April 2014        

Irish trade unions: A rump clinging to the coat-tails of a future “partnership”?


Recent media reports suggest that, with a supposed “recovery” on the horizon, employers and unions are increasingly making noises about a return to some sort of partnership structure. The leadership of the unions, most notably Jack O’Connor and Shay Cody, have raised the idea of reconstituting some type of formal Employer-Labour Conference.
      IBEC’s response has been a cautious mixture: on the one hand, not entirely ruling out the possibility of such a forum, if only to deal with protracted individual disputes, while on the other, maintaining that firms are at different stages, and centralised wage direction is not an immediate priority.
      The minister for jobs, enterprise and innovation, Richard Bruton, does not believe that any return to national-level bargaining would be feasible or desirable at present and suggests that this will probably remain the situation for a further “eighteen to twenty-four months.”
      However, the union leadership appear to be of the view that if they make enough noise about an “inevitable” and “forthcoming” wage explosion the Government and employers will come to their senses, and unions will find themselves once more at the national table.
      There is no doubt that within union officialdom at present there is a perception that, while things might be tough now, when the recovery sets in they will “get their own back,” so to speak.
      The unions’ confidence on this front derives in part from two sources. One is the registration of wage increases in parts of the unionised sector in recent years. The second derives from a perception that the present crisis is simply cyclical, a normal business cycle of boom and bust, and that the economy has now passed the trough.
      In reality, this confidence is misplaced. While it is true that wage increases have occurred in some profitable unionised firms, it is wrong to assume that general rising wage settlements are a matter of course. Most of this current wage growth has accrued to those workers in sections of the export manufacturing sector. This sector, dominated by the pharmaceutical and medical-device capitalists, has been generally sheltered from the effects of the recession. Such firms have maintained sufficient profitability to be able to continue meeting modest pay claims, partly in line with the last, stillborn national wage agreement and simply as a matter of due operational course.
      The capitalists operating exclusively in the Irish market and SME sector, however, continue to face stagnation in the domestic economy and pressures to reduce unit labour costs in an effort to survive.
      Furthermore, in a context of mass unemployment it seems improbable that the wage gains in the sheltered sector derived from any union bargaining power. Much of the modest pay increases have been accompanied by significant productivity concessions. The pharmaceutical and medical-device sector has undergone intensive productivity drives and labour-process restructurings in recent years, which have probably raised the relative rate of surplus value among workers in these firms. In most of these firms the union at the company level remains a fairly hollow shell, characterised by weak local structures, inexperienced shop stewards, and demoralised membership.
      While there is of course some shallow evidence of wage increases in other sectors, such as retail, these figures can be misleading. The weekly Industrial Relations News reports that about 22,000 workers in retail secured wage increases in 2013. However, 14,000 of these were Dunne’s Stores workers; this pay move was a unilateral decision by the management and not negotiated through collective bargaining.
      Even then some of the deals have included pay pauses or longer phases of pay-out, which would have brought down the average pay increase per year significantly. Like the pharmaceutical and medical-device sector, such deals have also included significant productivity items over and above “normal ongoing change.”
      Recent macro-economic reviews by the Central Bank and the Central Statistics Office also cast doubt on any wage explosion arising in the near future. The data in these reports indicates that a high level of slack in the labour market, along with pay restraint in the public sector, is expected to keep economy-wide wage pressures well anchored from 2015 onwards.
      In its latest quarterly report the Central Bank says that economy-wide pay per employee “probably registered a small decline” in 2013. It also notes that reductions in hourly pay, which were rare when employment losses were greatest during 2010 and 2011, have recently become a feature of the data.
      The CSO’s earnings, hours and employment costs survey provides further evidence of wage reductions in 2013. On a quarterly basis, it says, economy-wide wages declined by 2.4 per cent in the third quarter. Comparing the first nine months of 2013 with the same period of 2012, weekly earnings are down by 0.9 per cent, which the Central Bank says is “consistent with the trend in compensation from the National Accounts.”
      When less than a fifth of workers in the private sector are union members, when inflation averages a mere 0.5 per cent at present, and when GDP is down 2.3 per cent (the worst since 2008), it is difficult to see where a unionised wage explosion will come from. With the private labour force well disciplined by unemployment, and public-sector unions shackled until 2017 (thereby eliminating the relevant budgetary issues from the current labour cost expenditure equation), it is unlikely that the state and employers will have any need to invite unions into “managing our recovery” and constructing some sort of “understanding” on the industrial front regarding wage inflation.
      Yet it is revealing that this is the best of all possible worlds that the union leadership can seem to envisage.
      It’s tempting to maintain that the union movement appears slow to wake up to the potential game-changing quality of the present crisis. As Milton Friedman once observed, ruling classes should never let a good crisis go to waste. This is precisely the dictum our elites are following. As the CPI recently argued, the “Troika,” in alliance with the Irish ruling class, are engaged in a project precisely to ensure that the present crisis does not go to waste.
      The aim is to fundamentally restructure the rules of the game between capital and labour. The project is to construct a “flexible” low-wage zone, filled with pliable labour, to facilitate the transfer of wealth from working people upwards to the Irish ruling class, and to create an amenable environment for foreign capitalists to operate in.
      The unions, on the other hand, appear to believe that this is just a normal business cycle and that things will soon return to the days before the crisis. At the annual Jim Larkin Commemoration in Glasnevin Cemetery on the 2nd of February, Jack O’Connor said, for example, that the unions “must apply ourselves . . . to the immediate task of recovering ground which has been temporarily lost over the crisis years.”
      As noted above, this strategy is to to secure significant rounds of pay increases and thereby coax employers and the state back to some sort of tripartitism. The result of this would probably be for the unions to subsequently exchange wage restraint for some tax reliefs.
      In a context of weak local-level structures, demoralised membership and private-sector erosion, engagement with capital and the state—from a position of weakness rather than strength—is unlikely to be a strategy for revitalisation and growth. At best it indicates a role for the union leadership as pay moderators for a declining rump of union members and a road to further marginalisation and decline.
[NC]

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