, theframingofa

returntoaconsensusindustrialrecoverystrategyhadalreadybegunin1983.

62 “intheIrishcontext”,Liberty,Feb.1982;Flynn,‘CollectiveBargaining,ICTU1984’,FlynnPapers

121

Part2:

Genesisandconstructionofthe“PNR”

1984-87

122

Chapter5

Policyrevolution:thepoliticsoftheNESCplan

Inception:ÓhUiginn,Flynnandthegenesisofanidea

PádraigÓhUiginn,regardedbycoalitionleadersastoocloselyassociatedwith

the1980-82Haugheygovernments,was “exiled”byFitzGerald to chair the re-

constituted but downgraded NESC in June 1984. This would have major

unintended consequences. Ó hUiginn sought to revive the “demoralised”

institution, whose business and union representatives found his informal but

energetic style refreshingand invigorating. FromamodestnorthsideCork city

background and, like Haughey, educated by the Christian Brothers through

scholarship, later also excelling at university, Ó hUiginn, following a brief

involvement inradicalrepublicanism,hadenteredthecivilserviceatamodest

gradebutthenadvancedrapidlyinit.Heenjoyedanunusualcareer,especiallyin

hisconsiderableEuropeanandinternationalexperience ineconomicbriefs.His

risetothetopoftheservicewaspurelymeritorious,aswithcontemporariesof

hissuchasSeánCromien inFinance,amanfromasimilarbackground.ThatÓ

hUiginnwouldthriveinHaughey’scirclewasunsurprising,andduring1980-82,

ontransferringtoHaughey’sDepartmentwiththesocio-economicplanningstaff

ofO’Donoghue’sdisbandedone,hewaspromotedtosecretarylevelandoversaw

its new Economic and Social Policy Division, where he played a central role

coordinatingHaughey’s1982WayForwardplanninggroup.1

Despite the ICTU’s fraught relationswithgovernment, and itsmembership’s

hostility to a return to central bargaining, those favouring an Understanding

soughttoreviveabasisforit.AmongthemostcommittedwasPhilFlynn,newly

appointed LGPSU “acting general secretary” following Harold O’Sullivan’s

secondment to FitzGerald’s National Planning Board. Flynn, from a border

countyandwhosefatherhadsuffereddiscriminationandlongunemploymentin

theNorth,wasaRepublicansocialist,hispoliticsandactivism formed through

the IrishWorkersGroup in1960sLondon.As anofficial in theLGPSU’shealth

servicesectionhehadhaddealingswithHaugheyasministerinthelate1970s.

1 InterviewswithÓhUiginn,Attley,O’Sullivan,Power

123

In1982hewaselectedVice-PresidentofSinnFéin,thenamarginalpartytiedto

theIRAbutsincethehungerstrikesemergingasanelectoralforce.2

FlynnurgedhisLGPSUexecutive,despitetheon-goingpublicpayconflicts,to

pursueareturntoaNationalUnderstandingwithgovernment,apositionitthen

formallyadopted in1983. “In thepresent climate”,heargued, “the interestsof

membersandtheirfamilieswouldbestbeservedif[bargaining]wasnationalin

characterandincludedbothpayandsocio-economicelements”,withthe“actual

cash increase into the hand of workers achieved by the necessary tax

adjustment”. Thiswas already a formula tried in the 1980-82Understandings.

Flynn proposed it essentially as a political strategy at ICTU level, urging it to

adopt “anationalapproach tobargaining in thenextpay round”and“mobilise

around a set of social and economic demands”. But an ICTU pay conference

rejectedthisaspointlessin“theabsenceofsupportfor[it]fromGovernment”.3

Otherrising leaders,notablyAttleyoftheFWUI,adecidedlynon-Republican

socialist,andolder“centralists”suchascivilserviceleaderDanMurphyandJohn

Carrollof the ITGWU,wereawareof thenewpossibilityopeningatNESCwith

the appointment of Ó hUiginn, and manoeuvred for a mandate from ICTU to

exploit it.At the following ICTUannualconference, in July1984,whichelected

ATGWU leader Matt Merrigan - who decried central bargaining as “class

collaboration” - as Congress President for the year, a proposal from Flynn to

pursueanationaldealencompassing“jobs, taxation, landpropertyspeculation,

health and education” was again rejected. But two lengthymotions, proposed

through theirunionsbyCarroll andAttleyadvocating “economicplanning”– a

mantra all accepted - were carried. Carefully buried within them were

statements that planning be “in full co-operation with the trade union

movement”anddeliver “an integratedprogramme”agreedwith “Government”.

Theymadenolinktopay,whichwouldonlyhavedrawntheireoftheLeft.4

Withthismandateatleastfornegotiatingan“industrialplan”,pro-agreement

leaders drafted an ambitious document, Confronting the Jobs Crisis, timed to

2 InterviewwithFlynn3 “Inthepresentcimate”,FlynnatLGPSUExec.Board08/04/83and‘ReportonAgendaforH&SDiv.Exec.’,

08/04/83;FlynntoICTU,‘CollectiveBargaining,ICTU1984’(speech),FlynnPapers;“reportedback”,‘ReportonAgenda,Exec.Board’,23/03/84

4 “maneouvre”,InterviewswithCassells,Flynn,McLoone,Attley;“classcollaboration”,Merrigan2014:142-8;ICTUADC1985:3-14;motions,ICTUADC1984:61,73-83

124

appearthatautumnaheadofFitzGerald’sBuildingonReality.Thedrivingfigures

behinditwereallcommittedtoachievinganewUnderstanding-Carroll,Flynn,

Murphy, Quigley and Attley. It was compiled by the new deputy general

secretary, PeterCassells, unlikeNevin an enthusiast for social partnership and

onceassociatedwiththeB&ICO,withassistancefromlike-mindedresearchersin

individual unions, such as O’Riordan and Róisín Callander in the ITGWU, both

formerB&ICOmembersandCallendernowinfluentialintheWorkersParty.The

planavoidedtraditionalunionjargonorthelanguageof“demands”,specifically

so as to enable a “policy dialogue” develop at the NESC. Cassells, showing the

plan to Ó hUiginn, proposed that he try to secure FitzGerald’s consent to the

NESC,despiteitsweakenedremit,workingona“consensus”industrialstrategy.5

ConfrontingtheJobsCrisisrepeatedtheprinciplesofICTU’searlier ‘RealWay

Forward’ of 1982, but greatly expanded on them. It accepted the need for

controllingpublicexpenditurewhilepursuinganexpansionist industrialpolicy,

and,uncommonly,and thoughseeingstate industry inapivotal role,proposed

anexpansionofprivatesectorindustry.Also,somewhatstretchingitsconference

mandate, it indicated a role for pay moderation, weighted towards the lower

paid and compensated for through social policy and tax reform. Critically, it

identifiedthetripartiteNESCasthe“appropriatebody”todeveloptheplan.6

The ICTUplan’s backers ensured itwaswidely circulated in themovement,

billedasitsmainstrategy,thoughthemotionsenablingithadhardlysuggested

that.FlynnurgedLGPSUbranchestoendorseitandataspecialICTUconference

on itdescribed its core strategy: “The struggle for aplannedeconomy ismore

thanafirmlyheldtradeunionprinciple…Anationalplanmustbeanegotiated

document…extendingcollectivecentralisedbargainingtoanewlevel”.7

ThePlan’sproposedrolefortheNESCmirroredthatofLemass’sNIECofthe

1960s, aswell as thatof the transformedNESC the ICTUhadargued forwhen

pavingthewayfortheNationalUnderstandingsandwhichHaugheyhadsought

torealisein1980.Butitsimmediatecontextwastheopportunityopeningatthe

5 “drivingfigures”,ICTUECmtgs.18/07,19/09/84;drafting/language,InterviewsAttley,Cassellsand

Callander;promotewithNESC,ICTUECmtgs.19/09,17/10/84;Cassells’approach,InterviewÓhUiginn6 Confronting,ICTU19847 Dissemination,ICTUECmtg.17/10/84;promotionbyFlynn,‘ReportonAgendaforH&WDiv.’and

LGPSUExec,17/12/84;“plannedeconomy”,speech,‘SpecialConferenceICTU01/11/84’FlynnPapers

125

NESC.ThiswasagaindemonstratedinanunorthodoxmovebyICTU’sExecutive

which,afterpublishingtheplan,nominatedAttleyandCarrollas“alternates”to

itsexistingsecond-tierrepresentationontheCounciltoensureanauthoritative

pro-partnershippresenceattheNESCshoulditassumeastrategicpurpose.8

These ICTU appointments and the proposing and drafting of the plan had

followed Cassells’ soundings with Ó hUiginn on the possibility of the Council

serving as a vehicle for an economic strategy. Ó hUiginn had responded

positively,andICTU’splan,withitsconciliatorylanguage,wastheresultofthese

contacts.ÓhUiginncirculatedtheICTUPlantokeyDepartments,ostensiblyfor

their comments on “what is already policy,…whatmight be acceptable [and]

what is definitely unacceptable”, but in reality to engage them in a newpolicy

process.Hewrote to FitzGerald, urginghim too to engagewith it, drawinghis

attentiontoitsinnovatoryaspects-forauniondocument-andits“manypoints

ofagreement”withgovernmentpolicy.Apartfromits“unrealistic”emphasison

stateindustry,helistedtheseasitsacceptanceofreducedpublicexpenditure,a

pro-active EEC policy, and industrialisation through “advanced technologies,

high-growthandresourcebasedareas”.Hestressed itsproposed“well-defined

rolefortheNESC”andsaiditsproposalfor“someplanningofincomes”through

thepay/taxrelationship“suggestsanopeningwhichshouldbeexplored”.9

Butgovernmentwasuninterested.Atanawkwardmeetingwith the ICTU in

early1985,FitzGerald “lectured” itonhisdeflationarystrategy, towhich there

was,hesaid,noalternative,andinsistedpublicpayremainastand-aloneissue.

Invain,ÓhUiginninJuneagainurgedhimtoengagewithICTU’splan,repeating

its pay/tax proposal and willingness to contribute to “solving the deficit

problem”.DespiteevenanESRIstudyproposing“thatpayrestraintcouldbestbe

achievedthroughabroadly-basednegotiatedincomespolicy”,hecontinuedtobe

swayedbyT.K.Whitakerwhoheldtoastatutorycontrolsapproach.10

8 ICTUECmtg.17/10/849 Sec.[ÓhUiginn]toTaoiseach,‘MeetingwithICTU’,28.11.84,andICTUtoTaoiseach28.11.84,DTA:OHP10 ICTUAR1985;ICTUECmeetings18.09and10.10.1985;Secretary[ÓhUiginn]toTaoiseach,20.06.85,

‘M/Financeletterof17JuneonPayPolicy’,DTA:OHP;ESRIposition,Kennedy,K.1984

126

Partingoftheways:theLabour/unionpolicysplit

DespiteFitzGerald’sdismissalofboththeICTU’splanandÓhUiginn’spleato

engage with it, Phil Flynn and other union leaders worked to keep alive its

possibility.TheICTUwentthroughthemotionsofinvitingbothgovernmentand

employerstoengageonitinthehope,asFlynnputit,thatthiswould“contribute

tocontinuinginthepublicmindtheconceptofa[pay]roundwhichemployers

have been anxious to bury”. He had the LGPSU Executive secure itsmembers’

support for a motion that ICTU should “rigorously pursue negotiations with

government … at the earliest possible date” for “a return to centralised pay

bargainingintheformatofanannualNationalUnderstandingforEconomicand

SocialDevelopmentastheonlyeffectivemethodofensuringatradeunioninput

intonationalplanning…toendunemploymentandachieveajustdistributionof

the nation’s wealth and a real and substantial reform in the tax system, …

structured in favourof the lesswelloff”.Given thatLGPSUmembers’ interests

wereaddressedinpubicsectorpayagreements,thiswasapoliticalmanifesto.11

Two other union leaders promoted an identical position – Carroll of the

ITGWU,andAttleyoftheFWUI,withCarroll,whomaintainedclosecontactwith

Haughey,bluntlytellinghisunionthattheICTUjobsstrategywasonlyrealisable

through a National Understanding. Thiswas not solely a personal position, as

both unions had been central to corporatist endeavours since the 1940s. But

bothmenwerealsoLabourPartymembers,AttleypassionatelyandCarrollmore

ambiguously, and hoped though despaired of a coalition change of course

throughtheagencyoftheparty.Theysidedwiththepartyleadershipagainstthe

Left,CarrolldeployingITGWU’sblockvoteagainsta1985motiontorenegotiate

thecoalitionprogramme,whichwouldhavebroughtdownthegovernment.12

But as Labour was increasingly side-lined in cabinet, party-union relations

becamemore fractious. This had begunwith the resignation in 1983 of Frank

Cluskey, who on losing the party leadership had been relegated to a junior

ministryandmarginalised.HeresignedoverBruton’sbailingoutofDublinGas

shareholders, denouncing it as crony capitalism. The new Spring/Desmond

leadership, guided by advisor Fergus Finlay, prioritised social reform in areas

11 ‘ReportonAgendaforExec.Board’,09/05/85;‘AnnualDelegateConference’15-18/05/85,ILHS:LGPSU12 CarrollinDevine2009:708;“blockvotes”,Horgan1986:127-8

127

such as contraception and defending health and welfare spending, and were

hostiletoICTU’stripartiteagenda.LikeNortoninhisdismissaloftheNIECinthe

1960s,theywere,inessence,asopposedtotripartitismasFineGaelwas.13

Finlay recalled how relations between party and unions “plummeted

throughoutthetimewewereingovernment”,theirrespectiveleaders“barelyon

speakingterms”by1986.TheICTU,heclaimed,regardedthepartyas“adogthat

would bark whenever they kicked us”, Carroll “routinely” denouncing as

“Thatcherite”budgetsinwhich“DickandBarryhadfoughtforweekstoprotect

essentialsocialspending”.Desmond,aformerICTUofficial,whoingovernment

in1981hadfailedtoretrievetheNationalUnderstanding,wasequallyresentful,

particularlyofAttley,whoheaccusedof “undermining”Labour ingovernment.

Thepartywasalsounderpressureelectorallyandintheunionsfromtherising

WorkersParty,whichin1985wonnineseatsonDublinCityCounciltoLabour’s

twoandappearedtobeonthevergeofreplacingitinthecapital.14

Labourwas in a dilemma, only able to pursue its objectives in coalition by

submittingtoFineGaeleconomicpolicy.Thecabinet’soverrulingofarbitrators’

awards and resulting widespread union unrest, and the subsequent teachers’

strike, further tested union patience. In August 1986 Bruton reiterated his

deflationarystrategy,followingan8percent“downwardadjustment”oftheIR£

in the EMS by instituting a pay freeze to “suppress inflation” in September.

UnionsaffiliatedtoLabour,ledbytheITGWUandFWUI,hadalreadyinFebruary

1986calledforitto“stayoutofgovernmentforadecade…tobuilditselfupasa

crediblealternativegovernment”.Theynowalsobackedtheleft-wingleadership

challenge by Emmet Stagg and, in an unprecedented move, the ITGWU had a

motionadoptedthatforcedtheICTUtodemandthatthegovernmentresignand

parties fight an election on both their socio-economic policy record and their

positionontheICTU’splan,whichofcourseonlyFiannaFáilhadwelcomed.15

The Northern conflict intruded again to further sour union-government

relations when Phil Flynn was appointed acting LGPSU general secretary.

FitzGerald forbade ministerial meetings with Sinn Féin members, which

13 Cluskey,inO’Mahoney2015:27-9,36-8,Halligan2015:132-314 Finlay1998:43-4;Desmond2000:210;onriseoftheWP,HanleyandMillar2009:468-7115 Brutonposition,‘StatementbyMinisterforFinance,JohnBruton,02.08.86’GIS:D/Finance;“stayoutof

government”,Horgan1986:140;ICTUcallongovernment,ICTUADC1986:100-13

128

Desmond defended as “an act of political hygiene”.Minister Noonan called on

LGPSU members not to ratify Flynn’s appointment and when Flynn was

nevertheless appointed, another Fine Gael Minister, Paddy Cooney, urged the

ICTU to exclude him from its Executive. Some LGPSUbranches did oppose his

ratificationordemandedheresignhisSinnFéinrole,buttheever-popularand

effectiveFlynnsucceededinnotonlybeingvotedontotheICTUExecutivebutin

becomingchairof itspowerfulPublicServicesCommittee.Hisownunioneven

lobbiedgovernmentforavisaforhimtotraveltotheUS,arequestitrefused.16

Ironically, itwasjustasunionrelationswithLabourhadreachedanall-time

low and the coalition appeared on the point of disintegrating that FitzGerald

finallyriskedamovetowardsasharedsocio-economicplanningapproach.

StrategyrevolutionattheNESC

FollowingFitzGerald’srejectionofhisproposaltoengagewithICTU’splanas

thebasisforapay/taxstrategyin1985,ÓhUiginntookadifferenttack.Henow

suggestedthatheapproveanICTUrequestfortheNESCtobeallowedpreparea

“mid-termreview”ofmacro-economicpolicy.FitzGeralddeflectedthisbyasking

theNESCfor“feasibleproposalsintheshorttermforspecific improvementsin

the environment for job creation and job protectionwhich the social partners

could jointlyrecommend”.But therelativelymarginal issueshesuggested they

examine - disability benefits, PRSI and employment schemes - were precisely

“micro-issues”ÓhUiginnregardedasofakindwiththedivisivesubjectswhich

Ministers had been imposing on the council. FitzGerald, unsurprisingly, found

the inconclusive results that NESC produced on these issues “disappointing”,

confirminghisnegativeviewofthe“consensus”seekingCouncil.17

During1986,however,ascabinetrelationsdeteriorated,FitzGeraldagreedto

a suggestion by Ruairí Quinn that Quinn sound out Carroll and Attley on the

potentialfora“socialpact”basedonatax/paytrade-off.Quinn,aminister,FWUI

member and Cluskey protégée, was the only front bench voice even mildly

favourable to tripartitism. But when he reported their positive response,16 DesmondandNoonaninBrowne,V.2006;Flynn’sposition,LGPSU,‘ReportonAgendaforExec.meetings’

04/11/83,24/02/84,Exec.Boardmeetings19/12/1980,09/12/83and‘AnnualDelegateConference’15/05/84,SpecialExec.Boardmeeting,25/04/86

17 “review”,ICTUAR1984:223,Hastingsetal:27,InterviewÓhUiginn;“feasible”,Power2009:57-8;FitzGeraldidea,‘CouncilMeeting25/07/1986,NESCArchive:Box3b;“disappointing”,Power2009:58

129

FitzGeraldwassceptical,tellingcabinetthatNevintoldhimunionleaderswould

oppose talks with him. These “leaders” were presumably Carroll, Attley and

Flynn, but Carroll, although certainly favouring dealing with Haughey, later

claimedICTUwaswillingbutFitzGeraldwouldsimplynottakethe“gamble”.18

At theendof1985,however, FitzGerald,his governmentunderpressureby

public servicedisputes, finally conceded thatNESCmight “playauseful role in

looking at the employment/unemployment/public finance situation and

attempting to reach someagreedpositionon it”, especially “if itwere to come

withagreementbyallsocialpartners”,andtoldaCIIconferencethathewould

welcome “agreed views on development policies … that would have a strong

impactonemployment”.ÓhUiginngraspedtheopportunity,usingtheexcuseof

theCouncil’slimitedresourcestosetasideits“micro”projectsandfocusonthe

“plan”.Work, initially delayed by heated public debate between the ICTU and

FUE/CIIoverbudgetpolicy,gotunderway,ÓhUiginntablingtheICTU’sJobsPlan

andFiannaFáil’sWayForwardamongthedocumentsforinitialdiscussion.19

A framework “economic and social review set in the medium term” soon

emerged,with“policygroups”ofcouncilmembersinterrogatingoutsideexperts,

receivingsubmissionsandexaminingpoliciesunderthestrategyheadingsofthe

ICTU plan - macro-economic/financial, industrial, tax and social policy. The

outcomesweredebatedandcollatedbyNESCstaff intoanevolvingdocument,

titled “Strategy for Development”. The process was driven by Ó hUiginn in an

atmosphere described by Cassells as “like a government-in-exile”, one civil

servantsayingÓhUiginnturnedtheNESCfroman“underusedback-roomintoa

policypowerhouse”, applying “ChathamHouseRules” to ensure confidentiality

andencouragingtheICTUandFUEtoleavetheirdifferencesatthedoor.20

Employerswereinitiallyreluctanttoengage,giventheirhostilitytoareturn

tocentralagreements.Butthebusinesslobby,CII,wasconvincedbyÓhUiginnto

participate,especiallyon industrialpolicy,and internallybegantoconsiderthe

18 Quinninitiative,Quinn2005:246-7;“gamble”,Hastingsetal.2007:2819 FitzGeraldproposaltoNESC,‘CouncilMeeting’16/10/1986and‘DraftPreface’,NESCArchive:Box3b;

Power2009:58;ÓhUiginntoTaoiseach,n.d.[11/02/86]‘Re:NESCReport’,DTA:OHP;originisofreport,ÓhUiginn‘Presentation…onStrategyforDevelopment’,NESC‘CouncilMeeting’11/06/87;tables“Confronting”and“WayForward”,interviewwithÓhUiginn

20 ‘PresentationbyChairmanonStrategyforDevelopment’,CouncilMtg.11/06/87.NESCArchive:Box3b;InterviewswithCassells;“ChattamHouse”,interviewwithanon.D/Taoiseachofficial

130

framework of a “social partnership” as proposed by ICTU leaders for the

“strategyforeconomicrecovery”emerging.Thecouncil’smodusoperandiwasan

implicitunderstandingtocooperatewhileagreeingtodisagreeonwhatdivided

them, such as specific options in reducing public expenditure rather than the

principleofit,orevenwhetherapayagreementhadtoformpartofarecovery

strategy.WhileICTUwascommittedtothis,CIIstillfavouredapurelyindustrial

strategy backed by “political “consensus”. But the principle of controlling

spendingandaconsensusindustrialstrategyweresharedbyallpartners.21

Haughey followed the NESC process closely and, as will be seen, played a

criticalroleintheemergenceofboththeICTUandNESCplans.WhileFitzGerald

appearstohavetakenlittleinterestintheNESCwork,Haugheyensuredhewas

keptappraised,urginganywithwhomhehadinfluenceto“trytohammerout”a

“consensus”. Ó hUiginn had no formal contact with Fianna Fáil and kept his

professionaldistance,butallinvolvedsawhimasadrivingforce,McCreevylater

describing him rather colourfully as “the smartest civil servant, the smartest

personIevermet…HisrolewasatleastequaltoWhitaker,ifnotgreater”.22

ByOctober1986themassive,400-pageStrategyforDevelopment1986-90had

emerged.Itincorporatedandsynthesisedawiderangeofpolicies, fromTelesis

toTheWayForward, IDA’ssectoraland inward investmentstrategies, theICTU

Plan’sproposalsonstatecompanies,taxandsocialpolicy,andCIIsuggestionson

infrastructureandgreenfieldsectorssuchastradedservices.Itwasuniqueasan

“integratedfour-part”plan,coveringthemacro/financial,industrial,taxationand

socialequityelementswhichit insistedhadtobeimplementedsimultaneously.

Taxreformwasapolicylevertostimulategrowthandexpandthelabourforce,

compensate for pay moderation and increase equality. The Plan stressed the

needforanystrategytoformaconsensusacrosssocialinterestsandparties.23

WhilereferencingthesenseofpurposeoftheLemassera,theplanningNESC

proposedsurpassed thatof the1960s instateactivism. Italsoreferenced then

currentinstitutionalist“smallopeneconomy”theory,notablyKatzenstein,which

21 CIIpositioninConPower,‘StrategyforDevelopment.SpeechtoSouthCo.DublinFineGael’,25/02/86.

PowerPapersandCIINewsletter,11/11/8622 “hammerout”,InterviewwithÓhUiginn;“influence”,interviewwithMansergh;ÓhUiginnrole,Rafter

2002:128;McCreevyquotedinHastingsetal.:3423 NESC1987

131

argued the central role of an integrated institutional state and national policy

consensus in generating and implementing successful development strategies.

Given the dearth of venture capital or an industrial investment culture, NESC

proposed interventionistplanningas thekeydriverofdevelopment, criticising

the traditional over-reliance on purely fiscal policy. It also critiqued the

conservatism and inefficiencies of indigenous industry, proposing that

modernisationandscalingupofpotentiallarge-scaleexportperformersthrough

preferentialstatesupportsbeapriority,particularlyinunderdevelopednatural-

resource-basedandservice industries.FDIwasseen inanancillarybut critical

role.Insteadoftheindiscriminateapproachofthe1960s-70s,FDIshouldtarget

only select high-skill sectors to develop comparative advantage, drive a rising

value-chain, improve production quality and through “linkages” develop

indigenous firms.The foodsectorwas singledoutashavingsignificantgrowth

potential, but to supply it agriculturewouldhave toovercomeover-seasonally

dependent production and be weaned from grant reliance towards greater

commercialisation.Improving“socialequity”wouldbeessentialtodevelopinga

motivated, skilled workforce, by removing welfare traps, facilitating social

securitysupportsandeducationalaccess,andremovingbarrierstotheeconomic

andsocialparticipationofwomenanddisadvantagedgroups.24

One area on which a consensus was not achieved was, ironically, on what

exactly“consensus”entailed!Thiswasduetopoliticaldifferencesbetween,and

within, union and business groups. The NESC report could only agree “that

reference bemade… to the importance of building consensus if themeasures

necessary to deal with the current economic and social situation were to be

implemented”. Inearly1986,ontheICTU’s initiative, thecouncilhadagreedto

study“institutionalarrangementsforeconomicandsocialplanning”elsewhere,

identifyingaspecific“numberofEuropeancountries”.Butattemptstoprogress

“studyvisits” to furtherthismade littleheadway,andweresoonabandoned.Ó

hUiginnsuggestedacompromiseformulafortheStrategy:

“There isaneedto fosteragreaterdegreeofconsensus in Irishsociety if

these measures are to be implemented without giving rise to conflict. This

consensus is necessary both on the national level and the level of the24 NESC1987;on“SOE”theory,Katzenstein1984

132

workplace. The Council intends to pursue this issue further, through

examiningtheinstitutionalarrangementsforeconomicandsocialplanningin

anumberofEuropeancountriesandinparticularthemechanismsinplacefor

theachievementofconsensus”.25

In the event a weaker formulation was agreed, that stressed the value of

“consensus”withoutspecifyinginstitutions,especiallyattheworkplacelevel,but

committing NESC to “pursue this matter further”. The reason was employer

antipathy to “powersharing” in industry,which theyhadconsistentlyopposed

sincethe1960s,andwhattheysawasICTUattemptstofoistacommitmenttoan

Austrian-style corporatism on theNESC. The Councilwas a consensus-seeking

ratherthannegotiatingbody,andinotherareasitavoideddivisivesubjects.AsÓ

hUiginnpointedout,consensusonstrategycouldonlyrecommendsomuch,with

specificmeasuresamatterforthenegotiatingpartiesandpoliticalarena.26

TheNESC strategywasnovel in its comprehensiveness, its rangeof specific

proposals collated from existing plans, the indivisibility rather than a-la-carte

nature of its four strategy areas, and its emphasis on state institutions being

coordinatedinaconcertedconsensus.Inessencethisapproachwasinherentin

TheWayForward,TelesisandtheNESCproposalsof1982,onlynowintegrated

as a national strategy. The core aim was tackling Ireland’s comparative

underdevelopment rather as well as the immediate debt crisis, and this

contradicts awidespread view that the plan could “only” have emerged in the

conditionsofthe1986crisis.Butonmonetaryadjustment,itproducedaformula

to also resolve that problem. This originated with Jim O’Leary, a young

economistontheNPBsecondedtotheNESCtoworkontheplan.Heproposed

replacing linear deflationarymeasureswith gradual debt/GNP reduction ratio,

“stabilising”itatatargetlevelwithinthreeyears,andwitheconomicexpansion

throughindustrialstrategy“out-growing”itthereafter.ThelastNESCmeetingon

theStrategyagreedtoinclude“someoftheimplicationsofthisnote”.27

25 “examinestructures”and“studyvisits”,NESCmtgs.25/07,19/09,19/12/1986,‘DraftReport’,‘Work

Programme1986’,NESCArchive:Box3b;ÓhUiginntext,‘DraftReport’,NESCCouncilMtg.19/09/86,26 NESCCouncil19/12/86–‘WorkProgramme1987.NotefromSecretariat’27 “onlyhaveemerged”,Begg2016;O’Learyformula,‘SecretariatNote–AlternativepathstoFiscal

Adjustment’[byJO’L],CouncilMeeting16/10/1986,NESCArchive:Box3b;alsoHastingsetal2007:20

133

NESC members were aware that many of the report’s proposals would be

opposedbygovernment.Buttheyneverthelessagreedoneexplosiveconclusion:

that“whilethecurrentsituationisgravetheCouncilisevenmoreconcerned…

that the medium term prospects on the basis of unchanged policies offer no

relief”.Theyalsocriticisedas“defeatist”thepopularpublicdiscourseonthe“end

of work” and a “jobless future”, insisting that “the fall in manufacturing

employment… ismore theresultof the typeof industrialandotherpolicies…

pursuedthantheproductofanysetofimmutablehistoricalforces”.28

FitzGeraldwasfurious.WhentheNESCpresenteditsStrategyforDevelopment

in November 1986, he effectively rejected it by claiming it justified his

deflationarystrategy.Muchofthepress,includingeventheIrishPresswhichasa

FiannaFáil-linkednewspapermighthavebeenexpectedtosympathisewith its

approach, showed little understanding for it, highlighting almost solely, and

approvingly, the recommendations prioritising spending cuts and debt

reduction.SpringdemandedtoknowwhichspendingcutstheNESChadinmind

and,althoughproposingthatNESCneverthelessbeconsultedwhendraftingthe

budget,sarcasticallywelcomed“tradeunionstakinganewattitudetowardspay,

competitivenessandrestrictivepractices”.NESCwasalarmedat theresponses,

thoughmediahostility tounionswasnothingnew,with someunionsofficially

“boycotting”theIrishIndependentbecauseofitsbiasedcoverageofdisputes.But,

fearing“forthefateofthereport”,theNESCissuedastatementemphasisingitas

an“integrated”four-partstrategy,nopartofwhichcould“workonitsown”.29

ICTU condemned the government’s “scandalous abuse and misuse of the

report” and its “selective use” of its recommendations. The report did not, “as

claimed by the Taoiseach”, “endorse current Government policy”, but on the

contrary concluded that current policies were driving unemployment and the

“deteriorationinthepublicfinances”.TheCIIalsopubliclydefendedthereport,

stressingitsintegrated“four-part”aspect.Morereservedly,FUEwelcomeditas

“helpfulforbusinessplanningandpaybargaining”tohave“aslittleuncertainty

aspossibleaboutnationaleconomics,social,industrialandagriculturalpolicies”.28 Mtg.19/09/86,‘DraftReport’,NESCArchive:Box3b.Also,InterviewCassellsandAllen,M.1998:247-5029 FitzGeraldposition,‘GovernmentStatement’inNESCCouncilMeeting13/11/86andIT14/11/86;press

reports,IT,II,IP,13-16/11/86;SpringinIT17/11/86;LGPSUboycottofIndependent,LGPSU,‘ReportsonAgenda.LG&PBDiv.Exec.’,18/01and18/10/85,Exec.Boardmtg.18/01/85;NESC‘PressStatement’,13/11/86,inIrishPress,14/11/86andCouncilMeeting19/12/86

134

Whileitsupportedatripartitedevelopmentpolicy, includingguidelinesonpay,

itwasstillopposedtonational-levelwagesettingandminimumwages.30

Given the debt, emigration and unemployment crisis, the obvious imminent

disintegrationof theFitzGeraldcoalitionoverbudgetpolicy,andthecontinued

industrial unrest, these responses by government and employers to the NESC

report were hardly surprising. The pro-partnership faction in the ICTU

leadershipwaswellawareofthis,havingengineereditsownJobsPlantorevive

abasisforsocialdialoguein1984andbehindthescenesworkingwithÓhUiginn

to have the NESC secure government consent to develop a plan for economic

recovery.By1986itwasinlittledoubtthatthegovernmentwithwhichitwould

most likely be able to realise a restoration of social partnership was not the

incumbentonebuttheimminentprospectofaHaugheyone.

“Palacecoup”:theICTUsecuresa“mandate”

Itisnottrue,assomestudiesclaim,thatICTUenteredtalkswithHaugheyon

socialpartnershipin1987“withoutamandate”fromitsmembers.Thiserroris

understandable given the considerable subterfuge involved in securing that

mandate.Asworkgotunderwayon theNESCreport inearly1986,andwitha

changeof government in1987 increasingly likely, thepro-partnership leaders,

convinced a once-off opportunity was presenting, determined to secure a

mandate tobeable toenter talks immediatelyanewgovernmentwas formed,

wellawarethatthatthiswouldnotbeasimpletask.31

The tradeunionmovementwas ahousedivided.Asdescribed in chapter4,

ICTUwasanallianceofinterestsoftendividedduetothedivergentinterestsof

different unions. Congress’s carefully balanced 25-member Executive Council

reflectedthedominantstrandsinthemovementanditsauthorityreliedonthe

acquiescenceofitsaffiliateunionstopolicycoursesadopted.Socialpartnership

dividedthemovementlikenootherissue.

Two ICTU conferences in 1983 had rejected Phil Flynn’s proposal for a

restoration of social partnership as ICTU’s central strategy, on the ambiguous

grounds that it was “pointless” pursuing it in the absence of a government

30 ICTUAR1987:212;CIINewsletter,11/11/86;FUEBulletin,Nov.andDec.1986,Feb.198731 “nomandate”,e.g.Adshead2011

135

willingtoengage.Thepro-partnershipgrouphadhadtocarefullypoliticfirstto

buildthebasisforareturntosuchastrategy.Asdescribedabove,thishadbeen

achieved,followingFitzGerald’s“exiling”ofÓhUiginntotheNESCinJune1984

and union leaders’ discussions with him, through disingenuous motions they

secured through ICTU’s July 1984 conference authorising Congress to draft an

“industrial policy”, though with a coded link to pay buried in the text of the

motionstoenableastrategyformthebasisofanegotiatedagreement.Thisplan

–ConfrontingtheJobsCrisis-kick-startedboththestrategydevelopmentatNESC

andICTU’spoliticalre-engagementwithHaughey,nowsecurelyincontrolofhis

party,whoadvocatedapartnershipstrategy ifhereturnedtogovernment.The

pro-partnershipleadersnowrequiredamandatetoopentalksonanagreement.

Given the on-going union conflicts with FitzGerald’s government and the

collapseofrelationswithLabour,ICTUleaderscouldhardlyproposeastrategy

ofpolicycollaborationwiththatgovernmentoropenlydeclareapreferencefora

futureFiannaFáilgovernmenttoreplaceit.Butifontenuousgroundpolitically

and uncertain of support on the ICTU Executive, the pro-partnership leaders

were strong organisationally. They dominated the ICTU Executive’s agenda-

setting “General Purposes Committee” (GPC) and its NESC representation, and

usedthispositionbothtoensurethatJohnCarrolloftheITGWU–whohadclose

relations with Haughey - would be in the key position of Congress President

during1986-87whenthelikelychangeofgovernmentoccurred,andtoarrange

the1986ICTUconferenceagenda.Achievingamandatetoengagewithafuture

governmentwas a “high-risk strategy”, entailingwhat anLGPSUofficialwould

call“somethingofapalacecoup”attheJuly1986ICTUconference.32

ICTU conferenceswere four-dayaffairs,with a social eveningbefore a final,

usually poorly attended, morning session devoted to worthy, non-contentious

issues.Thepro-partnershipgroup–Carroll,Attley,MurphyandFlynn-decided

to have a brief and seemingly innocuous motion on pay not adopted and

proposedthroughtheExecutive,aswouldbenormal forsuchan issue,butput

directly to conference during that sleepy final morning session as a routine

motion by the LGPSU. To further avoid highlighting its significance, Flynn

32 GPCandNESCmembershipinICTUAR1987;“highriskstrategy”,interviewwithCassells;“palacecoup”,

interviewwithMcLoone;seealsoHastingsetal.2007:18

136

absentedhimselfandhadhisthenlittle-knowndeputy,PeterMcLoone,propose

itwithashortspeechhehadpreparedforhim.Flynn’sspeechdeclaredthatthe

traditionalunionaimsofarighttowork,decenthousing,healthandeducation,

and “a fair return for [their] labour” could be realised only “by extending

collectivebargainingtonewlevelsthroughaseriesofnationalunderstandings”.

Themotion itself simply proposed that ICTU seek “a return to centralisedpay

bargainingintheformatofanannualNationalUnderstanding…ensuringtrade

union input into national planning”. Moved to objections from surprised anti-

agreement delegates in what McLoone called a “near-empty hall”, it was

supportedbyCarrollandMurphyandpassed.Theleadershiphadthemandateit

neededtoopennegotiations,withthecriticalword“pay”included.33

Followingthesecuringofthemandateand,inDecember1986,publicationof

theNESCreportasageneralelectionwasincreasinglyobviouslyimminent,ICTU

helda “SpecialConferenceonPay, JobsandTaxation” tostrategise itsaims for

the series of National Understandings it envisaged. With the anti-agreement

unionspowerlesstoopposethisasitaccordedwithadoptedpolicy,themeeting

assessedtheweaknessesofpreviousUnderstandings,decidingthatamonitoring

body would be essential to ensure delivery of any new agreement. It also

identified the policy areas ICTU should prioritise - summarised in A Plan for

Work - endorsing the NESC report and its debt/GNP formula, and a tax-offset

approachtopaynegotiations.10,000copieswerecirculatedtopoliticalactivists

nationwideduringtheelection.34

ThecontextwasafirmcommitmentICTUleadershadsecuredfromHaughey.

The“HaugheyFactor”againdecisive Haughey, summarising his party’s history in 1980, described de Valera’s

achievement as establishing the nation’s sovereignty and intellectual freedom,

and Lemass’s as an economically successful state as the substance of that

independence. His own political goal was to realise the economic success for

which Lemass’s “techniques of modern nation-building” had laid the basis.

“Harnessing” the creative potential of social forces such as unions to realise it33 InterviewswithMcLoone,Cassells,Flynn;on“littleknown”,theICTUconferencereportmisnameshimas

“McClune”!“debate”,ICTUADC1986:223-9;Flynnspeech,‘ICTU,1986,Res[olution]7’,FlynnPapers.34 ICTUAR1987:194

137

wasthesubstanceof“nationalendeavour”.Thiswasaconsistentpositionhehad

presentedrepeatedlysincethe1960sasasingularly“pragmatic”concept.35

HaugheyhadsoughttoframehisWayForwardeconomicplaninanewtype

“social partnership” in autumn 1982 and before going into opposition in

DecemberhadagainapproachedICTUproposingaNationalUnderstandingasa

balanced programme combining financial adjustment, pay determination and

industrial expansion. FitzGerald, while not averse to cooperative policy

structures, considered tripartitism and monetary entrenchment mutually

exclusive, and suspended the former to achieve the latter, while Haughey’s

model remainedGermany’s corporatist approachwhichhehaddiscussedwith

HelmutSchmidt.WhileFitzGerald ignored the ICTU’sDecember1982renewed

call fora“negotiated”plan,Haugheyhadwelcomed it,pointingtoFiannaFáil’s

record of interventionism and describing, point-by-point, the compatibility of

TheWayForwardwithCongress’sposition.Heendorseditsproposalsonpublic

enterprise,sectoralplanning,industrialgrowthbasedonnaturalresources,and

evenworkerparticipation.Arecoverystrategycouldprotectwagesandwelfare

benefits, he said, andhepromiseda “permanenteconomicand socialplanning

system”foundedon“widespreadconsultation”.36

Once in control of theparty following several failed “heaves” by opponents,

Haugheyinoppositioninthemid-1980sdevelopedaprogrammebuildingonthe

sectoralapproachofTheWayForwardandideasgatheredfromunconventional

businessandsocialentrepreneurs.Heintegratedtheseintowhatheincreasingly

calleda“programmefornationalrecovery”.Onhearingofaninnovativeideahe

would typically invite the individual concerned to present it and, if convinced,

adopt it as party policy. Thiswas the casewith Dermot Desmond’s idea for a

financial services centrewhich the coalition had rejected, and Eoin Sweeney’s

marinepolicy.WhenSweeney,a former ITGWUofficial, called foran industrial

strategy to exploit maritime resources, Haughey “summoned” him and after

listeningtohiscasehaditadoptedvirtuallyunchangedasFiannaFáilpolicy.37

35 Haughey,‘PresidentialÁrdFheis,16/02/80,inManserghed.1986:32736 On1982initiativesseechapter437 Haugheyon“NationalRecovery”,‘PresidentialAddresstoÁrdFheis’,30/03/85,Manserghed.1986:935,

andinDáil16/01/86;onDesmondproposal,seechapter8;Sweeney,Obituary,IrishTimes19.08.17

138

In 1984 Haughey re-committed to tripartitism: “We will re-establish in

Governmentacloseunderstandingwiththesocialpartnersandsecuretheirfull

co-operation in achieving clearly stated and fully understood economic and

socialobjectives”.Followingthecoalition’srejectionofarbitrationdecisionsand

thewaveofpublicsectordisputes,heattackeditforits“insensitivehandling”of

industrial relations and failure to “win the confidence of workers and their

representatives”or“establishsomeunderstandingofpoliciesandtargets”with

the unions. Government should revive the National Understanding or “devise

somesimilarkindofmechanism”touniteemployers,unions,expertcentres“and

allotherrelevantsectorsfullybehindclearlydefinedeconomicpolicyobjectives

…Thefullcooperationofthetradeunionmovementisvital”.38

ThiswasconsistentwithhisapproachasMinisterinthe1960sandTaoiseach

in 1980-82. For him, trade union power, as he had put it in 1975, reflecting

Barbara Cassells’ In Place of Strife of 1969, was a “socio-political fact” to be

harnessedinacommonplan:“Iftheplanningprocessdoesnotpermit[it]tobe

exercised in developing the economic system, we must not be surprised if it

seeksitsownendsindependently”.Whilehecontinuedtoholdtohis1982Way

Forward plan, with its combination of monetary reform and state-driven

industrial expansion, he castigated FitzGerald’s government as “monetarist”, a

prisoner of “Thatcherism” and “New Right” economics wedded to a “book-

keepingethos”.Growingsocialpolarisationwasaconsequenceofits“uncaring”

policies,butcouldbeovercomebyanational“cooperative”approach.39

Hiscritiqueextendedtothegovernment’sstanceonEurope.Before1986the

EEC had played little role in Irish economic development apart from CAP

transfers and modest social funding, Haughey describing it in 1985 as “quite

frankly irrelevant” to an Irish recovery. He criticised the “one-sided” Single

EuropeanActandCommissionerSutherland’soppositiontoDelors’balancingof

regional/social policy proposals: “Unless there is…meaningful regional policy

one can forget about economic integration and monetary union … Economic

integration without a proper redistributive mechanism is nineteenth century38 “Wewillre-establish…”,‘PresidentialAddresstoÁrdFheis’,31/03/84,inManserghed.1986:824;

“insensitivehandling”,Dáil19/12/85;“revivetheNU”,Dáil06/02/8539 “Iftheplanningprocess…”,speechtoDublinSocietyofCharteredAccountants,inManserghed.1986:

205-6;“WayForward”combinedplan,Dáil01/02/84and14/12/84;“monetarist”,“NewRight”,“Thatcherism”etc.,inDáil10/10/84and‘PresidentialAddressÁrdFheis’,30/03/85

139

economics”. EEC policies played far from the central role in Haughey’s social

partnershipplanscriticshaveclaimed.HisviewofEuropewasepitomisedbyhis

reply to Schmidt in 1981 that the EEC could not aspire to shape international

economicaffairsaslongasithadnoeconomicstrategyofitsown.40

Many union officials distrusted Haughey for his connections withmoneyed

interestsandhisconservativestanceonsocial reformssuchasdivorce.Buthe

saw himself as a sophisticated and subtle statesman and felt insulted by the

Leftist narrative – such as inTheBoss, a book by two IrishTimes journalists -

portraying him as a venal, corrupt and even thuggish leader.Hewas similarly

outragedwhena fauxpasbyhisPR“handler”,P.J.Mara,whojokinglyusedthe

fascistslogan“UnaDuce,unavoce!” todescribehis leadershipstyle,waswidely

reported.Unionleaderswerereluctanttoengagewithhimashisdaysasparty

leader, at least until 1984, seemed numbered, with even the Irish Press

publishingaprematurepoliticalobituaryofhim.Thechaosofthefinalmonthsof

his 1982 government, MacSharry’s expenditure cuts and the collapse of the

National Understanding had strengthened anti-agreement sentiment and sewn

uniondistrustofFiannaFáil,including,critically,ontheITGWUExecutive.41

Nevertheless, Haughey hadmaintained contactwith leaders such as Carroll

and Flynn and when ICTU published Confronting the Jobs Crisis, he “endorsed

fully”itsobjectivesandexpressedhisparty’s“broadagreementwiththethinking

ofCongress”,demurringonlyoveritsrelianceonstateenterprisewhichhadalso

beenÓhUiginn’ssolecriticismof it toFitzGerald.HaugheyproposedthatICTU

meetFiannaFáil’sfullfrontbenchtodiscussit,somethingCongresshadturned

downin1981ascontrarytoICTUpractice,butthistimeaccepted.Atthemeeting

Haughey praised “the broad economic policy outlined in their valuable

document”anditscompatibilitywithFiannaFáilstrategy,convincingkeyunion

leadersthey“coulddobusiness”withhim.42

Haughey’s social partnership idea gained little traction with the press or

electorate, or even noticeably within Fianna Fáil. But he was attentive to its

40 HaugheyonSEA,Dáil26/06/85;“criticshaveclaimed”,Foster1988,2007;‘Confidential.Meeting

betweenTaoiseachandChancellorSchmidtinBonnon31stMarch1981’,NAI:TAOIS/2012/90/92641 Viewas“statesman”,Cronin1997;irritationat“Left”portrayal,RyleDwyer1996;outragedatMara,RTÉ

2016;“obituary”,IrishPress,21/01/83;ITGWUdistrust,‘TheWayForwardtowhat?’Liberty,Nov.198242 HaugheyinDáil10/10/84;Secretary[ÓhUiginn]toFitzGerald,28.11.1984,‘MeetingwithICTU’,DTA:

OHP;Hastingsetal2007:33;ICTUECmeeting10.12.1981

140

electoral aspect and in 1983 established a task force to address Fianna Fáil’s

failing support in Dublin working class areas where the Workers’ Party was

making inroads. “OperationDublin”, ledbyBrianLenihan, re-focusedpolicy to

meet working class concerns and revived local Cumainn. Haughey also

established a “Committee on Trade Union Affairs” of TDs and party trade

unionists such asNoreen Green and TonyMcKenna, to “position” the party in

tacklingthe“recession”.Thiswasunsurprisinggiventhatmanytradeunionists

wereFiannaFáilvoters.ThecommitteewaschairedbyBertieAhernandMichael

Woods, the party’s labour andwelfare spokesmen, and produced positions on

issuesofunionconcernsuchasPRSIreformandindustrialtraining.Butitdidn’t

pandertouniondemands,withAhern,despitetheon-goinguniondisputeswith

government,stressingthatonpubicpay“ourpolicy…wouldlikelyincludeonly

cost-of-livingincreasesandnotpaymentofspecialawards”.43

Haughey also used the committee to educate his own front bench. At his

directionitwas“lecturedto”onpartnershipinEuropeandsentona“studyvisit”

toAustriatoexamineits“modelofsocialpartnership”.This,Ahernrecalled,was

becauseofHaughey’sviewthatitwaswhyAustria-anoftenreferencedmodel

“smallopeneconomy”witha“consensusapproach”-hadrisen“fromtheashes

ofaworldwartorankwellabovetheOECDaverageonmostindices”.Ahernwas

also instructed to build relationswith union leaders and developed a rapport

particularlywithAttleyoftheFWUI,inwhichhehimselfhadonceserved,aswell

as Phil Flynn of LGPSU and Christy Kirwan of ITGWU. He organised the front

bench meeting with ICTU on its Jobs Plan and drafted the party’s response

endorsingit.ButitwasHaugheyhimselfwhodominatedthatmeeting,andwho

also“lunchedregularly”withITGWUPresidentJohnCarroll,anaustereandaloof

butauthoritative figure inmanywaysresemblinghim inbothbackgroundand

character.Itwasclearthat,whatevertheroleofAhernorothers,underaFianna

Fáilgovernmenttripartitestrategywouldbedrivenfromthetop.44

Just before the NESC report was published and with an election imminent,

Attleymadeawidelypublicisedcallforareturntothe“pioneeringspiritofthe43 On‘OperationDublin’,NewHibernia,Oct.1984andUCD-A:P176/382-3;ontradeunioncommittee,

Ahern2009:79-82;AhernquoteatCommitteemeeting,12/12/1985,UCD-A:P176/39344 AhernandAustria,Ahern2009:92,alsoInterviewwithAhern;andunionleaders,Ahern2009:92-3,

InterviewswithFlynn,Cassells;onCarroll-Haugheylunches,Hastingsetal2007:31;“hammeroutconsensus”,InterviewwithÓhUiginn

141

1960s”, lauding the “virtuous circle” of the “Nordic model” and advocating a

“national plan for economic recovery” agreed between government and social

partners. There was little doubt to whom the speech was addressed, and

Haughey responded by welcoming Attley’s proposal, stating that a social

partnership as in “Austria, Norway and Sweden” would be “an important

element” inFiannaFáil’sprogrammeforrecovery”.TheireoftheLabourParty

with ICTU thus had some basis, as ICTU’s preference for the election outcome

wasnowunambiguous.Asafinalstraw,whengovernmentdismissedtheNESC

report, Haughey turned on it for its selective treatment of it, saying “reduced

publicspendingalonewillnotrevivetheeconomy”andemphasisingthereport’s

integratedstrategyandthecentralitytoitofinvolvingthesocialpartners.45

Despite his friendships with individual entrepreneurs, Haughey’s relations

withbusinessorganisationswerefrosty,amajorityoftheCIIboardsupporting

FitzGeraldandhostile toa return toFiannaFáil government.Buthe contacted

them just before the NESC report appeared, and over an extraordinary three

daysofmeetingswithCIIofficialsdiscussedtheirpolicyproposals,incorporating

many into his strategy. He also urged their support for social partnership,

suggesting a meeting between his front bench and the full CII board. This

occurred on 8 January 1987, shortly before the budget that brought down the

FitzGerald government. The CII leaders cautiously agreed to engage with his

“consensus” strategy.While both CII and FUE continued to espousemonetary

orthodoxy,theypubliclyendorsedtheNESCtripartiteplanonindustrialpolicy.46

Haugheyhadsethishopes,andreputation,onachievingacomplex,high-risk

partnershipframeworkforhisrecoverystrategy,whichhewasintentondespite

mediaandpublicscepticismanddividedcouncilswithinbusinessandunions.

Partnershiponprinciple:FiannaFáilinthe1987election

Thoughlongcertain,Labourministersresignedon20January1987,unwilling

toacceptBruton’sfinalbudget,whichaswellasfurtherpublicservicecutsand

taxincreases,continuedthepublicpayfreezeandadvocatedprivatesectorpay

45 Hastingsetal2007:34;FUEBulletinNov.1986;IT18/10/86andIT,IP14/11/86;Attleyspeechin

Liberty,Nov.1986andFUEBulletinNov.1986;Haughey,speechtoFiannaFáil,Athlone,17/10/86,inMansergh(ed.)1986:1160-61

46 Haughey-CIImeetings,Power2009:60-2;FUE-CIIpositions,FUEBulletin,Feb.1987,Power2009:61

142

beingsuppressedbelowinflation.Springadoptedan“independentprogramme”,

with “opposition to cuts” central to Labour’s manifesto, along with “social

partnership”. This was formulaic and unconvincing, inserted by Quinn on the

urgingofAttleyandCarroll,whohadimpressedonhimHaughey’s intentionto

returntotripartitismandtheirownintentiontocooperatefullywithit.Despitea

Labour-FG coalition being off the cards, and a campaign overshadowed by

economiccrisis,mediareportingconcentratedontheissueofHaughey’s“fitness”

togovernandprovidedsoftsupport forDesO’Malley’snewPDparty.Haughey

had long lost theoutletcritical tothenarrativeofpreviousFiannaFáil leaders,

TheIrishPress,andhispartnershipplanbarelyfiguredintheelectioncoverage.47

Fianna Fáil’s manifesto, Programme for National Recovery, accepted the

“principles”oftheNESCreportandlistedahostofindustrialandinfrastructure

projectsalongwiththeeconomic/fiscalstrategyofTheWayForward.Employers

and unions promoted opposing forms of tripartitism, with ICTU circulating

10,000 copies of its partnership-orientated Plan for Work while employers

favoured a common industrial strategy only. Haughey’s manifesto straddled

both, down-playing the pay aspect but tilting towards ICTU: “The economic

situationrequiresus to takeamajorstep forward…toworktogethertowards

nationalgoals”through“a foruminwhichthesocialpartnerscannegotiatethe

termsofanationalplanbasedonagreedmedium-termobjectives”.48

Haughey gained a surprising supporter during the campaign. Following a

privatemeetingatKinsealy,newIrishTimeseditorConorBrady,along–standing

Fine Gael supporter, was so impressed by Haughey’s economic/partnership

strategythatheeditorialisedfavourablyonit.Thismetwith“outrage”fromIrish

Timesstaff,mostlyhostiletoHaugheyandinclinedtothePDs.Bradypraisedthe

plan’s coherence and noted IDA warnings that FDI flows were contracting

becauseofaperceptionthatIrelandlackedagrowthstrategy.Whilefallingshort

ofurgingreaderstovoteaccordingly,asthatpaperhadneveradvocatedsupport

for Fianna Fáil, it was a substantial endorsement from a surprising source,

thoughnodoubtinformedbythenearcertaintyofaHaugheyvictory.49

47 Brutonstatement,IrishTimes21/01/87;Springposition,IrishTimes21and26.01.1987;“impresson

Spring”,InterviewwithAttley;48 ICTUAR1987:194;FUEBulletin,Mar.1987;IT13/03/1987;IRNReport,Mar.1987;FiannaFáil198749 Brown,T.2015:339-40;Brady2005;IrishTimes,editorial,02/03/87

143

Chapter6:

Longhaul:thedramaticroadtothe“PNR”,1987Governmentchoiceandpolicypositioning HaugheywaselectedTaoiseachon10MarchonthecastingvoteoftheCeann

ComhairleandwithTonyGregory’sabstention,formingaminoritygovernment

inacontextwhereneitherthemootedFG/PDcoalitionnoranyotheralternative

commandedamajority.Inhisacceptancespeech,Haugheydeclaredhisintention

tomeetwiththeNESC,the“principles”ofwhosereport-a“consensus…among

theprincipal economicandsocialpartners” -was “consistentwithourviewof

whatisrequired”.Buttopublicdismay,hethenannouncedhispriorityasradical

expenditure cuts, continuing those of Bruton’s defeated budget, including its

public pay decree. Introducing a drastic budget on 31 March, McSharry

nevertheless repeated that NESC’s “strategy and principles” would “form the

basis for the Government's general approach”. It is claimed by Conor Lenihan

that McSharry insisted to Haughey on budget autonomy (and, less likely, that

BrianLenihanlikewisedidonforeignaffairs),butthishadlongbeenHaughey’s

perspectiveanyway.MacSharry,itmightbenoted,wasaninsideronHaughey’s

smallteamandhadplayedanidenticalroleinhis1982governmentstrategy.1

Minoritygovernmenthadadvantagesforastrategyoffinancialretrenchment.

AsFineGaelandthePDssharedthisprinciple,andFitzGerald,andlaterDukes,

committed to support Haughey in continuing their budget policy, clientelist

pressures could be kept at bay. Haughey praised FitzGerald for the difficult

decisionshehadtakenwhen,asheputit,thestatehadfewotheroptions.Buthe

planned achieving monetary stabilisation and growth through an alternative

routethateschewed“Thatcherism”infavourofasocial“consensus”strategy.

Given Haughey’s repeated commitment to such a course, it is striking that

whilehewouldengagewith the “socialpartners” from the start, itwouldbea

yearbeforeanagreedprogrammewouldbeinplace.

1MacSharryinDáil31/03/1987;insistedtoHaughey,Lenihan2015;“praisedFitzGerald”,Dáil10/03/87

144

Firststep:Haugheyengagesthesocialpartners

HaugheydelayedhisannouncedmeetingwiththeNESC.Beforethechangeof

government, Ó hUiginn had had the NESC agree to invite the “incoming

Taoiseach”tomeetittodiscussitsreportandseekastrategicrole“elaborating”

the“NationalPlan”.HaugheyonbecomingTaoiseachhadacceptedtheinvitation

andameetingwasinitiallysetforApril.But,followingdiscussionswithCassells,

Ó hUiginn’s advised a delay to accommodate ICTU. Congress feared talks in a

tripartite setting would put it “at a disadvantage since it can be assumed the

otherpartieswouldformaunitedfront”againstit,andalsosoughtanagreement

structuredeterminedbyICTUandgovernmentbeforeinvolvingotherpartners.2

Congress proved equally accommodating to government. Despite public

outcry over the budget, ICTU onlymildly criticised it, expressing its “extreme

disappointment” at the “savage cuts”, but the same day wrote to Haughey

seekingtalks“onallaspectsoftheeconomicsituation…todeviseanationalplan

forgrowthandeconomicrecovery”alongNESClines.Haugheyofcourseagreed,

publicly down-playing it in the Dáil as routine “consultation with the social

partnersatleastoneconomicandsocialobjectives”.Buthewarnedthatwithout

pay restraint “major lay-offs” in the public service were inevitable. ICTU put

downamarkerbyinsistingbothpublicandprivatesectorpayform“anintegral

partofanagreednationalprogrammeofeconomicandsocialpriorities”.3

ÓhUiginnagreedwithCongressonprinciplesandstructuresfornegotiations

beforeengagingotherpartners.ICTUinsistedthatany“negotiatednationalplan”

bedrivencentrallyfromtheDepartmentoftheTaoiseachtoensurecontrolfrom

the top and that it adoptNESC’s “four-part” strategy approachwith integrated

macro-economic, industrial, tax and social policies, fromwhich “pay questions

cannotbedivorced”.Bilateral“workingparties”chairedbytheDepartmentand

involving,ataminimum,secretary-levelofficialsshoulddevelopthedetailanda

2 NESCCouncilMeetings23.02,and24.04.87,alsoCouncilMeeting24.043.87‘NotefromSecretariat’;

Secretary[ÓhUigin]toTaoiseach,13/04/1987,‘Subject:MeetingwithICTU’,DTA-OHP;Cassells,‘BriefforGeneralPurposesCommitteereDiscussionswithTaoiseach’,13/04/87,ICTUArchive:GS-PA-1a

3 ‘BudgetStatement’,01/04/87,inICTUAnnualReport1987:206;Carroll(Pres.ICTU)toTaoiseach01.04.87,ICTUArchive:GS-PA-1a;HaugheyinDáil07and08/04/1987;‘Leadingtradeunionisturgesnewapproachonpublicpay’,IT11/04/1987

145

“Ministerial-ICTUWorkingGroup”dealwithpayandagreethefinalplan.ICTU’s

insistenceonthisstructurewasbecauseofitsexperienceofseniorcivilservants

in1980-82asuncooperativeandgiven to “blocking tactics”,and their “general

contemptforunions”duringtheFitzGeraldyears.ItwasaperceptionHaughey’s

circleshared.WhenAhern,nowMinister forLabour, toldofficialsofHaughey’s

plansforsocialpartnership,theyadvisedhimto“stayawayfromit”.4

Haugheyhimself facedconsiderableresistancefromseniorofficialswhohad

resentedhiscentralisationofpowerintheTaoiseach’sDepartmentin1980-82.

EndaDelaney,anewrecruittoForeignAffairs,describedhow,ontakinguphis

post in early 1987 he encountered “an incendiary group of embittered senior

officials … plotting against [Haughey]” and “drawing up ‘Documents of

Resistance’”.TheyresentedhismovingresponsibilityforEuropeanandNorthern

policy from their Department to Taoiseach’s, as he had also done with socio-

economicpolicy in1981.Haugheywouldcontinue to face resistance fromcivil

servicecircles,necessitatingatightcentralgovernmentgroup.5

Internally,Cassells,whospokeregularlywithÓhUiginn,recommendedthatin

thetalksICTU“recogniseandacceptthenecessityforpayrestraint/moderation

given the difficult competitive position of the private sector and the acute

Exchequerfinancialproblems”.Thiswould“persuadeGovernmenttoengagein

meaningful discussions on public service pay”. A period of budget autonomy

followedbya2-yearagreementwould“helpget[us]outfromunder”thebudget

paydeferralandbuildapositiveframeworkforfuturepaydevelopment.6

Governmentalsohadastrategy,partofwhich,despiteHaugheyunderstating

it in the Dáil, was engaging the social partners early to avoid themistakes of

1982. InpreparingforHaughey’smeetingwithICTU,ÓhUiginnadvisedhimto

commit to the NESC principles and structures Congress sought but stress the

centralityofNESC’sdebt/GNPformula,whichwas“sorealisticinitsapproachto

the public finances”, its prioritising of the exporting and FDI sectors as the

“locomotives of growth”, and its tax/pay formula. “It is clear that the union

4 H/wnote:‘PresidentofCongressandreps.ofEC’[formtg.15/04],and“BriefforGeneralPurposes

CommitteereDiscussionswithTaoiseach’,13/04/87,ICTUArchive:GS-PA-1a;‘JointGovernment-ICTUPressStatement’,15.04.1987,GIS:D/Taoiseach;AherninHastingsetal2007:22-3,33-4andInterviewwithBertieAhern

5 Delaney(2001),AccidentalDiplomat:1-36 ‘BriefforGeneralPurposesCommittee.DiscussionswithTaoiseach’,13/04/87,ICTUArchive:GS-PA-1a

146

leaders want to be involved … A Plan will take them off a number of hooks,

particularlytheevolutionofpublicsectorpayoverthenextfewyears”.Taxwas

alsothekeytoinvolvingbusinessinterests.The“prospectsofsuchaconsensus

Plan,giventheNESCbasis,areexcellent”and“wouldbeagreatachievement”.7

ÓhUiginnalsourgedHaugheytoacceptthe“institutionalmechanisms”ICTU

proposedforthetalks-thepolicy“workingparties”chairedbyhisDepartment

and only secretary-level civil service involvement, as well as the “Ministerial-

ICTU Working Group”, chaired by Haughey himself. Just before the meeting,

CassellstoldÓhUiginnthatICTU’smainconcernwashowseriousHaugheywas

regardingthe“integrated” four-partNESCstrategy,whileHaugheytoldhimhis

concern was how serious ICTU was on debt reduction. Two intensemeetings

followedon15 and29April clarifying these issues, atwhichCongress leaders

stressedtheircommitmenttoreducingthedebtandHaugheycommittedtothe

NESCframeworkandthe“institutionalarrangements”ICTUproposed.8

Itwas clear from thesemeetings that theagreementwouldnotbea1970s-

style “redistributive” one, but instead involve monetary retrenchment and

industrial growth on the basis of the NESC plan, as well as a trade-off of pay

restraintforjobcreation,taxandsocialreform.Thekeymomentcamewhen,as

Cassells had intimated to ICTU beforehand, Haughey said they would have to

“envisage[aninitial]periodoftime”to“enabletheExchequerfinancestobeput

inorder”andtheEBR“reducedtoasustainablelevel”.AProgrammecouldthen

be ready foragreeing inSeptember.While ICTUagreed to this,Carrollwarned

thatpubliclyICTUwouldhavetocontinueopposinghealthcutsandtheretention

of Bruton’s public pay freeze. But Haughey agreed to try to get employers to

includeanationalprivatesectorpaydealwithintheagreement,andthemeeting

agreedatargetdateofSeptember.ÓhUiginnwasconfident thatwith theICTU

committed,otherpartnerswouldhavelittleotheroptionbuttofollow.9

7 Secretary[ÓhUigin]toTaoiseach,13/04/1987,‘Subject:MeetingwithICTU’,DTA-OHP8 ICTUstrategy,‘BriefforGeneralPurposesCommitteereDiscussionswithTaoiseach’,13/04/87,ICTU

Archive:GS-PA-1a;ÓhUiginnadvice,Secretary[ÓhUigin]toTaoiseach,28/04/1987,‘Government/ICTU’and‘MechanismsforImplementingtheProgrammeforNationalRecovery’,DTA-OHP;onNESCstructureanddebt,interviewwithPádraigÓhUiginnandHastingsetal2007:36;onmeetingoutcomes,CassellstoICTUEC,‘DiscussionswiththeTaoiseachonaNationalPlanforGrowthandEconomicRecovery.ReportofMeetingon29April1987’,ICTUArchive:GS-PA-1aand‘JointGovernment/ICTUPressStatement’,29/04/1987,GIS:D/Taoiseach

9 “enabletheExchequer”,‘StatementbyTaoiseachatthemeetingwithICTU’,15.04.1987,ICTUArchive:GS-PA-1a;discussion,CassellstoEC,‘DiscussionswiththeTaoiseachonaNationalPlanforGrowthand

147

Havingprioritisedagreeinga frameworkwiththeunions,Haugheynowmet

theotherpartnerstobringthemintotheprocess,startingwiththeconstruction

industry, the CIF, on 30 April. Though opposed to national agreements and

minimumwagesetting,CIFmorethananysectorwasdependentongovernment

capital programmes, a pointHaughey exploited.He chided their infrastructure

proposalsas“notambitiousenough”andtheyquicklycommittedtoengagewith

his more audacious plan. A joint CIF-Departmental “working party” was

established, though with the Department of the Environment rather than the

TaoiseachaswasthecasewiththeprivilegedICTU.10

On7MayHaugheymetfarminggroups.Givenhishistoryofconflictwiththe

IFA,hehadensuredawidergroupingwas involved, includingdairyproducers

(ICMSA), the coop industries (ICOS) and, to the delight of AgricultureMinister

Walsh,the“progressive”youngcommercialfarmersofMacranaFéirme.IFAhad

welcomed the NESC report, its President, Joe Rea, praising its expenditure

targetsand food industryambitions.Hehadcalledonallparties to “putaside”

their antipathy to Haughey and support him in implementing it. But Rea now

pressedHaugheyfora“stronglineon[the]EEC”tocounterthreatstoCAPand

presenteda listof IFAgrant-seekingdemands,whichhedescribedas the IFA’s

“development proposals”. Before the meeting, officials bemoaned the poor

economicperformanceof farmingand the IFA’ssuperficialendorsementof the

NESC report: “This line, set out in the forward to the IFA proposals”, Finance

noted,“isincontrasttothepolicyproposalswhichfollow”,whichwouldinvolve

“substantialoutlay”bytheexchequerand“mustberejected”.11

The IFA pressed their shopping list onHaughey,which he deftly evaded by

welcoming their endorsement of the NESC report with its strategy for

commercialising farming.Here-statedhisgoalof transformingagriculture into

an entrepreneurial, export-led and consumer-oriented sector by up-grading

product quality, farmer training and marketing. He side-stepped demands for

EconomicRecovery.ReportofMeetingon29April1987’,ICTUArchive:GS-PA-1a;concessionsandprivatesectorpay,Secretary[ÓhUigin]toTaoiseach,13/04/1987,‘MeetingwithICTU’,DTA-OHP

10 ÓhUiginntoTaoiseach,30/04/87,‘MeetingwithCIF’,DTA:OHP11 ‘MeetingwithICMSA/ICOS7thMay1987’,FergusO’Farrell,chiefexecutive,MacranaFéirmeto

Taoiseach,16/04/87,Travers,D/Taoiseach,hand-writtennote,‘farmbodies’,01/05/87,DTA:S25861-A;‘Reacallsfordecisiverule’,IT02/03/87;IFA(1987);JoeReato‘Mr.Haughey’,02/03/87,D/Taoiseach,‘MeetingwithICMSA/ICOS7thMay1987’,F.Coleman,D/FinancetoPO’Sullivan,D/Taoiseach,06/05/87:‘BriefformeetingofTaoiseachwithIFA,7May1987’,DTA:S25861A

148

wider grant schemes by suggesting the IFA pursue them and other ideas in a

jointWorkingPartywiththeDepartmentofAgriculture,towhichtheyagreed.12

Finallyhemetbusinessandemployerleaderson14May.Theywere,asever,

divided on priorities. While what Ahern called the “big boys” of the CII were

eager to progress proposals they had discussed with Haughey before the

election, the “small boys” of the FUE remained truculent. They had endorsed

NESC strategy but opposed any return to “National Understandings”, as they

againrepeatedatthemeeting.ÓhUiginnadvisedHaugheytofocusonindustrial

policyandleavepaytobedealtwithlaterat“MinisterialCII-FUEGrouplevel”.13

AlthoughtheFUE’sinsistenceonexcludingpaywasachallengeforHaughey,

he was not overly perturbed despite his promise to ICTU to try to ensure its

inclusion.Finance,neverenthusiastsfor“Understandings”,hadadvisedhimthe

differences between the ICTU and FUE on pay made “the achievement of a

central dealwell nigh impossible”, and typically recommended that he control

public pay along the lines of the FitzGerald government and hope this set the

pacefortheprivatesector.Butitwasalsoagrowingpublicperception,withthe

IRNbelievinganagreementonindustrialpolicy“withoutanationalpaydeal”the

most likely outcome. For Haughey the pay stand-off provided more time for

governmentplanningwithouthavingtoconfrontthe issueyet.HetoldtheDáil

thetalksunderwaywereona“medium-termprogrammebasedontheprinciples

recommended by NESC” and should not be “confused” with pay negotiations.

Governmentwould “adhere to [the] strategy of the budget”, including on pay,

andbudgetpolicywouldremain“amatterfortheGovernment”.14

BeforemeetingtheFUE/CII,Haugheyhadagreedtoacceptemployers’views

onpaywhileencouragingthemtoengagewiththerecoveryplan,withpaytobe

“revisited”.At themeeting theyconfirmedtheirsupport for theNESCplanand

agreedtoworkwithgovernmenton“industrialdevelopmentstrategy,industrial

promotion, productive infrastructure, taxation and industrial input costs” to

12 ‘Taoiseach’smeetingwithIFAonMonday27April1987’,ÓhUiginntoTaoiseach,06/05/87,re‘Meeting

withIFA,ICMSA/MacranaFéirme’,‘StatementbytheTaoiseachatmeetingwithPresidentsandrepresentativesoftheIFA,ICMSA,ICOSandMacranaFéirmeon7May1987’,DTA:S25861-A;IFA,NationalRecovery.TheRoleofAgricultureandFood

13 “bigboys”,AherninMcGinley1997;FUEBulletin,Feb.1987;‘SearchforConsensus’(editorial),IT13/03/87;FUE‘PressRelease’,15/04/87;ÓhUiginntoHaughey.‘CII/FUEMtg.’,14/05/87,DTA:S25875

14 D/Finance.‘BriefingsforTaoiseach’smeetingwiththeCII/FUE’,26/04/87,DTA:S25875;IRNReport21/05/87;HaugheyinDáil28/04/1987

149

make industry “competitive internationally”. Three CII-FUE “working parties”

were established with the Department of I&C, on “Employment-Development

Measures”, “Social Policy” and “Environment for Enterprise”. On industrial

policy,CIIwasverymuchinthedrivingseatontheemployer/businessside.15

Blunttalk:Haughey’sthree-stagestrategy

Haughey had a clear three-stage monetary-industrial-partnership plan.

Engaging the “partners” in protracted planning gave him space to implement

radical monetary adjustment while integrating the major social forces by

involvingtheminthedetailofwhatcouldbecommittedto.Heavoidedrepeating

hismistakesof1982bymakingitcleartotheunionsthatthiswashowhewould

proceed, but also promising to achieve an agreed integrated recovery plan by

September.Whattheydidnotknowwashisdeterminationalsotopre-determine

aspectsofthatplanbyproceedingimmediatelywithindustrialinitiatives.

Haugheywouldlaterstatetheviewthatrealpoliticalpowerrestednotinthe

party or on the backbenches, but in cabinet. An authoritative Taoiseach

managing a cabinet united on a clear strategy could marshal the support of

backbenchersandparty.Whilegeographicfactorswereunavoidableinforminga

government, the key figures must be able for the task. Irish politics were

constrained by PR and multi-seat constituencies, exaggerating clientelist

influences,butastrongcabinetcouldovercomethese.Inasmallcountry,“where

you sort of know everyone well”, personalities and connections were vital in

strategy building and implementation. Fianna Fáil would unite behind

governmentonceconvinced itwasadvancing thenationalwelfare.Thesewere

principleshefollowedinassertinghisauthorityovergovernmentin1987.16

Haugheyfirstmovedtoestablishhisauthorityovergovernmentandhisown

ministers.HereinstatedtheDepartmentoftheTaoiseachtoacommandingrole,

elevatingitsSecretary,ÓhUiginn,tothecentreofgovernmentandinvestinghim

with “plenipotentiarypowers” to re-organisedepartments, integrateagencies -

particularlytheIDA-intheplanningprocess,andensureministers’compliance.15 “revisited”,[ÓhUiginn],hand-writtennote,‘CII/FUEMtg.19/5/87’,DTA:S25875;‘JointGovernment-

FUE/CIIStatement’,14/05/87,GIS:D/Taoiseach;‘DiscussionswithSocialPartnersonNationalProgrammeforGrowthandEconomicRecovery’n.d.,DTA:S25281-E;D/Finance:‘BriefingsforTaoiseach’smeetingwiththeCII/FUE26/04/87’,DTA:S25875

16 InterviewHaughey,2005

150

He formed an inner cabinet of himself, MacSharry and Ahern to work with Ó

hUiginn in driving policy. It was largely the same group, strengthened by the

union-friendlyAhern,thathadproducedtheWayForwardin1982,a“cabal”he

hadpreviously attemptedbut failed fully to achieve in1982, andwhichAhern

andCowanwouldlaterreplicateintheirgovernments.17

Thenewstrategywasdrivenhometoministersatameetingon13April,the

day before Haughey’s first meeting with ICTU. Ó hUiginn circulated a memo

synthesisingHaughey’spriorities.Monetaryautonomywasessentialforthefirst

year and ministers were to report, on a monthly basis, their progress in

achieving targets and, to relieve interest rate pressures, postpone spending

plans.Ministersofstate,meanwhile,weretodevelop“quickpracticalactionon

developmentproposals”,“fleshedouturgently”withtheIDA.Allsuchinitiatives

were to be tailored to fit with a later negotiated social partnership plan and,

whilekeptstrictlywithincurrentresources,shouldemphasisetheiremployment

potential,a“keyinputintothediscussiononaPlanwiththesocialpartners”.The

DepartmentsofEducation,Labour,HealthandWelfareweretodeveloplow-cost

reformsreflectingNESCprioritiesthatcouldbeimplementedimmediately,such

as moving from institutional to community care in health, job-friendly school

curriculum reforms, social employment initiatives in place of “ephemeral”

training,andreformingwelfare tobenefit “lower-incomes,bringgreaterequity

andreducecosts”.Ontax,Financewastoplanfortwothirdsofworkerstomove

to the standard tax rateovera seriesofbudgets, akeymanifesto commitment

and “quid pro quo for pay restraint”. On industry, state supports were to be

redirected from fixed assets tomarketing andmodernization, and the Finance

Act should include provisions to encourage multinationals to re-invest, as

currently“mostofthemkeeptheirfundsoff-shore”.McSharrywastopreparea

1988“budgetprofile”asa“keytothePlandiscussions”,encompassingspending

reductions but alsomaking “a start on PAYE tax concessions etc.” to facilitate

“social partner agreement to changes”. All measures were to be complete by

17 CruinniúRialtais,13/03/87,‘ChangesinGovernmentalStructure’,DTA-OHP;oninnercabinetgroup,

MacSharryandWhite2000:43-5;ontheAhernandCowancabinet“cabals”,O’Riain2014

151

September, which, Ó hUiginn told Haughey, would put him “in a very strong

politicalposition”insecuringapartnershipdeal.18

Ministers were ordered to report to ameetingwithMacSharry by 22May,

afterwhichexpendituredecisionsbythecorecabinetwould issueonaweekly

basis.Proposalsweretoinvolve“radical”cuts,“theeliminationorreduction”of

programmes, “rooting out overlaps and duplications”, and “the disposal of

physicalassetsthatarenolongerproductivelyused”.Afinalprogrammewasto

be ready by September for discussionwith the “social partners”. Haughey did

“notwanta seriesof justificationsof the statusquoor specialpleadings”.This

clear if somewhathumiliatingmessage toministerswasdeliberately leaked to

themediatoaddfurtherpressureandsignalgovernment’sdetermination.19

Haugheyevenactedtoslowdowntheworking-partypolicyprocesswiththe

socialpartners,firstdelayingappointingthem.On21MayÓhUiginninstructed

officials to treat the “workinggroups” for themoment aspurely “exploratory”,

gather “costed” proposals for later consideration at “Ministerial-social partner

level” but “without prejudice to decisions at that level and clearly subject to

budgetary constraints”. The framework for an eventual plan would be the

“emerging macro-economic and budgetary scenarios for 1988 and the years

beyond,tobeagreedbyGovernmentonasubmissionnextweekbytheMinister

forFinance”,andthen“puttothesocialpartnersastheframework”.20

In another move, possibly both to put ICTU on the defensive and deflect

oppositioncriticismofarevivedtripartitism,TánaisteLenihantoldtheDáilthat

ICTU’s engagement reflected its “agreement” to continuing the previous

government’spublicpaypolicy.Governmentwasdetermined“togetorderinto

thepublicsector”whichwaswhyithadagreed“theseworkingcommittees”with

ICTU,with private sector pay a purely “separate operation”. An alarmed ICTU,

who Lenihan had portrayed as hapless collaborators, demanded that Haughey

distancehimselffromLenihan’scomments,whichhepromptlybuttactfullydid

inastatementtotheDáil.WithICTUonthedefensiveoveritsengagementwith

18 Secretary[ÓhUigin]toTaoiseach,13/04/1987,‘Subject:MeetingofMinisters’,DTA-OHP19 TaoiseachtoallMinisters,13/05/87,ICTUArchive:GS-PA-1a;onleakstothepress,Bew,Hazelkornand

Patterson1989and‘Bombshell’(editorial),IT27/05/198720 ÓhUiginntoPaddyMullarkey,D/Finance,21/05/87[withh/wnote:“lettersinsimilarterms”issuedto

Secs.ofallrelevantDepartments],DTA:S25281-E

152

government, the weekly announcements of drastic cuts continued into the

summer.Theymetwithgrowingunrest in thepublicservice,especiallyhealth,

andoppositionintheDáil,butwidespreadmediaapproval.21

Governmentthusmovedsimultaneouslyonmonetaryplanningandaparallel

processof industrialpolicyinitiativeswhilealsoengagingthe“socialpartners”.

Theapproachwasagreedataninnercabinetmeetingon27April,justdaysafter

Haughey’s second meeting with ICTU. The cabinet meeting was attended by

agencyofficials,notablyPádraicWhiteoftheIDA,andreviewedindustrialpolicy

optionscompiledfromvariousMinisters’reportsbyÓhUiginn’sstaff.

Thereviewdescribedtheperformanceofindigenousindustryas“disastrous”,

its“management,marketingandproductdevelopment…poor”,domesticmarket

share down “sharply”, investment down by two thirds since 1980, and

employmentathirdsince“wejoinedtheEEC”.Despite1960splanning, Ireland

had failed “in creating strong indigenous companies based on our natural

resources”andcompaniesremained“productionratherthanmarketled”.Dairy

coops,forexample,with“largeunwieldyboardsdominatedbyproductionrather

than market interests”, were performing poorly commercially. Policies

prioritising indigenous industryhadtobe“called intoquestion”and incentives

redirectedand “concentratedon fewer firmswithhighgrowthpotential to the

exclusion or benignneglect ofmany small firmswhich soakup a gooddeal of

time, effort and resources of the State with little return”. But internationally

traded FDI had proved uniquely successful, greatly outperforming domestic

industry and providing high quality jobs, linkages to the economy and know-

how, andwasan “areaof growingopportunity suitable toourhighly-educated

work-force”.“Ashiftofresourcestothisarea”,itconcluded,“isjustified”.

Todrivethepolicyshift,stateagenciesweretoberationalisedandsupports

re-directedtogrowthsectorsona“companydevelopmentplan”basis.Supports

should shift from fixedassets tomarketing, upgrading technologyandproduct

21 LenihaninDáildebates21/05/1987;ICTUECmeeting20/05/87;NevintoHaughey,21/05/87,and

NevintoECmembers,05.06.87‘ref.1030’,GS-PA-1a;Haughey’s“tactful”statementinDáil27/05/87;“opposition”,inDáil04/06/87;“mediaapproval”,ITeditorials,27/05,and04,26/06/1987

153

development. International and financial services, and natural-resource based

exportingfirmswithgrowthpotentialshouldbe“selected”andassisted.22

This reflectedNESC proposals, though inmuch starker language, aswell as

IDA thinking, especially its robust defence of the FDI sector against Telesis’s

criticisms. The targets identified revealed Haughey own preferences and

Departmentsweregiventwoweekstocomeupwithappropriatecostedplans.

On 26May Haughey publicly announced several major projects to proceed

immediately,notably the financial servicescentre(IFSC),expansionof thebeef

industry, a commercially funded gas pipeline, and initiatives in forestry,

horticulture, tourism and maritime policy, again all private-sector driven. By

playingdownthepartnership“workingparties”butannouncingtheseinitiatives,

hewaspre-determiningthethrustofindustrialstrategy.23

Government also proceeded with a policy to radically commercialise the

farming sector. Responsibility for the food industrywasmoved from Industry

andCommercetoanexpandedDepartmentof“AgricultureandFood”,whichwas

henceforth to be industry- rather than producer-driven, and a horticultural

marketingboard,BordGlas,was established.Aplan for the food industrywas

producedbyIDAinitsfirstevercollaborationwiththatDepartment.24

Broadbase:mobilisingsocialpartnerinput

Having achieved budgetary breathing space, and with the MacSharry

Committee driving expenditure cuts and the Way Forward team industrial

strategy,Haugheyreturnedtothetalkswiththesocialpartners.

Giventherollingcuts,ICTUfacedgrowinginternaldissent.Disputeserupted

in the ESB, the new training agency FÁS, CIÉ and other public bodies, and a

campaign of non-compliance was launched by an “Alliance of Health Service

Unions” led by ambitious ITGWU official, Pat Rabbitte. Congress found itself

managing these revoltswhile facing a government determined on a continued

suspensionofspecialawards,andpublicpayguidelinesstipulatingcost-of-living

22 ÓhUiginntoHaughey,n.d.,withmemobyJohnTravers,‘PresentationtoTaoiseachandMinistersfor

FinanceandLabouronApril27thonIndustrialPolicy’,DTA-OHP23 HaugheyinDáildebates24and/05/1987;PressRelease,‘OfficeoftheTaoiseach’[notitle–announcing

initiatives],26/04/1987,GIS:D/Taoiseach24 “firstever”,JoeWalsh,MinisterforAgriculture,toTaoiseach16/04/87,and‘DraftofGovernment

Minutes’,23.4.87,‘BordGlas’,inDTA:OHP;IDAIreland(1987)

154

increases only, “tailored to EBR goals”. Ó hUiginn also insisted to ICTU that a

campaignfornon-paymentofhospitalchargesbeabandoned:“Theauthorityof

the Dáil cannot be flaunted”. Congress mounted token protests, refusing for

example to nominate to the new FÁS board, but drew back from Rabbitte’s

campaign. Ó hUiginn later suggested to Haughey that it was now time for a

conciliatorymove:ICTUcouldnotbeexpectedto“buyapig-in-the-poke”.25

Haugheyrevivedmomentumwithatypicalintervention.HeapproachedPhil

Flynn, LGPSU general secretary and, as observers noted, a republican if of a

differentstripe,proposingheaddresstheunion’sannualconferencedinner.This

wasunprecedented,forwhileministerialaddressestotheunionwerecommon,

thiswouldbeafirstbyaTaoiseach.Flynnconvincedhisexecutive,despitetheir

angeroverservicecuts,toinvitehim.McLoonerecallshowHealthMinisterRory

O’Hanlonhadbeengreetedwith“stonysilence”attheunion’shealthdivisionand

EnvironmentMinisterPádraigFlynn“faredlittlebetter”withits localauthority

division, but “it was different with Haughey”. Flynn in his conference speech

urgedtheuniontoholdtoitscommitmenttoanationalplan,mentioning“other

successful small economies where a consensus approach ... [had] resulted in

standardsoflivingfarhigherthanwehavehere”.ICTU,hesaid,wouldmake“any

faircompromises…tosolveIreland’seconomicproblems”.Haugheyinhisafter-

dinnerspeechdefendedhisstrategybutalsopromisedanagreementbeneficial

topublicservantsas “anessentialelementof theprogramme”.Hewasgreeted

byastandingovationanddelegatesqueuingforhisautograph.26

TheICTUremainedwary,notyetconvincedofHaughey’sbonafides,though

alsofearingthatabudgetdefeatwouldprecipitateanelectionthatcouldreturna

government less favourable to its strategy. It agreed to a first meeting of the

“Ministerial-ICTUWorkingGroup”on9 June todiscuss the“NationalPlan”and

public/private pay. The policy “working parties” agreed in April also finally

begantomeet.ÓhUiginn,asagreed,appointed“secretarylevel”andothersenior

civilservantswhileCongressnominatedsixtoeightofitsExecutivemembersto

eachgroup,ensuringthetwodriversofitsstrategy,AttleyandFlynn,wereonall25 ‘dissent”,‘CivilServiceUnionprotestsatpowersofnewBill’and‘UnionstomeetthreeMinisterson

healthcrisis’,IrishTimes13/06/87,andICTUECmtg.17/06/87;alsoNevintoTaoiseach,08/06/87,ICTUArchive:GS-PA-1a;ÓhUiginntoTaoiseach,29/07/87,‘Subject:MeetingwithICTU’,DTA:OHP

26 InterviewswithPhilFlynnandPeterMcLoone;“observersnoted”,Hastingsetal2007:37;Flynn,‘SpeechtoLGPSU’,15/05/87’,FlynnPapers;HaugheyinIRNReport21/05/87;Hastingsetal2007:37

155

three,alongwithofficialsNevinandCassells.Representativesofanti-agreement

unions, hostile to engaging, were conspicuous by their absence. The meeting

withHaugheywas short and formalbut, critically, he repeatedhiswish for an

agreementwhich“sawjobs,pay,taxreformandsocialservicesasinterlinked”.27

ICTUmobilisedallitsresourcestofleshoutproposalsforatwo-yearbudget-

linked plan. Years of ICTU policies were “ransacked” for useful material, and

priorityobjectivesset.Itwouldseekastatutoryminimumwageand“tradeoffs

between jobs and pay ‘moderation’” and pay increases and tax reform. A “40-

Point Jobs Plan” was produced, adopting NESC’s private-sector drivers while

stressingthepotentialofsemi-states. ICTUopposedprivatisationonprinciple,

but sought improved welfare benefits, reform of employment services from a

punitive to an enabling system, and reduced working hours. Ó hUiginn told

Haughey: “basically they are prepared to be moderate on pay in return for

measuresonjobsandtaxreform”.Theydidnotexpect“firmresponses”nowbut

onlythattheprocessgetunderwayandthatthearbitratorbere-appointed.28

Initial meetings of the policy groups consisted of ICTU representatives -

mostly Flynn, Cassells and Attley – presenting proposals, with officials, on Ó

hUiginn’s instructions,“noting”thesewithoutcommitting.Atearlymeetings,as

ICTUnoted,secondarynon-cost-increasingdemandsweremet,suchassupports

for workers’ cooperatives and advisory forums on worker participation and

industrialrelationsreform.Addressingthefirstmeetingofthegovernment-ICTU

industry policy group on 11 June, Haughey departed from his script to

emphasise, Lemass-like, how the “viability of the economy [was] at stake” and

theplanwouldbea“historic”departure.“Consensusondevelopmentmeasures”

would produce “an improvement in morale”, the “key to success”. This was a

27 ICTU,SpecialMtgofEC,02/06/87,‘NoteonAgendaforPayTalks–theCongressPerspective,27May

1987’,ICTUArchive:GS-PA-1a;ICTUECmeeting29/05/87,Item1260;NevintoECmembers:05.06.87,‘ref1030’and‘DiscussionswithTaoiseachonNationalPlan’,ICTUArchive:GS-PA-1a;‘JointGovernment-ICTUStatement’,09/06/87,GIS:D/Taoiseach

28 InterviewwithCassellsandfollowingmaterialinICTUArchiveGS-PA-1a:‘JobsandDevelopmentMeasures:DiscussionsonaProgrammeforNationalRecovery”,June1987;‘TaxReform.Discussions’,ConstructionIndustryCommittee:AProgrammeforConstruction.A40-PointPlanfortheBuildingIndustry,ICTUPressRelease.18/06/87.‘ICTUsubmitsproposalsfortheHealthServices’;‘SocialPolicy’,12/06/87,‘SocialPolicy’,12/06/87;D.Nevin,‘MeetingsofCongressCommitteesetc.inJune1987involvingExecutiveCouncilmembers,’28/05/87,[Cassells],‘SpecialMeetingofExecutiveCouncil02/06/87:NoteonAgendaforPayTalks–theCongressPerspective,27May1987’,Nevin,‘BriefingNoteforMeetingwiththeTaoiseach,9June1987’,09/06/87ICTUPressRelease,‘NationalTalkswiththeGovernment-ICTUProposalsforaProgrammeforNationalRecovery”,09/06/87,‘ICTU40-PointPlanonJobs’;ÓhUiginntoHaughey,cc.P.Teehan,‘Re:ICTUMeeting’,08/06/87,DTA-OHP

156

pointheoftenstressed, includingprivatelytothe IrishTimeseditorandtoPhil

Flynn:“thegreatmeritofwhatwe’retryingtodo…istoinstilconfidenceinthe

economy…,theessentialingredient…toturn[it]around”.29

Onthesameday,11June,HaugheyalsofinallymetandaddressedtheNESC,

making a significant proposal. Introducing the NESC report, Ó hUiginn said

councilrequestedareversalofthepreviousgovernment’smarginalisationofthe

bodyandanewstrategicroleforit.Haugheyundertooktoholdtothefour-part

NESCstrategy, abolishministers’ right to seek studies from the council, and to

restoreittoacentralrolein“elaborating”the“RecoveryPlan”.Hethenproposed

thecouncilundertakeanin-depth“strategic”studyon“IrelandandtheEEC”to

shapegovernmentstrategy.AlthoughtheEEChadplayedonlyamarginalrolein

Irishrecoveryandpartnershippolicy,Haugheyexpectedthistochangewiththe

SingleMarket.ÓhUiginnhadalreadydraftedabriefforthestudyandthecouncil

eagerly agreed to pursue it, Ó hUiginndescribing it as a keynational-strategic

task. Following the meeting, Ó hUiginn suspended all work on subordinate

projectstoconcentrateNESC’senergiesontheEECstudy,whichwouldtaketwo

yearstocompletebutplayasignificantroleinIrishECstrategy.30

Inastatementtwoweekslater,Haugheyemphasised“thewholetraditionof

Fianna Fáil Governments back to the early thirties” of “active intervention to

promote economic and social development in accordance with the resources

available”. This would continue, with a “realistic consensus with the social

partners”“oneofthemostimportantendeavoursofthisGovernment”.31

This statement came days before ICTU’s annual conference where the

leadership faced a swathe of motions denouncing health cuts and national

bargaining. The Health Service Alliance in particular had mobilised anti-

government sentiment which ICTU sought to assuage by presenting their

complaints to government. But anti-talks sentiment had largely shrunken to

29 J.Mooney,D/Fin.,toJ.TraversD/Taoiseach,12/05/87,inc.financialbriefingonICTUproposals,DTA:

S25875;ICTUECmtg.17/6/87;Haughey,inh/wnote,“Firstmtg.WorkingPartyonIndustry/Devpt.’n.d.,ICTUArchive:GS-PA-1a;IrishTimes,Brady2005:8-9,andFlynninHastingsetal.2007:31

30 ‘SpecialMeetingoftheCouncilwithTaoiseachandMinisterforFinance(Minutes),’11/06/87,‘PresentationbyChairmanonStrategyforDevelopment’,11.06.87,‘IrelandandtheEEC.RequestfromtheTaoiseach.’Confidential.11/06/87,NESCArchive:Box3b;‘AddressbyTaoiseach,Mr.CharlesJ.Haughey,TD,toNationalEconomicandSocialCouncil,’11.06.1987,GIS:D/Taoiseach;MinutesofCouncilMeetings17/07,11/09,16/10,20/11and17/12/1987,‘MeetingwithMinisteroftheEnvironment’,17/07/1987,CouncilMeeting16/10/87-‘LiteraturereviewforEECStudy’,NESCArchive:Box3b

31 Dáil25/06/1987

157

what a government official called ICTU’s “Dublin problem”, i.e. the sectional,

militant “Left”.Despite ill-tempereddebates, a strong speechbyCarroll,which

the Executive had urged him to give, stressed government’s concession of an

integrated pay/policy package, and ETUC leader, Matthias Hiinterscheid,

passionatelybackedtheICTUleaders,contrastingthepositiontheyhadachieved

to the retreat from tripartitismelsewhere inEurope and the stalling of “social

dialogue” even at EEC level. An ITGWUmotionwas easily passed, committing

ICTU to “pursue its objective of a national economic and social programmeby

consensusbetweenthedisparateelementsofsocietyandtheGovernment”.32

Over the summer, the working parties progressed laboriously, with much

stallingby theofficial side.Thegovernment-ICTU social policy groupmetonly

twice, officials refusing to commit on issues with “budgetary implications” or

which disturbed elite vested interests, such as medical consultants’ tax-free

earnings or drug procurement policy. The tax talks also met with official

unwillingness to commit until budget strategy was finalised. At the FUE/CII

social policy group, employers pressed for cost relieving demands, while the

farming group,whichmet six times, advanced little beyond IFA’s catalogue of

costincreasinggrants.ButbyAugustarangeofcompositepolicydocumentswas

neverthelesscompleted,themostsubstantialonethatonindustrialpolicy.33

Payandplanningagendas:craftingtheagreement

Government’sstallingonthepolicyworkinggroupswasofcoursedeliberate,

reflecting its pre-emptive strategy. But ICTU by this stagewas the least of its

worries,asemployers,whohadgainedleveragethroughtheplan’sdependence

onanagreedpaystrategy,suddenlyadoptedahardline,publiclydeclaringtheir

opposition to a central pay agreement and even taking out newspaper

advertisements explaining their objections. Their opposition also extended to

statutory minimum wages, reduced working hours, proposals for a Labour

RelationsCommission,paternity leave,reformofoccupationalpensionsand,as

32 ICTUADC1987:5-13,77-80,97-129,150-2;‘ICTUproposalsfortheHealthServices’,18/06/87,ICTU

Archive:GS-PA-1a;IT13/06/87;Interviewwithanon.D/Taois.official;ICTUECmeeting17/06/8733 ‘DiscussionswithSocialPartnersonNationalProgrammeforGrowthandEconomicRecovery’n.d.,DTA:

S25281-E;J.Cantwell,D/TaoiseachtoNevin,ICTU,15/07/87,encl.summaryreportofmeetingofWorkingGrouponTaxof6July1987,‘JobsandDevelopmentMeasures.DiscussionofaProgrammeforEconomicRecovery’,and‘ICTU/GovernmentDepartmentOfficials,WorkingGrouponJobsandDevelopmentMeasures:WorkingGroupSummaryPaper:IndustrialPolicy’,ICTUArchive:GS-PA-1a

158

they particularly impressed on Haughey, any “legislation for worker

participationatboardandbelowboardlevelintheprivatesector”.34

Government decided to first secure terms on public pay with ICTU. Before

meeting Haughey, ICTU agreed its own objectives as a “gross post-tax”

improvement in “real pay” in both public and private sectors, composed of a

modest annual 3 per cent increase – below predicted inflation – once it was

combinedwithequivalentcompensation intaxdeliveringarealvalue increase.

Toappeaseemployers, ICTUwaspreparedtoaccept increasesbeingsubject to

firms’ competitiveness and “ability to pay”. But in return it would need “firm

commitments” fromgovernmenton jobcreation,“howevermodest”,andtothe

“pay/taxadjustments”startinginJanuary1988.Suchasettlement,itwasaware,

“wouldinvolvea…scalingdownof[members’]expectations”.35

TwomeetingswithHaugheyandhisministersfollowed.Theseweretakenup

dealing with press rumours of a renewed public pay freeze, which Haughey

dismissed as “speculative …. rubbish”, and solo runs byministers announcing

industrial projects, which Haughey undertook to rein in. Government even

provided“confidential”revenueaccountsfor1987todemonstrateitsbonafides.

Tosecurethe“veryrestrained”settlementICTUnowappearedwillingtoaccept,

Haughey, at Ó hUiginn’s urging, and while continuing to stall on detailed

commitments,hintedpubliclythathewouldconcedesubstantialtaxreformand

“firmcommitments”onjobspolicy.WhatenabledgovernmentacceptCongress’s

pay proposal was ICTU’s unexpected consent to a voluntary redundancies

programmewhichwould“ease”pressureon thepublicpaybill.ÓhUiginn told

Haugheythatwithinflationfallingtowards3percentandexportsgrowing,the

1987 public pay bill “used in Finance estimates up to now” was in fact an

overestimate, and with staff reductions, “a gain” of £80m could be achieved,

sufficienttofinancethedeal.“Wehavenot”,headded,“toldICTUofthis”.36

34 FUEBulletin,June1987;IT,II,IP23/07/87;DiarmuidQuirke,Pres.FUEtoTaoiseach,27/07/87,‘Planfor

EconomicRecovery’,DTA:S2587535 dn[=DanMurphy],‘NoteforSpecialGrouponPaymeeting10/07/87’,J.Cantwell,D/TaoiseachtoNevin

15/07/87,encl.reportofmeetingoftheWorkingGrouponTaxof6July1987,‘Confidential.July1987.NotesformeetingwithTaoiseach,16July1987’15/07/87,ICTUArchive:GS-PA-1a

36 ‘JointStatementonMeetingbetweenGovernmentandICTU’,16/07/87,GIS:D/Taoiseach;ÓhUiginntoTaoiseach,29/07/87,‘Subject:MeetingwithICTU’,DTA:OHP;ICTUh/wnotesofmeetingof15/07/87,JohnTravers,D/TaoiseachtoDonal[Nevin],22/07/87,encl.‘ReceiptsintoandIssuesoutofExchequerbetween1/1/87and30/6/87’,ICTUArchive:GS-PA-1a;‘HaugheyhintsatPAYEcutinreturnforpay

159

With movement towards a public pay deal, the development plan was

finalised as government gave “firm commitments” on expanding semi-state

activities and “social equity”measures. The text of a “Programme forNational

Recovery” (PNR) was “generally agreed”, encompassing monetary and fiscal

goals, indicative job targets, social policy initiatives and a tax/jobs “trade off”.

Congress publicly lauded the package, Attley reminding members that unions

hadnofutureifthey“concentratedpurelyonwagesandconditions…Theonly

waywastogetthecountryonagrowthpattern”.ICTUpressedtheDepartment

oftheTaoiseachfor“continuousmeetings”tofinaliseit,withspecificjobtargets

forindustrialprojectsandapay/taxformulaweightedtothelowerpaid.37

But,asTheIrishPressreported,talksonthePNR“threatenedbreakdown”as

Congressrefusedtowithdrawitsinsistenceontheprivatesectorbeingincluded.

Ó hUiginn told Haughey he believed FUEwould relent with a bit of pressure,

given ICTU’s modest 3 per cent claim, which had to be “very attractive” to

employers given thehigher settlements emerging at theLabourCourt through

local bargaining. But, ignoring Irish Times editorials describing the emerging

consensusasessentialtoeconomic“certainty”andtoarecoverythatavoidedthe

social divisions of “Mrs. Thatcher’s Britain”, FUE’s Central Council again voted

againstany“returntonationalunderstandings”,andrejectedminimumwagesas

topping-uplowpaywasamatterforwelfarepolicy.Butitagreedtopostponea

definitivedecisionuntilafinalGovernment-ICTUpublicpayformulaemerged.38

Governmentand ICTUconspired to force thepacewithapublic sectordeal,

whichtheyquicklyconcludedaweekbeforegovernment’sbudgetplandeadline

of9October.Congressdroppeditsdemandforastatutoryminimumwage.But,

asÓhUiginninformedHaughey,itsfurthertermswerealsomoderateandakey

dealonredundanciesmadethepackageworkable.ICTUwouldnowaccepta2.5

percentannual increasewithmatching taxconcessionsover twoyears,witha

rises’,IrishIndependent,17/07/87;‘Cabinetofferspaydealforunionsupport’,IT05/08/87;ÓhUiginntoTaoiseach,26/08/87,DTA:OHP

37 Nevin‘To:EachmemberoftheExecutiveCouncil”,27/08/87,ref.4030:‘SpecialmeetingExecutiveCouncil,2September’,Cassells‘To:EachmemberoftheSpecialWorkingGroup”,11/09/87,ref.4030:NextmeetingwithTaoiseach,18Sept.’,ICTUArchive:GS-PA-1a;AttleyquotedinIT26/09/87;onICTUpressureanddemandsonD/Taoiseach,TraverstoTeahonandSec.[ÓhUiginn],handwrittennote,18/09/87,DTA:S25871andP.O’Sullivan,‘MeetingswithSocialPartners,conferenceroom,DepartmentoftheTaoiseach,18-23September’,15/09/87,DTA:S25875

38 ‘PayDealTalksonTightrope.Unions’ChallengetoHaughey’,IrishPress26/09/87;ÓhUiginntoTaoiseach,26/08/87,DTA:OHP;ITeditorial‘TonicfortheTroops’25/09/87;‘Specialdealforlowpaiddelayseconomicplan’,IT26/09/87

160

higherincreaseof3percentonearningsbelow£120p.w.oraflatminimumof

£4p.w.toensuretheover80,000publicserviceworkersandthequarterofthe

entire private sector in that category benefited proportionally. As tax

improvements in the Januarybudgetwouldserveasapay increaseequivalent,

deferringthefirstpayphasetoJuly1988wouldnotrepresentapay“freeze”.The

arbitratorwouldbere-instatedand“specialclaims”allowedtobelodgedthough

with awards only payable from July 1989.The cost of the overall paypackage

wouldbepartlyoffsetby theagreedvoluntaryredundancyscheme.Bothsides

agreed recommending that the same terms apply in the private sector except

wherestressedconditionsinindividualcasesprecludedthem.39

TheIrishTimesurgedtheFUE,whichdismissedthedealasgearedtoappease

thepublicsector,tocomeonboard,editorials(“IntheInterestsofAll”)stressing

its centrality to recovery and stressing ICTU’s concessions meeting employer

fears on the minimum wage, the “local conditions” clause, and the purely

voluntaryapproachtoworkerparticipation.ÓhUiginnwasshockedbytheFUE’s

obstinacy,havingbelievedthelowwage/taxformulasufficientforthem.Hesoon

learnedthatindigenousindustry,withitspredominantlyweak-sectoremployers

dominatingtheFUE,had“morelower-paidworkersthanwehave”andopposed

the 3 per cent or £4 flat rate minimum proposal. With little other choice,

Haugheyset9Octoberforlaunchingtheprogramme,settingfinalmeetingswith

eachgroupforthatverymorningtotrytofinalisetheiracceptance,followedbya

presseventintheafternoonlaunchingtheProgrammeforEconomicRecovery.40

Governmentmobilised its leverage to bring employers around. Inmeetings

with the FUE Haughey, as Turlough O’Sullivan recalled, intimated that “if we

didn’tgoalongwithit”hewould“dothedeal[withICTU]anyway”whichwould

“set the pace for the private sector”. On 7 October the FUE conceded the

minimum3 per cent/ £4 increase though onlywith strong conditionality. The

ratewouldbea“guideline”onlythat“could”applybutonly“withdueregard…

to the economic and commercial circumstances of the particular firm or

industry”, subject to “local negotiations and local agreement”, and with “no39 ‘CassellswarnsGovernmentonconditionsforpaypact’,IT05/10/87;ÓhUiginntoTaoiseach,02/10/87,

re:[draft]‘ProgrammeforNationalRecovery’,DTA:OHP40 IT30/09;ÓhUiginntoHaughey,02/10/87‘ProgrammeforNationalRecovery’,DTA:OHP;ÓhUiginnto

Ministers,08/10/87,encl.‘DraftProgrammeforNationalRecoveryfordiscussionwithsocialpartnerson09/10/87and‘MeetingswithSocialPartners’09/10/87,DTA:S25281-E

161

furthercostincreasingclaims…exceptwhereotherwiseagreedatlocallevel”.As

aseniorcivilservantnoted,thisformularepresentedthe“breakingpointasfar

as the FUEwere concerned”, and “thewords ‘could’ and ‘by local negotiations

andlocalagreement’…theoutcomeofverymanyhoursofdifficultnegotiation”.

Employersachievedotherconcessions,suchasexcludingtheLabourCourtfrom

an“interpretative”role,andtheclausesonannualleave,part-timeworkersand

working hours also all subject to “local agreement and practice”. Industrial

relationsreform,workerparticipationandparentalleavewereleftunspecific,to

be advanced through “consultation” and “advisory committees”. On securing

theseconsiderableconcessions,andwithonedaytospare,FUEagreedtosign.41

Farmers too sought further concessions. Their “working party” with the

Department of Agriculture and Food had progressed little beyond the IFA’s

catalogue of grant demands. But, after a meeting with Haughey in late

September, the IFA,believing ithadsuccessfully rebuffeda looming tax threat,

announced its new “special relationship” with government, and intimated it

wouldjointheagreement.ICMSA,ontheotherhand,fearingthethreatofafull

PRSIlevyonfarmersremained,threatenedtopullout.Atthefinalmeetingwith

Haughey on the morning of 9 October, ICMSA complained of the proposed

“unsuitable tax treatment for farmers”. Ó hUiginn presented a compromise

offering a consultation process with the PRSI charge phased in over several

years. When ICMSA rejected even this, Haughey offered to “solve ICMSA’s

problem by scrubbing their name from the draft Programme”, whereupon its

representatives “made no further contribution at the meeting …, having been

eliminatedfromfurtherparticipationbytheTaoiseach’saction”.AtÓhUiginn’s

urging,Haugheyalsoresistedotherfarmerdemands,suchasIFA’sEurocurrency

proposal, which Finance had warned would “involve a heavy cost for the

taxpayer”andexchequer lossesof25percentofamountsdrawndown. ICMSA

also demanded levies only at point of sale rather than income, but Ó hUiginn

warnedthatthiswas“completelyinconflictwithGovernment’scommitmentto

tax farmers on the same basis as everyone else”. Government offered some41 “setthepace”,interviewwithTurloughO’Sullivan,andsimilarHastingsetal2007:39;‘Major

breakthroughonEconomicPlan’,IT08/10/87;‘ProposalsforanAgreementbetweentheICTUandtheFUEandCIF’,[Memo:]‘MeetingswithSocialPartners’09/10/87,andÓhUiginntoTaoiseach,08/10/87,‘PointsEmployerbodiesarelikelytoraise’,DTA:S25281-E;KevinMurphySec,PSMD(D/Lab.)toÓhUiginnandTravers,01/12/87,DTA:S25857-A

162

sweeteners, such as “an aggressive international marketing strategy” for food

exports which the Minister had just that night agreed in Berlin. In the event,

Haughey had to concede several of the IFA’s demands. But government’s

leverageremaineditsCAPbargainingrole,and,asthepressreported–andapart

from ICMSA - the IFA and the other groups, describing the agreement as a

“historiclandmark”,agreedtosign,“pendingratificationbytheirmembers”.42

Congress secured some final concessions too. The Department of Labour,

warningofemployerhostility,hadadvisedÓhUiginn“againstany inclusionon

WorkerParticipation”,orifunavoidablethenatmosttalksonrecommendations

fromtheexisting“AdvisoryCommittee”.Italsoinsistedthatsimilarmeasuresin

thepublicsectorbemadesubjectto“budgetaryconstraints”.Aclausewasnow

agreed, even if diluted to the maximum employers had indicated they would

accept.Commitmentstoequalitymeasuresandindustrialrelationsreformwere

also finalised, again subject to consultative/“review” processes. Finally an

“umbrella” clause was added for “outstanding” issues, such as on-going local

authoritylay-offs,outstandingLabourCourtrulingsinthesemi-states,astrikeat

Irish Sugar etc., which it was agreed be resolved in urgent “bi-lateral” talks

betweenICTUandMinisters immediately theagreementwasratified.Congress

then agreed to sign, pending ratification by affiliates. The ICTU Executive

convenedstraightafter themeeting,narrowlyvoting–bywhatmajority isnot

recorded-torecommendthePNRataspecialconferenceon19November.43

Finally,havingfinaliseddisputedclauses,theFUEmetHaugheyandagreedto

sign,thoughsubjecttoratificationbytheFUECentralCouncilinlateOctober.

“TothestrainsofMiseÉire”:thepoliticalsymbolismofaplan ThefateoftheProgrammeforNationalRecovery,contentiousevenamongthe

signing groups’ leadership strata, now depended on endorsement by volatile

memberships.ButHaughey’sparamountdeterminationwas tohave itsucceed,

42 ‘MainPointsFarmerBodiesarelikelytoraise’,08/10/87,DTA:S25281-E;‘FarmtalksboostHaughey

strategyoneconomicplan’,IT24/09/87;ICMSAreport,‘NationalPlan1’,09/10/87,‘DepartmentofFinanceviewonextensionofEurocurrencyscheme,’12/10/87,DTA:S25858-A;DavidCostello,D/A&F,onbehalfofMinisterKennedy,inBerlin,toD/Taoiseach,09/10/87,andJ.Travers,D/Taoiseach,‘Note’,07/10/87,DTA:S25281-E;‘ICMSApullsoutofdraftNationalPan’,IT10/10/87

43 J.Travers,‘Note’,07/10/87.‘PointsICTUwantincluded’,andÓhUiginntoTaoiseach,08/10/87,‘PointsICTUarelikelytoraise’,DTA:S25281-E;ICTUECmeeting09/10/1987(‘SpecialMeeting’)

163

with his and his government’s political credibility riding on it. It was an

extraordinarilyhigh-riskpoliticalgamble,but,ashewouldlatersay,thecritical

turningpointandcrowningachievementofhispoliticalcareer.44

On the afternoon of those final meetings, the partner leaderships, together

with Haughey and his full cabinet, assembled in a Dublin hotel for the press

launch.When Ó hUiginn announced Haughey’s arrival, the doors swung open

and,asCarolCoulterreported,hesolemnlyledhisentourageupthehalltothe

“strainsofMiseÉire”,SeánÓRiada’sfamousscoretoafilmcelebratingthebirth

ofthestate.Thefragilityofthemomentwasreflectedinalastminutepanicata

rumoured public sector rebellion. Haughey, muttering “that’s very helpful”,

turned to those beside him, repeating “rhubarb, rhubarb” as he shook their

hands.Later,seeingaphotographerpoised,heputhisarmaroundanoff-guard

embarrassedPhilFlynn.Attleylatersaiditwaslikebeingin“afuckin’play”.45

InabriefspeechHaugheystressedthePNR’s“historic”significanceensuring

“alongperiodofindustrialpeace”thoughalso,withits“morerealisticbasisthan

any previousNational Plan, Understanding or Agreement”, “a better andmore

productivewayofconductingouraffairs”.Keepinghisoptionsopen,heentereda

caveatthatthePNR“supplemented”the“developmentandemploymentpolicies

already being carried out by Government in accordance with its own

programme”while adding “greater precision and newpossibilities”. Observing

fromadistance,T.K.Whitaker,whohadalwaysopposedHaughey’stripartitism

and been a proponent of statutory controls, and who would later describe

Thatcher’s “most creditable and enduring achievement” her re-establishing of

“thesupremacyofGovernmentandParliamentoversectionalinterests",seemed

bothaghastandimpressedinequalmeasureatHaughey’sachievement.46

ThePNR:aplanforsocio-economictransformation The PNR proposed a 3-year plan running from January 1988 to December

1990.Comparedtolateragreements,itwasarelativelyshorttext,theproduct,it

44 Haughey201345 Coulter,‘Nothingalloweddisturbthesoundofharmony’,IT10/10/87;AttleyquotedinHastingsetal

2007:4146 ‘EconomicPlan“amajorachievement”’,IT10/10/87and‘OpeningremarksbyTaoiseachatPress

ConferencetolaunchPNR’,09/10/87(“NotreleasedthroughGIS”),DTA:S25281-E;WhitakeronThatcher,and“impressed”,Chambers2014:240,371

164

stated,of the “concertedeffortsbyall interests” to face “thegrave stateofour

economicandsocial life”and “regenerateoureconomyand improve the social

equityofoursociety”.Itendorsedthe“principles”ofthe1986NESCReportand

followeditsstructure.Governmentwouldcontinue“tocontrolandcurtailpublic

expenditure” to reduce borrowing and the National Debt, but also “increase

economicactivity,reduceinterestratesandstimulatenewemployment”.Strong-

EMSalignment,paymoderationandtaxreformwoulddeliverlowinterestrates

and“promoteinvestorconfidenceandinhibitspeculativecapitalmovements”.It

detailedarangeofspecificcommitmentsontax,welfareandsocial“equity”,and

over a hundred infrastructure and industrial projects which, together with a

specialroleforstatecompanies,woulddriveeconomicandsocialrecovery.47

Surprisingly, given its secondary role in the creation of the plan, the first

sectionwastitled“EuropeanCommunityDimension”.ThisalignedthePNRwith

theasyetun-concludedDelorsplan,embracedthesinglemarket,andadvocated

anenlargedEECbudgetandregional/socialstrategies“tonarrowdisparitiesin

economicdevelopmentand living standards”.Achieving this consensusonEEC

strategy was a significant achievement by Haughey. Many employers

sympathisedwithThatcher’s anti-centralisation stanceandunions,notably the

ITGWU, anddespite reservationsby ICTU leaders, hadopposed the SEA in the

Aprilreferendum,rehashingtheir1972oppositiontoEuropean“capitalism”.48

ThePNRagreedprecisetaxreformtargetsoverthecourseoftheprogramme,

subject to improvingpublic finances, including reduced rates, an expanded tax

“net”, curbing the “black economy” and reforming collection systems to

“guarantee a significant improvement in compliance”, core issues for ICTU.On

“social equity”, welfare would be ring-fenced regardless of public spending

pressures, long-term dependent rates increased, servicesmodernised, equality

legislation introduced, and voluntary organisations “consulted” on policy. A

strategy for an “equitable, comprehensive and cost effective health service”

wouldbeproduced, includingprimarycare,de-institutionalisation,community-

basedandpreventativestrategies,reformofthepsychiatricservices,andother

areas.The “considerable”arrears inhealth contributionsowedby farmersand47 GovernmentofIreland198748 ICTUpositiononSEA,ICTUADC1988:220-1;“Europeancapitalism”,O’Dowd1992:iv

165

the self-employedwould be recouped.On education,measureswould increase

participation by “working class children”, the disadvantaged and those with

special needs. Vocational training was to be expanded and a Housing Bill

introduced. These reforms reflected ICTU positions developed over years, and

severalhadpreviouslyfeaturedintheNationalUnderstandings.

EmploymentandindustrialpolicycombinedWayForwardinitiatives,suchas

the IFSC, tourism, food, marine and forestry, with CII sectoral proposals and

ICTUdemandsforthesemi-states.Anoveralltargetof20,000jobsannuallywas

set, each project allocated a specific target, from 1,000 in beef processing to

smallbutprecisefiguresinvariousmicro-projects.Thestrategyhingedonstate-

driven growth of the indigenous industrial and services base by supporting

“selected Irish companies” to develop to be internationally competitive and

achieve the “size and vitality other small economies have achieved”. Inward

investment(FDI),whichhadperformedpoorly in the1980s,wasnotseenasa

primary driver, but rather an auxiliary element supporting indigenous

expansion,focused“onaspecialisedbasis”inspecificsectorsand“encouraged”

through re-fashioned fiscalmeasures. Thiswas a compromisewith theTelesis

position, hardly reflecting the driving role Haughey’s inner circle actually

foresawforFDI.Thewholestrategywouldbesupportedbyadrivetomodernise

marketingandmanagement,targethightechnologiesandnewskills,undertakea

“radical re-organisation” of agency supports, andmeasures to reduce costs to

businessand remove restrictionson state-companyexpansion,by legislation if

necessary.Itwasaprogrammeforaradicaloverhauloftheproductiveeconomy.

Thestrategycontainedonenotablehostagetofortuneindefiningprecisejob

targetsandstating these referredonly tonew jobs,notnet joboutcomes.This

representedamajorsuccessforHaughey.WhileICTUhadinsistedon,andwas

conceded,concretetargets,thatbêtenoireofWhitaker,Haugheyinsistedthatjob

lossesinsunsetsectorswereinevitableandthestatecouldnotacttosavethem.

ManyPNRinitiativesmetpartner-specificdemands.WhilethePNRpromoted

a market-led expansion of food, forestry and horticulture, the IFA secured

commitments “to safeguard Irish agriculture and family farm income” by

defending CAP, expanding “headage” schemes and renewing the Eurocurrency

166

programme Finance had opposed. The CII secured commitments on lowering

costs tobusinessandexpanding infrastructure.While ICTUgoals toendhealth

cuts, a national anti-poverty strategy and national minimum wage were not

achieved,itsecuredexpansionplansforstateindustries,socialpolicymeasures,

increasedwelfarebenefitsandanambitiousprogrammeoflegislativereform.

Finally, the PNR included provisions to ensure its delivery, especially, as

soughtbyICTUinparticular,amonitoringcommitteeoftopofficialsandpartner

representatives,chairedandsupportedbytheDepartmentoftheTaoiseach,with

inbuiltrecoursetotheTaoiseachandministersforresolvingproblems.

Politicalhighstakes:therockyroadtoratification Political partisanship and traditional partydispositions towards tripartitism

shapedpartypoliticalresponsestothePNR.Itwassooncleartherewouldbeno

“politicalconsensus”onitassoughtbytheNESC,theCIIandHaugheyhimself.

ThenewPDpartysimplyrejectedthePNRonprinciple,opposing“deals”with

“interest groups”. Fine Gael, because of rather than despite its “Tallaght

Strategy”, announced in September 1987, also attacked it as compromising

monetaryautonomybyitscapitulationto“vestedinterests”,whilepromisingto

supportthe1988budgetifitcontinuedintheveinof1987.Inamoretraditional

partisanpose,FineGaelinseveralDáilinterventionsrepeatedthislineofattack.

DukescondemnedthePNRas“neitheraplannoraprogramme”buta“dickied

up public service agreement” with “a fungus of promises attached”. He urged

partnerorganisations, thenballotingon it, toreject “the infamousprogramme”

with its“fictitious jobtargets”.Noonancalled it“acynicaldealbypublicsector

unions trading jobs for pay”. In the tradition of Whitaker’s and FitzGerald’s

fundamental antipathy to tripartitism, Dukes decried its “consensus” as

“illusory”,leaving“norolefortheDáilinthisprocess”.“Itisinthishousethata

democraticconsensusmustbeworkedout…andthattheimplementationofthe

actionrequiredtoreachtheagreedtargetsmustbedesignedandcrafted”.49

Labour’s initial response, reflecting its own historic internal contradictions,

sawSpringbothlaudCongressforseekingtosecureimprovementsforthelower49 Dukes,“vestedinterests”,IT03/09/87;Dukes,“neitherplannorprogramme”,Dáil08/10/97;“infamous

programme”Dáil20/10/97;NoonaninDáil02/11/87;“consensus…illusory”,IT24/10/87

167

paidandinsocialpolicy,andattackthePNRforits“miserly”payterms,funded

by“firing…publicservants”.TheWorkers’PartyrefrainedfromcriticisingICTU

directly,butgenerallyattacked “cuts”.Labour,whichhadbeenbadlyhit in the

election, barely returning twelve TDs, was convulsed by internal division as

EmmetStaggmountedaleadershipchallenge,withunionsupport,onaleft-wing

socio-economic policy platform. The embattled leadership of Spring, Desmond

and Finlay fought back with “a war to the death”. Bitter exchanges erupted

betweenDesmondandAttleyatLabour’sSeptember1987conference,justasthe

final, tense negotiations on the PNR were concluding. Attley defended ICTU’s

PNRstrategytoahostilehallandshoutsof“lies”and“nottrue”,whileDesmond

attacked theunions and eviscerated thePNR, pledging theparty’s unremitting

opposition. The Spring leadership saw off Stagg’s challenge, and immediately

positionedthepartytoopposeonprincipleHaugheyandallherepresented.50

Spring remorselessly attacked the PNR in the Dáil as “the con trick of the

century”, with its “sell-out” of natural resources, “firing” of public servants,

slashingof services, “niggardly”pay increases, and “cosmetic” tax reforms that

were“aninsult”toworkers.ICTUhadsignedadeal“hostiletoworkingpeople”

thatwouldbenefitonly“yuppiesandfinancialservices”hidingtheirmoneyina

capitalist “Holy Grail” on “twenty-seven derelict acres of Dublin dockland”. As

unionswereballoting,Springencouraged ICTU’sdissidents,alsocalling for the

Dáil toreject thePNRandgovernment to“re-opennegotiationswith thesocial

partners”torescind“thecuts”:“Weintendtofightthisplan”.51

The political opposition’s hostility to the PNR, and encouraging of partner

organisations to reject it, chimedwith the viewsof leading economists.Kieran

KennedyofESRI,despitehisroleindraftingTheWayForwardin1982,damned

it with faint praise, its job targets “unconvincing”. Colm McCarthy, despite

headingHaughey’s“BordSnip”,andPaulTanseyattacked“socialpartnership”as

anout-datedconceptandthreattoparliamentarygovernment.ASundayTribune

editorialcalledita“self-destructive”planandSeanBarrettofTCDapaydeal“the

countrycannotafford”.ThenearesttoapositiveviewwasBusiness&Finance,an

50 Spring“miserly”,Dáil,07/10/87;WPposition,IT08/10/87;“wartodeath”andDesmond-Attleyconflict,

Finlay1998:38-61alsoQuinn2005:246-8;“lies…nottrue”,IT28/09/87,Finlay1998:46-751 SpringinDáil,12,17and20/10/87

168

employer-friendlyorgan,whichgaveitlukewarmapprovalforcontainingwages,

while BrendanKeenan suggested itsmarginalmerit in defusing conflict in the

semi-states.The“DohenyandNesbittSchool”wasnotimpressed!Almostalone,

TheIrishTimes,ineditorialscontradictingthehostilecommentariesitpublished,

supportedboththepartnershipconceptandthePNRrecoverystrategy.52

Given the political and “expert” opposition, ratification of the PNR faced a

rockyroad.TheICMSA,whoseleadershadwalkedawayfromtheirfinalmeeting

with Haughey on 9 October, the day the other partners signed it pending

ratification,denounceditasa“capitulation”totheunions,causingtheIFAtooto

waver in its commitment. Haughey, under pressure from ICTU not to retreat

from theprincipleofequitable taxation,dispatchedMacSharry tokeep the IFA

onboardbyconcedingthatfarmers’PRSIwouldbebasedontheirdeclarednet

ratherthangrossincomes,enragingtheICTU.ButitmollifiedIFAleaders,though

evenfurtherconcessionswouldlaterberequiredtokeepthemonside.53

Employerswaveredtoo,despitethemajorconcessionstheyhadsecured.The

divided FUE Central Council deferred its final decision until ICTU’s conference

had made the unions’ position clear. With farmers exploiting their leverage

beforeratifying theagreement,and theFUE fearing theagreement’s impacton

their credibility with members, the PNR’s survival was down to whether the

unionswouldratify it.The ICTUExecutive, inaccordancewithpractice,agreed

that unions ballot their members and send mandated delegates to the 19

Novemberconferencetodecidethefinalstanceoftheoverallmovement.54

As this ballotingwas underway, opposition parties boosted the PNR’s trade

union opponents by intensifying their assaults on the PNR in the Dáil. Spring

declaredthat“beforetheinkwasdry”onit,governmenthadcapitulatedtothe

“bullyboytactics”offarmers,“desperatetohavetheirnameonthedottedline”,

something “all tradeunionists should take… into account”.. FineGael attacked

education cuts,demanding that government “suspendall furtheraction”under

52 Kennedy,IT15/10/87;McCarthy,IrishIndependent;Tansey,ST11/10/87;STeditorial11/10/87;

Barrett,IT10/10/87;Business&Finance14/10/87;Keenan,II10/10/87;ITeditorials10and11/10/8753 ICMSAattack,IT13/10/87;ICTUpressure,CassellstoHaughey,19/10/87,ICTUArchive:GS-PA-1c;

O’Sullivan,D/Taoiseach,toTravers,‘MeetingbetweenMinisterforFinanceandIFArePRSI’,30/10/87,DTA:S25858-A;‘SplitloomingoverPRSIreport’,IrishFarmers’Journal19/12/1987;JohnHynes,Dept.SocialWelfare,toJ.Travers,Dept.Taoiseach,10/12/87,DTA:S25858-C

54 FUEBulletin,Oct.1987;ICTUECmeeting09/10/1987(‘SpecialMeeting’)

169

thePNRandappealing tounions to foregopay increases tosave teaching jobs,

i.e.rejecttheagreement.APDmotiondemandedastatutorywagefreeze.55

GovernmentassistedthebeleagueredICTU,Haugheyhavingofficialssupplyit

with agency plans for specific PNR projects, instructing ministers to provide

details on projects within their remits, and launching several significant PNR

initiatives,notablytheCustomsHousesite, thenewsemi-state forestryagency,

Coillte,andthenewDepartmentoftheMarine,andstartingthedecentralisation

programme.Cabinetbackeddownonprimaryeducationcuts, launchinga joint

INTO/Department “review”. The public service redundancy scheme, already

popular,wasextendedtoallreleasablepublicofficialsover50yearsold.56

ICTU ratification depended on how unions voted at the special delegate

conference (SDC), where individual union delegates would be bound by the

positionadoptedbytheirunionthroughtheirvariousinternalprocedures.These

varied from democratic workplace or union hall-based secret ballots in most

publicserviceandlargergeneralunions,whichrepresentedthegreatmajorityof

workers, to “democratic centralist” executive-determined decisions in craft

unions–someofwhom,inadvisingrejection,toldtheirmembersthetermswere

“confidential” and to simply follow their instruction - and someemploying the

arbitrary process of a “show of hands” at mostly sparsely attended branch

meetings. Few British-based unions balloted, relying instead on their “Irish

Region” ormilitant-dominated local executive councils to reach an “informed”

position, aprocess controlledbyunionofficials and shop stewardswhowould

followthemilitantline.Eveninlargeunionsthatheldsecretballots,countingof

voteswas“in-house”.Butthebindingsenseofclassacrossallunionsmeantthat

eventhemost“militant”wouldacceptandabidebywhatevercommonposition

theSDCdetermined.TherewasnoappetiteforwithdrawalfromCongress.While

not impeccable, the ratification processes across the movement, representing

500,000workersintheRepublic,was,onbalance,aroughlydemocraticaffair.57

55 SpringinDáildebates20/10/87,FineGaelinDáil12,13,17/11/87;IT13and14/11/8756 ÓhUiginntoPádraicWhite,IDA,‘BackgroundBriefing’,23/10/87,CTT,‘SectoralDevelopmentProposals’

n.d.,DTA:S25281-E;‘SummaryConclusionsofMeetingofMinistersandMins.ofState’,01/11/87andM/Finance‘Aide-memoireforgovernmentonDecentralisationProcess,’01/11/87,DTA:S25858-B;‘GovernmentStatement’,04/11/87,GIS

57 IndividualratificationprocessesinPádraigYeates,unpublishedMAresearchpaper,2003,YeatesPapers

170

Thebasicdivide in theunionswas the sameas thatoverNWAs throughout

the1970s,ontheprincipleandbenefitsofcentralisedbargaining.Sectional,craft

andBritish-basedunionstendedtooppose,whilethelargernational-orientated

generalandmostpublicserviceunionshadleadershipsgenerallycommittedto

central agreements. These could usually secure amajority ofmembers behind

them,howeverprecariously.Somefactorscutacrossunions.Tradeunionistsin

strongprivatesectorfirmswhobelievedtheycouldsecurebettertermsthrough

localbargaining,forinstance,includingingeneralunionsliketheITGWU,tended

tobehostiletonationalagreementslevellingwagesdown,astheysawit.

Butanyagreementtosecureamajorityat ICTUlevelhadtohavethepublic

serviceandlargergeneralunions-especiallytheITGWUandFWUI-behinditto

outweigh themass of smaller opposing groups. Teachers could go either way

depending on on-going disputes with government, with INTO, representing

nationalschools,andTUItechnicalteachers,tendingtofavour,whilesecondary

school teachers (ASTI) tended to oppose, resenting being “held back” in the

interestsofthelow-paid.ThoughtheleadershipsoftheITGWUandLGPSUhad

beeninstrumentalinbringingthePNRabout,itwasunclearhowtheirmembers

wouldvote,withmuchinternaldiscontentevident.Themodestwageincreases,

and the impact of left-wing agitation or calls for rejection by Labour and Fine

Gaelleaderscouldwelltipamajorityevenintheseunionsagainstratification.58

Theresultsproducedanunevenpattern.Unionsballotingtoacceptincluded

most public servants, with civil service technicians (UPTCS, 6,000 members)

10:1, teachers (INTO, 20,000, and ASTI, 12,000), 2:1, telecom workers (CWU,

9,000)6:1andpostofficeworkers(PTWU)3:1 in favour. In theprivatesector,

bricklayers and painters, usually opponents, surprisingly supported it, swayed

perhapsbyhope fora recoveryof theirbattered sectors through theplan.But

theoppositioninitiallyseemedstronger,withtheATGWU(23,000),onthebasis

oflocalexecutivedecisions,rejectingit,ostensiblyby15:1.Itwasalsorejected,

bysometimessimilarlyquestionablemeans,byelectricians(ETU,10,000),white

collar/managerial staffs (ASTMS, 14,000) and construction craftsmen (UCATT,

11,000).Cutbackssawvocational teachers(TUI),unusually, reject it,aswellas

58 unpublishedresearchpaper,2003,YeatesPapers;‘Unionsuncertainonnationalplan’,IT02/11/1987

171

the small clerical-grade civil service union (FUGE). The greatmajority of very

smallunions,asusual,decided,usuallybyleadershipfiat,against.59

Withthisnearequalbalance,allnowdependedonhowthethreelargeunions

whose leadersweremost identifiedwiththePNR–theITGWU(Carroll),FWUI

(Attley) andLGPSU (Flynn) – all ofwhichused secret balloting, voted.Attley’s

traditionally well-disciplined pro-agreement FWUI (60,000), with its mainly

publicservicemembership,voted2:1infavour.Butinthelargestpublicservice

union, the LGPSU, whose general secretary, Phil Flynn, had been a primary

architectandpassionateadvocateofthePNR,itslargeelectedExecutivedecided

to recommended rejection. Thiswas due to the radical cuts in the health and

local government sectors, which dominated its membership. But despite this

recommendation, LGPSU members balloted to endorse the PNR, albeit by a

narrowmajority. The surprise result reflected both Flynn’s popularity and the

FiannaFáildispositionofmostmembers.IntheITGWU,itsExecutive,followinga

long, heated meeting, recommended a “yes” vote, after its authoritative

President,JohnCarroll,alsoaleadingarchitectofthePNR,urgeditto.60

The results in the LGPSU and ITGWU illustrated the key role of leaders in

determining union choices. This factor had also been critical in the unusual

decision by the bricklayers and secondary teachers to support the PNR. Both

unions were traditionally hostile to central agreements, but their general

secretaries,KevinDuffyandKieranMulvey,werepersuasivepersonalitieswho

stronglysupportedthepolitically-drivenpro-partnershipICTUleadershipcircle.

After the ITGWU counted the ballot of its 110,000 nominal members, the

union dramatically announced it would not reveal the result until the ICTU

conference,ostensiblysoasnot toprejudicehowotherunionsvoted.The Irish

Timesreportedthat“itisunderstoodtheballotcameclosetorejectingthedeal”

andsomeinCongresscertainlydoubtedamajorityhadactuallyvotedinfavour

atall.ButthemovewasalsotacticalbyCarroll,topanicopponentsofcentralised

dealsinotherlessdemocraticunionleaderships,whoroutinelyrejectedcentral

agreementtofostertheir“militant”image,butinrealitywouldpanicifanICTU

59 ‘SpecialDelegateConference,LibertyHall,Dublin,’19/11/87,[unpublishedreportofproceedings],ICTU

Archive:GS-PA-1c;‘Unionvotes’IT18and20/11/8760 OnITGWU,IrishTimes19/11/87andDevine2009;onLGPSUvote,IrishTimes18and20/11/87.

172

majorityactuallyrejectedit.TheofficialITGWUresultwas54percentinfavour,

inapollinwhich60percentpollofitsactual90,000membersvoted.61

ThetenseICTUconferenceon19Novemberreproducedthesedeepdivisions.

Cassells,onbehalfoftheCongressExecutive,argueddefensivelythatthePNR,in

which some “central features of our approach are incorporated”, was entirely

separate to government’s “massive cuts in public expenditure”,which had not

been negotiated, formed no part of the agreement, and would continue to be

opposed.ThePNRofferedtheonlyrealisticalternativetoatriumphofthe“new

right” economics of Thatcherism, which many in the elite, he said, eagerly

awaitedanopportunitytoimplement.Attleystressedthatunionaimsofdecent

wagesandlivingstandardscouldsimplynotbeachievedby“whatyoucangetby

negotiating in a few profitable companies”, throwing “the lower paid to the

wolves”. IncomingCongressPresident,BillWallace, pleaded for the agreement

“for the sake of the unemployed, … of our members and of those on social

welfare”.Withdelegatesvotingasmandated, thePNRwasendorsedby181 to

114.Thiswasacomfortablemajority,butthelarge“no”minorityinunionssuch

as the ITGWUandLGPSUwhosemajorityhadvoted“yes”,meantamajorityof

union members overall opposed it, certainly if the results declared for

oppositionalunionsaretakenatfacevale.TheICTUmandatewasprecarious,the

IrishTimesdescribingitas“effectivelyswungbyafewthousandITGWUvotes”.62

But armedwith themandate, ICTU immediatelydeclared itspriority to “get

on”with“rebuildingourindustrialbase”byensuringspeedydeliveryofthePNR

plan.InalettertoHaugheyonthedayofthevote,itsoughtanurgentmeetingon

the “immediate implementation of the Programme” and to establish the

structures“tomonitorachievementoftargetsandobjectives”.63

Employer endorsement followed twoweeks later, but only after a flurry of

backgroundactivitybygovernment.TheFUEhadbeenalarmedbyrumoursthat

the Labour Court, whose exclusion from an “interpretative” role they thought

61 IrishTimes19/11/87;onICTUdoubts,interviewwithS.McCarthy;onITGWUstrategy,Interviewwith

Attley;actualITGWUballotresultDevine200962 ‘SpecialDelegateConference,LibertyHall,Dublin,’19/11/87,[unpublishedreportofproceedings],and

‘RemarksbythePresident,Mr.BillyWallace,atthecloseoftheConference’,19/11/87,ICTUArchive:GS-PA-1c;ICTUAnnualReport1988:216;‘ICTUacceptsnationalplanbymajorityof63’,IT20/11/87

63 ICTUPressRelease,‘JobCreationfirstprioritysaysCongress’,19/11/87,ICTUArchive:GS-PA-1c;CassellstoHaughey,24/11/1987,ICTUArchive:GS-PA-1d;

173

they had secured, intended to regard PNR rates as generally applicable.

GovernmentstressedtoemployersthePNR’s“importancefornationalrecovery”,

with“adherencetothepaynormscrucial”,especiallyasiteffectivelysubsidised

payincreasesthroughtaxreforms.This,aswillbeseen,hadbeenHaughey’sfinal

concession to ICTU to assist it secure a majority at its conference. But the

DepartmentofLabourwarnedAhernthattheFUEwasrebellingontheLabour

Court issue. The 3 per cent/£4 “floor” had been the cause of “considerable

acrimony and negotiation” with employers, who had only finally agreed to

generallyapply itona locally-agreedvoluntarybasisand“wouldnotbe forced

by the…LabourCourts to do so”. A rumour circulated that the chairs of Joint

LabourCommittees(JLCs) intended, intheeventof tiedemployer/unionvotes,

toadoptadefaultpositionof issuingbindingwagesordersapplyingPNRrates.

This ledDanMcAuleyof theFUEtowarntheDepartmentthatanyadoptionof

the£4as “mandatoryonemployers”wouldberegardedbyFUEasabreachof

trust. The Department warned Ó hUiginn of “a real risk the FUE would be

instructed to withdraw”. He therefore intervened to assuage employer fears,

stressingthegovernmentpositionthattheCourtwouldnothavesucharole.64

While the Labour Court position was thus parked rather than resolved,

anotherproblemforemployers,indicatingthelimitedremitoftheFUEinmore

dynamicsectors,was,paradoxically,companieswantingtoretainfreedomtopay

increases above PNR rates. It was a problem similar to ICTU’s in profitable

industries.ThepresswasreportingnewwagedealsandLabourCourtawardsof

over 5 per cent, and the FUE confided its fear to a Department official that

“certainemployersandunions”had “jointly indicated to theLabourCourt that

theywanttooptoutoftheagreement”.McAuleysecretlylobbiedgovernmentto

pressure such companies to comply. Although Finance reported that the cases

werenotnewandmostlyinvolvedthelastphasesofpre-PNRdealsandinsome

cases non-FUE-member companies, the Department warned Ahern that “any

continued divergence from the agreed norms … will ultimately make it more

difficult to hold the line in the public sector”, and, stressing government’s

insistence on “adherence to the pay norms as crucial”, suggested he have

64 KevinMurphy[Sec.,D/Lab.]toMinister[forLab.],‘PayinthePrivateSector’,24/11/87,MurphytoÓ

hUiginnandTravers,01/12/87,andTraverstoTeahonandSec.[=ÓhUiginn],02.12.87,DTA:S25857-A

174

Haughey personally write to the MDs of the thousand largest companies

emphasisingtheagreement’s“importancefornationalrecovery”.65

TheFUEalsoworriedthatFDIcompaniesreliantonhighskilledlabourwould

offer pay increases “over the odds”, again putting it under pressure. Although

suchfirms,asadvisedbytheIDA,tendedonprinciplenottogoagainstnational

norms,theFUEbelievedthatHowmedica,aUSpharmaceuticalfirm,notanFUE

member but a pay “trendsetter”, intended to exceed the PNR’s 2.5 per cent

“guideline”. He needn’t have worried for, as Ó hUiginn told Haughey, its

managingdirector,DermotWhelan–laterCIIPresidentandLimerickUniversity

luminatus-had“assuredmethat,asamatterofprinciple,theywouldnotexceed

the guideline”. “They regard themselves as guests of the Irish economy and

wouldnotwish to takeanyactionwhichwouldbedetrimental to thenational

interest.Mr.Whelanalsoaskedmetoconveyhisregardstoyou”.66

Finally“assured”,especiallythroughthe“amplescopeforresolvingproblems

andtakinginitiativesatlocallevel”,theFUECentralCouncilannouncedthat“in

generalmemberswerepreparedtosupporttheProgramme…intheinterestsof

thecountryandthedevelopmentoftheeconomy”.WhiletheFUEwasfinallyon

board, the construction industry needed a further nudge. To bring it over the

line,governmentconfidentiallyprovided“clarification”thatthe1-hourworking

time reduction agreed in the PNR would be understood as applying in

construction only to workers on over 40 hours, and promising that public

contractswouldbeadjustedtocompensateforPNRpay-increasecosts.67

Fine Gael, after talks with whips on a commonmotion opposing increased

pupil/teacher ratios failed due to the PDs, moved another motion in the Dáil

demandingpublicservicepayincreasesbesuspendedtosaveteachingjobsand

rejectingthePNR.Haugheysoughtthroughalastminuteamendment,draftedby

ÓhUiginn,tosecuresupportforthePNRbystressingitsconsensusaspect.But

thisfailedandFineGael’smotionwascarried.Asitwasnotaconfidencevoteit

65 ‘Unionsuncertainonnationalplansupport’,IrishTimes02/11/87;Murphy[Sec.,D/Labour]toMinister

‘PayinthePrivateSector’,24/11/87,DTA:S25857-A;D/Finance,‘SettlementsinexcessofPrivateSectorPayAgreementassociatedwiththePNR’,Dec.1987,DTA:OHP

66 OnIDAguidancetoTNCs,InterviewwithPádraicWhite;onHowmedica,ÓhUiginntoTaoiseach,‘NationalProgramme-PayGuidelines’,11/11/87,DTA:OHP.OnWhelanalsowww.ul.ie/ceremonies/dermot-patrick-whelan

67 FUEBulletin,Nov.1987;ThomasReynolds,MD,CIF,toÓhUiginn,24/11/87,DTA:S25858-C

175

could not stop the PNR proceeding, but it showed the limits of the Tallaght

StrategyandendedHaughey’shopesofa“politicalconsensus”onthePNR.68

LastminuteconcessionshadbeenessentialtosecuringratificationofthePNR,

including a rather dubious interpretation of the Labour Court’s remit and the

working hours clause of the PNR to appease employers. The agreement also

failed toachievepolitical consensus in theDáil. Its final ratificationbypartner

organisations,howeverclose,resultedfromthesingle-mindeddeterminationof

government and beleaguered pro-partnership ICTU leaders to achieve their

“consensusplan”.DespiteCIIenthusiasm,considerablepoliticalinterventionhad

been required to finally bring employer leaders on board. Haughey’s own

dramaticinterventionsmeanthishigh-stakesstrategynowhadbuy-in,however

precarious.Withoutthe“fewthousandvotes”oftheITGWUhispoliticalposition

might well have been fatally undermined, as the only alternative available, a

Thatcher-likestrategybackedbyFineGaelandthePDs,wouldhavecontradicted

everythinghestoodforinpolitics.EnsuringthesuccessofthePNRasmorethan

simply a “dickied up public service agreement” with “a fungus of promises

attached”,asDukescontemptuouslydescribedit,wasHaughey’snextchallenge.

68 ÓhUiginntoChiefWhip17/11/87,DTA:OHP;Dáil24/11/87;DáileventsalsoIrishTimes25/11/1987

176

177

Part3:

Implementation,1987-89

178

Chapter7Thestrategyanddynamicsofpartnership,1987-89Kick-startingthepartnership“system”,December1987 Once the unions had ratified the agreement, Haugheymoved to embed the

newsystem.ICTUwasjustasdetermined,intentongettingthe“CentralReview

Committee” (CRC) up and running while simultaneously establishing political

distancetogovernmentwitha“CampaignforJobs”aheadofthe1988budget.1

Beforemoving,governmentassesseditsposition.Theeconomicsituationwas

precariousfollowingtheLondon/NewYorkstockmarketcrises.TheESRIurged

thattoavoidrecessionPNRexpenditurereductiontargetshadtobemet“infull”

which, it pessimistically opined, should lead “within a couple of years” to a

“return toapathof steadygrowth”.The IrishTimeswarned that a “worst case

scenario”mightrequirere-negotiatingthePNRtoachievehighercuts.ThePNR’s

prioritisingofmonetarystabilisationallowedgovernmentagradualistmoderate

approachontaxreform,soitstartedwithlow-costcommitments,suchaslabour

lawreform.ButMacSharry’sreportingtocabineton10Decemberthat1987ERB

reduction targets were “certain to be achieved” created budgetary space,

allowingHaugheyorderthatChristmaswelfarebonuses,whichthecoalitionhad

suspendedandhehadnotcommittedtorestore,bepaid.2

This opened the door for ICTU to engage. But it had several “outstanding”

issues,which PNR’s “umbrella” clausewas designed to resolve, it firstwanted

addressed. These included local authorities laying off workers for cost-saving

reasons, health boards cutting student nurse salaries, the pupil/teacher ratio

review,and thehomelessnessbillpromised forChristmas. Itwasalso irritated

byministerial announcements of PNR initiativeswithout consultingwith it or

mentioning their PNR context. These included the Gleeson Report which had

embarrassingly advised a 15 per cent salary hike for top state officials, an1 CassellstoHaughey,24/11/1987,DTA:S25857A;‘PNR-ICTUContinuesCampaignforJobs–Addressby

PeterCassells…toSSISI’,03/12/87,ICTUArchive:GS-PA-1c2 ESRI,Mid-termforecast,Dec.1987;IT(editorial)20/11/87;‘M/LabourpublishesReviewofEquality

Legislation,’30/11/87,GIS:D/Labour;D/FinancetoD/Taoiseach,‘BudgetaryDevelopments’n.d.[10/12/87],DTA:S25862-A

179

“efficiencyaudit”demandedbytheIFAofstaffandservicesattheDepartmentof

Agriculture,andsolorunsbyAhernwith“discussiondocuments”onlawreform.3

Employersalsohadconcerns,FUE’sprioritybeing toensurePNRpay terms

werenotanational“norm”enforceablebytheLabourCourt.DefiningPNRpay

termsassubjectto“localconditions”and“localnegotiation”hadbeenvitalinit

signingthePNR.Anyattempttore-openthesubjectontheCRC,Departmentof

Labour officials warned, would only “muddy the waters on what the Pay

Agreement entails” and cause anFUE “walk-out”. Congress,when it learnedof

this,wasalarmedattheapparentconcessiontoemployersonwhichithadnot

beenconsulted.TheDepartmentoftheTaoiseachknewtheissuewouldhaveto

beresolvedinICTU’sfavour,asthey“had‘sold’theProgrammetotheirmembers

on[the]basis,interalia,of[its]specialprovisions…forlow-paidworkers”.4

HaugheyarrangedtomeetbothICTUandCII/FUE–inthatorder,asever.He

assured Congress beforehand on some issues, explaining that the “efficiency

audit”was a purelyDepartment-IFA affair, formedno part of the PNR, andhe

hadnotorderedit.Actionwouldalsobetakenontheotherissuestheyraised.He

had Ó hUiginn berate the Department of Environment over continued local

authoritylay-offsandthehousingbill,tellingtheminaction“detractedfromthe

credibilityof theProgrammeandtheGovernment’scommitment to it”.Healso

orderedthatarrangementstoestablishtheCRCbe“expedited”.5

Before meeting ICTU, Haughey, through Ó hUiginn, instructed ministers to

arrange “bilateral”meetings to resolve its grievances. Theywere also tomake

sure departments were “gearing their activities very firmly to secure the

employment targets set out in the Programme” and that unilateral

announcementsceased.TheICTUvotehadbeen“veryclose”and“agooddealof

scepticism among union members in relation to Government commitment”

remained. Their “perception” was of “Government Departments and State3 J.T.[=Travers]toSec.[=ÓhUiginn],‘MeetingbetweenTaoiseachandMinisters…withReps.ofICTUon

10thDec.’,03/10/87,CassellstoÓhUiginn,04/12/87re“efficiencyaudit”,DTA:S25862-A;‘MeetingofTaoiseach,M/FinanceandM/Agric.withIFA,ICOSandMacranaFéirme’,13/11/87,GIS:D/Taoiseach

4 TraverstoTeahonandSec.[=ÓhUiginn]02.12.87,andJ.T.[=Travers]toSec.,‘MeetingbetweenTaoiseachandMinisters…withRepresentativesofICTUon10thDecember’,03/10/87,DTA:S25857-A

5 h/wnote,J.T.[=Travers]oftelephoneconversationbetween“Sec.”[=ÓhUiginn]andPeterCassells,07/12/87,‘MeetingbetweenTaoiseachandMinistersandEmployerBodies’,14/12/87,DermotNally,Sec.,D/Taoiseach,toM/Finance,08/12/87,andÓhUiginn[toHaughey],‘AideMemoireforGovernment-PNR:ProposedArrangementsforEstablishmentandOperationoftheCentralReviewCommittee’,ÓhUiginn,h/wnote,n.d.,‘PNR1987ReviewandMon.Cttee’.,DTA:S25857-A

180

agencies not actively pursuing the provisions of the Programme” and this

“lackadaisicalapproach”mustchangetoan“urgentone”.Congress’sfearsmust

be “allayed by firm implementation of the measures … and by demonstrating

earlyprogress”, essential “if theprogrammewasnot todisintegrate”.Plans for

PNRinitiativesintheirremitweretobesubmittedbeforeHaugheymetICTU.6

At themeetingwithCongress,Haugheydominatedon the government side,

withministerscontributingonlywhenasked,andsimilarly,anddespitea large

delegation, Cassells and Flynn – as Attley couldn’t attend - provided most of

ICTU’s input. In front of his silentministers Haughey detailed how each ICTU

issuewasbeing“immediately”addressed,andundertooktoreininsolorunsand

deferGleeson.Hegavedetailedupdatesonmeasures initiatedandtheplansof

eachdepartment,andassuredICTUof fullcivilservicecooperation.Timescales

forcommencingprogrammeswerediscussed,bilateralmeetingswithministers

arranged, terms of reference for the CRC, which Ó hUiginn had drafted with

Haughey, agreed, and an inaugural date set for its first meeting the following

week.InamajorcoupfortheICTUthatdisregardedFUEthreats,Haugheysaid

governmentconsideredthePNR’spaytermsasgenerallyapplying,unlesswhere

inexceptional casesa company’sdifficultiesprevented this.He thuseffectively

concededLabourCourtenforcement. ICTUagreed to theCRCbeing focusedon

programmedelivery,withpayamatterforaseparateforum.Agovernment-ICTU

“Joint Statement” followed, listing the PNR measures already initiated,

welcomingtheCustomsHouseproject,andnotingthe“bounce”intheeconomy

alreadyapparentduetothestabilityandconfidencethePNRprovided.7

6 Instructionstodepartments,ÓhUiginntoTaoiseach,‘MeetingwithICTU10/12/87’,alsocorrespondence

betweenTravers/ÓhUiginnandvariousDepartments/agenciesB.McDonagh,D/CommunicationstoTravers,D/Taoiseach,09/12/87,DTA:S25862-A;“ICTUvoteveryclose”,J.T.[=Travers]h/wnoteoftelephoneconversationbetween“Sec.”[=ÓhUiginn]andCassells,07/12/87,and‘MeetingbetweenTaoiseachandMinistersandEmployerBodies’,14/12/87,DTA:S25862-A

7 h/wminutesofGovt.-ICTUmeetingof10/12/87,‘Documentation,PNR’[formeeting10/12/87],J.T.[=Travers]toSec.[=ÓhUiginn],‘MeetingbetweenTaoiseachandMinisters…withRepresentativesofICTUon10thDecember’,03/10/87,DTA:S25862-A;D/I&C,‘ListofIndustrialMeasures’,TourismSection,D/I&C,‘BriefforTaoiseach’smeetingwithICTUon10December’,09/12/87,JohnHynes,D/SocialWelfaretoTravers,D/Taoiseach,‘MeasuresbeingimplementedbyD/SocialWelfare’,10/12/87,andD/Taoiseachmemo,‘SocialPolicyAspect’,DTA:S25858-C;ICTU,‘Confidential–PNR,ReportofMeetingwiththeTaoiseach,10December1987’,ICTUArchive:GS-PA-1c;ÓhUiginn[forTaoiseach]:‘AideMemoireforGovernment,PNR,ProposedArrangementsforEstablishmentandOperationoftheCentralReviewCommittee’,DermotNally,PrivateSec.D/Taoiseach,toM/Finance:08/12/87andÓhUiginntoTaoiseach,10/12/87,DTA:S25857-A;‘JointGovernment-ICTUStatement’,10/12/87,GIS:D/Taoiseach

181

HaugheythenmettheFUE,CIIandCIF.Whileexpressinghis“understanding”

for their position on the pay issue, he quickly moved on to the benefits to

businessofbudgetdiscipline,theeconomicstabilityprovidedbythePNR,andits

growth and infrastructure plans, with which CII enthusiastically engaged. He

then met farming organisations. He remained hopeful the ICMSA could be

induced to re-engage, instructing thatplacesbe reserved for themon theCRC,

andassuredanervousIFAthatPRSIlevieswouldbedeferreduntilthePensions

Boardhadcompletedareviewoftheinsuranceliabilitiesoftheself-employed.8

Withthemainpartnersplacated,thefirstmeetingoftheCRCtookplaceon18

December. “Bilateral” pre-budgetmeetingswere also arranged during January

1988. The budget continued MacSharry’s schedule of cuts and while the PDs

attacked concessions to “interest groups”, Fine Gael did not oppose it and the

FUE and CII welcomed it. Although it deferred farmers’ PRSI and Spring

denounced it as “miserly and penny-pinching”, it included PAYE and welfare

improvements.ICTU,whilecriticisingthecuts,welcomedthis“firststeptowards

theimplementationofthetaxreformandsocialequityelements”ofthePNR.9

Partnership did not end the routines of class warfare, with Congress

responding to an employers’ Christmas statement, which boasted of having

minimisedwagesandcoststhroughthePNR,byattacking“scroogeemployers”

resisting basic PNR increases and highlighting ICTU’s success in having the

minimumratesagreedapplyinggenerally.10

Socialpartnershipwasupandrunning.

Institutionaldrivers:CRC,NESCandtheState

CRC:a“mechanismuniqueintheEuropeanCommunity”

A1990reviewofthePNRdescribedtheCRCasa“mechanismuniqueinthe

EuropeanCommunity” enabling “the social partners tohave anon-going input

into Government decision-making on economic and social policy”. Those

8 Mtg.,TaoiseachandMinistersandEmployerBodies.14/12/87’,DermotNally,PrivateSec.D/Taoiseach

toMin.Finance:08/12/87,DTA:S25857-A;JohnHynes,D/SocialWelfare,toJ.Travers,D/Taoiseach,10/12/87,DTA:S25858-C;‘SplitloomingoverPRSIreport’,IrishFarmers’Journal19/12/1987

9 FUEBulletinandCIIBulletin,Jan.1988;ICTU‘StatementonBudget’,27/01/88,inICTUAR1988:223-5;DickSpring,‘Miserlyandpenny-pinching’,andCassells,‘Firststep’,CorkExaminer,28/01/88

10 FUEBulletin,Dec.1987;‘JLCs£4minimumtoberepaid’,IRNReport,07.01.88;ICTU,‘PressRelease’,22/12/87,ICTUArchive:GS-PA-1c

182

involved, from Ó hUiginn to Flynn, Cassells to Power, recall its meetings as

sometimesgruellingorexasperating,butmostly collegial, innovativeandquite

effective. It provided the PNR’s administrative dynamic, coaxing programme

delivery, trouble-shooting problems and resolving impasses. It met monthly

(except August) in the prestigious conference room of the Taoiseach’s

Department, over 19 months from December 1987 to September 1990, when

negotiationsonasuccessoragreementbegan.Itsmodusoperandiwasconsensus

and confidentially though, as Haughey told opposition leaders criticising its

“secrecy”,itsminuteswereonthepublicrecord,availableintheDáilLibrary.11

TheCRC,chairedbyÓhUiginnwhonevermissedameeting,consistedofsix

members each from ICTU and business/employer groups (two each from CII/

FUE/CIF),and four from farmingbodies (two IFAandoneeach fromICOSand

Macra na Féirme),with two held “open” for ICMSA. Civil servants – “assistant

secretary or higher”, as the terms of reference specified – were appointed by

Finance,LabourandIndustryandCommerce,withothersattendingasrequired.

The CRC focused on monitoring programme delivery, accepting that pay and

otherissueswereseparatemattersforthe“negotiating”and“politicallevels”.12

ICTU’srepresentatives-Attley,Flynn,Browne,KirwanandQuigley-wereall

strongpartnershipadvocates,andmembersofeither,orboth,theNESCandthe

CongressExecutive’sGPC.Theywerebacked-upbyfull-timeofficialsNevinand

Cassellsor,followingNevin’sretirement,PatriciaO’Donovan,theCRC’sfirstand

solewomanmember.Althoughetiquetteprescribedthatseniorelectedfigures–

“presidents”etc.-representtheirorganisations,itwasthefulltimeofficialswho

providedmostinput.CongressPresidentJohnCarroll,despitehiskeyroleinthe

PNR, attended only the “inaugural meeting”, as figures at this level, like their

politicalcounterparts,didnottoattendtheCRCbutpresidedinsteadat“political

level”meetingswithHaughey.Thesenior figureswhoattendedregularlywere

Attley,FlynnandBrownethemostconsistentforICTU,thedominantfigurefor

employers Jim O’Brien, divisional director of FUE/FIE, until joined by John

Dunne in 1989, for the CII Liam Connellan, Director General, and Con Power,11 CRC1990;InterviewswithCassells,ÓhUiginn,Power,O’Sullivan,Attley,O’Donovan;Dáillibrary,

HaugheyinDáil,02/03/8812 ÓhUiginn[forTaoiseach]:‘AideMemoireforGovernment,PNR,ProposedArrangementsfor

EstablishmentandOperationoftheCentralReviewCommittee’,DermotNally,PrivateSec.D/Taoiseach,toM/Finance:08/12/87,DTA:S25857-A;onCRCmembershipseeAppendixA

183

chiefeconomist,andfortheIFAMichaelBerkery,itsgeneralsecretary,andCon

Lucey, its chief economist. Similar level officials also attended for ICOS and

Macra.GovernmentwasrepresentedbyÓhUiginn,hisassistantsecretary,Paddy

Teahon,andagainwithconsistentattendance,assistantsecretariesfromFinance

(Tutty and O’Gorman), Labour (Bonner) and Industry and Commerce (Woulfe

and Dorgan). These were also government appointees on NESC. Typical CRC

meetingsinvolved8to12“socialpartners”andfrom12to20stateofficials.13

InFebruary1988,ÓhUiginnproposeda“SecretariatGroup”(SG)toconvene

betweenmeetingstoorganisetheagendaandfreeCRCofmundanebureaucratic

work.AsomewhatsuspiciousCRCagreedtoit“onatrialbasis”,butitbecamea

regularancillarystructure.The“SG”waschairedbyTeahonandcomprisedeight

“partner”members - themain full-time official for each organisation - and an

assistant secretary from each department. For ICTU this was Cassells, or

sometimesO’Donovan,butgiventheiractivismandtheconsensusethos,thefact

theywerejusttwounionpeopleamongeightpartnersontheSGdidnotdilute

the ICTU input.To facilitateopendiscussionandefficientdecision-making, the

SG dispensed with minutes, producing only simple agreed “Action Points” for

consideration by theCRC, though luckily for historians extensive hand-written

notesofmostSecretariatGroupmeetingssurvive.14

HaugheyhadplannedtoopentheinauguralCRCmeetingwithahigh-minded

speechonitshistoricsignificanceandthe“solemn”commitmentofgovernment

todeliveronPNRgoals.Butitturnedoutamoreprosaicaffairlackinghistorical

resonance, as Haughey was again ill and could not attend. It discussed

departmental progress in resolving “outstanding” issues and a long composite

document of progress by departments on PNR commitments. The CRC’s

confidentialand“consensus”modusoperandi, farfromnourishing“groupthink”,

facilitated open and robust debate, with little grand-standing.With no voting,

numbersattendingwasirrelevant.Consensuswasfarfromalwayspossible,but

only rarely did partners insist on their dissenting views being recorded.More

usually,minorityviewsweretakenbypartnerstothe“politicallevel”.Thatthis

13 RecordsofCRCmeetings1987-89;ICTUECmeeting16/12/87,Item1371;SeealsoAppendixA,CRC

membership,andAppendixB,CRCattendance1987-9014 DTASGandCRCrecords

184

modusoperandi workedwas assisted by the fact thatmost CRCmembers and

officials,includingÓhUiginn,kneweachotherfromNESCandotherforums.15

Ó hUiginn, a pro-active chairman, representedHaughey,withwhomhe had

closealmostdailycontact,ratherthangovernmentperseorthecivilservice.He

intervened to initiate or steer debates, support particular partner demands,

pressurise officials, or deflect partner claims to defend state interests. Hewas

highly respected by all members and his authority – often “a weary stare”

sufficing-enoughtoensurecompliancefromthemostrecalcitrantcivilservant.

Whendivisionsarose,hissupport forwhicheverside–representingHaughey’s

preference – determined the balance of “consensus”. Other civil servants also

actively debated propositions or defended their departmental interests. Itwas

notalwayspossibletoleavedisputesatthedoor,causingtheFUEinJune1988to

againinsistthatpayanddisputesbeexcluded.ArareexceptionwaswhenICTU

protestedtheCIF’srefusaltoincreasepensioncontributions.Claimingthiswas

“contrary to the spirit and intent of the PNR” and warning of inevitable

“confrontation”, ICTU asked Ó hUiginn to use his “good offices” to ensure CIF

“respect[ed]theunderlyingcommitments”.CIFwasbroughtquicklytoheel.16

RegulardisputesaroseoverinterpretationofPNRpolicies.WhentheIFAand

ICTUclashedoverVATrefundsandPRSIforfarmers,onÓhUiginn’ssuggestion

theCRCparkedtheissuebyadvisingtheIFAtopursueitsgrievancedirectlywith

government. On other partner clashes with government, the CRC sometimes

backedaggrievedpartners,aswhenAgricultureMinisterO’Kennedyinsistedon

appointingdirectorsofhischoicetothenewTeagascboard.TheIFAprotested,

demandingformalrepresentation,andICTUtheelectionofworkerdirectors.On

ÓhUiginn’sadvice,HaugheyhadO’Kennedy“takeaccount”oftheirrequests,and

theirnomineesweredulyincludedamongO’Kennedy’sappointees.17

15 ‘DraftStatementbyAnTaoiseachattheInauguralMeetingofthe[CRC]establishedon18December

1987’,DTA:S25857-A,TraverstoSecretariesofallDepartments–02/12/87,andcorrespondencewithDepartments,DTA:S25858-C;‘SpecificMeasuresincludedintheProgrammeforNationalRecovery:SummaryofpositionsasreportedbyGovernmentDepartments,Dec.1987’,‘CRC,PNR:firstmtg.Friday18December1987,Dept.TRoom116’,Agendaandcorrespondenceforfirstmeeting,andMinutesFirstmeetingoftheCRC,18/12/87,DTA:S25857-A

16 “wearystare”,Attleyinterview;FUEinsistence,h/wnotes.‘SecretariatGroup16/6/88’,DTA:S25857-F;constructionindustry,TomMcGrath,ICTU,toÓhUiginn,26/04/89:‘Re:ProgrammeforNationalrecovery’,DTA:S25857-R

17 farmer’sPRSIissue,h/wnotes,CRCSecretariatGroup,‘Sec.Group16/6/88’,DTA:S25857-F;Teagascdispute,CRC.SummaryReportofThirdMeetingheldonThursday,18Feb.1988,DTA:S25857-B;D/A&F,memo,‘AbolitionofAFT’,21/03/88,S25857-C;CRC6thMeeting–h/wnotesforMinutes,n.d.[26May

185

ICTU ensured that the check-listing approach tomonitoring progress of the

programme,whichHaugheyhadproposedfortheinauguralmeeting,becamethe

CRC’s standard operating procedure. Each meeting examined the bulky

composite document, updated monthly, “Specific Measures included in the

Programme for National Recovery: Summary of positions as reported by

Government Departments”. This rolling reporting process provided the

committee’smonitoringdynamic.ICTUalsoinsistedonprecisedates“bywhich

implementation of specific measures are to be achieved”, reflecting its

frustrationwithbureaucratic“blocking”andevasiverepliesbyofficials.18

Despite Haughey’s centralised control, officials were prone to continue in

whathehadcalledtheir“lackadaisicalapproach”.TheDepartmentofI&C,while

establishing a special unit tomeet CRC’s reporting requirements, remained, to

the exasperation of Congress, often evasive, or vague on detail, while Finance

also tended to minimal reporting, quoting budget confidentiality, and

Environment listed other impediments. When John Travers of Taoiseach’s,

reflecting the CRC’s growing impatience, politely asked I&C to provide “more

activefollow-uponspecificcommitments”andon“precisestepsbeingtakenon

a sector by sector basis”, it responded that “while not wishing to be

uncooperative”and“whilesatisfiedtoworkwithintheparameterslaiddownby

the Taoiseach” for the PNR, itwould require time to study the issues, and for

“material tobeprepared,co-ordinatedandcleared”.Traverspromptly“put the

Departmentonnoticethatdetailedprogressreports”beprovided,sarcastically

suggestingleaving“the‘study’tofollowtosupportsuchactioninduecourse”.19

ThepartiesmostcommittedtothePNRdrovetheCRC.TheactivismoftheCII

was especially impressive, presenting papers and pressing for action on

initiatives, fromexport costs andan international conference centre, to roads/

1988],ÓhUiginntoMichaelO’KennedyTD,M/A&F,26/05/88andSec[ÓhU]toTaoiseach,30/05/88.‘BoardofTeagasc’,DTA:S25857-E

18 CRCSecretariatGroup,‘ActionPointsarisingfromFirstMeeting[ofSG]’,08/02/88’,DTA:S25857-B19 Ondepartmentalreluctance,CRC,SummaryReportandh/wminutes3rdMeeting,18/02/88,DTA:

S25857-B;D/I&C,Feb.88,‘CRC/14–PlansforMonitoring,ImplementationofOverallManufacturing/InternationalServices/JobCreationTargets’,DTA:S25857-B;MichaelO’Connell,D/Environment,toTravers,16/02/88,DTA:S25858-E;D/I&CandD/Fentriesin‘SummaryReport,SpecificMeasures…’,15/02/88,DTA:S25857-B;forTravers/I&Cexchange,TraversD/TtoPaulBates,D/I&C25/02/88,andtoSec.[ÓhUiginn],23/02/88,inc.CTTdraft,‘PNR:AutomotiveComponentsExports’,DTA:S25857-B

186

infrastructureprojectsandadulteducation.ItsproposaltomarketIrelandasan

“InternationalEducationCentre”advancedonceHaugheyvoicedhissupport.20

TheDáiloppositiontreatedtheCRCasaneasytarget,Labourcallingforitto

demandareversalofeducationcuts-absurdlyatoddswithitspurpose-andthe

Workers Party, ironically given its own history, querying its legitimacy as a

secretive, unaccountable body, and demanding its deliberations be subject to

publicscrutiny,despitetheCRCminutesbeingavailabletoitintheDáillibrary.21

The major constraint on the CRC were the boundaries government put to

informationprovidedorwithheld,asexampleslaterwillillustrate.Butallsocial

partners involved recall it as a heroic effort, an innovative institution that

generated inter-agency collaboration in what was a profound break with

traditionaldisjointedcivilservicetraditionanddecision-makingroutines.

NESC:the“appropriatebody”fornationalstrategy

The NESC was the representative national-level strategic agency of social

partnership, forming its senate. Haughey elevated the “principles” of its 1986

report to the framework for government socio-economic strategy and, when

addressingthebodyin1987,restoredit,ashehadpreviouslydonein1980-82,

to a central role in further “elaborating” national strategy.He underscoredhis

support for the NESC by lauding its recommendations on issues such as state

social spending at the expense of its rival, the semi-private-sector ESRI, the

economicthink-thankco-establishedbyWhitakerandfavouredbyFitzGerald.22

TheCRCdebatedhowthepartnershipsystemcouldbe furtherconsolidated

andtheemergingpartnershiparchitecture“rationalised”,suchasbymergingthe

1980-eratripartiteSectoralDevelopmentCommitteeandotherinstitutionswith

it,anddefiningthemutuallycomplementaryrolesoftheNESCandCRC.Noting

how theNESC’s advocacy of “awell developed consensus approach in a small

country like Ireland” was “now recognised”, and how the use of the NESC by

previousgovernments in“commissioningconsultants’reportsandcommenting

uponthem”wasnowpast, itproposedthat“forthefuture[NESC]shouldfocus20 Memo,JohnKenna09/03/88(‘fromMrPowerCIIforCRC’,10/03/88)-‘FreighttransportCoststoUK

andContinentalEurope’,DTA:S25857-C;D/Marine,‘Confidential.SummaryofReportonInitialMeetingwithCIIonAccessTransportCosts’,26/08/88,DTA:S25857-G;Power,CII,toPTeahon,26/10/88andCRC,SummaryReport14thMeeting,19/04/89,DTA:S25857-R

21 Dáil02and09/03/8822 ‘StatementbyGovernmentonReleaseofNESCReportNo.85’,30/11/88,GIS:D/Taoiseach

187

ongettingagreementon[strategic]prioritiesandsubmittingthemthroughthe

system”.TranslatingNESCproposals intoprogrammes, suchas thePNR,wasa

“political”matter,with“oneofthestrengthsoftheNESC”beingthat“politicians

could take or leave its recommendations”: “without a conscious political

initiative,thegapbetweenNESC’s…StrategyforDevelopmentandnegotiationof

thePNRcouldnothavebeenbridged”.Butemployersresistedanydeepeningof

partnership structures as “premature”, and the CRC agreed to await the re-

constitutionofNESCin1989beforeagainconsideringinstitutionalchanges.23

Once the first-stage legislation freeingcapitalmovementunder theSEAwas

passed, Haughey and Ó hUiginn decided to request the NESC to undertake a

majorproject“elaborating” IrishpolicyontheEEC,Haugheytellingthecouncil

heregardeditasthe“appropriatebody”toundertakesuchastrategicreview.An

enthusedNESCshelveditsmicroprojectstofocusonthe“EECstudy”,entrusting

the research and field-work to the talented young economist Rory O’Donnell,

who in a future erawould play a central role at theNESC itself. Even the IFA

supportedtheupgradingoftheNESCgiven,asitschiefeconomistConLuceyput

it,the“restricted[policy]expertiseinDepartments”.Theseriousnesswithwhich

the NESC took Haughey’s promotion of it was reflected in the ICTU Executive

nowretiring its second-tierNESC representatives (“due topressureofwork”!)

and replacing them with senior partnership figures, Phil Flynn and Kieran

Mulvey,andCIIsimilarlyappointingitstopstrategists,ConnellanandPower.24

The first sections of the “EEC study”, already available by autumn 1987,

examined Ireland’s comparative performance in the EEC, critiquing its poor

relative institutionalperformanceandshort-termpolicyapproachcomparedto

other “more successful” “small” states. NESCmeetings over the following year

scrutinisedsuccessivedraftchaptersandtheirconclusions.Aconsensusposition

quicklyemerged,thoughfinalisingthestudywasdelayedpendingEECapproved

ofstructuralfundplans,anditwasonlyfinallypublishedinAugust1989.ICTU

focusedonindustrialpolicybutensuredastrongendorsementofDelors’“social

23 CRCSec.Group.ActionPointsarisingfrom3rdmtg.,18/04/88,DTA:S25857-D;h/wnotes.‘Sec.Group

16/6/88’,DTA:S25857-F;‘Functions,MembershipandWorkProgrammeoftheCRC,SDCandNESC’,SG/70,n.d.[Sept.1988],DTA:S25857-I;h/wnotes,SGmtg.13/12/88,DTA:S25857-M;ÓhUiginntoO’Sulivan,‘CRCSec.Group:preliminarydiscussion,possiblerationalisation’,13/12/88.DTA:S25857-R

24ÓhUiginntoCouncilmembers,21/05/1987,CouncilMinutes,27/05/88,Danaher(Sec)tomembers,04/10/87,NESCArchive,Box3;h/wnotes,CRCSecretariatGroup.meeting10/03/88,DTA:S25857-C;

188

dimension”,while theCIIpromotedsectoralstrategiesandthe IFAagricultural

goals.Whencompleted,TomToneroftheFUEdescribeditas“ourlatestblock-

buster”,thefruitof“enormouslyconstructiveand,Ihope,usefulwork”.25

The NESC quickly reachedwhat it termed a “fundamental conclusion” that,

contrarytotheCommissionview,theworkingoftheinternalmarket,onitsown,

would not “narrow the income disparities between regions … let alone bring

aboutconvergence”.Itslogicwouldratherbetoconcentratewealthatthe“core”

at the expense of periphery.Major interventionism, as opposed to themodest

structuralfundingproposed,wouldbeessentialtocounterthismarketlogicand

achieve “convergence”. The Irish experience of EEC membership had been a

“constant attrition” of indigenous industry: “instead of integration stimulating

dominantindigenousfirmstoexploiteconomiesofscaleandthuseliminatethe

tailofhighcostproducers,largerIrishmanufacturerswouldseemtohavebeen

part of the tail eliminated by producers in other countries”. It concludedwith

polite understatement: “part of the rise in unemployment since accession is

attributable…tothetradeeffectsofEECmembership”.26

The absence initially of a credible EEC transfer strategy, and the negative

critique of single market planning by the European Trade Union Congress

(ETUC),haddeterminedICTU’scallfora“No”voteintheSEAreferendum.Union

economistsarguedthatinanopenmarket“foreigndirectinvestmentwilltendto

move more to the centre of Europe in the absence of a European industrial

policy”.Anotherresultofan“unfettered”marketapproachit identifiedwasthe

trendalreadyapparentsincetheliftingofsomecapitalcontrolsofIreland’sforty

biggestcompaniesbeginningtoexpandthroughacquisitionsabroadratherthan

investmentathome.ICTUusedthistoarguethatonlythesemi-statesoffereda

crediblebasisforalarge-scaleindigenous-based“export-ledindustrialisation”.27

But another perspective on freeing capital controls as an opportunity for

Irelandalsoemerged,evenbeforetherapidfreeingofcapitalmovementscame

on the European agenda. It should be stressed how unexpected this policy

departurewas.TheSEA initiallyhad limitedobjectives, and itwasonly in July

25 CouncilMinutes,27/05/88andsubsequentmeetings1988-89,TonertoÓhUiginn,24/10/90,NESC

Archive,Box3;Int.Power26 NESC1989:160,51527 Sweeney1990:204

189

1988 that theECCouncil agreed to anew “DelorsCommittee” to examine and

proposestepstowardsEMU.ReportinginApril1989,itproposedmovingrapidly

toachieveit,though,asRoryO’Donnellnoted,centralbankers“probablysigned

the report believing it was primarily a descriptive document” which member

states would “quietly drop” when its political ramifications became clear.

Instead, theDelorsReport “rapidlyunderwentametamorphosis andwas soon

seen as a prescriptive document”, leading to “a series of remarkable political

decisions”.InJune1989theECCouncildecidedtoproceedtofullEMU,withthe

first stage set for July1990.The contextwas thewhollyunexpected imminent

collapseoftheEasternEuropeanstates.Irelandcametotheforeasasupporter

of theEMUplanwhen itemerged,Haugheyagreeing toallDelors’ “principles”,

particularly free movement of capital and labour. That course was opposed

initiallybyotherECstates,andobserverswereamazedwhenDelorsproposedin

July1989theimmediate“completeliberalisationofcapitaltransactions”.28

A year earlier, in August 1988, before that EC policy turnaround, Liam

ConnellanoftheCII, inoneofthefirstairingsofwhatwouldbecomecoreIrish

strategy, criticised early drafts of RoryO’Donnell’s EEC report for treating the

singlemarketasa“closed”economytowhichIrishcompaniesshouldrelate.The

opportunity,hesaid, lay inthesinglemarket’s function inthewiderprocessof

globalopening.“OneofIreland’smainadvantages”,hecontinued,wasitsunique

positiontoexploittheEuropeanopeningtoestablishitself“asagatewaytothe

SingleMarket forcompanies fromtheUnitedStatesandFarEast”.This radical

idea quickly gained acceptance, and the NESC report would combine the two

perspectives–urgingbothenlargedECbudgetsandregionaltransferstoeffecta

rapid convergence for Irelandwithin the EEC, and a radical opening of capital

marketstoenableIrelandbecomeabaseforglobalcapitalaccessingEurope.To

achievethesetwinaimsIrelandshouldallywiththepro-EMUpowersandadopt

a“vigorouspro-integrationposition”to“enhance”itsadvantage“inthepractical

negotiations”. These conclusions emerging atNESC already in 1988 reinforced

Haugheyincontinuinghis1980-82alliancestrategyatECCouncillevel.29

28 O’Donnell1991:9,1429 CIIinitiative,ConnellanCIItoDanaher,NESC,29/09/88,‘CouncilMeeting16/12/88’,NESCArchive,Box

2;“NESCcombined…”,DanahertoCouncilmembers,n.d.[16/12/88],onchapter‘HistoricalPerformanceandFutureProspects’,NESCArchive,Box3

190

As the CRC had noted, however, the step from NESC proposals to practical

programmes, suchas thePNR,wasessentiallya “political”matter, requiring “a

consciouspoliticalinitiative”to“bridgethegap”betweenNESCstrategyandits

implementation. Even then, while the CRC could administer programme

implementation, impasseswould arise that could only be overcomepolitically.

Thesocialpartnerswereacutelyawareoftheprimacyofpolitics,whichwaswhy

directrecoursetopoliticalpowerwaswrittenintothePNRasadeliverydriver.30

Politicaldynamic:partnershipatthe“politicallevel” Socialpartnershipstruggledtogaintractionforitsnarrative.WhileHaughey’s

monetary policy determination won widespread approval, few, apart from

Brady’slonelyIrishTimeseditorials,recognisedthesocial-productiveor“factor-

mobilisation”rolepartnershipplayed.PreviousFiannaFáil leadershadhadthe

Irish Press to communicate an authoritative narrative, but Haughey faced a

mostlyhostilemediaandhadlosteventheColley-supportingPressin1980.Once

farmore influential than the IrishTimes, thePress, uncoupled from itspolitical

purpose,was rapidly declining and finally shut in 1995. Haughey had even to

convincehisownÁrdFheisofthe“miracletheirgovernmenthadachieved”.31

Fine Gael was bewildered by social partnership and the PDs ideologically

hostile. While this was understandable, Labour’s peculiar resentment of it

weakened ICTU’s bargaining position. Attley’s attempt at Labour’s 1987

conference to explain it as a dynamic alternative to Thatcherism in achieving

recovery,industrialgrowth,tripartiteplanning,andwelfareandstate-enterprise

expansionmetonlywithderisionandcontemptfroma“socialdemocratic”party

peculiarly fixated on ridding Ireland of “Haughey”. Even within the unions,

whose members were more influenced politically by the general media and

political leaders than by internal ICTU discourse, Attley, Carroll, Flynn and

Cassellsstruggled tomaintainsupport for theirstrategy.Whilepartnership for

30 CRCSec.Group.ActionPointsarisingfrom3rdmtg.,18/04/88,DTA:S25857-D;h/wnotes.‘Sec.Group

16/6/88’,DTA:S25857-F;‘Functions,MembershipandWorkProgrammeoftheCRC,SDCandNESC’,SG/70,n.d.[Sept.1988],DTA:S25857-I;h/wnotes,SGmtg.13/12/88,DTA:S25857-M;ÓhUiginntoO’Sulivan,‘CRCSec.Group:preliminarydiscussion,possiblerationalisation’,13/12/88.DTA:S25857-R

31 IrishPress,O’Brien,M.2001;“miracle”,‘SpeechatCáirdeFáilDinner’,04/12/1990,DTA:S25858-Z10

191

the PD right was an affront to market purety, for the Labour left it was a

reprehensible“deal”witha“right-winggovernment”,or“classcollaboration”.32

Although handicapped by this narrative conflict, interest leaders within

partnership understood its ultimately political dynamic. What during the

negotiationswascalledthe“politicallevel”wasintegratedinthePNRintheform

of direct recourse to government or the Taoiseach to resolve impasses and

conflicts. The CII and ICTU constantly lobbied Haughey and his ministers to

advance projects or overrule bureaucratic obstinacy. This differed from

traditional lobbying in that rather than favour-seeking it sought to realise

consensus-agreedmeasures,eveniftheconsensushadsometimesbeenminimal.

AnexamplewasICTU’smeetingswithAherntoadvanceindustrialrelations,

worker participation and other agreed areas of reform, or, more rarely, with

MacSharry, on issues such as the state-owned assurance company, Irish Life,

given the “role of the State in the development of the financial services sector

providedforinthePNR”.InwasfromthistimethatAhern,whohadpreviously

playedasecondary,ancillaryrole,emergedtoprominence,beingnowreferred

tobythemediaas“oneofthechiefarchitectsoftheprogramme”.ICTUusedthis

ever-closer relationship to have departments stalling on PNR commitments to

act,suchasEnvironmentontheissueoflocalauthorityredundancies,whichwas

puttingICTUleaders“underseverepressurefromtheirmembership”.33

Conflicts on such issues, some, though not all, relatively minor, consumed

muchCRCtime,butthiswasoneofitsvitalfunctions.Ultimateresolutionoften

required “political level” intervention.The ITGWUwarnedgovernment that its

inaction over issues in semi-autonomous agencies such as health boards, local

authorities and theOPW,which it had repeatedly raised on the CRC, “posed a

growing problem of credibility for them vis-à-vis their stance on the PNR”.

MacSharryhadOPWredundancynoticesrescindedbuttheywerelaterre-issued

despite the Labour Court concluding they were “probably in breach of that

agreement”.Theunion finallyhad tohave recourse to adirect interventionby

Haugheytohavetheissueresolved.ICTUinsistedin1989thatthepublicservice

32 ICTUADC198833 “roleoftheState…”,ICTUAR:223-4;“chiefarchitects”,IT09/02/90;ArthurO’MalleyD/LabourtoPat

O’SullivanD/Taoiseach,24/05/88,encl.‘ReportofMeetingbetweenM/LabourandICTU…oncommitmentsinthePNR’,20/04/88,DTA:S25857-E

192

staff embargo, whose continuation at Finance’s insistence it said was another

“breachofthewholespirit”ofthePNR,beurgentlyreviewed,leadinginJanuary

1990toasummitwithHaugheywherehefinallyagreedtoendthemeasure.34

A political driver of the systemwas also provided by the Dáil opposition’s

relentlesscriticismsof job lossesdespite the“so-called”PNR.Haughey insisted

that delivery of the 1988 target of 20,000 new jobswas on course, explaining

that the target referred to new jobs, not old ones being shed or overall net

employment.AlthoughthiswassetoutinthetextofthePNR,ICTUwasalarmed

bythenegativediscourse,andrequestedCarrollandFlynntopressonHaughey

theurgencyofprogressingPNRprojectsorotherwiseitwould“lookseriouslyat

itsposition in relation to theProgramme”.Haugheyrespondedbyconveninga

highlypublicised“summit”betweenhiscorecabinetandthefullICTUExecutive,

whichconcludedwithaformal“agreement”topublishanupdateonprogressin

PNR jobs initiatives and to appoint a “designated” official to “co-ordinate

development projects” in the semi-states and report to the CRC. Following

ministerialinterventions,withintwoweeksstalledinitiativeswerere-activated,

especially in the semi-states, and, following several drafts, a report satisfying

ICTU(Nevin:“exactlywhatwewanted”),waspublished.Afurthermeetingand

“Jointstatement”followed,statingthePNRwasdeliveringonitscommitments.35

A furtherpolitical dimensionwasprovidedby internalpressures inpartner

organisations. ICTUat its1988annualconferenceonlynarrowlyheadedoffan

attempt to force the Executive to hold a special conference “with a view to

withdrawaliftheProgramme’stargetsandcommitmentsarenotfulfilled”.Attley

argued that job creation, while slow, was on course, and “for our State

34 ‘ReportofMeetingbetweenM/LabourandICTU…oncommitmentsinthePNR’andCRC,Summary

Reportof6thmtg.,26/05/88’,DTA:S25857-E;D/Taoiseach,‘Redundancies/Short-timeworkinginOPW’,11/03/88,DTA:S25857-C;D/Taoiseach,note‘reAOB_’,n.d.[June1988],DTA:S25857-F;Browne,ITGWUtoHaughey,20/10/88,DTA:S25857-J;D/Health:‘RemunerationofStudentNurses’,NoteforCRC,21/06/88;D/Finance,‘Point4ofICTUdocument–PublicService’,n.d.[Dec.89],DTA:S25857-Z;O’SullivantoO’Gorman,D/Finance,03/05/89,DTA:S25858-S;CRC,SummaryReportsandh/wnotesof14th–20thmeetings,April1988-Sept.1989,DTA:S25857-RtoY;CRCSGmtg.02/05/89(h/wnotes),DTA:S25857-S;‘’BriefingMaterialforMeetingbetweenTaoiseachandM/Finance,I&CandLabourwithrepsECofICTU’,23/01/90,‘PositioninRelationtoICTU30PointPlan’andh/wreportofmeetingICTU-Government,23/01/90,D/Finance,DTA:S25862-F

35 On“newjobs”,HaugheyinDáil02and09/03/88;ICTU“concern”,ICTUECmtg.20/04/88,item1419;Haughey-ICTUmeeting,‘JointGovernment-ICTUstatement’,18/05/88,GIS:D/Taoiseach,CRCSummaryReportof6thmtg.,held26/05/88,DTA:S25857-E,InternalD/Taoiseachh/wnote,‘reICTUdocument’,26/5/88,andNevininInternalD/Taoiseachh/wnote,‘reICTUdocument’,26/5/88,DTA:S25870-C;‘JointGovernment-ICTUstatementonjobcreationdevelopmentsundertheProgrammeforNationalrecovery’,27/05/88,withattached‘ProgressontheProvisionofJobs’,27/05/88,GIS:D/Taoiseach

193

companies, we have started the process of stopping their run-down, and

returningthemtowhattheywereintendedtobe,vehiclesforjobcreation”.The

alternativetoa“negotiated”recoverywasconfrontation,theexclusionofunions

andthedismantlingofwelfare,aswashappeninginBritain.Buthewontimeby

concedingthattheExecutivehad“warnedGovernmentthatifsufficientprogress

wasnotmadeinparticularareas”,itwouldholdaSpecialConferencewherethe

Executivewould“recommend…thatwewithdrawfromthisProgramme”.36

ICTUcontinuallyemployedthisthreatofamembershiprevolt,Nevinwarning

HaugheyofCongress’sdeterminationtoopposeprivatisationonthatbasis.Most

importantly, anti-PNR sentiment was strong even in the ITGWU, causing Ed

Browne to remindHaughey that assurances the previous year on ending local

authority redundancies had been “of major significance in determining our

members’votetoaccepttheProgramme”andCarrollwritingtoÓhUiginnthatit

had been “no easy job for the platform to convince [the recent ITGWU]

Conference of the bona fides of all concerned”. “Early and positive indications

that thePNR isworkingand isnowgoing todeliver”wereneeded,andamid-

termreviewwouldbea“majorsteptothisend”.ÓhUiginnusedthispressureto

forcedepartmentalactionandconvinceHaugheytoagreetoafull-scalereview.37

Onthebusinessside,CII’smembershipacceptedtheultimatepotentialofthe

PNR,anditsleaderswereunderlittleapparentpressurefrommembers.Butthe

FUE remained less engaged and more single-mindedly focused on defending

employerinterests.ThisFUE-CIIdivergencewasreplicatedinthefarmingsector,

where smaller non-negotiating partners such as Macra and the ICOS engaged

activelyontheCRC,especiallyonruraldevelopmentandenterpriseplans,while

the IFA, underpressure from the ICMSAoutside the system, remained itsbête

noire, engaging little other than to oppose threats of tax or social insurance

reforms or the strengthening of market dynamics in agriculture. When Tom

Clintonwas elected IFA President, joining the CRC, Ó hUiginn sent Haughey a

gloomy profile, concluding that Clinton would continue the IFA’s defensive

stance. Clintondidn’t disappoint and intervenedon theCRCmainly to seek an36 ICTUADC1988:97-9,11337 NevinICTUtoHaughey,13/09/88,DTA:S25858-M;BrowneatCRC,SummaryReportof8thmtg.,

08/09/88’andh/wnote,‘CRCmeeting8Sept1988’,DTA:S25857-H;BrownetoHaughey,20/10/88,DTA:S25857-J;Carroll,toÓhUiginn,27/09/88,DTA:S25858-K;Teahonh/wnoteofSGmeeting,05/10/88,DTA:S25857-I

194

expansionofCAP,despiteAgriculturewarningthatthiswasalready“atitslimit”.

Confrontation over farmer taxation dominated the 1989 budget, Ó hUiginn

tellingAlbertReynolds,thenewMinisterforFinance,thatfarmlobbyresistance

meantonlyaslow,incrementalapproachtofarmertaxationwouldbepossible.38

At“bilateral”meetingswiththeIFA,Haugheycontinuedtopromotehisideas

foracommercialisedagriculture,buttheIFA,facingsimilarmemberscepticism

as the ICTU, spoke only of tax, support schemes and CAP. In response to

Department of Agriculture requests for proposals to expand the cattle herd to

overcome shortages inhibiting expansion of the beef industry – a PNR target

sector–theIFAsuggestedthat“ataxincentivetodairyfarmers”toproducebeef

calves “might be appropriate”. To keep farmers on board, government had to

slow,thoughnotstop,farmertaxreform.Whilesecuringtheprincipleoffarmer

socialinsurancecontributionsinthePNR,andannouncingamorethandoubling

ofthefarmertaxyieldto£80min1988,Haugheylaterhadtoadmititwasaslow

process, with that figure being “inclusive of the [tax] amnesty” and the 1989

intakeexpectedtobejustoverthe1987figureof£36m.39

The “political level” partnership dynamic was vital to both maintaining or

revivingmomentuminthePNRandaddressingparticulargrievancesanimating

partners outside the policy consensus. If lobbying is the bread and butter of

politics, in Haughey’s social partnership it had the added role of a corrective

levertoimpassesinthesystem’sadministrativeandeconomicdrivers.

PartnershipasmobilisationofTotalFactorProductivity Socialpartnershipwasitselfaneconomicdriver.ThePNRwaspredicatedon

economic success, and the collaboration contributed at many levels to what

economistscall“TotalFactorProductivity”(TFP), includingthrough“intangible

capital”,factorsoftenmorecriticaltosuccessthanpurelyfiscalmeasures.40

38 InterviewswithPower,O’Sullivan;‘RowoverPRSIReport’,IrishFarmers’Journal,09/01/88;‘Woods

ReceivesPensionBoard’sReportonExtensionofSocialInsurancetotheSelf-employed’,14/01/88,GIS:D/SW;J.T[=Travers].‘MeetingbetweenAnTaoiseachandTomClinton,PresidentdesignateofIFA’,06/01/88:h/wmemo–“forfile”.DTA:S25858-D;CRC,SummaryReportof6thmtg.,26/05/88,andD/A&F,‘BeefCowHerd.MaterialforReplytoCRC’25/05/88,DTA:S25857-E;ÓhUiginntoAlbertReynolds,Min/I&C,28/02/89,andtoÓMaryO’Rourke,M/Education,31/01/90,DTA:S25857-R

39 ‘MeetingoftheTaoiseach,M/FandM/A&FwithrepsofIFA,ICOSandMacranaFeirmeunderthePNR’,13/11/87,DTA:S25857-B;‘SpecificMeasures….’,15/02/88,DTA:S25857-B;HaugheyinDáil,02/03/88;‘CRC:SummaryReportof8thmtg.’,08/09/88’,DTA:S25857-H;HaugheyinDáil,01/02/89

40 KleinandVentura2019

195

Economic policy was tightly controlled by Haughey’s inner cabinet, a

triumvirate of gifted ministers – MacSharry (Finance), Ahern (Labour) and

Reynolds(IndustryandCommerce).ReynoldswastobepromotedtoFinancein

January 1989when, as Haughey had agreed, MacSharry, having overseen two

budgets to secure the decisive monetary adjustment, would move to the EC

Commissioner role. Other ministers, senior or junior, were kept far from the

leversoflittlemorethanpettypatronage,orbroughtintolinewhentheycaused

problems,asinO’Kennedy’sclimb-downoverhisTeagascboardappointments.41

Haughey saw government’s primary role as managing a credible monetary

adjustment and encouraged the social partners to be pro-active in economic

planning.TheCRC relentlessly studied industrialdata, analysing successesand

failures. Its meeting of 26 October 1988, which would mark a turning point,

focused on job creation, with members interrogating officials from across

departments.ThedocumentationÓhUiginnensuredwasprovideddetailed job

gainsandlossesbysectorandregion,withtheIDA’sPádraicWhitereportingon

these and “pipelineprojects”. Industry andCommercewas adamant thatnew-

jobtargetswerebeingmetandthatthe20,000targetfor1988wouldjustabout

bedelivered.Butdemographic factorsmeant thatunemploymentwouldbarely

fall. The CRCwas as determined to highlight success, even accepting casuistry

such as I&C’s explanation that target achievement would involve combining

13,000actualnewjobsand7,000“recoveriesofjobslost”.That“old”jobswould

continue to be lost in declining sectorswas accepted. All partners agreed to a

“JointStatement”confirmingthatthePNRwasdeliveringasplanned.42

ICTU urged that the PNR successes be publicised, but employers refrained

fromextollingpartnershipand initiallyopposeda JointStatement.ButwhenÓ

hUiginn stressed the need to counter relentless media negativity, which was

dampeninginvestorconfidence,theFUEconcededtheneedto“getthemessage

across” that there was “lots of good news”. Agreeing the media was “not

presentingaveryfavourablepictureontheprogress…achieved”,FUEleaderJim

41 SeeChapter642 ‘StatementbyCRConProgressinJobCreation,revisedDraft’24/11/88,andD/I&C,’20,000Targetfor

Manufacturing/InternationalServices-ProgressReport‘,Aug.1988,DTA:S25857-G;IDA,‘UpdatedProgressonProvisionofJobsunderPNR’,21/10/88,DTA:S25857-J;CRC,SummaryReportof9thmtg.,26/10/88,‘ReviewofProgress…andevaluationoftheirimpactontheobjectivesoftheprogramme’,21/10/88,andPadraicWhite,IDA,‘Presentation.PNR.CRC.October1988’,DTA:S25857J-2

196

O’Brienagreed to sign theStatement.AnotherFUEofficial afterwards toldThe

IrishTimes:“Todayclearedallthehotair.Therewasageneralacceptanceofthe

figures…[and]solidevidencethatnewjobsaredeveloping…Thescalemightbe

modest but the trickle was gaining momentum”. Even farmers’ groups were

enthused, with IFA obstinacymellowing as farming enjoyed its best year in a

decade,outputexceeding£3bnforthefirsttimeandincomesrising17percent.

SeánDorgan,I&CDepartmentsecretary,statedsimply:“It’sworking”.43

A particular concern of ICTU was the role of state industries, where it

organised88,000workers,themostpowerfulforceinthemovementapartfrom

the public services. In 1987 it hadmade the semi-states itsmain issue in the

election, circulating 100,000 copies of a leaflet opposing privatisation and

extolling the potential of the semi-states. Haughey had assured it of his

commitment to an “efficient and effective semi-State Sector as a major

instrumentofeconomicdevelopment”.HecitedtheAerLingusengine-overhaul

subsidiary,Airmotive,whichhehadopenedin1981,as“anexampleofthetype

ofdevelopmentwehadinmind”.DavidBegg,leaderofthetelecomunionCWU,

reflectedtheviewofmanypublicsectortradeunionistswhenhedeclared:“we

favouracentrally-plannedandcontrolledeconomyrelyingheavilyonState-led

investmenttothesemi-StateCompaniestocreatejobs”.OfficialICTUpolicywas

more nuanced and supported sectoral expansion through joint ventures with

privatecapital,anaimwhoseinclusioninthePNRitsecured.44

ICTUwasnot thealone inadvocating for state industries,with thebusiness

group,theCII,whichhadmostsuchcompaniesasmembers,championingtheir

expansionwhileseekingstricterperformancecriteriaandjointventures,aswell

ascallingforincreasedsub-contactingandoutsourcingofpublicservices.45

When negotiating the PNR, Haughey boosted his credibility with ICTU by

convening semi-state executives to impress on them “the importance which

43 ‘Jobs:ICTUkeepsupthepressure’,IrishIndependent,27/10/88;‘’14,500newjobscreated’,IrishTimes

27/10/88;‘Vigorousjobcreationprogrammeneeded’,CorkExaminer,27/10/88;‘StatementbyMichaelO’Kennedy…launchingtheAnnualReviewfortheAgricultureandFoodIndustry’,18/01/89,GIS:D/A&F:CRC,SummaryReport9thmtg.,26/10/88andh/wnotesCRC26/10/88,DTA:S25857J-2

44 O’Dowd,J.ed.1989:51;ICTU1987;ICTUECmtg.18/02/87;HaugheytoCassells,20/01/1987,DTA:S25862-F;BeggatICTUADC1988:117;PNRVandAppendix,‘State-SponsoredBodies–Proposals’

45 ‘TheComplementaryRolesofPublicandPrivateEnterprise’,CIINewsletter,13/04/82;‘GrowthIndustrieswithEmploymentPotential,’CII8thAnnualCareersinIndustryConference,19/09/86,PowerPapers;‘ParticipationinStateEnterprise’,CIINewsletter,24/02/87;‘SwedishExamplebacksStateParticipationCase’,CIINewsletter,28/04/87;Power2009:93

197

Government attached to the developmental potential of the State-sponsored

sector”andseekingproposalsforexpansionthroughjointventureswithprivate

capital to “contribute to theProgramme”.Heestablisheda “WorkingGroup”of

semi-state chiefs to report on the sector’s “developmental potential”. Many

specificprojectsresultingfromthisprocesswereincludedinthePNRandfrom

early1988,assistedbytheIDA,manywereoperationalised.ICTU’sstubbornness

borefruit,withAerLingus,alreadyIreland’slargestcompanybothincapitaland

employmentterms,outperformingallprivatesectorcompaniesin1988.46

Akeyfactor in1988-89wasadecline indisputesandtheachievingofwage

certainty and “industrial peace”. That pay disputes rarely surfacedwas due to

howthePNRwasstructuredandotherfactors,examinedinchapters8-10.The

PNR set wages and disallowed strikes over “cost-increasing” claims. Although

moststrikesinthe1980shadbeeninthepublicsector,thePNRgaveemployers

wage certainty andprevented awage-inflation “spiral”. The role of theLabour

Court and acceptance of its application of PNR termswas critical. Compliance

withthePNRacrossindustry,byboth“sides”,wasalmosttotal,andstrikedays

plummetedspectacularly in1988 toa tenthof the1979 figure,and in1989 to

“theirlowestlevelsincetheStatewasfounded”,asAhernputit.Thefewstrikes

thatdidoccurconcernedredundancytermsorchangedworkpractices.47

Ireland’s newfound “industrial peace” made the PNR the talk of the global

businessworldanda“keyfactor”enablingtheIDAsecurethefirstgrowthinFDI

since 1980. This was intangible capital of major value, enabling partners and

governmenttoconsiderafundamentalreformofindustrialrelationssuchashad

eluded them for decades. The PNR agreed “discussions” to create “a better

framework for collective bargaining and dispute settlement” conducive to

“employment-generatinginvestment”.Ahern,eagertomakehismark,usedthis

modestphrasetoinitiateamajorreform.Hestartedthe“discussions”asthePNR

46 ‘StatementonMeetingofTaoiseachwithChiefExecutivesofState-sponsoredbodies’,22/06/87,GIS:

D/Taoiseach;‘AideMemoire.MeetingbetweenTaoiseachandConsultativeGroupofChiefExecutivesofStateAgencies,22June1987:MainConclusions’,DTA:S25857-E;‘DevelopmentProposals–MechanicalEngineeringSector.NotesarisingfrommeetingatIDAofficeson15February1988’,S25857-C;J.Lloyd,IDA’:“EngineeringProposalforSSBsisgoingwell…”,n.d.[April1988],DTA:S25858-G;MalcolmTaylor,D/T&T,toO’Sullivan,D/Taois.,07/03/88:reAerLingus-Aeroflottalks,DTA:S25858-F;Sweeney1990

47 ‘Strikes,RedundanciesandUnemploymentfellin1989–AnnualReportoftheD/L’,30/03/90,GIS:D/Labour;CRC,‘ProgressReport.PreliminaryDraft’,Nov.1989,DTA:S25857-Y;D/Lab.‘BriefingforT’smeetingwiththeICTUon24Nov.’,DTA:S25862-D;Sweeney1990:26;‘SpeechbyMrBertieAhern…attheformalannouncementoftheFrameworkAgreementonHoursofWork’,17/02/89,GIS:D/Labour

198

wasstillbeingnegotiated,andinFebruary1988theIrishPress,reportingaBillin

preparationforautumn,statedthat“hisapproachwouldbecompletelydifferent

tothatoftheBritishGovernment-Theiraimwastosmashtheunions:hiswasto

strengthen thepositionofunionexecutives”.Thebillwasnotpresented to the

DáilasemployersinitiallyrejecteditandbothFineGaelandLabourthreatened

to oppose some of its provisions, for opposite reasons. Though not legislated

until 1990, its proposals curbing picketing, strengthening union authority and

instituting a ‘Labour Relations Commission’ as a powerful conciliation tool,

signalled thedeterminationof government to establish anorthEuropean-style

industrial relations system.The1990 IndustrialRelationsActwasunthinkable

withoutsocialpartnership,andprovidedafurthereconomicgrowthdriver.48

Through its role in planning, co-determining semi-state development,

deferringsocialandwagecosts,calmingindustrialrelationsandprovidingwage

certainty,socialpartnershipcontributedkeyTFPfactors toeconomicrecovery.

Haughey’sattempttoexplainthistotheDáilwasmetwithoppositionderision,

Brutonscoffingatthis“programmeofso-callednationalrecovery”anddeRossa

demanding to know following the historic October 1988 CRC meeting if “the

questionofdisadvantagedpeopleinoursociety[hadbeen]raisedbyanyofthe

socialpartners”.Partnershipwasstillabesiegedconcept.49

Measuringtheeconomicroleoftotalfactorproductivityiscomplicatedbythe

sometimes protracted and complex nature of such “intangibles” as “labour

quality”,oneoftheelementsofithighlightedbyKleinandVentura.Thedelayed

impact of the introduction of free secondary education in the late 1960s –

recognized already in the 1990s - is a case in point. This had effectively been

forced on government by Donogh O’Malley’s surprise announcement in 1966,

though in coordination with Lemass, during the absence abroad of the then

Finance Minister, Jack Lynch and against the advice of an “appalled” T.K.

Whitaker, who in what Carl O’Brien called a “scalding memo” to Lemass had

“ragedagainsttheproposal”.Whilesecondaryschoolcompletiongrewbyleaps

and bounds, it was still only 60% by 1979. A network of regional technical

48 InterviewswithWhiteandAhern;PNR,SectionVI/5;‘DiscussionDocument’,30/11/87,GIS:D/Labour;

TheIrishPress04/01/88;CRC,‘SpecificMeasures…’,15/02/88,item125,DTA:S25857-B;Dáildebates,10/03/88;‘Minister’sProposals:MixedReactionsLikely’,IRNReport,25/02/88

49 Dáil,08and26/10,08/11/88

199

collegesinitiatedundertheThirdProgramme,alongwithinitiativeslikethetwo

NIHEs,providedanexpandingtertiaryskillproductionbase,butthesetooonly

cametofruitionbythe1980s.Thecomingtomaturityofthefirstgenerationto

widelybenefitfromthiseducationalwideningaccountedformuchofthe“labour

quality”aspectinKleinandVentura’sstudy.Accessto3rdleveleducationplaces

wasstillrestrictedinthe1980s,butthePNRinauguratedafurtherexpansionof

provisionand,asimportantly,ofaccessthatwouldwidentheskillbasegreatly.

Education,however,wasonlyone,ifamajorTFPfactor.50

Other TFP factors provided through social partnership included a range of

“intangible capital” inputs such as co-ordinated long-term planning across

departments and new support programmes in welfare, education and social

policy. These delivered value growth in human resource factors critical to the

reconfiguredhigher-valueeconomicmodelbeingpursued,especiallyexpanding

thelabourforceparticipationofwomenandpreviouslyexcludedsocialgroups.

Analysing the 1980-2005 period in terms of TFP effect, Klein and Ventura

showthat,contrarytowidespreadassumptions,onlyasubordinateproportion

of23%ofoutputgrowthwasattributabletobusinesstaxchangesalone:

Furthercontrollingforexpenditurecuts,theyfindthecombinedimpactoftax

andstateexpenditurechangesin1987-2005risingonlymarginally,to27%.But

whenTFP factors from1988are included–especiallycapitalopeningpolicy -

thesealoneaccountfor76percentofoutputgrowth,i.e.thegreatbulkofit:50 “TFP”,KleinandVentura2019;“recognisedinthe1990s”,Kennedy,K.2001;“freeeducation”Chambers

2015:176-78;“appalled”,DesO’Malley,IrishIndependent,05/01/17;“scaldingmemo”,CarolO’BrienquotedinO’Riordan2019,Pt.7

200

Inotherwords, “intangiblecapital”andpolicymatter,muchof itenabledby

social partnership, which was thus not only an important but arguably a

decisivefactorintheeconomictake-off.Asasetofco-ordinatedpolicyandinput

changes, partnership represented a significant policy paradigm shift in itself.

KleinandVenturaalsocontendthatevenwithoutcapitalopening,theotherTFP

factors added in 1988-89 –which this thesis groups as the social partnership

effect –would, in conjunctionwith the tax/consumption policy changes, have

causedsignificantGDPgrowthanyway,of55percent,i.e.halftheextraordinary

growthactuallyachieved.Thus,evenwithouttheopportunityofglobalization,a

less dramatic but still substantial economic improvement would have been

achievedduetothe1987-89policydepartures,includingsocialpartnership.

But the optimism of the CRC meeting of 26 October 1988, despite the

continuednegativityofthemediaandDáilopposition,asohadafurtherbasis-a

breakthroughachievedthatverysamedayinBrusselswhich,asHaugheywould

laterdescribeit,wouldtaketherecoveryplanto“anewplaneofdevelopment”.

LeveragingEurope:the“NationalDevelopmentPlan”(NDP)

ThenatureofthePNRandofthesocialpartnershipstructureitcreatedwould

change dramatically in 1989. Its interactionwith new opportunities emerging

throughEuropeanpolicyexemplifiedtheflexibilityofthePNRasapolicysystem.

ThePNR’seconomicplanwasfocusedinitiallyonnational-economicdrivers.

Irishlivingstandardswerejustover60percentofthethenEEC-12averageand

the “EC Dimension” of the PNR was notably cautious, committing only to

implement the SEA, defend CAP, protect the indirect tax base in EC

201

harmonisation, and seek an expanded EC education programme. But it also –

decisively–agreedtofullysupportthe“DelorsPlan”.Thatconsensusonthiswas

achievedwasasignificantfeatinitself.Thatstatementwouldformthebasisfora

farmore ambitious policy departure asHaughey aligned Ireland, and the PNR

partners,withonesideinanopeningfundamentalEuropeanpolicyconflict.

The“DelorsPlan”,publishedinFebruary1987,wasaCommissionproposalto

completetheinternalmarketby1992.ItsoughtanincreasedECbudget-highly

contested by net-contributor states - to double structural and social funding

(ERDF/ESF)tooffsetthesinglemarket’scentripetaleconomicdynamicthrough

a “convergence” process by funding regional/social infrastructure in “less

developed regions”. Irish Commissioner Peter Sutherland sided with the free

marketers in opposing “anti-competitive” tendencies and social policy

“impositions”intheDelorsPlan.Butevenbeforetheplanappeared,Haughey,in

opposition, criticised FitzGerald for supporting a “one sidedly … monetarist”

single market project, demanding strong regional and social investment

programmes.Europeantradeunions,includingtheICTU,sharedthisview.51

TheECCouncil,aftermuchwrangling,withtheDepartmentofForeignAffairs

pessimistic of the outcome, finally adopted a diluted versionofDelors’ plan in

February1988, fivemonthsafter thePNRwassigned.Thecontentof theplan,

managedby the Commission and involving “multi-annual”-funded “operational

programmes” (O/Ps) - a novelty for Irelandwith its strictly annualisedbudget

tradition-–wastobeclarifiedduring1988,butmemberstatesweretoprepare

proposals, for submission, negotiation and eventual sign-off by early 1989.

Preciseprogrammeswouldthenbeagreed,andtransfersbeginin1990.52

WhentheDelorsPlanfirstappeared,justweeksbeforehebecameTaoiseach,

Haughey had grasped its potential: “The far-reaching significance of that Plan

andthehistoricopportunityitpresented…toaccelerateoureconomicandsocial

developmentwasimmediatelyobvious”.AthisfirstEuropeanCouncil inMarch

1987, which was still divided over the plan, he unequivocally backed Delors’

proposals,sayingasuccessfulsinglemarketdependedon“greatereconomicand

51 ECCommission1987b;Sutherland1999;Dølvik1999:24-7;ICTUAR198752 OnD/FA“pessimistic”,F.M.Hayes,Dep.Secretary,D/ForeignAffairs,toJ.Travers,D/Taoiseach,

17/12/87,DTA:S25858-C

202

social cohesion”. Helmut Kohl, in discussion with Haughey, admitted that

Germanyrealisedthat“thelatter[was]anecessaryconditionoftheformer”.53

Structuralfundinghadhithertoprovidedaminor,ifgrowing,contributionto

Ireland’sPublicCapitalProgramme(PCP).In1986theNESCdidnotyetforesee

itplayingmorethanaminorroleindevelopment.ERDFhadincreasedfromjust

1.6 per cent of the PCP in 1976 to a significant but still ancillary 10 per cent

(£239m) in 1988, the last pre-Delors allocation. Finance prided itself on how

“Ireland has consistently been one of the most successful Member States in

takingup themoneyavailable fromtheERDF”.ButunderDelors,whichwould

more than double Ireland’s allocation to 30+ per cent of the PCP given its

weightingto“lessdeveloped”regions,FinancebelievedERDFwouldhenceforth

drivethePCP,andurgedcredibleprojectstoensurefulldrawdown.54

Haugheyhada radical idea for combining theusuallydiffuseERDF funding,

ingenuously proposing Ireland apply as a single region, with seven “sub-

regional”programmes,butframedasawholeasa“NationalDevelopmentPlan”

(NDP).He further proposed, in linewithDelors’ thinking, that it be developed

involving local interests and agencies, and include the private sector.55 The

government intention, he told the Dáil, was “to avail of the opportunity to

formulate a comprehensive investment plan… to overcome the economic and

socialdeficienciesthatareholdingusback”.Allplanningwastobealignedand

integratedwiththePNRandsocialpartnershipmadecentraltoit.Thisframing

ofdisparatestructural fundprojectsasa“nationalplan”wasutterlynovel,and

greatly enthused Delors. Haughey described the NDP as an “extension” of the

PNR, “consistent with its objectives” and bringing it to a “new plane of

development”. He established a “Committee on EC Coordination” of senior

officialsandCRC“socialpartners”toprepareforthesinglemarket.56

The mandarins at Finance were appalled at Haughey’s extending social

partnershipoverwhattheysawastheirpreserve,warningTeahontodisabuse

53 HaugheyinDáil,01/02/89and23/03/8754 NESC1986;D/Finance,‘FutureDevelopmentofERDF’,14/03/88,S25857-C55 ECCommission1987b;W.KirwintoPatO’SullivanD/Taoiseach,23/03/88attaching‘Programmesfor

E.C.Funding’and‘RevisedDraftFrameworkRegulationissued16/03/88,CRC39,DTA:S25857C;O’Connell,D/Env.,toHelenKehoe,D/Taoiseach,12/05/88,DTA:S25857-E

56 HaugheyinDáil,12/04/89;CRC,‘SummaryReport5thmtg.,’28/04/88’,S25857-D.CRCmembersoftheJointCommitteewereConnellan(CII),Cassells(ICTU),O’Brien(FUE),Hennessy(CIF),Collier(Macra),Whelan(ICOS)(D/Taoiseach,‘PreparationforCompletionofEECInternalMarket‘,DTA:S25857-E)

203

theCRCoftheideathat itwouldplayasubstantialrole:“nodecisionshaveyet

been takenonhowtheoverallnationaldevelopmentplan…willbeprepared”.

ToavoidantagonisingFinance,ÓhUiginntoldtheCRCitmightatbestexpectto

beconsulted,andinstructedofficialstorefrainfrommentioningasocialpartner

role. But he advised government that itwould be “difficult to see howwe can

avoidconsultingCRCbodiesonanyplaninvolvinganevolutionofthePNR”.57

FollowingHaughey’sstatementofhisintentiontointegratetheNDPandPNR,

theCRC,seeingitselfas“theappropriateforuminwhichtoconsidertheoverall

…plan”,nowdemandeda role indrafting it. In July1988governmentordered

that structures representing social partners and local interests be formed to

advise and assist the drafting of the “sub-regional” plans, and that the overall

NDP on completion be submitted to the CRC for approval before finalisation.

Finance, as yet, would retain the chairmanship of the planning groups,

responsibilityforcoordination,and“afinalsay”onprogrammespecifics.58

A first draft NDPwas produced, following a similar format to the PNR and

alignedwith it. Its aimwas to stimulate growth locally and nationally, reduce

unemployment and “raise per capita incomes towards average Community

levels”. Additional training and labourmarket programmeswould be financed

through the European Social Fund (ESF). Haughey urged CRC partners to

mobilise their local structures in the planning process, which they did. This

participative planningwas unique in Europe, and so impressedDelors that he

promotedittoothercountriesasamodeltoemulate.59

TheCRCmeetingof26October1988which,asdescribedinthe lastsection,

hadtrawledthroughgovernmentandIDAreports,confirmedtheeconomyhad

“turned a corner” and publicly endorsed Dorgan’s view of the PNR (“it’s

57 TuttytoPTeahon,20/04/88,S25857-D;ÓhUiginninh/wnotesformins.,4thCRCmeeting24/03/88,

DTA:S25857-C;W.KirwantoTeahon,‘PaperformeetingoftheCRC28April’,26/04/88,S25857-D58 CRC,‘SummaryReportof6thmtg.’,26/05/88,DTA:S25857-E;h/wnotes,SecretariatGroup,‘SGCRC

29/7/88’,DTA:S25857-F;GovernmentdecisioninDermotNally,RunaíanRialtais,toanRunaíPríobháideach/AntAireAirgeadais,26/07/88,DTA:S25857-F;D/Finance,‘Confidential-BackgroundBriefingforSRCSecretariatMeeting’,24/8/88,andD/Finance,‘NoteforCRCSecretariat:ConsultativeProcessonRegionalProgrammesforECFunding’,26/8/88,DTA:S25857-G;NallytoPrivateSec.,M/Finance23/09/88,,attachingD/Finance‘AideMemoire’agreedbygovernment,DTA:S25857-

59 D/Finance,‘OutlineofNationalDevelopmentPlan’,July1988,DTA:S25857-G;onHaugheyandlocalsocialpartnerengagement,h/wnoteofmeeting,SG,05/10/88,DTA:S25857-Iand‘ActionPoints…fromSGmtg.of5October’,12/10/88,DTA:S25857-J;‘ECStructuralFunds:DiscussionatCRCSec.Group,5Oct_1988’(internalD/Taoiseachuseonly);‘StatementbytheTaoiseachonNESCReportIrelandintheEuropeanCommunity,Dáil,24/10/89

204

working”),alsoreviewedpreparationsfortheNDP.ÓhUiginntolditofamajor

breakthrough: civil servants who had just met Delors had been told how the

Commissionwas “very impressed”with thePNRandwould fund theproposed

NDPsectoralplansalignedwithitwitha£700mpackage.Furthermore,Brussels

hadagreedanextraprogrammeto“createjobsinemploymentblackspots”.60

Drafting theNDP brought the PNR, inHaughey’swords, to a “new plane of

development”,withtheNESCtaskedwithdevelopingEuropeanstrategy,theCRC

givenoversightoftheNDP,andlocalsocialpartnersintegratedintoplanningits

“sub-regionalprogrammes”.HaugheydescribedtheNDP’sasaimedtoovercome

the“costlyimpedimentofourperipherallocation”andthewideinvolvementin

itsplanning“generat[ing]agreatcountry-wideeffort…insupportofthisplan”.

Speaking for him in the Dáil, Lenihan said the approach would “become an

integralpartoftheState’swholeeconomicandsocialplanninginthefuture”.61

PartnershipandtheHaughey-Delors“alliance” TheOctober1988breakthroughwhenBrusselsendorsedIreland’s“NDP”was

the result of a deliberate strategy. On the EC CouncilHaughey had nurtured a

rapportwithFrancoisMitterand,whohehadhostedonaprivatevisittoIreland

in March, and successfully pressed Ireland’s case on Helmut Kohl. Framing

Ireland’s ERDF/ESF programme as a “National Plan” enthused Delors. These

threeleadersweredeterminedtoprogressECintegrationagainstoppositionled

byBritain,withKohlandMitterandsealingtheirallianceatasymbolicrenewal

ofthe1963DeGaulle/AdenauerÉlyséeTreaty.Thatcher’sfamousBrugesspeech

opposinga“newstate…imposedataEuropeanlevel"hadbeenmadejustweeks

earlier,inSeptember,andboththeCommissionandtheFranco-Germanleaders

neededallies.HaugheyassuredthemthatIrelandwouldbeoneofthese.62

Haughey’s enthusiasm for Europe had always gone beyond the generalised

small-state/Commissionconfluenceof interestoftenascribedtoIrishpolicy.As

Minister for Finance in 1967 he had been involved in the renewed EEC

application, during which he was present at de Gaulle’s reiteration of his

60 CRC,‘SummaryReportof9thmtg.’,26/10/88,DTA:S25857J-2;‘14,500newjobs,IrishTimes,27/10/8861 Haughey,‘Speechatlaunchof“NDP1989-1993’,31/03/89,GIS:D/Taoiseach;Lenihan,Dáil26/10/8862 ÉlyséeTreaty,…;Thatcher,‘SpeechtotheCollegeofEurope’,20/09/88,

https://www.margaretthatcher.org/document/107332

205

opposition to Britishmembership, and inDublin argued in favour of pursuing

membershipregardlessofBritain.AsTaoiseachin1979-82hehadalignedwith

Germany, agreeing at ameetingwith Chancellor Schmidt that rapid European

integrationwasanexistentialnecessity.OnagainbecomingTaoiseach in1987,

and against considerable opposition from Foreign Affairs, hemoved European

policy to theDepartmentof theTaoiseach,appointingMáireGeogheganQuinn,

whowouldlaterbecomeIreland’sfirstwomancabinetmembersinceMarkievicz,

toco-ordinateEuropeanpolicy.AssoonastheSEAwaspassed,hemandatedthe

NESCtodraftaEuropeanstrategyand,inaremarkablefeatgivensocialpartner

divergence over the SEA six months earlier, succeeded in having a consensus

integrationistpositiononthe“ECDimension”includedinthePNR.63

Haughey personally led European strategy, launching a “new departure in

Irishgovernmentalorganisation”byestablishinga“CommitteeofMinistersand

Secretaries”,chairedbyhimself,to“takecontrolanddirectpreparations”forthe

SingleMarket.FollowingBrussels’approvaloftheNDP,hepresenteditasaplan

jointly developed through the “unique” Dublin-Brussels “partnership”. Delors

reciprocated and, in Dublin to “cement and deepen” what he called the new

“partnership between the European Commission and the Irish Government”,

issuedanunprecedentedjointstatementwithHaugheydescribingthis“historic

partnership” as based on a common will to both “integrate European and

nationalpoliciesinacommonplantodeveloptheIrisheconomy”,andprogress

European “economic and social cohesion”. “By our actions, the policies of the

Communityand thoseof the Irishnationwillbe fullyandeffectivelycombined

and integrated”. Ireland would “fully coordinate its policies with those of the

Communitytocreateanefficientandcompetitive[Irish]economy”.Itwasagreed

thatHaughey’sECCommitteecollaboratewithaCommission“taskforceheaded

byPresidentDelors”, thatthetwowould“meetregularly”toensurepolicywas

“fullyco-ordinated”onboththeNDPandEuropeanintegration,andthatIreland

wouldsupportrapidfreeingofcapitalmovements.DelorsalsoassuredHaughey

63 OnIreland/Commissionrelationship,FitzGerald1991andBrennan2008;onHaughey,France,Germany

andEECmembership,seechapter2;onD/FA“resistance”,Delaney2001;‘ECDimension’,PNR,I;onsocialpartnersandSEA,Hourihan1996:90-1

206

that NDP approval deadlines would be met. This “partnership” was

unprecedented,theCommissiondescribingitas“sofarunique”inEChistory.64

IndevelopingtheNDP,Haugheyusedthis“uniquepartnership”tosecurekey

policy goals. Ó hUiginn sought a front-loading of 1989 current-round ERDF

fundingtofreebudgetprovisiontomeetPNRcommitmentsin1990.Heargued

thisonthebasisoftheneedforcontinued“restraintonExchequerborrowing…

in line with Community guidelines”, warning that “we are likely to have

difficultieswith the social partners, particularly the…unions, unless the1989

Budgetcanindicate…additionalresourcesforjobcreation”.Whilethiswasnot

disclosed to the CRC, such was the new relationship with Brussels that the

requestwasapproved.Irelandalsosecuredthemaximuminterventionrateof75

percentandaper-capitaallocationfarinexcessofanyothermemberstate.65

ThefinaldraftNDPwascompletedbytheJanuary1989deadline.Followinga

lengthy meeting, the CRC issued a “Joint Statement” “endorsing” it and

committing to cooperate in developing its “sub-regional programmes”. The

Commission, impressed by Ireland’s focused planning, its intention “to spread

the projects of the [NDP] Programmes throughout the country” and its

integration of the structural-funded NDPwith the PNR, praised the “thorough

and comprehensive work presented by the Irish Government”. Delors was

particularlytakenwithitslocalandsocialpartnerinvolvement,whichHaughey

stressedwereIrishinnovationstheCommissionhadnotspecificallysought.66

Government proposed another innovationwhich, in a series of concessions,

Brusselsalsoapproved.ThiswasforprivateinvestmenttobeeligibleforECco-

finance, prohibited under the 1986 ERDF regulation. Haughey argued it was

indispensible to enable the NDP proceed while maintaining budget discipline,

though it also of course reflected the private sector-centred ethos of the PNR.

Government first sought this for the plan’s roads programme,which it argued

64 OnECCoordinationCommittee,HaugheyintheDáil01/02/89’;Haughey-Delors,‘JointDeclarationbythe

Taoiseach,CharlesJ.Haughey,TD,andPresidentDelorsontheEconomicandSocialDevelopmentofIrelandwithintheEuropeanCommunity’,28/10/88,GIS:D/Taoiseach;onDelors’“personaassurance”,h/w:‘Notes–CRCSG31/8/88’,DTA:S25857-G;and“sofarunique”,‘JointDeclarationaftertheMeetingbetweentheCommissionandtheMembersoftheIrishGovernment’,Bxl.16/01/89.Comm.IP(89)13

65 ÓhUiginntoAntonioCosta,DGII,CommissionoftheEC,19/12/88,and,onsecretstrategy,O’SullivantoSec.[=ÓhUiginn],‘reCRCmtg.11January’,05/01/89,DTA:S25857-N

66 CRC,‘SummaryReportof11thmtg.’,11/01/89,DTA:S25857-N;‘GovernmentStatement’,11/01/89,GIS:D/Taoiseach;‘JointDeclarationaftertheMeetingbetweentheCommissionandtheMembersoftheIrishGovernment’,Bxl.16/01/89;HaugheyinDáil01/02/89

207

theExchequeralonecouldneverfinance.Delorsapproveditinprinciplewithin

weeks. It then sought and secured the same exemption for infrastructure

generally, especiallywater facilities forwhich an extensivemodernisationwas

planned. Government had secured EIB loanswhen establishing Coillte to fund

PNRforestryandtimberindustryprojects,whichhadenabled“recordplanting”

andnewindustrialplantsin1988.Haugheynowsoughtapprovalforthissector

tootobeeligibleforprivate/ERDFco-financing,securinganamendmenttothe

relevantERDFregulation.Dublinsimilarlyandsuccessfullylobbiedforthesame

fortourismprojects,whichÓhUiginntriumphantlyreportedtotheCRCinJune

1989theCommissionnow“fullyaccept[ed]”.Theprinciplewaslaterextendedto

private/communityco-financingoflocaldevelopmentprojects.67

Thesocio-economicstrategyofthePNR,aswiththoseofLemass,wasfocused

solelyontheeconomyoftheRepublic.Whilehavingan“ECDimension”,itmade

nomentionofNorthernIreland.Businessorganisationshadneitherapresence

normembersintheNorth,andviewedtheattritionalconflictmainlyintermsof

itsimpactonsoutherneconomicdevelopment,deterringinvestmentandforeign

trade.AlthoughICTUhadathirdofitsmembershipandplayedasignificantrole

intheNorth,itkeptthisseparatefromitsactivitiesinthesouth.But,likePádraic

White of the IDA, ICTU leaderPhil Flynnhad grownup in a depressedborder

county. A prominent republicanwhose father had endured discrimination and

unemployment in the North, it was Flynnwho first raised the potential of EC

funding for cross-border projects under the NDP. Finance hadmentioned this

possibility, but dismissed it as probably limited to minor initiatives. Flynn

persisted, stressing that the single market meant the border would be “gone

otherthan[for]security”,butFinancecounteredthatmoreambitiousinitiatives

would be “difficult to implement”. But Ó hUiginn, who was a republican in a

similarsensetoWhiteandHaughey,calledtheFinancesecretary,Tutty,totask,

remindinghimoftheAIAstudygroups,whichcoulddeveloprelevantproposals.67 DiscussionofERDFregulationandIrishstrategy,h/wnotes‘CRCmeeting’08/09/88’,DTA:S25857-H;

Haughey’sjustificationinDáil,12/04/89;onDelorsapprovalforroads,CRC,‘SummaryReportof7thmtg.’,30/06/88’,DTA:S25857-F;extendedtoinfrastructure,CRC,‘SummaryReportof8thmtg.’,08/09/88’,DTA:S25857-H;onEIBloansforforestry/timber,‘EuropeanInvestmentBankfundsforForestry’,15/12/88,GIS:D/Energy,andDenisMehigan,PrivateSec.,toPaulineO’Shaughnessy,D/Taoiseach,‘BriefingmaterialforD/TaoiseachforreplytoletterfromP.CassellsregardingLeinsterPaperMills’,06/02/89,DTA:S25857-O;onprivate/ERDFextensiontoforestry/timber,‘ECActionProgrammetoaidIrishforestry’,29/05/89,GIS:D/Forestry;andtourismCRC,‘SummaryReportof16thmtg.’,22/06/89,DTA:S25857-U

208

Thiswasasmallbeginning,butwouldleadtoagrowingcross-bordereconomic

elementintheNDPthatwouldlaterbeofsignificanceinthe“PeaceProcess”.68

If theNDPandDelorsPlanwerethe frameworkforthebeginningsofanew

aspectofNorth-Southdevelopment,theyalsoshapedanewleft/rightalignment

in Europe that brought the ICTU, andmuch of the Irish Left, closer to the EC.

Following union opposition across Europe in 1987 to the “one-sided” free-

marketorientationoftheSEA,Delorssoughttowinlabourtothesinglemarket

bydramaticallyannouncing,attheETUCconferenceinMay,there-activationof

EC-level“collectivebargaining”througha“EuropeanSocialDialogue”hehadfirst

announced in1985andhad includedprovision for in theSEA.Even inBritain,

where the TUC had long been hostile to the EEC, he enthused trade unionists

with his call to them to join in building a “Social Europe”, unveiling at their

conference in September 1988 his proposed “European Charter of Workers’

Rights”,whichhepromisedwould formpartof the1992Treaty.Hisspeech, to

which Thatcher’s Bruges address the following week was a direct riposte,

reportedly “electrified” delegates, who gave him a standing ovation, singing

“frere Jacques!” (Delors was a former union official). Unions across Europe,

including Britain, rallied to Delors as representing a “social capitalism”, the

“optimistic” opposite pole to Thatcherism.ICTUwas equally enthused, and its

endorsementattheOctober1988CRCmeetingoftheNDPandthegovernment’s

casethatanIrishrecoverywasunderwaywascriticallyinfluencedbyit.69

Bothbusinessandunions in Ireland threw themselves intoplanning for the

NDP. The promise of Europe dissipated residual sympathies for Thatcherite

policies among Irish employers, though these had always beenmoremuted in

the CII.Planningworkshops by partner organisations onEurope followed. The

newly optimistic farming groups hosted meetings on CAP and rural

development,andICTUalargeeventontheEuropean“socialdimension”,which

Delorshimselfaddressed.Haugheywasalsoduetoattendbutcouldnotdueto

68 OntheNorthandtheeconomy,Reynolds2009:124-5;CIIview,Power2009:25;onICTUNorthernrole,

ICTUARs1971-89;Tuttyonthepossibility,in‘£239millionRegionalFundassistanceforIreland’,06/01/88,GIS:D/Finance;Tutty,FlynnandÓhUiginninh/wnotesforMinutes4thCRCmeeting24/03/88,W.KirwintoO’SullivanD/Taoiseach,‘re‘rogrammesforECFunding’,23/03/88,DTA:S25857-C,h/wnotesofSecretariatGroupmtg.,‘SGCRC29/7/88’,DTA:S25857-F,andCRC,‘SummaryReportof9thmtg.’,26/10/88,DTA:S25857J-2

69 ECComm.1988b,c;Lee,D.2010;LangeandTeague,1992:24;Hourihan1996:70;McGinley1999:128-9

209

illness, his speech being delivered by Lenihan. While the ICTU quibbled with

aspects of theDelors Plan, especially the “inadequate” scale of ERDF transfers

envisagedintermsofIrishneeds,itembracedDelorsandthe“SocialCharter”.70

TheDublin-Brussels “special partnership”didnotprecludemore traditional

practices, the Department of the Environment, for example, reporting its

continued “strictly confidential” policy in defiance of EC rules of covertly

“promotingimportsubstitution”byfavouringIrishmaterialssuppliersinpublic

construction contracts. Nor did the “partnership” deter government from

dissenting fromCommissionproposals itdisliked, strongly resistinghastyVAT

harmonisationor,tothereliefofcivilservantsandbusiness,whenAhernjoined

BritaininopposingtheVredlingDirectiveonworkerdirectorsinJuly1988.71

Butthe“alliance”withtheCommissionwasaveryrealone,ofmutualbenefit.

Irelandreciprocatedthespecialconsiderationitreceivedby–asNESCadvised–

consistentlysupportingFranco-German integrationpolicyand fast-tracking the

liberalising of capital movements ahead of others, though this accorded with

governmentstrategyanyway.Asalreadythe“mostopeneconomyinEurope”,Ó

hUiginntoldtheCRC,IrelandstoodonlytogainfromopenECpublictendering,a

positionalsoadvocatedbytheDepartmentofFinance,CIIandgovernment.72

Before the finalised NDP was approved by Brussels in March 1989, it was

again sent for CRC’s “consideration” and only submitted following its

endorsement.AdditionalSocialFunding(ESF)forunemploymentmeasureswas

addedinJune.TheNDPinvolvedatotalinvestmentof£9.7bn,including£3.9bn

ERDF,butwithmuchoftheIrishinputfromtheprivatesector.Haugheyhailed

the75percentinterventionrateandeligibilityofprivateinvestment,sayingthe

NDPwouldthusachieveitsgoalswithoutbeing“aburdenontheExchequer”.73

WithBrussels’finalapprovaloftheNDPinApril1989,andfollowingtherole

of the unions in drafting it, Congress seized on Haughey’s commitment to

partnershipas“anintegralpartoftheState’s…planninginthefuture”tosecure70 OnCII/FUE,Power2009andInterviewswithO’SullivanandPower;forICTUevent,ICTU1988bandc71 On“importsubstitution”,MichaelO’Connell,D/Env.toJohnTravers,D/Taoiseach,16/02/88,DTA:

S25858-E;onoppositiontoVredling,IrishTimes,20/07/88,andcivilservicerelief,SeánDorgan,notetoTravers,“materialforTaoiseach’sspeechon1992campaign’,22/06/88,DTA:S25281-E

72 CRC,‘SummaryReportof8thmtg.’,08/09/88,DTA:S25857-H;D/Finance,‘ImplementationProgrammeforNationalRecovery:AreasofResponsibilityofD/Finance’,March1988,DTA:S25858-F

73 CRCdebate,approvalofNDPinCRC,‘SummaryReportof13thmtg..’,13/03/89,DTA:S25857-QNDPfundingin‘GovernmentStatement’,22/03/89,GIS:D/Taoiseach;HaugheyinDáil12/04/89

210

amonitoringroleintheimplementationoftheNationalPlan,similartotherole

it achievedon theCRC in relation to thePNR.ÓhUiginn,underDepartmentof

Finance pressure, demurred. While he conceded that Brussels required a

monitoring system, he for once countered ICTU, warning that an agreed plan

withBrussels involvingpublicmonieswasa “politicalmatter”andpartnership

shouldnotoverreach itselfby infringingonDáil sovereignty.But ICTUhadnot

only other partners’ but also Haughey’s support, and Ó hUiginn relented,

“recommending” to Reynolds, nowMinister for Finance, that he accommodate

theirwishes.Financereluctantlyagreed,establishinga“smallunit”fortheNDP,

reportingtoboththe“CommitteeofMinistersandSecretaries”(CMS)andsocial

partnership’s CRC. As the Commission required a “Committee” for each

programmeanyway,itphilosophised,the“advisorygroups”,onwhichthesocial

partnerswere“heavilyrepresented”,shouldbemergedwiththeplanninggroups

forthepurpose.ThisproposalwasadoptedbyGovernmentinMay1989,placing

asocialpartnershipstructureovertheNDPandeachofitssub-programmes.74

Haughey defined the PNR’s objective as “real convergence [with Europe] in

employment level, incomes and general prosperity”. Structural funds, he told

FiannaFáiltradeunionists,werevital,but“onlyonelegofatripod”:“Inthefinal

analysis, no amount of EC support will compensate for inadequate policies at

home… The fruitful relationship that now exists between social partners and

Government is the key to economic success. I would like to see it firmly

establishedasapermanentstructureforthefuturesothateconomicandsocial

progresscanbeplannedinaconstructiveatmosphere”.75

TheNDP,developedasan“extension”ofthePNR,wasatriumphforHaughey.

Its enthusiastic approval byBrussels andextensivepositivemedia coverage at

homewasfollowedwithinaweekbyhisdecisiontocallasurpriseelection.

74 “integralpart”,HaugheyinDáil26/10/88;ICTUdemandmonitoringroleand“ÓhUiginnconceded”,CRC

‘SummaryReportof14thmtg.’19/04/89,DTA:S25857-R;“counteredICTU”,‘13/3/89’[i.e.h/wnotesfor13thmeetingCRC,13/03/89],DTA:S25857-Q;Haughey’ssupport,O’SullivantoÓhUiginn,‘reAgendaitem4–ConsultativeProcessonMonitoringImplementationofECStructuralFundAssistance’,18/05/89,DTA:S25857-S;“recommendstoReynolds”,ÓhUiginntoReynoldsM/F,28/02/89,DTA:S25857-S;Finance“reluctantlyagrees”,D/Finance,‘CMS166.Revised.MonitoringtheNationalDevelopmentPlan.SuggestedArrangements’,DTA:S25857-S

75 Haughey,‘SpeechtoFiannaFáilTradeUnionConference,Lucan’,07/05/89,GIS:D/Taoiseach

211

Chapter8

Greenshoots:economicrecoveryandpolicyinnovation,1987-89

“Turnaround”:apatternemerges

The 28October 1988CRCmeetingwas the turning point of the PNR,when

what ICTU leader JohnCarroll had called its “gamble”was agreed finally tobe

“working”.DespitetheUS/UKmarketcrisis,anIrish“turnaround”wasoccurring,

withgrowth reviving,new jobsbeing created, “thehaemorrhageof substantial

joblosses…ended”,andagriculturerecovering.AsaseniorFUEofficialputit,the

recovery“mightbemodest”,butonjobs“thetricklewasgainingmomentum”.1

A core aim of the PNR agreement, as Haughey had told Phil Flynn, was to

“restore investor confidence”. The CRC, government and Europe now all

concurred that the PNR was generating a “resurgence of investment by Irish

industry”following“leananddifficultrecentyears”:“thedaysofrealoutputand

jobsgrowthhavereturned”.MacSharryreportedexports rising in1988 to two

thirds of output, compared to just half in 1986, the highest in the EC, while

DelorssaidthePNRhadledtoa“substantialinwardflowofcapital”.2

But rather than a general phenomenon, the recoverywas occurring in very

specificareas.Thesocialpartnershadoverlappingbutdivergentinterests.While

ICTU sought job creation and industrial expansion to reduce mass

unemployment and boost wages, and business a recovery of profitability and

trading growth, Government neededpolitically to achieve both. Thepattern of

industrialrecoveryanditseconomicstructurebecomingapparentbytheendof

1988,whilemirroringtheprofileandtargetsofthePNR,tookaformdifferentto

it,withthethreetargeted“businessareas”performinginamannernotforeseen.

Nevertheless, while external factors, notably early forms of globalisation, and1 D/I&C.’20,000Target…ProgressReportofMid-Year’.August1988,DTA:S25857-G;FUEofficialquoted

inTheIrishTimes27/10/882 HaugheytoFlynn,inHastingsetal2007:31;PNRSectionII(6);[IDA],‘UpdatedProgressonthe

ProvisionofJobsunderPNR’,21/10/88,DTA:S25857-J;McSharry,‘AddresstoGeneralHumbertSummerSchool’,26/08/88,GIS:D/Finance;‘JointDeclarationbytheTaoiseach,CharlesJ.Haughey,TD,andPresidentDelorsontheEconomicandSocialDevelopmentofIrelandwithintheEuropeanCommunity’,28/10/88,GIS:D/Taoisecah

212

inherenteconomicfactors,suchasthenatureoftherationalisation“shake-out”,

were important, sectoral performancewas decisively shapedbypolicy choices

bybothgovernmentandthesocialpartners,notonlyinmacro-economicterms,

but in thespecificsof industries.Thepoliticsof socialpartnership, rather than

exogenousfactors,becamethevitaldriveroftheIrisheconomicturnaround.

Policytested:“indigenous”industry’sunevenperformance

PNRindustrialstrategyprioritisedatake-offofindigenousindustry.TheIDA

described its “central objective” as to “stimulate and assist Irish controlled

companies to be internationally competitive” and “become European market

leaders”. Critics later dubbed this “crony capitalism”, although, as examined in

the introduction to this thesis, state-industry integration was the essence of

“successfulsmallopeneconomy”theory.FDI,whichhadbeenperformingpoorly,

was seen as ancillary, assisting the “central objective” by upgrading industrial

quality and “linkages” with Irish firms. The IDA pursued whatever mobile

investmentitcouldonthisbasis(withanew“specialfocusonJapan”giventhe

US/UK recession), but did not expect a dramatic breakthrough. Its immediate

priority,theDepartmentofI&Creported,wasimprovingexportcapacityamong

the900overseas firms “still in Ireland”. Supporting small start-ups,whichhad

also, despite considerable state investment, shown poor results in the 1980s,

was another secondary objective. Privately, Haughey and his circle were

scepticalofthisorderingofpriorities,havingalreadyidentifiedasubstantialFDI

growthasthekeydriver,butaccepteditintheinterestsofthePNRconsensus.3

In line with PNR strategy, agency supports were re-directed from general

start-up and fixed asset grants to selected larger companies to promote their

presence abroad and modernise their capacity, marketing, company planning

andmanagementtechniques.JohnBrutonclaimedthishadalreadybeen“central

core” coalition policy, citing theGoodman example, but government dismissed

this as having been little more than aspiration. Pádraic White described the

policy re-orientation now underway as the “biggest shake-up in industrial3 IDAIreland,‘ReviewofIDA’sThreeBusinessAreas,1988,’05/01/89,DTA:S25857-N;D/I&C,‘Progress

intheProvisionofJobs’,27May1988,DTA:S25857-E;onHaugheycircle’spreferences,ÓhUiginntoHaughey,n.d.,withmemo,Travers,‘PresentationtoTaoiseachandMinistersforFinanceandLabouronApril27th[1987]onIndustrialPolicy’,DTA-OHP(seealso,chapter4)

213

incentivessincethefoundationoftheIDA”.Thehelptotargetedfirmswasvery

considerable,aDepartmentofI&Cofficialdescribingitasdifficult“toimaginea

greater degree of intervention short of a substantially enlarged State sector”,

thoughalsowarningitwouldbeyearsbeforeitsconcretesuccesswasapparent.4

BothbusinessandunionsacceptedthatthepromiseofthePNRlayinthenew

future sectors it would drive, not old industry. The on-going “shake-out” was

extreme.Mostofmanufacturinginthe1970shadbeenforthehomemarket,and

a third of those jobs had disappeared by 1985, displaced by imports, as the

industrialbaseoftheLemasseracollapsedintheabsenceofanewstrategy.Only

firms innon-tradedsectors, suchas food, survived, thoughstillover-relianton

UKmarkets andwith only an eighth exporting elsewhere in Europe. Ireland’s

EEC “transition” had ended in 1978 with the last protections - apart from a

further4yearsforthecarindustry–removed,precipitatingadecadeofsevere

manufacturing decline. ICTU privately accepted that old-industry loss-leaders

weredoomed.WhengovernmentwithdrewsubventionstoLeinsterPaperMills,

Haughey adamant it could not become “financially involved again”, ICTU

protestedpubliclybut, asÓhUiginnnoted toHaughey, “the fact [they]didnot

raisetheissue[ontheCRC]…suggeststheyunderstandthereality”.5

Besides large-scale exporting, the PNR also hoped for quick employment

dividendsfromservicesandfromsectorssuchastourism,whoseplannedgrant-

assistedexpansionaimedfor25,000newjobsby1993achievedbyapromotion

campaign,upgradingthe“product”andexploitingEuropeanliberalisationofair

transport.AlthoughthistargetwasridiculedbytheDáilopposition,government

established a “Tourism Task Force” whose tax-incentive/marketing-based

strategy was energetically implemented in 1987-88. This fulfilled Haughey’s

prediction of a “bumper year for tourism”,with visitor numbers increasing 15

4 PNRV(11);D/I&C,‘ProposalsforFurtherRe-organisationandSimplificationofIndustrialPromotion

Agencies’,Feb.1988,S25858-E;IDAIreland,YourPartnersinDevelopment,Jan.1988;Bruton,‘SpeechtothelunchofSmallFirmsAssociation’(FineGaelPressRelease),18/02/88;oncoalition“aspiration”,TraversD/TtoPaulBates,D/I&C,25/02/88,DTA:S25858-E;on“shake-up”,IDA,‘IntroductoryCommentsbyPadraicAWhite’,07/04/88,DTA:S25870-C;on“stateintervention”,PaulBates,D/I&C,encl:‘PoorResponsefromPrivateSectortoJobCreation.Mfr./Ind.Policy’,Nov.1989,DTA:S25862-D

5 On“shake-out”,O’Dowd1996:43;NESC1989:515;onPaperMills,DenisMehigan,PvteSecretarytotheTaoiseach,toCassells,ICTU,29/03/89,andInternalD/Tmemo,O’SullivantoSec[ÓhUiginn],‘RepresentationtoTaoiseachfromMrP.Cassells,reLeinsterPaperMills’,06/03/89,withh/wnote,ÓhUiginnforTaoiseach,14/03/89,DTA:S25857-Q

214

percentand5,000“directandindirect”newjobscreatedby1989.TheCRCwas

confidenttargetsforsucceedingyearswouldalsobeexceeded.6

The trawl to increase net employment led to every area of government

activity being scrutinised for its potential. When Foreign Affairs, like all

departments,wasasked to report toCRCon the jobs impactof its activities, it

listed overseas development aid (ODA) as its “contribution”. When the

Department of theTaoiseach queriedODA’s “balance of advantage to Ireland”,

ForeignAffairsdemonstratedhowits£39mbudgethadresultedincontractsfor

Irishprivateandsemi-statesuppliersof£86m,with70percentofallbilateral

aid expended on goods and services from them, producing 1,200 direct and

indirectjobs.ÓhUiginnsolemnlytoldHaugheythatwhiletheCRCwasawareof

the“moralandothernon-economicreasonswhy[ODA]shouldbemaintainedor

increased”, the “flows of contract income” were nevertheless favourable and

apartfromtheirvalue,“perhapsmoreimportantly”,provided“atrainingground

andimagevitaltoincreasingtheflowofincomefromothersources”.7

The uneven development of indigenous large-scale industry under the PNR

was exemplified by the food sector. Ireland had a competitive advantage in

grass-based production and was already Europe’s largest beef producer,

exporting75percentofproductpredominantly toBritainand thirdcountries.

Butproductionwasinefficientandqualitypoor.Thefuture,asboththeNESCand

ministers repeatedly stated, lay in quality processing and away from “volatile”

third-countrymarketstosellinghighvalue-addedproductintoEurope.8

Haugheyexhorted farmers to “wean” themselves fromEEC interventionand

seasonal production,whichwere “constraining” growth, andmove from being

“primarilycommoditytraders…tomarketersof[quality]products”,supplying“a

highly competitive and technologically sophisticated agri-food industry …

competingontheworld’sfoodmarket”.Ontheprocessingside,IDAcollaborated

withtheDepartmentforthefirsttimeindevelopingadetailedindustrystrategy,

two semi-state boardswere founded, Teagasc to drive a professionalization of6 PNRV(27);BordFáilte1988;HaugheyinDáil17/05/88;CRC,ProgressonJobCreation,n./d.[Dec.1988]7 JohnSwift,Asst.Sec.,D/FA,toTravers,D/Taoiseach,13/01/88,DTA:S25858-D;D/FA,untitledmemo,on

‘AidandTrade’(forCRC),n.d.[Sept.88],DTA:S25857-H;Sec.[ÓhUiginn]toTaoiseach,‘BilateralAidProgramme’,Oct.1988,DTA:S25857-J2

8 “volatile”,NESC1986;MichaelO’Kennedy,M/A&F‘Statement…,launchingAnnualReviewandOutlookfortheAgricultureandFoodIndustry’,18/01/89,GIS:D/A&F

215

agricultureandBordGlashorticulturalproduction,andahorseindustrystrategy

wasdeveloped.Ultimate employmentwas forecast in the thousands,withbeef

processing alone targeted to deliver 1,000 by 1993. Selected beef firms –

principallyHibernian andAIBP (Goodman) -were identified and assistedwith

EC-approvedIDAmodernisationplans.Describingthestrategy,Haugheywarned

theDáilitwouldalso“inevitably”involveclosingolderinefficientplants.9

Despite quality challenges and inefficiencies, IDA reported “very significant

progress” in restructuring beef companies, updating production, modernising

management and training farmers during 1988. Rationalisation and plant

closurescreatedbothunemploymentandnewjobs.Thoughby1988therewere

just300moreemployedintheindustrythanin1986,thisexcludedaburgeoning

sub-contractsector.Theindustryfacedmanyproblems,bothinternal, likeslow

productqualityimprovementandfarmerspersistinginseasonalproduction,and

external, like continued protectionist practices in target European markets,

notablyGermany.Toexpandthird-countrytradeinthemeantime,exportcredit

insurancewasrestoredforMid-EastmarketsinJanuary1988.10

In addition to the as yet unanticipateddisastrous Iraqi default of two years

later, this meant newly emerging Far-Eastern opportunities could not be

exploitedasexportcredit insurancewasfullycommitted.But,by leveragingits

newpoliticalcapital inBrussels, IrelandsucceededinhavingGermanyagree in

early1989tofinallyopenitsmarkettoIrishbeef,andtheECalsoestablishedan

intervention “safety net” in the event of a sudden closure of third-country

markets.ButthejointimpactoftheBritishBSEcrisisandUS/UK-led“GulfWar”

in 1990 collapsed beef export trading. The CRC nevertheless remained

optimistic, judging IDA-driven restructuring to be on target to grow quality

9HaugheyinDáil24/10/89;onbeefindustryplan,‘Draft.OutlineoftheCurrentStateoftheIrishBeef

Industry’,n.d.,[1990],DTA:S26694,PNR14;IDAIreland1987:25-31;onotherfoodindustryplans,PNRV(14-21);IDAIreland1987;AnBordGlas(1988);CTT‘FoodIreland’1988;ColinMcCrea,ChiefExecutive,CTT,‘CTTandFoodin1989.SpeechtotheGuildofAgriculturalJournalists,19/01/89,DTA:S25858-O;onIDAplansinHibernianandGoodman,D/I&C,‘ProgressontheProvisionofJobs’,27/05/88,DTA:S25857-E;D/I&C,‘20,000Target...ProgressReportofMid-Year’.August1988,DTA:S25857-G;D/T,O’SullivantoSec[ÓhUiginn],‘BeefIndustry’,14/10/91,DTA:S26694;HaugheyinDáil16/06/88

10 D/A&F(forCRC)‘BeefIndustryProblems’,11/09/90,DTA:S26694;HaugheyinDáil17/05/88;onGermanprotectionismlifted,‘SummaryReportofMeetingonBeefIndustry’,heldWed.,12/09/90,DTA:S26694;O’Toole1995

216

exports to Europe, with ICTU seeing “major opportunities for the creation of

employmentandwealth”.Asinotherareas,realisingthiswouldtaketime.11

A different development pattern emerged in another PNR-target food

industry,dairyprocessing,withdifferentexternalfactorsproducingunforeseen

results.Governmentsawthesector’spotentialconstrainedbytheco-opsystem,

butICOSproposedovercomingthisthroughcapitalisationtocreatea“globalised

industry”. By 1988 IDA-assisted rationalisation had already seen employment

contract over the decade from 10,100 to 7,200, leading the ITGWU, which

organised co-op creameries, to suggest government “approach Brussels” for

“special”supportsanalogoustothatfortheEuropeancoalandsteelindustries.12

An ICOS plan proposed rationalising the fifty larger co-ops into three giant

capitalised companies “to reduce costs and improve product development and

marketing to international competitive levels”. An impressed Haughey had

broughtICOSintotheCRC,andtheIDAtoosupportedtheplan,investing£4.5m

in Kerry Foods, formed in 1988, to assist it “become a major large-scale

international foodcompany”.By late1988theDepartmentof I&Creported the

sector“oncourse”toachieveits2,000new-jobtarget,thoughwarnedthat“some

shakeout”, as already apparent in the newly consolidated Kerry plc., would

probablyresult inanetdeclineof2,000by1992.Thereport,whichÓhUiginn

withheld from the CRC, admitted that “competitive pressures are such that

rationalisation and, as part of this, employment contraction, is inevitable”. Ó

hUiginntoldICTUjobsgrowthdependedonqualityproductdiversification.13

But the strategyworked, ifnot innetemploymentgrowth.New“largescale

indigenous companies” emerged in the dairy sector to become “European

leaders”,diversifying throughquality-upgradedproduct.Haugheypraised their

spectacular success while noting the “disappointing” jobs outcome. The dairy

companies’successfulstockmarketfloatationindicateda“newconfidence”and11 OnIrelandsecuringEC“safetynet”,D/A&F(forCRC)‘BeefIndustryProblems’,11/09/90,andICTU

assessment,Cassells,ICTU,toÓhUiginn,30/08/90,DTA:S2669412 Whelan(ICOS)inh/wnotesCRCSecretariatmeeting10/03/88,DTA:S25857-C;D/A&F,‘Employmentin

theDairyProcessingIndustry’,16/06/89,DTA:S25857-T;ITGWUinterventioninh/wnotesCRC15thMeeting,18/05/89,DTA:S25857-S

13 ICOS1987;KerryFoodsinIDAIreland,‘ReviewofIDA’sThreeBusinessAreas,1988,’05/01/89,DTA:S25857-N;“shake-out”inh/wnotesofCRCmeeting,30/11/88,DTA:S25857-L;jobsdeclineinCRC,‘SummaryReportof15thmtg.’18/05/89,DTA:S25857-S;“competitivepressures”inD/A&F,‘EmploymentintheDairyProcessingIndustry’,16/06/89,DTA:S25857-T;ÓhUiginntoICTUinh/wnotesofCRC15thmtg.,18/05/88,DTA:S25857-S

217

the “market-led approach” would finally “eliminate many of the problems

mentionedintheNESCreport”.By1989anotherfeatureofthenewgrowthwas

manifested when, as a consequence of opening capital markets following the

SEA,thenewdairycorporationsbegantoexpandandearngrowingprofitsmore

throughacquisitionsandinvestmentsabroadthanproductiongrowthathome.It

wasamodeltrendreplicatedinothersectors.14

The “central objective” of PNR industrial strategy – scaling selected

indigenous companies up to “international competitiveness” - was certainly

beingachieved,butitsconsequenceswerenotthoseenvisaged,astechnological

modernisation -what the IDA called “the greatest single influenceon thepoor

overall employmentperformance inmanufacturing” - reducedworkforces.The

DepartmentofI&Creportedthatwhile“intheveryfirstyearofthePNR”allnew-

jobtargetswerebeingachieved,thelogicofrestructuring,togetherwithpublic

service contraction and the on-going “shake-out” in old industry, meant

“disappointing” job results. An industrial take-off was occurring, producing

better quality higher-paying jobs, but the creative “churn” meant net

manufacturingemploymentremained“static”at200,000acrossallsectors.15

Net jobs growth occurred elsewhere, as alreadymentioned in tourism and,

duetothegradualgeneralrecovery,servicebusinesses.Indeed,andcontraryto

expectations, itwas the “small industry sector”,whoseprospectshadnotbeen

rated highly or given PNR priority, which IDA reported showing “surprising

buoyancy” and “running ahead of expectations”, with over ten new start-ups

weeklynationwide,creatingover5,000jobsinthePNR’sfirstyear.Thesewere

inniche industriesandservices,supplyingtogrowthsectors.Buttheemerging

pattern further nudged policy away from the “large indigenous sector”, which

suffered furtherreputationaldamagewhen inMarch1989LabourandthePDs

demandeda“publicenquiry”intofavouritismtowardsthebeefindustry.16

14 HaugheyinDáil24/10/8915 “greatestsingleinfluence”inIDAIreland,‘ReviewofIDA’sThreeBusinessAreas,1988,’05/01/89,DTA:

S25857-N;“disappointing”inPaulBates,D/I&C,encl:‘PoorResponsefromPrivateSectortoJobCreation’,Nov.1989,DTA:S25862-D;“churn”inD/I&C.’20,000Target…ProgressReportofMid-Year’.August1988,DTA:S25857-G

16 D/I&C.’20,000Target…ProgressReportofMid-Year’.August1988,DTA:S25857-G;White,‘ReviewofIDA’sThreeBusinessAreas,1988,’05/01/89,DTA:S25857-Nand‘UpdatedProgressontheProvisionofJobsunderPNR’,21/10/88,DTA:S25857-J;BarryDesmondquotedinRyleDwyer1995:135

218

Growthdrivers:newsectorsandECleverage

ThePNRpromisedamajorexpansionofthejobs-intensivebuildingindustry,

a traditional Fianna Fáil driverwhich had contracted drastically in the 1980s.

Thescaleofurbanderelictionwascompoundedbycontractingpropertyprices

andwidespreadvacancy.ApartfromnewcitycouncilofficesatWoodQuay,nota

singlenew-buildorrestorationhadoccurredonDublin’squayssince1975.The

PNR construction revival was planned to come from the general recovery,

infrastructureplansandespeciallytheregenerationofderelicturbanareas.The

CRC’s partners moved early to establish a tripartite “Construction Industry

DevelopmentBoard”(CIDB)togeneratedevelopmentproposals.17

The Haughey government of 1980-81 and 1982 had begun regeneration

throughsomehigh-profileprojectssuchastheRoyalHospital,andjustbeforeit

fellin1982publishedabill,agreedinthe“GregoryDeal”,establishinga“Dublin

Inner City Development Authority”. This also initiated housing, industrial and

trainingprojects.Afterthefallofthe1982Haugheygovernment,thecoalition,at

theinstigationofRuairíQuinn,anarchitectandurbanplanner,revivedthebill,

finally establishing a “Customs House Dockland Development Authority”

(CHDDA)inDecember1986,amonthbeforeleavingoffice.18

Haughey’s government retained the CHDDA, but also produced a first

programme designating urban districts nationwide for “renewal”, with the

Docklandsproject,reconfiguredaroundtheIFSC,theflagship,butwithprojects

inothercentresalsoqualifyingfortax-incentives.TheCIDBadvocatedablanket

extension of these incentives to all urban renewal areas, a position the CRC

endorsed, as well as time-limiting planning appeals, 100 per cent capital

allowancesoncommercialdevelopments, andre-configuring theCHDDA intoa

semi-state“RenewalAuthority”withpowerstooverridelocalgovernment.When

the new round of EC structural fundswas being negotiated, the CIF and ICTU

urgeditbeusedtoextendtheCHDDAtothewholeofcentralDublin.19

17 PNRV(25);CRCmtgs.,Feb.-May198818 Quinn200519 DermotNally,SectoGovernment,toSec.,D/F,09/08/87–rememoPD118of08/06/87,ÓhUiginn,h/w

noteon‘CruinniúRialtais:FinanceBill1987.AmendmenttoextendDesignatedAreasScheme’,09/06/87,DTA:S25306;TraverstoTeahonandSec.,D/T,03/03/88;h/wonthisbyO’Sullivan21/03/88,DTA:S25857-C;D/Tmemo,O’Sullivann.t.,25/11/88,DTA:S25857-K;h/wnotesofCRCmeeting,26/10/88,DTA:S25857-J2

219

Haughey saw the IFSCas the centrepieceof the largest rebuildingofDublin

since Georgian times. Combining the IFSC’s “high end jobs” with regeneration

would transform the poverty-stricken city core into a “NewBloomusalem” – a

referencetoJoyce’sUlysses.Hehadlongadvocatedreforminglocalauthoritiesto

act as “development corporations”, and the CIF welcomed the new CHDDA’s

“more commercially oriented” structure and “quicker approval procedures”

comparedtobothitspredecessorandlocalgovernmentprocesses.20

But as other planned Dublin projects failed to materialise, an irritated

Haugheysummonedcityofficialstocajolethemtokick-startthem.Teahonofthe

DepartmentoftheTaoiseachtoldtheCRCofHaughey’sfrustrationwithDublin

Corporation and his scepticism that it had the “competence” to drive re-

development. Haughey was also amenable to CRC proposals to extend the

CHDDAtothewholeInnerCity,butrelentedinthefaceofobstinateCorporation

resistance. The CRC supported the CIDB’s advocacy of extending compulsory

purchase, 100 per cent capital allowances and curtailing planning appeals,

thoughhad todrop the latteras “probablyunconstitutional”.DespiteFinance’s

objections that extending tax incentives “greatly weakened” their impact and

that given the limited capital “pool” available “itwould be pointless diluting it

thinlyoveralargenumberofareas”,sixteendistrictswereselectednationwide

for such incentives, including four in Dublin. The strategy of tax-incentivised

developersdrivingDublin’s chronicallyneeded regeneration thus emergednot

through a developer/political nexus as often claimed but rather through a

proposal from social partnership. The general recovery, but especially

regenerationmeasures,sawtheconstructionindustrygrowforthefirsttimeina

decade, commercial construction alone increasing in 1988 by fifty per cent,

creating2,000jobs–atenthoftotalnewemployment-despitethecurtailingof

thePublicCapitalProgramme.21

20 OnbuildingDublin,Haughey,‘Address…atlaunchingofPlanningSchemefortheCustomsHouseDocks’,

04/06/87,GIS:D/Taoiseach;on“Bloomusalem”,Haughey,‘Address…atlayingoffoundationstoneforIFSC’,22/09/88,GIS.D/Taoiseach;on“developmentcorporations”HaugheytoCassellsICTU,20/01/1987,DTA:S25862-F;onCIF,D/Fmemo,‘InnerCityRenewalAuthorities–CIDBandCIIproposals’,DTA:S25857-K

21 HaugheysummonsDublinManager,‘UrbanRenewal:DesignatedAreasScheme.ProgressonMajorDevelopmentProposals.Positionat7November1988’,DTA:S25857-K;onHaugheyfrustrationwithCorporation,h/wnotesCRC-SGmtg.,03/01/89,DTA:S25857-NandN.Callan,D/Env.toO’Sullivan,Sec.toCRC.,24/01/89,DTA:S25857-O;on“relented”,Ec.&SocialPolicyDiv.,D/Taoiseach,‘InternalNoteonly:DublinInnerCityRenewalAuthority’,07/02/89andh/wnotes,SGmtg.,n.d[07/02/89],DTA:

220

The securing of increased EC funding in 1988, thoughmodest compared to

later programmes, was viewed by the Department of Finance as a significant

inputtothePublicCapitalProgramme(PCP),especiallyindevelopingtelecoms,

tourism, cross-border initiatives, roads and other infrastructure. Haughey

exploitedhisalliancewithDelorstoenhancePNRsectoraltargetplansinseveral

key areas. As described in chapter 7, after securing an unprecedented ERDF

front-loading,governmentalsosecuredCommissionagreementtoamendERDF

regulationstoallowprivate investmentas“national funding” forECco-funding

purposesfirstintheroadsprogramme,theninfrastructuregenerally,andfinally

for non-infrastructure programmes, notably forestry, tourism and local

enterprise. These were all PNR target sectors, and this opening to private

investmentwoulddrivetheirdevelopment.

Irishforestry,forhistoricalcolonialreasons,hadoneofthelowestafforested

land ratios in Europe, just 4 per cent compared to over 20 per cent in many

memberstates.Timberwasoverwhelminglyimported.ThePNRaimedtogreatly

expand reforestation and timber production, driving a potentially export- and

employment-rich processing industry. In opposition Haughey had proposed

transforming the Department of Forestry into a commercial semi-state and

opposed the sale of semi-mature forests. Even before the PNR was signed he

establishedCoillte Teo tomanage forestry assets to this end. As in all sectors,

governmentplansdependedonprivatesectorinvolvement,andinpreparingthe

Forestry Bill an Inter-Departmental Group led by Finance evaluated “the

comparative advantages and disadvantages to the State of private and public

investment inforestry, takingaccountoftheneedforahighandstable levelof

plantingandthepresentstateofexchequerfinances”.Unsurprisingly,itstrongly

advisedanemphasisonprivateplanting.In1988governmentsecuredEIBloans

for Coillte and the timber processing industry, enabling “record planting” and

processing expansion through upgraded and new plants that very year.When

S25857-O;CRCsupportforCIDBproposalsandD/Financeviewsinh/wnotesCRC-SGmtg.,03/01/89,DTA:S25857-N,CRC-SG,‘ActionPoints:Updatesarisingfrom11thmtg.’03/01/89,Ec.&SocialPolicyDiv.,D/Taoiseach,‘ExtensiononTimeLimitsandIncreasesinCapitalAllowancesforCommercialDevelopmentinDesignatedAreas’,07/02/89,andN.Callan,PO,D/Env.toO’Sullivan,Sect.toCRC.,24/01/89,DTA:S25857-O;D/FinanceviewsandareasdesignatedinEc.&SocialPolicyDiv.,D/T,‘InternalNoteonly:IdentificationofItemsfornextCRCmtg.’,07/02/89,DTA:S25857-O;ondeveloper/politicalnexus,Connolly,F.2014;jobscreatedinCRC,ProgrammeforNationalRecovery,ProgressonJobCreation,n./d.[Dec.1988]

221

the amended ERDF regulation permitting private co-funding in forestry and

timberwassecuredinMay1989,theNDPincorporatedplanstodoubleforestry

andfurtherexpandprocessingthroughapublic/private/ERDFinvestmentmix.22

Inasimilarprocess,thetourismplanofthePNRwasgreatlyexpandedinthe

NDP following Brussels approval for a similar investment mix. Ireland

reciprocatedBrussels’specialconsiderationbybeingtotheforeinlegislatingthe

liberalisation of competition and capital restrictions, though it had already

decidedtoexploitthisopeningwithadaringlyinnovativestrategy.

Innovation:IFSC“pipe-dream”andtheFDI“surge”

As with many policies Haughey adopted, that for an international financial

servicescentre(IFSC)inDublin’sdocklandswasfortuitous.Suchanideawasnot

new,withanalogousprojectsunderway inLondon,Bostonandelsewhere.The

CIIadvocatedaservicescentrenearDublinairport.ButDermotDesmondhada

novelplantorealiseitinthederelictdocklands,andaftermeetingaFiannaFáil

supporter in a Dublin pub, was brought to Kinsealy to present it to Haughey.

Desmond had tried to interest Bruton, but he, on the advice of Fine Gael

industries spokesman Fergus O’Brien, had dismissed it as a “pipe dream”.

Haughey too was initially sceptical, but this changed when he witnessed the

eager responseof Irish-American financiers toDesmond’spresentation inNew

York.Haugheythenincludeditasaflagshipprojectinhis1987manifesto.23

HaugheycombinedtheideawiththeCHDDA’sregenerationplanstocreatean

entirely new economic sector and simultaneously transform inner-city Dublin.

Describingfinancialservicesas“oneofthefastestgrowingsectorsofeconomic

activity in theworld”,Haugheysaidhisgovernmentaimed“toput Ireland into

themainstreamofthatgrowth”.An“IFSCCommittee”,chairedbyÓhUiginnand

prominentlyincludingmembersofCII’s“FinancialServicesIndustryAssociation”

(FSIA),wasestablishedwithinweeksofthegovernmentbeingformed,todrive

22 ForestryplaninPNRV(22);HaugheyandCoillte,Dáil05/12/89;Inter-Dept.Cttee.,inDermotNally,Sec

toGovernment,toPrivateSec.,M/Energy,29/03/88,encl.aidememoireof25/03/88fromM/Financereestablishingstateforestrycompany,DTA:S25858F;onEIBloans,MinisterMichaelSmith:‘EuropeanInvestmentBankfundsforForestry’,15/12/88,GIS:D/EnergyandDenisMehigan,PrivateSec.[toTaoiseach],toPaulineO’Shaughnessy,D/Taoiseach,‘BriefingmaterialfortheD/TaoiseachforreplytoletterfromP.CassellsregardingLeinsterPaperMills’,06/02/89,DTA:S25857-O;onplansubmittedMinisterAylward,‘ECActionProgrammetoaidIrishforestry’,29/05/89,GIS:D/Forestry

23 OntheeventssurroundingtheinitiationoftheIFSC,Power2009,Reddan2006,Keena2003,FF1987

222

the project and advise on a regulatory/incentive package. A special IDA unit,

headedbyDavidHanna,wascreatedtopromoteit.24

TheCentrewas initiallyrestricted tosecuritiesandbondtrading. Incentives

tolocateinitincludedzerocapitalgainstax,a10-yearratesremissionandfree

capital movement in non-IR£ currencies. The Department of Finance was

instructedtodraftaregulatoryframeworkmodelledonotherEuropeancentres.

GPA,anearly Irish financialmultinationalwhoseboardwould includerecently

retiredECCommissionerPeterSutherland,suggesteda10ratherthan0percent

taxrating,asthatwouldatleast“impl[y]someformofcontrolandsupervision”

andthereforebemoreacceptabletoinvestorsandforeigngovernmentsalike.25

Irish-ownedfinancecompaniesurgedÓhUiginnto“playtoourstrengths”by

using the IFSC as a base to grow the domestic accountancy industry, already

“second tonone in theworld”.Astrategy like “theGoodmanmeat investment”

couldmakethecentrea“launchingpadtoforce…thisresourceintotheexport

business”, transforming conservative Irish stock brokers into global market

traders. But the committee rejected this, remaining firmly FDI-focused. It

targeted “influential and very powerful people in [US] financial circles”,

especiallywith Irish personal or business connections, and arrangedmeetings

betweenthemandtheIDA,orevenwithHaugheypersonally.26

Securing a “big player” proved elusive, however, and with US/UK markets

stalled, potential clients in Germany and Japan were wooed. When Finance

producedabillsettingthetermsforthecentre,ÓhUiginn,asurgedbyNCBand

GPA,suggestedextendingthespecialtaxratetopropertyfundmanagementand

tradewithShannonZonecompanies.ThiswastobothfacilitateandwooGPA’s

partner,Mitsubishi,Japan’slargestbank.ButHaughey,despitebeingurgedthat

24 “fastestgrowing”inHaughey,‘AddressatlaunchingthePlanningSchemefortheCustomsHouseDocks’,

04/06/87,GIS:D/Taoiseach;onIFSCcommittee,OifiganTaoisighS.25150[ÓhUiginn],‘MemorandumforGovernment.EstablishmentofanIFSCCommittee’,30/03/87andDraftofG.20/8,GovernmentMinutes31/03/87,DTA:S25150-A

25 D/Finance,‘PerformanceandotherCriteriarequiredforCertificationofCompaniesintheIFSCattheCustomsHouseDocksSite’[FSC/099],18/06/87,FSIA,‘CustomsHouseDocks,Dublin,IFSC,PreliminaryBrief’,n.d.[June1987],DTA:S25150-A;IFSCCommittee,‘SummaryReporton11thmtg.’,18/06/87,DTA:S25150-A;PeterDenison-Edson,SeniorVice-President,GPACorporateAffairsJapan,toDermotDesmond,11/06/87,DTA:S25150-A

26 AlexSpain,chairman,ZEUS,toÓhUiginn,19/06/87,CII-FSIA,circulartomembercompanies,‘Re.:IFSCDublin’,29/06/87,Spain,chair,CII-FSIA,toÓhUiginn19/06/87,and,onIrish-Americanfinanciers,‘NoteontelephoneconversationwithMrPeterOwens’04/06/87,and“PeterOwens26/6/87”,withh/wnotereFoley,DTA:S25150-A

223

the amendment would “solve the Mitsubishi problem”, did not intervene, and

Finance’sview,whichanywaysuspectedGPAofspecialpleading,prevailed.27

BuildingoftheIFSCcommencedinlate1987,entirelyprivate-sectorfunded,

with surprisingly strong initial interest reported. Desmond, who had since

becomeafriendofHaughey,steppeddownfromÓhUiginn’scommitteetoavoid

accusations of a conflict of interest, but still funded the first IFSC “block”. The

wholeprojectwasnecessarilyoneoffuturepotential,withjust200buildingjobs

involvedatfirst,expectedtoriseto500in1988.TheIDAreportedsecuringover

fiftyfinancialcompaniesinterestedinlocating(its“1988target”),withapromise

of1,300financialjobs,butbytheendof1988thesitewasstillbeingprepared,

thefirstblocknotdueforcompletionuntiltheendof1989,andtheIDAverifying

just23companiesemployingamodest120actuallytradingunderIFSClicenses.

The only “big player” as yet confirmed was AIB’s international branch, which

governmenttalkedupasthestronglocalanchoressentialtosuccess.28

The faltering progress attracted widespread criticism. Michael Lafferty, a

London-based expert commissioned by Ó hUiginn to assess options, reported

thatexperienceofothersmallcountriesindicatedthatawholesale-basedcentre

wouldfailandrecommendedinsteadasecretretailbankingmodelontheSwiss/

Luxembourg model. Cabinet rejected the advice, but did change strategy in a

significant step when new EC single market reforms introduced in December

1988removedrestrictionsonforeignportfolioinvestmentsbyresidents.29

The IFSCnowchanged focus to targetingmobileunit funds, thoughwarned

thatthe10percentCGTratewasproving“arealdisincentive”againstcompeting

Europeancentres.ÓhUiginnurgedazeroCGTrateandtheIDAadvisedincome

on such funds for non-residents also be zero-rated, despite the “risks of ‘tax

27 ‘IrelandanideallocationforJapaneseinvestment–Reynolds’,20/01/88,GIS:D/I&C;AnthonyRyanto

Haughey,‘Personal&Confidential’,15/06/87andTony[Ryan]GPAtoHaughey,22/06/87,DTA:S25150-A;J.CantwellD/TtoSec.[ÓhUiginn],‘TelephonecallfromMrDermotDesmondre.FinanceBillAmendment’23/06/87,DTA:S25150-A;Mullarkey,D/Fin.toÓhUiginn,25/06/87,DTA:S25150-A

28 on“surprisinglystronginterest”,IrishTimes,‘BusinessReview1987’.31/12/87;onDesmond“steppingdown”Reddan2006:16;IDAreportfor‘DraftmaterialonIFSCforinclusioninTaoiseach’s[1988]budgetspeech’,DTA:S25306;IDAIreland,‘ReviewofIDA’sThreeBusinessAreas,1988,’NewsRelease,05/01/89;‘GovernmentStatementofProgresswiththeIFSC’,09/12/88,GIS:D/Taoiseach

29 onLafferty,RonaldBolgerSKCtoÓhUiginn06/02/89,DTA:S25306and‘IFSCcanyield£70mtaxby1992,despitegloomyreport’,SundayTribune05/02/89;governmentresponseandpolicychange,CRC,‘SpecificMeasures…’,03/02/89,Section:‘ECDimension’,DTA:S25899-A,and‘Commentbythechairman,IFSCCommittee.,ontheLaffertyResearchPaperonInternationalPrivateBankingpublishedtoday’,07/02/89,DTA:S25858-P

224

haven’connotations”.Financeopposedthisbecausesuch“haven”criticismshad

alreadyemergedattheOECD:“thefurtheronegoesinextendingtaxconcessions

intheIFSC,thegreater…thedangersofjeopardising[its]acceptability…inthe

internationalarena”.ButcabinetsidedwithÓhUiginnandtheIDA.30

FineGael,whichtauntedgovernmentonitsfailuretosecurea“majorplayer”,

claimedthat“changingtherules…atthisstage”showedthewholeprojectwas

not “going anywhere very fast”. Lafferty joined the criticisms, resurrecting his

retail-banking concept, which Ó hUiginn rejected as a recipe for “criminal

money”.Haughey,themoralityofwhoseownpersonalfinancesatthistimewas

questionable, was nevertheless clear that the public good required a tightly

regulated wholesale model at the IFSC: government would “not permit or

encourageundesirablesecretbankingoranyothersimilaractivities-thehighest

standardsoffinancialprobitywillberigidlyenforcedintheCentre”.31

The tax changes and re-orientation tomanaged fundsproved an immediate

success. The global financial press excitedly reported that the IFSC was now

giving competitor locations “a real run for fundmanagers’money”. An upbeat

IDAannounceditsbestmonthyet,withthirtynewfundsand100newjobsinthe

pipelinebyFebruary.Itconfidentiallypredictedacorporationtaxyieldfromthe

centreof£70mby1992.WhilethecompaniestheIDAhopedtosecureincluded

theoft-chasedMitsubishi,andthelistoffirmsdeclaringaninterestextendedto

ChaseManhattan,Citibank,BruxellesLambertandothers,thecontinuedabsence

ofa“bigplayer”insitumeantthatallpotentialinvestorswereavidlypursued.In

May 1989, a “major player”was finally securedwhenAIG, theworld’s leading

commercial/industrial underwriter, opted to locate to the IFSC, identifying as

keyfactorsIrelandasabaseforaccessingthesinglemarketaswellasits“helpful

Government”andeducated,availableworkforce.32

30 D/Fin.,‘MemoforGovt.-TaxationofFundsunderManagementintheIFSC’,forGovernmentmeetingof

05/12/88,andDermotNally,Sec.toGovernment,toPrivateSec.ofM/Finance05/12/88,DTA:S2530631 Transcriptofinterviews[inc.withO’BrienandLafferty]from‘ThisWeek’,RTÉradio,04/12/88and

‘CommentbyChairman,IFSC,MrPádraigÓhUiginn,ontheLaffertyBusinessResearchPaperonInternationalPrivateBankingpublishedtoday’07/02/89,DTA:S25306;HaugheyinDáil14/02/89

32 Quotinginternationalpress,DavidHanna,FinancialServices,IDAtoÓhUiginn12/02/89,DTA:S25306;IDApredictionsin‘IFSCcanyield£70mtaxby1992,despitegloomyreport’,SundayTribune05/02/89;onMitsubishi,BrendanRussell,FSUnit,IDA,toÓhUiginn,02/02/89,withattachedlistofprojects,“StrictlyConfidential”,DTA:S25306;onbankssecured,CRC:PNP,ProgressonJobCreation,n.d.[Dec.1988]:8;focustoGermany/Japan,‘GovernmentStatementofProgresswiththeIFSC’,09/12/88,GIS:D/TaoiseachandHaugheyinDáil02/05/89;oninvestors“pursued”,‘DraftmaterialonIFSCforinclusionintheTaoiseach’sspeechatlaunchofIrelandChamberofCommerceintheUnitedStates’,n.d.[01/89],

225

Thismodest take-offof the IFSC inearly1989marked the turningpoint for

the centre, though it would take several years before the its viability was

assured. Ithadbeenachievedbyadroitlyexploitingthe liberalisationofcapital

markets following theSEA.Asimilarapproachwouldsoonbeapplied toother

areasofforeigninvestment,involvinganotherchangeofstrategy.

FDIhadcontractedinthe1980s,accusedofbeingunreliableandoverlycostly

per job.Newprojects,astheIDAhadput it,hadslowedtoa“trickle”.ThePNR

hadthereforefocusedonthelargeindigenoussectorandtreatedFDIasancillary.

Inlinewiththis,theIDAwasinstructedbyI&CtomovefromattractingnewFDI

to improving the export capacity of the 900 FDI firms “still in Ireland”. But

Haughey’sWay Forward circle had been sceptical of this re-focusing, and its

planninginearly1987,asalreadydescribed,identifiedFDIastherealpotential

driverofaqualityindustrialtake-off.Haugheyhadsensedthispotentialin1986

when observing the eager reaction of Irish-American financiers to Desmond’s

IFSCproposal.Thesamepolicychangewhichunleashedthe“wave”ofinterestin

theIFSCinJanuary1989nowalsocameintoplayregardingFDIgenerally.The

IDAreportedhowFDI“surged”afterstrategyswitchedtomarketingIrelandasa

“key location… for1992and theSingleMarket”.TheCII, traditionally close to

governmentandtheIDA,hadurgedthischangeattheNESC.LiamConnellanhad

criticisedRoryO’Donnell’sdraftEECreportforportrayingtheSingleMarketasa

“closed economy” with themajor opportunity being industrial exports into it,

rather thanasa lever toaglobalcapitalopening.Heurged theNESC toadvise

liberalisecapitalmovementaheadofcompetitorstatesandexploiting Ireland’s

locationandtomakeit“agatewaytotheSingleMarket”fortheUSandJapan.33

ExecutivesofGPAhadalreadyurgedsuchacourseonHaugheyin1987and

he had seized on the idea, legislating the removal of capital controls and

pursuing mobile investment. With the Single Market identified as Ireland’s

“majoropportunitytocapturefurtheroverseasinvestment”,theIDAnotedhow

Lyons,D/FAtoSec.,D/Taoiseach,14/01/89andPatNolan,D/TaoiseachtoDavidHannaIDA20/01/89-reD/FAnoteonapproachestoIrishAmbassadorinAustralia,DTA:S25306;onAIG,‘AmericanInternationalGroup(AIG)toEstablishinIFSC’,30/05/89,GIS:D/Finance

33“overlycostly”,NESC1982aandb;“newprojects”and“stillinIreland”,D/I&C,‘ProgressintheProvisionofJobs’,27/05/88,DTA:S25857-E;onWayForwardscepticism,seechapter4;onFDI“surge”,IDAIreland,NewsRelease,‘IDAreviewof1988andoutlookfor1989’,05/01/89andMinisterRayBurke,‘PNRRecoveryJobTargetExceededin1988:End-YearStatementonIndustryPerformance’,29/12/88,GIS:D/I&C;ConnellanCIItoDanaher,NESC,29/09/88,‘CouncilMeeting16/12/88’,NESCArchive,Box2

226

it was now “raised by nearly all [US] companies wemeet”, with interest also

stronginJapan,“muchofit…alsoattributedtotheSingleMarket”.TheIDAwas

“specifically exploiting all these opportunities”, promoting Ireland as a “key

location… in preparation for 1992”. Bymid-1989, I&C secretary Noel Dorgan

waspredictingafurther“potentiallysignificantsurge”ininwardinvestment.34

Incontrasttothe“disappointing”jobsgrowthinindigenousindustry,theIDA

reported4,700newjobsthroughFDIbyOctober1988,anet increaseof2,700,

with even existing companies, such as the Shannon-based De Beers, EI and

Molex, expanding despite the imminent end of Shannon’s special tax status. In

governmentplans,theancillaryroleofFDIinthePNRwasquietlydiscarded.IDA

reported that the “criticismof overseas industry”hadproven “misplaced”, and

incentivecostsand“highlevelsofrepatriatedprofits”shouldbeacceptedgiven

the“actualeconomicactivity”and“valueadded”itwasgeneratinginIreland.35

Therewasalsoradicalthinkingingovernmentonanewhigh-riskFDIformula

whichwouldonlyfinallybepursuedin1990.Itwasfirstproposedbyexecutives

of GPA who argued the potential, combined with low tax, to exploit Ireland’s

“networkofdoubletaxationagreementswhichprovideforfavourabletreatment

…ofprofitsaccumulatedinorrepatriatedfromIreland”todriveaninvestment

dynamic.TheCIIalsofavouredthisformula,butitwashighlysensitiveandthe

strategywouldawaitamajoritygovernmentbeforebeingpursued.36

Amixedeconomymodel:Haughey,theunionsandthe“semi-states” NoissuehadgreaterpotentialtoderailthePNRthanstatecompanies.These

hadbeencriticalinIrisheconomicdevelopment,butnowplayedadecliningrole.

Privatisationhadbegununder theFineGaelcoalition in IrishShipping,Ceimici

Teoandsocialhousing,investmentwascutdrasticallyatCIÉandIrishSugar,and

loss-makingbyprivatecompaniesnationalisedbecauseofstrategicfactors,such

34 PeterDenison-Edson,SeniorVP,GPACorp.AffairsJapan,toDermotDesmond11/06/87,DTA:S25150-A;

‘EffectsofInternalMarketinInwardInvestment’enclwithh/wnote,fromLonergan,D/I&C,toÓhUiginn,10/05/89,DTA:S25857-R;IDAIreland,NewsRelease,‘IDAreviewof1988andoutlookfor1989’,05/01/89andMinisterRayBurke,‘PNRRecoveryJobTargetExceededin1988:End-YearStatementonIndustryPerformance’,29/12/88,GIS:D/I&C;Dorganinh/wnotesofmeetingofCRC‘Sub-GrouponJobCreation’,n.d.[h/wnotes1ofmeeting28/06/89],DTA:S26122-A

35 onnewFDIjobs,IDAIreland,‘ReviewofIDA’sThreeBusinessAreas,1988,’05/01/89,DTA:S25857-NandD/I&C.’20,000Target…ProgressReportofMid-Year’,August1988,DTA:S25857-G;onShannon,Bates,D/I&C,toCRC,encl:‘PoorResponsefromPrivateSector‘,Nov.1989,DTA:S25862-D

36 PeterDenison-Edson,SeniorVP,GPACorp.AffairsJapan,toDermotDesmond11/06/87,DTA:S25150-A

227

as ICI, B&I, Irish Steel and Dublin Gas. These issues had made the 1980s a

“traumaticdecade”forthesector,withemploymentfalling25percentto67,000.

Butby1988itstillaccountedfor6percentoftotalemployment,18percentof

investment and19per cent ofGDP (or 10per centGNP).Aer Lingus andESB

werenotonlyIreland’slargestbutalsoitstopindustrialperformers.37

Commercialisation and privatisation of state enterprises was not yet a

dominant trend in a Europe which, apart from the UK, remained wedded to

dirigisme.But ithadbeenadvocatedbytheOECDsince1977,andinthe1980s

monetary crisis the selling of state “assets”, though most extreme in the UK,

increased only slowly across the OECD. The Single European Act nevertheless

foresaw theopeningofnationalmarketsbyending statemonopoliesandstate

aidstobothprivateandpublicindustry,anissuelongtrackedbyBrussels.38

Irish governments since the1960shad sought to increase the “commercial”

dynamicinstateenterprisesbyreformingtheirfinancingstructuresandseeking

outentrepreneurstoheadthem,asinLynch’sappointmentofJeffersonSmurfit

toBordTelecom. In1980-82Haughey changed “boards” suchTelecomandAn

Postintocorporationsandbeforethat,asMinisterforHealth,hadinitiatedsemi-

state consultancies, suchasPARC, todevelophospitals in theMiddleEast, and

joint ventures to co-fund Irish hospital expansion, as at Beaumont in his own

constituency. The Way Forward proposed further such developments. In

oppositioninthe1980sHaughey,notunreasonably,presentedFiannaFáilasthe

party of the state sector, criticising the sale of Irish Shipping (“a furtive act of

nationalsabotage”)andofforests,aswellasunderinvestmentinTelecom,saying

“if this process of dismantling the State sector is brought much further, the

GovernmentwillgettothepointofdismantlingtheStateitself”.“Ourapproach”,

hetoldtheDáil,wouldbe“totallydifferent”.39

Inthe1987electionpartiesadoptedcontrarypositionsontheissue.ThePDs

advocated wholesale privatisation while Labour opposed any. With business

opinion leaders likeMooreMcDowell and BrendanWalsh advocating absolute

37 Sweeney199038 OECD1990;onEECmonitoringstate-aids,Directive80/723/EEC,OfficialJournalOJL195,29/07/8039 Smurfit2014:14Sweeney1990:93-5;FiannaFáil1982;HaugheyinDáilonIrishShipping14/11/84and

forestry14/12/84,and“totallydifferent”14/05/86

228

commercial criteriaand the saleof suitable sectors,FineGaelproposedselling

minority holdings. Fianna Fáil saw semi-states as “essentially national

development corporations”, and undertook to “retain all profitable parts” of

them. Early in the 1987 government, Des O’Malley tested government resolve

with amotion, supported by Fine Gael, to sell companies apart from strategic

ones.Reynoldsrespondedbysaying thatwhileprivatisationhadbecome“very

fashionable”, Fianna Fáil had no “doctrinaire view”. While the motion was

defeated with the help of Labour and Workers’ Party votes, it illustrated the

government’sprecariouspositiononissuesotherthanstrictlymonetarypolicy.40

TheNESC advocated strengthening state companies, though since1980had

alsourgedthey“begivenasoundfinancialbasisfromthestart”.KieranKennedy

of the ESRI, however, doubted that “the political process … is capable of

maintaining the kind of freedom and accountability” this required. Given this

climate,ICTU,whose80,000semi-statemembersformeditsmostpowerfulblock

after thepublicservices,madetheprotectionofsemi-states itscentralelection

issuein1987.Haugheyassureditofhiscommitmenttoan“efficientandeffective

semi-StateSectorasamajorinstrumentofeconomicdevelopment”.HecitedAer

Lingus’ssemi-autonomoussubsidiary,Airmotive,whichhehadopenedin1981,

as“thetypeofdevelopmentwehadinmind”,andassuredICTU“thatFiannaFáil

hasnointentionofprivatisinganysemi-Statebody”.41

Thebusiness interestCIIequivocatedontheissue,notsurprisinglyas ithad

most state bodies in membership. “Ireland is not doctrinaire on nationalised

industry”, it stated, proposing further commercialisation, “value-for-money”

criteria and contracting out of services, though also a new “Development Co-

operation”companytoselltechnicalassistancetoemergingcountries.42

A positive policy on state industry, combining ICTU and CII views, was

included in thePNR.During itsnegotiationHaugheybuilt credibilitywithboth

40 ‘PrivateInvestmentinStateCompanies’,CIINewsletter,27/01/87;McDowell1987;Walsh1987;Fine

Gael1987);FiannaFáil1987;Labour/WPinDáil7-8/04/8741 Kennedy,‘Introduction’toSweeney1990:ii;unionpowerO’Dowd1989:51;ICTU1987aandICTU-EC

meeting18/02/87;HaugheytoCassellsICTU,20/01/1987,DTA:S25862-F42 CII,‘TheComplementaryRolesofPublicandPrivateEnterprise’,CIINewsletter,13/04/82and‘Growth

IndustrieswithEmploymentPotential,CII8thAnnualCareersinIndustryConference’,19/09/86,PowerPapers,ITSligo;CII,‘PrivateInvestmentinStateCompanies’,CIINewsletter,27/01/87;‘ParticipationinStateEnterprise’,CIINewsletter,24/02/87;‘SwedishExamplebacksStateParticipationCase’,CIINewsletter,28/04/87;Power2009:93

229

groups by summoning semi-state chiefs to impress on them “the importance

which Government attached to the developmental potential of the State-

sponsored sector” and “requesting” them to submit plans for expansion, joint

ventures and overseas consultancy contracts to “contribute to the Programme

forNationalRecovery”.A “WorkingGroup”ofexecutiveswas toreport “on the

role and purpose of State-sponsored bodies” and their “developmental

potential”. Haughey also supported rationalising the sector, privately assuring

semi-stateleadershewouldbackthemin“standingfirm”onpayandapproving

thesplittingofCIÉintothreecompaniesinaprocessthatwouldreduceitsstaff

inadecadefrom16,500to11,000.ThePNRincludedvarioussemi-stateprojects

proposedbycompanies,theCIIandICTU,somewithspecificjobstargets.From

early1988,withextensiveIDAassistance,thesebegantobeactivated.43

In1988DavidBegg, leaderof the telecomunionCWU,spoke formanystate

sector unions by declaring that “we favour a centrally-planned and controlled

economyrelyingheavilyonState-ledinvestmenttothesemi-StateCompaniesto

create jobs”.ThePNR“wasacompromise,embodyingsomeoftheseconcepts”.

Butofficial ICTUpolicywas in factmorenuanced, advocating expanding semi-

statesactivityincludingthroughjointventuresandinternationalconsultancies.44

ICTU nevertheless suspected government of having covertly decided on a

course of privatisation. Discussion papers circulating in the civil service

advocateddismantlingIreland’s“extremeversion”ofawelfarestateandforthe

statetowithdrawfromenterpriseentirely.DisputesovermeasureswhichICTU

sawasweakeningstateenterprisecontinuallyaroseontheCRC,suchastheout-

sourcingofcargo-handlingatDublinAirportandtheIDA’srefusalofagrantfor

anexpansionatAirmotive,whichICTUcriticisedas“contrarytothespirit”ofthe

PNR.The IDAhad in fact supported theAirmotiveprojectbut, as if to confirm

ICTU’s suspicions - though it was not informed - this had been over-ruled by

43 Haughey“request”in‘StatementonMeetingofTaoiseachwithChiefExecutivesofState-sponsored

bodies’,22/06/87,GIS:D/Taoiseach;“standingfirm”in‘AideMemoire.MeetingbetweenTaoiseachandConsultativeGroupofChiefExecutivesofStateAgencies,22June1987:MainConclusions’,DTA:S25857-E;splittingCIEinSweeney1990:26;onCIErescueplanTSSAleaderatICTUADC1988:58;onIDAassistance,‘DevelopmentProposals–MechanicalEngineeringSector.NotesarisingfrommeetingatIDAofficeson15February1988’,S25857-C,J.Lloyd,IDA,‘TheEngineeringProposalforSSBsisgoingwell…”,n.d.[April1988],DTA:S25858-GandMalcolmTaylor,D/T&T,toO’Sullivan,D/Taoiseach,‘reAerLingus-Aeroflottalks’andattch‘NoteandAL-AFMemoofUnderstanding’,07/03/88,DTA:S25858-F

44 BegginICTUADC1988:117;ICTU1984;PNRVandAppendix

230

cabinet. The dispute festered,with government protesting disingenuously that

theIDAgrant-aidedsemi-statesonthesamecriteriaasprivatefirms.45

Government was determined tomaintain the option of privatisation.When

Coilltewasestablished,ICTUprotestedatthepowerthebillgavetheministerto

dispose of shares and the absence ofworker representatives on the board, as

alsoatTeagasc.Itinsistedthatthe1983TelecomActbethemodelforallboards,

whichCassellsclaimedHaugheyhadassuredhimofwhennegotiatingthePNR.

But the minister, John Wilson, supported by cabinet, resisted, confidentially

tellingÓhUiginnthatwhilehewouldaccept“participativearrangementsatsub-

boardlevel”asagreedinthePNR,itwas“thestrongviewofGovernment…that

membersof[theCoillte]Boardbeappointedontheirownmeritsandinanon-

representative capacity”. The issue was provisionally resolved at Coillte and

TeagascbyministersacceptingIFAandICTU“proposals”inappointingboards.46

ICTUalso criticised the slowpaceof job creation in semi-states, urging that

companiesbe“pressured”toshowresults,andasitsannualconferenceloomed,

it sought a direct meeting with Haughey. He agreed to appoint a designated

officialfromhisDepartment,answeringtotheCRC,“toco-ordinatedevelopment

projects in the State Sponsored area” and a “Joint Statement” on the state’s

commitment to the sector with a lengthy report on progress with semi-state

initiatives was published. Haughey again met semi-state chiefs to urge “rapid

progresson theirdevelopmentproposals” anda flurryof activityensued,with

theCRCupdatedonarangeofexpansioninitiatives.47

45 OnICTU“suspicions”,AttleyICTUADC1989;on“papers”,DeclanMcDonagh,ConferenceDirector,IPA,to

ÓhUiginn,03/11/88,attch.WilliamANiskanen,Chairman,CatoInstitute,‘TheFailureoftheFabianState’,DTA:S25306;oncargo-handling,NevintoHaughey,21/12/87,‘Urgent’,encl.NevintoM/T&TJohnWilson,21/12/87,‘Urgent’,andBarryMurphy,PrivateSec,Min/T&T,toNevin,20/01/88,DTA:S25858-D,andCRC4thMeeting,Mar1988,DTA:S25857-C;“contrarytospirit”inBates,D/I&CtoO’SullivanD/Taoiseach,21/03/88,S25857-CandCRC,‘SummaryReportof5thmtg.’,28/04/88andD/I&C,‘IDAAssistancetoPublicEnterprises’,26/04/88,DTA:S25857-D;cabinet“overruling”inDraft,O’Sullivan,D/Taoiseach,toPádraicWhite,IDA,May1988,‘ReAirmotiveIrelandLtd.’,withh/wnotes29/04/88byCantwell,DorganandÓhUiginn,DTA:S25857-D;issueatCRCinD/Taoiseach,note,n.d.[forJune1988CRC],‘IDAGrantAssistancetoPublicEnterprises’,DTA:S25857-F

46 OnCoillteboard,h/wnotes.‘SecretariatGroup16/6/88’,DTA:S25857-F;onsuccessfuldevelopmentAirmotive,Sweeney1990:76;onTeagascÓhUiginnCRCtoMinisterO’Kennedy,26/05/88,DTA:S25857-F;onTelecom“model”,CRC,‘SummaryReportof7thmtg.’30/06/88’,DTA:S25857-F;M/ForestrytoÓhUiginninSmithtoÓhUiginn,CRC,07/07/88,DTA:S25857-F

47 ICTUcriticism,CRC,‘SummaryReportof5thmtg.’,28/04/88,and“pressure”h/wnotes‘CRC[5thmtg.]”,28/04/88,S25857-D;“designatedofficial”inHaugheyinDáil24/05/88andJointGovernment-ICTUstatementonjobcreationdevelopmentsunderthePNR’,27/05/88,withattached‘ProgressontheProvisionofJobs’,27/05/88’,GIS:D/Taoiseach;onHaugheyandCEOsofSSBs,CRC,‘SummaryReportof6thmtg.’,26/05/88,DTA:S25857-Eand‘ProgressontheProvisionofJobs’,27/05/88,GIS:D/Taoiseach

231

Haugheyremainedconsistentonpolicy,curbingcostsatstatecompaniessuch

as CIÉ and Irish Sugar while encouraging expanded activities by others and

legislatingtoenableACCbanktolendoutsidetheagriculturalsectorandtheESB

to engage in international ventures. He also established new state bodies,

notably Coillte, though also Teagasc, Bord Glas and FÁS. The ESB launched a

range of new ventures, in fish farming, fuel-ash for cement production, and

international consultancy, securing “sizeable assignments in three new

countries”withinamonth.Apublic-private“OverseasServicesGroup”marketing

consultancywork,asproposedbyCII,wasalsolaunched,reportingtoHaughey.

Liberalisation under the SEA also continued, with government assisting the

establishmentofprivatebroadcasting,airtransportandtelecomcompanies.48

ICTU’s conference in July 1988 proved a stormy affair. Attley countered

hostilitytothePNR“compromise”onpublicenterprisebystatingthatunionsdid

“nothavepoliticalpower”and,whatevertheshortcomingsoftheagreement,“by

andlarge…it[represented]arealattemptbythismovementtogetthepolicies

inwhichitpassionatelybelievesimplemented”.Theonlyalternativegovernment

was an FG-PD coalition of “unfettered Thatcherism”, which would make “this

debate…redundant”.“Isthatwhatyouwant?”UnderthePNR,hesaid,ICTUhad

securedthesemi-statesand“startedtheprocessofstoppingtheirrun-downand

returningthemtowhattheywereintendedtobe,vehiclesforjobcreation”.With

the issueofpaymuted, theexecutivenarrowly securedamandate to continue

withthePNR,notleastonthebasisofprojectsunderwayinstatecompanies.It

succeededinhavingamotionpassedthat“thepublicsectorshouldbedefended,

but not uncritically” and that accepted commercial criteria for semi-states,

thoughopposingfurthercontracting-outofpublicservices.49

Despite the April 1988 agreement with Haughey, ICTU-government clashes

continued. The Turf Industry Bill, which theMinister for Energy described as

“themostfundamentalchangeintheBoard’sremittodate”, incorporatedBord

naMóna and authorised it to expand its activities, particularly in horticulture,48 P.J.Moriarty,ChiefExecutive,ESBtoJ.Cantwell,Secretary,CRC,11/05/88.‘PNR’,DTA:S25857-E;CRC,

SG39:‘OverseasServicesGroup’,n.d.[April1988],DTA:S25857-D;onliberalisingmeasures,GovernmentofIreland,ElectricitySupply(Amendment)Act1988andAgriculturalCreditAct1988;‘The1988closedown:HowalegalloopholeledtoanexplosioninIrishpirateradio’,www.thejournal.ie,29/12/2018;Murphy,G.,2016:85;Smurfit2014:141-52

49 Attley,ICTUADC1989:54,96-7;executivemotiondebateADC1988;ICTUstrategyO’Dowd1989:viii-ix

232

and engage in joint ventures, but also provided for sub-contracting and the

closingofuneconomicactivities.Thisprovoked fury fromunion leaders,as the

companyhadbeenclosingplantsandsheddingthousandsofjobssince1982.Its

chief executive pleaded with Ó hUiginn that its “rescue plan”, which unions

withinthecompanyaccepted,sought,throughredundanciesandout-sourcing,to

put the companyona competitive footing: “far frombreakingany spiritof the

PNR,BordnaMónahasenshrinedthespiritofthePNRinitsplans”.50

Another conflict that arose was over Department of Environment plans for

localauthoritiestocontractoutwasteservices.AnofficialadvisedÓhUiginnthat

“itwouldbeaswelltoavoidanyspecificreferencetothis”attheCRC,butifhe

had to, he could defend it on the basis that “decisions of this nature are the

essence of local democracy” and to sweeten the pill could mention the

involvementoflocalauthorityengineersinoverseasprojects!Concernedfurther

at out-sourcing in the health services, ICTU sought a “central agreement”with

theDepartmentofHealthtoregulateit.ButHealthwarnedÓhUiginntoheadoff

any such suggestion, which would not only be “difficult … and unwieldy” but

would lead to “a clawing back of savings”. Cabinet was intent on further out-

sourcing-widespreadinvoluntaryhospitalsanyway-andhadinstructedhealth

boards to pursue it. Itwas, said theDepartment ofHealth, an issue best dealt

with“locally”,andinsteadofany“centralagreement”ÓhUiginnmightsuggesta

“forum”beestablishedtodiscuss“difficultiesexperiencedontheground”.51

Asstatecompanieswerereviewed,sellingoffpoorlyperformingones,suchas

the Great Southern Hotel Group (GSHG), was increasingly recommended. But

Haughey hesitated to take such a course. The semi-state TV film company,

Telegael,wasrestructuredtoallowforprivatesectorinvolvement,despiteunion

complaints of “privatisation by stealth”. There was also hostility to alleged

government favouring of Ryanair. The struggling airline had secured a license

undertheCoalitionbuthadasyet tosucceed instartingasingleroute inwhat

50 Onturfindustry,RayBurke,‘TurfDevelopmentBill1988’,20/10/88,GIS:D/Energy;ICTUreaction,

CassellstoTeahon,D/Taoiseach,‘re:FutureOrganisationalstructureofBordnaMóna’15/11/88andSeanS.O’Muiri,AS,D/Energy,toTeahon,CRC,16/12/88,DTA:S25858-N;BnMjob“shedding”,Sweeney1990:96-100;BnMresponse,E.O’Connor,MD,BordnaMóna,toTeahon,CRC,23/11/88,DTA:S25858-N

51 On“advised”,D.McKenna,APO,D/Env.toTheSec.,D/Taoiseach,24/11/88,DTA:S25858-M;onICTUand“generalagreement”,JohnHurley,AS,D/HealthtoO’Sullivan,D/Taoiseach,attch.D/Health,‘Confidential:NoteonContracting’,14/04/89,DTA:S25857-Q

233

was a highly protected market. Cabinet agreed to give it one of Aer Lingus’s

Stanstedslots,whichICTUdecriedasfavouritismdamagingthenationalcarrier.

On the CRC,Macra na Féirme attacked ICTU’s position, accusingAer Lingus of

“demolishingRyanair”.TheStanstedslotwasaminorconcession,Wilsonsaying

heonlywanted“tobe fair toRyanair”andgive ita “reasonableopportunity to

establishapresence”.GiventheCRCstand-off,HaugheytriedtoassistRyanairin

otherways,including-unsuccessfully–bytryingtopersuadeMitterandtoallow

it fly into Paris. The whole incident illustrated Haughey’s social-democratic

dirigistepreference-whilegovernmenthadgivenRyanairminimalassistance,it

simultaneouslypursuednewroutesforAerLingus,intoMunichandVienna.52

Despite the privatising zeal of some civil servants and state company

executives, Haughey thus kept government action within the PNR framework.

But from the state’s perspective Ryanair was important and when Ó hUiginn

outlined theCRC’s concerns to theMinister forTransport, the latter replied in

“strictconfidence”thatwhilecabinetwasdeterminedtosupportcompetitionin

airwaysinlinewithECpolicy,itsprioritywastosupportIrishairlinescapableof

withstanding“foreigncarriers”.AfewslotswouldenableRyanairgrow,butAer

Linguswouldalsobeassistedtoexploitanyopeningopportunities.53

As state companies expanded and “commercialised”, it soon emerged, as in

private industry, that this produced asmany job losses as gains. A June 1989

update for theCRCby the“SpecialProjectsOfficer”,whichTeahonsuppressed,

detailed the array of new projects underway, but also restructuring and sub-

contractingplansvirtuallyallinvolvingstaffreductions.ICTU,throughitsunions

inthesecompanies,waswellawareofthisandwhilewelcomingnewprojectsit

complainedthat jobswerebeing“destroyedasfast”,EdBrownelamentingthis

as“contrarytothespiritofthePNR”and“againstthenationalwill”.Strugglingto52 OnGSHG,[Dignam],Ec.&SocialPolicyDiv.,D/Taoiseach,‘DevelopmentProposalsofStateBodies’,n.d.

[June1988],DTA:S25857-G;onunioncomplaints,DonnchaÓhÉallaithe,MeithealOibreTheilefisnaGaeltachtatoCassells,ICTU,20/10/88,DTA:S25858-O;Ryainair“struggling”,Aldous201:104-119,182-4;Stansted“slot”debate,CRC,‘SummaryReport’andh/wnotesof15thmtg.’,18/05/89,DTA:S25857-S;MnFcomments,h/wnotesSecretariatGroupmtg.,10/03/88,DTA:S25857-C;Minister“tobefairtoRyanair”,O’SullivanD/TaoiseachtoÓhUiginn,‘AgendaItem5–AOB,Dublin-Stansted’,18/05/89,encl.D/T&T,‘re:PNR-CRCMtg.,18thMay:NoteforChairman,Dublin-LondonRoute’,17/05/89’,andD/T&T,06/06/89,DTA:S25857-S;‘HaugheyinsistedMitterrandstopoffathishomeforchampagne’,IrishTimes,29/12/2019;Ryanair/AerLingussupports,ÓhUiginn,Chair,CRC,toJohnWilsonTD,MinT&T,04/07/89,JohnWilsonTD,M/T&T,toÓhUiginn,ChairCRC,‘Confidential’,12/07/89,DTA:S25857-V

53 ÓhUiginninCRC,‘SummaryReportof16thmtg.’22/06/89,DTA:S25857-U;ÓhUiginntoWilsonM/T&T,04/07/89,WilsontoÓhUiginn,Chair,CRC,12/07/89,‘Confidential’,DTA:S25857-V

234

maintaincoherenceingovernmentstrategy,MacSharrystressedtoICTUitsPNR

commitment to a “profitable and successful commercial state sector”, but also

that companies “must have flexibility” to reform. “The general question of

privatisation per se is not currently under consideration” but it would be

“unreasonableandunrealistic” to rule itoutentirelyasgovernment “couldnot

subscribe”toanyservice“currentlyinpublichandsremain[ing]soforever”.54

ICTU disingenuously claimed the PNR aimed to maintain and increase

employment, not reduce, it, but it waswell aware that semi-state commercial

success, which it espoused, was incompatible with such criteria. Irish Sugar

(CSET)hadbeenpreventedfromclosinguneconomicplantsinthe1970s,andin

the 1987 election Michael O’Kennedy had campaigned specifically against the

closure of its Thurles plant in his constituency, threatening to prevent it by

appointing directors from the local area. CSET plans required the closure of

Thurles however, and unions had accepted this on the premise of alternative

industrial projects.But theseproved slow inmaterialising, creating a situation

Browne warned was “intolerable … [and] could be explosive”. O’Kennedy

intervenedintime-honouredfashion,forcingthecompany’shandbyexpressing

“surprise” at its decision. As the sole shareholder he “requested” CSET to halt

closure pending examination of alternatives. This remained the situation

throughoutearly1989asalternativeprojectsweresought.55

Thesemi-statesbecameifanythingmorecrucialtoICTUasjob-creationinthe

privatesectorremained“disappointing”.SIPTUarguedthatasthesinglemarket

would mean investment would concentrate at “the centre of Europe in the

absenceofaEuropeanindustrialpolicy”,andwithIrishcompaniesexpandingby

acquisitions abroad rather than throughdomestic investment, state companies

weretheonlyreliablebaseforanindigenous“export-ledindustrialisation”.56

54 ColmRegan,SPO,[“SpecialDevelopmentProjectsOfficer,D/Taoiseach”],‘StateSponsoredBodies’,

16/06/89,withh/wnotetoO’Sullivan,D/Taoiseach,30/06/89[“NotcirculatedatdirectionofAsst.Sec.MrTeahon–P.O’S],DTA:S25857-T;Browneinh/wnotesof14thCRCmeeting19/04/89,DTA:S25857-R;MacSharry,M/Finance,‘Replydated18October1988toMrDonalNevin’,ICTU’,DTA:S25858-M

55 CRC,‘SummaryReportof14thmtg.’19/04/89,DTA:S25857-R;O’Kennedy,“OpenLetter”,09/02/87,quotedinSweeney1990:64;“explosive”inh/wnotes14thCRCmeeting19/04/89,DTA:S25857-R;O’Kennedy“request”,‘ThurlesSugarFactory’,20/01/89,GIS:D/A&F;h/wnotes14thCRCmeeting19/04/89,‘CommercialSSB’,DTA:S25857-R

56 Sweeney1990:204

235

Government held its hand, halting the Thurles closure and in early 1989

talkingupsemi-stateexpansionsuccesses suchasby theESBandAerRianta’s

acquisition of hotel chains and duty-free shops in the Soviet Union. Haughey

refinedhisposition,welcomingthosesemi-statesperforming“impressively”,for

whom“thefuturecanbebrightandrewarding”,whilewarningathisÁrdFheis

thatthiswoulddepend“entirelyontheirabilitytoperformefficientlyand,where

appropriate, profitably”. Non-performing companies could no longer expect

“huge subsidies [from] the hard-pressed taxpayer”, nor the country “afford to

leavelargeamountsofscarceresourcesofcapitalandprofessionalskillslocked

upuselesslyinout-datedstructures”.Itwasastatementofintent.57

Socialpartnershipbothenabledandblockedgovernmentplans inthehighly

politicisedsemi-statesector.Buttheimpassecouldnotcontinue,especiallygiven

problems in distressed companies andHaughey’s intention to release creative

potentialthroughpartialdenationalisation.Hewastofinallyachievearesolution

ending the impasse in1990when,with thestrengthofamajoritycoalition,he

wouldsecureICTUacquiescencetoabroad,flexiblestrategytowardsthesector.

Nevertheless,innoareamorethanthesemi-states,Haughey’sactivismbelies

anysimplecharacterisationofhimasafreemarketdogmatist.Throughvarious

initiativessincethe1960shehadbeentothefore inreformstocommercialise

the sector, but under his 1987-89 government not alone was the widespread

clamour for privatisation resisted, but a near moribund sector facing

remorselessdeclinewasrevivedasakeydevelopmentdriver,withnewagencies

andenterprises founded,companiesrestructuredthroughcommercialopening,

new ventures and international enterprises initiated and private capital input

expanded.Thiscommitmenttoandrealisationofamixed-economymodelwasa

product of the state/business/union alliance of social partnership, without

whichtheventuresoutlinedinthischapterwouldlikelynothaveoccurred.

57 RayBurke,‘Statement…attheofficiallaunchofanewStateIndustrialOverseasConsultancyCompany’,

09/01/89,GIS:D/I&C;BurkeinDáil25/01/89;ÁrdFheis,Haughey1989

236

Chapter9

Thepoliticsofpayandsocialcompensation1987-89Deferringreward:partnershipandthepoliticsofpay

PayhadbeenattheheartofthePNRnegotiations,forunions,governmentand

employersalike,asine-qua-nonfor itssigning, the indispensible“coredeal”on

whichthePNR“consensus”depended.Achieving“industrialpeace”,especiallyin

the public service and wider public sector, was critical to restoring economic

confidenceandimplementingaconsistentmonetaryadjustment.1

The“separate”payagreementsforthepublicandprivatesectorshadsimilar

terms.With inflation falling towards 3 per cent, these involved a first-“phase”

fromJuly1988of3percentonearningsupto,and2percentonearningabove,

£120p.w.,withabasicminimumof£4/p.w,followedbyansimilarsecondphase

in July 1990. Additional “cost increasing claims” were disallowed and

implementationwassubjectto“localnegotiation”andcompanycompetitiveness.

For traditional reasons pay agreements were voluntary and not legally

enforceable, but through the PNRwere linked to quid-pro-quos on tax reform

increasingtake-homepayandonexpandingwelfare.The“phases”paralleledthe

budgetary cycle, followingActsgivingeffect to taxandwelfaredecisions. ICTU

welcomedthe1988/89budgetsasprogressingthepay/taxcommitment.2

Apublicpayagreementwasessentialforgovernment,butnolessforICTU,for

while the public service accounted for just over a quarter of all workers, it

composed over half all union members, forming the most powerful block in

Congress. The agreement’s treatment of “special claims” was crucial, a key

determinantofgovernment/unionrelations.ThePNRrestoredtheC&Asystem

and allowed such claims be heard, though their actual paymentwas deferred.

Governmentwas intent on an initial sixmonth pay pause and reducing public

employmentlevels.AgreementonthefirstphasetakingeffectonlyinJuly1988

1 “coredeal”,interviewswithCassells,Attley,O’Donnell2 Terms,ICTUandFUE-CIF1987;notlegallyenforceable,Kerr2006;‘Statementon1988Budget’,

27/01/88,ICTUAR:223-5;‘1989BudgetandPNR’,ICTUECmeeting30/01/89

237

providedthepaypause–even ifsoftenedbytaxreformstakingeffectearlier -

andthevoluntaryredundancyprogrammeachievedthestaffreduction.Thiswas

barteredagainsta formula for“specialawards”whichdeferredpaymentof the

initial40percentofanysuchawardstoJuly1989,withthebalancetobeagreed

subsequently. In the event of “serious financial or budgetary consequences”,

government and ICTU would “consult” “with a view to arriving at a mutually

acceptablesolution”andtimescaleforpaymentofthebalance.3

The redundancy scheme ended compulsory lay-offs while targeting a

reductionof20,000publicserviceposts.Thecoalition’s“completeembargo”on

recruitment,exceptto“keyposts”,andnon-replacementofstaffexitingthrough

early retirement or career breaks,would remain in place, to be “reviewed” in

1989. The Department of Finance reported the unexpected popularity of the

redundancyschemeandthecertaintyofreachingitstargetbytheendof1989.

Thiswould reduce the civil service to the “more sustainable” figure of 27,000

where ithadbeen “immediatelyprior to the [1977] ‘job creationprogramme’”

(sic),andshouldbe”consolidated”atthatlevel,asshouldtheoverallreduction

of the public service to 197,000. Small issues remained to upset public pay

calculations, suchas the “unavoidable”paymentof thebalanceofa legacypre-

PNRspecialawardtoteachers.Therefusalbythecoalitiontoimplementthishad

been the start of that government’s unravelling. But otherwise government

needed only budget in 1988 for the initial general 2 per cent phase, which Ó

hUiginnhadconfided toHaughey in1987wouldbe coveredbyDepartmentof

Financeover-estimatesnotrevealedtoICTU.Theredundancyschemedelivered

additionalcostreductions,andspecialawardswerenotdueuntilJuly1989.4

Thiscomplexformularesolvedpublicsectorpay,evenifunionshadtoaccept

considerabledeferral.Buttaxreforminthemeantimebluntedtheimpactofthis.

TheLGPSUPresidentdescribedthedealasa“greatstepforwardinthecontextof

the climate that existed in 1987” and as having “returned the Trade Union

3 GovernmentofIreland1987a4 PNRII(11);CRC,‘SpecificMeasures…’,03/02/89,DTA:S25899-A;D/Finance,‘rePoint4ofICTU

document–PublicService’,n.d.[Dec.89],DTA:S25857-Z;McGuire,D/Educ.,toO’Sullivan,D/Taoiseach,14/04/89,attchd,‘CRCQueries:FinancialProvisionforVECColleges’,DTA:S25857-Q

238

Movementtoitsrightfulplacecentre-stageinnationallifefromthepositionfrom

whichithadbeenmarginalisedoverthepreviousdecade”.5

Pay issues in theprivate sectorwere, if anything, evenmore complex. ICTU

hadinsistedontheprivatesectorbeingintheagreementasitwasdeterminedto

reverse the15percentdecline inpost-taxwagessince1980. Its chief concern

waslowpayandithadsoughtastatutoryminimumwagetosetafloortothis,

butemployers,andthereforegovernment,wereadamantlyopposed.Haughey’s

interventionhad ensuredFUEparticipation in thePNR, but only by conceding

conditionality on the minimum rate, and only secured construction industry

participationbypromising“compensation”inpubliccontractsforthePNRwage

costs. In contrast to public service “special claims”, “cost-increasing claims” in

privateindustryabovePNRrateswererigorouslyexcluded.

Theseconditionsweregallingparticularly forworkers instrongprivateand

semi-statescompanies.Bothgovernmentand theFUE feared that suchgroups,

withemployer connivance, couldundermine thePNRby “locally”agreeingpay

top-ups. Government worried that any “divergence from the agreed norms”

would “ultimatelymake itmore difficult to hold the line in the public sector”,

causingthepublicdeal“tocomeapartattheseams”.ItthereforepressuredFUE

toacceptthePNRasa“nationalnorm”,apartfromindistressedcompanies,and

urgedstrongcompaniestoseethe“importancefornationalrecovery”ofholding

tothePNR,“apackageembracingnotonlypaybutalsotaxconcessions”.6

MostintheICTUacceptedthebalanceachieved,thoughanti-PNRunionswith

members in strong firms complained loudly of such employers “hiding behind

thenationalinterest”incontrollingwageswhileenjoyingrisingprofits.Butthey

adhered to the agreement, Ahern declaring that “the great majority of pay

settlements” in 1988 had been “within the terms” of the PNR. Strikes fell to a

tenth of the 1980 level and those that occurred were seldom about pay, but

ratherredundanciesorworkpractices.SIPTUnotedonlyoneintenofcompanies

it organised conceding local terms “over and above”. Cases before the Labour

5 Reporter(LGPSU),June19896 MurphytoMinister(forLabour)‘PayinthePrivateSector’,24/11/87,andtoÓhUiginn,01/12/87,DTA:

S25857-A;Keegan,Sec.D/Lab.toÓhUiginn,04.12.87,‘JointLabourCommittees:PayProvisionsofAgreementbetweenICTU/FUE/CIF’,DTA:S25857-A

239

Court fell from1,000 in 1986 to 708 in 1988 and just 450 in 1990. Industrial

conflict,notjustoverpaybutalsootherissues,wasdecliningrapidly.7

The transition toPNRpay terms in theprivate sectorwasdelayed inmany

companies for several years as pre-PNR agreements ran their course. At least

600suchagreementsweresignedin1987alonepriortothePNR,manyrunning

to 1990 or later, greatly relieving pay pressures. Besides these companies

effectivelystilloutsidethePNR,attheotherendofthespectrumwerenumerous

distressedcompanieswhereunionshadaccepted“rescueplans”involvingactual

paycuts,wherePNRtermswouldthereforenotyetapply.Whenarescueplanin

B&I,asemi-stateferrycompany,cameupforreviewin1989,ICTUevensought

CRCsupportforthecompanydeferringPNRtermsas“spaceneedstobecreated

… to be able to respond in a positive manner to the needs which the unions

genuinely have to keep the show on the road” (sic.). Private companies in a

similar position includedWaterford Glass, where ICTU offered to end a strike

overrescueplantermsbytradingawagefreezeforaworkers’shareholding.8

ICTU’s overriding priority in the private sector were the lower-paid, who

predominated among its membership. In the absence of a National Minimum

Wage, ithadacceptedHaughey’sadamantassurancethatthePNRtermswould

be enforced as a “national norm”. As claims to apply PNR rates began to be

lodgedwith the Labour Court as pre-PNR agreements expired during 1988, a

satisfiedITGWUfounditruling“consistently”againstrecalcitrantemployersand

ordering PNR “norms” to be applied. It equally ruled against unions seeking

above-PNRterms,andinclaimsforincreasesforproductivityorchangedwork

practices,excludedbythePNR,itregularlyadvisedunions“toawaitexpiryofthe

Programme before pressing [such] claims”. The issue of industry-wide

applicationofPNRtermswasalsosoon testedwhena threatenedstrike in the

7 ICTUAR1988:58;Ahern,‘Speech…attheformalannouncementoftheFrameworkAgreementonHours

ofWork’,17/02/89andD/Lab.,‘Strikes,RedundanciesandUnemploymentfellin1989–AnnualReportoftheDept.ofLabour’,30/03/90,GIS:D/Labour;[ManusO’Riordan],‘ReviewoftheProgrammeforNationalRecoveryandtheroleoftheLabourCourt’,ResearchDept.,SIPTU,n.d.[1990],[faxdated23/10/90],ICTUArchive:FolderPN-1

8 ICTU-FUE-CIF(1987);D/TaoiseachreportinCRC,‘SpecificMeasures…’,03/02/89;McGinley(1999):117;[ManusO’Riordan],‘ReviewoftheProgrammeforNationalRecoveryandtheroleoftheLabourCourt’,ResearchDept.,SIPTU,n.d.[1990],[faxdated23/10/90],ICTUArchive:FolderPN-1;O’SullivanD/TaoiseachtoMurphy,D/T&T,andtoO’Gorman,D/Finance,19/09/89,reB&I,attch.StephenMcCarthy,ICTUtoCassells,‘re:B&IWageNegs_’,14/06/89,DTA:S25857-V;ICTUPressStatement04/03/89,LabourComment,29/04/89;onWaterford,Cook1992

240

clothingsector-coveredbyaJLC–causedemployerstoacceptthePNR£4rate

acrosstheindustry.ThiswasfollowedbyasimilarJLCagreementinthecontract

cleaningsector.TheLabourCourtthereafterconsistentlyappliedthe£4national

“norm”across industries.The strongFUE resistanceof1987againstminimum

rates thus evaporated, with the recovering economy doubtlessly lessening

pressuresonmanyemployerswhohadsofiercelyresistedthemin1987.9

Low pay and precarious work, especially among women, was a growing

realityinthe1980s.From1983ICTUpursuedanationalminimumwage(NMW)

to counter it, unsuccessfully seeking its inclusion in the PNR. Some unions

opposedaNMWascreatingalow“floor”andunderminingbargainingpower,as

hadhappenedintheUS.ButtheITGWUinparticular,whichhadpioneeredthe

“flat rate” in pay bargaining to benefit the low paid, now soughtmeasures to

counterwhatDesGeraghtycalled the “NewWave flexibility”.Unionsmustend

their “ambivalence” on “marginal workers’, and rather than rely on industrial

organising“concentrateourenergies”onimprovingtheirpositionthrough“legal

reform,taxreformandsocialreform”.ThisshapedICTUstrategyinthePNR.10

A further concession sought by ICTU for pay moderation and also as an

employment-boostingmeasure,wasreducedworkinghours,thenamajortheme

across the EC.When the FUE resisted this in negotiating the PNR,Haughey in

exasperation threatened a government-union alliance applying it in the public

service that would force them to follow suit. A typical PNR compromise was

achieved, agreeing “discussions” between the social partners and government

“onageneralframeworkwithinwhichtheissue…canbedealt”(sic).11

Aboardroom-typeconflict,oftentypicalofpartnership,eruptedattheinitially

friendly firstmeetingof the “workinghours committee”, chairedbyÓhUiginn.

This had only finally met in October 1988 and when employers proposed a

furtherdrawn-out talksprocess, a furiousAttley changed the “whole tenor” of

themeeting,accusingtheFUE“ofextremefoot-dragging”.TurloughO’Sullivanof

9 LabourCourtRecommendationNo.11940;Reporter(LGPSU),June1989;[ManusO’Riordan],‘Reviewof

theProgrammeforNationalRecoveryandtheroleoftheLabourCourt’,ResearchDept.,SIPTU,n.d.[1990],[faxdated23/10/90],ICTUArchive:FolderPN-1

10 Cordova1986;ICTU1989c;ICTUAR1988:143;AttleyinMcGinley1999:245-6;BlackwellJohnandNolanBrian1989;GeraghtyinICTUADC1988:58

11 McGinley1999:124,135;PNRII(9)

241

theFUEreciprocatedbyrefusingtocontinueuntilÓhUiginnrestoreddecorum.

TheDepartment of Finance, sidingwith employers, reported to cabinet how it

hadacted“tosafeguardExchequer interests”byensuring that“net”hoursonly

werecalculated(“excludinglunchbreaks”)andthat“‘spin-off’claimswould“not

beentertained”.“Anothermostimportantfeature”,itreported,wasthatdespite

ICTU’sdemandforaJuly1989deadlineforthereform,employershad“refused

toconcede”,insistingon“localnegotiation”.Butafterseveralmeetingsanagreed

“General Framework on Working Hours” emerged. This conceded a one-hour

reduction phased in over three years, subject to “local” or JLC sector/industry

negotiationandcompetitiveness “implications”.Launching it inFebruary1989,

AhernstressedtheroleoftheLabourCourtinensuringasmoothintroduction.12

TheDepartmentofFinanceestimated that themeasurewouldcost£24m in

thepublicsectorannually,with themaincost falling in thehealthservicesand

local authorities. But the “budgetary allocations for special pay increases

generally” for 1989 (including the Gleeson report’s “interim award” for senior

officials) includedno provision for this. Government therefore stalled in “local

negotiations”onit,withtalksstillon-goinginmanybodiesinto1990.Withthis

pacesetbygovernment,employersfollowed,withfewprivatesectoragreements

onreducedhoursconcludedbylate1989,coveringjust18,000workers.13

ThecomplexagreementsonpayandworkinghoursonwhichtheentirePNR

depended,howeverdrawnout,neverthelessdeliveredboth“industrialpeace”-a

key factor in economic stability - and reduced budgetary pressures.While the

state and private employers achieved a notable deferring of cost inputs – art

fromtax-until1989,unionssecuredanidealpublicserviceagreement,evenif

subject to considerable deferral and budget conditionality. For private sector

unions,theachievementofminimumPNRratesandworkinghourreductionsas

nationally applicable, and on-going tax, welfare and social policy reforms

12 [O’Sullivan,D/Taois.],‘DraftingGrouponReductionofWorkingHours’,n.d.[Jan.89],DTA:S25858-O;

OfficeofM/Fin.,‘AideMemoireforGovt.Mtg.on10February.FrameworkAgreementonreductioninworkinghours’,DTA:S25858-P;PNR,GeneralFrameworkonWorkingHours,[17]February1989

13 OfficeoftheM/Fin.,‘AideMemoireforGovernmentMeetingon10February1989’,DTA:S25858-P;N.T.O’Gorman,D/Finance,toO’Sullivan,D/Taoiseach,21/11/89:‘Re:ICTUmeetingwithTaoiseach’,24/11/89,encl.‘BriefingNoterereductionofworkinghours’;CRC,‘ReportofBilateralMeeting[Departments]withRepresentativesofICTUon8Nov.1989’,andh/wnotesofthemeeting,DTA:S25862-D;D/EnvironmentfaxtoD/Taoiseach,06/07/90:n.t.,DTA:S25858-Z6;h/wnotes,‘CRC,BilateralMeeting[Departments]withICTU’,08/11/89’,DTA:S25862-D

242

providingincrementalimprovements,benefitedmanyhundredsofthousandsof

workingclassfamilies.Forgovernment,thedeferralofspecialawardpayments,

the continued reduction of public employment and the recruitment embargo,

pending“review”,weremajorbenefits.Theslackprovidedbytheoverlapofpre-

PNRpayagreementsinmanystrongcompaniesmeantunionsintheprivateand

semi-statesectorswererelievedofpressuresfromthePNRbanonlocaladd-on

claims. But these private sector pay and public service pressures were only

deferred, cushioned by tax reforms and pre-PNR arrangements running their

course,andwouldforcefullyreturntothepartnershipagendafromlate1989.

Newparadigms:RuralDevelopmentandLong-termunemployment Already from 1988 the focus of social partnership began to shift from core

economic/industrial policy as the “turnaround” saw thePNR recovery formula

gain wide acceptance. Continued high unemployment and a realisation that it

would not be solved quickly moved centre stage. The integration through the

NDPof theEC structural fundswith thePNR further strengthened the shift to

compensatorysocialpolicy.Twoparticularinterventionstoemergewerefirstly

“integrated rural development” (IRD) and secondly measures to combat what

was identifiedas a “newphenomenon”of long-termunemployment (“LTU”) in

deprivedurbanareas.Thisoccurredasaneweconomywithnewgrowthsectors

rather than a recovering old economy emerged. Compensatory policies on tax

complianceandsocialreformsalsoassumedgreaterprominence.Howinitiatives

intheseareasevolvediscriticaltothere-shapingofpartnershipthatensued.

On IRD, Haughey had long been an advocate of promoting off-farm rural

enterprise, even before CAP reform. Both Macra na Feirme and ICOS had

developedideasonhowlocalinterestsmightdriveaprocessofsocio-economic

regenerationthroughan“IntegratedRuralDevelopment”programme(IRD)and,

with IFA support, pilot IRD projects were included in the PNR. While this

approachmeshedwiththinkinginBrussels,itpre-datedtheECprogrammeand

haddomesticroots.Localinitiativesbuildingonco-operativetraditionshadbeen

supported by government through the Combat Poverty Agency (CPA), for

243

example in North Mayo. Many local development groups campaigned to be

included in the programme. Macra na Feirme saw the potential of IRD to

overcome the “fundamental weakness in our structures” of local government,

especially their impact on socio-economic development. Haughey had been

acerbic in his scepticism of local government having the competence to drive

development inDublin, andwasno less so in relation to rural Ireland.Hehad

welcomedMacra’sproposals, included theirpilot IRDprojects in thePNR, and

hadexpandedthesepilotsintoanationwideprogrammeundertheNDP.14

Inpreparing theNDP,governmenthadasked theDepartmentofAgriculture

for proposals for this IRD programme. When it returned with a plan for a

Department-runschemeof “programmeactivators”overseeing “localeconomic

and social improvement”, Haughey intervened furiously through Ó hUiginn to

scupper it. Ó hUiginn told Agriculture that while it was unprecedented for a

Taoiseach to criticisedepartmentalplans, itwas tonotehisviewson this.The

purposeof IRDwas to generate enterprise in a post-CAP reformenvironment,

withprojectsfocusedondisadvantagedareasandbuildingonexistinginitiatives.

Governmentofficialswouldonly“stifle local initiative”rather thanstimulate it.

Localbodies,bothstateandvoluntary,shouldinsteadbe“mobilised”byoutside

“co-ordinators”to“lead,stimulateandfosterlocalinitiative”ratherthan,“asyou

put it”, oversee “improvement”. ThemodelHaughey “envisaged”was the CPA-

fundedprojectinMayoorthatproposedbytheWestKerryDevelopmentgroup.

TheDelorsPlanwasonlyinpreparation,buthadtheDepartment,heasked,even

sought“advancedrafts”ofitsideas?Ifnotitshoulddoso,andreturnwithfresh

proposalsincorporatingCommission“thinking”andwhatmight“fitinwithit”.15

In 1987Delors had launched a discussionpaperTheFutureofRuralSociety

which, as agriculture minister O’Kennedy put it, rejected the “US model” of

abolishing rural subsidies due to the “intolerable social and economic cost”

involved, promoting instead strengthening the “economic and social fabric in

ruralareas”throughoff-farm,quality localenterprise.Delorsforesawan“area-

14 PNRV(20);DrFergusO’Ferrall,ChiefExecutive,MacranaFeirme,toPatO’Sullivan,D/Taoiseach,

13/09/88,‘Re:StructuralFunds’,DTA:S25857-I;h/wnoteofmeetingSG,05/010/1988,DTA:S25857-Iand‘ActionPointsfromSGmtg.on5October’’,12/10/88,DTA:S25857-J

15 ÓhEigeartaigh,forSec.,D/Taoiseach,toSec.,D/A&F,forattn..DrTedAtwood,15/01/88,DTA:S25858.D

244

focussed”programme to “harness local energies, imaginationandenthusiasm”,

supportedbycentralandlocalgovernmentandtheprivatesector.16

The Department of Finance seized on the focus in draft EC guidelines on

assisting poorer and converting regions and “speeding up” agricultural

adjustment and rural development in anticipation of CAP reform, to propose

structural fund co-financing forprojects involving theprivate sector.Macrana

Feirmesoughttheinclusionofcommunityresourcedprojects,andoncethiswas

achieved,Government“subsumed”itsIRDplanswithintheERDFprogramme,as

achapteroftheNDP.Butvariousagencieshadalreadybeenre-orientedtowards

“localdevelopment”.In1988,forexample,ShannonDevelopment(SFADCo)was

re-directed to support voluntary enterprise groups, community co-operatives

andotherprojectsonacounty“enterpriseplan”basisacrosstheSouth-West,as

wellasinLimerickcity,whereitpartneredwiththeCityRenewalScheme.17

The IRD programme thus emerged organically, but adjusted to “fit in”with

Commissionthinking.WhatemergedinIrelandwouldrapidlybecamea“model”

for how IRDwasdevelopedby theCommission as aEurope-wideprogramme.

Oneofthemostsuccessfulruraldevelopmentprogrammessincethefoundation

of the state thus took form through the integration of the PNR and NDP, and

becameamodelforEuropeanruralregenerationandeconomicorganisation.

Inurbansocialregeneration,auniquemodelalsoemergedtotacklethevery

differentissueoflong-termunemployment.Itwouldbeshapedbyacombination

ofEuropeanpolicy re-think, organic local responses to social crisis, andpolicy

innovationbytheorganisationsoftheCRCunderthePNR.

The social impact of de-industrialisation had led the OECD’s minister-level

SocialAffairsCommitteein1986toidentifya“newphenomenon”of“long-term

unemployment”andproposetargetedmeasuresofspecialeducationand“active

labourmarketpolicy”totackleit.Creatingindustrialjobsandtrainingpeopleto

fill them was seen as no longer functional in addressing this unemployment

16 O’Kennedy,‘Statement…launchingtheAnnualReviewandOutlookfortheAgriculturalandFood

Industry’,18/01/89,GIS:D/A&F;ECCommission,1988a;D/Finance,‘FutureDevelopmentoftheERDF’,14/03/88,S25857-C

17 D/Fin.,‘FutureDevelopmentofERDF’,14/03/88,S25857-C;O’Ferrall,MnF,toO’Sullivan,D/Taoiseach,13/09/88,‘Re:StructuralFunds’,DTA:S25857-I;TomDunne,MD,ShannonDevelopment,‘PartnershipapproachpositionsShannonregionforthe1990s’[PressRelease],03/01/89,DTA:S25857-N

245

givenitsgeographicconcentrationandthetypeofskillstheemergingeconomy

required.Theterm“LTU”wascoinedtorefertopeoplewithobsolescentskills,

overayearunemployedandcaught inacycleof joblessness.A “ratcheteffect”

meant that while LTU increased in recessionary periods, it did not similarly

declinewhengrowthresumed,and thisgroupbecame trapped inadownward

spiral of labourmarket exclusion and disadvantage. Unemployment in Europe

declinedinthe1980s,but long-termunemploymentremainedstubbornlyhigh,

accountedfornearlyhalfofallthoseoutofworkinIrelandby1988.18

The OECD declared the supply-side vocational training solution of the full-

employmentera redundant,promoting insteadanarea-basedapproach toLTU

andlabourmarket“disadvantage”.Themethodologyitproposedwasoneof“re-

orientating” programmes to “particularly disadvantaged groups”, “improving

motivation,lifeskillsandjobsearchtechniques”,compulsorytesting,jobsclubs,

self-employment, “social employment” projects supplying non-economic but

socially useful services, and “additional and still ‘heavier’ forms of aid” for the

“more seriously disadvantaged”. The aim was to re-integrate the unemployed

throughnewservicejobs,ortooccupythemtoproduce“societalbenefitsinthe

formofreducedunsocialbehaviour,lowerlevelsofillhealthetc”.19

ThisOECDpolicywascontroversialandonlyfinallyadoptedin1989,before

theEC.TheEuropeanSocialFund (ESF)hadbeenestablishedby theTreatyof

Rome as a “compensatorymeasure” to assistworkers dislocated by industrial

restructuring to retrain for new jobs. But policy drift saw it increasingly used

fromthe1970stocounteryouth joblessnessandsocialmarginalisation.Bythe

1980s Irish vocational trainingwas fully one-third funded by ESF, the highest

rateintheEC.In1988DelorsquestionedthefitnessofEurope’ssocialprotection

systemstocounterthenewsocialratherthaneconomicphenomenonofpoverty,

“acancergrowingawayinoursociety”thatallowedthenewpoor“slipthrough

themeshesofthesocialprotectionnet”.MeasuresundertheESFspecificallyto

“combatsocialexclusion”,thenanewterm,wereonlyfinallyadoptedin1989.20

18 OECD1988a;Bond1993b:26-919 OECD1988a:34,48,9620 OnESF,ÓCinnéide1993b:14;“financedbyESF”Mangan,I.,1993:64-5;“meshes”Mangan,G.1993d:44;

ESFreg.CounciloftheEC,1989,‘Resolutionof29/09/1989oncombatingsocialexclusion’,89/C277/01

246

AstheseECpolicieshadyettoclarify,thePNRinitiallyadoptedatraditional

approachtounemployment,assumingthatjobcreationwouldgraduallyerodeit

as the collapsed industries of the Lemass-era recovered. It referred to

“disadvantagedareas”onlyintermsofeducationalneeds,andmadenomention

of geographic concentrations or “long-term unemployment”. But as industrial

strategyunder thePNR, forall itssuccesses,hardlydentedunemployment, the

issuebegantodominatetheCRC,especiallyaftertheStructuralFundregulations

appeared proposing investment in “converting regions” affected by industrial

decline and urban concentrations of high unemployment. The ESF was re-

designated“tocombat long-termunemploymentand facilitate theoccupational

integrationofyoungpeople”,withproposalstobesubmittedbyJune1989.21

Following the EC Council’s adoption of the Delors Plan in early 1988, ICTU

raisedtheissueof“unemployment‘blackspots’”ontheCRC,proposingsupports

be “concentratedon… [the] long-termunemployed areas of big cities… rather

thanspreadingthemacrossthecountry”.TheIFAopposedthisonthebasisthat

averageruralincomeswerelowerthanurbanones,butgovernment,sidingwith

theICTU,commissioneda“studyonDublin”fromsuchaperspective.The1988

ICTUconferencewasdominatedbythejobsquestionanddemandedthatsocial

investmentbefocusedon“unemploymentblackspots”.22

The CRC debated the grim prognoses of the OECD’s “LTU report” and its

recommendations.ÓhUiginntoldgovernmentthatconcreteprojectsalongsuch

lineswerenowessentialforICTU,whichwasunderpressureto“showthattheir

membershipoftheCRCisfruitful”.AftertheCommissionunveileditsproposed

“CommunityActionProgramme”to“fostertheEconomicandSocial Integration

of the Least Privileged Groups” in December 1988, Cassells proposed the

establishment of a CRC “Sub-Group on Job Creation” to evaluate job creation

measures and develop proposals to address “the position of the long-term

unemployed”.TheCIIsupportedthisas“alogicalextensionofPNRstrategy”and

governmentreadilyendorsedit.23

21 PNRIV(15)-(17);D/Finance,‘FutureDevelopmentoftheERDF’,14/03/88,S25857-C22 CRC,‘SummaryReport’andh/wnotesof4thmtg.’24/03/88,DTA:S25857-C23 “LTUReport”inCRC,‘SummaryReportof15thmtg.’,18/05/89,“fruitful”inO’SullivantoSec[ÓhUiginn],

D/Taois.,‘JobCreation:ProposaltoestablishGrouptoexamineinitiativestocreateadditionaljobs’,19/05/89inDTA:S25857-S;CommissionproposalinECCommission1988d;Sec.[=ÓhUiginn]to

247

TheCRC “Sub-Group”met twenty timesover sixmonths. It consistedof the

samepersonnelasthe“SecretariatGroup”,whichsuspendeditsactivitiesforthe

duration.ItsobjectivewastoassesslikelyjobcreationunderthePNR/NDPand

propose“feasiblemeasurestoimprovethelevel,andspeeduptheprocessofjob

creation (productive and social) and training, having particular regard to the

position of the long-term unemployed”. It was supplied with material by all

departments,especiallyonwideningeducationaccess,aswellasanalysesbythe

OECD and reviews of pilot projects in other EC countries. The Department of

Labour supported the OECD proposals for “targeting” groups, while ICTU

pressed foranareabased focus.Thegroupconcluded thateven ifPNR targets

weremet, unemploymentwould remain above200,000beyond1992, that the

long-termunemployedwouldbenefitleastfromnewjobsbeingcreated,andthat

well-resourcedsocialprogrammeswerethereforeessentialintargetareas.24

A “Ministerial Committee on Employment” chaired by Ahern adopted

proposalsemergingfromtheSub-GroupandincorporatedthemintoNDPplans.

National regulations were changed to enable educational access for the

unemployed and new education initiatives targeting deprived urban areas,

notablyYouthreach.AhernurgedICTUinthesub-regionalNDPplanninggroups

to“ensuretheneedsofunemploymentblackspotsaretakenintoaccount”.Civil

servants offered some resistance on cost grounds and fearing disincentives to

job seeking, but they also realised the value of suchmeasures in suppressing

unemployment figures, especially given demographic pressures, the need for

widespreadupskillingandtheundeniablyhighrateofyouthunemployment.The

newemployment/trainingagency,FÁS, re-oriented fromtraditional training to

developing“integratedareaplans”thatprioritisedLTUmeasures.25

Taoiseach.‘Subject:Sub-GroupoftheCRCtoexamineinitiativestocreateadditionaljobs’,22/05/89,DTA:S26122-A;O’SullivantoÓhUiginn,D/Taoiseach,‘reAgendaitem2–JobCreation’,18/05/89,DTA:S25857-S;CIIon“logicalextension”inCRC,‘SummaryReportof15thmtg.’18/05/89,DTA:S25857-S;governmentendorsementinCruinniúRialtais23/05/89,DTA:S26122-A

24 CRCSub-GrouponJobCreation’(SG-JC),‘SummaryReportof1stmtg.’,27/06/89,anddocumentationforthe2ndCRCSGmtg.inc.Sexton1988,OECD1988b,ProfKennedy(ESRI)paperonSwedishlabourmarketpolicyandtheCSO1988FinanceSurvey;D/Labourpositioninh/wnotes1stmtg.,‘Sub-GrouponJobCreation’,n.d.[28/06/89],andSG“conclusions”inh/wnotes1stmeeting,allinDTA:S26122-A

25 ‘MinisterialCommitteeonEmployment.SummaryofRecommendationsandConclusions’,n.d.[June1989],DTA:S26122-A;‘GovernmentStatement’[onESFpriorities],22/03/89,GIS:D/Taoiseach;h/wnotesof14thCRCmeeting19/04/89,andD/SW,‘Optionstoallowtheunemployedtoengageineducationcourses’,02/05/89,DTA:S25857-R;onYouthreachandothermeasures,MaryO’Rourke,‘AddresstoTUIConference’,29/03/89,GIS:D/Educ.;onHaugheyurgingICTUinNDPplanninggroups,

248

Thisspeedyresponseandtheraftofnewmeasureslaunchedoccurredinthe

run-up to the “surprise” election ofMay 1989, but nevertheless represented a

strategicre-orientationoflabourmarketpolicyandprogrammereform,andwas

welcomedbytheCRC.Butre-focusingtheCRCtothispolicyareaalsoreflected

there-orientationofsocialpartnership itself fromitsoriginalprimaryfocuson

macro-economicpolicytomeasuresofsocialcompensatoryadjustment.

Thepoliticsof“unemploymentblack-spots”

The PNR had not includedmeasures on long-term unemployment or urban

“black-spots”. But the confluence of the OECD policy departure, the CRC “Sub-

Group”andtheopportunityoftheEC-co-fundedNDPsawthemnowemergeasa

priority.This ledto initiativesbyareceptivegovernmentwillinglyadoptingan

approachurgedonitbyanallianceoftheICTUandanew“communitysector”.

Haughey’sviewoftherelationshipbetweeneconomicandsocialprogresssaw

the economic as primary, as reflected in his interventions on rural and urban

renewalstrategyasalreadydescribed.ÓhUiginnmadethisorderingofpriorities

clear in a clashwith theCHDDA.Whenhis IFSCCommittee criticisedCHDDA’s

rentspolicyfordis-incentivisingfinancefirmsfromlocatingtothedocklands,its

chairman, Frank Benson, responded that his remit was physical regeneration,

funded by rent receipts. Ó hUiginn put him on notice that the IFSC was “the

majorGovernmentconcern in regard to theDocksdevelopment [and]mustbe

seentobetheobjectiveofthedevelopmentandnottheotherwayaround”.26

TheCRCforitspartcriticisedtheCHDDAfromanotherperspective,wanting

itsremitexpandedfromphysicalrenovationtosocialobjectives,andextendedto

the inner city generally while focusing on “employment black-spots”. Unions’

concernforsuchcrisisareaswasduetotheirhistoricrootsandbaseinthem.But

theoldleadershiproleofunionactivistsinthesecommunities,wherelong-term

unemploymentnowoftentopped40percent,wasdisappearing,andreplacedby

anewmovementofcommunityactivists.Someofthenewgroupsstillemerged

NTO’Gorman,D/Finance,toO’Sullivan,D/Taoiseach,03/11/,DTA:S25858-M;onemographicsandyouthunemployment,OECD1988bandPower2009:167;re-directionofFÁS,D/Labour,‘CRCSub-GrouponJobCreation,Informationrequestedat1stmtg.’,27/06/88’,DTA:S26122-A;Ahern‘SpeechatlaunchofFASDublinRegionalPlans’,08/06/89GIS:D/Labour

26 BensontoÓhUiginn[18]/12/88,andÓhUiginntoBenson,04/01/89,DTA:S25306

249

fromthelabourmovement,liketheLarkinandBallymunJobsCentres,butothers

likeTonyGregory’sNCCCAP,theBallyfermotActionGroupandTallaghtWelfare

Societyweremoreoften ledbycommunityorsocialworkers,college-educated

and espousing an “empowerment” philosophy. Thiswas shaped not by labour

movementtraditionsbutUScivilrightsthinkingandsocialpsychologytheory.A

major influencewas Dr. Ivor Browne’s “Foundation for HumanDevelopment”,

which sponsored projects in the city promoting “empowerment” through

community development. The new groups networked through the Community

WorkersCo-op,whichaimed“tobuildontheprinciplesoflocalcommunitylevel

participation”towards“aradicalreshapingofdemocracyatthenationallevel”.27

Despiteunions’ strongattachment to tradition, theunifying class identityof

thelabourmovementwasfracturingwiththeriseofmiddleclasspublicservice

interests in the ICTU and the emergence of aworking class stratum detached

both from regular work and the union movement. In 1987 the Irish National

Organisation of the Unemployed (INOU) was formed on the lines of similar

initiatives of the past, seeking a structured role in the ICTU. But, despite its

aspirationstomassmobilisation,itwassoondominatedbycommunityactivists.

In the 1980s ICTU sought the support of the new community movements to

reinforceitssocialpolicycredibilitywhileresentingtheirencroachmentontoits

territory andencouraging local trades councils,which had lost their industrial

relations function, to revive the movement’s community leadership role by

forming“unemployedactiongroups”and“centres for theunemployed”. Itonly

finally agreed in late 1987 to meet the INOU to discuss “possible links” but

avoided the formal tie-up “envisaged” in the INOU constitution. By 1989 talks

hadadvancedonlyto“consultation”on“issuesofmutualinterest”.28

Given the tensions in this alliance and its state orientation, the ICTU in

proposing how local initiatives in “black-spots” should be organisedunder the

NDP initially foresaw joint “task-forces” solely of social partners and state

27 CRCviewofCHDDA,h/wnotesCRCmtg.26/10/88,DTA:S25857-J2;IrishTimes,27/10/88;onthe

LarkinandBallymunCentres,O’Connor,P.2009andinf.MichaelCreedon;onthe“Foundation”,Browne,I.,2009andRaffertyandMcCarthyeds.2019:27-32;“aspirations”,Larragy2006:383

28 AllenatICTUADC1988:41;ChabanetandRoyall2009:286;onpredecessormovements,Kilmurray1987;onINOUmembership,Int.Monks;INOU-ICTUrelationsalsoChabanetandRoyall2009:273-4andMcGinley1999:158;on“Centres”,ICTUARs1984-8;Royall2009:132;“envisagedinconstitution”ICTU,AR1988:281and“mutualinterest”ICTUAR1990:3

250

agenciessuchasFÁS,localgovernmentandtheVEC.ButsoonHaughey’smuch-

derided“GregoryDeal”of1982,withitsintegratedcommunity-basedapproach

ofschool,communityandsocialemploymentprojects,overseenbyacoalitionof

agencies and community groups, emerged as the preferredmodel. Many such

micro-projectshad survivedwithECpoverty funding, and communityactivists

urgedICTUtosupporttheapproach,whichitdidfinallypromoteontheCRC.29

Haughey immediately responded to this CRC proposal when launching the

Custom House project in September 1988. An “integral feature” of inner city

renewal would be to “provide local employment and help create in the local

communityasenseof involvement…[in]thecreationofthisnewenvironment

in their area”. This “commitment to involving the local community” through

“establishedlocalgroups”wouldextendto“preferentialconsideration”forlocal

residents in job recruitment, and cooperating “with developers and statutory

agencies”toprovide“appropriateeducationandtrainingprogrammes”.30

A range of sub-areas of Dublin, Limerick and other townswere designated

“disadvantaged”onthebasisofunemploymentlevel.Aninitialpilotprojectwas

developed forTallaght,adeprivedworkingclasssuburbdeclareda “socialand

economically disadvantaged area”. In addition to tax-incentivised construction,

includinganew“towncentre”,theprojectinvolvedsocialinterventionsunderan

“IntegratedAreaDevelopmentPlan”deliveredbylocalcommunityorganisations.

At ICTU instigation, the FÁS social employment scheme was re-configured to

combinesocialwithtrainingobjectives,despiteÓhUiginncautioningthattheEC

waslikelytoresistanysuchchangetoasocial-ratherthaneconomicfocus.31

“Integrated”socialplanninginDublinInnerCity,LimerickandTallaghtthus

already began under social partnership in 1988, before their usually assumed

initiation by later EC programmes. The new schemes, like rural development,

had a strong organic origin, mobilising local groups as their driving element.

Ahern articulated thiswhen he described FÁS’s role in the Tallaght plan as to

“provide a flexible response to the pressing needs of the new town” and “co-

29 ICTUproposalsforlocalbodies,Sub-GrponJobCreation,‘ReporttotheCRC,October1989’,DTA:

S26122-E;“GregoryDeal”,Lee1989:508;projectswithECfunding,InterviewwithInnerCityGroup30 Haughey,‘AddresslayingfoundationstonefortheIFSC’,22/09/88,GIS:D/Taoiseach31 ‘Tallaght’,n.d.[Nov.1988],DTA:S25858-M;h/wnotesofCRC15thmtg.’,18/05/89,DTA:S25857-S

251

operatewith all relevant community groups… topromote employment and…

the development of… small businesses”. This, he said, pre-datedECproposals

nowemerging,butwould fit “admirably”with them. In theirearlyyears, these

projectswouldattractwidespreadacclaimfortheirinnovativeimpact.32

Managingdespair:governmentpolicyand“anti-poverty”politics

The beginnings of the integrated local development plans described above

were accompanied by an overhaul of social policy-making at the institutional

level.OneofICTU’smajortacticalaimsinthePNRhadbeentoring-fencewelfare

spending.Whilethiswasachieved,itslargerobjectiveofafundamentalwelfare

state reform proved more difficult. As with its alliance with the community

sector on local development strategy, to overcome how it often found itself

“alone” in social partnership on social policy ICTU formed an alliance with

campaigning poverty groups to force the pace of institutional reform. These

groups had mostly evolved from Church-based charities, traditionally, as

dramatizedinJamesPlunkett’snovel,StrumpetCity,hostiletounions.Butsince

the 1960s liberalisation of Catholic doctrine,many had turned to campaigning

forsystemchangeand“socialjustice”,raisingdemandssimilartotheICTU.33

Ireland’s health and welfare systems involved extensive subcontracting to

voluntary organisations. This gave such groups significant leverage, with the

NESCnotingin1981howwelfareprovisionhadevolvedin“pragmaticpiecemeal

reaction to perceivedneeds, often as advocated by organised interest groups”.

WelfareministerMichaelWoods, a conservative Catholic, commentedhow the

St.VincentdePaulSocietyhad“changedenormously”fromprovidingcharityfor

poor people to “attempting to get to grips with the root causes of poverty”

throughpolicychangeandeconomicprojectsindeprivedareas.Fr.SeánHealy,

headofthe“JusticeOffice”oftheConferenceofMajorReligiousSuperiors(later

CORI),emergedasaprominentadvocateofa“minimumincome”asaresponse

topovertygivenwhathesawastheunlikelyreturntofullemployment.34

32 Ahern,‘SpeechatlaunchofthethreeFASRegionalPlansforDublin’,08/06/89,GIS:D/Labour33 “aloneonsocialpolicy”,InterviewO’Donovan;onCatholicsocialreform,Dorr,D.1992:228-317;

InterviewswithFr.FrankSammonandBillTonerSJ34 Onhealthsystem,Carey2007;NESC1981c;‘SaintVincentdePaultocreate1,000Jobs’,n.d.[05/89],GIS:

D/SW;onHealyand“minimumincome”,Larragy2006:384

252

In1986thecoalitiongovernmenthadestablishedtheCombatPovertyAgency

(CPA)to liaisewithvoluntarygroupsandadviseonwelfarereform.CPAurged

implementation of the Commission on SocialWelfare’s recommendations, and

theintroductionofa“basicminimumincome”anda“nationalanti-povertyplan”.

As the PNR was being negotiated, CPA urged that “the plight of the poor” be

given “equal importance” todebt reductionand jobcreation,and lobbied ICTU

for “closer liaison” between government and the voluntary “sector” in

determiningpolicy.Thesectorwassupportedby theLeft,withWorkers’Party

leader Proinsias de Rossa championing CORI’s objectives and proposing a

“rainbowcoalition”of “progressive forces” to transformwelfarepolicy. Similar

callsweremadebyWP-affiliatedunionfigures,notablyDesGeraghty.35

ICTUhadsoughttheinclusionofCPAproposalsonsocialandbudgetpolicyin

the PNR, and secured a commitment to structured policy consultation with

voluntarygroups.ItspreferencewasforaCPA-ledapproach,givenCPA’sformal

statutorystatusandICTU’schequeredhistorywithvoluntaryorganisations,and

urged that CPAbe given a central role “coordinating” the sector. InNovember

1988thefirst“Pre-BudgetForumonSocialWelfare”underthePNRtookplace,

hostedbyMinisterWoodsandattendedbynineinvitedgroupsfromVincentde

PaultotheINOU.ICTU,inliaisonwithCPA,thensoughtapermanent“advisory

body”, under CPA “auspices”, of “groups concerned with poverty” to advise

governmentonreform.WhiletheCRCsupportedthis,Woodsopposedit,though

agreed to post-budget “dialogue” and instituted the pre-budget “forum” as an

annual event. In what a dissident Labour journal dubbed “a Vincent de Paul

budget”, he also greatly expanded state grants to voluntary groups, cementing

whatwouldbecomeasymbioticrelationshipbetweenthestateandthesector.36

ICTU’s relationshipwith the CPA developed into a firm alliance. Before the

1989budget,itmetwithCPAand“variousgroupsandorganisationsconcerned

35 CPAprogrammeinCPA1987;“equalimportance”inNoreenKearney,CPA,toNevinICTU,09/09/87,in

ICTUArchive:GS-PA-1a,NationalTalks,1987;deRossainDáil…/01/89;GeraghtyinICTUADC1988:5836 PNRIV(6);‘Pre-BudgetForumonSocialWelfare’,25/11/88,GIS:D/SW;ICTUseeks“advisorybody”in

CassellsICTUtoÓhUiginn,28/02/89,DTA:S25857-R;D/SW,‘EstablishmentofanAdvisoryBodyonSocialWelfare’,indocumentsfor14thCRCmeeting19/04/89,DTA:S25857-R;CRC,‘SummaryReportof14thmtg.’,19/04/89,DTA:S25857-R;O’Sullivan,CRC,toColmO’Neill,D/SW,24/05/89,andCRC,‘SummaryReportof15thmtg.’,18/05/89,DTA:S25858-S;ColmO’Neill,D/SW,toO’Sullivan,SecttoCRC,D/Taoiseach,31/01/89,DTA:S25858-O;‘ASt.VincentdePaulBudget!’,LabourComment,04/02/89;onstatefundingofvol.organisations,‘SaintVincentdePaultocreate1,000Jobs’,n.d.[January1989],GIS:D/SWandMangan,I.,1993:79

253

with poverty and low pay” to agree a joint “Anti-Poverty Campaign”. The CPA

coordinated the sector’s input and ICTU brought this to government through

socialpartnership.TheICTUandCPAhostedajointconferenceonpovertyand

unemployment and ICTU’s own budget submission included many CPA

proposalsfortacklingpoverty,includinganationalanti-povertystrategy.37

Aswith thenewcommunity role inurbanregeneration,Haugheywelcomed

the inclusion of campaigning groups in social policy making through social

partnership. While this was the start of this new sector’s role in the system,

reinforcing the shift to a social policy compensatory focus, it also benefited

government by providing new policy input to rectify system dysfunctions. Its

involvement initiated the overhaul of thewelfare state that, through the 1990

PNRreviewprocess,wouldformakeyelementofthefollow-onPESPagreement.

Socialcompensationsandstatemodernisation Besides local economic development and welfare state reform, other PNR

inputswhichcombinedsocialcompensatoryandstatedevelopmentalfunctions

included the reform of tax enforcement, the black economy and business

regulation. Since the 1979 tax revolt, tax reform, as variously interpreted, had

remainedhighonthepoliticalagenda.BesidescorePNRcommitmentsreducing

taxesonworkersandbusinesses, the ICTUandNESChadstressed theneed to

achieve tax “equity” by extending the tax base and combating evasion among

privileged groups such as farmers, the professions and self-employed, and

improving regulatory compliance generally. Finance had disputed many of

ICTU’s demands but government conceded legal reforms, expanded Revenue

powersandnewinstrumentsforcomplianceenforcement.38

The full extent of tax evasion was later revealed, not least widespread

registering by citizens as “non-resident” for tax purposes and use of offshore

accounts. Government surprised many by honouring its PNR commitments,

expanding Revenue’s powers in 1988 and changing regulatory controls to

improve compliance. Systemic tax dysfunction led to MacSharry’s 1988 “Tax

37 ICTUECmtg.15/02/89,item160;Callanetal(ESRI)1989;ICTUbudgetproposals,ICTUSpec.ECmtg.

30/01/89,item1584;ICTU1989b38 PNRIII(3)-(5),(9)-(15)

254

Amnesty”which enabled evaders avoid penalties by settling liabilities, netting

£200m.FarmerswereforthefirsttimemadeliableforPRSIonthesamebasisas

theself-employedandcompanylawondirectors’responsibilitieswasreformed

asinitiallyplannedbythe1980scoalition.Establishingthenewsystemsproved

slow,butacomprehensivereformwasbegun,unionleadersevendefendingthe

amnestyas“vindicate[ing]totally”theirclaimsontheextentoftaxevasion.39

Partnershipshieldedgovernmentpoliticallyinimplementingtheseunpopular

reforms, presented as ICTU’s price for partnership. But the modernisation

process greatly benefited the state both in revenue terms and institutional

credibility.MacSharry,announcingthemeasures,saidthe“scandaloftaxdefault

andtaxevasionmustend”:“Thereisagrowingfeelingofconfidencethatafairer

and more effective system is possible” and “the present year will be seen in

retrospect as a turning point in our efforts to improve our tax system”. The

tougherregulatoryregimewasofakindwithcabinet’srejectionofasecretretail

model for the IFSC. Though the tax system would later be further tightened,

makingitaninternationalmodel,thiswasanotherareawherethedecisiveinitial

stepstowardsreformandmodernisationwereinstigatedunderthePNR.40

ThemodernisingfunctionofthePNRwasalsoreflectedin itstacklingofthe

endemic “black economy”. When the CIF announced its withdrawal from a

monitoringbodysetupunderthePNRforitsindustry,governmentpressuredit

to remain, “in the interests of thePNR”, by threatening to tighten tax rules on

public contracts if it didn’t. TheDepartment of Labour’s inspectoratewas also

strengthenedandparticularlytargetedillegalpracticesinthehospitalitysector.

Therewasconsiderableresistancetothis,“amajorproblem”beingthat“thefull

co-operationoftheemployeeisneededandthisisnotalwaysforthcoming”.The

PNRneverthelessbegantherollingbackofthelargeillegaleconomy.41

Contrary toa commonperceptionofHaughey’sgovernmentas inaugurating

an era of “light-touch regulation” and “corruption”, the PNR in fact heralded a

39 Reporter(LGPSU),June198940 MacSharry‘AddressatlaunchofInstituteofTaxation’s1988/89SummaryBooklet’,20/10/88,GIS:

D/Finance;onIFSCtaxationdebate,seechapter641 OnCIFthreattowithdraw,CassellsICTUtoÓhUiginn,25/04/89,andÓhUiginntoTomReynolds,

DirectorGeneral,CIF,27/04/89,DTA:S25857-R;onD/Labourenforcement,D/Labour,‘NoteonEnforcementofHotelsandCateringEROsandtheProtectionofYoungPersonsEmploymentAct,1977’,attachedbyBonner,D/Labour,toTeahon,D/Taoiseach,08/09/89,DTA:S25857-V

255

turntowardsasignificantlytightenedregulatoryregime.Indeed,asiftodispute

the popular view, ex-Finance Minister Charlie McCreevy, in an injudicious

statementshortlybeforethe2008crash,claimedthatitwasonlyfrom1997that

Irelandmovedfromahighregulatoryenvironmenttoaregimeof“lowtaxation,

light-touchregulationandopenandflexiblemarkets”.42

Irishmodel:astate-dirigistegloballyactivemixed-economy

In summary, by spring 1989 the contours of the emerging “Irish economic

model”werebecomingapparent.Thiswasshapedbyaconfluenceofexogenous

influences, opportunities and constraints and how these interacted with the

policiesofanactivistgovernment,autonomouseconomicdevelopmentandthe

constraints,agendasandconstituencypressuresofsocialpartnership.

TheexogenousopportunitieswerefirstandforemosttheemergenceoftheEC

SingleMarket,thoughuntilmid-1989thiswashesitantanddisputed,withtheEC

Council prevaricating on fully committing to it. The contested Delors Plan

nevertheless calmed markets, halted inflation and stabilised interest rates,

providinganidealenvironmentforanactiveinterventionistIrishgovernment.

The Haughey government early identified the opportunity the European

development presented, not only the potential through EC “convergence”

strategy for infrastructure modernisation, but also by exploiting the putative

singlemarketnotprimarilyforexportsofgoodsandservices–thoughalsothat-

butasalevertopositionIrelandastheprimeentrypointforglobalcapitalinto

it.ItthuspursuedadualstrategyofECinvestmentandpre-emptivelyopeningto

capitalmovement,aligningcloselywiththepro-integrationistpowersatEClevel.

The PNRhad assumed the primary driver of an industrial and employment

recovery would lie in selected large-scale indigenous industries supported to

attaininternationalcompetitiveness.Thetravailsofthebeefindustryhastended

toobscuresuccessesachievedby1989inotherareasofthisstrategy,intourism,

forestryandtimber,thearts,dairyfoods,marine,horticultureandconstruction.

Successful internationally trading indigenous companies emerged for the first

time,thoughgrowingmorebyexploitingtheopportunityofcapitalopening,with

42 “commonview”,e.g.FintanO'Toole,‘ThecorruptionofIrishbankinggoesback30years’,TheIrishTimes,

24/10/2017;McCreavyin‘Foreword’toPower2009:xviii

256

their employment impact “disappointing”. The initially secondary, quality-

driving role envisaged for FDI – of which Haughey’s close circle remained

sceptical – was soon seen to have been “misplaced” as FDI “surged” past

domestic industry in growth and employment. Policy switched to exploit this,

targeting specific FDI sectors. At the other end of the spectrum, small-scale

ventures,initiallynotprioritisedinnationalstrategy,alsoproveda“surprising”

success sector, and by early 1989 policy also began to change to support this.

The third success were the semi-states which, freed to expand commercially,

enjoyedrapidbusiness,thoughalsonotemployment,expansion.

Socialpartnershipprovidedbothastableeconomicenvironmentattractiveto

investors in both its medium-term planning and intangible capital inputs,

establishing historically unprecedented wage certainty and social peace, and

boosting labour quality through a host of state-subsidised social, educational,

labourmarketaccess,regenerationandproductionmodernisationprogrammes.

Theneweconomybeinggeneratedthroughtheconfluenceofopeningglobal

opportunitiesandstateactivismwasamixed-economymodel,characterisedby

anactiviststatesectorandalevelofstateinterventionistdirigismeoftheprivate

sectorwhichanI&Cofficialdescribedashardlyshortofsocialistplanning.The

falloftheBerlinWallinNovember1989andfurtherglobalopeningarisingfrom

itwoulddriveafinaleconomicstrategychangein1990,examinedinchapter11.

But the combination of late-industrialisation restructuring, demographic

labour-forcepressuresandglobalisingexpansionmeant that as the jobsof the

future began to emerge through new-job development in often entirely new

sectors,closures,under-andunemployment,obsolescentskillsandsociallyand

geographically concentrated long-term unemployment presented a growing

challenge. Social partnership responded with social-compensatory strategies.

Ratherthanpassiveamelioration,theunemploymentcrisis,whichwasaccepted

would last several years,was used to initiate innovative programmes in areas

such as welfare expansion and institutional reform, local development, urban

regeneration, community enterprise, educational access and training. A

transformation of the Irish welfare state towards an enabling labour and

enterprise-activatingdevelopmentmodelwasthusalreadybegunby1988.

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Part4:

Consolidation,1989-92

258

Chapter10

InstitutionalisingSocialPartnership,1989-91Haughey’scommitmenttopartnershipasa“permanentsystem”

During the first 18 months of the PNR, as analysed in Part 3, its principal

stakeholders–Haughey’sWayForwardcircleandtheCII/ICTUpro-partnership

leaders – saw themselves as initiating a radical transformation. Programme

deliveryhadbeenmanagedwhileminimisingconflictthroughtheCRCordirect

political exchange. Major divisions had been avoided as system consolidation

was prioritised. Less committed stakeholders - employers, farmers and some

unionleaders-hadactedmoreininterest-defencethanpolicy-innovationmode.

Thesecond18months,fromtheformationoftheFiannaFáil/PDcoalitionin

July 1989 to the signing in February 1991 of the successor Programme for

EconomicandSocialProgress (PESP), is thesubjectofPart4. Itwasaperiodof

high drama and unionmobilisation, involving no fewer that two ICTU annual

conferencesandthreenational“specialdelegateconferences”.Thepoliticaland

institutionaldynamicsdrivingprogrammedelivery remainedsimilar tobefore,

butaunionrevoltin1990threateningtoendthesystemhadfirsttobecarefully

managed through a programme “review”, ultimately requiring significant

adjustmentstothePNR.Thiswasfollowedbyaconflictoverthefutureofsemi-

state industries which had the potential to derail the agreement. How these

criseswereresolved,andtheirconsequences,demonstratedthatthepriorityof

theprinciplestakeholderswastomaintainandconsolidatesocialpartnership.

During the1989election,FiannaFáilwasheavilycriticised for its “austerity

policies”,particularlyinhealth.LabourandthePDsalsomadea“goldencircle”of

businessmen allegedly corruptly benefiting from public policy through close

association with Haughey a central election issue. This began with Barry

Desmond’s assault on fraud in thebeef industry, though this relatedmostly to

events in theGoodmanGroup thathadbegununder thepreviousgovernment.

259

The favouritism shown particular companies, including Goodman, was also

notablyakeyNESC/PNRstrategy,thoughnowattackedas“cronycapitalism”.1

The Fianna Fáilmanifesto committed to continuing the PNR and upholding

the NESC/CRC system, adding new policies, such as on tackling long-term

unemployment, from proposals that had emerged from the CRC. It advocated

alsofollowingthePNRwithasuccessoragreementandforthesystemtobecome

“apermanentwayofmanagingouraffairs”.Labourproposedanalternative ill-

defined“statutory”systemof“consultative,flexibleandde-centralised”planning,

FineGael“aconcerteddevelopmentprogrammefor1992”,with“arrangements

…toinvolvethemajorpoliticalpartiesandsocialpartners”.Thesewouldconsist

of a “Select Committee” of politicians joined by NESC partners in a “National

Forumfor1992”,whilepaywouldbenegotiatedseparately“inaccordancewith

existing procedures”. Decisions on policy would be solely a matter for

government. Any of these opposition party proposals, if implemented, would

havecollapsedthesocialpartnershipsystemcreatedin1987.2

FiannaFáilreturnedwith77seats,down4,FineGael55,up4,Labour15,up

3,theWorkers’Party9,up6,andthePDsjust6,down8.Withthisoutcome,Fine

Gael,whosepre-electioncoalitionpactwith thePDs lackedsufficientnumbers,

nevertheless declined to renew its “Tallaght Strategy” and Labour declared

againstcoalitionorsupportingaminoritygovernment.TheDáilre-convenedon

29 June and with the PDs fearing extinction in a re-run election, a FF-PD

coalition,clearlytheonlyoption,wasformedaftertwoweeks’negotiation,with

HaugheyagainTaoiseach.ItsProgrammecombinedthetwoparties’manifestos,

withHaugheymakingacontinuationofsocialpartnership,regardlessofthePDs’

declaredhostility to it, his onlynon-negotiable condition.The first pageof the

PfG committed to “fully honour” the PNR, secure a successor agreement and

“buildsocialconsensusintoapermanentwayofmanagingouraffairs”.Thiswas

furtherevidenceofHaughey’soverridingcommitmenttosocialpartnershipasa

permanentinstitutionframingsocio-economicstrategyandpolicy-making.3

1 RyleDwyer1992:135-6;Desmond2000;PDposition,O’Malley,D.2014:178-802 FiannaFáil1989b;Labour1989;FineGael19893 ProgrammeforGovernment,PD1989;PDchoices,O’Malley,D.2014:181-4

260

But social partnershipwas far from achieving institutional equilibrium. The

weekthePfGwasbeingnegotiated,ICTU,meetingatitsannualconference,wasa

housedivided.Withtheprospectofa“right-wing”FF-PDgovernment,anti-PNR

unionsexploitedICTUvulnerabilitytomobilisesentimenttoendthePNR.

ICTUandprogrammedelivery:theleveragingofdiscontent Pro-partnershipunionleaderswereasdeterminedasHaugheytoseethrough

thePNRandestablishpartnershipasapermanentsystem.Giventhe“rightwing”

majority in theDáil and theweaknessof thepoliticalLeft, despite its electoral

advances,theyargued,thePNRwastheonlymeanstoadvancethetax,welfare,

industrial and social policies and protection of state industries themovement

sought.Buttheyalsoproposedanunderpinningofpartnershipthrougharadical

restructuring of unions, with amalgamation into fewer larger organisations, a

strengthenedCongressasits“generalstaff”,biennialpolicyconferencesinplace

oftheusualannualconferenceset-piecesandre-basingunionpoweronworkers’

participation, at national level through the NESC and CRC, and in companies,

forminganewunionismtoreplace“out-dated”confrontationalrepresentation.4

These reform proposals reflected the ICTU’s 1975 Schregle report and

reformsproposedbypoliticaleconomistssuchasHardimanasprerequisitesfor

effectivecorporatism.OutsidethearenaofCongress,preparationsforwhatICTU

calleda“waveofamalgamations”werealreadywelladvanced,especiallyamong

pro-partnershipunions.Conferencenoddedthroughthereformplanwith little

debate but, reflecting wariness at enhancing Congress’s powers, also adopted

motions contrary to its spirit, defending the autonomy of trades councils,

rejectingenhancedpositiveactiontoincreasewomen’sunder-representationin

unionstructures,anddeferringtheproposedmovetobiennialconferences.5

ButitwasrancouroverthePNRthatmoststarklydividedopinion.Theline-

up was the traditional 2:1 divide over confrontation versus cooperation, free

bargainingor“classcollaboration”,withlargelythesameunionsoneitherside.

Specificissues,usuallyofadivisivepoliticalnaturesuchasthewagesstand-still

4 “right-wingmajority”,ICTU1989dandICTUADC1989:45;re-organisationplan,ICTU1989e5 Schregle1975;Hardiman1988;“waveofamalgamations”,ICTUAR1991:2;amalgamationplans,Devine

2009;Maguire1998,2010,2017;motions,ICTUADC1989;ICTU1987b

261

orderof1941or the ITGWUchangingsideson the1976NWA,hadalways the

potentialtoreversethe2:1divide,changingthemajoritypreference.

HavingfailedtopreventthePNR,in1989anti-agreementunionsandtheLeft

mobiliseddiscontentovervariousissuestoachieveacriticalmasstooverturnit.

These ranged from PNR constraints on pay bargaining in strong sectors to its

poor jobs performance and industrial relations and apprenticeship reforms.

Several straight anti-PNR motions were easily defeated, but the British-based

journalists’ union, a rather privileged group, following a similar but failed

“premature”attemptbyitthepreviousyear,proposedatacticallyastutemotion.

With thePDsnow inpower, it argued, a “SpecialConference” (SDC)within six

months should be held to “consider withdrawal” from the PNR should its

commitmentsnotbehonoured.Thisstruckachordwithmanydelegates,being

adoptedby139:125against thepleasof ICTU leaders that suchamovewould

representabreachoftrustandexcludeunionsfromfuturepoliticalinfluence.6

Dáil opposition parties fanned the flames of union discontent, Spring and

Rabbitte taunting Haughey that the vote on withdrawal demonstrated the

“obvious failure”of thePNRandgave the lie to “thisconsensus…he is talking

about”. JustasHaugheywasnegotiatinga coalitionprogramme, theLeft in the

Dáil not only sought to undermine social partnership – in anyother country a

left-wingcause–butalsoCongress’sstrategyandcredibilitywith itsmembers.

But ignoring thisbetrayalby thepoliticalLeft, ICTUcongratulatedHaugheyon

becomingTaoiseachandsoughtanurgentmeetingwithhimtoensuretheCRC

was“retainedandusedtobestadvantage”.Ajointgovernment-ICTUstatement

followedthemeeting,re-affirmingthePNRanditsNESC/CRCgoverningsystem.7

But leveraging its internal dissenters, ICTU turned its conference defeat to

advantagebyusingtheloomingspecialconference,scheduledforearly1990,to

accelerate programme delivery. Whenever government took steps it opposed,

suchas assistingRyanair at the expenseofAerLinguswithout consulting it, it

warnedthatit“willshortlybereviewingitsparticipationintheProgramme”and

“thesedecisionsandthemannerinwhichCongresswastreated”did“notauger

6 ICTUADC1989:50-55;“premature”,Dooley2019:1687 Spring/RabbitteinDáil10/07/89;CassellstoTaoiseach,13/07/89,DTA:S25281-E;‘JointGovernment-

ICTUStatement’,25.07.89,GIS:D/Taoiseach,

262

wellforafavourableoutcometothatreview”.Intherun-uptotheSDC,itbecame

ever more aggressive on the CRC, complaining of government failures on job

creation and obstruction by Finance and other departments. One civil servant,

bewailing ICTU’s truculence,notedhowwhen theCRC JobGroup’sReportwas

beingcompiled,ICTU,“apartfromsuggestinganexpandedroleforStatebodies”,

haddisengagedand“playedonlyaminimalpartinframingtheproposals”.8

ButHaughey’sreputationdependedonthePNR,andministersacceleratedits

delivery to re-assure ICTU. In autumn 1989Ahern finally launched theHealth

and SafetyAuthority, announced a schedule of labour law reform and assured

ICTUofaunion-friendlyagendaundertheIrishECPresidency,anECprogramme

onlong-termunemploymentbasedontheCRC’sproposalsandIrishsupportfor

theEC“SocialCharter”.ButFinance’soppositiontomanyCRCproposalswhich,it

said,“inthespiritofconsensus”ithad“refrainedfromindicatinguptonow”,was

nonethelessreal.Inaninterventionperhapsreflectingamorebullishattitudeat

FinanceunderAlbertReynolds,itssecretary,SeánCromien,upbraidedÓhUiginn

fornotopposingCRCproposals,especiallyonexpandingtheSES,asathreatto

budget discipline, towhich “the response of themarkets [would be] swift and

severe”. The key to jobs growth, he opined, was lower taxes which “in turn

requiresthegreatestdisciplineinpublicexpenditure”.9

Congress took the offensive, telling Haughey that a PNR “mid-term review”

and “Progress Report” were essential to head off opposition at their special

conference.Haugheywillinglyconcededthis,againstressinghisdesirealsofora

successorprogramme.10ICTUusedthepromised“review”toleverageadditional

measures on unemployment, tax and social equity. Cassells told government

8 “shortlybereviewing”,CassellstoÓhUiginn,21/09/89,DTA:S25857-W;‘Sub-GrouponJobCreation.

DraftReporttoCRC.Sept,1989’,DTA:S25857;ICTUinput,CRC,h/wnotesof19thmtg.,19/10/89,and“minimalpart”,D/Taoiseach,internal,O’Sullivan,E&SPolDiv.,toÓhUiginn,‘Re:ReportofSub-GrouponJobCreation’,18/10/89,DTA:S25857-X

9 OnAhern’sinitiatives,‘Ministerannouncespackageofmeasuresforemploymentcreationandhelptothedisadvantaged’,27/09/89,GIS:D/Labour;W;‘AhernlaunchesProgrammeofEventsoftheInstituteforPersonnelManagement’,29/09/89,GIS:D/Labour;Ahern,‘SpeechatlaunchofNationalAuthorityforOccupationalSafetyandHealth’,02/10/89,GIS:D/Labour;‘LongtermunemployedtobepriorityfortheIrishPresidency’,20/10/89,GIS:D/Labour;INOUBulletin,Nov89;ICTUECmtg.20/12/89,item1803;ICTUAR1990:66;Ahern,‘SpeechatSeminar‘UnitedStatesofEurope’,22/09/89,GIS:D/Labour;“refrainedfromindicating”,D/Taois.,O’SullivantoÓhUiginn,‘Re:ReportofSub-GrouponJobCreation’,18/10/89,DTA:S25857-X;CromientohUiginn,28/11/89,DTA:S25857-Y

10 ICTUECmtg.15/11/89,item1776.ICTUArchive,ECminutes;HaugheytoCassells,01/11/89,DTA:S25862-D;D/Taoiseach,O’SullivantoSecretary[ÓhUiginn],08/11/89:‘Re:MeetingwithRepresentativesoftheExecutiveCouncilofICTUon8Nov.,1989’;Haughey,Dáil,24/10/89

263

officialsthatCongress“acknowledgedthesuccessoftheProgrammeinmeeting

the targets agreed” but it was essential to be able to demonstrate that it was

succeeding.Hediscouragedtalkofasuccessorprogramme“atthisstage”,saying

the “review” must include new measures to ensure “soaring profits” were

“translated” into jobs, profit-sharing and further tax reform. Government

concededtherewasscopetoexamine“whatimprovementscouldbemade”.11

BeforemeetingHaughey, ICTU issuedawidelyreported30-pointdocument,

Sharing theBenefits, seeking newmeasures. “Tax reform and the reduction of

povertymustbemovedto thetopof theagenda”, itsaid,andbudgetdecisions

woulddeterminetheoutcomeofitsconference.Reflectinginternalpressureson

localpay,itcriticisedemployer“inflexibility”.Whilenotseekingarestorationof

localbargaining,itsuggestedamendinglegislationonprofitsharingso“workers

couldshareinthe‘enormousprofits’beingmadebysomecompanies”.12

AllayingfearsthatICTUwaslosingitsauthority,ÓhUiginnadvisedHaughey

that “what is in question is a review of progress, not a re-negotiation”, but

governmentshouldconcede “newactionsormeasuresconsistentwithexisting

targets and commitments”. Haughey agreed and Finance conceded it was “of

courseamatterforGovernmenttodecide”.Financewasanequalopportunities

enforcer,havingalsowarnedagainstprojectsproposedbyotherpartners,such

asCII’s internationaleducationproposal.ÓhUiginnremindedHaugheythat“as

positive as possible” a Progress Report would “be a key element in the ICTU

conference on withdrawal” where leaders would “want to be able … to

demonstratemoreprogressonjobsandonthetax/wagerelationship”.Haughey

assuredICTUofhiscommitmentsonthis,andagreedtopressstatecompaniesto

accelerateexpansionplans,expandSESandtrainingprogrammes,discusshistax

and other plans with ICTU before the budget, and not publish the “Progress

Report”untiljustafterthebudgetandbeforeCongress’sSDC13

11 ‘CRC.ReportofBilateralMeetingwithRepresentativesoftheICTUon8Nov.1989’,“forcirculation

officialsideonly”,DTA:S25862-D;‘ICTUrapsfailuretocreatejobs’,CorkExaminer,09/11/8912 Sharing,ICTU1989f;“workerscouldsgare”,II,24/11/89;AlsoITandDailyStar,24/11/89,ICTU‘ANew

PhasefortheProgrammeforNationalRecovery’,PressRelease23/11/89,ICTUArchive,PN-113 Secretary[ÓhUiginn]toTaoiseach.‘Subject:MeetingwithICTU’,23/11/89,D/Finance‘Noteon

AssessmentandCostingofVarious“Employment”ProposalsSubmittedtotheCRCSub-Group’,21/12/89,(Internal)O’SullivantoSecretary[ÓhUiginn],‘AgendaItem5:ReportoftheWorkingGrouponIrelandasanEducationCentre’,20/12/89,DTA:S25857-Y;Connellan,CII,toTeahon,‘CRCJobCreationCommittee’,15/01/90,andCII,‘ProposaltoCreateAdditionalThirdLevelPlacesinPrivateEducationalInstitutions’,DTA:S25857-Z1;“remindedHaughey”,SecretarytoTaoiseach.‘Subject:

264

ICTUandCIIproposalswerenowprogressed,ÓhUiginntellingCromienthat

government was “obliged to consider them”. Employer leader John Dunne,

emboldened by Finance’s stance to initially also oppose the SES proposal,

relented,agreeingtoendorseitonce“theprivatesector[was]notpickingupthe

tab”. Government moved to resolve other issues. An inter-departmental

committeeproposedthatemployersbepressedtomeetICTU“concerns”onlocal

pay “flexibilities” by expanding profit sharing schemes, that the budget amend

regulationsforsuchschemes“inthecontextofbridge-buildingbetweenthePNR

andafurtherProgramme”,andthatGovernment“facilitate”theintroductionof

the39-hourweekinthepublicservice.Theworkinghoursagreement,which,as

has been seen, had stalled in 1988,wasnow implemented, re-framed as a 39-

hourweek,witheventheprivatesectoralsoagreeingtoproceedonit.14

In January 1990 a wave of initiatives followed in industrial policy, tax and

welfare, profit sharing, education, unemployment, joint ventures by state

companies, and construction and forestry contracts. The “black economy”

monitoringgroupwasputonapermanentbasis,employersagreedtoconsulton

“anomalies in private sector pay”, pension and health service reforms were

initiated,andtalksbeganonparent-teacherratios,workerparticipationandthe

rightsofdisabledpeople.Haughey confirmed “Ireland’s full support [at theEC

summit]totheadoptionofthe[Social]Charter”,concededaCRCrequestforNDP

monitoringcommitteestoelecttheirownchairsinplaceofFinanceappointees,

and agreed with Delors a special scheme for Irish semi-states to provide

technicalassistancetoemergingEastEuropeaneconomies.TheCommissionon

theStatusofWomenwasannounced,a“framework”fortheIndustrialRelations

Bill published and the public service reduction programme ended, Haughey

telling the Dáil it had been “a necessary reformwhich is now over”. The CRC

receivedastreamofupdatesongovernmentactiononCongress’s“30points”.15

MeetingwithICTU’,23/11/89,and“Haugheyassured”,ReportofMeetingofTaoiseachandMinistersforFinance,I&CandLabourwithRepresentativesofExecutiveCouncilofICTU’,24/11/89,DTA:S25857-Y

14 “obligedtoconsider”and“pickingupthetab”,ÓhUiginntoCromien,SecD/Finance,28/11/89,andh/wnotesof‘CRCon16/11/89’,DTA:S25857-Y;“Governmentmoved”,‘ConclusionsofInter-DepartmentalCommitteeMeetingon8December1989inrelationtoPoint12inICTU’s30PointPlan’,DTA:S25857-Y;ICTUAR1990:51;‘PNR.CRC.ProgressReport.PreliminaryDraft’,Nov.1989,DTA:S25857-Y;h/wnoteJimO’Brien,FIE,‘Observations[ondraftCRCProgressReport]’,n.d.,DTA:S25862-F

15 PatriciaO’Donovan,ICTU,‘ResponsesfromGovernmentDepartmentstoProposalsintheICTUDocument‘SharingtheBenefits’’,05/01/90,ICTUArchive:PN-1;h/wnotesofInter-Departmentalmtg.of

265

At ICTU’s “confidential” pre-budgetmeetingswith theMinisters for Finance

andSocialWelfare,CassellstoldDr.MichaelWoodsthatICTUdemands“should

beseeninthecontextoftheforthcomingSpecialDelegateConferencetoreview

continued participation in the Programme”, with the budget “an input to that

review”.WoodsassuredhimICTUpositions“wereregardedas‘core’views”and

thathewouldimplementallCommissiononSocialWelfarerecommendationshe

could.Justbeforethebudget,ICTUagainmetthecabinetleaders,stressing“the

link between the Budget and continuation of the Programme”. Reynolds,

expressingthegovernment’sdesiretocompletethePNRandagreeasuccessor

programme,saiditwasessentialthat“successnot[be]thrownaway”.16

The extraordinary pace of government action in response to ICTU pressure

justbeforeitsspecialconferenceshowsthedeterminationofbothunionleaders

and theHaughey government for the PNR to succeed. After the budget,which

satisfied Congress with further improvements in tax, welfare and other areas

while remainingwithinmonetary targets, a succinct PNRProgressReport was

signedoffbytheCRCadaybeforetheICTUconference.Listingprogressonall

commitments,notably40,000newjobscreatedinPNRtargetindustriesin1987-

88followingyearsofcontraction,it judgedthePNRtobeachievingand,ontax

andjobcreation,“overachieving”itsaims,andextolledtheCRCasa“mechanism

uniqueintheEuropeanCommunity”enabling“thesocialpartnerstohaveanon-

going input into Government decision-making on economic and social policy”.

ICTU also published a separate, more critical review of its own, outlining the

PNR’s“Strategy”butalsoits“Shortcomings”,andcirculatingbothitsownandthe

CRCreportstoitsconference’sdelegates.17

04/12/1989,DTA:S25857-Y;ICTUECmtg.17/01/90;HaugheytoICTU,‘SocialCharter’,n.d.(January1990),inICTUAR1990:66;onDelorsinitiative,Haughey,‘Statement’,04/12/89[meetingwithsemi-statecompanies],inGIS:Dept/Taoiseach,andonSCSW,Dáil07/11/89;Ahern,‘IndustrialRelations:FrameworkforthefutureIndustrialRelationsBill1989published’,07/12/89,GIS:D/Labour;D/Finance,‘Point4ofICTUdocument–PublicService’[Nov.89],DTA:S25857-Y;HaugheyinDáil,15/12/89;departmentalresponsestoSharingtheBenefitsinDTA:S25857-Y;‘IndustrialPerformance’,ICTUAR:59-61;D/I&CtoO’Sullivan,13/12/89,‘Reviewofindustrialperformance’,DTA:S25857-Y

16 ‘CRC.SummaryReportof22ndMeeting,16January1990’,DTA:S25857-Z1;‘Confidential.MeetingbetweenMin/SocialWelfareandICTU,18January1990’,DTA:S25862-F;Cassells,‘BriefingNoteforMeetingwithGovernment-23January1990’,ICTUArchive:PN-1;‘’BriefingMaterialforMeetingbetweenTaoiseachandMinistersforFinance,I&CandLabourwithrepresentativesoftheExec.CouncilICTU’,23/01/90,‘PositioninRelationtoICTU30PointPlan’and‘ReportofMeetingofTaoiseachandMinistersforFinance,I&CandLabourwithrepresentativesofICTU,23January1990’,23/01/90,andh/wreport,‘ICTU-Government.meeting’,23/01/90,DTA:S25862-F

17 CRC,PNR.ProgressReportoftheCRC,Feb.1990;ICTU1990b;O’Sullivan,D/Taoiseach,toKieronO’Carroll,Govt.SuppliesAgency,21/01/90,andh/wnote,notitle,n.d.,circulationlist,DTA:S25862-F

266

Who’s“Left”?ICTUanditsrebels

The union divide over partnership was reflected on the ICTU Executive in

conflictsoverhowtoapproachthespecialICTUconferenceof8February1990.

Pro-partnership leadersemployedeverymeans tosave theagreement.Topre-

empt an anti-PNR opposition “withdrawal” motion, the Executive’s “General

PurposesCommittee”(GPC)proposedthattheExecutivepresentamotionofits

own that ICTU remain in the PNR but under instruction to “ensure that

commitments…arefullyimplementedbytheendoftheyear”andauthorisedto

takeappropriateactionshould thisnot succeed.Thestarkdivisionswithin the

ICTU Executive were reflected in a full seven of its 27 members absenting

themselves fromthemeetingdebating thisproposaland in thebitterdivisions

among those present. Of the 20 who attended, just 11 – a majority of those

presentbutaminorityofthefullExecutive-backedtheGPCproposal.18

Having barely secured this mandate to even put a motion to conference, a

furthercrisisarosewhenitemergedthatmajoranti-PNRunionswereplanning

to attend the conference with delegations representing their full North/South

membershipstodefinitelytipthebalanceagainstthePNR.Fewsouthernunions

apart from the ITGWU and INTO had northernmemberships, and those were

quite small, but eleven mostly British-based and craft unions, including the

largest anti-PNR ones, had substantial northernmemberships.While Congress

rulesdidnotprecludeNortherndelegatesattending,theGPCargued,thiswould

breach ICTU traditions of non-involvement in matters relating purely to one

jurisdiction, and threaten to split the movement “at the border”. Following

heated debate on the Executive and attempted tactical amendments, a GPC

motion that unions be “requested” to send delegations representing their

Republic-basedmembersonlywaspassedby13to4,againamajority,but,with

many absentees and abstentions, a minority of the Executive. The GPC had

arguedthatitspositionwasintheinterestsofthe“commongood”ofpreserving

the“national”unityofthemovement,butitalsothreatenedthat“intheeventof

any Union not agreeing to this request” the Executive should consider

postponingtheSDCaltogether.Thata“majority”,howevertight,wassecuredfor

18 ICTUSpecialECmtg.01/02/90,item1830.ICTUArchive:ECminutes

267

this GPC proposition was due to several key Northern leaders who, while

stronglyopposingthePNR,sharedtheCPIperspectivethatprioritisedall-Ireland

tradeunionunityaboveallelse.TheGPCpositionwasahigh-stakesultimatum

that demonstrated the utter determination of SIPTU and the public service

leaderstocontinuewithsocialpartnership.19

Thedaybeforethespecialconference,theExecutivereconvenedinwhatthe

presspredictedwas“settobeastormyaffair”.Cassellshadcontactedtheeleven

relevantunionswiththeExecutive’s“request”,andmosthadcomplied,butfour

with large cross-bordermemberships refusedas, alone among trades councils,

did the “Trotskyist”-ledDerryCouncil.Amotion fromKieranMulvey (ASTI) to

nowpostpone theconferencewasputand lost,butasolutionproposedby the

GPC to bridge the divide succeeded. This suggested that the conference be

opened by John Freeman, leader of the anti-agreement ATGWU but a former

Congress President committed to all-island union unity,who, speaking for the

Executive,wouldformallyrequestNortherndelegatesattendingnottovote.20

HaugheyaddedhisweighttoassistthebesiegedICTUleaders.Describingthe

PNRas “a newand sophisticated formof economicmanagement” as “found in

manyContinental countries”, drivingprogress towards “living standards and a

qualityof lifeenjoyedbymostofour[EC]partners”,hesaid itwas“difficult to

understand…why therewouldbeanyattempt toundermine it”, andmadean

impassionedpleaforitscontinuation.ThePNR’s“outstandingcharacteristic”,he

said, was that “almost all of its objectives have been achieved, something not

very common with national economic plans here or elsewhere”. The press

editorialised in favour of the agreement and reported final concessions by

governmenttoteacherunionsonparent/teacherratios“inabidtosecuretheir

fifteen votes”, and to the public service on a pilot childcare project. Even Dáil

opposition leaders, who had encouraged ICTU’s dissenters before but now

baulkedattheconsequences,urgeddelegatestovotetocontinuewiththePNR.21

19 ICTUSpecialECmtg.01/02/90,item1831.ICTUArchive:ECminutes,andinformationfromformer

NorthernIrelandCPI-affiliatedunionleader20 “stormyaffair”,II,07/02/90;ICTUSpecialECmtg.07/02/90,item1832.ICTUArchive:ECminutes.

North/southdelegationswereMSF,printers(NGA),buildingtrades(UCATT)andbakers(BFWAU)21 “undermineit”,HaugheyinDáil15/12/89;“outstandingcharacteristic”,HaugheyinDáil07/02/90;

“securetheirvote”,II07/02/90;childcareconcession,EH07/02/90;oppositionleaders,Dáil,07/02/90

268

At the conference, the PNR, the press reported, “withstood a massive

onslaught”.Anti-PNRunionssensedafinalchancetoreversepartnershipbefore

it consolidated.Theconfrontationwas rawand,unusually,while recording the

proceedings,ICTUneverpublishedthem.Speakerafterspeakerfromsmall,craft,

andBritish-basedunions,aswellassectionalistonesliketheIMETUandIDATU,

denouncedthePNRasa“sell-out”,advocatingwithdrawalandaresumptionof

“traditional”militancy.While expressed in left-wing rhetoric, their case was a

very material one. “The only solution to low pay is more pay”, achieved by

militancyratherthannationalagreements,arguedone,whileanothercalledfor

“differentials”, “eroded” by central agreements, to be restored. Another

complained that “while … containing wage claims in the private sector”, with

workers “nailed to the cross”, the PNR “provided far greater flexibility in the

Public Service”: ICTU had been “captured” by the public sector, its character

utterly changed. Industrial relations reforms would destroy the basis of the

unionmovement,aswouldremovingcraftunioncontrolofapprenticetraining.22

Pro-partnershipleadersreiteratedtheiressentiallypoliticalcaseforthePNR,

and the need for ICTU to honour agreements. Their own delegations were

mandated to back the motion, though some, not least the then ITGWU, had

supportedthePNR in1987onlybyaslimmajority.But leaderssuchasAttley,

Flynn and Cassells were no less “left-wing” than the PNR’s opponents who

soughttomonopolisesocialistvirtue,andbothsidesarguedtheircaseasinthe

“working class interest”. The PNR, said Flynn, was “modifying the market by

means of a trade union input to social and economic policy”. Attley attacked

sectionalismandan“ideologicalblock”againstpursuinga“nationalconsensus”.

ThePNR’ssocialgainsanditsbenefitsforthelow-paidwereindisputable,with

the tax/pay formula delivering take-home increases of 8 per cent, which for

many could never have been achieved through free bargaining. The ATGWU’s

Mick O’Reilly would later bluntly sum up the “left” position: “Our view of

consensus…isthatweshouldbestrivingforaconsensuswiththeLeft”against

“theconsensusofgovernmentandtheNewRight”.23

22 “massiveonclaught”,IT,09/02/90;quotesfrom40-pp.report,notcirculated,‘SpecialDelegate

Conference.ProgrammeforNationalRecovery,LibertyHall,8February1990’,ICTUArchive:PN-123 ‘SpecialDelegateConference…’08/02/90;“ourviewofconsensus”,ICTUADC1990

269

Freeman’s appeal to Northern delegates attending not to vote was mostly

heeded, crucially in the caseof the largeATGWUandAUE,but thebakers and

MSFrefused.ASocialistWorkeractivistrepresentingtheanti-PNRDerryTrades

Councilurgedall-outopposition to “theTorygovernment” (inDublin!)by “the

organised working-class” but was interrupted mid-sentence by one delegate

asking sarcastically: “is the [northern] delegate speaking on the PNR?” The

Executivemotiontocontinuewiththeagreementonconditionoffulldeliveryby

theendoftheyearwascarried,mainlybySIPTUandthepublicservice,butbya

slim56percentmajority. IfNorthernATGWU/AUEdelegateshadvoted,andif

theCP-ledBelfastCouncilhadattended,itwouldhavebeendefeated.

In oneway, however, the “special delegate conference” (SDC) strengthened

Congress.Despitethedeepdivideoverpartnership,bothwingswerecommitted

tomaintainingunityandnounionleftCongressbecauseofthevote.Therewasa

widespreadifunspokenviewthatthepositionsadoptedbymanyamalgamated

unionswere the result of undemocratic procedures, JohnTierney ofMSF later

admittingtoPádraigYeatesthatmanyofhissouthernmemberswerefrustrated

at the anti-agreement decisions imposed on them. The SDC mandate

strengthenedCongress’sleveragewithinsocialpartnershipandtheinstitutionof

specialconferencesitselfwasreinforcedasademocratic instrument.Following

the SDC, the Executive scheduled another such conference for September to

decideonwhethertoentertalksonafurtherProgrammeand“theissueswhich

shouldbecoveredinanysuchnegotiations”,andyetanotherforFebruary1991

tovoteontheoutcomeof thosenegotiations.ThesystemofSDCsandmember

ballotingrepresentedademocraticparticipationandratificationprocesswhich

Cassellsrightlydescribedas“almostuniqueinEurope”amongtradeunions.24

The February 1990 Special Delegate Conference was the high-point of the

anti-partnershiprevolt,iffarfromtheendofit.Butitconvincedpro-partnership

leaders that if the programmewas delivered the system of social partnership,

withagovernmentcommittedtoitsinstitutionalisation,couldbeconsolidated.

24 ICTUECmtg.21/02/90,ICTUArchive,ECminutes;TierneytoYeates,interview,YeatesPapers;“almost

unique”,ICTUADC1990:33-4

270

Systemconsolidates:localpay,apprenticesandindustrialrelations Themorepragmaticthanideologicalbaseforthewidersupportfortheanti-

PNRLeftrevealedbytheICTUspecialconferencewouldneedtobeaddressedif

socialpartnershipwastosucceed.Somesuchissueswerenot,however,readily

amenabletosolution.Neithergovernmentnoremployerswereyetpreparedto

countenancelocalpay“flexibility”orprofit-sharing,Financewarningthatithad

been the “proliferation” of “so-called productivity agreements” that had

underminedthe1970sNWAs,andtherewasalso“anunderstandablereluctance

amongemployers to introduce…profit-sharing schemes”.Governmentheeded

Finance’s advice, but in its 1990budget did soften the regulations onworkers

redeeming shares under such schemes. More importantly, it also decided to

resolve public pay anomalies and implement the hours-of-work agreement to

counter union discontent. Dates and rates for the deferred phases of special

awardswerenowfinallyset,andimplementationofthe39-hourweekfrommid-

1990wasconcededacrossthepublicservice,withtheprivatesectorfollowing.25

ICTU’spaystrategywastoconsistentlyraiseminimumratesandthroughthe

pay/tax formula achieve income increases sufficient to deflect demands from

strongprivatesectorgroupsforlocal“flexibility”withoutupsettingthisformula.

Italsosoughttodivertlocalunionnegotiatingpowertowardsprofit-sharingand

theobjectivesofthe“newtradeunionism”.CassellsdescribedthisatICTU’smain

conferenceinJuly1990aslocal“flexibility…notjustinanarrow,oldfashioned

sense”, i.e. more pay, but rather participation in company decision-making to

direct profits towards re-investment and job creation”. This “industrial

democracy” approach fell on deaf ears, however, as private sector unions

vehementlyopposedit.Unions,astheysawit,were“losingcredibility”,andwas

localpayflexibilitynotjustthecorollaryof“specialclaims”inthepublicservice?

Companies,theyclaimed,shouldbedividedbetween“profit-makers”and“loss-

makers”, with workers in the former freed to extract greater wages. While

motionsseekingareturntoa“freehand”inlocalbargaining,whichwouldhave

25 On“flexibility”andprofitsharing,D/Finance,‘TreatmentofProfitSharingSchemesunderthePNR’,encl.

withN.T.O’Gorman,D/Finance,toO’Sullivan,D/Taoiseach,21/11/89:‘Re:ICTUmeetingwithTaoiseach’,24/11/89,DTA:S25862-D;onbudgetreforms,publicpayandhoursofwork,LGPSU,DublinHealthServices,BranchBulletin,n.d.[May90],ILHS-Archive:LGPSUBox2;DignamtoSecretary[ÓhUiginn],18/07/90,‘SummaryReportlastMeeting-HoursofWork’,DTA:S25857-Z8

271

ended the PNR,were defeated, several seeking some level of local “flexibility”

within national agreements passed decisively. This was a rejection of ICTU’s

“new unionism” based on “worker participation”, but it was telling that the

desirewas for reform rather than abolition of partnership pay determination.

FutureICTUpaystrategywouldhavetotakethisonboard,anddid.26

IfICTU’srebelswonthisvictoryonpaystrategy,thoughbyreformingrather

thanoverturningit,theylostintwootherareasimportanttosocialpartnership

andnewunionism,whichwonmajoritysupportamongaffiliatedunions.

First was reform of the apprenticeship system from the old craft union-

controlled model towards a Austro-German-inspired systematic state-certified

qualificationsystem.Ahern,withbothICTUandCIIsupportandinput,proposed

a general opening of apprenticeships, certified qualifications instead of “time

served”,thepromotingofwomeninnon-traditionalskills,andsocialpartnership

ratherthanindividualcraftsexercisingoversight.Apprenticeshipshaddeclined

drastically in the 1980s and, after considerable internal rancour, the ICTU

Executivedecidedbyasmallmajoritytosupportthereform.Atthe1990ICTU

conference, craft unions made a last stand, desperately seeking to defend the

indefensible.Followingheateddebate,conferencedecisivelybackedreform.27

SecondwasAhern’sindustrialrelationsreformbill,themostradicalchangein

industrial relations since 1906, designed to eliminate unofficial action and

sectional disputes that closed industries, while strengthening central union

authority. The reformhad been delayed in 1988-89 by government’sminority

position,butAhernnowprogressed it, acceptingmanyamendments suggested

by ICTU.While quibbling overminor points, Congresswelcomed it as amajor

pro-unionmodernisationprovidingthebasisforstableindustrialrelations“well

into the next century” with “none of the extreme characteristics of its British

counterpart”. The proposed conciliation system would prevent disputes

escalatingtoall-outconflict,ICTU’sroleinapprovingall-out-picketswasgivena

statutory basis, and its stipulation of secret ballots for all industrial action

accorded with good union practice anyway. Anti-PNR unions attacked the

26 “newtradeunionism”,ICTU1990g;Cassellsandcritics,ICTUADC1990:45-5727 apprenticeshipplan,FÁS1990;Executivedebate,ICTUECmtg.20/06/90;conferencedebate,ICTUADC

1990:115-8

272

undercuttingofsectionalpower,thecurtailingofpicketingandrequirementsfor

secretballots,andWorkersPartyTDsencouragedoppositionbystokingfearsof

wide-scalecourtintrusionintodisputes,butaswithapprenticeshipreform,they

weredefending the indefensible andwereagaindecisivelydefeated.Claimsby

sectional unions that the bill would “emasculate the collective power of this

movement”byconstrainingsympatheticaction,withworkerssaying“wemayas

well not be in unions”, fell on deaf ears. Itwas certainly true that aswith the

apprenticeshipbill, thereformwoulddestroymuchofthearmouryofsectional

unionism,butitenhancedthepositionofthegeneralworkforceand,apartfrom

notconcedingstatutorytradeunionrecognition,metmostICTUdemands.28

The disruptive power of anti-PNR unions was weakened further by the

Executivedecidingtorestrictvotingonfutureagreementstotherepresentatives

ofmembershipsdirectlyeffected,NorthorSouth,thoughamendedonNorthern

insistencetoreferonly tomattersofpayandconditions.Votingrightsof trade

councils on pay agreements were also curtailed on the basis of preventing

double-voting.Thegrowinghegemonyofpro-partnershipleaderswasreflected

inthefailureofanti-PNRfiguressuchasJohnTierneyofMSFandSeánRedmond

oftheIMETU,bothseasonedleftleaders,tobeelectedtotheExecutive.29

FollowingtheICTU’sFebruary1990specialconference,theCRCresumedits

role as the administrative driver of social partnership, with the “Secretariat

Group” re-formed and the CRC meticulously tracking implementation of

commitmentsbydepartments.Pursuingitsnewmandate,ICTUsoughtameeting

withHaughey“toensurethatcommitmentsarisingfromtherecentreviewofthe

Programme…areimplementedbetweennowandtheendof1990”.ÓhUiginn’s

staffrelentlesslypressureddepartmentsfortime-scalesonvariousinitiativesas

soughtby ICTU, andHaughey reiteratedhis intent todeliveron commitments.

TheCRCalsoresumeditsproblem-solvingroleinoftenfraughtconflicts,suchas

onpensionsreform.ICTUsoughtstatutoryprovisionformembertrustees,which

the FIE (as FUE had been renamed) vigorously opposed, but again, acting as

28 ICTUwelcomeIRBill,ICTUAR199045-6,ICTU1990gandADC1990106-8;“claimsbysectionalunions”,

ICTUADC1991:33;“stokingfears”,RabbitteandGilmore1990;benefits,ICTUECmtg.18/09/90,item1955;alsoGunnigleetal.1999:62-71

29 agreementonnorthernvotes,ICTUSpecialECmtg.09/04/90,item1832;tradescouncils,ICTUADC1990:33-8;TierneyandRedmond,ICTUADC1990appendix,‘ElectionoftheExecutiveCouncil’

273

arbiterforthestate,ÓhUiginnintervened,inthiscaseonICTU’sside,urgingthe

Pensions Board to concede member trustees “on a voluntary basis” until a

reviewinthreeyearsassessedtheneedforstatutoryprovision.FIErelented.30

By autumn 1990, ICTU had consolidated its agenda internally against the

dissident opposition, and through the CRCwas ensuring programme delivery.

The only substantial issue on which it would have to seek a reconfiguring of

partnershipagreementswas somemechanism tomeetprivate sector localpay

flexibility,theoneissuestillgeneratingsignificantsupportforanti-PNRmotions.

Strategicshift:theHaughey/ICTUdealonthe“semi-states” Apart from local pay, the state companies were also an issue of potential

conflictbetweengovernmentandtheunions.WithICTUthestatesector’smain

champion, thePNR, followingmuch contractionunder theFitzGerald coalition,

had agreed expansion through joint ventures, new subsidiaries, international

consultanciesandprivatecapital input,and in1987-9manysuchnewprojects

had been initiated, with Haughey urging companies on in their ambitions.

Existing boardswere incorporated on the Telecommodel and new companies

andstatebodiescreated,includingCoillte,TeagascandFÁS,withothersplanned

forsectorssuchasthemarine.“MyGovernment”,HaugheyassuredtheITGWU,

“believe in the value of a sound, viable State sector … to create employment,

contributetothenationaleconomyandprovideaneffectiveandefficientservice

… Our approach is pragmatic, not ideological”. Itwas amessage he reiterated

throughout 1989. The new coalition, on Haughey’s insistence and despite the

PDs’privatisingzeal,committedtosupporta“viableandprofitablecommercial

semi-State sector”withany changes to “ownership structures” subject toprior

“consultationwiththesocialpartners”.31

30 OnCRCdynamicandHaugheycommitment,O’SullivantoSecretary,‘Subject:MeetingwithMrPCassells

andMsPO’Donovan,ICTU,on2March1990’,01/03/90,and‘ReportofMeetingwithICTUon2March1990’,02/03/90,DTA:S25857-Z4;Onpensionreformdispute,O’SullivantoSecretary[ÓhUiginn],‘Subject:AgendaItem9–PensionsBill–Appointmentofmembertrustees’,25/04/90andD/SocialWelfare,‘PensionsBill1990.IssueofProvidingmemberswithstatutoryrightsinrelationtotheappointmentoftrustees’,20/04/90,DTA:S25857-Z4;‘CRC.SummaryReportof25thMeeting,26April1990’,andh/wnotes25thCRCmtg.,26/04/90,DTA:S25857-Z4;‘CRC.SummaryReportof26thMeeting24May1990’,DTA:S25857-Z6

31 Haughey,‘SpeechatadinnertomarkwindingupoftheITGWU’,29/12/89,GIS:D/Taoiseach;repeatsmessage,Dáil12/12/89;coalitioncommitment,PfG1989

274

Withsweepingde-nationalisationinBritainandthefallofsocialisminEastern

Europe,leadingeconomistsbeganagitatingforwholesaleprivatisation.FineGael

harried Haughey for hesitating on privatisation while UCD Professor Frank

Convery declared it the new “international trend, … an idea whose time has

come”.TheIrisheconomyatindependencehadbeen“dominatedbyarelatively

small,mainly Protestant, business oligarchy”, and state companies had broken

this, “creating a business class among the Catholic community”. Government

shouldunleash thispotential throughprivatisation.Haugheywasnotaverse to

this view, having told his 1989 party Árd Fheis of the need to liberate

“professional skills lockedupuselessly inout-datedstructures”.Even left-wing

economists noted how the state sector was “spawning entrepreneurs”, with

former statemanagers emergingas globalbusiness leaders. Converyproposed

alsoincentivisingworkerstosupportprivatisationthroughemployeeshares.32

Finance’s 1990 budget planning proposed raising “at least” £50m towards

reducingthenationaldebtbyasaleof“stateassets”.ThePDshadchampioned

this, O’Malley’s “catchword” being to “roll back the state”, but Haughey had

ensured this did not feature in the Programme for Government. Senor civil

servants,however,supportedtheidea,withtheproposaltocabinet–inpartto

meetPNRpayandtaxcommitments–theinitiativeofSeánCromien,secretaryof

Finance.ConcernedthatanICTUinitiativeatCRClevelonthestatesectormight

“jeopardise”theplan,heremindedÓhUiginnhowtheyhadbothbeenpresentat

meetingsatwhichHaugheyhimself“onseveraloccasions”had“spokeninfavour

ofassetdisposal for thebenefitof theExchequer,mentioningStatecompanies,

and pressed that the matter be pursued expeditiously”. In fact what Haughey

referredtowereunusedpropertiessuchasCIÉ’sTempleBarsite, forwhichhe

createdapublic/privatejointventuretodevelopasa“culturalquarter”.33

Public opinion was acclimatised to a privatisation offensive by statements

fromministers favouringstatecompaniesbeing included in“assets” tobesold.

This followed immediatelyonthenarrowvictoryof ICTU leaders’at itsspecial

conference.SIPTUdenounced the “speculation”as “entirelyatoddswith… the32 “wholesale”,ConveryandMcDowell1990;FineGael“harried”,Dáil12/12/89;ConveryinSunday

Independent18/03/89;“outdatedstructures”,Haughey1989;“economists”,Sweeney,P.,2004:20-7;33 SeánP.Cromien,Sec,D/Finance,toÓhUiginn,D/Taoiseach,29/02/90,DTA:S25862-F;PDposition,

O’Malley,D.2014:168;“unusedproperties”,‘StatePapers’,IrishTimes29/12/2017

275

PNR”.Reynoldsexacerbatedgrowingdistrustbystatingthatthe“restructuring”

ofIrishLife-theonlysuchcommitmentinthePfG–wouldseethestateretain

only aminority 34 per cent holding as a “golden share” to protect the “public

interest”. Talks were also announced with foreign investors on Irish Steel, to

ensureits“futureandthemaintenanceofitsemployment”.Withingovernment,

and in tune with Convery’s urgings, privatisation proposals often came from

state companies themselves, includingGSH,whoargued that resources to save

andexpanditcouldnotbegeneratedinternally.IrishSugarexecutiveswerepart

ofacommitteethatproposedfloatinghalfthatcompanyandAerLingusleaders

proposedthatitsstructurebechangedto“facilitatefuturedisposal”.34

Finance warned Haughey that “whatever about the past”, state companies

“must operate and plan for the future on strictly commercial lines” and this

shouldnotbedilutedbycommitmentsonemploymenttoICTU.Thefinalbudget

plan,CromientoldÓhUiginn,“assumesthat£62.5millionwillaccrue…fromthe

saleofequityinStatecompanies”,specificallyGSH,IrishSugarandtheTSBand

ICCbanks.Cabinet agreed that these “bedisposedof in suchamannerandon

suchascale”asnecessarytoachievethis.HebelievedICTUwereplanningtoget

theCRCtoseekaWhitePaperonsemi-states,whichwould“puttheentire1990

Budgetstrategyatrisk”.ÓhUiginnmustpreventCRCproposalsthat“jeopardise

Government’sabilitytoraisethesumsreferredto…ordelaytheprocess”.35

CongressdemandedthatthestateretainitsmajorityholdinginIrishLifeand

demanded to meet Haughey on the whole issue of “the future for State

companies”.Decisions shouldbe suspendedpending that, or itwouldbe “very

difficult if not impossible to commence negotiations of a further Programme”.

TheICTUExecutivepublishedapolicyposition,PublicEnterpriseandEconomic

Development, which, while welcoming expansion through joint public/private

ventures and claiming that semi-states could drive a large-scale indigenous

sectorexpansiongiventhefailingsofprivateenterprise,demandedthatthestate

34 EdBrowne,SIPTU,toTaoiseach,21/02/90,DTA:S25862-F;‘Govt.Statement’[notitle,reIrishSteel],

09/03/90,GIS:D/Taoiseach;D/Labour,‘BriefingMaterialonGreatSouthernHotel(GSH)Group’,n.d.(fax26/03/90);D/Finance,‘PossibilityofSaleofcertainStatebodies:presentposition’,n.d.[26/03/90],DTA:S25862-F

35 “FinancewarnedHaughey”,D/Finance,‘StateCompaniesandJobCreation.BackgroundNote’,encl.withN.T.O’Gorman,D/Finance,toO’Sullivan,D/Taoiseach,21/11/89,‘Re:ICTUmeetingwithTaoiseach’,24/11/89,DTA:S25862-D;“finalbudgetplan”,CromientoÓhUiginn,29/02/90,DTA:S25862-F

276

retainmajorityshareholdings,andequitysalesbeexclusivelyforre-investment.

ItproposedtheWhitePaperCromienhadwarnedofand insistedonanendto

“secrettalks”with“bankers,stockbrokersandconsultants”.Ithadthesupportof

theCIIwhich,whilefavouringcommercialisation,hadmanystatecompaniesin

membershipandchampionedthemagainstperceivedstatediscrimination,asin

the case of Aer Lingus/Ryanair. This had led the IFA to accuse CII of being a

“prisonerofthestatesector”andevenofrefusingRyanairCIImembership.36

Cromien urged Haughey to be devious. While being open with ICTU about

plans for IrishSugarandotherbodies towhich theunionswerealreadyprivy,

“they should not know of the possibility in relation to ICC and TSB”. Also, the

statehad toretaina freehand toreduce thenationaldebt throughassetsales.

Consultationwithunionsmustnotmeangivingthem“avirtualvetopower”,nor

shouldhecommittoretainworkerdirectorsin“restructured”companies,asthe

“the state cannot bind other … owners”. Partial privatisation would boost

employmentanyway,andwas“apolicynowbeing followednotonly in theso-

called capitalist countries but in socialist and communist states as well”.

Cromien’smemowassupportedbyextensivedocumentationfromdepartments

arguing for privatisation of “assets” within their remit and discounting ICTU’s

arguments.ThecentralaimofmeetingCongressmustbetousenuancesintheir

position to “advance the degree of acceptance of the principle of privatisation

shownintheICTUdocument”.Congresswasfacingaformidableonslaught.37

Asever,ÓhUiginnwasoptimistic.Onequitysalestoreducethenationaldebt,

he recommended reformulating this as sales “contributing to the growth and

development of the economy”. In general Haugheymight commit to the state

retainingmajorityshareholdings,butsuggestfullsaleswherenecessarytosave

enterprises which would otherwise have to close, such as Irish Steel, and in

“strategic”casesretaininga“golden”share“toprotectthepublicinterestagainst

undesirableownership”.TheoverridinggoalforÓhUiginnwasastrategyagreed36 “Congressdemanded”,CassellstoTaoiseach,14/03/1990,andTaoiseachtoCassellsICTU,16/03/90,

DTA:S25862-F;PublicEnterprise,ICTU1990d;seeksWhitePaper,CRC‘Sub-GrouponJobCreation’,h/wnotes,n.d.[mtg.28/06/89],DTA:S26122-A;position,Power,CII,toÓhUiginn,andtoAhern,‘Re:PRSIExemption’,13/10/89,DTA:S25857-X;refusesRyanair,h/wnotesof18thCRCmtg21/09/89,DTA:S25857-W

37 Cromienmemoanddocumentation,‘SteeringNote’,attch’dwithRobertCarey,[pvte]Secretary[toM/Finance],toO’Sullivan,D/Taoiseach,26/03/90,and“advanceacceptance”,R.J.Curran,D/Finance,toÓhUiginn,D/Taoiseach,27/03/90,DTA:S25862-F

277

withICTU,whichhewasconvincedwasattainable:“Itwouldbepossible,inthe

lightoftheirsubmission,toreachagreement…onprincipleswhichwouldapply

tothesaleofsomeoralloftheState’sholdinginStatecompanies”.38

Themeetingon27March1990–oneofthemostextraordinaryofthePNRera

-was attended by a formidable array ofMinisters, officials and union leaders.

Even JohnCarroll attended, theaustereSIPTUPresidentwhohadnotofficially

metgovernmentsince1987,whenhehadbeeninstrumentalinengineeringthe

PNR with Haughey. ICTU reiterated its core “principles” on state industry,

warning of the “credibility problem” it faced with members complaining that

unilateral stateactionproved “therewasnovalue in the consensusapproach”.

Haugheyrepeatedhisconcernforasuccessfulstatesector,disregardingmuchof

whatCromienhadadvised.HehadnointentionofinterferingwithAerLingus(“a

star performer”) or any successful company. B&I and Irish Steel were special

cases, failedprivateventuresnationalised for strategic reasons,but shouldnot

necessarilyremainso. IrishSugar’s functionwaschangingduetonewCAPand

SingleMarketrulesandwouldrequireanewstructureandpurpose.Hegave“a

solemnassurance”that theIrishLifedecision,necessitatedby legalconstraints

in operating abroad,was neither a “precedent” nor “amodel for restructuring

other State companies”, and agreed that some companies had potential to

become“largescaleindigenouscompanies”,butmonetarystrategydictatedthis

could only occur through private capital involvement. Selling equity to reduce

thenationaldebtwasnotagovernment“aim”, though“lossmakers”shouldbe

considered. Carroll intervened forcefully in Haughey’s support, insisting only

that “essential services” and “strategic” companies remain in state ownership.

Haughey promised full consultation and, to the undoubted horror of Finance,

metICTU’sWhitePaperdemandhalf-waybyproposingthatCRCdraftcommon

“principles” forpolicy towards the sector. ICTUwas greatly relieved, declaring

the “Taoiseach’s pragmatic stance” “comforting”, accepting that Irish Steel and

38 Secretary[ÓhUiginn]toTaoiseach,‘ICTUMeetingonPrivateInvolvementinStateCompanies’,

26/03/90,DTA:S25862-F

278

Verolmecouldbesoldofftosurvive,andwelcomingHaughey’sproposalthatthe

CRCdraftasetofprinciplesforfuturestatepolicyonthesector.39

Financewasoutraged atHaughey’s concessions.Nevertheless, following the

meeting,Congresspubliclyendorsedtheprincipleofsellingequity-apartfrom

“strategicservices”–wherethiswasnecessarytomaintainemployment,enable

expansion or ensure future viability, and in private, as Ó hUiginn reported,

agreed to restructurings commencing “evenwhile the [CRC]Working Party is

sitting”,whichwould“enablesalestogoahead”.Cassells’onlyconditionwasthat

theCRC“principles”befinalisedanagreed“wellinadvanceofnegotiationsona

furtherprogramme”.TheHaughey-ICTU“deal”epitomisedsocialpartnershipas

understoodbybothHaugheyandunion leaders,andCarroll’s interventionwas

keytofacilitatingthecompromise.ICTU’sconcessionsonprivateinvestmentand

equity sales were reciprocated by Haughey’s commitment to retain majority

shareholdings in successful companies and to the CRC setting future policy

principles.IntheDáil,Labourandex-Workers’Partyleaderssuspectedasecret

dealhadbeenreachedtofacilitate“privatisation”,whileFineGaelworriedthata

compromisehadbeenagreedpreventingit.Inasense,theywerebothright.40

TheCRC“workingparty”convenedimmediately,collatingrestructuringplans

from companies and drafting “principles” for policy on the sector. Individual

unionscontinuedtobeinvolvedinrestructuringatBordnaMónaandGSH,and

buyerswerefoundforthedistressedVerolmeDockyard,enablingproductionto

resume and leveraging IDA supports.41Therewas often conflict, as at Bord na

Móna over developing or selling off cut-away bogs, or at Irish Sugar over

alternativeemploymentforworkersinplantsearmarkedforclosure.PlansbyAn

Post led to conflict and even strike action, and in June, just before its annual

39 ‘ReportofMeetingofTaoiseachandMinistersforFinance,I&CandLabourwithrepresentativesofICTU,

27March1990’,andh/wnotesofthemeeting,DTA:S25862-F40 ‘JointGovernment/ICTUStatement’,27/03/90,GIS:D/Taoiseach;Cromien,SecD/Finance,toO’Sullivan,

D/Taoiseach,04/04/90;ÓhUiginn‘Note’[toTaoiseach],30/04/90:‘CRCmeeting26/04/90’;O’Sullivan[toÓhUig],h/wnoteoftel.conversationwithCassells,27/03,andnoteCassells,‘Forattn.PatO’Sullivan:IssuesforinclusioninStatementfollowingmeetingthisafternoon’,27/03/90,DTA:S25862-F;oppositionreaction,Dáil01/05/90

41 ‘WorkingGrouponStateCompanies’,inCRC,‘SummaryReportof26thMeeting,24May1990’,DTA:S25857-Z6;ICTUAR1990:70;D/Labour,‘BriefingMaterialonGreatSouthernHotel(GSH)Group’,n.d.(fax26/03/90),DTA:S25862-F;Dáil08/02/90;Reynolds,‘AddressbytheM/FinancetoannouncesaleofVerolmeDockyardtoDamenShipyardsofHolland’,29/06/90,GIS:D/Finance

279

conference, ICTUevenwithdrew “temporarily” from theCRCWorkingParty in

protestattheBroadcastingBillestablishingcommercialcompetitiontoRTE.42

Anti-PNR unions mobilised against the Executive’s new position, but

partnership leaders robustlydefended it,Attley stating thathehad “absolutely

no doubt” about government’s “hidden privatisation agenda”, but in Britain

obdurateunionoppositionhad failed,andstate industrywasbeingdismantled

wholesaleacrosseasternandevenwesternEurope.“Dowewanttogodownthe

sameroad?” Irish state companieshadbeenhaemorrhagingemployment since

1980 and “ifwe don’t do something theywill simplywither away”. To ensure

semi-states survived as “a vehicle for development and job creation” required

embracingoutside investment,and ifunionsopposedthis, “wewillsimply lose

thedebate”.Theconferenceendorsedthenewpolicybyanarrowmajority.43

Haugheyforhispartheldgovernmenttothe“understanding”hehadreached

with Congress, and privatisation as envisaged by Finance was halted.

Government,hetoldhisparty’sÁrdFheis,wasnot“engagedinanyprogramme

of systematic privatisation”. While there “may” be equity sales to reduce the

“crippling national debt”, such decisions would only be reached if of “overall

benefittothenationaleconomy”,theformulationÓhUiginnhadproposed.44

TheCRCfinaliseditsproposed“principles”onstatecompaniesinSeptember,

recommending continued expansion through subsidiaries, private equity and

export ventures, and allowing distressed companies be sold to secure their

viability. The key criterion was business success and, tellingly, no “majority”

conditiononretainedstateholdingswassought.TherestructuringofIrishSugar

asaprivatised international foodcompany, laterGreencoreplc,proceeded,but

with thestate retaining45percent.ToCongress’s satisfaction,GreatSouthern

Hotelswassold,nottoprivatebiddersbuttoAerRianta,anotherstatecompany,

andICTUagreedaplanwithFinanceforB&ItobesoldtoIrishFerries,aformer

subsidiaryofIrishShipping.A“viabilityplan”forIrishSteelretaineditinpublic

42 ICTUAR1990:70;ICTUADC1990:91-3;RayBurke,‘AddresstoAnnualConferenceofCWU’,Cork,

18/05/90,and‘MinisterurgesCommunicationWorkerstofacechallengesofcompetitionandchange’,18/05/90,GIS:D/JusticeandComm.;‘WorkingGrouponStateCompanies’,inCRC,‘SummaryReportof27thMeeting,21June1990’,DTA:S25857-Z7

43 ICTUADC1990:91-10344 Haughey,‘Taoiseach’saddresstoFiannaFáilArdFheis’,07/04/90,DTA:S25858-Z3

280

ownership, andplans to sell off CIÉTourswere abandoned. The only closures

wereofdefunctentitiessuchastheJointHospitalsServicesBoard.45

When the Irish Sugar planwas announced,TheIrishTimes, no doubt to the

satisfactionofbothHaugheyandICTU,editorialisedthatitwas“nowwellplaced

to become one of the leaders in the food sector”. “With the State as themost

significantshareholderbutwithstockmarketparticipationandscrutiny,amodel

ofpublicandprivatepartnershipmayperhapsdevelopwhichoffersahealthier

basis for promoting national champions” than the “alliance between the state

andaveryprivatecompany”hadproveninthe“problematic”Goodmancase.46

Reynolds, considered a particularly strong advocate of private enterprise,

defended state companies, urgingUS investorsnot to shunbut engage in joint

ventures with them. Selling state companies would only occur where

“warranted” as government saw “the State sector continuing as an important

influence on the Irish economy”. While Haughey had pioneered semi-state

commercialisation, and insisted on commercial criteria, his reputation as a

discipleofprivatisationhasnobasis.Heagreedtothe“principles”producedby

the CRC,whichwere incorporated verbatim into the follow-on agreement, the

PESP,andwouldgovernstatepolicyonthesectorforthenextdecade.47

TherestructuringofIrishSugarinvolvedundoubtedinsidertradingbysenior

executives, leadingtoamajorscandal inwhichHaugheyforcedthemtoresign.

RelatedthoughunfoundedaccusationsweremadeinthecaseofUCD’spurchase

ofCarysfortCollegeandthepurchasebyTelecomofnewheadquarters.Haughey

wasnot involved in these transactions,andpublicly forced those implicated to

resign, but a hostilemedia continued to insinuate his central role in a corrupt

“goldencircle”enriching itselfat thepublic’sexpense.Spring, inanoutburstof

moraloutrage,spokeofan“evilspiritthatcontrolsonepoliticalparty”,a“cancer

… eating away at our body politic” threatening “to corrupt the entire political

system”.The“viruswhichhascausedthatcancer”wastheTaoiseach,CharlesJ.

Haughey. In reality, these various “affairs” were arguably inevitable

consequencesofstate-sectorcommercialisationandthebusinessrelationshipsit45 ‘PublicEnterprise–ProgressReport’:ICTUECmtg.19/09/90,item1986;ICTUAR1991:53-546 IT26/10/9047 Reynolds,‘AddresstotheSheridanCircle’,Washington,25/09/90,GIS:D/Finance;reputation,Sweeney

2004;“Principles”inICTUAR1991:53-4andPESP,SectionV(89-90),1991

281

created, a policy endorsed by all Dáil parties. While Haughey was certainly

acquaintedwithmanyof those involved,notonlyhave figuressuchasMichael

Smurfitcontinuallydeniedunethicalbehaviourandneverbeenprosecuted,but

nodirectinvolvementbyHaugheyhaseverbeenestablished.48

Even if overshadowed by this political theatre, ICTU’s agreement with

Haugheyonthesemi-stateswasamajorachievement,guaranteeingforadecade

astrongroleineconomicdevelopmentforanexpandingstatesector.ICTUhad

few illusions about state companies, and in its planning for a post-PNR

agreementdistinguishedinternallybetweenthe“goodones”andthe“disasters”,

focusing its expansion plans on the former. It combined this realism with a

strategyofdeepeningworkerparticipationatboardandsub-boardlevel,agreat

expansion of which it achieved under PNR/PESP, and established sectoral

networks of worker directors and business management training for them.

AnothernewstrategyfirstfloatedbyCassellstoresolveproblemsatTEAMAer

LingussawICTUtradecooperationinrestructuringforemployeeshareholdings,

astrategythatwouldexpandinthefollowingyears.49

Planningthetransition:towardsanewAgreement Themajor dramas and crises of social partnershipduring1990occurred in

theGovernment-ICTUrelationshipbecause,byandlarge,theotherstakeholders

hadcometotermswiththenewsystem,havingsecuredtheirinterestswithinit.

Foremployers,fearsofunionindisciplineonpayhadprovenunfoundedand

the economic take-off and growing profitability had obviated their previous

obsessive determination to prevent minimum PNR pay rates becoming an

established“norm”across industry.PNRrateswerenowwidelyconceded.The

tax/pay formula had delivered take-home pay increases of over 7 per cent, of

whichoverhalfwascontributedby thestate through taxreform.ThePNRpay

system,TurloughO’SullivanofFIErecalled,hadproventobea“nobrainer”.The

business lobby,CII,enthusiasticallyengaged in theeconomicplanningafforded

48 “scandals”,Ryle-Dwyer1992:152-60;SpringinRyle-Dyer1992:149-5049 “goodones/disasters”,ICTU,h/wnotes,“PayNegotiations”,Oct.1990,ICTUArchive:PN-1;

“participation”,ICTU,‘SpecificareasfordiscussionwithGovernmentonaPESD’,18/10/90,ICTUArchive:PN-2;‘PESD,WorkingGrouponSemiStates1990’,ICTUArchive:PESP-PWG[Folder4050-8];ICTUAR1991:53;Cassellsin‘Conferenceonprofit/gainsharing’,IRNReport,15/11/90;Sweeney2004

282

by partnership, influencing Irish EEC and FDI strategy and co-shaping the

programmes of the NDP through large social and infrastructural programmes,

privatesectorparticipationinstructuralfund-financedprojectsandtheopening

to pursue radical regulatory liberalisation under the Single Market. Liam

Connellan,warningofinternationalpressuresontheeconomyandwithBritain,

“our largest trading partner”, in “near recession” as Sterling “plummeted”,

praised “the consensus” of the PNR for creating “a climate of confidence and

stability”,itsimpact“morepronouncedeachyear”.50

Farming bodies for their part depended on government to minimise CAP

reform at EC level and tax reform at home, and made their peace with

partnership as the framework for pursuing policy goals. With their scope for

manoeuvrethuslimited,Haugheygavesomeoftheirdemandsshortshrift.When

theycomplainedof“inequities”forfarmersinproposedinheritancetaxreforms,

he suggested they “submitdetailsof cases to illustrate theirpoints”, andwhen

theywarned that applying property tax to farms “would raise the question of

IFA’s continued participation in the PNR”, he directed them to the Expert

Committee on local taxes. When they sought the extension of the business

expansion scheme to farms, he retorted that “IFA might consider such farm

enterprises establishing as companies, thus qualifying in principle for the

Scheme”,asmushroomfarmshaddone.TheIFAhadlittleoptionbuttostayand

fightitscornerwithinpartnership.51

Thehigh-pointoftheHaugheygovernmentwasitswidelypraisedPresidency

ofthethen12-memberECinJanuary-June1990.Haugheyusedittopromotethe

Irishpartnershipmodel,whichhedescribedtoECleadersas“asocio-economic

policyconsensus,unique,Ithink,inEurope”,showcaseIrelandasaseriousand

successful state, and pursue the NESC strategy of close alignment with the

Franco-GermanEMUprojectandsocialmodeltomaximiseregional investment

distributionundertheDelorsPlan.Hisrolewasepitomisedinhisleadershipon

50 PNRratesgenerallyconceded,ICTU1990g;“nobrainer”,InterviewTurloughO’Sullivan;CII“workedthe

planningsystem”,Connellan,CII,toTeahon,‘CRCJobCreationCommittee’,15/01/90,andCII,‘ProposaltoCreateAdditionalThirdLevelPlacesinPrivateEducationalInstitutions’,DTA:S25857-Z1;Connellan“warning”,CII,‘AddressbyLiamConnellan,DirectorGeneral,CII,atBrayChamberofCommerce’,23/04/90,PowerPapers,SligoITArchive

51 ‘ReportofMeetingofTaoiseachandMinisters/F,A&FandEnv.withDeputationfromIFA’04/10/89,DTA:S25899-B[folder:‘EECAspect’]

283

German unification, which reaped rich dividends for Ireland. A British TUC

leader,addressingtheICTU,marvelledattheinfluenceIrishunionshadachieved

innationalpolicyandpraisedIreland’sECPresidencywhich,“spurredonbythis

Congress”, hadadoptedaprogressive socialpolicy agenda.Referring toAhern,

shesaid,“Idon’tthinkyoureallyappreciatehowrefreshingitwastobeableto

talk with a person in power with such an awareness of the interdependence

betweeneconomicsuccessandsocialprogress”.52

Despite ICTU’s internalconflicts,Haugheyandhiscircle repeatedlydeclared

their desire to achieve a successor agreement and institutionalise social

partnership: “we need only look to … Germany with its long tradition of

consensustoseethevalueofharnessingallinterests…forthecommongood”,he

toldtheITGWU.Whileaddressingnewissues,anynewdealshouldcontinuethe

“principles”ofthePNR.Socialpartnership,hetoldhisÁrdFheis,was“anational

pearlofgreatprice”which“wemustholdonto”.Ahern,warningthatasa“small

openeconomy…wecannotaffordanydomesticallygeneratedpolicymistakes”,

and,usingICTU’sproposedtitle,advocatedanew“programmeforeconomicand

socialdevelopment”(PESD)continuingthe“basicprinciples”ofthePNR.53

In preparing for the September1990 special conference (SDC) to decide on

whether to enter talks on a successor agreement, ICTU leaders exploited

governmenteagernessforapositiveoutcometohaveoutstandingissuesunder

the PNR resolved and had the CRC issue another Progress Report on the

“achievementsof thePNR”.At the ICTUExecutive they securedadecision that

onlydelegatesrepresentingmembershipsintheRepubliccouldattendandvote.

ICTUidentifieditsprioritiesasfurthertaxreform,theexpansionandreformof

public services, a range of equality policies, a “major assault on long-term

unemployment” and, critically, some limited local pay bargaining. Government

assisted thembymeetingdemandson “unresolved issues”,making last-minute

concessions on teacher recruitment and reformsbenefiting part-timeworkers.

52 “promotespartnership”,Haughey,‘AddresstotheEuropeanRoundTableatDromolandCastle’,

13/05/90,GIS:D/Taoiseach;“richdividends”,EamonDelaney,‘GermansupportforIrishonBrexitispaybacktimetoBritish’,IrishCentral,08/04/19;TUCleader,ICTUADC1990:87-8

53 Haugheyonsuccessorprogramme,Dáil,15/12/89;speechtoITGWU,Haughey,‘SpeechatdinnertomarkwindingupoftheITGWU,29/12/89,GIS:D/Taois;toÁrdFheis,Haughey,‘Taoiseach’saddresstoFiannaFáilÁrdFheis’,07/04/90,DTA:S25858-Z3;Ahern,‘SpeechtoannualconferenceofCPSU,Tralee’,19/05/90and‘SpeechatannualconferenceofMSFUnion’,10/03/90,GIS:D/Labour

284

The SDC gave ICTU a strong 70 per centmandate (218/114) to enter talks. A

furtherSDCinFebruary1991woulddecideontheproposalsthatemerged.54

With thismandate and a government keen for a newprogramme, Congress

draftedanambitiousagenda, stipulated the jointpolicy “workinggroups”with

governmentwhich should be formed and the structures of a new “PESD”, and

sought a meeting with Haughey. The day before this meeting, it published its

plan, Ireland 1990-2000: A Decade of Development, Reform and Growth. This

acceptedacontinuationofthemonetaryandmacro-economicframeworkofthe

PNR, but focused also on “underdeveloped” “social rights” and institutional

weaknesses: “we have a big State but a weak State”. It advocated a 10-year

frameworkwith successive 3-year agreements under it. The aim should be to

achieveECstandardsofliving,a“totalrestructuringofoursocialservices”and“a

modernefficientsocialmarketeconomy…similartoGermany”,atthattimethe

modelEuropeansocialdemocracy,towhichHaugheytooaspired.55

Completingtheblueprint:NESCandthe10-year“PESP”

Negotiations and policy formation for the new agreement progressed

similarlyto1987throughjointpolicygroupsandbilateralgovernment/partner

meetings.Asin1987ICTUinitiatedanddeterminedmuchofthestructure.Butit

wasalsodifferent,instakeholderinputbeingfarmoreorganisedandconcerted,

party political opposition mooted or blunted, and employers, business and

farmers fare more willing to engage. Government proposals to continue the

“principles” of the PNR and its macro-economic/industrial/social policy

structure, though with some new socio-economic aims, was widely accepted.

ICTU established a 17-member “negotiating team” which, unlike 1987, and as

leverage towards securing a local pay clause, included representatives of anti-

54 ICTUECmtg.12/09/90,item1955.ICTUArchive:ECminutes.‘CRC.SummaryReportof28thMeeting

19/07/90’,h/wnotesofCRCmtg.19/07/90,andO’DonovanICTUtoDignamD/Taoiseach,13/07/90,andDignamtoSecretary[ÓhUiginn],18/07/90,re‘Item3–UnresolvedissuesundertheProgramme’,DTA:S25857-Z8;Corr.ICTU/TUI/CRC,inc.ÓhUigtoFitzpatrickTUI6/09,andFitzpatricktoCassels26/09/90,ICTUArchive:PN-1;CRC,‘ProgrammeforNationalRecovery:SummaryofAchievements’,Sept.1990,andAherntoCassells,18/09/90,withh/wnote:“Confidential”,S25857-Z9;ICTU,‘ExecutiveCounciltoseekapprovaltoopentalksonnewProgramme’,n.d.[19/09/90]:ICTUArchive:PN-2

55 ICTUproposals,CassellstoHaughey,28/09/90.ICTUArchive:PN-2and,‘CongresstoseekearlymeetingwithGovernment’,IT27/09/90;Ireland1990-2000,ICTU1990h;

285

PNRcraftunionswhohadbeenoutsidethe1987talks. It formedarangeof its

ownpolicysub-groupsofICTUofficersandtrainerstocompilepolicies.56

Haughey welcomed ICTU’s “concept of a ten-year strategy within which

programmesforaperiodofyearswouldbeagreed”,aswellasitsproposalsfor

thestructure,issuesandevennameoftheputativeagreement.Hemetemployer

groups and farmers too, who, as with ICTU, declared in joint statementswith

government their “general agreement on the importance of a newprogramme

and a commitment to seek successfully to negotiate one”. Though not a

negotiatingpartner,theCIIalsourgedthatanewdealbeachieved.57

AsRoryO’Donnelllaterremarked,anessential“glue”ofpartnershiponwhich

allelserestedwasarealistic,workabledealonpay.TheFIE’sprimaryobjective

wastokeepcoststobusiness low,with“asensiblearrangementonpay”based

oncontinued“taxrelief”.Itwouldacceptanagreement“ontherightterms”,but

anyinitiativeonworkerparticipationincompanydecision-makingmustinvolve

a voluntary framework, and it would accept no restrictions on “contract

workers”. Thiswas a response to ICTUwho again sought a nationalminimum

wage,restrictionsonemployerspressurisingworkerstobecomeself-employed

“contractors”,andaclauseenablingsomedegreeofadditionallocalbargaining.58

Government’s eagerness for an agreement saw it set the pace on pay,

committing early to forgo a pay pause, and agreeing to a similar approach to

“special awards” as under the PNR, though again with certain conditions and

deferrals.Internallyitplannedforapublicpaybillincreaseof9percentin1991.

ICTU, facing “very high expectations” due to the “build up” of special claims,

acceptedgovernment’sphasingproposalslinkedtobudgetaryconstraints,given

itsconcessiononapaypause.Thefinalpackagewoulddependonitstaxaspect,

andonthis theritualbudgetdancewasplayedout,Reynoldswarningof “little

56 ‘MembershipofNegotiatingGrouponaPESD’;‘PESD-FirstMeetingofNegotiatingGroupon02/10/90,

Agenda’,n.d.;‘SpecificAreasfordiscussionwithGovernmentonaPESD’,n.d.;Cassells,‘toEachMemberoftheNegotiatingGroup,Re.MeetingwithGovernmentMonday8Oct.1990’,03/10/90;[Cassells],‘MeetingwithGovernment/BriefingNotesforPresident’,n.d.[formtg.08/10/90];ICTU,‘[Press]BriefingonNegotiationsonPESD’,08/10/90;ICTUArchive:PN-2

57 Haughey“welcomes”,Dáil,31/10/90;meetings,‘JointGovernment/ICTUStatement’,08/10/90,‘JointGovernment/CII,FIEandCIFStatement’,08/10/90;‘JointGovernment/IFA,ICOS,ICMSA,MacranaFeirmeStatement,10/10/90,inGIS:D/Taoiseach,;HaugheytoCassells,03/10/90,ICTUArchive:PN-2;CII,QuarterlyReview,Oct.1990;‘Compensationforoilhikenoton:CII’,IrishIndependent,19/10/90

58 O’DonnellandThomas1998:132;FIEBulletin,Nov.1990;ICTU,internal,‘PayandConditionsofEmployment’,n.d.,ICTUArchive:PN-1

286

roomfor…reductions”,ICTUthreateningthatwithout“radicaltaxreform”there

wouldbe“nopact”,farmingorganisationscomplainingofpubicpayundermining

the national finances, and Haughey intervening to “pledge” “significant” tax

reform. A crucial change was linking public pay to a modernisation process,

introducing performance management that would develop over subsequent

years. Civil service unions welcomed this major structural reform and traded

cooperationwithitforconsultativestructuresand“workplacepartnerships”.59

On private sector pay ICTU noted how local arrangements for “add-on”

bonuses, productivity “allowances”, VHI benefits and service pay were

proliferatinginstrongcompaniesunderthePNRasdirectpayriseswerelimited

under its terms.Thesebenefits tended tonullify thecatch-upeffectof flat rate

increasesforthe lowerpaid inweakeremployments. Itcontinuednevertheless

toseekanationalminimumwageand,shortofthat,anextensionofJLCsanda

“voluntarilyagreed”minimumwitha“LowPayUnit”tomonitorpaylevels,and

unions having recourse to the Labour Court for increases forworkers earning

belowthis. ICTUprioritiseda localbargainingclause,bothtomeetdemandsof

workers in stronger industries and maintain shop-floor union activity. Any

arrangement, it decided internally, should ensure “maximum continuous local

involvementinnegotiationsovertheperiodofthenewprogramme”.Employers,

reversingtheir1987position,weremainlyconcernednottosuppresswagesbut

prevent a costs spiral from local bargaining, and ICTU believed they would

acceptalocalclause“cappedinsomeway”.Governmenthadurgedemployersto

be prepared to concede some local bargainingmechanism. A pay formulawas

finallyagreed,combiningpercentageandminimumflatratesandconditionalon

competitive conditions. It also allowed, “exceptionally”, for one-off additional

localclaims,cappedat3percentofpaycostsovertheperiodofthePESP.Both

59 Plansforpublicpay,O’Sullivan,D/Taoiseach,‘WorkingGroupwithICTUonPayandConditions.’

01/12/90,ICTUArchive:PESP-PWG;ICTU“expectations”,Doc.,notitle,PSEUtoICTU,17/11/90,‘forPublicServiceCommittee’,ICTUArchive:PESP-PWG,‘PublicServicePay.Positionatendofmeetingon05/12/90’,ICTUArchive:PN-1andJohnO’Dowd,CPSU,‘Toeachbranch.Re:PayAspectsofPESD’,16/01/1991,ICTUArchive:PN-2;onReynolds,ICTU,IFAandHaugheyinterventions,‘IFA/ICMSAviewsinrelationtoMacro-EconomicStabilityinthenewPESD’,28/11/90,O’Sullivan,D/Taoiseach,‘WorkingGroupwithICTUonPayandConditions’,01/12/90,ICTUArchive:PESP-PWG;‘Taxreformornopact:unions’,IrishIndependent,19/10/90;‘ICTUwarnstaxreformneededineconomicplan’,IrishTimes,19/10/90;‘Newdealwillincludetaxreformpledge–Taoiseach’,IrishIndependent,22/10/90;on“performance”system,PSEUtoICTU,doc.onpaystrategy,notitle,30/11/90,and‘MemorandumofUnderstandingontheOperationinthePublicSectorofClause[X]oftheAgreementonPaywhichformspartofthePESD’,ICTUArchive:PESP-PWG;PESP,Annex1toAppendixA

287

employers and government rejected a statutory NMW, but agreed to the

Employer-Labour Council investigating acceptableminimum levels, and to the

LabourCourttakingthese“intoconsideration”inassessingclaims.60

Thenon-payaspectsoftheprogrammeweredraftedinjointworkinggroups,

asin1987,withtaxreformagaintothefore.Theirproposalsfedintoa“central

team”,headedbyKirwanforICTUandÓhUiginnforgovernment.TheCIIwere

again active, submitting industrial policy and competitiveness proposals. The

frameworkofthePESP,whileanticipatedinICTU’sDecadeofDevelopment,was

providedbythenewreportagreedbythesocialpartnersattheNESC,AStrategy

fortheNineties.In1989Haugheyhadrequestedittoproduceastrategicstudyas

thebasisforapost-PNRagreement,asits1986ReporthadbeenforthePNR.The

new strategywasdraftedbyNESC economist, RoryO’Donnell, andnegotiating

each chapter dominated the NESC agenda throughout 1990. A consensus

emerged on a 10-year programme continuing the monetary/industrial policy

frameworkof thePNRbutaddinga radicalprogrammeof structural reformto

modernisesocialprovisionandpolicy-makingandservicedeliveryinstitutions.61

In addition to a study to underpin a post-PNR agreement, Haughey also

strengthenedtheNESC,upgradingthecivilservicepresencewhenappointinga

newcouncil in summer1989byhavingdepartment secretaries rather than,as

heretofore,assistantsecretaries,representgovernment. Ina further innovation

he invited the European Commission to appoint an advisory “observer” to the60 On“add-ons”,ICTU,memo,notitle,relowpay/NMW,n.d.[Nov.90],ICTUArchive:PESP-PWG,Barbara

Kelly,SIPTU,toBillAttley,‘Post-PNR(30thRound)Settlements’,17/12/90,ICTUArchive:PESP-PWGandICTUECmtg.18/09/90,item1955;“lowpay”strategy,ICTU,‘WorkingGrouponPayandConditions.LowPay.ProposalsforaNationalMinimumWage’,23/11/90,ICTUArchive:PN-1;“continuouslocalinvolvement”,[Cassells],‘Mtg.withGovernment/BriefingNotesforPresident’,n.d.[08/10/90],ICTUArchive:PN-2;“cappedinsomeway”,‘WorkingGrouponPay/Conditions,BriefingNoteforMeeting’of23/11/90,ICTUArchive:PN-1;“governmenturgesemployers”,‘ConclusionsofInter-DepartmentalCommitteeMeetingon8December1989re.Point12ofICTUPlan’,DTA:S25857-Y;“cappedat3percent”,ICTU,‘MeetingonPayandConditions,17Dec.1990-StatementbyChrisKirwan’,17/12/90,ICTUArchive:PESP-PWGandPESP,AppendixA;“takeintoconsideration”,ICTUAR1991:43

61 ‘Onnegotiationsystemandworkinggroups,‘ICTU.NegotiationsonPESD’-ResponsetoICTUFrameworkforDiscussions,BroadOutlineofIssues,EstablishmentofWorkingGroups,18/10/90,ICTU,‘NegotiationsonPESD.WorkingGrouponTaxReform’,n.d.[Oct.1990],ICTUArchive:PN-1,ICTU,‘NegotiationsonPESD-WGonTaxReform’,n.d.[22/10/90],ICTUArchive:PN-2,ICTUPressRelease,‘NoTaxReform,NoProgramme’,18/10/90;onCIIactivity,CII,papersforWorkingGroupson‘CompetitivenessandEconomicSlowdown’and‘EconomicCohesionandRegionalDevelopment’,ICTUArchive:PN-1,[Cassells],‘MeetingwithGovernment/BriefingNotesforPresident’,n.d.[08/10/90],andPSEU[i.e.DanMurphy]toICTU,‘PNR4–StructureofDiscussions’,15/10/90;Decade,ICTU1990handStrategyforNineties,NESC1990;onO’Donnell’srole,NESCCouncilMinutes,16/06/89and27/07/90and‘CouncilMeeting17/11/89,BriefingforChairman’,NESCArchive:Box3(Correspondence);“consensusemerges”,NESCCouncilMeeting17/11/89,BriefingforChairman’,NESCArchive:Box3(Corr.)and‘UpdateonWorkprogramme’,21/12/90,NESCArchive,Box3c,‘Meetings’

288

NESC.Delorsnominatedafigurefromhisowncabinet,JolyDixon,consideredhis

“right-hand man on EMU”. These moves by Haughey further institutionalised

social partnership by integrating the top echelons of the state with the social

partnersintheplanningstructure.Thealliancebetweengovernmentandsocial

partners, Haughey declared, was “one of the most powerful instruments of

progress this country has ever known”, an alliance “in effect between

government and people”. The significance of thesemoveswas not lost on the

opposition, with John Bruton criticising them in the Dáil, especially the

appointment of Dixon and departmental secretaries who would now have to

answertothebodyasinbreachoftheCouncil’sownconstitution.62

TheNESC’s470-pageStrategyfortheNinetieswascompletedinOctober1990.

It advised continuing the monetary/fiscal “principles” of the PNR, with some

refinement, as well as the industrial strategy of growing selected large-scale

indigenouscompanies,especially inthefoodsector, targetinghighvalue-added

FDI and supporting start-ups. As Cliff Taylor noted, in this the NESCwas “re-

visitingterritoryoverwhichithastrampedmanytimesbefore”.OnEuropeitre-

iterateditsrecommendationsinIrelandintheEECforaclosealliancesupporting

rapid integration, with large scale regional transfers to ensure “balanced”

growth, rapid implementation of policy changes required for EMU, and the

defenceofnationalinterestsinareassuchasfarmingandVATharmonisation.63

The novel aspect of Strategy for theNineties,however, was its far-reaching

proposals for structural reform, to be implemented over a decade, enhancing

state planning capacity and service delivery. Its proposals included a semi-

autonomoushealthexecutiveagency(later theHSE),re-structuringtheCentral

Bank to broaden its representational base, and a board to plan the national

finances(later theNTMA),aswellasstructuralchangesto improvethequality

and delivery of educational, industrial, social, labour market and local

government systems. It listed its policymodernisation and social equity goals

andproposedkeepingtaxcutsmoderatewhileshiftingfocustowideningthetax

base.Italsosupportedastrengthenedroleforsemi-stateindustries,withfurther

62 OnJoly,en.wikipedia.org/wiki/Joly_Dixon(accessed20/03/19);“mostpowerfulinstruments”,Haughey,

‘SpeechatCáirdeFáilPresident’sDinner’,04/12/1990,GIS:D/Taoiseach;BrutoninDáil,30/01/9163 TaylorinIrishTimes26/10/90;NESCviewinNESC1989

289

commercialisation, and privatisation where appropriate, and “area based

strategies”totacklelong-termunemploymentandpoverty.Italsorecommended

strengthening “consensus-forming arrangements” to underpin partnership and

vitiate “populist policies”, and appealed for Ireland to look to successful small

states such as Austria, Denmark and Finland for appropriate models of

institutional reform, re-focusing “policy-learning and development towards

them,andawayfrommoretraditionalpointsofcomparison”,i.e.Britain.

With theNESCreportas the framework, theworkinggroupsofgovernment

and social partners fleshed out the details of a “Partnership for Economic and

SocialProgress”(PESP).Theresultwasbulkierandnearlythreetimesaslongas

the PNR. As well as macro-economic principles and industrial strategies, it

coveredtaxreform,employmentandtraining,agriculture,combatinglong-term

unemployment, and legislative reform. It continued the PNR target of 20,000

new jobs per year, further tax compliance and enforcement measures, and

programmes to combat theblackeconomy, expand thewelfare system, reform

thehealthservice,andprovidefordisabledpeople.ItalsopromisedaChildCare

Bill, improvedpatientandconsumerrights–aPDpriority–aswellascontrols

ondrugcosts,expandededucationalprovision-especially in furthereducation

and access for disadvantaged groups - expanded youth services, parental

involvement ineducation,measuresonhomelessness, increasedsocialhousing

(including through “innovative”housingassociation), travelleraccommodation,

strengthenedprivaterentedtenants’rights,reformofthelegalsystem,overseas

aid, a second Council for the Status of Women, amendments to employment

equality legislation, a childcare initiative, a roads/transport plan, tourism,

marine development, an environmental action programme, arts and culture

initiatives,newapprenticeshipschemes,horticultureandforestrystrategiesand

rural development. It also included a special section on the semi-states,

incorporatingtheCRC“principles”draftedfollowingthehistoricHaughey/ICTU

dealofMarch1990,achapteronthe“ECDimension”,andtheestablishmentof

localpartnershipcompaniesforhigh-unemploymentareas.64

64 “fleshoutdetails”,workinggrouppapersandnotesofdiscussions,inICTUArchive:PN-1,PN-2andPESP-

PWG;“finalform”,PESP1991

290

ThePESPwasanextraordinarilydetailedprogramme,farmoresothaneither

thePNRortheProgrammeforGovernment.UnlikethePNR,itincorporatedthe

draft pay agreements, but maintained the mechanism of the Central Review

Committee (CRC) and committed to await the NESC’s review of partnership

institutionsbeforeproposingchangestothestructuresofparticipativeplanning.

ICTU strengthened its hand in the talks by again joining forces with the

CombatPovertyAgencyand,withthesupportofother“poverty”NGOs,issuinga

joint programmewith CPA for “an all out effort … to wipe out the scandal of

povertyinIrelandbeforetheendofthedecade”.ThiscentredonCommissionon

Social Welfare recommendations, a national minimum wage, a National Anti-

Poverty Strategy and a “major assault on long-term unemployment” through

“area-based strategies” and a “Community Development Programme”. All of

thesewouldultimatelybeachieved,by1997,thoughsomealreadyinthePESP.65

ICTUalsoattempted,lesssuccessfully,tobuildpoliticalsupportforthePESP.

While Fine Gael expressed support for “the overall approach outlined by

Congressasabasis fordiscussion”, itsoughtreformofthepartnershipprocess

itself, especially “some format… to involve the Parliamentary Opposition as a

normal feature of this process” so that agreed strategies could continue

“regardless of changes of government”. This at least indicated that while Fine

Gaelsoughtstructuralreforms,itnolongeropposedsocialpartnershipperse.66

The ICTUExecutiveendorsedthe finaldraftandrecommended it in January

1991ballotingbymemberunions.A special conferenceon21Februarywould

decideitsfinalposition.Whileendorsementproceduresvariedbetweenunions,

withsomecraftgroupsrelyingsolelyonanexecutivedecision,thelargegeneral

and public service unions organised secret ballots. The executive of the new

60,000-memberpublicserviceunion,IMPACT,formedbyafusionoftheLGPSU

and UPTCS (and later the IMETU), agreed by large majority to recommend

acceptanceof thePESPas itoffered the “bestachievable” terms,preserved the

65 OntheICTU-CPAalliance,PressRelease,‘ICTUmeetsCombatPovertyAgencyonGovernmentTalks:

BroadAgreementonwhatisneededtotacklepoverty’,09/10/90,ICTUArchive:PN-2,ICTU,h/wnotes,‘PESD’,n.d.(Oct.1990),ICTUArchive:PN-1,‘ICTU.SpecificareasfordiscussionwithGovernmentonaPESD’,18/10/90;ICTU,‘WorkingGrouponJobs,MeetingwithGovernment,24Oct1990’,ICTUArchive:PN-2,andICTU,‘WorkingGrouponSocialServices-Health,MeetingwithGovernment,23/10/90.Agenda’,‘NegotiationsonaPESD,WorkingGrouponSocialServices,31/10/90’,ICTUArchive:PN-1

66 JimMitchellTDtoCassells,17/10/90;ICTUArchive:PN-2

291

“freedomtopursuegradeclaims”andprogressedmany“TradeUnionsocialand

economic aspirations”. Its members voted by over 70 per cent in favour, a

majority replicated in other public sector unions. In often difficult-to-organise

workplaceorunionhallballots,SIPTUmembersvoted60:40percentinfavour

ona50per centpoll.The largestunions thus committed to the ICTUposition.

OppositionunionssuchastheATGWUurgeda“no”voteontraditionalgrounds,

craftunionsrejectedit,anda“grassroots”movementalsoralliedopposition.67

IntheDáil,andinsomecontrasttowhenthePNRfirstfacedunionballotsin

1987anda special conferenceon continuingwith theprogramme inFebruary

1990, this timeopposition leaders,whilequibblingwithgovernmenteconomic

policyandaspectsofthepartnershipsystem,calledforthePESPtobeendorsed.

Labour’sRuairiQuinn, thoughnothisparty leader,DickSpring,whoremained

silent,urgedsupportforboththeNESCplanandthePESP.Againincontrastto

1987and1990,theICTU,atitsspecialconferenceinFebruary1991,achievedan

overwhelmingmajorityof224:109,ornearly70percent,forthePESP.68

A last minute hiccup, as always, provided for some final drama. In

recommending acceptance of the PESP, ICTU made this conditional on “a

satisfactory outcome” to a stand-off with the CIF over the application of the

PESP’s local bargaining clause in the construction industry. Building industry

leaderscomplainedof ICTU’s “mostextraordinarydecision”whichput it in the

“invidiousposition”ofbeingresponsibleforthefateoftheentireagreement.As

withtheCIF’ssimilarlastminutehesitationin1987,itfinallyrelented,however,

andaspecial“memorandumofunderstanding”betweentheICTUandCIFonthe

applicationofthelocalbargainingclausewasappendedtothePESP.69

67 ICTUrecommendation,ICTUSpecialECmtg.17/01/91,items2059-61,ICTUPressRelease,‘Programme

forEconomicProgress[sic]:ICTUExecutiveRecommendsAcceptance’,17/01/91,andCassells‘ToEachAffiliatedUnionintheRepublic’,‘NoticeofSpecialDelegateConference,Thursday21February1991’,21/01/91,ICTUArchive:PN-2;IMPACTandpublicserviceposition,‘MinutesofMeetingofJointExecutives(LGPSU/UPTCS)’,16/01/91,‘MinutesofInauguralMeetingofCEC’,04/02/91,‘MinutesofSpecialMeetingofCEC’,18/02/91,and‘IMPACT:BallotonPESP_’,n.d.[January1991],IMPACTArchive:MeetingsoftheCEC;SIPTUballot,Croke,‘TradeUnionMembershipParticipationinCollectiveBargaining’,IRNReport,14.01.1993;oppositionunionsand“grassroots”movement,M.O’Reilly,Secretary,ATGWU,‘ToallMembers,Branch11/90’,04/02/91,andanon.,‘TradeUnionistsandUnemployedAgainsttheProgramme’[leaflet],08/12/90,ICTUArchive:PN-2

68 RuairiQuinnintheDáil,19/02/91;ICTUvote,ICTUAR1991:48-969 ICTUPressRelease,‘ProgrammeforEconomicProgress:ICTUExecutiveRecommendsAcceptance’,

17/01/9,ICTUArchive:PN-2;ThomasReynolds,ManagingDirector,CIF,toPeterCassells,21/01/1991,ICTUArchive:PN-2;ICTU-CIF“memorandumofunderstanding”,PESP,Annex2toAppendixA

292

Chapter11

Metamorphosis:EconomicandpoliticalconsequencesofthePNR/PESP

PrototypeTiger:towardsan“economicmiracle” Apre-planned transformationof the Irisheconomywas implementedunder

the Haughey governments of 1987-92, establishing the essential features,

trajectoryandmuchofthedetailoftheeconomyofthefollowingdecade.Asin

the previous critical transitions of the 1930s and 1960s, a maturing policy

consensus was adopted, adjusted and implemented by an activist Fianna Fáil

leadership. National economies can be steered by government policy, but will

necessarilybeco-shapedbysemi-autonomousfactorssuchasinheritedfinancial

andagricultural structures,orexternalevents suchas changes in international

traderules.Thiswasnolesstruein1987-92thanintheearliertransformations.

ThePESP,agreedduringthedramaticeventsimmediatelyfollowingthefallof

the Berlin Wall, re-committed to the PNR economy model, adding a 10-year

frameofstructuraltransformation.Giventhenewglobalturbulenceitstatedits

“overridingprinciple”tobereducingthedebt/GNPratioto75percentoftheEC

average and “closing the gap” with EC living standards by 2000. Consistent

progress towards these goals, it said, would boost business, consumer and

market “confidence”, driving investment. Ambitious infrastructure expansion

wouldbeassistedbothbytheECandtheprivatesector.ItbackedspeedyEMU,

thoughbalancedbypoliciesto“suitIreland’ssocialandeconomicneeds”.

Theemergingglobalenvironmentimpactedimmediatelyonthe“Irishmodel”.

Ministers, including from thePDs,now fully in supportofHaughey’s economic

strategy,urgedfirmsto“grasptheimmediateopportunities”openinginEastern

Europe, especially through joint ventures with the mostly German companies

active there but, as Reynolds presciently noted, EMU might “well prove even

moremomentous”.MinistersportrayedIrelandastheECstatemostsupportive

of“expediting”EMU,insistingthatthe“GermansituationnotdelayEMU”,theEC

“speedup…integration[to]provideastableenvironmentinachangingworld”,

293

andurgingthatglobaltradebarriersbedismantled:“Asasmallandtotallyopen

economy”, Irelandneeded “continuinggrowth inworld tradeand theon-going

integrationofnationaleconomiesintotheglobaleconomy”.1

Monetary policy reduced the exchequer borrowing requirement (EBR) in

1990toafifthofits1986peak,andinitiallytheindustrialpolicyfocusofthePNR

wasmaintained.“ThemainfocusandobjectiveofIndustrialPolicy”,Industryand

Commerce,nowledbyPDministerDesO’Malley,reiterated,“istobuildstrong,

internationally-tradingindigenousindustries”.Despitethechangesof1988-89,it

stillsawFDIasancillarytothisobjective,providinghigher-valueproductionand

“linkages”toIrishfirms.Start-ups, thoughonlywithexportpotential,wouldbe

supportedandsemi-states,thoughonlyifprivatecapital-led,assistedtoexpand.2

Butexpandingindigenousexportindustries,the“mainobjective”ofthePNR,

becametheSorgenkindofnationalpolicy,asdescribedinchapter8,evenwhere

itwasdeliveringsuccesses.Despite“avastrangeofincentivesandprogrammes”,

an internal analysis concluded, “the lack of innovation, limited management

capability and absence of good projects were constraining development”. It

would be “some years” before growth in the food sector would deliver

employment dividends. The Department bluntly titled another report “Poor

ResponsefromPrivateSectortoJobCreation”.Theproblemsbesettingthebeef

industry,describedinchapter8,werefurthercompoundedin1990bytheBSE

crisis and theGulfWar.Government securedEC concessionsonmarket access

and emergency intervention to prevent the industry collapsing,while the CRC

established a crisis group on the industry, inducing government to provide

“workingcapital”andincreaseagencysupportstocompaniesfacinginsolvency.3

1 “graspopportuntities”,DesO’Malley,‘SpeechataForumonEconomicandTradeLinkswithEastern

Europe’,01/03/90and“moremomentous”,Reynolds,‘AddresstoIMINationalManagementConference,Killarney’’,28/04/90,GIS:D/I&C;“expeditingEMU”,Haughey,‘SpeechbytheTaoiseachatthepresentationoftheSundayIndependent/UlsterBankBusinessoftheYearAwards’,15/02/90,GIS:D/Taoiseach;D/Finance,‘Address…totheCommitteeonEconomicandMonetaryAffairsandIndustrialPolicyoftheEuropeanParliament,DublinCastle,28/02/90,GIS:D/Finance,Reynolds,‘AddresstoETUCatBrussels’,05/03/90,GIS:D/Financeand‘AddresstoAnnualMeetingofIMFandWorldBankatWashington’,26/09/90,GIS:D/Finance.

2 Nationalborrowing“peak”,Reynolds,‘AddresstotheclosingdinneroftheAnnualConferenceoftheCII’,23/02/90,GIS:D/Finance;industrialpolicy,‘BriefforTaoiseach’smeetingwithICTU23/1/1990,‘ICTUPlan,SharingtheBenefits-MajorReviewofIndustrialPolicy’,DTA:S25862-F

3 “vastrangeofincentives”,D/I&C,‘BriefforTaoiseach’smeetingwithICTU23/1/1990-MajorReviewofIndustrialPolicy’,DTA:S25862-F;“poorresponse”,PaulBates,D/I&C,toD/T,encl.:‘PoorResponsefromPrivateSectortoJobCreation’,Nov.1989,DTA:S25862-D;CRConbeefindustry,CassellstoÓhUiginn,30/08/90,and‘SummaryReports’oftheCRC“WorkingGroupontheBeefIndustry”,Sept.-Oct.1990,

294

AfurtherproblemforthePNRstrategywastheunanticipatedformexporting

industriestookinexploitingtheopeningglobaleconomy.FewIrishglobalfirms

hadexistedbefore1987butmanynowemerged,notablyindairyfoodsthrough

thenewlyincorporatedco-ops,inmanufacturingthroughfirmslikeSmurfitand

Glen Dimplex, in construction through CRH and Sisk, and a range of others in

services. But, contrary to national strategy, and despite unprecedented state

supports, these new companies, as described in chapter 8, were tending to

expandthrough“restructuring”athomeand,byexploitingnewcapitalopenings,

throughprofit-“off-shoring”andacquisitionsabroad.Whilecontributingtovalue

growth, they were delivering little new employment. The sector also suffered

growingreputationaldamagefromaccusationsofa“culture”ofcorruption.What

hadbeenacoreNESCstrategyofpreferentialstatebackingforpromisingfirms

wasincreasinglyunderattackas“cronycapitalism”.4

In this context of uneven performance, government examined its policy

options.Haugheyadmittedinlate1989thatdependingonlarge-scaleindigenous

industry,whilesuccessfulincontributingtogrowth,hadproved“disappointing”

increatingjobs.AstheIDAhadalreadynotedthepreviousyear,itwasmorethe

neglectedsmall industrysector,mostlynewservice-focusedstart-ups, thatwas

demonstrating a “surprisingbuoyancy” and “runningaheadof expectations” in

bothexpansionandnew-jobcreation,accountingforaquarterofalljobsgrowth.

The presence in cabinet of the PDs, champions of small business, assisted a

return tosupporting thesector,not least reformingcompany law in its favour.

But itwas the previously downplayed FDI sectorwhich, following several key

governmentpolicychanges,wouldre-emergeastherealdriverofgrowth.5

Asalreadynoted,FDIhadperformedpoorlysince1980,evencontracting in

themid-decade for the first time since the 1950s. As the NESC and ESRI had

concluded in 1982, from reports such as Telesis produced under Haughey’s

NationalUnderstandingofthetime,thiswasduetothelaissez-faireFDIstrategy

D/A&F,‘CRC-BeefIndustryProblems’,11/09/90,andD/A&FNote,‘Draft-OutlineoftheCurrentStateoftheIrishBeefIndustry’,D/A&F.‘OutlineofPaperonBeefIndustry’,n.d.(Sept.1990),andOifiganAireTalmhaiochtaagusBia,‘MemorandumforGovernment-FarmIncomeSituation’,12/09/90,and‘SummaryReportofSecondMeetingonBeefIndustry’,19/09/90,allinDTA:S26694

4 “culture”,O’Toole19945 “disappointing”,HaugheyinDáil24/10/89;IDAassessment,White,‘ReviewofIDA’sThreeBusiness

Areas,1988,’05/01/89,DTA:S25857-N;PDeffect,O’Malley,D.2014:184-6

295

oftheWhitakererahavingrunitscourse,withbasic-productionfirmsattracted

duringthattimewithdrawingasprotectionistbenefitsended.Telesisdescribed

these FDI firms as having proved costly, unreliable and unsustainable, and

advocatedthestrategychangeto“pickingwinners”inthedomesticsector.With

newFDIslowinginthe1980stowhattheIDAcalleda“trickle”,the1986NESC

reportadoptedTelesis’sproposals,andthePNRasaconsequencefocusedonthe

potential of large indigenous industry, treating FDI as an ancillary element

thoughtargetingittohigh-endsectorstodriveproductionqualityandlinkages.

In linewith thePNR focus, I&CunderReynolds initially scaled back attracting

newFDIinfavourofimprovingexportcapacityamongthe900FDIfirms“stillin

Ireland”.AdominantviewofFDIasvolatilepersisted,andafterEasternEurope

“opened” in1989,many feareda furtherexodus, this timeeastwards,with the

CIImakingthecaseforincreasedbusinessincentivestocounterthethreat.6

HaugheyandtheWayForwardgroup,however,hadneverbeenconvincedof

this“ancillary”viewofFDIandwhilefosteringlarge-scaleindigenousindustries,

continuedin1987tochampionFDI,muchtotheIDA’srelief.FDIrevivedin1988,

the EC attributing a new “substantial inward flow of capital” to the policy

stabilityprovidedbythePNR.Besidessmallstart-ups,FDIsoonprovedtheother

majornew-jobcreator,with the IDAreporting4,700new jobs in thesectorby

October, a net increaseof 2,700,with even existing companies in the Shannon

Zone expanding despite the imminent end of its special status. The IDA told

governmentthatthe“criticismofoverseasindustry”hadproven“misplaced”and

Haugheyleveragedhis“partnership”withDelorstosecureCommissionapproval

to replace the zero export tax ratewith a low 10 per cent corporation tax on

manufacturedexports,applicableatleastto2000,andtoapplythesamerateat

the IFSC. It was the immediate success of the changed focus of the IFSC to

managed funds in late1988,exploitinganearlyreform incapitalopening, that

proveda turningpoint.While the IFSC, lampoonedbypolitical opponents as a

6 onTelesisand1980sstrategiesseechapter7;“trickle”and“stillinIreland”,D/I&C,‘Progressinthe

ProvisionofJobs’,27/05/88,DTA:S25857-E;CIIdemands,CRC,‘SummaryReportof24thMeeting’12/03/90’,h/wnotesofCRCmeeting12/03/90,andIDA,‘DevelopmentsinEasternEurope–ImpactonMobileIndustrialInvestment’,forCRC,25/04/90,DTA:S25857-Z4

296

”whiteelephant”,stillonlyinvolvedafewfirmsemployinglessthan200,itnow

begantogrow,achieving2,000employeesandfundsofover£20bnby1992.7

ThedebateonEECstrategyattheNESCin1988furtherdrovepolicychange.

TheCIIarguedthatwhileEMUopenedopportunitiesforexportingindustries,it

couldgeneratemuchgreaterFDIifIrelandpositioneditselfas“agatewaytothe

Single Market” for mobile investment, incentivising it through low taxes and

profitrepatriationfacilitatedbydouble-taxationrules,andbyliberalisingcapital

movement ahead of competitor states, an approach Tony Ryan of GPA had

alreadyurged in1987.Haugheyhad sensed thepotential of sucha strategy in

1986 when observing the reaction of Irish-American financiers to Dermot

Desmond’sproposalfortheIFSC.Thesamepolicychangeinlate1988whichled

to the “wave” of interest in the centre in early 1989was now also applied to

generalFDIpolicy,withtheIDAsoonreportinghowFDI“surged”inresponseto

itpromotingIrelandasa“keylocationinpreparationfor…theSingleMarket”.

Bymid-1989,I&Cpredicteda“potentiallysignificantsurge”ininwardcapital.8

In the critical year to early 1990, as the global economy opened, the IDA

broughtinarangeoftopFDIcompaniesonthebasisofwhatReynoldscalledthis

“uniquesellingpoint”,includingFujitsu,MotorolaandIsotec.Butitwasafurther

policychangeproposedbyinwardinvestorsthemselvesthatcompletedthenew

government FDI formula.When Apple, the first US computer firm to locate in

Ireland,employing1,500workersandcontractorsinCork,butnowstrugglingto

survive against rivals, threatened in 1990 to relocate to Singapore as the zero

exportrateexpired,Haugheyandhisofficialsstretchedregulationstotheirlimit

7 “neverconvinced”,seechapter6;“IDA’srelief”,interviewPádraigWhite;ECview,‘PresidentDelorson

theEconomicandSocialDevelopmentofIrelandwithintheEC’,28/10/88,GIS:D/Taois.;onnewFDI,IDAIreland,‘ReviewofIDA’sThreeBusinessAreas,1988,’05/01/89,DTA:S25857-NandD/I&C.’20,000Target…ProgressReportofMid-Year’,August1988,DTA:S25857-G;onShannon,Bates,D/I&C,toCRC,Nov.1989,DTA:S25862-D;“misplaced”,‘ReviewofIDA’sThreeBusinessAreas,1988,’05/01/89,DTA:S25857-NonECapprovaloftaxrate,D/I&C,‘ReviewofIndustrialPerformance1990’,n.d.[Nov.1989],DTA:S25862-DandDavidHanna(IDA)inh/wnotesofCRCmtg.26/05/90,DTA:S25857-Z6;onIFSC1988“turnaround”,seechapter7,andpost-1989IFSCgrowth,Reddan2008

8 “gateway”,ConnellanCIItoDanaher,NESC,29/09/88,‘CouncilMeeting16/12/88’,NESCArchive,Box2,also‘AddressbyLiamConnellan…atBrayChamberofCommerce’,23/04/90,DTA:S25857-Z6;“doubletaxation”,ConPower,‘USTaxandInvestment,FourKeyIssues’,CIINewsletter,03/10/89;GPAproposal,PeterDenison-Edson,SeniorVP,GPACorp.AffairsJapan,toDermotDesmond11/06/87,DTA:S25150-A;FDI“surged”,IDA,NewsRelease,‘IDAreviewof1988andoutlookfor1989’,05/01/89andMinisterRayBurke,‘PNRRecoveryJobTargetExceededin1988:End-YearStatementonIndustryPerformance’,29/12/88,GIS:D/I&C;singlemarketstrategy,‘EffectsofInternalMarketinInwardInvestment’enclwithh/wnote,fromLonergan,D/I&C,toÓhUiginn,10/05/89,DTA:S25857-R;“significantsurge”,SeánDorganinh/wnotesofCRC‘Sub-GrouponJobCreation’,28/06/89,DTA:S26122-A

297

to retain thecompany.Theyagreed tocombine low taxandprofit repatriation

with Apple investing its intellectual property (IP) in a “parent company” in a

non-taxjurisdiction.Profitscouldbe“repatriated”tothisentityandIProyalties

offsetagainsttax.ApplewouldremaininIreland,quadruplingitsworkforceover

the following decade, and the same package was offered to other technology

companies, laying the basis for the sector’s European base concentrating in

Ireland.Government,AherntoldtheCII,alsosecuredalooseningofECdouble-

taxation rules “against considerable resistance fromstateswith concerns”, and

convincedtheUStodefertaxrepatriationreformforadecade.9

The new strategy was soon vindicated following an EC-US agreement that

removed restrictions on microchip wafer technology transfer when the IDA

securedits“biggesteverinvestmentinIrishelectronics”,byglobalmarketleader

Intel, with the promise of 2,500 jobs. The sector surged after this, andwould

soonspawnIrishoffshoots.By1993,100,000orhalfofallmanufacturing jobs,

andtwo-thirdsofcorporationtaxincome,wasaccountedforbytheFDIsector.In

tandemwith thenewFDI focus and to complement it, thePESP inaugurated a

radicalexpansionofthirdleveltechnicaltrainingandawideningofaccesstoit.

In1990HaugheyboastedhowtheWorldCompetitivenessReport“ratedIreland

first amongdevelopedcountries in its readyavailabilityof skilled labour”.The

valuechainbegan tochange,withemployment insoftwareexceeding5,000by

1991,fivetimesits1985level,andalreadyaccountingforIR£600minexports.10

ICTU was not uncritical of this development, demanding that government

curblow-taxprofitrepatriationandoff-shoringbyIrishcompanies.ButtheIDA

warnedgovernmentthat incentivecostsand“highlevelsofrepatriatedprofits”

shouldbeacceptedgiventhe“actualeconomicactivity”and“valueaddedwithin

Ireland” they generated. Ó hUiginn therefore urged Haughey to resist ICTU’s

demands,sayingFDIwasnowthebesthopeforgrowingcorporaterevenue,and

9 new1989FDIcompanies,CRC1990;“sellingpoint”,Reynolds,‘AddressataseminarontheDublinIFSC

organisedbytheFSIAandIDAinTokyo’,14/05/90,GIS:D/FinanceApple“deal”,CliffTaylorandIanKehoe,‘Applegottaxdealin1990’,SundayBusinessPost,26/05/2013;‘Adealmadein1991pavedthewayforApple'scurrenttaxissue’,BusinessInsider,30/08/2016;IrelandlobbiesEC,Ahern,‘AddresstoNationalCouncilLuncheonoftheCII’,12/09/90,GIS:D/Labour

10 OnIntel,HaugheyintheDáil15/12/89,Ahern,‘SpeechtoDublinChamberofCommerce’,24/01/90,GIS:D/Labour,O’Malley,‘Inteltocommence£200mmicrochipwaferfabricationplant’,07/06/90,and‘BiggesteverinvestmentinIrishelectronics’,03/10/89,GIS:D/I&C;“ratedIreland”,‘SpeechbytheTaoiseachatpresentationoftheSundayIndependent/UlsterBankBusinessoftheYearAwards’,15/02/90,GIS:D/Taoiseach;valuechainandsoftware,Power2009:198

298

“everymodernopeneconomyhastoaccepttheproblemof internationalprofit

flows…Allthatcanbedoneistoremovedomesticimpedimentstotheretention

ofsuchprofitsand…encouragedomesticinvestment”.11

AsIrishindustrynowbegantomoveupthe“valuechain”,drivenbyFDIfirms,

basicproductioninthesector,suchasatDell,ImpactandDigital,wouldmoveto

Asia or Eastern Europe, but such “losses”were compensated by higher value-

addednewFDIanddomesticenterprises.Thisprocessalsodrovearapidgrowth

ofR&DinbothFDIandindigenouscompanies,risingfrom38to85percentof

theEUaveragebetween1985and1995,surpassingeventheNetherlands.Irish

long-term FDI strategy had thus essentially been put in place and already

deliveringdividendsby1991.Apre-Keynesianeconomywasbeingsuccessfully

re-engineeredasafinancialisedoneattheforefrontoftheglobaleconomy.What

wasoccurringwas,inConPower’sword,nothingshortofa“metamorphosis”.12

The Industrial Policy Review sought by ICTU during the PNR review and

agreed in the PESP in 1991would result in the CullitonReport of 1992, often

portrayedasaPDinitiativeasitappearedunderDesO’MalleyasMinisterofI&C.

But, with FDI policy now set, the PD influence certainly strengthened the re-

orientationofstrategyinCullitontowardssmallbusinessstart-ups.Thechange

offocuswouldleadtoaspittingoftheIDA,withindigenousindustry,start-ups

andexportinghivedoff to “Enterprise Ireland” and its local enterpriseboards,

andtheIDAre-structuredtofocussolelyonattractingfurtherFDI.13

Theaccord reachedbyHaugheywith ICTUonstate industry inMarch1990

incorporatedthatsectorintothenewstrategy,likewisesettingthepatternofits

development.Privatecapitalinputledtoexpansions,successesandfailures.No

actualstatestrategyofprivatisationwasadopteduntilthe1997FF-PDcoalition,

in again changed global conditions, opted for such a course. Haughey, and

Reynoldsafterhim,keptstrictlytotheagreementreachedwithICTUin1990.

11 ICTUdemands,ICTU1989f;IDAon“repatriatedprofits”,on“repatriatedprofits”,IDAIreland,‘Reviewof

IDA’sThreeBusinessAreas,1988,’05/01/89,DTA:S25857-N;ÓhUiginnopposesICTUdemands,‘BriefingMaterialforMeetingbetweenTaoiseachandMinistersforFinance,I&CandLabourwithExecutiveCouncil,ICTU,23/01/90-PositioninRelationtoICTU30PointPlan’,DTA:S25862-F

12 OnR&Dexpansion,Barry,BradleyandO’Malley1999:54;“metamorphosis”,Power200913 Culliton1992;“PDinitiative”,O’Malley,D.2014:184;onIDA/EI,IDAAR1993

299

Thisemergentneweconomyhadmanyconsequences forsocialpartnership.

IntelwasthefirstmajorFDIfirmtoinsistonanon-unionpolicy,andwithnew

servicestart-upsalsooutsideof traditionalunionterritory, themost important

sectorsoftheeconomyweredestinedtodevelopwithout littleunionpresence.

Thisacceleratedthetrend,alreadyidentified,fortheroleofsocialpartnershipin

economicpolicyco-determinationtodeclineinfavourofwelfarestatebuilding.

In 1990 Haughey told his Árd fheis how the Irish recovery was being

“increasingly spokenof internationally as aminor economicmiracle”, and told

hispartyelitethatasaresult“wehaveearnedanewrespectandstatusforour

country among the nations of Europe and the world”. “Our achievements in

economicmanagement and success in transforming the economic outlook are

constantlyacclaimedabroad”.FiannaFáilshouldtakecreditforthisand“speak

out loudly about the miracle their Government brought about”. Given the

absenceofasupportivemedia,thiswouldproveaforlornhope14

TemplateforaSocialandDevelopmentalState Theenduringeconomicmodelthattookshapein1989-91wasaccompanied

by,andinterdependentwith,thestartofatransformationofthewelfarestate.

The PESP was unprecedented in its breath of policy goals across all socio-

economicareas.Nocomparableall-encompassingsocialpartnershipprogramme

existedelsewhereinEurope,apartperhapsfromtheinitialagreementsin1930s

Sweden and post-WW2 Austria. European “neo-corporatist” bargaining was

largely confined to pay and related aspects of economic and welfare/labour

policy. The PESP set the trajectory of the whole of Irish social policy

development forageneration.Theexpansionof the institutionalstate initiated

underthePNRwasspecifiedindetailinthePESP,settingprinciplesofequality

of access, quality development and citizen empowerment within a public-

private-voluntarydeliverymodel,inafurtherconceptualbreakfromtheBritish

Beveridgemodel.Even localgovernmentreform,usually identifiedwitha later

period, extending local competences andmobilising civil society participation,

was initiated in thisperiod, through the “AdvisoryExpertCommittee”of1990.

14 “minoreconomicmiracle”,Taoiseach’saddresstoFiannaFailArdFheis,07/04/90,DTA:S25858-Z3;

“newrespect”,‘SpeechattheCáirdeFáilDinner’,04/12/1990,DTA:S25858-Z10

300

Though not specified in the PESP, it would develop in tandem with it. The

restructuringofthewelfarestateandthebeginningsofaNationalAnti-Poverty

Strategy, asproposedbyCPAand ICTU, alsobeganunder thePESP, asdid the

performance-management and open-recruitment model in the public services.

Aspects of the sweep of institutional reform agreed in the PESP were to

experience bottlenecks and delays, such as the HSE, NTMA, NRA and social

housingmodelsitproposed,butmostwouldeventuallyberealised.15

That comparative studies of European partnership systems view the Irish

modelasapuzzle in itsmultipleoutliercharacteristics, ishardlysurprising,as

partnership was always about much more than purely economic or labour

market management. It organised the “factors of production” to initiate a

transformation of the economy, with incomes as a central “glue”, but also

transformingthewelfarestatetoanenablingfactorineconomicexpansion.The

PESPstateditsobjectiveasto“transformIrelandby…2000intoaneconomyof

anadvancedtypeprovidingsignificantlyhigherstandardsof livingandgreater

economicandsocialequity”,withthesemutuallyinter-dependent.ThePNRand

PESP expanded welfare state transfers, but also reformed it profoundly. As

HaugheyandCassellscorrectlyassertedinthisregard,the“Irishmodel”wasnot

only“uniqueinthehistoryofthestate”but“probablyinEurope”.16

The 1990 NESC report underpinning the PESP critiqued the debilitating

effects on institutional development and long-term planning of “populist”

politics. Indeed, political scientists had long identified the electoral system as

facilitating an avoidance of unpopular decisions and an obstacle to policy

innovation. Dermot McCarthy, long-time Director and later chair of the NESC,

regardedpartnershipasprobablyanecessitygiventhe limitationsof“electoral

parliamentarism”,asitenabled“amuchwidersetofstakeholders”tobeengaged

in shaping andmanaging the “economic, structural and social change” Ireland

urgentlyrequiredbuthadbeenpreventedfromachievingduetothe“limitations

ofthe…traditionalrubricofparliamentarygovernment”.Haughey’simpatience

withbureaucraticatrophyandpoliticalpopulismwasintheradicalFiannaFáil15 Onlaterlocalgovernmentreform,Dept.Environment199616 Multiple“outlier”,BaccaroandSimoni2006;welfarestate,Carey2007;“glue”,O’DonnellandThomas

1998;“transformIreland”,PESPVIII(9);CassellsinICTUADC1990:33-4andHaugheyin‘AddressbyTaoiseachtotheEuropeanRoundTableatDromolandCastle’,13/05/90,GIS,D/Taoiseach

301

mould.PRhad,afterall,beenimposedbythehostile1920GovernmentofIreland

Acttopreventstronggovernmentemerging.DeValera,LemassandHaugheyhad

allchampioneditsreform.ThePNR/PESPpartnersregardedsocialpartnership

asessentialtoovercometheseandotherinheritedinstitutionalweaknesses.17

Thusfar…:settinglimitstopartnershipinstitutions Inreviewingtheirrespectiverolesin1988,theNESCandCRChadconcluded

that a benefit of consensus policy-making by the NESC was that it gave the

political sphere options which it could take or leave. But finalising the NESC

report,StrategyfortheNineties,asthebasisforthePESPwasdelayedbyafailure

bytheCounciltoreachconsensusontwokeypoints.Onewaspropertytaxesand

theother,ironically,partnership’sown“futureinstitutionalarrangements”.18

TheNESC’sStrategyfortheNinetieswasreportedindetailalmostalonebythe

IrishTimes,whicheditorialisedthatasaconsensusstrategybygovernmentand

social partners, itwould, “like a newProgramme forDevelopment”, “be looked

backoninyearstocomeasasignificantstepforwardinpolicyformation”.Italso

praised the “radicalism of theNESC” in “contemplating” a land tax to increase

landuseinsteadoftrying“tomaintainthemaximumnumberofholdings”.19

It was the report’s section on tax, a draft of which was leaked before

publication,thatdominatedwhatÓhUiginndescribedasthemedia’s“distorted”

coverage.TheIndependent,withaneditorialentitled“WrongTax”,declared“the

daythetaxburdenislightenedwillbealongtimeincomingiftheNESCadviceis

heeded”. Appealing to populist sentiment, it further opined: “The kind of tax

reformmostpeoplearelookingforissimple:itisonewhichwouldleavepeople

with enough of their own earned incomes to dispose of as they wish”. The

influentialBusiness&Finance,describingtheNESCas“theofficialtalkingshopof

economicpressuregroups”and the reportasa “returnof thespending lobby”,

17 “populistpolicies”,NESC1990:459andMurphy,M.2006:92;McCarthyinMcCarthy,D.2006:76;

Haugheyonmultiple-seatSTVsystem,interviewHaughey200518 “options”,CRC,‘Functions,MembershipandWorkProgrammeoftheCRC,SDCandNESC’,n.d.[Sept.

1988],DTA:S25857-I;“institutionalarrangements”,NESC199019 “LikeanewProgramme”,ITeditorial26/10/90;“radicalismofNESC”,ITeditorial13/10/90

302

demanded radical income tax cuts funded by further reductions in spending,

suggesting“perhapsweshouldstartbyabolishingtheNESC”.20

Dáiloppositionleaders,capitalisingonHaughey’sweakeningpositionascrisis

rocked the presidential election, denounced what they misrepresented as

NESC’s, and hence government’s, back-peddling on tax reform. In response,

variousministersrushedtodisowntheNESC“proposals”,denyinganyplansfor

property taxes and describing service charges as amatter for the new expert

committeeonlocalgovernment.InfacttheNESCdidnot“propose”suchreforms

butsimplysuggestedtheybediscussedasinstrumentsforwideningthetaxbase.

When launching the report, Ó hUiginn explained that recommendations to

restraintaxcutsandwidenthetaxbase,includingthroughproperty/landtaxes,

income-adjustedlocalchargesandtheabolitionofmortgageandVHIreliefs,had

beendroppedduetooppositionfromfarmingbodiesandthebuildingindustry.21

ThePESPtherefore,whilecontinuingwithincometaxcuts,extendingthetax

base and improving compliance, did notmention property taxes, and tellingly

committedto“promotingowneroccupationasthe formof tenurepreferredby

most people”. When in 1987 cabinet had discussed the most radical cuts, a

property/land tax had been raised but, with Finance advice on its doubtful

impact, had dismissed it as politically inopportune. The controversy over the

NESC report nevertheless demonstrated that however interdependent the

structural reforms proposed by NESC, party politics would determine their

selectiveuse.Theoppositionbyinterestsandpartiestopropertyandlandtaxes

and tax reliefs meant that reforms that might have shaped a very different

evolutionofpropertymarketsoveradecadelater,werepreventedatbirthbya

political/media“consensus”fullyindependentofsocialpartnership.22

Another telling incident was ICTU’s failure to achieve NESC consensus on

developingpartnership structures. In 1987,withÓhUiginn’s – i.e.Haughey’s -

support, ICTUhadsuggestedastudyof “comparative institutions” inEuropean

countries that accounted for their socio-economic success. Its own view, later

20 “distorted”,NESCminutes,23/11/90;“WrongTax”and“kindofreform”,IrishIndependent13/10/90;

“talkingshop”,Business&Finance01/11/9021 Oppositionattacksandministers’denials,IrishIndependent13/10/90,IrishTimes16/10/90;“ÓhUiginn

explained”,IrishTimes26/10/90;originalNESCproposals,ICTUAR1991:5522 “owneroccupation”,PESPIV(79);1987cabinetandD/Financeview,‘StatePapers’,IT29/12/2017

303

outlined inDecadeofDevelopment,was that Ireland should replicate countries

such asGermany, Austria and Finlandwhich had “more developed economies,

higher living standards and lower unemployment, achieved through National

Programmes agreed centrally but implemented with a high level of worker

participation and involvement at the level of the individual company”. ICTU’s

aim,withwhichHaugheysympathised,wastoachieve“amodernefficientsocial

marketeconomy…similartoGermany”.23

“Institutionalism”wasmuchdiscussedbytheNESC,withKatzenstein’sviews

heavilyinfluencingits1986report.Asalreadyseen,thequestionof“appropriate

institutions” for Irish partnership had already dogged that report, with

employersunwilling to support strongspecific recommendations.Whenanew

council was being appointed in 1989, NESC’s secretary suggested that J.J. Lee,

about topublishhismajor ifpessimistic institutionalist study, Ireland1910-85,

beconsideredforappointment.Intheeventhewasn’t,andfortuitouslyperhaps

ashewastoemergeasaprominentcriticofsocialpartnershipforits“holdover

the next government” and its “emasculation of the Dáil”. But the suggestion

illustratedtheprominencegiventoinstitutionalthinkingbytheNESC.24

The study now proposed by ICTU was suspected by employers and civil

servantsasaunionstratagemtocommittheNESCtoAustrian-stylecorporatism,

andthecouncilbecameboggeddownwranglingoveritstermsofreference.The

study, “The Irish Economy in Comparative European Perspective”, was finally

allowedproceed,contractedout toNorwegianpoliticaleconomist,LarsMjøset.

ItsfindingsweretohaveinformedaPESPsectiononpartnershipstructures,and

tomollifycritics,NESChadevenagreedthatbesides“corporatist”states,italso

studySwitzerlandasa“liberalbusiness”model.Butthestudywastobedelayed

bydisagreementsofinterpretation,andwouldnotappearuntil1992.25

NESC’s report to underpin the PESP, Strategy for theNineties, reflected this

stalemate,suggestingsimplyaneedforstrongerinstitutionstoredressIreland’s

“very poor system of innovation”. It noted that institutions in successful23 ICTU1990h24 Lee1989;proposedforNESC,Danaher(Sec.)toChairman[=ÓhUiginn],28/07/1989,NESCArchive:

‘IrelandandtheEEC’,Box3;Leeonpartnership,SundayTribune19and26/01/9725 Mjøset1992;debatedatNESC,DanahertoNESCmembers,26/09/90,NESCArchive:Box3c‘Meetings’;

NESCCouncilMinutes,17/11/89;‘UpdateonWorkprogramme’,21/12/90andDanahertoNESCmembers,26/09/90,NESCArchive:Box3c,‘Meetings’;NESCCouncilMinutes,01/10/90

304

countries had evolved in specific socio-political contexts that could not be

“transplanted” to Ireland, andproposed that further considerationof the issue

awaitMjøset’sstudy.ICTUdidhoweversucceedinhavingthetermsofreference

for the Mjøset study included in the PESP, with a commitment to review its

findings. The question of “appropriate” institutions would remain unresolved,

andMjøset’sreportwouldprovetobealargelyacademicexercise.26

TheinabilityoftheNESCtoagreeonfutureinstitutionsatthisformativestage

meant that the structures of social partnership would develop in an ad-hoc

ratherthanplannedmanner,withsignificantinitiatives,suchasthefoundingof

theNESFin1993andthelaterbroadeningoftheNESC,theresultmoreofparty

politicalandgovernmenttinkeringthanconcertedinstitutionbuilding.Mjøset’s

reportwhen it appeared ironically did find that the source ofmany countries’

successwasindeedtheir“corporatist”“consensus”-seekinginstitutions.

Aneedfordeeperpartnershipstructuresthusremainedthepreferenceofone

partner,theICTU,ratherthanaconsensusofNESC,andon-goingdisputesover

“worker participation”, central to ICTU strategy, would continue to dog social

partnership.Throughitsalliancewithgovernment,ICTUsecuredaconsiderable

extensionofsuchstructuresinthesemi-stateandpubicsector,butintheprivate

sector employers continued to resist any intrusion into management or

shareholderprerogative,concedingonlytalkson“voluntaryparticipation”.27

ICTUhopedthatDelors’“SocialEurope”wouldprovideleverageonthisissue,

especiallygivenacommitmentintheSEAtoreviveEC-level“socialdialogue”as

partoftheSingleMarketproject.ThisledDelorstoestablishanEC-levelunion/

employer“steeringgroup”ontrainingpolicyin1989,thefirstsuchcooperation

inadecade,butitmadelittleheadway.HaugheyandAhernpromisedICTUthat

Ireland would support the “Social Charter” but, following a meeting with

Mitterand,Haugheyalsostatedthatmemberstatesshouldbefreetoapplyitas

in accordancewith their own traditions. He alsomet ICTU requests to confer

withtheETUCandAherndeliveredmajorsocialpolicyinitiativesundertheIrish

EC Presidency. But, noting that differences between member states meant an

intendedCommissiondirectiveonworkerdirectorswasunlikelytoproceed,the26 “awaitMjøset’sstudy”,NESC1990,Ch.15;TermsofReference,PESP,X;remainsacademic,Begg201627 PNRVI(4)

305

Department of Labour advised government that while it might proceed with

participatorystructuresasagreedforthepublicsector,itshouldmeetemployer

objectionsbysupportingonlya“voluntaryandagreed”approachtoparticipation

inprivateindustry,aswasthenagreedinthePESP.28

Asa result, followinga reviewbyahigh-level “Civil ServiceEfficiencyAudit

Group” involving the state, unions and business leaders, and with Reynolds’

support, a performance management/pay system and open recruitment were

trialledandAhern“fullycommitted”tosupport“participativecouncils”inpublic

servicebodies.UnderthePNR,workerdirectorswereelectedinadditionalsemi-

statecompaniesandsub-boardcouncilswereestablishedin24of36bodies.But

therewas littleprogress inprivate industry.ThePNR“AdvisoryCommitteeon

Worker Participation” of ICTU, FIE and experts from the IPA and IPC,

recommended “enabling legislation” for worker representation in larger

companieson theGermanmodel,but theFIEdissented, insisting inaminority

reportona “purelyvoluntaryapproach”onan individual companybasis. ICTU

usedthePNR“review”ofJanuary1990toagainprogresstalksontheCommittee,

arguingthatparticipationwouldenhancecooperationincompetitiveness.Ahern

sidedwith the ICTU,urging “a changeof attitudeon thepartofmanagement”:

“The demand for greater employee involvement is undoubtedly growing

throughout industry, and unless it is met, this motivation will not be

forthcoming”. He assured ICTU he was “fully committed to the principle” and

wanted “theconsensusapproachatnational level translated to the levelof the

enterprise”, but advised “a voluntary rather than legislative approach”. InMay

1990herevivedtalksonparticipationintheprivatesectoronthisbasis.29

28 SEA,Art.118b;ETUC-UNICE“steeringgroup”,O’Dowd1992;FajertagandPochet1997;Governmenton

“SocialCharter”,D/Labour,‘BriefingforTaoiseach’smeetingwithICTUon24Nov.’,and‘ECCharterofFundamentalSocialRightsofWorkers’,DTA:S25862-D;Haughey’spreference,Dáil,24/10/89;Haughey/Aherncommitments,ICTUECmeeting.21/02/90,item1851;D/Labouradvice,D/Labour,‘CRC,ICTUItemno.28:WorkerParticipation’,[Nov.1989],DTAS25857-Y

29 System“trialled”inpublicservice,Reynolds,‘AddresstoIMINationalManagementConference’,28/04/90,GIS:D/Finance,and‘SpeechatthelaunchofTheCivilServiceObservedbyDrCHMurrayattheIPA’,07/06/90,GIS:D/Finance;publicsectorboards,ICTUAR199156;Ahernposition,‘SpeechatannualconferenceofthePSEU’,27/04/90,GIS:D/Labour;on“AdvisoryCommittee”report,ICTUAR1991:55;PNR“review”,CRC1990,ICTU1990h;Ahern“sideswith”ICTU,‘ConferenceinKilmainhamonprofit/gainsharing’,IRNReport,15/11/90;“fullycommitted”,‘Meeting[MinisterandD/LabourwithICTU]30March1990’,DTAS25857-Z4;Ahern,‘SpeechatannualconferenceofPSEU’,27/04/90,GIS:D/Labour;“revivedtalks”,Ahern,‘SpeechatannualconferenceofMSF,10/03/90,GIS:D/LabourandICTUECmeeting.16/05/90,item1921

306

ICTUinpublicdescribedtheachievementof“workplacedemocracy”asoneof

itsmainpriorities,complainingthat“Irishemployers’attitudes…lagfarbehind

the practice inmost European countries”. But it faced amajor obstacle in the

widespread indifference to the subject in its own ranks,which a leading study

described as “marked by apathy”. Debates at its 1990 conference on pay

bargaining,andthepurelyformaladoptionofthe“newtradeunionism”strategy,

hadshownthatpayandsectionaladvantageremainedthemainconcernsofboth

pro- and anti-PNR unions, for all their left-wing rhetoric. Talks on “voluntary

participation” continued in the negotiations on PESP, with one of ICTU’s first

inputs a proposed “Framework Agreement” for an evolutionary process,

extending to shareholdings. Cassellswarned that an agreement “would not be

worthhavingwithout this”.Employersheld toamenuofdifferentapproaches,

including new “corporate cultures” motivating employees through individual

autonomy and share options rather than formal European-style participative

structures.ThePESPagreedthat“participativearrangements”betrialledinthe

public sector, in combination with performance systems, and, for the private

sector,a“JointDeclaration”byICTU/FIEmerelyoutliningamenuofoptions.30

The outcomeof these conflicts on land tax, future institutions andworkers’

participationincompaniesrevealedthepoliticalconstraintspreventingadeeper

partnershipsystem.Theinstitutionsofpartnershipwouldremainprovisional,or

expandedonlythroughadhocmeasuressuchastheNESForcommitteeswithin

theNDP.Asimilarrestrainingoutsideinfluenceontheinstitutionalconsolidation

ofsocialpartnershipwasthecriticalroleofpartypoliticalconflict.

Partypolitics:the(partial)demiseofanti-corporatism Post-WW2 governments involving Fine Gael were notable for their

discontinuationoftripartitestructures.Socio-economicplanningwasinvariably

returned “in house” and tripartite bodies side-lined or down-graded to an

advisory role. Elite socio-economic policy bodies, notably the ESRI, were

preferred. Labour, which might have been expected to champion tripartitism,

30 ICTUcomplaint,ICTU,CongressNews,No.2,July1990;“markedbyapathy”,Gunnigleetal.1999:316;

“Cassellswarns”,‘DraftFrameworkAgreementonWorkerParticipation’in‘StaffMeeting’22/10/90-PESD’,ICTUArchive:PN-1;“notworthhaving”,CassellsinIRNReport,43:90,15/11/90;employerviews,‘IndustrialRelationsConference’,FIEBulletin,Nov.1990;PESPcompromise,PESPIX(7)-(10)

307

waseverwaryofunionpower,preferringstatistplanningwithadvisorysocial

partnerinput.Itwasinstrumentalinestablishingmanyagencieswithatripartite

element, but each government involving Labour ended in bitter party/union

conflict. More left-wing parties, such as Clann na Poblachta and later the

Workers’ Party, tended to promote community participation rather than

tripartite policy-making,which they criticised as undemocratic. In the decades

from1945,FiannaFáilremainedthesolechampionofaradicaltripartitism.

Fine Gael and Labour opposed the PNR in 1987 but, following its role in

stabilisingtheeconomyanditsgrowingpublicacceptance,accommodatedtoit.

In1989FineGaelundertookifelectedtocontinuethePNRbutmodifiedtode-

couplepolicy-making frompaydetermination, and governmentpolicyprimacy

over the NESC. Tripartite forums would be made “transparent” through Dáil

oversight and party political involvement. Labour proposed replacing the PNR

with a traditional statist approach, though now described as “participative

planning”.EitheroptionifimplementedwouldhavecollapsedthePNRsystem.31

The 1990 “left” revolt in the ICTU threatening withdrawal from the PNR

forced a further change in opposition party positions, as they urged union

members to vote to maintain the agreement, though continued to propose

“reforms” to it. The government’s successful European strategy, reflected in

Brussels’supportfortheNDPandasuccessfulIrishPresidency,consolidatedthe

system and reinforced its public acceptance, and this was reflected in the

enthusiasticendorsementofthePESPbyallofitspartners,notleastthe70per

cent union vote accepting it. Opposition critiques became muted, reduced to

minorproposalsforadjustments.GarretFitzGerald,acommentatoragaininThe

IrishTimes, criticised partnership for usurping parliamentary government and

whilethePESPwasbeingnegotiatedDukesagaindemandedarolefortheDáilin

theprocess.JimMitchellcalledfortheNESC,andeventheCRC,tobeexpanded

withgroupsrepresentingyouthand“thepoor”,whohad“asmuchrighttobeat

theconferencetableasthefarmers,unionsandemployers”.32

31 FineGael1989;LabourParty198932 FitzGeraldarticlesquotedinMcGinley1999;DukesonrolefortheDáil,Dáil19/06/90;Mitchellonyouth

and“poor”,Dáil28/11/89;“atthetable”,Dáil14/03/90

308

Haughey’sauthoritywasdamaged in thePresidentialelectionof1990ashe

washumiliatinglyforcedtosackhisTánaistewhilecontinuingtosupporthimas

candidate. He was further weakened by Lenihan’s subsequent defeat. His

positionwasfinallyfatallyunderminedastheGoodman“affair”escalatedanda

successionofrealandconstruedscandals insemi-stateboardsensued.Hewas

soonaTaoiseachonsufferance,finallybeingforcedtoresigninFebruary1992,

whenhedepartedquotingOthellothathehad“donetheStatesomeservice”.33

WhenNESC’skeyreportappearedinOctober1990,ithadbeenlaudedbythe

IrishTimesasadepartureonaparwithLemass’sProgrammesforDevelopment.

But with the presidential election crisis instigated by a faux pas by Lenihan,

opposition leadersused thereport toattackHaughey,denouncingaspectsof it

andquestioningthelegitimacyoftheNESCitself.ThefuroreovertheNESC’stax

“proposals” has already been described. Ó hUiginn complained of “distorted”

press coverage and of the launch of the council’s report being eclipsed by the

“controversialpoliticaleventstakingplaceatthetimeofitsofficialrelease”.34

JohnBruton, nowa contender for the FineGael leadership, demanded from

the NESC how it had arrived at its property tax proposals, and challenged its

study of consensus institutions: “In a democracy legitimacy ultimately stems

from the ballot box” and a “consensus” that excluded “elected political

representatives”wasnot“agenuineconsensus”.Programmesthatextendedover

the electoral cycle eroded parliamentary autonomy and bound incoming

governments.NESC’smandateshouldbetrimmed,andthecouncilexpandedto

include politicians “as full members or observers”. In the Dáil he attacked

Haughey’s appointment of an EC “observer” and department secretaries as in

breach of the NESC constitution, and repeated FitzGerald’s criticism that

partnershipthreatenedthe“sovereigntyofparliament”,presentingit“withafait

accomplinegotiatedoutsidethishouse”.OtherfrontbenchFineGaelTDswarned

that partnership had become “a Fifth Estate or third house”, “more influential

thantheelectedHouses”andpre-ordainingtheirlegislativefunctions.35

33 HaugheyinRyle-Dwyer1993,Maume200734 ITeditorial,IT26/10/90;ÓhUiginninNESCCouncilMinutes,23/11/9035 BrutontoSecretary,NESC,01/02/91,TonyMcCashin,ActingSec.,NESC,toBruton,01/02/91,and

BrutontoMcCashin,11/02/91,in‘AdditionalMaterialRelatingtoCorrespondencewithMrJohnBrutonTD’,NESCArchive:Boxes3and3c;Bruton,JimMitchellandAlanShatterintheDáil30/01/91

309

Bruton’s critique formed themost substantial and sustained criticismof the

partnershipsystem.Preparingthegroundforanalternativegovernmentmoved

Labour tore-align towardsFineGael’spositionandbothparties torefine their

critique. Quinn, closest among the Labour leadership to ICTU and chair of the

ICTU-PLP “LiaisonCommittee”, had applauded theNESC report and supported

union endorsement of the PESP. But he now demanded that partnership be

movedawayfrom“secretive”meetingsin“smokefilledrooms”.Ratherthanthe

CRC,aDáilCommittee,“subjecttodemocraticscrutiny”,shouldoverseedelivery

of agreements. When the Industrial Relations Bill was being debated, he

criticised as “a negation of the functions of this house” talks on amendments

“behindcloseddoors”withsocialpartners.HedemandedthataDáilcommittee

oversee andgive thePESP “somedemocraticunderpinning”. FineGael andex-

Workers’PartyleadersrushedtosupportQuinn.Brutonsuggestedhisproposed

DáilCommitteealsobeinvolvedinnegotiatingprogrammes,asotherwisethese

wouldtiethe“legislativeoutputofthisHouseintoaconcordatinwhich[it]has

nopart”.Rabbittesupportedthisidea,evensuggestingtheCRCberestructured

toincludepoliticiansto“allowforamorepublicappraisalofprogress”.36

This emerging joint opposition position, whether opportunist or idealistic,

prefigured reforms later attempted by various coalitions.While further bodies

such as the NESF would be established by the Rainbow government and the

NESC expanded under a later FF-PD coalition, paywould stubbornly remain a

centralpartofagreementsandideasforinvolvingpoliticiansintheoversight,let

alonenegotiationofagreements,wouldcometonaught.37

Haughey defended the system against its critics. He concededmore groups

mightbeinvolved,thoughonlyifagreedbytheexistingsocialpartners,andwas

notaversetoaDáilCommitteediscussing,thoughnotnegotiating,programmes.

Normalgovernment involvedproposals to theDáiloften formedbeforehand in

discussionwithconcernedinterests,hesaid,andTreatiesalsoonlycamebefore

theDáil for ratificationwhen alreadydrafted. TheNESCwasnot a negotiating

bodyand its reportswerepublic.Partnershipagreementswere subject toDáil

ratification, as were legislative measures proposed in them. Negotiations,36 QuinnapplaudsNESC/PESP,Dáil19/02/91;“democraticunderpinning”,Dáil06/02/9137 “glue”,O’DonnellandThomas1998

310

already “complex enough”, would be “quite impossible” if Bruton’s “additional

politicaldimension”wereadded.Ifthathadbeenattemptedin1987“wewould

never have got an agreement”. As if to illustrate his point, the Dáil thereupon

descendedintoadisorderlytumult.38

As Haughey’s authority waned, ministers began to revert to pre-1987

practices, “requesting” the NESC to undertake minor or politically sensitive

studies on their behalf, such as a review of a postal service viability plan. But

Haughey’sdefenceofpartnershipemboldenedthesystemandatICTUinsistence

the request from the minister for An Post was rejected by the NESC as

“undermining” the purpose of the Council. The council proceeded to adopt a

programmeofwork focusedsolelyonstrategic issues. ItalsorejectedBruton’s

criticisms,respondingthattheNESCdidnotinfringeparliamentaryautonomyas

“theCouncil as such isnot involved innegotiationswhich lead toProgrammes

suchasthePESP”.Forittobeaneffectiveforum,itrequiredconfidentiality,and

would“notwelcomeparticipationbyrepresentativesofpoliticalparties”.39

TheNESCthusweatheredthecrisesthatprecededHaughey’sresignation,and

wouldsurviveuntil1997withoutbeingrestructured.Butpartyconflictinvolving

much point-scoring and pedantry weakened the political legitimacy of social

partnership. Despite converging pragmatic cross-party acceptance of it, the

critiquesaccusingitoflackingdemocraticlegitimacyshowedthattherewaslittle

political appetite outside Fianna Fáil’s leadership circle for any further

embedding of a “corporatist” system. These conflicts also demonstrated the

continuedprimacyofpartypoliticsindeterminingtheremitofthesystem.

Socialpartnershipandequalitypolitics:acasestudy

The PESP presented social partnership as themechanism for a decade-long

structural make-over of the state and economy,mobilising stakeholders in its

implementation. It was all-encompassing, extending to areas few would have

regarded as concerns of “collective bargaining”. This was Garret FitzGerald’s

38 HaugheyinDáil30/01and06/02/9139 OnNESCwork-programme,D.McCarthy,Director,NESCtoCouncilMembers,22/02and20/03/91,

CassellstoMcCarthy,05/03/91andMcCarthy‘NESC’sWorkprogramme’,15/03/91,NESCArchive:Box3c‘Meetings’andCouncilMinutes,15/03/91;NESCrejectsBruton’scriticisms,TonyCashin,secretaryNESC,toBruton15/03/91,CouncilMinutes15/02/91,NESCArchive:Box3c

311

casus belli in his criticisms of the system. In contrast, Haughey suggested the

socialpartnersextenditsparametersevenfurther, includingtoproposals from

the Law Reform Commission (LRC) established to tackle contentious areas of

socialpolicysuchasfamilyplanning,equality,children,andmaritalbreakdown.

ICTUwelcomedthesuggestion,butotherpartnersweremorecautious,andthe

PESPincorporatedonlya fewLRCrecommendations,suchasonprisonreform

andchildren’srights.Butadeliberatelyvaguely-wordedsectionofthePESPleft

openawayforpartnershiptoplayaroleinenablingsocialreform.Thissection

examinesthisinitsroleinthebeginningsofreformtowardsgayrights.40

TheprogressiveliberalisationofIrishsocietyon“socialissues”fromtheearly

1960swas abruptly halted in 1981 by awell-organised conservative counter-

offensivetargetingthedivisiveissuesofabortionanddivorce,butinfactaimed

at reversing what it called the entire “liberal agenda”. The vulnerability of

politiciansunderthePR-STVsystemwasexploitedtocowerandsilencethem.41

Haugheyhadregardedliberalisationasacorollaryofmodernisation,reflected

inhis1960sreformsbenefittingwomen,hisestablishingofthetwoCommissions

on the Status of Women and even his “Irish solution” partially legalising

contraception in 1979. Fianna Fáil had been a liberalising party in the 1960s

until Fine Gael adopted a more liberal stance, culminating in FitzGerald’s

“ConstitutionalCrusade”of1981.FiannaFáilalsoretainedacertainanti-clerical

appeal, deriving from the time of the Treaty conflict. Lemass once said that

however devout the electorate, he found a “political advantage in having a

certainanti-clerical tinge”, something towhich Haugheywasalsonotaverse to

appealing.Whena FineGaelTDdemanded the inclusionof the “Conferenceof

MajorReligiousSuperiors” insocialpartnership,Haugheyretorted thathewas

“alwaysabitdoubtful”ofanygroupwith“‘major’and‘superior’initstitle”.42

The abortion/divorce conflict and the way it was framed presented Fianna

Fáil, then struggling to retain its “dominant party” status, with a dilemma,

leadingHaugheytoalignwiththemajorityanti-reformposition.Thepartywas

40 OnpartnershipandtheLawReformCommission,Haughey,‘SpeechattheCáirdeFáilPresident’sDinner’,

04/12/1990,GIS:D/Taoiseach;ICTU,‘MeetingonPayandConditions,17/12/90,1990-statementbyChrisKirwan,President’,ICTUArchive:PESP-PW

41 OnthePLAC/SPUCcampaigntargetingTDs,seeO’Reilly199242 LemassinatapedinterviewwithDermotRyan,UCDArchiveP311;HaugheyinDáil14/03/90

312

not innately “illiberal”, and had enactedmany liberal reforms, but by 1985 its

illiberal image had reached a nether with its rejection of Barry Desmond’s

contraceptive reform bill, precipitating the founding of the PDs. The law on

homosexuality,whileopentoabusebytheGardaí,hadneverbeenenforcedasin

Britain and Fianna Fáil’s approach to public sensitivities had been reflected in

PresidentChilders’gestureatthefuneralin1978ofpopularactor,MicheálMac

Liammóir,when,asRichardDunphydescribesit,he“verypubliclyaccorded”his

lover,HiltonEdwards,“therespectsduetoawidow”.Inthelate1980s,Haughey

soughtanescapefromFiannaFáil’sentrapmentastheilliberalparty.Heviewed

the LRC as amechanism for further cautious liberalisation free from fractious

political divisions, and believed this could be assisted by the “consensus” of

social partnership. Mary Robinson’s presidential victory demonstrated the

substantial public desire for liberal change if framed in equality terms and

Haughey,whenappointingtheLRC,excludedclericalinterestsentirelyfromit.43

Gayrightsreformintheearly1990spresentsaninterestingexampleofhow

politics, social partnership and liberal reform interacted. Gay rights first

achievedwidepublicattentionwhentheEuropeanCourtin1988upheldDavid

Norris’s case that the Irish courts, in defending the 1867 act criminalizing

“homosexual acts” on the basis of the Constitution’s “Christian values”, had

breachedhishumanrights.TheLawReformCommissionproposedgivingeffect

to the ruling by abolishing the act rather than reforming it as in Britain, and

legislating for legal equality. Haughey, welcoming this, committed in 1990 to

implement the recommendation, as “Fianna Fáil are sensitive to the changing

needsofourmodernsocietyandreadytorespondsensitivelytothem”.44

In the event, with his authority waning, the reform was deferred as the

Catholic-conservative faction supportingReynolds’ bid for the leadership came

totheforeinFiannaFáil.ItwaseventuallyenactedbyGeogheganQuinnin1993

under Reynolds’ Fianna Fáil-Labour coalition. The reform was shaped by an

assiduouscampaignledbyactiviststhroughtheunionsandsocialpartnership.

43 “dominantparty”,McGrawandO’Malley2018;“precipitatePDs”,O’Malley,D.2014:149-55;MacLiammóir

funeral,Dunphy1997:261;Robinsonstrategy,Finlay1998;“illiberal”imageandLRC,Dunphy1997:25444 LRCproposals,Dunphy1997:253;Haugheyresponse,‘SpeechbyTaoiseachatCáirdeFáilPresident’s

Dinner’,04/12/1990,GIS:D/Taoiseach

313

The gay community had been an invisibleminority, and the opprobrium in

which elite circles held it was such that that perpetrators of homophobic

violence,includingmurder,wereoftentreatedlightlyby“understanding”judges.

Publiclygayactivistswerefew,buttheyincludedaleftwingcirclewhowerealso

tradeunionists.Thefirst“NationalGayConference”washeldinCorkin1981in

theITGWU’sConnollyHall,typically,intermsofIrishsocialbonds,becauseGer

Philpott, the son of Cork ITGWU leader Taghd, was “himself amember of the

[GayRights]Collective”.Thiseventmarkedacoming-outofthecommunity,and

established the unions as an ally in securing their rights. Kieran Rose, a

pioneeringactivistandLGPSUmember,urgedthecommunitytopursuereform

through ICTU’sadvocacyof socialequalityand theequal treatmentofworkers

and citizens, rather than as a separate identity. This won over the LGPSU

president,TomBrogue,a“leftwingCatholichugelysympathetictous”,and“the

greatfixer”PhilFlynn,whosympathisedwithgayliberation.45

TheLGPSUwasthefirstuniontoaddresstheissue,adoptingin1982Rose’s

motion to amend employment law to include “sexual orientation” among the

groundsofdiscrimination.WiththesupportofFlynnandBrogue,andfromtwo

otherunions,wherefellowactivistshadalsowonsupport,RosehadtheLGPSU

positionadoptedbyICTU,whereaspeechbyFlynnsecureditsacceptance.46

Manyunionleadersremainedcautiousbutin1985FlynnconvincedtheICTU

Executivetoactionitspolicywithaworkshopongayequality,whichledtowhat

Dunphy calls the “radical” policy, Lesbian and Gay Rights in the Workplace:

GuidelinesforNegotiators, the firsteveronsuchan issue.This initiative ledthe

EEAandtheICCLtonowalsotakeuptheissueofemploymentequality.ICTU’s

equalityofficer,PatriciaO’Donovan,promotedtheGuidelineswithunionsandin

1988UPTCSsecuredafirstagreementunderitprohibitingdiscriminationinthe

civilserviceonthebasisofsexualorientation.Thiswasfollowedin1990bythe

IncitementtoHatredAct,thefirstlawtoinclude“sexualorientation”initsterms,

andtotheLRCproposingthatthisbeextendedtoemploymentlawgenerally.47

45 Interview,KieranRose46 LGPSUinitiative,Rose,www.linkedin.com/pulse/lesbian-gay-right-work-1-kieran-rose;LGPSUCork

conference,IrishIndependent,CorkExaminer14/05/82;Flynnspeech,RoseInterview47 “radicalpolicy”,Dunphy1997:252;Guidelines,ICTU1986;O’Donovamnrole,O'Donovan,ICTU,to

D/Labour,26.11.1986,O'Donovantoaffiliatedunions,05.01.1987;onEEA,Meehan(EEA)toRose,

314

Rose’sactivistshadformedthe“GayandLesbianEqualityNetwork”(GLEN)in

1988toadvancethisagenda,workingcloselywithICTUontheGuidelines.Italso

convinced the FIE to concede the principle and declare that employerswould

welcome “legal clarity”. The equality approach was boosted by the Robinson

Presidentialcampaign,whichhadbeenbuiltaroundthethemeofsocialequality.

These developments formed the background to Haughey’s suggestion to

negotiators that they include Law Reform Commission proposals in the PESP.

Continued de jure criminalisation, however, meant civil servants cautioned

against a “partnership” approach and the eventual equality provisions in the

PESP only focused on women and disabled people. But a brief clause was

includedwhichopenedthewayforageneralreviewofequalitylegislation.48

Theissuewasprogressednotonlyatsocialpartnershippolicylevel,butalso

in its practice. Gay activists secured for an SES project, “Gay Health Action”,

addressingHIV.Asaprojectsponsorrecalled,DepartmentofLabourofficialshad

advised against it after forceful intervention “at the highest level” from the

DepartmentofJusticeopposingitasstate“endorsementofhomosexuality”.But

attheSESmonitoringcommittee,whichincludedsympatheticunionfigureslike

theITGWU’sDesGeraghty,Ahern“toldthecivilservantstogetreal,andnomore

washeardofoppositiontothe[project]beingapproved”.49

Thisprogress throughpartnership ledLabour, strongly lobbiedbyGLEN, to

re-frameits1991EqualStatusBilltoinclude“sexualorientation”.Whenthis,as

anoppositionbill,failed,ICTUcomplainedtoministersofthe“inordinatedelay”

inlegislatinggaylawreformsincetheECHRruling.Progressfurtherstalledafter

Haughey’s departure when Reynolds, embroiled in renewed conflict over

abortion,resistedGLEN/ICTUlobbyingtotakeactiononit.50

But change came the following year with the Fianna Fáil-Labour coalition.

While Labour’s equality agendawas an important factor, thosewho reformed

08.05.1986,RoseArchiveandRose2018;oncivilserviceagreement,InterviewKieranRoseandCivilServiceCircular12/88,RoseArchive;LRCrecommendation,Dunphy1997:253

48 FIEstatementinGLEN,‘ResourceMaterialsonLesbian/GayLawReform’1992,RoseArchive;PESP“review”,PESPIX

49 CathalKerrigan,email18/03/1950 OnLabourbill,Rose,www.linkedin.com/pulse/equal-status-bill-1990-kieran-rose/;“inordinatedelay”,

CassellstoM/Justice,24.05.1991,RoseArchive;Reynold’sinaction,PhilFlynntoM/LabBrianCowan,reUnfairDismissalsAct,08.04.92;GLEN,‘ResourceMaterialonLesbian/GayLawReform’1992andGLEN,‘UnfairDismissalsAct’,1992;UPTCS,‘UnfairDismissalsActResourcePack’1992,inRoseArchive

315

labour,servicesandhomosexualitylawweretwowomenoriginallyappointedby

Haughey,MaryO’RourkeattheDepartmentofLabourandGeogheganQuinnat

Justice.O’Rourke immediately initiateda “sweepingupdate”ofequality law,as

proposedunderPESP,adding “sexualorientation”asa “ground” inall relevant

laws.GeogheganQuinnfollowedsuit,andaftermeetingaGLENdelegationthat

included the mother of a gay man who made an emotional appeal for full

equality, opted, to the “amazement” of activists and public alike, to abolish

homosexuallawentirelyinfavourofsexualequality,withouttheconstraintson

privacyandageofconsentintroducedinBritain.ThisoccurredafterGLENurged

hertoignorethe“puritanBritish”approachandlegislate“atrueIrishsolution”.

This“nationalist”approachappealedtoFiannaFáil,easingthepathtoreform.As

oneactivistnoted,“twoIrishmothershaddecidedtheissuebetweenthem”.51

Gay politics would continue to progress through social partnership, first

throughrecognitionofgaysocio-economicdisadvantagethroughapartnership-

endorsed CPA project and then through the Equality Authority andNESF. The

development of the Irish “equality”-based social state initiated through

partnership had resulted in progressive gay rights reform, leading to other

progressive social reforms that would transform Ireland into a European

equalityleader.Theissueillustratesthecomplexinter-relationshipthatevolved

from1988betweenpolitics,partnershipandreform,replicatedinmanyareas.52

Unrulyoffspring:partnershipandthepoliticsofpoverty CommunitygroupsandcampaigningNGOsweretoachieveasignificantrole

in partnership politics, making the 1990s a “golden era” of “community

development”.Chapter8describestheiremergenceasplayersunderthePNRin

1987-8throughICTU’salliancewiththesectorandHaughey’sacceptanceofitas

adriveroflocalinstitutionalchange,pilotinglocalpartnership-typeinitiativesin

1988.Thisrolewas institutionalised in thedraftingphaseof thePESP through

initiatives under the EC co-funded NDP, and strongly legitimised by Mary

Robinson’s election as President. The “community and voluntary” sector was51 O’Rourke’s“sweepingupdate”,interviewKieranRose;“trueIrishsolution”,ChrisRobson,‘Whatwe

reallywantfromMáireGeogheganQuinn’,GayCommunityNews,April1993;“twoIrishmothers”,quotedinDunphy1997:255-6

52 OnGLENprojectsandNESF/EAinvolvement,interviewRose,emailfromEoinCollins,01/04/19,O'CarrollandCollins1995,EqualityAuthority2002andNESF2003

316

without parallel in Europe, reflecting inadequacies of inherited institutions in

Ireland. The PESP further institutionalised the sector, through the welfare

budgetforums,extendingpilotIRDprojectsandinitiatinglocal“partnerships”.53

WhatemergedwasaninstitutionaldeparturewhichwouldinfluencelaterEC

policy,theIRDprojectsbecomingamodelforits“LEADER”Programme.In1990,

beforethePESP,DelorshadsupportedaninitiativeproposedbyAhernunderthe

IrishPresidency fora “generously funded”additionalEC“Special Initiative” for

projectstocombaturbanunemployment,with“alargedegreeofdiscretion”for

“localoperators” indesigningand implementing them.Ahernalso launchedan

ECresearchprogrammeonlocaldevelopment.AmongtheIrishprojectsselected

under “Poverty3”wasPAUL inLimerick, chairedbyProfessor JoyceO’Connor,

which combined statutory and community groups, including the local ICTU

Centre, in a programme of “integrated measures to tackle poverty”. Ahern

described“thebasisofthestrategy”asa“concertedintegratedeffort”by“local

groups[working]inpartnershipwithStateagencies”.54

Under the PESP, local “area based partnership companies” were piloted on

this basis, encompassing welfare, education, employment, SES and enterprise

projects. Boards representing communities, state agencies and social partners

were established, assisted by a national co-ordinating body meeting in the

Department of the Taoiseach. If successful, the initiative would be rolled out

nationally. Following ratification of the PESP, Congress sought their speedy

establishment and the CRCmet community bodies to form the national body.

Twelve such partnership companies – including PAUL in Limerick and three

consortia in Dublin - were established, with Paddy Teahon of the Taoiseach’s

Departmentco-ordinatingtheinitiative.55

OfficialbodiesresistedconcedingauthoritytosuchgroupsandevenICTUhad

initiallynotenvisagedcommunity-ledprojects,butratherconsortiaofagencies,53 “goldenera”,SeánaiLambe,ininterviewwithDublinInnerCityGroup;“pilotprojects”,SectionVI/1954 Roleof“Poverty3”,KelleherandO’Neil2018;onDelorsandAhern’sinitiatives,‘ConclusionofECSocial

AffairsCouncilmeetinginDublin’,02/03/90,GIS:D/LabourandGerardCollins,‘AddresstoEuropeanParliament’,16/01/90,GIS:D/Finance;“researchprogramme”,Ahern,‘SpeechtoopenLedaProgrammeConference’,21/03/90,Ahern,‘SpeechatopeningofERGOSeminaronactiontocombatlong-termunemployment’,15/05/90,and‘ECCouncilofSocialAffairs,Brussels’,29/05/90,GIS:D/Labour;onPAULalliance,Woods,‘MinisterlaunchesLimerickECPovertyProjecttotackleunemployment’,10/01/90,GIS:D/SocialWelfare;“basisofthestrategy”,Ahern,‘SpeechtoopenLedaProgrammeConference’,21/03/90,GIS:D/Labour

55 “replicated”,PESPVIII;ICTUinitiatives,ICTUAR1991:14,51

317

public servicesandsocialpartners,with the “community” representedby local

ICTU representatives.TheDepartmentof theTaoiseachensureda community-

led structure, however, and used Brussels’ interest in a “high degree of local

involvement” to force agency cooperation, with Teahon, at meetings with the

Commission,oftenbackinglocalleadersagainstcivilserviceresistance.Haughey

was also involved directly, coaxing authoritative figures to take on board

chairmanshipstoensureleveragewiththestateagencies.TheseincludedMark

HelyHutchinson,retiredceooftheBankofIrelandwhohadpreviouslyheaded

theEnterpriseGroupunderthe1981“Understanding”,atDublinInnerCity,and

Pádraic White, just retired from the IDA, at Dublin Northside. Community

activists rather than officials were recruited as managers, and put on senior

salaryscalestoenhancetheirauthorityindealingwithpublicofficials.56

The partnerships were to have a chequered history and their effectiveness

wasimpairedwhenofficialresistancein1992successfullyreversedthepooling

ofagencybudgetsunderthemenvisagedinthePESP.Buttheyprovedsuccessful

in mobilising communities and combining local groups and agencies in many

innovative projects tackling social problems. Many significant innovations

reforming welfare and labour market services, such as income disregards,

women’s programmes, back-to-work schemes and the Local Employment

Service, would emerge from them. They enhanced social inclusion in

marginalised communities, and an OECD evaluation described them as

pioneering a form of “participative democracy” of “potentially international

significance”.Fromthemid-1990stheywereextendednationwide,contributing

totheintroductionoflocallydeliveredservicesandlocalgovernmentreform.57

ICTU again worked in alliance with campaigning organisations, notably the

CPA, innegotiatingthePESP,withtheHierarchyassistingbypromisingICTUa

“PastoralonSocialJustice”.Catholicsocialtheoryremainedapowerfulinfluence,

withArchbishopKavanaghofDublin,whosebrotherhadbeenanFWUIofficial,a

strongadvocateofpartnership.Governmentcontinuedthepre-andpost-budget56 InitialICTUconcept,CRCSub-GrponJobCreation,‘ReporttoCRC,October1989’,DTA:S26122-E,

CassellstoTeahon,12/01/90,DTA:S25857-Z1andICTUADC1990:56-7;leveragingBrusselsinsistenceon“localinvolvement”,h/wnotes18thCRCmtg.21/09/89,DTA:S25857-W;TeahonatCommissionmeetings,DavidConnolly,ininterviewDublinInnerCityGroup;Haugheyinterventions,InterviewswithPádraigWhiteandDublinInnerCityGroup

57 Localpartnershipachievementsand“participativedemocracy”,McCashin,2004:211,Sabel1996

318

consultative “forums” initiatedunderPNR,and instituted thesystematicgrant-

aidingofvoluntarybodies.AtEC levelministersshow-cased the “unique” Irish

State/NGO collaboration in “delivering social services and combating poverty”

andthePESPcommittedtofurthersystematisethisrelationshipthoughaWhite

Paperonthesector,aninitiativeoftenwronglyattributedtoalaterperiod.58

The ICTU-NGO alliance had its tensions, as noted in chapter 8. While it

strengthened Congress’s hand with government, ICTU remained wary of the

sector’s growing influenceand some ideasgaining favourwithin it, notablyFr.

Healy’s“basicincomeforall”asanalternativetopursuingfullemployment.ICTU

rejectedthis“post-industrialdefinitionoflabourandwork”andafuture“world

withoutwork”.Healy’s“SocialJusticeOffice”andyouthorganisationssuchasthe

NYCI,withFineGaelsupport,demandedarole inpartnershipnegotiationsand

evenontheCRC.ÓhUiginnadvisedHaugheytoresistthis,asICTUwasadamant

that partnership not be “diluted” and the CRC remain confined to the “main”

socialpartners.ThechangessoughtbyHealyandtheNYCIwerepartlyconceded

by later governments, resulting, as ICTU leaders saw it, in social partnership

becoming “swamped”, with hard-headed policy debate at the NESC and other

forumsbeingdisplacedby“idealisticspeechesandimpossiblistdemands”.59

As the unemployed organisation, the INOU, also gained momentum, it too

soughta“voice”inpartnership,proposinga“NationalForumonUnemployment”

similar to the New Ireland Forum. Union leaders lent support publicly to the

conceptbut,againfearing“dilution”andanother“talkingshop”,andsuspecting

the INOU of not being an “authentic” voice of the unemployed, urged that the

forum be confined to parties and the “main Social Partners, i.e. trade unions,

employers and farmers”, with “views” being elicited from other “interested

groups”. The Haughey governments therefore resisted the proposal, though it

was laterrealised inweaker formintheNESFestablishedundertheReynolds-

Labourcoalition.Haughey’sgovernmentinvolvedthenewsector inotherways

short of a direct role in partnership, through Woods’ consultative forums,58 ICTU-CPAalliance,ICTUandCPA1990e;“pastoral”,ICTUAR1990:59;Kavanaghrole,Interviewwith

JohnSweeney;grant-aidingvoluntarysectorandWhitePaper,Ahern,‘AddresstotheETUCPressGroup’,28/06/90,GIS:D/Labour

59 Healyand“minimumincome”,Ward1997:247-8;ICTUposition,ICTUADC1989:44-5;seekroleonCRC,MitchellinDáil14/03/90;ÓhUiginnadvice,‘Briefing’forTaoiseachforrepliestoPQs,14/03/90,DTA:S25858-Z2;“swamping”,interviewswithICTUleaders

319

Ahern’sappointmentof INOU figures toprojectboardsand thesector’s role in

the local partnerships. Irish NGOs became sector leaders at EC level, where

Ireland came to be regarded as pioneering an innovative form of state-NGO

interaction.ThisgrowingprestigesawtheINOUtotheforeinfoundingboththe

EC-wide “European Network of the Unemployed” and the “European Anti-

Poverty Network”. Both were given a rare and much coveted policy

“consultative”statuswiththeCommissionbyJacquesDelors.60

ICTUalsohoped,conversely,toreviveitsfadinglocal-levelinfluencethrough

its NGO alliance, urging trades councils and ICTU unemployed centres to be

activein localcampaignsandonthenewlocalpartnershipboards.Whilesome

activists tookup this challenge, this ICTUambitionwasnever realised,despite

theLeftdominatingtheunionmovementat this level.Despiteenormousunion

memberships, the pool of officials and activists interested in such local

involvement proved small, and even the unemployed centres soon faded from

the prominent local role ICTU had envisaged for them. Indeed, Left

oppositionismcontinuedtodogthemovementlocallyaswell.WhileICTUatCRC

level sought a significant expansion of the SES programme, it was to be

embarrassed by left-wing unions blocking schemes in Cork and Dublin city

councils.This involvedthestronglyanti-PNRunion,theIMETU,whichopposed

SESas threatening jobdisplacementdespite amonitoring committee involving

ICTUoverseeingit.EvendirectinterventionsbyAhernwithDublinandCorkcity

managersandCassellswiththeIMETUfailedtoendtheimpasseuntil1992.61

The local partnership and community development structures would face

similarpoliticalhostilityastheoverallpartnershipsystem,especiallyfromTDs

jealous of their intermediary role between constituents and the state being

usurped by the new local institutions. But government’s fostering of the

communitysector,whichinitiatedtwodecadesofinnovativelocaldevelopment,

transformed local public services, inevitably leading to the sector ultimately

being formally included in social partnership, a processmuch analysed in the60 INOU“forum”,Allen,M.1998:288-92;ICTUproposals,ICTUADC1990:43-4;“inauthentic”,interview

O’Donovan;INOU’sECrole,INOUBulletin,June1990,alsoinformationfromRobinHannan,TonyMonks61 Exhortingalocalunionrole,DesGeraghtyinICTUADC1989:60-1;onineffectivenessandfadingofunion

localinvolvement,interviewswithInnerCityactivists;onIMETUblockingSES,h/wnotes‘CRCon16/11/89’,DTA:S25857-Y,‘EmploymentSchemerunsintoTradeUnionflak’,Business&Finance,03/05/90andD/Labour,‘GovernmentActiononEmployment’,27/09/89,DTA:S25862-D

320

literature.Butthebasisforthesector’sgrowthandtheEurope-wideprestigeit

attainedhadbeeninstigated,withICTUsupport,bytheHaugheycirclealreadyin

1987-88andsystematisedby1990,withhehimselfofteninterveningdirectlyin

shaping it. A movement with its origins in a community challenge to state

institutionaldysfunctionwasthuschannelledthroughsocialpartnershiptohelp

achieve institutional reform. Despite its often stormy relationship with that

system, the sector played a key role in the re-formatting of Ireland’s social

servicesandlocalgovernmentsystem.62

Thischapterhasattemptedtodemonstratetheconstraineddynamicsofsocial

partnership as it began to consolidate as a new institutional paradigm. It also

demonstrates the comprehensive societal impact of the new institutions, from

shapingeconomicpolicyandthestructuresofthesocialstatetoinfluencingthe

emergent equality revolution thatwould become central in Irish politics. The

economy would not finally take-off in terms of a radical expansion of

employmentuntilafter1993,butthetrajectoryofthattake-offandthestructural

transformation of the welfare state that would follow was already clearly on

courseby1991.

62 “TDsusurped”,KelleherandO’Neill2018;onthecommunitysectorinpartnership,Adshead2011and

sourcescitedthere

321

Conclusions This thesis contends that the social partnership system initiated in 1987

proved a key institutional factor enabling the transformation of the Irish

economyfromoneofWesternEurope’spooresttooneof itstopperformers in

little over a decade. This was a policy paradigm shift, as profound as that of

1959-63, recasting the economywithin a few years to a newmodel, its future

characteristics clearly established by 1991 and the economic take-off on that

basis indisputable from 1993. Charles Haughey was the central figure in that

transformation, the political innovator who oversaw a socio-economic

turnaroundthroughtightcontrolofgovernmentandaworkingalliancewithkey

socialforces.Amodernisingnationalist,in1987-91hefinallyrealisedastrategic

approachhehaddevelopedovertwodecadesinconjunctionwithbusinessand

unioncirclesandhadseveraltimespreviouslyattemptedtoachieve.

Thisthesisfillsanimportantgapintheliteratureonsocialpartnership.Many

studieshaveappearedon specific aspectsof it, andanextensive literaturehas

appeared in relation to its later role in policy making. There have been

comparative studies with European models of “corporatism”, whose main

conclusion,however,hasbeenthemultiple“outlier”qualityofwhatoccurredin

Ireland, requiring explanation in the specific domestic cultural-political factors

thatshapedit.Intheabsenceofadetailedhistoryofpartnership,manystudies

have been hampered by an inadequate evidential base on its inception, pre-

history and formative early years. This study seeks to provide, on the basis of

rarelyexaminedsources,adetailedtracingofthepoliticsofpartnershipandthe

roleofhumanpoliticalagencyinitsevolution.

The thesis refers to academic theories onwhat explains paradigm shifts in

institutions, and how innovative forces achieve – or fail to achieve - profound

institutionalchangeatmomentsofcrisisanduncertainty.Thesevereeconomic

situationofthe1980swasnot,ultimately,thecoreproblembeingaddressedin

the 1987 departure but rather the contingent event that enabled a long-pre-

planned institutionalparadigm tobeaffected in socio-economicpolicy and the

structuresofpolicymaking. In suchprocessesof radical change, agent-centred

theoriesaremoreappropriate thanstructuralistanalyses,whileprecedingand

322

subsequentinstitutionsinequilibriumarearguablymoreamenabletostructure-

centredpathdependencyapproaches.Itisthereforetheinnovativeprocessthat

is traced in this thesis, as the multiple streams of policy-making, social force

interactionandpoliticalinnovationconvergedatamomentofcrisis.Itidentifies

howplausibilityforamajorpolicydeparture–especiallywithcautiousopinion

leaders among business and unions, political parties and the media – was

achieved in this case by a policy innovator securing authoritative government

power.ItwasHaughey’sconvincingcontroloverparty,governmentandthestate

apparatus in 1987 that accounts forwhy the radical institutional departure of

socialpartnership, forwhichtherewasonlyweakprecedent,achievedsuccess,

incontrasttohisearliersimilarinitiatives.

The thesis explores the corporatist/anti-corporatist dichotomy that shaped

alternategovernments in Ireland inaconsistentpattern fromthe1920s to the

2000s. The particular form in which Irish party/social interest relationships

developed pre-dated the foundation of the state. But political factors

surroundingthebirthoftheFreeStatedeterminedthatwhilethetwodominant

partiesthatemergedcannoteasilybecharacterisedonaleft/rightbasis,aclear

socio-economic divide nevertheless soon separated them. A developmental

allianceofruralandurbansocialforcesformedthebaseofone,FiannaFáil,with

itshighrisk-takinginstinct,whileareactiveallianceofmoreconservativeforces

formedthatoftheother,whatbecameFineGael.AsmallLabourParty,founded

by the Irish Trade Union Congress before the statewas established, espoused

“socialdemocracy”.But,breakingfromtheunions,Labourdevelopedapeculiar

butpersistenthostilitytocorporatismasamereFiannaFáilpropagandaploy.Its

focus instead, usually in Fine Gael-led coalitions, would centre on expanding

statewelfare provision, rather than economic strategy. In this it differed from

social democratic parties elsewhere, which championed corporatism, an

anomalymainlyexplicablebyIrishLabour’selectoralmarginality.

AsaministerandTaoiseach,Lemassportrayedbusiness,unionsandfarming

bodies as productive forces in their own right to be “harnessed” in a national

economicendeavour.FineGaelontheotherhandviewedthemasmere“interest

groups” to be contained, and when in power downgraded and marginalised

323

tripartiteplanningbodiessuchastheNESC,minimisedcentralbargainingto,at

best, pay agreements, and restored policy-making to the sole preserve of

government. While accepting consultative input from “social partners”, Fine

Gael/Labour repeatedly dispensed with systems of structured cooperation,

preferringforpolicyguidancetheinputof“independent”economicexperts,but

withoutachievingnotableeconomicsuccessasaresult.FiannaFáilremainedthe

sole champion of a radical corporatism, though itselfwas consistently divided

betweencorporatistminimalistsandmaximalists.

Therewere also importantdivisionswithin social interests. Inbusiness, the

strong-sector lobby,CII,whichhadevolved fromthe1930sstate-orientedFIM,

inheritedacloserelationshipwiththestate,andwasoftenawillingparticipant

incorporatist strategies.OlderAnglo-Irishcommercial/financial interestswere

more detached and a recurrent problem for state policy, while strictly

“employer” organisations, representing the mass of small businesses and

domesticorBritish-marketdependentexporters,werescepticalorevenhostile,

oftenhavingtobecajoledbygovernmentintotripartitearrangements.Farming

bodies, while opposed to union influence over state policy, ultimately needed

government as an ally to contain EEC or other policy threats, and tended to

comply,howeverreluctantly,withtripartitismwhenitwasintheascendant.This

pattern of state/interest relations also illustrates how the state, rather than

majoreconomicinterests,formedthemaindriveroftheIrisheconomy.

Trade unions, which in European terms organised a high proportion of

workers,werealsodivided,againalongahistoricfault-line.Intheircaseitwas

one between nationalist/republican-aligned general and pubic service sectors

versus a more British-socialist oriented sectional, craft and Left wing that

regardedcorporatismasanunwelcomeregimentationof labourmarketpower

and, ideologically, as “class collaboration”. Though both sides portrayed their

approach in socialist terms, i.e. as in the general working class interest, the

conceptual fault-line remained a fundamental one, producing an almost

monotonouslypredictable2:1divideon the issue, thoughatmomentsof crisis

thisratiocouldinverse.Unresolvedaspectsofthelargernationalquestioncould

alsointervene,inanasymmetricmanner,toexacerbatethisinternaldivisionor

324

underminecooperationwithgovernment,ashappenedtherelationshipbetween

thehegemonicnational-orientedunion, the ITGWU,and theLynchgovernment

following the latter’s volte faceonNorthern policy inMay 1970. This factor is

central tounderstandingseveral turningpoints inthestate/unionrelationship,

notleastthepowerfulpositionoftrustHaugheyachievedwiththeunions.

Haughey,apoliticalratherthanbusinessinnovator,wasthecentralfigureina

nationalist modernising circle espousing a specific socio-economic approach

from the late 1950s. This led in 1982 to the “WayForward” plan that laid the

basisfortheultimatelysuccessfulsocialpartnershipof1987.Althoughthisplan

represented a departure for Haughey in that it initially proposed a unilateral

statestrategy,hewasconvincedbyGermansocialdemocraticchancellor,Helmut

Schmidt,withwhomhewasalliedatEClevel,topersuadehiscircletoembedit

inasocialpartnershipframework,ashehadhispreviousinitiatives.

Analyses of Haughey’s role in Ireland’s economic modernisation have been

overshadowed by an excessive focus on his personal finances, and how his

“lifestyle” was supported by donations from a few wealthy people. Haughey’s

closerelationshipwithsomeentrepreneurialcircleswascertainly important in

influencinghis private-sectordriven approach to economicmodernisation, but

little evidence, as opposed to inferences, has ever emerged to support a claim

thathewaspolitically“corrupt”, i.e.providedpolitical favoursforthispersonal

financial support.This thesis contends thathispersonal financial relationships

wereof littleconsequencetohissocialpartnershipagenda,andarereferredto

only where relevant. There are also other aspects of Haughey’s politics only

briefly touchedon, such as, apart from their ECdimension thatwaspertinent,

innovationsbyhiminforeignpolicy,orinotherareas.Thethesisfocusesonhis

role inshapingthemajorsocio-economicdepartureofhisera,which it finds is

quiteadequatelyexplicableinpoliticalandpolicydevelopmentterms.

The1987ProgrammeforNationalRecovery (PNR)wasakeyevent initiating

bothapartnership systemand the subsequent economic take-off. It integrated

budgetstrategy,socialreform,industrialdevelopmentandpaydeterminationfor

thefirsttimeinatightlyinterdependentstructure.Byprovidingrealwage-value

growththroughitspay/taxformula,expandingwelfare,legislatingforindustrial

325

relations and other reforms to establish industrial peace and promote labour

quality,promotingaprivatesectordynamicinitseconomicstrategies,exploiting

opening opportunities such as in capital liberalisation and involving the social

partners in core policy-making and economic management, it generated

intangible capital strengthening total factor productivity and enabling the

economictake-off,aswasimmediatelyrecognisedbyboththeOECDandEC.The

thesis contends that these TFP factors played a far greater role than hitherto

recognisedinproducingthe“Irisheconomicmiracle”.

Haughey, together with pro-partnership union and business leaders, was

determinednot only that thePNR succeed, but that it be institutionalised as a

“permanentway ofmanaging our affairs”. His sole precondition in negotiating

his1989coalitionwiththe“neo-liberal”PDswasthatthePNRbecontinuedand

partnership become an enduring system. Structures initiated under the PNR

wererefinedandcompletedfirstinadramaticPNRreviewprocessin1990and

then in the successor Programme for Economic and Social Progress (PESP) of

1991. The PESPwas a 10-year plan which in addition to fine-tuning the PNR

model, initiated an institutional transformation of the social state, consciously

conceived as a convergence towards the “Germanmodel”. This arose from yet

another NESC strategy report Haughey had initiated. Subsequent 3-year

agreements in the 1990s, while introducing new elements, were essentially

subsetsofthe10-yearPESPplan.After1992thesystemwouldbetweakedand

tinkeredwith,sometimeswithnegativeeffects,butnotchangedfundamentally.

The“socialpeace”orpaybargainingaspectofpartnershiphastoooftenbeen

narrowlyinterpretedasitscentralfeature.Thethesiselucidatesthekeypower

shift that occurred within trade unionism from sectional to general interests,

which came toahead in conflictsoverapprenticeship, industrial relationsand

otherinputreformsthatlaidthebasisforageneralworkingclassbenefitinthe

subsequent economic expansion. The industrial relations aspect, described by

critics as a “Faustian bargain”, was important in the political exchange of

partnership,butnotitsprimarydriver.Thethesiscontendsthatprimarydriver

tohavebeenacommonprojecttoovercomeadeepproblemofbothsocialand

economic“underdevelopment”, itsaimsframedasachievingstandardsof living

326

and services equal to those of the best-performing small open European

economiesasaresultoftheirpost-wardevelopmentaltransformation.1

Thethesisrevealsthe3-stageplanofHaughey’scircle in1987torealisethe

1982 Way Forward strategy. This entailed an initial half-year free hand to

achievearadicalmonetaryadjustment, followedby industrialpolicy initiatives

pre-empting the PNR but tailored to facilitate a partnership agreement, and

finally thatpartnershipagreement itself, the “PNR”, framing the immediatebut

alsotheplannedlonger-termgoalsandgovernanceofthestrategy.The3-stage

planwasalmostidenticaltowhathadbeenattemptedin1982buthadfaileddue

toHaughey’sinsufficientcontrolovergovernmentandpolicyformation.

Haughey’sstrategywasahigh-riskpoliticalgamble,hisreputationdependent

on its success. It required in turn themembershipsofpartnerorganisations to

ratify it - far from a foregone conclusion. Successful ratification was barely

achievedandwouldremainaprecariousandunpredictablevariableforseveral

years.The intensepolitical exchangewithin socialpartnershipduring1987-91

was reflected in the extraordinary policy output of government and partner

organisations–especiallytheICTUandCII–andinthenolessthansevenhighly

chargedICTUnationalconferencesandtheintenseDáilconflictofthoseyears.

Thepartnershipallianceof1987,asnoted,wasnotbasedprimarilyonsolving

immediate economic problems, but rather addressing problems which the

Lemass-erainitiativesultimatelyhadnotresolved.Anambitious,internationally

tradingbusinessclassanda functionalpolicysystemhadfailedtoemerge,and

many foreign assembly industries attractedunder1960-80planningwithdrew

in the 1980s. The brief Haughey governments of 1980-82 initiated a policy

revolution targeting these structural deficiencies, reconfiguring the National

Understanding, centralising policy power in the Department of the Taoiseach

andrevivingtheNESCasastrategy-makingbody.EvenJ.J.Lee–noadmirerof

Haughey–wasimpressedbytheresultingpolicyoutput,“thefirstseriousdebate

on industrial policy for more than twenty years”. The focus of Haughey’s

strategy,includingtheworkoftheNESC,wastoresolvethehiatusinwhichthe

economyfounditselfaftertheLemass-eradeparturehadrunitscourse,withthe

1 “Faustianbargain”,D’ArtandTurner2011

327

aimoffindingacoherentstrategytoreplaceit.Thishademergedby1982,asThe

WayForward,butcouldonlybeimplementedfrom1987.2

Thestrategicagendaofsocialpartnershipgaveititsdeeplypoliticalcharacter.

This can be summarised as the oft-repeated achieving of “average” European

standardsoflivingandinstitutionalandeconomicsuccesscomparabletothatof

other “small European open economies”. The institutional aspect included

structures to reproduce “concerted” policy-making as in those states, i.e. a

systemof integratedstate/economystrategy-production. Itwas this consensus

goal,thethesisargues,ratherthanthepay/taxbargainingformula,thatprovided

the real “glue” of social partnership, and it is noteworthy that this consensus

begantodissolveandpartnershiptoloseitscommonsenseofpurposeprecisely

asthatprimarygoalwasover-achievedbytheearly2000s.

Thestructuresandpoliciesofpost-1987socialpartnershipwereremarkably

similartowhatcertainpoliticalandinterestcircleshadproposedsincethelate

1940stodriveaneconomicandindustrialdevelopment.Theseinvolvednational

strategybeingagreedbystateand industry interests througha central council

(latertheNIEC/NESC),acentralisedcoordinatingroleforgovernment,anagreed

fiscal/monetary framework, integratedmedium-termplanning,sectoralgrowth

strategies, an enabling – rather than passive - welfare state, business/labour

economicpower-sharingandagreementonresourceallocation.In1987-91such

an institutional departurewas finally achieved through thePNR,with strategy

formation by the NESC, policy coordinated centrally in the Department of the

Taoiseach, and monitoring of implementation by a tripartite “Central Review

Committee” (CRC). The Lynch/O’Donoghue First National Understanding had

lackedallofthese,despitetheunionsseekingthem.Buttheyhadbeeninherent

in Haughey’s first 1970 initiative and more fully in his attempted 1980-82

departure.Howtheconcepts,managementstructuresandpoliciesimplemented

from 1987 were realised and how opportunities presented by the critical

junctureof1987-91enabled their realisation form theheartof this study.The

issueof labour/capitaleconomicpower-sharingisalsoexamined,anditswilful

preventioninindustryidentifiedasacriticalinstitutionallimitation.

2 Lee1989:504

328

Haughey’sECstrategywasinspired,combining-asurgedbytheNESCthough

alreadyinherentinhisown1980-82plan-amaximalistEuropean-integrationist

position aligned to the core pro-integration powers, particularly Germany.

DisparateECStructuralFundinputswereframedinanovelformasa“National

Development Plan”, itself an innovation in EC terms, integratedwith the PNR,

andsubordinatedtothePNR’ssocialpartnershipsystem.ThisenthusedDelors,

at that time facing strong anti-integration opposition, and resulted not only in

Irelandsecuringthehighestrateandpercapita levelofstructural intervention

butalsoarangeofregulationexemptionsenablingtheIrishprivatesector-ledor

co-funded PNR model to be substantially expanded. The Ireland-Commission

allianceformedtodrivetheNDP,describedbyDelorshimselfas“uniqueinthe

history” of the EC, would become the model for EC assistance to emerging

membereconomies.Haugheycementedthealliancethroughseveralimaginative

personal-political initiatives, notably on German unification during the 1990

IrishPresidency,itselfahigh-pointofhisyearsasTaoiseach.

AdistinguishingfeatureofIreland’ssocialpartnershipwashowitintegrateda

liberal-economic but state-dirigiste mixed-economy model with substantial

social-state expansion and social reform. This integrated linkage was insisted

upon by ICTU in particular, but was in fact integral to Haughey’s essentially

socialdemocraticphilosophy.ThroughthePNRof1987,amodeldeepenedand

completedby thePESPof1991, a long-termprogrammeof social/institutional

transformation, strategic planning innovation, employment growth, expanded

private and state enterprise, a remodellingof social/educationalprovisionand

an equality-based approach to social reform was set in train. The combined

economic/socialpolicystrategy,withamixedeconomydevelopingbyexploiting

the global opening, high-regulation, and an expanding enabling welfare state,

wasconsciouslyconceivedasarealisableanswertoIreland’schallengesarising

from late industrialisation. It was also conceived as an alternative route to

modernityandgrowthtothe“monetarist”orsocial-statecontractionstrategies

adopted elsewhere and espoused in Ireland by many opposed to social

partnership and still wedded to aWhitaker-style state-guided but laissez faire

developmentparadigm.Despitesignificantbutultimatelyminorityoppositionto

thestrategywithinbusinessandunioncircles,thekeyinstitutionsofpartnership

329

– the NESC and CRC – ensured its structural viability, long-term policy

perspectiveandthedeliveryofitsprogrammes’commitments.

Thegovernment/partnershipstrategyprovedflexibleandopentoinnovation,

quickly evolving to exploit opportunities for industrial restructuring, new

policiesatEClevelinsupportoftheSingleMarketand,especially,opportunities

presenting through a newly global financial system. Problems in the domestic

industrial sector were overcome by the state-dirigiste policy system changing

priorities and direction. The thesis establishes many of the details of the

emergingeconomicmodelandhowessentialsectoralandothermodificationsto

itwereengineeredduringthedecisive1987-91period.

As the economicmodelwasproving successful andbeginning to assumean

autonomousdynamic, especially from late1990,but job creationhadasyet to

overtakeattritionindecliningindustriesanddemographicpressurescontinued

toexpandthelabourforce,socialstateinnovationbecameanevermoreurgent

concernof partnership.High skills loss through emigration and geographically

concentrated deprivation emerged as singular challenges to state and society.

The shiftof focus to theseareasandaway fromcoreeconomic strategywould

inaugurate a certainmission drift that would later becomemore pronounced.

Nevertheless,many novel initiatives developed in response to the social crisis

through thedual economic/social strategyof socialpartnershipwouldbecome

oneofitsdefiningcharacteristics,makingitamodelofinternationalsignificance.

Thiswasparticularlysoassocialpartnershiphadseemedsocounter-intuitiveat

a time when other states were retreating from or dispensing entirely with

“corporatism”,letalone,asinIreland,ambitiouslyextendingitsfunctions.

This thesis contends that the establishment of social partnership in 1987

represented an institutional rupture, and that the economic transformation

achievedinthe1990s“Irishmiracle”cannotbeexplainedwithoutunderstanding

the key role social partnership played in enabling it. It does not argue that

partnershipperse,oralone,causedtheeconomictake-off,butdoescontendthat

the twoprocesseswere inextricably interlinkedandmutually reinforcing,with

key elements of the latter enabled through the frameworks provided by the

former. It also argues that in the short period of 1987-91 virtually all major

330

economicandsocialpolicyaspectsofthelater“CelticTiger”wereinitiated,their

course,trajectory,andevenmanyoftheirdetails,clearlyestablished.Inarguing

this, thethesisrevealskeypolicy-makingeventsshaping initiativessuchas the

IFSCandurbanrenewalprogrammes,theinspiredstrategyadoptedtowardsthe

EU, aswell as key changes in sectoral policy towards indigenous industry, the

semi-states and FDI that drove the ultimate take-off. It also traces parallel

decisionstakenthatshapedthesocialstatethatemergedthroughpartnership.

The thesis, in theoretical terms, identifies the multiple streams in politics,

politicalandinterestrelations,historicalandculturalprecedents,andexogenous

and domestic factors that converged to enable the institutional departure in

economicandpoliticalpolicyofsocialpartnershipin1987-91.Itestablishesthe

primacy in that institutional rupture of political agency, i.e. the critical role of

dominantfiguresandleaders.Whiletheanalysisofpoliticsandpoliticalprocess

canbepursuedscientifically,politicsitself,andespeciallyleadership,is,asHans

Morgenthaufamouslyputit,“anart,andnotascience,andwhatisrequiredfor

itsmasteryisnottherationalityoftheengineerbutthewisdomandthemoral

strengthofthestatesman”.Thethesischartstheroleofpoliticalleadershipand

even statesmanship, alongside that of the “engineers” as well as structural

factors,inshapingthedepartureof1987-91.3

The thesis contends that Haughey’s role in the economic and social

transformation initiated in 1987-91 was comparable to that of Lemass in the

previousdecisiveparadigmshiftof1959-63.YetwhileLemass’sProgrammesfor

Expansion are accorded near iconic paradigm-changing status in the dominant

historical, political and economic literature, the transformativeProgramme for

National Recovery and Programme for Economic and Social Progress agreed

underHaughey’s leadership areunjustifiablypassedover as largely irrelevant.

The findings of this thesis challenge this, and in doing so also fundamentally

challengedominantnarrativesexplainingboth the “Haugheyera”and the Irish

economictake-off.

3 Morgenthau1946:introduction

331

Addenda

AppendixA:MembershipoftheCRC,1990 332

AppendixB:CRCattendanceunderthePNR,1987-90 333

AppendixC:Payroundsandpartypreference,1945-91 337

Acronymsandabbreviations 338

References:

Archivalsourcesandprivatepapers 344Interviewswithandinformationfromwitnesses 346Presssources 347Bibliography 348

332

AppendixA

MembershipoftheCentralReviewCommittee,1990(ThefollowingwasthemembershipperFeb.1990.Therewereonlyminorchangesduring1987-92,traceableintheattendancerecordinAppendixC)1

GovernmentDepartments

Chair: PádraigÓhUiginn,Sec.D/TaoiseachAgricultureandFood: ThomasArnold,ChiefEconomistFinance: NoelT.O’Gorman,Asst.SecretaryIndustryandCommerce: SeánDorgan,Asst.SecretaryLabour: KevinBonner,Asst.SecretaryTaoiseach: PaddyTeahon,Asst.Secretary ColmRegan,SpecialDevpt.ProjectsAdvisor

ConfederationofIrishIndustry(CII)LiamConnellan,DirectorGeneralConPower,DirectorofEconomicPolicyDr.AndrewO’Boyle,DirectorofIndustrialPolicyConfederationofIrishIndustry(CII)ThomasReynolds,ManagingDirectorGeorgeHennessy,EconomistFederationofIrishEmployers(FIE)JohnDunne,DirectorGeneralJamesO’Brian,DirectorIrishCo-Op.Org.Society(ICOS)JohnTyrrell,DirectorGeneralSéamusO’Donoghue,Director

IrishFarmersAssociation(IFA)AllanGillis,PresidentMichaelBerkery,GeneralSecretaryMancranaFeirme(MnF)LarryFallon,PresidentTonyGarahy,ChiefExecutive

IrishCongressofTradeUnions(ICTU)WilliamAttley,ICTUExec.&JointGen.Pres.,SIPTUEdmondBrowne,ICTUExec.&Pres.,SIPTUPhilFlynn,ICTUExec.&Gen.Sec.,LGPSUGerryQuigley,ICTUExec.&Gen.Sec.,INTOPeterCassells,GeneralSecretary,ICTUPatriciaO’Donovan,Asst.Gen.Sec.,ICTU

CRCSecretariatPatrickO’Sullivan,DepartmentoftheTaoiseachDerekDignam,DepartmentoftheTaoiseach

1 Membershipfrom:CentralReviewCommittee1990:25-6.Firstnameshavebeensubstitutedforinitials

intheoriginal

333

334

335

336

337

338

Acronymsandabbreviations

ACOT AnChomhairleOiliúnaTalamhaíochta[AgriculturalTrainingCouncil]AEU AmalgamatedEngineeringUnionAFF AnForasForbartha[ResearchandDevelopmentAgency]AFT AnForasTalúntais[LandsAgency]AGEMOU Automobile,GeneralEngineeringandMechanicalOperatives’UnionAHSC AssociationofHigherCivilServantsAIA Anglo-IrishAgreement(1985)ALCE AdultLiteracyandCommunityEducationSchemeAnCO AnChomhairleOiliúna[NationalTrainingCouncil]AR AnnualReportASTI AssociationofSecondaryTeachersinIrelandASTMS AssociationofScientific,TechnicalandManagerialStaffsATGWU AmalgamatedTransportandGeneralWorkers’UnionAUEW AmalgamatedUnionofEngineeringWorkersBATU BuildingandAlliedTradesUnionBFWAU BakeryandFoodWorkersAmalgamatedUnion B&ICO BritishandIrishCommunistOrganisationBJIC BritishJournalofIndustrialRelationsBSE BovineSpongiformEncephalopathy[“MadCowDisease”]C&A ConciliationandArbitrationServiceCAP CommonAgriculturalPolicy-- CommunityActionProgrammeCBF CórasBeostoicagusFeola[=IrishLivestockandMeatBoard]CBI ConfederationofBritishIndustryCHDDA CustomsHouseDocklandsDevelopmentAuthorityCIDB ConstructionIndustryDevelopmentBoardCIÉ CórasIomparÉireann(=IrishNationalTransportBoard)CIF ConstructionIndustryFederationCII ConfederationofIrishIndustryCIO CommitteeonIndustrialOrganisationCIU CongressofIrishUnionsCIU-CC CongressofIrishUnions–CentralCouncilCMS CommitteeofMinistersandSecretariesCORI ConferenceofMajorReligiousSuperiorsCPGB CommunistPartyofGreatBritainCOIG ChurchofIrelandGazetteCORI ConferenceofReligiousofIreland

339

CPA CombatPovertyAgencyCPI CommunistPartyofIrelandCPNI CommunistPartyNorthernIrelandCPSSU CivilandPublicServicesStaffUnionCRC CentralReviewCommitteeCSET ComhluchtSiuicreEireannTeo[=IrishSugarCo.]CTT AnCórasTráchtála[IrishExportBoard]CUI CommunicationsUnionofIrelandCYTP CommunityYouthTrainingProgrammeD/ DepartmentofDDA DublinDiocesanArchiveDEPD DepartmentofEconomicPlanningandDevelopmentDept.I&C DepartmentofIndustryandCommerceDept.T. DepartmentoftheTaoiseachDFA DepartmentofForeignAffairsDL DemocraticLeftDSP DemocraticSocialistPartyEBR ExchequerBorrowingRequirementEC EuropeanCouncil-- EuropeanCommunity-- ExecutiveCouncil(ICTU)EDD EconomicDevelopmentDivision(formerlyBranch),Dept.FinanceEEC EuropeanEconomicCommunityEETPU Electrical,Electronic,TelecommunicationsandPlumbingUnionEFTA EuropeanFreeTradeAssociationEIB EuropeanInvestmentBankELC EmployerLabourConferenceEMS EuropeanMonetarySystemEMU EuropeanMonetaryUnionEPA EnvironmentalProtectionAgencyERDF EuropeanRegionalDevelopmentFundERO EmploymentRegulationOrder(LabourCourt)ERP EuropeanRecoveryProgrammeERU EnvironmentalResearchUnit(Dept.oftheEnvironment)ESB ElectricitySupplyBoardESF EuropeanSocialFundESRI EconomicandSocialResearchInstituteETU ElectricalTradeUnionEU EuropeanUnion

340

FÁS AnForasÁiseannaSaothair(EmploymentandTrainingAuthority)FDI ForeignDirectInvestmentFF FiannaFáilFIM FederationofIrishManufacturersFIE FederationofIrishEmployersFII FederationofIrishIndustriesFT FoirTeoranta(IndustrialRescueAgency)FUE FederatedUnionofEmployersFUGE FederationUnionofGovernmentEmployeesFWUI FederatedWorkers’UnionofIreland(also:WUI)GDP GrossDomesticProductGIS GovernmentInformationServiceGLEN GayandLesbianEqualityNetworkGNP GrossNationalProductGS GeneralSecretaryGSO GovernmentStationaryOfficeH&WExec.HealthandWelfareDivisionalExecutive(LGPSU/IMPACT)IAOS IrishAgriculturalOrganisationSocietyIBOA IrishBankOfficials’AssociationICEU IrishCustomsandExciseUnionICMSA IrishCreameryMilkSuppliersAssociationICOS IrishCooperativeOrganisationSociety(FarmingCoops)ICTU IrishCongressofTradeUnionsICTU-ADC ICTU:ProceedingsoftheAnnualDelegateConferenceICTU-AR ICTU:AnnualReportoftheExecutiveCouncilICTU-EC ICTUExecutiveCouncilIDA IndustrialDevelopmentAuthority(IDAIreland)IEA InstituteofEuropeanAffairsIEC IrishEmployersConfederationIFA IrishFarmers’AssociationIFSC InternationalFinancialServicesCentreIFUT IrishFederationofUniversityTeachersIHSB IrishHospitalServicesBoardII TheIrishIndependentIIEA InstituteforInternationalandEuropeanAffairsIIRS InstituteforIndustrialResearchandStandardsILHS&A IrishLabourHistorySocietyLibraryandArchiveIMETU IrishMunicipalEmployeesTradeUnionIMI IrishManagementInstitute

341

IMPACT IrishMunicipal,ProfessionalandCivilTradeUnion INO IrishNursesOrganisationINOU IrishNationalOrganisationoftheUnemployedINP&DTU IrishNationalPaintersandDecoratorsTradeUnionINPC IrishNationalPetroleumCorporationInt. InterviewINUVGATAIrishNationalUnionofVintners,GrocersandAlliedTradesAssistantsINTO IrishNationalTeachersOrganisationIP TheIrishPressIPA InstitutionofPublicAdministrationIPC IrishProductivityCentreIPS IrishPoliticalStudiesIPU IrishPrintUnionIR IndustrialRelationsIRA IrishRepublicanArmyIRD IntegratedRuralDevelopmentIRNR IndustrialRelationsNewsReportIT TheIrishTimesITGWU IrishTransportandGeneralWorkers’UnionITUC IrishTradeUnionCongressJLC JointLabourCommittee(LabourCourt)JSSISI JournaloftheStatisticalandSocialInquirySocietyofIrelandLEADER LiaisonEntreActionsdeDéveloppementdel'ÉconomieRurale[=EC

ruraleconomicdevelopmentprogramme]LGExec. LocalGovernmentDivisionalExecutive(LGPSU/IMPACT)LGPSU LocalGovernmentandPublicServicesUnionLRC LabourRelationsCommission[ofLabourCourt]-- LawReformCommissionLS LimerickSocialistLTU Long-termunemploymentMNF MacranaFéirme(YoungFarmers’Movement)MPGWU MarinePortandGeneralWorkersUnionMSF Manufacturing,ScienceandFinanceUnionNABCO NationalAssociationofBuildingCo-operativesNADCORPNationalDevelopmentCorporationNAI NationalArchivesofIrelandNBU NationalBusmen’sUnionNCCAP NorthCityCentreCommunityActionProgrammeNDC NationalDevelopmentCorporation

342

NDP NationalDevelopmentPlanNEC NationalExecutiveCouncilNEETU NationalElectricalandEngineeringTradeUnion[?]NESC NationalEconomicandSocialCouncilNGA NationalGraphicalAssociationNIEC NationalIndustrialandEconomicCouncilNMW NationalMinimumWageNPB NationalPlanningBoardNUJ NationalUnionofJournalistsNUT&GW NationalUnionofTailorsandGarmentWorkersNWA NationalWageAgreementOECD OrganisationforEconomicCooperationandDevelopmentOEEC OrganisationforEuropeanEconomicCooperationOPW OfficeofPublicWorks[ofD/Finance]P2000 Partnership2000forInclusion,EmploymentandCompetitiveness.PAYE PayAsYouEarn(PayrollTax)PCW ProgrammeforCompetitivenessandWorkPDs ProgressiveDemocraticPartyPEP PoliticalandEconomicPlanning,LondonPESP ProgrammeforEconomicandSocialProgressPLAC Pro-LifeAmendmentCampaignPNR ProgrammeforNationalRecoveryPPF ProgrammeforProsperityandProgressPRSI PayRelatedSocialInsurancePSEU PublicServiceExecutivesUnionPSMD PublicServiceManagementandDevelopmentSection,Dept.LabourPTR Pupil-TeacherRatioPTWU PostalandTelecommunicationsWorkers’UnionPUTUO ProvisionalUnitedTradeUnionOrganisationRTC RegionalTechnicalCollegeRTÉ RadioTelefísÉireann(=IrishNationalradioandTelevision)SDLP SocialDemocraticandLabourPartySEA SingleEuropeanAct,1986SES SocialEmploymentSchemesSFADCo ShannonForeign…DevelopmentCompanySFWP SinnFéinTheWorkers’PartySIPTU Scientific,Industrial,andProfessionalTradeUnionSME SmallandMediumEnterprisesSPUC SocietyfortheProtectionoftheUnbornChild

343

SRTC SligoRegionalTechnicalCollegeSSBs State-SponsoredBodies/Semi-StateBodiesST TheSundayTribuneSWM SocialistWorkersMovement T2016 Towards2016.Ten-YearFrameworkSocialPartnershipAgreementTASS TransportSalariedStaffAssociationTCD TrinityCollegeDublinTFP TotalFactorProductivityTUC TradeUnionCongressTUI TradeUnionInformation(IrishCongressofTradeUnions)UCD UniversityCollegeDublinUCATT UnionofConstruction,AlliedTradesandTechniciansUCD UniversityCollegeDublinUNICE UnionofIndustrialandEmployers’ConfederationsofEuropeUPTCS UnionofProfessionalandTechnicalCivilServantsVEC VocationalEducationCommitteeVET VocationalEducationandTrainingVPTP VocationalPreparationandTrainingprogrammesVTOS VocationalTrainingOpportunitySchemeWCL WaterfordChrystalLtd.WG WorkingGroupWP TheWorkersParty(formerlySinnFéinandSFWP,subsequentlyDL)WUI Workers’UnionsofIreland(also:FWUI)

344

References

ARCHIVALSOURCESANDPRIVATEPAPERS

Note onarchival references: Some series ofminutesmuch quoted in this study,notablythoseofICTU’sExecutiveCouncilandoftheNESCCouncil,arereferencedsimplybythedatesofsuchmeetings,andoccasionallytheagendaitem.TheICTU-ECminutesuptoFebruary1987areintheNAIandfromMarch1987intheICTUArchive, as detailed below. Other material from these sources, including hand-writtennotesofmeetings(“h/wnotes”)onwhichminutesarebased,aregivenfullarchival references, as is all material from other archives, and minutes of CRCmeetings,cabinetandotherorganisations.

charlesjhaughey.ie HaugheyfamilywebsitearchiveCookPapers PapersofSenanCook,formerlyATGWU,WaterfordGlassDCA DublinCityArchive:

CPI RecordsoftheCommunistPartyofIreland

DCU DublinCityUniversityArchive:B&ICO British&IrishCommunistCollection

DDA DublinDiocesanArchive:AB8-B PapersofArchbishopJ.C.McQuaid

DTA DepartmentoftheTaoiseachArchive1984-97:OHP PádraigÓhUiginnPrivatePapersS25150-A IFSC.Development.Feb.-June1987S25281-DtoEPNR.Development,1987 S25306 IFSC.Development.1987-91S25857-AtoZ9PNR-CRC,mtgs./secretariat,1987-90S25858-AtoZ9PNR,Follow-Up,Oct.1987–Jan.1991S25861-A PNR1987.Prep.:TalkswithFarmOrgs.S25862-A PNR1987.Rev./Mon.Cttee.ICTU.Dec.‘87S25862-D Govt.officialsmtg.withICTU,08.11.1989S25862-E Taoiseach-ICTUmtgs.,Nov.-Dec.‘89S25862-F Taoiseach-ICTUmtg.23.01.1990S25862-G Taoiseach-ICTUmtg.27.03.1990S25865-AtoC PNR.StateSponsoredBodiesS25870C Mtg.w.ICTU18/5/1988,27/5/88S25871 PNR1987.Prep.:Mtgs.Govt.-ICTUonPayS25874and-75PNR.Prep.:Mtgs.Govt-CII-FUE,1987S25899-AtoCPNR.CentralReviewCttee.-EECAspectS26122-AtoFCRC.Sub-GrpJobCreation1989S26462 CRCSub-GrpUnemploy.PersonsDisability

345

S26694 CRCWkngGrp/BeefIndustry,Sept-Dec.‘90

FlynnPapers PapersofPhilFlynn,formerGS,LGPSU/IMPACT,Pres.ICTUGeraghtyPapers PapersofDesGeraghty,formerPres.,SIPTU,Vice-Pres.ICTUGIS GovernmentInformationService: PressreleasesonbehalfofMinisters/Depts.,1980-94ICTUArchive ArchiveoftheIrishCongressofTradeUnions:

EC MinutesofICTUExec.Councilmtgs.,1987-

GS- RecordsoftheGeneralSecretary:PA-1a PayAgrmt.,NationalPayTalks–Pay.

1987PA-1b PayAgrmt.,inc.SDC17/11/87PA-1d PayAgrmt.,PNR1987-90PN1-2 PartnershipNegotiations,1987-2000PESP-PWG PESPPay/ConditionsWrkng.Group,

1990ILHSArchive IrishLabourHistorySocietyLibraryandArchive:

O’Shannon CathalO’ShannonPapersCardiff PaddyCardiffPapersLGPSU- RecordsofLGPSUinc.mins.CEC,Exec.

Board,H&WandLGDiv.Execs.,1970-90IMPACTArchive ArchiveofIMPACTTradeUnion(nowFórsa):

CEC MeetingsofCentralExec.Cttee.1991-99NAI NationalArchivesofIreland:

CIU CouncilofIrishUnions,CentralCncl.,Boxes105-6PUTUO Prov.UnitedT.U.Org.,CentralCncl.,Boxes105-6ICTUEC ICTUExecutiveCouncilmtgs.,1959-87.(Boxes

106-11,G4/82/44-49–G4/84/1)TAOIS. RecordsofDepartmentoftheTaoiseach

NLI NationalLibraryofIrelandIQA IrishQueerArchiveO’Brien Papers,WilliamO’Brien,ITGWUgen.sec.1916-59

NESCArchive NationalEconomicandSocialCouncilArchive:Boxes1-14 Correspondence,records,Councilminutes(inc.

h/wnotes)andpapersofNESC,1976-99RoseArchive PapersofKieranRose,formerdirectorGLENSIPTUArchive SIPTUCollegeArchive:

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346

UCDArchive UniversityCollegeDublinArchiveP150 DeValeraPapersP175 WhitakerPapersP176 FiannaFáilPapersP180 TonyHeffernanPapers(Workers’Party)P311 Lemassinterviewsw.DermotRyan,1967-9

WikiLeaks www.wikileaks.org,onlinearchive:USdiplomaticcables,Ireland1966-2014.

YeatesPapers Records/interviewsofPádraigYeates,historian,onpartnership

INTERVIEWSWITHANDINFORMATIONFROMWITNESSES

[Noteoninterviews:Interviewsarereferencedinfootnotessimplyby“Int.”or“Interviewwith”,andinterviewees’names,withfirstname/initialwhereneeded.Someanonymousinterviewswereheldandtheseareidentifiedas“anon.”]

Ahern,Bertie Interviewof12.02.2016.FormerMinister,leaderofFiannaFáilandTaoiseach(1997-2008)

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347

InnerCityGroup Groupinterviewof21.02.2017withDavidConnolly,SeánieLambe,KathleenO'NeillandMickRafferty

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CharlesHaugheyO’Connell,MauriceTelephoneconversationof28.06.2013.Formerchairman,

CentralBankofIreland.O’Donovan,PatriciaInterview28.05.2019.Former“EECOfficer”,Equality

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