Ireland: The Celtic Tiger and the Social Con-trick

In 1987 the propaganda machine of the Irish government and the bosses worked overtime to sell the social contract. Trade union leaders too were keen to sell their members the idea of social partnership, management and unions would get together to cooperate over improving the state of the Irish economy in order to share out the subsequent wealth generated.

The Programme for National Recovery committed these 'social partners ' to "seek to regenerate the economy and improve the social equity of our society through their combined efforts." As long as workers worked harder the size of the national cake would grow and consequently the workers share would grow too.

I have no idea what effort the bosses made but the figures quoted above demonstrate that for all their hard work the workers share has been consistently falling throughout the unprecedented boom in the Irish economy over the last decade.

Today the government and the bosses yell bellicose attacks at workers fighting to defend themselves that there must be no conflict, no challenge to the social partnership which has produced this redistribution of wealth to the rich, or the whole boom will fall apart. Is it the case that the boom was created and is sustained by the social contract which holds workers wages in check while the bosses rake in super profits?

Certainly the social contract has been the cover behind which the bosses have sought to increase their profits by increasing productivity, that is changing working conditions to make us all work harder and longer.

Any claim that there is a link between profits and wages in the social contract sense, ie that if workers work hard and improve the profits of their company they will be better off, has been shattered by the results of this boom. On the contrary, the Marxist argument that, all else being equal, as the bosses share rises so the workers portion declines has been conclusively proven. Between 1990 and 1997 industrial profits soared by 144% whilst workers wages grew by 59%. If we look at all sectors of the economy the average profit growth for every year from 1990 to 1998 was 50% higher than the growth in wages.

The real cause of the Irish boom is to be found in the world market and, in particular, in the US expansion which has kept the entire world economy afloat and dragged Ireland along in its wake. Sensationally low corporate taxes helped to attract inward investment into a country with an educated and English speaking working class. Money from EU funds and the like has played a certain role, but above all it is investment that is the engine of growth in the capitalist economy. US firms in particular have expanded their operations in the south hand over fist. Yet it has been through the deterioration of workers wages and conditions that their profit levels have soared. Ireland has acted as a springboard into the markets of the EU for US multinationals like Dell and IBM and the level of workers wages has been an important attraction for them. The US government estimates that total hourly compensation for Irish workers in 1998 for example was $14 an hour compared to $28 in Germany.

The term Celtic Tiger is in some ways misleading. Whilst it has been a powerful boom from which the bosses have gained at the expense of the workers, and indeed it shares with its South East Asian counterparts a large degree of corruption in high places (the Ansbacher bank accounts and the sleaze surrounding Haughey for example) the real model for the Irish boom has been the US. The growth in inequality in Ireland mirrors that of the giant across the Atlantic. Indeed hardly a surprise since US multinationals own a bigger and bigger slice of the Irish economy. The contribution made by US foreign affiliates in Ireland to the country's GDP is a staggering 16.5%. The Irish economy today is more dependent on the US than Honduras or Costa Rica. Spurred on by this foreign investment the Irish capitalists have invested too. Employment in 'home grown' industry has risen. However much of this is in the service sector, still linked to and utterly dependent on the US.


The belief that this bounty will continue indefinitely is a delusion. Even now US firms do not reinvest the profits they rip out of Ireland. In the event of a recession in the US the steady flow of new investment will dry up and the American multinationals will leave the Irish economy high and dry. The same workers who have paid for the bosses super profits in the boom will be asked to pay for their losses with unemployment or still worse wages and conditions in a slump.

Investment from the US is indeed linked to the social contract in that US multinationals are keen to invest in a country which offers them such a staggering rate of return on their investment. In Ireland they are getting a 25% rate of return, twice what they can expect from Portugal, three times Spain and five times Britain.

Where's all the wealth created gone? Not into workers pockets that's for sure. It has been invested in the stock market, or flown out of the country.

Investment has meant industrialisation and the growth of new production. There are more workers employed yet they share between them a smaller portion of the national wealth than before social partnership. In fact, if wages had maintained the same proportion of national income as in 1987 every worker in Ireland would be £2,500 better off.

Productivity has been increased through the introduction of new, US-style management techniques, lean production etc, in other words the same counter revolution on the shopfloor as in Britain - in fact this is an international phenomenon. Whilst new technology and so on have played an important part in the recent expansion, the boom has essentially been paid for out of the pockets and the stress and strain of the workers. Now ironically it is precisely those new technology sectors, computers, mobile phones that are beginning to cut back on their investments, and cut back on Irish jobs.

However it will be argued that whilst the bosses profits have grown exponentially workers wages have nonetheless grown. Living standards for a part of the working population have indeed improved but only at the cost of immense stress and strain. However the poorest in society have seen their position steadily deteriorate. Meanwhile state expenditure, the so-called safety net meant to catch those falling into poverty, has been cut back drastically. According to the UN Ireland has the second highest level of poverty in the western world. Whilst workers have worked harder and longer to make more profits for the bosses, they've gained little or nothing themselves. Even in this its greatest period capitalism has been unable to benefit the majority.

The growing realisation of this fact is responsible for the growing class polarisation in Irish society.

Juxtaposed to the position of the majority, we have the conspicuous consumption, the brash display of wealth on the part of those who've profitted most. The flash cars parked outside Dublin's top restaurants contrasts severely with the position of the majority of the population. It is this inequality, the struggle to survive on the part of the majority alongside the obvious wealth of the rich which leads workers to the conclusion that they have been cheated. Workers have not got their fair share. In reality the boom was due to the world economy and the US in particular, the social contract has been the con trick by which the bosses have squeezed more and more out of the workers for themselves. When the economy was stagnating for a whole period the idea became quite widespread that everyone had to tighten their belts, that nothing could be done. But when workers see these bosses flaunting their waste of the wealth we have produced but are not sharing in then they are bound to draw conclusions.

Indeed there has already been the beginnings of a backlash. Bus workers, nurses and teachers have been striking for the higher wages to which they are entitled or against a further deterioration of their conditions. Building workers, (given the non stop programme of construction in and around Dublin you'd imagine they were benefitting,) have been fighting back against appalling safety conditions in the industry. The Social contract might have had an initial attraction for some workers, promised by their union leaders that everyone would benefit, but if it means constant attacks on conditions it must be fought. In any case it is not responsible for the boom only for the size of the profits Irish, American and other capitalists have been raking in during the boom. That will come to an end as sure as night follows day and we'll be asked to pay again.

Feeling increasingly cheated workers in Ireland are beginning to fight back. In some cases they simply want the higher wages to which they are entitled too for their higher productivity. Others have reached a line in the sand where the bosses are trying to undermine conditions still further to boost their profits. The Irish Nurses Organisation not traditionally known for militancy, nevertheless demonstrated how far nurses had been pushed beyond their limits when a staggering 96 percent voted for strike action in 1999

Fight back

However time and again it is not just the employers the government and the state that opposes the workers attempts to fight back, it is the workers own leaders in the trade unions. SIPTU, the Services Industrial, Professional Technical Union with 155,000 members comprises around 40 percent of union members. In a ballot, despite the overwhelming endorsement of the leadership, 42 percent voted against the Partnership 2000 deal. Bearing in mind that even the ballot paper contained a recommendation to vote in favour this is highly significant. The union leaders, however, see partnership with the bosses not struggle as the way forward. As ICTU put it partnership means moving from "the clenched fist of confrontation to the open hand of cooperation." They are tied to the idea of social partnership, more accurately class collaboration. They act like referees in the fight between workers and bosses rather than leaders. Yet they are not the ones suffering short term contracts or total quality management. The top three officials in SIPTU receive more then £70,000 a year, so they aren't suffering from too much belt tightening either. The only partnership the bosses are willing to offer the workers is the partnership between the horse and its rider, and we can't really be expected to carry these people around on our backs any longer.

This far and no further. If the social contract means longer hours, lower pay or worse conditions then it must be broken. Today the fight is on to stop the bosses squeezing the life out of us. This is in a boom, as any economist will tell you the best Ireland could ever hope for. Tomorrow the fight will be to save jobs. The boom will not last indefinitely. A recession in the United States will have a devastating effect on the Irish economy. Irish workers will need to break the unions out of the collaboration stranglehold and transform them once again into fighting organisations.

The success story of growth in the Irish economy is entirely the work of the Irish working class. It is squandered by the ruling class. The same talents and abilities put in charge not only of producing wealth but also managing it, planning its use in the interests of the whole of society could see the economy grow even faster than today with shorter working hours safer conditions and higher wages.

Break the social Con Trick

For a 32 hour week without loss of pay

For Militant trade union action

For a Socialist United Ireland.

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