Notes on the Front

If you’ve been around the block enough times you will learn many things: from the smile on Mrs. Murphy’s face you can guage how well she’s getting on with her husband, from the number of beer cans in the their front garden, you can calculate how many people were partying at the Gallagher’s last night, you can even analyse the state of the property market from the number of For Sale signs.

And – and this is most helpful – you can learn to read pre-budget submissions from ICTU.

It would be understandable if you were to think A Reforming Budget for All Citizens is a straight-forward read. Social organisations use the budget season as an opportunity to put forward their own analysis and proposals – to lay out their stalls, if you will. No one believes the Minister for Finance wades through these submissions. Rather, it is an opportunity for social organisations to influence the agenda and garner some PR.

Like ICTU. It states that investing in

‘ . . people and the services that support them will reap rich dividends; it will enhance social cohesion, augment national skill levels, facilitate greater choices and opportunities for working families and, ultimately, generate increased productivity and stronger national competitiveness.’

True enough and in the 40 pages that follow they put forward a number of constructive proposals to achieve that aim, in particular, in the area of social insurance:

• Increased maternity benefit
• A new paid paternity benefit
• A new Paid Educational Leave scheme,
• A general 8% increase in all social insurance categories including a substantial increase to carers and pensioners

Most significantly, ICTU proposes new pay-related elements to the old age and invalidity pensions. This is particularly noteworthy as it would entail a radical expansion of PRSI coverage. And a radical increase in cost. But that is part of the vision that David Begg, ICTU’s General Secretary, has been outlining for some time:

Where should we look to find a society we would want to emulate?  To me the answer is to be found in the Nordic countries.  They manage to combine economic efficiency and social cohesion. They all feature in the top ten countries for competitiveness, productivity, labour force participation, public services and social infrastructure such as childcare.  They are highly unionised and operate on the principles of a well defined social dialogue.

Heady stuff. Ireland isn’t even at the starting blocks when it comes to social insurance. We have the weakest system in Europe. If we wanted to reach Nordic levels and deliver on Mr. Begg’s vision, we would have to engage in a long-term and sustained increase in PRSI.

Indeed, just to maintain the current system will require an increase. The recent Actuarial Review reported that the Social Insurance Fund is rapidly heading into the red and will, in the long-term, require an increase in PRSI just to maintain the Fund’s ability to pay out our current meagre level of social insurance.

But if ICTU is pushing a progressive programme, Fianna Fail has far different plans. The Programme for Government is quite specific:

We will abolish the PRSI ceiling for full rate payers and reduce the rate at which this tax is levied from 4% to 2% over the lifetime of the next administration.

If fact, this policy is prioritised over cuts in income tax rates which will only occur after PRSI is cut. If this were implemented, the Social Insurance Fund would be eviscerated and fall into deficit in no time. Never mind funding ICTU’s progressive vision for social insurance, even the current programme would be at risk.

So how does ICTU defend their vision? Well, they don’t:

Congress will oppose any removal or upward shift in the PRSI ceiling that is not accompanied by a commensurate reduction in the rate, particularly with regard to middle income workers.

They are demanding the exact thing that the Government is proposing. Confused? Then you haven’t been around the block enough times. In many cases, an ICTU submission is like a palimpest – you have to peel off the surface text. The recent pre-budget submission is an example: there is the economic policy text, but thinly layered below is the political text. So what is the politics of all this?

We are now in the lead-up to new pay talks and the fundamental premise of all pay agreements is that if trade unions lower their wage demands, the Government will see them right by cutting income tax, thus increasing net take-home pay.

The problem is that substantial income tax cuts are off the agenda, given the Exchequer’s descent into deficit. But PRSI can be cut without an immediate impact on central funds – there’s a current €2.5 billion surplus (sounds like a lot but it really only amounts to a few months’ expenditure). The only way trade unions can be enticed to enter a new pay deal with low wage increases is to increase take-home pay – thus, cutting PRSI.

And here’s where it gets a bit desultory. ICTU is effectively signalling to the Government that they will, however reluctantly, accept the PRSI cuts. The vision thing can be put on hold. Why would they do that? Why would they turn their back on a progressive programme which they have been propounding? For the simple reason that whatever happens, whatever the Government does or doesn’t do – a wage agreement must be concluded.

Many trade unionists can’t imagine life outside centralised wage agreements (which is not the same as social partnership, by the way). That this view is buttressed by the sincere belief that progress can be made ‘inside the tent’ does not alter the fact that contradictions arise; in this case, the contradiction between a progressive vision on social insurance and the current imperative to accept the logic of wage deals premised on tax/PRSI cuts.

This almost endemic failure to visualise another route to their goals has set back progressive politics. It reinforces the tax cutting (and now PRSI-cutting) agenda of the Right. It hamstrings the trade union movement and progressive political parties (for Fianna Fail can use ICTU as a shield if the Left opposes such cuts – ‘Sure, don’t the trade unions support what we’re doing?). It creates a disconnect between the political goals of the trade union movement, and the reality within which centralised wage agreements exist.

This is not an argument for jettisoning social partnership or walking out of pay negotiations. That’s relatively easy in one sense. The problem is more deep-rooted – a profound lack of a political strategy that leads to political goals. What is desperately needed is a confident trade union movement that will impose its vision – not just on the negotiating table between the Government and employers – but on the political agenda itself. That need is not being fulfilled.

That’s how you can read ICTU’s pre-budget submission: at one level, a significant contribution to progressive policy making, made all the more important because it is one of the largest social organisations on this island; at another, more pessimistic level, a fatalistic acceptance of Government programmes that continue to chip away at the social fabric, all in the name of mechanistically concluding a wage agreement.

The loss to public discourse is immense. It is somewhat understandable that Left politicians are reluctant to spell out difficult truths such as ‘If you want European style services and infrastructure you’re gonna have to pay European level of taxes’. This shouldn’t excuse their timidity but in the political culture we live in, it is understandable – holding seats, holding deposits, and such.

ICTU has no such excuses. It does not run for office. It can stand apart from the electoral dynamic, take a longer view, and deliver home truths. This could begin to shift the parameters of the debate, puncture holes in right-wing arguments and create rifts through which the Left could progress. In tandem, the trade union movement and the Left could begin to shape an alternative debate, founded on an open and honest dialogue with people.

But ICTU is caught up in its own dynamic – the logic of concluding wage deals. And if that means taking up positions that stand its own proposals on their heads, then so be it. That this isn’t the only logic in town is no consolation.

That’s what you get for being around the block enough times. Oh, well, the Gallagher’s are having another party. I think I’ll crash it.