PROVEEDORES, ACREEDORES, CLIENTES Y DEUDORES DE TRÁFICO

The Council’s shared understanding of the Irish economy includes agreement on Ireland’s role in the EU and the EU’s role in the world. It recognises the critical role of European integration in facilitating the development of a small, peripheral country such as Ireland. Early studies highlighted the role, and appropriateness, of both the CAP and the Structural Funds. The Council has long seen the internal market as important in facilitating market access for firms located in Ireland and improving consumer choice. It accepts the validity of mutual recognition and new-approach harmonisation in achieving a continental market, making it fair to firms and workers in each member state and safe for consumers and national economies. This reflects Europe’s social approach to the construction and management of a market economy. NESC recognises that the small size of Ireland, and its peripheral location, can make it difficult to devise the best strategic and regulatory regime in networked sectors, such as telecommunications, energy and parts of transport. The openness of the Irish economy and society and their small size in world terms – with the consequent importance of trade, international investment and labour mobility – mean that the existence of effective international political and regulatory institutions such as the EU, and Ireland’s full participation in them, is absolutely essential to economic development and social cohesion (NESC, 2002: 13).

A most important element of NESC’s understanding of the economy is agreement on currency and monetary policy. Since at least the late 1980s, NESC has supported Irish policymakers in their quest for a low-inflation and stability-oriented monetary regime through membership of the EMS and participation in transition to the euro. While the Council agreed that, on balance, analytical arguments suggest that this

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is the most appropriate currency regime for Ireland (compared to a crawling peg or a free float), its own work highlighted the fact that the technical mechanism of currency and monetary management can only succeed where there is sufficient consensus on inflation, incomes and public finance (NESC, 1996, 1999, 2002). This is taken up in the discussion of social partnership below.

The Council’s future deliberation on the EU is likely to focus on other areas of policy, such as the environment, common principles on migration and the EU’s role in building a system of international governance that supports economic development, social justice and environmental sustainability. Consequently, the international dimension of the Council’s shared understanding needs to extend beyond Europe, to include policies such as overseas development aid and the issues addressed by the International Labour Organisation, the World Trade Organisation and, to a degree, the UN. While these issues are implicit in NESC’s perspective on Ireland’s economic and social development in an international context, it is too early to claim that the Council has a shared understanding of globalisation. 2.2.4 The Partnership Dimension

Interdependence

The Council’s shared analysis and understanding of the Irish economy includes a significant policy and partnership dimension. At a basic level, the existence of the Council since 1973 reflects the belief of government that dialogue with, and among, the social partners can assist policy for economic and social development. But experience since the late 1970s has greatly enhanced our understanding of these relationships. In its 1996 Strategy report, the Council reviewed Ireland’s economic development in the three decades after 1960. It pointed out that, although the Irish economy achieved significant economic growth, adjustment, modernisation and inward investment in those decades, these successes were qualified in important ways.

Inevitable adversities were allowed to become divisive and produced delayed and insufficient responses. Overall, there was an insufficient appreciation of the interdependence in the economy – between the public and the private sectors, between the indigenous economy and the international economy, and between the economic and the political (NESC, 1996a: 4).

It is this interdependence that underpins the Council’s emphasis, since 1990, on a consistent policy approach, its formulation of an analytical framework for seeking consistency and its understanding of the role of social partnership.

The Council’s Consistent Policy Framework

In 1990, NESC argued that there are three requirements for a consistent policy framework in a small, open, European democracy:

(i) Macroeconomic: the economy must have a macroeconomic policy approach that underpins low inflation and steady growth of aggregate output – discussed above;

(ii) Distributional: there must be an evolution of incomes which ensures continued improvement in competitiveness, handles distributional conflict in a way that does not disrupt the functioning of the economy, and is fair; and

(iii) Structural: there must be a set of complementary policies which facilitate and promote structural change in order to maintain competitiveness, eliminate barriers to participation and achieve social cohesion in an ever-changing environment. Distributional Policy: Coordinated Wage Bargaining and Negotiated Incomes The Council’s view is that the distributional requirement is best achieved by a negotiated determination of incomes and that, to be really effective, such a negotiated approach must encompass not only the evolution of pay, but also taxation, the public finances, exchange rate and monetary policy, and the main areas of public provision and social welfare (NESC, 1990, 1996). This argument reflects the advantages of coordinated wage bargaining in a small open economy adhering to an external monetary anchor. Coordinated bargaining can provide business, government and employees with a degree of certainty that improves their ability to plan. When conducted with skill and flexibility, and on the basis of a shared analysis of the economy, it can reduce the risk of wages over- or under-shooting and thereby smooth aspects of the economic cycle. It reduces the time and attention devoted to distributional bargaining and minimises industrial conflict. This reflects the Council’s view on the analytical issues, its understanding of the approaches adopted in other small European countries, and its reflection on the experience of Irish wage bargaining, both before and during the partnership period. This takes some of the emphasis off the centralised/decentralised bargaining structure and places it instead on the degree to which the social partners pursue a wider national interest and their own long-term self-interest. The Council concluded: ‘the Irish experience suggests that such a co-operative mood of play is, in turn, shaped by the existence of a wide-ranging national programme which aligns economic actors to a particular policy approach and provides trade union members with guarantees on non-wage issues, such as taxation and social provision’ (NESC, 1996a: 102). The Council’s analysis of wage bargaining leads it to the following conclusions on public service pay (NESC, 2005b). First, the competitive sector of the economy should set pay levels and public service pay should follow that set in the competitive sector. Second, ongoing change in a modern public service must be the ‘default’ position. Third, the normal rate of pay advancement in the public service should be the general pay increases negotiated at national level. Fourth, it is appropriate that there are periodic reviews of pay in the public and private sectors which can be achieved through a benchmarking process.

Structural or Supply-Side Policies

The third requirement for a consistent policy approach is structural or supply-side policy. In the context of globalisation, the Council has argued that:

(i) Most of the policies which affect Ireland’s prosperity and social cohesion are supply-side policies – i.e. those that improve quality, quantity and allocation of resources and capabilities;

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(ii) Given rapid economic change, national policies must produce flexibility; and (iii) Successful national supply-side policies – directed towards innovation, competitiveness and inclusion - depend on the high level social cohesion and co- operation that the state can both call upon and develop (NESC, 1996).

This has a number of implications of on-going relevance. First, it suggests that once a consensus on macroeconomic policy is in place – and is reflected in government policy, wage bargaining and management – the main focus of policy analysis and development should be the supply-side measures that influence competitive advantage, social cohesion and societal well-being. These supply-side measures include the adequacy, timeliness and effectiveness of capital investment in the different physical infrastructures that affect the competitiveness of businesses and the levels and consistency of capital and current spending on educational and training that affect the capabilities and adaptability of individuals. Second, it suggests that partnership can play an important role in achieving successful supply-side policies. Indeed, the Council is of the view that structural reforms and supply-side policies are best achieved with the active consent and participation of those who work in public agencies and with the participation of affected citizens and groups. Third, the difficulty experienced in changing some services and making new supply-side policies effective suggests that policy and partnership must focus, in part, on creating institutional arrangements which encourage the discovery and implementation of effective services and other supply-side measures. Indeed, the Council has argued that exploration of the best arrangements for provision of supply-side policies – in utilities and networked sectors, planning and infrastructure, and public services – is a central task for government and the social partners. Equally, ‘willingness to adopt the best arrangements is a central test of social partnership’ (NESC, 2002: 67).