Bertie Ahern (Dublin Central, Fianna Fail)

I welcome the opportunity to speak on the motion welcoming the draft social partnership agreement, Towards 2016. I congratulate the House on its early discussion of the new agreement, following its earlier debate on the negotiations in the context of the National Economic and Social Council, NESC, and National Economic and Social Forum, NESF, reports which preceded them.

Before turning to some of the principal features of the new agreement, which are worthy of support by the House and the public, I will address some of the criticisms of the social partnership process. In doing so, I observe that much of this criticism comes from the same old tired voices, many of whom seem to resent that our social partnership process works so well, is admired so widely on an international level and continues to adapt and develop in the light of changing circumstances. It is a case of some people regretting that what should not work according to their theory works so well in practice. We are invited to believe that social partnership is a dangerous conspiracy, subversive of democracy and empowering vested interests with vast control over public policy, while, at the same time, it is an outdated and empty ritual which makes no practical difference to the world in which we live and work. I can resolve this contradiction by stating that both criticisms are incorrect.

This is not an anti-democratic project. Since the bold initiative of the late Charles Haughey in 1987, social partnership has been based on an invitation by the Government of the day to the social partners to join it in discussions of how, through dialogue, we could together develop policies and behaviour which better serve the needs of our people. As in the past, the Government entered these negotiations on the basis of our programme for Government. We maintained close ministerial oversight of the conduct of the negotiations. The terms of the draft agreement were approved in every respect by the relevant Minister in a process led by the Tánaiste and me. We are satisfied the outcome is entirely consistent with our programme.

In implementing the agreement, we will, as before, be fully accountable to the Oireachtas. The substantive elements of the agreement require the introduction of legislation which, as ever, will be subject to close scrutiny and debate in this House and in the Dáil. The expenditure implications will be dealt with in the budgetary and Estimates process in the usual way, with full accountability, approval and oversight by the Oireachtas. All the implementation arrangements are reported regularly to the Oireachtas. For example, in the course of Sustaining Progress, more than 30 progress reports were laid before the Oireachtas, together with other commissioned reports and studies. Since 1997, I have answered more than 300 parliamentary questions on the social partnership process and the implementation of agreements, while my ministerial colleagues answered questions in respect of their particular responsibilities under these agreements. This will continue. I welcome greater parliamentary engagement and scrutiny of the process. I wish that Oireachtas committees would take a greater interest in the substance, rather than the mythology of social partnership and that the other House would be as constructive as the Seanad in its engagement.

Social partnership is not anti-democratic because it is based on a recognition of the proper and distinct roles of Government, on the one hand, and the legitimate contribution to public life of the social partners who, entirely in their own right, exercise very significant influence over the economic and social life of this country. As employers, trade unions, farm bodies and voluntary organisations, they play an enormous role in civil society. Their independent decision making and behaviour has a profound effect on employment, living standards, productivity, adaptation, the quality of public services and the social cohesion underpinning the quality of life of our community. It is entirely democratic to recognise and respect their independent roles and contribution. At the same time, the social partners recognise that the Government in this process is not simply the first among equals. They appreciate fully that the Government must insist on, and exercise fully, its prerogatives within the framework of political accountability.

I do not need to rehearse here the contribution that social partnership has made over the years since 1987. Apart from the industrial peace and stability it has produced in the labour market, and the confidence this has given to investors, the process has been important in developing a consistency of approach across all the main players in the economy. This reflects a strategic analysis of the opportunities and challenges we face. This consistency of approach has been an important, if not critical, factor in our successful adaptation to change over many years. This adaptation has extended beyond the technical and economic, into the successful response to social change and the imperative of building a more inclusive society.

Fairness has been at the heart of the process since 1987. It is that very quality which has led so many international observers, including the IMF, the OECD and the European Commission, to comment so favourably on its role in the Irish success story. It is also why the European Council urged all member states to develop what it calls national reform partnerships, like Ireland, to underpin the Lisbon strategy for growth and jobs, since governments acting in isolation cannot deliver the change which is required.

There is one final myth which I would like to address, which is that the agreement, in so far as it relates to pay and the workplace, really only affects a minority of the private sector who are trade union members, and is essentially a public service pay agreement. Nothing could be further from the truth. It may be true that a majority of employees in the private sector at any one time are not organised members of trade unions. However, wage determination is never a purely local matter. Wage norms and trends are easily established, especially in small labour markets. We know from our own experience how badly wrong these norms can be in the light of conditions across the economy. Collective bargaining across Europe has a powerful influence on wage levels, even in countries with much lower rates of trade union membership than Ireland.

The key to the success of the Irish model is that it is flexible enough to recognise the wide diversity of situations in employments across the economy, while providing a framework of confidence that is effective in guiding in the right direction not just wage setting, but all aspects of the employment relationship. The concerns which were so widely and publicly voiced last year about the potential for displacement and a race to the bottom in the labour market evoked the genuine and passionate concern of many thousands of workers and citizens. Even though the instances of grave concern about exploitation and unreasonable behaviour affected only a small number of employments, we need mechanisms which provide confidence about decent standards and fairness, without compromising flexibility or adding unreasonably to the burdens of regulation of the labour market. That delicate balance requires the active engagement of all the parties to our employment system.

I am happy to say that the social partnership process provides precisely that opportunity. The outcome of the recent negotiations in respect of employment standards represents, in my view, a very fair balance between the competing legitimate interests and objectives, and will provide confidence for the future in a rapidly-changing labour market.

The level of the pay increases which have been agreed reflects the correct balance between what we know about productivity, inflation and a range of other factors which will impact on the state of the economy, and our ability to be competitive in international markets. The pay terms of the agreement are quite straightforward, with 10% payable over 27 months, in four amounts of 3%, 2%, 2.5% and 2.5%. An additional 0.5% is to be added to the payment, due from 1 July 2006, for those earning €10.25 per hour or less. In addition, the parties have agreed to make a recommendation to the Minister for Enterprise, Trade and Employment to increase the national minimum wage with effect from 1 January 2007. For those whose circumstances require it, there are provisions to plead inability to pay and-or to seek offsetting productivity changes.

The pay terms for the public sector are the same as those for the private sector, albeit that the payment starts later, from 1 December 2006, rather than 1 January 2006. As under Sustaining Progress, these payments will only be made after delivery of verifiable change. Such change includes better opening hours and improved promotion and recruitment practices, particularly the opening up of more senior jobs to competition from people from outside the public service.

A second round of benchmarking is under way and a report will issue in the latter part of next year. This will indicate the differences in pay and conditions, if any, between public workers and their private sector equivalents. If any pay increases are recommended for particular groups we will have to ensure that substantial change and flexibility is delivered in return.

The draft agreement is not just about pay, important though that is. It is also about maintaining a supportive macroeconomic environment in order to enhance productivity, competitiveness and build a stronger society. Put simply, it is about improving the quality of people's lives.

Chapter 2 sets out the macroeconomic context to the agreement and assumes a certain level of economic growth in the short to medium term. It also endorses the key national strategies such as the national spatial strategy and national development plan that will inform investment and planning, together with details of key actions planned or already in place regarding sectoral strategies in areas such as science, technology and innovation, better regulation, public enterprise, manufacturing, transport, housing, energy, telecommunications, education and training, the environment, rural development and the agrifood sector.

Chapter 3 develops a new framework to address key social challenges which individuals face at each stage of their lives. This means a focus on the needs of children, young adults, people of working age, older people and people with disabilities. In each case, a vision is set out for people in that stage of the life cycle, which the social partners will work towards over a ten-year period. This ambitious approach will pose a major challenge because public services will have to be designed around individuals and their requirements, rather than based on different State agencies. The approach will take time to deliver and the agreement sets out how we propose to measure and review progress over the ten years. In addition, it sets out a number of priority actions in each case over the first phase of the agreement up to 2008. The new approach will also help us to monitor progress more effectively, by focusing on outcomes for people at each different stage of their lives.

The draft agreement will now be subject to ratification over the coming weeks, in line with the internal procedures within each social partner pillar and organisation. I believe that all concerned will recognise the benefits of the new agreement for themselves and the country as a whole, and give it a fair wind in the course of the ratification process.

In the event of a favourable outcome to the ratification process, I would see considerable value in a quarterly discussion with the Seanad on the partnership process. It might be more helpful and effective if the Seanad selected specific themes covered by the agreement for a more extensive debate on such occasions. The quality of Seanad debates confirms my belief that the Seanad is an appropriate place to debate the analysis and conclusions of the more reflective instruments of social partnership. In particular, the reports of the National Economic and Social Council, the National Economic and Social Forum and the National Centre for Partnership and Performance have important contributions to make to informing social partnership and the wider policy process. Direct engagement with the chairmen and directors of these bodies could contribute to the value of appropriate discussions by the Seanad. In addition, I am sure the social partners would be happy to avail of opportunities to share their experiences and their views on the process which has been a critical factor in our overall economic and social development in recent years.

I welcome the House's engagement with this topic. I would like to see a more active approach by the Seanad to the overall partnership process, along the lines that I have outlined. Social partnership is a European tradition that in no way challenges the democratic process. On the contrary, I believe them to be entirely complementary aspects of modern governance, and I look forward to continued engagement as a means of expressing that complementary relationship.