John Gerard Hanafin (Fianna Fail)

In the 1970s and 1980s, we heard of the German economic miracle, which was due in part to partnership. I welcome the fact that we have developed partnership arrangements to an advanced art whereby, every few years, the Government can, with the social partners, comprehensively address areas of concern. I anticipate that the difficulties which have arisen in recent years will be so addressed in this round.

Social partnership has played an important if not pivotal role in Ireland's dramatic economic and social development since 1987. Each of the six agreements reflected the unique challenges and opportunities of its time and injected a greater measure of stability, certainty and consistency into policy making. Each agreement had unique priorities and achievements, which, in all cases, were the products of rigorous analysis, quality debates and sensible compromises under the guidance of the NESC. There has been an incremental shift over the course of the agreements from macro-economic issues to structural and supply side policies, a trend which will undoubtedly deepen given the remarkable recent improvement in Ireland's absolute and relative growth rates, as well as general prosperity levels.

I find it strange that some commentators continue to take the view that all or most of the progress made since 1987 would have happened anyway and that evolving national policies were overwhelmingly driven by external influences, especially at EU level, which would of themselves have generated growth, employment and wealth over the period since the first social partnership agreement. If that is the case, why do most of our EU partners admire our economic success and why does it contrast with their own high unemployment and low growth rates?

Today, Irish people have cause for pride in their country's achievements and for optimism on their future. Our economy has been transformed and significant inroads have been made on social disadvantage. Ireland's population recently passed the 4 million mark for the first time since 1871 and major growth is predicted over the next few years. In fact, the population of the island, which currently stands at over 5.7 million, will reach 7 million by 2021. Apart from 100,000 people, the growth will have occurred entirely within this jurisdiction.

With the appropriate and, in many cases, well tested frameworks in place, including, social partnerships, Government programmes, national spatial and anti-poverty strategies and multi-annual capital envelopes, we are well poised to maximise our potential. We can take heart that many of the policies contributing to and flowing from such frameworks were the products of discussion and agreement between Governments and social partners. The younger generation can look forward to a bright future. Educational attainment, public finances, the labour market situation the industrial relations scenes and many of the other contexts for economic growth and societal contentment are positive and are overwhelmingly the product of informed decisions. However, nothing is given in terms of the future and we must be diligent, imaginative and agile in responding to new challenges and creating opportunities.

Since 1987, Ireland's economic growth has averaged over 6% per annum in GDP terms. If we use the economic formula of the 72 rule, dividing 72 by six means that our economy doubles every 12 years. If we consistently attain 6% until the end of 2011, we will have quadrupled the value of Ireland's gross national product in 24 years. That would be a remarkable achievement.

Average industrial earnings have increased by 75% in real terms, taking into account tax changes and inflation. Employment growth has been striking, with almost 900,000 extra jobs created in the period from 1987 to 2005. As a consequence, unemployment has fallen from almost 17% to 4.3%. However, social partnership is about more than jobs and pay, important though they are. For example, public spending on health is almost 700% of the 1987 level, while the corresponding figures for education and social welfare provision are almost 400% and 317%, respectively.

The prosperity secured through partnership has the purpose of improving the quality of life for our people. The record of success of social partnership in underpinning our economic and social transformation represents the best argument for its continuation. Some commentators are opposed to this, presumably because it is not enough for them that partnership works in practice and that those with experience of it want its continuation. It should not work, according to the commentators' theories but fortunately, they are not the people who make policies.

While today's challenges differ from those of 1987, they are no less complex and it is no less important that they are met. Now, as then, partnership offers the best way forward. The recent publication by the NESC of its strategic report, People, Productivity and Purpose, provides the guiding vision for economic and social development in Ireland over the coming years and, more immediately, the framework within which the negotiations for a new agreement should take place.

Ireland needs to put in place the policies and delivery systems which will allow us to realise our full potential. Experience teaches us that this is best achieved when there is a reasonable consensus about the choices we face as a country. The best hope of developing a realistic consensus is through adopting a shared vision of an Ireland of the future. As a small and very open economy, we have learned that competitiveness and flexibility are key components of our economic development. This is a simple reality that must guide us in the talks, not least when it comes to matters of pay. We have to price and position ourselves in a very challenging market and must do so sensibly. At the same time, we do not want to see growth in competitive advantage based on poor wages, casualisation of labour, low health and safety standards or other poor compliance practices. The issue of employment standards has been flagged by the Irish Congress of Trade Unions as a core agenda item for these talks and is of vital importance for the country.

The Government does not wish to see a race to the bottom in the Irish labour market and its progressive record on employment, real take-home pay and working conditions shows that it means what it says in this regard. The Government wishes to ensure that we keep up in the race for greater productivity and enhanced competitiveness by developing new products and services, upskilling staff and embracing new work practices and technological innovation. The lowering of employment standards forms no part of the Government's vision and, in fact, runs contrary to it.

The majority of employers are decent, responsible people who play by the rules. Our prosperity depends on them but it also depends on the labour movement. Employers have played a positive, constructive role in our social partnership system thus far and in our economic and social development.

Ultimately, social partnership is based on a consensus that short-term goals and the narrow pursuit of self interest are harmful to the long-term interests of each of the social partners and society as a whole. That is why, with goodwill and determination on all sides, we can develop an approach to the issue of employment standards that will be balanced, effective and fair. The Government is committed to playing its part in this process to the full. As further evidence of its concern to maintain standards, the Government has decided to intervene in the Laval case at the European Court of Justice. Its aim is to protect Ireland's long-standing traditions in the areas of social partnership and industrial relations from any adverse consequences arising from this case.

Our competitiveness is closely linked to pay, flexibility and the development of quality employment but is also linked to public service modernisation. The Government will seek to build on the measures agreed in Sustaining Progress in this area and will be negotiating for further improvements so that we can achieve more responsive and better quality customer service, improved management of performance, enhanced finance and human resources management and greater flexibility and openness to change. As a strong proponent of public service workers, I recognise the commitment and dedication of our civil and public servants, whether they are in the frontline in our communities or in the important areas of support of frontline delivery. In the interests of transparency, open government and value for money, it is crucial that civil and public servants are given an opportunity to demonstrate to the public their commitment to ongoing improvement of services and to having those improvements verified in an objective way.

The overall Government strategy is aimed at developing a more dynamic, enterprising and innovation-based economy which can sustain higher living standards and ensure a better quality of life for all. The Government, with the NESC, sees this as embodying the core elements of a vision for the Ireland of the future. Social partnership has worked well for this country and will continue to do so. It is something we should develop and fine tune as it has been a vital part of our progress, both socially and economically. I want to see social partnership continuing and look forward to a successful outcome to the current negotiations.