Economic crisis,austerity and trade union responses: The Irish case in comparative perspective

Introduction: the fall of the ‘Celtic Tiger’

‘We are not Ireland. We will resist’, cried Greek protestors as they marched through Athens in February 2010 (Guardian, 10 February). Why did externally enforced austerity generate so much less resistance in Ireland than in other European countries? Impressive economic growth from the late 1980s earned Ireland the designation ‘Celtic Tiger’, but it rested on precarious foundations: financial speculation, a construction boom and high personal indebtedness grew manifold. When the global crisis struck, property values tumbled, followed by a banking sector collapse. The government moved in haste to guarantee all banking deposits and liabilities, which in effect became sovereign debt. While estimates vary, the government’s actions are thought to have cost in the region of €64bn. The government debt-to-GDP ratio increased from a modest 24 percent in 2007 to 123 percent in 2013, while the deficit-to-GDP ratio increased from a small surplus in 2007 to a deficit of 32.4 percent in 2010 – the largest increase among the European Union (EU) 27 countries. As the cost of borrowing in bond markets to service the debt escalated, in November 2010 the government sought an emergency ‘bail-out’ from the EU, the European Central Bank (ECB) and the International Monetary Fund (the ‘Troika’).

The conditions entailed a sequence of contractionary budgets involving tax increases, welfare cuts, salary reductions in the public service (on average of about 15%) and cutbacks in public service provision. In 2010, these ‘adjustments’ amounted to the equivalent of 13 percent of GDP, or €4600 per person, one of the largest budgetary adjustments ever witnessed in an advanced economy. There was no increase in corporation tax although the rate was one of the lowest in Europe, because of the country’s dependence on foreign investment. Unemployment rose from a low of 4.6 percent to a peak of 14.8 percent. The rate of mortgage and rent arrears among Irish households became the highest in the EU.

In the early stages of the crisis, employers, unions and government endeavoured to steer a united path by reaffirming social partnership. However, negotiations on a national recovery programme broke down and the government unilaterally imposed a pension levy and cuts in public spending. After some 22 years, Ireland’s experiment with social partnership came to an abrupt end. However, union mobilization was sporadic and short-lived when compared to reactions in other countries, notably Greece, Portugal and Spain, that were also forced to seek aid from the Troika (Bach and Stroleny, 2013; Meardi, 2012; Nowak and Gallas, 2014). This article asks why.

I begin by reviewing the literature on union responses to economic crises. Then, I discuss the historical evolution of Irish trade unions, and their response to state economic adjustment policies and employers’ strategies in the public and private sectors. The final discussion explains Irish union responses by drawing comparisons with those in Southern Europe.

Understanding union responses to economic crises

Unions’ responses to economic crises are often explained by their historical roots, ideology and paths to development (Hyman and Gumbrell-McCormick, 2010a) and by their organizational resources and capacity for strategic action (Hyman, 2007). Their ability to sustain membership mobilization is derived from material resources (finance), people resources (leadership, expertise, access to networks and decision-makers), societal resources (social status, legitimacy) (Culpepper and Regan, 2014; Ganz, 2000) and political opportunity structures (Goldstone and Tilly, 2001). The space for protest may be greater when the margins for government control are narrow or when competition between political parties is intense (Jenkins and Form, 2005). But such capacities and opportunities are also linked in complex ways to unions’ orientations and traditions. Low membership density might dispose a union to engage in mass street mobilizations, as in France, in preference to prolonged and expensive strike action. A history of past successes might encourage similar acts of protest, thereby encouraging path-dependent responses to new crises. In addition, a fragmented union movement divided along political and ideological lines, as in many Southern European countries, tends towards political protest rather than bargaining (Ebbinghaus, 1995).

But change does occur and is often explained by the nature and severity of the contextual challenges faced by unions. In Ireland in the late 1980s, unions laid aside their traditional preference for free collective bargaining and worked with government to establish a ‘partnership approach’ in the face of a profound economic crisis and growing employer hostility to union organization. All union orientations tend to be contradictory and uneasy (Hyman, 2001). At the core of social partnership, unionism is the principle of compromise in pursuit of moderate objectives. Closely associated with ‘corporatist’ deals and more recently with ‘new social pacts’, in hard times such pacts have often cast unions as the co-managers of retrenchment. In ceding past gains, unions risk membership revolt, undermining their capacity and legitimacy to act as economic representatives and political intermediaries by eroding their ‘moral power resources’ (Bernaciak et al., 2014).

This article draws on interviews with a wide range of public and private sector unions and the Irish Congress of Trade Unions (ICTU). Over 60 officials at various levels were interviewed between 2009 and 2014, with some senior officers interviewed on two or more occasions. The research also involved attendance at union conferences, an analysis of a wide range of documentary sources, including strategic review documents and specialist media sources. Interviews were also conducted with senior public servants in the Department of Public Expenditure and Reform and the Labour Relations Commission (LRC).

The changing faces of Irish trade unionism

For much of the 20th century, the predominant face of Irish trade unionism was business unionism. Thereafter, a gradual shift became evident as union leaders conceded that free collective bargaining endangered future economic growth. A central wage agreement reached in 1970 represented a watershed. An increasingly political self-understanding became more pronounced as union leaders strove to respond to the economic crisis of the late 1980s and to growing employer hostility to union recognition, particularly among US-owned firms. Fearing prolonged marginalization and with a keen eye on political developments across the Irish Sea – the advance of Thatcherism in Britain – the ICTU moved resolutely to work with government. From 1987, a succession of ‘social partnership’ agreements was concluded, extending to embrace commitments on a broad range of social policy objectives, particularly around the alleviation of gross inequality, poverty and social exclusion.

Unions demonstrated considerable political adroitness in working with governments of different political hues. Social partnership, too, demonstrated considerable adaptability in coping with different phases of the economic cycle, including holding its ground under unpropitious economic circumstances. The recasting of Irish unions towards the concerted pursuit of social-democratic ideals under the aegis of social partnership was a singular achievement. Up to this point, Irish unions were very similar to their British counterparts, but they became much more ‘corporatist’ in their involvement in political bargaining. Irish ‘social partnership’ had no equivalent in Britain.

This strategy brought clear benefits. Unions enjoyed a privileged position in the Irish polity, with extensive access to government and the capacity to influence macro-economic and social policy decision-making (Baccaro, 2006). With rapid economic and employment growth, real wages rose, resulting in the ‘Celtic Tiger’s social dimension’ (Teague and Donaghey, 2009: 58). But there were also costs. Many of these advances were achieved through tax reductions which undermined the basis of developing an extensive welfare state (Hardiman, 2000). Union organization on the ground was also weakened: density declined from 45.5 percent in 1996 to 34 percent in 2009. ¹ Union influence came to rest increasingly on membership in the public sector. As elsewhere, union leaders had lost a great deal of their veto power as the balance of class forces had shifted unremittingly towards employers (Baccaro and Howell, 2011). Successive governments steadfastly resisted the enactment of a legal provision for mandatory union recognition: an unwritten rule of social partnership was to sustain Ireland’s appeal as a location for inward investment. Yet on balance, Irish unions calculated that their interests and those of their members were best served, as Teague and Donaghey put it, by the ‘logic of representation’ and not by the ‘logic of mobilization’. But in the face of an economic shock as severe as that encountered in 2008, did Irish unions reinforce their commitment to partnership, did they revert to business unionism or did they seek to give class interests a new salience?

Unions’ response to economic adjustment

Union responses to employer strategies

Union organization

In response to the crisis, unions also reviewed their own organization. Various reports, including that of the Commission on the Irish Trade Union Movement in 2011, recommended rationalizing and recasting union structures, reducing the 48 ICTU-affiliates to 6 large sectoral unions. The early signals, however, were not encouraging. Those unions seen as being among the most likely to form a sectoral alliance under a federated structure – the teachers’ unions and, in the broad retail sector, Mandate, Communications Workers’ Union (CWU) and Irish Bank Officials’ Association (IBOA) – have made little progress. However, the 2013 ICTU biennial conference led to an agreement on a 10-point plan as to how to proceed.

Closely linked to the debate on union consolidation have been proposals to reposition the role of the ICTU. The confederation receives resources from its affiliates but has traditionally relied to a considerable degree on funding from government and philanthropic sources. As the latter depleted during the crisis, so the debate on the resourcing of ICTU gained new momentum. However, there has been little progress to give the ICTU a stronger role to determine and coordinate union policy.

Attempts to cultivate workplace activism under the rubric of new union organizing campaigns also acquired a new prominence during the crisis, modelled on similar initiatives by unions in the United States. SIPTU has gone furthest both in reorganizing its structures and in dedicating increased resources to organizing. The TEEU, CWU, Mandate, Unite and IMPACT also established organizing departments, but progress has been uneven and halting. Unions have also sought to reinvigorate their organization by cultivating activism and organization among young people, both employed and unemployed. Examples included union participation with the Young Workers’ Network and the We’re Not Leaving campaign, which drew attention to poor employment conditions and government policies which were seen to be forcing young people to emigrate. While such initiatives were modest in their ambition, they did signal a partial departure, involving attempts to organize young people as a discrete cohort. They also illustrate union efforts to adopt a multi-pronged approach to address low pay: the campaigns to support EROs and REAs, and their aligning with community and civic society groups such as youth groups and migrant rights groups. These represent efforts to develop a new narrative around value-based campaigning, however tentative and modest, in the defence of traditional union concerns. There have also been ethical consumer campaigns, generally modest in scale, such as the SIPTU Fair Hotels’ Scheme and the Supporting Quality initiative in manufacturing, and Mandate’s Fair Shop campaign.

Finally, unions continued to address the thorny issue of legislative support for collective bargaining. The demand for legislative provision for mandatory union recognition grew increasingly impracticable given the government’s reliance on American investment, together with the constitutional impediments which lay in its path. ³ The increasingly more popular option was to seek a revision of the Industrial Relations (Amendment) Acts 2001–2004; this was widely seen to have adroitly side-stepped the difficulty of recognition and directly addressed the issue of workers’ rights to representation (and protection from victimization) in matters of dispute. In essence, Irish unions came to accept that a legal right to collective bargaining, without any attendant obligation on an employer to cede union recognition, was the better way to proceed. A bill that gives effect to these provisions has recently (May 2015) been agreed by the government.

Discussion

Irish unions’ responses to the economic crisis and to subsequent government reforms contrast sharply with those in Southern Europe. In Greece, there were extensive and sustained union mobilizations and strikes (Tzannatos and Monogios, 2013). While at the outset, public support for union actions was muted – against the backdrop of widespread criticisms of inefficiencies in public service provision and clientelism and patronage in public sector appointments – it rallied as the Troika’s legitimacy declined (Ioannou, 2013). In contrast to Ireland, a significant feature of these protests was that they took place within a political milieu where the political elite, particularly on the Left, played a key role in legitimizing and even mobilizing public discontent (Rüdig and Karyotis, 2014). As the crisis deepened further and became progressively intractable and as ordinary people became increasingly immiserated, so the space for trade union and public resistance, often organized by the Aganaktismenoi (Indignant Citizens’ Movement) intensified and gained legitimacy.

As in Greece, but again in contrast to Ireland, some of the largest demonstrations in Portugal and Spain included large numbers of young people: the Geração à Rasca (‘Desperate Generation’) and the Indignados. Such was the size of these mobilizations in Portugal that they were comparable with the public demonstrations witnessed during the 1974 revolution (Campos Lima, 2013). In Spain, the mobilization capacity of the two main union confederations (CC.OO and UGT) was widely seen to have been impaired by their close connections to the former socialist government and its management of the early phases of the crisis (Molina and Miguélez, 2014) and by their perceived unwillingness or inability to form alliances with new social movements, particularly those comprising young unemployed people. By contrast, in Ireland high levels of emigration among younger people during the crisis acted to reduce unemployment rates (OECD, 2015) and, arguably, helped to dampen levels of protest. Levels of emigration, for instance, have been considerably lower in Spain and youth unemployment very much higher.

In the private sector, the parallels with Ireland are more evident than the differences. While there were a number of spectacular actions, resulting in some instances in clashes with police, such as those involving the Asturias miners, more often unions endeavoured to reach agreements with private employers wherever possible. Often, they engaged in various forms of concession bargaining, principally as a means of safeguarding employment and their future involvement in the firm. In contrast to Ireland, however, this had the effect (in Spain and Portugal at least) of aggravating the fragmentation and competition between ideologically opposed unions (Koukiadaki et al., 2014). As in Ireland, unions conceded that their capacity to develop a coherent and assertive reply was exacerbated by their declining membership and diminished resources. This hastened calls for union mergers and reorganization (Broughton and Welz, 2013) and for new strategies of union growth and renewal.

The following comparative conclusions emerge. First, unions in Ireland and Southern Europe often struggled to develop a coherent and strategic response to the crisis. In responding to government policies, unions were confronted by the dilemma that in opposing them they might precipitate the fall of a ‘friendly’ government (Spain and Portugal), or that they might undermine unions’ own influence over the shape of future policy-making (Campos Lima and Martín Artiles, 2011; López and Rodríguez, 2011 ). As the crisis intensified, and as social-democratic administrations lost power, the unions found it increasingly difficult to influence the policies of their governments and the Troika. Second, negotiations with government – where they took place – were often fraught with tensions within and between unions (Campos Lima and Martín Artiles, 2011; Hyman and Gumbrell-McCormick, 2010b). While these tensions were more pronounced in Southern Europe, they were also evident in Ireland. Third, the mass political demonstrations and public sector strikes in Southern Europe tended to be demonstrative, defensive and modest in their objectives as well as short-lived. They were also – despite their often unprecedented size – largely unsuccessful (Hyman and Gumbrell-McCormick, 2010b; Meardi, 2012; Nowak and Gallas, 2014). Fourth, unions in Southern Europe struggled to retain a role as the principal face of public discontent and the managers of its expression. Many large-scale mobilizations were led by, or involved a major role for, other social movements. A somewhat similar dynamic occurred in Ireland in 2014–2015 with the introduction of domestic water charges. Finally, union responses defy an easy classification. There is evidence of both radical and conflictual responses as well as a reinforcement of cooperation and partnership, oftentimes both responses paradoxically interconnected (Campos Lima and Martín Artiles, 2011; Gumbrell-McCormick and Hyman, 2013). This should not surprise us. As anticipated in Hyman’s (2001) conceptual framework, unions in all four countries’ faced in multiple directions. Ultimately, union leaders were caught by the dilemma whether policy solutions might be better framed within the existing socio-economic order or within an alternative socio-economic model; long-term objectives could be overwhelmed by the need to respond to the immediate imperative of safeguarding members’ employment and incomes. In the main, unions adopted defensive postures in the face of wage deflation, job losses and the hollowing out of the welfare state.

Against this comparative background, how might we account for union responses to the economic crisis and to government reforms in Ireland? Four elements are highlighted. First, there is a contextual challenge. The primary component is the economic crisis, which in turn has three elements: its timing, size and location. The ‘Irish crisis’ was the first (after Greece) in Europe to be cast as critical and to have been identified as having overflow implications for the rest of the Euro-zone; it was also one of the most severe; and given its ‘location’, that is, its potential wider ramifications, the political autonomy afforded to the Irish government was consistently narrowed by the EU and the Troika. Ireland’s economic policy was thus subsumed into a European-level adjustment strategy. In this context, the economic responses of the government, whatever its political hue, were consistently ‘orthodox’. This broad political-economic canvas, together with the abandonment of social partnership, denuded unions of a significant means of influencing government policy options. Senior union leaders came quickly to accept that power was now in the hands of non-elected and politically unaccountable external agencies which had little, if any, interest in local political exchange and over which they exercised little or no influence. Buffeted by forces beyond their control, and lacking any significant support from the major political parties, the unions eschewed militant action or campaigns of civic protest of a form or extent witnessed in Southern Europe. Instead, the unions moved to influence the downstream policy initiatives taken by government.

Second, there is Irish unions’ ideological inheritance, which precludes class unionism of a form which continues to exist in Southern Europe. Neither is there a concomitant tradition of street protest. The orchestration of general strikes, too, is inhibited by the absence of any general legal provision. Furthermore, the predominant recent face of Irish trade unionism has been that of ‘social partner’. Throughout the crisis, many union leaders retained a deeply rooted predilection for dialogue, negotiation and compromise both in regard to public sector reform and pay-fixing in the private sector. To that end, their strategy was to present the union movement as a party with which the government could still reach a reasoned and consensual compromise. Thus, the pay protocol in the private sector preserves significant elements of the spirit of social partnership in enjoining unions to pursue wage claims adapted to the economic circumstances of companies and, in the event of disputes, to work constructively with dispute resolution agencies.

The third important element is unions’ organizational capacity. While union members were by and large disenchanted with the government’s response to the crisis, there was no appreciable sense that they saw this as a justifiable (or perhaps more critically, a winnable) casus belli, even in the highly unionized public sector. Critically, membership of the largest public sector union voted against strike action at the peak of the crisis in 2009. Thus, the orientation towards social dialogue, collective negotiations and compromise was never fundamentally challenged by the union membership. Moreover, in contrast to experience in Greece, there was no attempt by any of the major opposition parties (including Labour before it assumed political office) to radicalize popular dissatisfaction. Resignation and fatalism were the predominant orientations among union members. And while critics claim union leaders had long been co-opted and demobilized through social partnership (Allen, 2012), these leaders were never convinced that widespread industrial action was sustainable.

A fourth factor is the opportunity structures afforded unions. In a recent paper, Culpepper and Regan (2014) argue that social partnership collapsed in Ireland and Italy because trade unions had nothing to offer to policy-makers. As they were unable to instil fear in governments and employers through industrial action or to develop or sell reforms to their members, they were effectively ignored. This is not, however, my argument. Their analysis is certainly correct as it pertains to tripartite policy-making, but carries less weight when considered in the context of Irish unions’ role in public sector reform (Bach and Stroleny, 2013). Here, one might draw on an earlier analysis by Culpepper (2002) where he argues that concerted policy-making is likely to occur when the state lacks the necessary technical, relational and local information to institute successful blueprints for reform and where unions can demonstrate and exercise ‘dialogic capacity’. In Ireland, the government was willing to negotiate with public sector unions in order to secure their and their members’ acquiescence and to enlist their active support and assistance in designing and mobilizing support for public service reforms. This is an instance of sectoral corporatism, premised on the shop-floor organizational strength of public sector unions and their associated capacity to sell unpalatable reforms to their members. Thus, there were obvious political benefits in involving unions in the reform process. In response, the majority of union members preferred the (albeit contingent) protections offered by the two reform agreements, rather than confronting the wrath of a government which was prepared to cut wages unilaterally in the face of obstruction.

In large parts of private industry, economic contraction was absorbed by reducing working time rather than by imposing wage reductions. In unionized multinationals, employers in general remained willing to consult and bargain with unions; and, in the main, core earnings were maintained. While wage freezes were common at the outset of the crisis, low or negative inflation helped moderate their effect. In yet other sections of the economy, where high-tech multinationals predominated, workers were little affected by the crisis. The distinctive feature of the crisis in Ireland was the strength of the foreign-owned sector; this marks it apart from the Southern European countries. The corollary is that this strengthened its political weight and made almost inviolable its resistance to any legal strengthening of union collective bargaining rights.

The opportunity for unions to pursue an alternative course of protest and mobilization was also made more complex by their relationship with the Labour Party. In contrast to Spain and Portugal, where social-democratic parties were ousted from office as the crisis took hold, in Ireland Labour assumed office, albeit as the minority party in a coalition government, as public anger was vented on the incumbent government led by Fianna Fáil. At times, the Labour Party’s ‘hold’ on the unions was complementary (the re-enactment of legal supports for wage settlement mechanisms together with proposed collective bargaining legislation), but at other times it was contradictory in that it checked any disposition the unions, and particularly SIPTU, might have had in opposing government policies. Moreover, the government of which Labour was now a member held the largest electoral majority in Irish history. In such circumstances, any union action mounted in opposition to the government risked raising not only public ire and media condemnation, but also the objections of Labour colleagues. In essence, the relationship which SIPTU in particular had ‘struck’ with Labour had the effect of holding it hostage as the latter retreated from agreed policy commitments.

Conclusion

This article has sought to account for Irish trade union responses to the recent economic crisis. While conflict and protests occurred, as demonstrated by the spike in strike levels in 2009, they tended to be short-lived and sectional. There was no sustained coordinated campaign of resistance. The ‘Irish response’ was remarkably muted in comparison to the Greek, Portuguese and Spanish responses. The various elements or faces to Irish unions’ response can be enumerated as follows. They represent the enlistment of an amalgam of old and new resources. The predominant face was one of restrained mobilization and of attempts to preserve unions’ ‘cooperative social partner’ orientation and to portray unionism as a vehicle for the achievement of consensus and social cohesion. In part, this was an anticipative strategy, but it was also defensive. Union leaders were keenly aware of the fragility of their status, influence and legitimacy. Resistance to government risked provoking political mobilization against public sector unionism in particular, which would probably have gained traction with a public that had rapidly grown distrustful of unions at the onset of the crisis (Culpepper and Regan, 2014). In the face of increasingly strained ties and a consequent diminution in their political influence, unions attempted to develop new ‘moral’ power resources. The ICTU invested heavily in an analysis of the crisis and in ‘framing’ and communicating its programme for reform as an alternative to the ‘orthodox’ policies of the government and the Troika. This engaged union leaders in a ‘battle of ideas’ as to how a new social order might be envisaged. The establishment of the Nevin Economic Research Institute (NERI) by a number of major unions in 2012 was an important attempt to develop new resources of this kind. Second, unions sought to preserve their status and influence in collective bargaining. This included their efforts to engage in social dialogue and negotiations with government on public sector reforms; their campaign to safeguard and preserve statutory wage settlement mechanisms; their ‘turn’ to organizing in an attempt to grow and animate their membership; their campaign to win legal supports for collective bargaining; and finally, their efforts to enhance inter-union cooperation and union consolidation. Third, unions – especially SIPTU – sought to underpin these two strategies by supporting the electoral ambitions of the Labour Party. Finally, some unions at least sought to enhance their ‘coalitional power’ (Gumbrell-McCormick and Hyman, 2013) by building alliances with civic society and community groups. In summary, unions sought to maintain and reinforce their role as a representative organ while also preserving a union ‘movement’ perspective in order to cultivate a broad view of social solidarity.

Why there was no sustained mass mobilization of union members in Ireland is explained, on the one hand, by unions’ ‘past faces’ and, on the other, by a series of immediate factors. The first included the lack of a tradition of ideological or militant unionism; the absence of a polarized left-right political culture; an inimical legal regime that inhibits political strikes; and a normative orientation (although relatively recently embedded under social partnership) towards pursuing agreement through dialogue and negotiation. The second included the perception among union leaders that the external constraints arrayed against them were too powerful; a context of continuing union density decline, limited financial resources, weak and fragmented organization, limited mobilizing capacity and a quiescent membership; and an inability to marshal wider public support. Both elements came together in a context in which public sector employers (the government) and some private sector employers, particularly in large manufacturing firms, were willing to seek an accommodation. In such circumstances, there remained the scope, however limited and circumscribed, for unions to shape the process of adjustment and reform, and moreover to seek refuge in safe harbours in otherwise very turbulent waters. To have acted otherwise and to have remained steadfast in opposing government and employer actions would have been difficult to organize and, in any case if mounted, risked further marginalization and worker impoverishment. In these circumstances, Realpolitik won out.