Business Irish

Saturday 30 August 2014

A strike today is likely to end with lost wages and empty union coffers

Few workers remember the days of travelling to work in army lorries or cashing cheques in the local bar. In austere times the option of 'all out' seems self-defeating, writes Mark Keenan

Published 07/03/2013 | 05:00

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UNTIL very recently a Google search for the terms "Ireland" and "strike" would have yielded references only to Bobby Sands, Robbie Keane, lightning storms and ten-pin bowling.

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Apart from the notably massive teacher's walkout of 2009, 25 years of social partnership have made Ireland a largely strike-free zone for a new generation who will require a history book to find out about serial power blackouts and long walks to work.

In 2008 an IMD survey showed that Ireland's economy had just 0.92 strike days lost per thousand people compared with 3.67 in France, 5.67 in the USA and 10.06 days in our nearest neighbour, the UK.

However, with the Government attempting to strip out another €1bn in wages from the public sector and social partnership hanging by a thread, could we be heading for an Irish winter of discontent in 2013? And if so, what effects might the return of strikes have on business and the Irish economy?

This week, Unite asked its 6,500 public sector workers to reject the Croke Park extension as the 24/7 Frontline Services Alliance representing gardai, nurses, paramedics and firefighters reported plans to kick start a nationwide campaign to oppose Croke Park II which include linking with other unions.

IMPACT says it will start balloting its members at the end of this month. Much now hangs on SIPTU, the biggest union with 200,000 members. Leader Jack O'Connor is on record as stating that the only thing likely to bring them out on strike is another attempt to cut wages – exactly what the Government is now attempting.

With all sabres being rattled and some apparently being sharpened, should business owners who remember the dark pre-Partnership days be worried?

Through the 1970s, commerce was hit especially hard by transport strikes, bank strikes and power strikes, the first hampering worker's ability to get to work, the second playing havoc with funding and payments and the third killing all forms of industry. The economic fallout was enormous. In the 1970s we lost 58,000 strike days per annum, falling to 32,000 in the 1980s.

Since 2005, the tally has remained below 10,000 (aside from 2009) with a lowest ever of 3,695 in 2011.

In contrast, France, which employs a similar high proportion of public workers to Ireland, has been experiencing wave after wave of industrial action.

Labour market

At one point in 2010 the French employment minister estimated that strikes were costing the country jobs at the rate of 1,500 per day.

So what could happen here?

Industry experts and economists seem generally united in the view that a spate of industrial actions would be far less damaging today because:

(a) of the occupations of sectors most likely to strike and

(b) because of the fundamental changes which have taken place in the labour market since pre-Partnership days.

Economist John FitzGerald of the ESRI says: "The economic effects would largely depend on how widespread the strikes would be. But the nature of the labour market has changed so much since the early 1980s that they would most likely be confined to certain segments within the public sector and would be unlikely to have a wider effect on the economic sector overall. Would anyone notice if the ESRI went on strike for example?"

Despite a slight rise in recent years, union membership has generally fallen – from 46pc in 1994 to 34pc in 2009, the last available figure. Unlike the 1980s there's a significant public/private sector split with 68.7pc union penetration in the public sector workers compared with 24.9pc outside it.

The growth of FDI companies since the 1980s has played a role with its domination of private sector employment in non-union but high satisfaction environments. Today's trade union member is not a blue collar manual worker, but a middle-aged public servant with a third-level degree.

Nevertheless, some business sectors would be affected.

Economic consultant and outspoken Croke Park opponent Dr Eddie Molloy singles out tourism as being most vulnerable.

"With the potential for strikes at the airport authority, Aer Lingus and the potential of fire workers disrupting landings by withdrawing services, hotels and hospitality seem to be the most obviously exposed sector.

Tourist events

"What if the gardai decide not to turn out en mass for big tourist events for, let's say, St Patrick's Day, or if the historic sites which tourists visit are closed?"

"However I think that because those involved are from the public sector, we would be looking at strikes likely to have a higher social than economic cost."

"If strikes were widespread and sustained over a long period of time, then perhaps there would be a risk to the confidence of FDI companies. But sustained long-term action is unlikely and these companies tend to take a very pragmatic long-term view."

"Action which might affect welfare or pension payments could, of course, have a huge impact on local businesses – but much of that process is automated these days.

"The big strike worry areas in any country are the utilities but the Irish semi-states which once had strong monopolies like the ESB, the VHI and An Post are now competing with private sector rivals. Even if their workers went on strike, which does not look likely, they'd only damage themselves by losing market share."

Mark Fielding of ISME believes a handful of sectors have the power to harm business. He agrees that a teacher's strike could cause problems for firms as working parents struggle to accommodate children.

"There would be some difficulties for employees, but it's nothing that we couldn't overcome by working together. Businesses are surprisingly inventive and resourceful.

"In the bad old days they came up with innovative systems which enabled them to get through the big bank strikes."

Lack of public support is another widely cited factor in restricting the length of actions. Unions are not united and even internally there is friction as some larger unions also have significant private sector memberships.

This also means that unlike the 1970s and 1980s contagion is unlikely – whereby non-affected unions join those in dispute as a sign of support.

Dr Molloy adds: "This time around the Government has no money to use to buy a settlement, and the unions know this. In either case, a Government which has staked so much on following a disciplined path to recovery cannot be seen to back down when there's so much at stake.

"It means that the best the public sector workers are likely to achieve for a strike is a return to work under a face-saving agreement, having lost wages and emptied their union coffers.

Irish Independent

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