President of Congress, Jack O’Connor
General Secretary, David Begg
Delegates and Friends,
I am very pleased to have the opportunity to address you at the
beginning of your Delegate Conference here in Killarney. We meet
at a critical time for the future of our country. You and I have a
shared commitment to the well-being of the people of this island,
especially those at work or looking for work. I want to outline to
you here this afternoon what my Government is determined to do to
resolve this crisis, and how we can work together to make that happen.
This Government has an unprecedented majority. The people have
entrusted us with the task of fixing our broken economy and
re-establishing our economic independence, while restoring trust in
society and respect in the international community. That is the
task. It has to be done, urgently and comprehensively.
Let me assure you this afternoon: I am up for this challenge. The
Government will not fail the people. We have begun with energy and
determination, and that is how we will continue.
The crisis that we face has many strands to it: the NESC described it
as a five-part crisis, and they were right. We have to stabilise the
public finances, we have to restore economic growth, we have to fix
the banking system, we have to deal with the employment challenge and
all of its social consequences, and we have to deal with the
reputational damage incurred by the country, by many of our
institutions and by politics and public administration.
I am under no illusion about the scale of the challenge. But I know
that avoiding it, deferring it, or equivocating on the scale of it, is
pointless. The Irish people know that. You know it, and the
members of trade unions right around this country know it.
We cannot change the past but we can influence our own futures, above
all by doing what it takes to restore our economic independence, so
that we have control of our own affairs without being dependent on the
wishes or the approval of outsiders.
We need to build the confidence required to enable us to re-enter the
financial markets, as lenders accept our capacity to run our own
affairs. That means making the necessary adjustments to ensure that
our spending and revenue are on a sustainable path, while we make the
structural changes to restore competitiveness and make Ireland an even
more successful location for investment, enterprise and jobs.
We have met all of our obligations to date to our funding partners
under the Programme of Assistance. We will continue to do so. We
will take the necessary steps to bring spending into line with our
capacity to fund it, and we will enhance the revenue base of the State
in ways which are fair, sustainable and facilitate growth and
employment.
The decisions we will have to take are not easy, and we know that many
will not be popular. But I can promise you this: they will be fair,
they will be balanced, and they will support our strategy of getting
the country back to work.
We have embarked on a comprehensive review of public spending to help
us in this process. For the first time, we are looking rigorously
and in the round at all aspects of spending. Nothing is excluded
from consideration. We will probably conclude that there are some
things that the country simply cannot afford, and they will be
dropped. There are some things that we cannot afford unless they are
done very differently, at a lower cost, and they will be changed.
There are some things which may be better done by the private sector
or the voluntary sector, within a framework set by the Government, and
we will be focused on the ends, rather than the means.
And there are undoubtedly other things which the country needs and
which only a well-managed and cost-effective public service can
provide. These will be maintained, and expanded where necessary.
We also need to consider whether assets that are owned by the State
are producing the best social and economic results, or whether they
would be better placed into other hands, where investment and
innovation are more likely to be possible, for the common good. A
careful objective assessment of that option is also taking place. You
are aware of our commitments in the Programme for Government in this
regard.
How we fund activities which are necessary in the public interest must
also be considered. The Government’s position on income tax rates is
clear. But there are many other sources of revenue, and there are
sources of revenue which many other countries rely upon, and which we
will introduce as part of a balanced and fair system for funding
necessary public services.
At the heart of our efforts is the maintenance and creation of jobs.
While showing some signs of stabilization, the reality is that the
number of those who are unemployed is far too high. Equally
unacceptable is the continuing fall in the numbers in employed.
The economic and fiscal crisis leaves the Government with little room
for manoeuvre.
But within those limits, we have introduced the Jobs Initiative to
help restore confidence in the economy and generate some momentum.
Here in Killarney its appropriate to note that a central focus of our
efforts is the tourism industry.
This year we have already seen growth in the sector: trips to Ireland
for the first three months of 2011 increased by 8.6 % compared to last
year.
We want to build on this progress.
That is why we have reduced the level of VAT on a range of
tourism-related services from 13.5% to 9% with effect from last
Friday.
This new 9% rate will apply to restaurant and catering services, hotel
and holiday accommodation, and entertainment services like cinemas,
theatres, museums and amusement parks.
It is essential that every business reflect the VAT reduction in their
prices, immediately, and in full.
Last week I also launched the Visa Waiver Scheme – perhaps the most
radical change in Irish immigration policy since the coming of the
Single Market.
This will encourage more visitors from emerging markets to come to Ireland.
As part of the Jobs Initiative we also halved employers’ PRSI on jobs
paying up to €356 per week.
This will reduce the cost to employers of sustaining existing jobs,
and of creating new ones.
We have also provided an extra €40 million for the 2011 School Summer
Works Scheme, and an extra €75m for shovel ready transport projects to
help create and sustain jobs.
Given the demands placed upon the hard-pressed taxpayers of this
country, there must be absolute clarity that the Irish public service
is operating to the highest possible standards, at the lowest possible
unit cost. Any excess cost means unmet needs among our citizens,
unreasonable pressure on under-resourced public services, and a delay
in achieving the economic and social goals which we all share. That
is why the full implementation of the terms and the spirit of the
Croke Park Agreement is so important.
I recently met with the Chairman and members of the Implementation
Body for that Agreement. I congratulated them on their work to date
and I commended the public service unions and their members for the
scale of the adjustments which have already taken place. I share
their view that there has been much unfair and unreasonable criticism
of the Irish public service over recent years. I acknowledge the
hard work and commitment, and indeed the flexibility and innovation of
so many public servants across all the branches of our system.
But I am equally aware of the frustration, and even despair of many
committed public servants at the outdated structures, the inadequate
processes, the fragmentation and arcane work practices which blight
their working lives and frustrate our objective to have the highest
quality public services available to those who need them.
That is why nothing less than public service transformation is
required. It is why the Government established a new Department of
Public Expenditure and Reform to provide effective and focused
political leadership for the task
of managing change. The progress
to date under the Croke Park Agreement has been impressive, but it is
only the beginning. If we are to maintain the agreed framework of
Croke Park – and the Government is fully committed to doing so – then
we must have the pace and scale of change that makes honouring those
commitments possible.
There is an onus on management and staff at all levels of the public
service to make the Croke Park Agreement work in their own areas of
activity. There is an onus on those who manage the system at senior
levels to make the changes that can only be made at a strategic level,
to liberate the rest of the system to get on with delivering services
and programmes, knowing they have the support of world-class back-up
systems.
Our future has to be based on facing into, embracing and indeed
driving change, rather than resisting it. I can give you this
assurance: a public service and its representatives that embrace this
change, that recognise that the public interest and their own long-run
interest are one and the same, that show the determination and
creativity of which I know they are capable, will find in me their
best champion, and their most willing partner.
In addition to reducing expenditure and increasing revenue, the task
of this Government is to accelerate recovery and renew growth in the
economy. And there is much to give us confidence in this task. The
impressive performance of our export sector, the quality and dynamism
of our tourism sector, the skills and flexibility of our people, the
international outlook of our business community: all of these have
been evident over recent months. The return to growth is slow and
has yet to impact on our unemployment problem. But we know the path
ahead. We know it involves not only restoring competitiveness, but
making the structural changes to maintain it. That’s why it is
critical that banks not only demonstrate that they have new credit to
lend, but demonstrate that it is actually happening for new business
and new jobs
Some of the necessary change is painful. I acknowledge that workers
across the public and the private sectors have, in many cases, had to
accept significant reductions in their earnings in order to sustain
jobs. Work practices, staffing levels and settled ways of doing
things have all been challenged and, in many cases, totally
transformed. I acknowledge the constructive spirit in which trade
unions and their members have met that challenge when faced with
incontrovertible evidence about the risks to employment.
Of course, the burden of adjustment should not fall on ordinary
workers alone. At its first meeting the Government reduced the pay
of the Taoiseach and Ministers, and most recently Minister Howlin has
brought in further reforms to the highest levels of public sector,
including the pay and bonuses of semi state chief executives. Senior
managers have to set an example, not just in the public service, but
right across the economy. We are all in this together. We all have
to play our part and show example in how we approach our own
responsibilities. Those who neglect to play their part can expect no
sympathy from this Government. That goes for those operating in
sheltered sectors of the economy, in the professions and in other
areas where extraordinarily high incomes have persisted even in this
time of deep recession. That has to change, and it will change.
Both the cost of living and the cost of doing business in Ireland
remain too high. Such high costs and prices remain a barrier to
strong economic recovery.
There has been, rightly, a lot of focus on changes in the way in which
wages are set and regulated. At a national level, I know that there
has been a continuing dialogue between Congress and employers in the
private sector, just as the Croke Park Agreement has provided a
framework for partnership in the public service. Wage determination
is primarily a matter for the parties, whether at national or local
level. The Government, for its part, has no ideological position on
how wage bargaining should be structured, and we will continue to
dialogue with all sides in exploring how this should evolve over the
months and years ahead.
But I will say this: how we behave in the labour market, how wages
evolve by comparison with our competitors, and how costs generated
within the economy evolve over time are critically important for
recovery and jobs. The approaches taken by employers, trade unions
and the Government should be consistent with each other and with the
objective needs of an economy struggling to recover and grow
employment. That is the imperative. How we organise ourselves to
achieve it is a matter for a discussion in which I am happy to
participate.
I want to comment briefly on the ongoing discussion about the
regulation of pay and conditions in certain sectors. First of all,
let me say there should be no ambiguity about where the Government
stands on the protection of vulnerable workers. This is the
Government that insisted on reversing the unwarranted cut in the
National Minimum Wage. We felt that was unfair and unnecessary, and
we acted. That required a renegotiation of the EU IMF Memo of
Understanding
When it comes to the wage-setting machinery of Joint Labour
Committees, Employment Regulation Orders and Registered Employment
Agreements, the fact is that everyone has long accepted the need for
change. That has been the common view of employers and Congress for
some time.
The radically altered circumstances of recent years have turned that
into an imperative for radical change.
The thrust of the reform agenda has to be to retain employment and
create new jobs.
The sectors and occupations where the greatest job losses have
occurred in the economy generally coincide with the sectors where
statutory minimum wages are most prevalent. 82% of the fall in
employment in the first quarter of this year was in the retail,
accommodation and hospitality sectors.
The categories of workers covered by Employment Regulation Orders are
most vulnerable precisely because they suffer the highest rates of
unemployment.
While demand in these sectors is clearly a key factor, labour costs
represent a relatively high proportion of total output costs in these
locally traded sectors.
We must not only stem the haemorrhage of jobs in these sectors but we
must move to generate new job opportunities. Our commitment to
fairness to those on low incomes must embrace those locked out of
employment opportunities. We must move quickly and decisively to
ensure that our labour market institutions are reformed so that they
respond appropriately to this crisis of unemployment.
The analysis carried out in the Duffy/Walsh Report, the submissions
made by interested parties and the discussions which have been held by
Minister Richard Burton have all been a valuable input to clarifying
the shape of the radical changes which are most appropriate to our
current conditions. The Government have not yet reached a conclusion
about the precise changes to be made, but it is clear that there is a
very large measure of common ground. Our decision will be a careful
and measured one, taking account of all of the important
considerations which have been legitimately put forward by the
Congress and others.
This is a time of great change. That much is clear. Indeed, I note
that you are discussing at this Conference changes in the way the
Congress itself is organised and does its business.
When I addressed the National Economic and Social Council recently, I
said that this Government does not have all the answers, and neither
does the public service that works on our behalf. We are open to
ideas from every quarter in framing our policies in order to achieve
our goals and honour our commitments in the Programme for Government.
In that context, I want to assure you that I am very much open to the
views of the Congress on the many issues of concern to you.
And why would I not be open? The Irish Congress of Trade Unions is
the largest civil society organisation on this island. Your members
are at work across every sector of the economy, in every part of
the
country and at all levels of skill and experience. The Government is
extremely interested in your views, and that of your members, that
flow from that range of experience and knowledge.
There are many arrangements and institutions through which that
contribution is being made, in the industrial relations and training
areas in particular and, in my own Department’s area of activity,
through the work of the National Economic and Social Council.
It may be that formal Social Partnership Agreements are not
appropriate at this time. But I recognise that social partnership is
a status which derives, not from formal agreements, but from the role
played by key interests in civil society, including the trade unions.
That is a valuable European tradition and I will uphold it. In
particular, I plan to follow up on my recent meeting with your
President, your Vice President and your General Secretary with further
meetings to review the broad areas of mutual interest and concern, so
that a structured dialogue can take place with a whole-of-government
perspective. I propose to engage with the other social partners in a
similar spirit.
In concluding my address this afternoon, and in wishing you well in
your deliberations over the rest of this Conference, I want to
encourage you, as representatives of your members all across this
island, to approach your task with energy, ambition and confidence.
I applaud the work of the Congress as an all-island body for its
steadfast championing of peace and reconciliation across troubled
communities and the resolute rejection of sectarianism and violence.
I would like to congratulate Mr Eugene McGlone on his election as
President. I wish him the very best in his new role. I would also
like to acknowledge the work of your outgoing President Mr Jack
O’Connor. He has been a very effective President and I wish him well.
The economic challenges which we face are daunting, but they can be
mastered. That is our common challenge and has to be our common
conviction.