The hammer of the (union) gods
The Irish Times has an interesting two part series on the predicament of the Irish unions. Today’s installment provides a good insight into the minds of the union leadership and in so doing illustrates the challenge of relevance. David Begg and Jack O’Connor now say that after 20 years of Social Partnership™, all they ever really wanted was the “Nordic Model” which is clearly the key buzz phrase sitting in the ICTU talking points. Now leave aside that it’s a tad odd to decide after such a long time with a seat at the table to claim that your preferred direction is different and let’s focus on specifics. What is the Nordic model? A recent book by Nordic economists offers a definition –
a comprehensive welfare state with an emphasis on transfers to households and publicly provided social services financed by taxes, which are high notably for wage income and consumption;
a lot of public and/or private spending on investment in human capital, including child care and education as well as research and development (R&D); and
a set of labour market institutions that include strong labour unions and employer associations, significant elements of wage coordination, relatively generous unemployment benefits and a prominent role for active labour market policies.
Which indeed sounds like the kind of thing that unions might be in favour of. But can we get there from here? The difficulty of shifting to a higher tax model is obvious, notwithstanding that Ireland has significant scope for higher taxes. But the whole tax and welfare system would also have to reconfigured to encourage work and the Irish childcare model is very far from the direct role taken by the state in Scandinavian countries.
Indeed, with its focus on reducing unemployment and drawing more people into the labour force (which is critical to the sustainability of its benefits system), the Nordic model works very differently from Social Partnership™, which in its late Tiger days had become a ritual whereby Bertie would descend at the tail end of “tight” negotiations with apparent goodies for everyone currently employed.
There are two other issues worth mentioning. The same book says that it’s necessary to go beyond a list of ingredients and ask: what makes the Nordic model work? –
Furthermore, the importance of a high level of trust and absence of corruption must not be underrated – these phenomena help maintain the public backing and therefore the viability of a large public sector.
Hands up who thinks Ireland has the requisite level of trust in government for such a model to be viable?
Second, the Nordic countries have an interesting difference from Ireland in another respect. Put aside Norway, given the oil and gas. From Sweden, Denmark, and Finland, the first two stayed outside the Eurozone which, for better or worse, has given them more policy autonomy at home which may well be part of the sustainability of their social model in their eyes. One hopes that instead of tossing around a silly insinuation that Ireland is headed for a Blueshirt resurgence (“It shouldn’t be forgotten that it was the middle classes who formed the fascist parties in the 1930s as a consequence of dissatisfaction with both markets and democracy”), David Begg is putting some genuine serious thought into a reworked Irish social model and the past choices that may have pre-empted it.