Participants
During the last week of January 1999 a delegation comprising ten business and trade union leaders undertook a study tour to Ireland and the Netherlands.
Participants included, from the ranks of organised business:
And from the ranks of organised labour:
The ILO / Swiss Project assisted the parties in planning the study tour and Mr Charles Nupen, the project director, accompanied the delegation.
Choice of Countries Ireland and the Netherlands were chosen for study because, from a position of economic crisis in the 1980's, they had undergone a profoundly successful economic transformation to become among the top performing economies in Europe and had at the same time maintained acceptable social policies. In the process these countries had been immensely successful in creating jobs, and reducing unemployment significantly, when many of their European counterparts were experiencing rising levels of unemployment. A feature of the successful transformation in both countries had been intense social dialogue and a national consensus, on key economic and social issues.
Objective
The objective of the study tour was to determine whether, in the experience of both countries, there were lessons and insights which might assist the stakeholders in South Africa to address some of the more pressing challenges confronting them in relation to South Africa? own specific process of economic transformation.
Itinerary
During the course of its visit to Ireland, the delegation met the Irish Prime Minister, leaders of the Irish Confederation of Trade Unions and the Irish Business and Employer Confederation, members of the Central Review Committee (which monitors implementation of the Irish National Accords), the Chief Executive of the Irish Labour Relations Commission, and representatives of Enterprise Ireland, an institution which develops and promotes indigenous Irish business.
In the Netherlands, the delegation met the Deputy Prime Minister and Minister of Economic Affairs, the Minister of Social Affairs and Employment, representatives from the Social and Economic Council and the Labour Federation, business and labour leaders, and representatives from government departments.
The meetings were joint meetings and, in addition, the labour and business representatives took the opportunity to meet separately with their counterparts. At the end of each country visit the delegation met to consider the lessons and insights gained.
Observations
The Republic of Ireland In 1986, in response to its economic crisis, Ireland began to develop a national economic and social consensus involving Government, Employers, Trade Unions, Farmers and other interest groups. This consensus developed over time into a series of three-year national accords known as:
The programmes have covered wages, employment, competitiveness and development, taxation, education, health and welfare.
The programmes have involved trade offs, for example linking wage moderation, a shorter working week, and income tax breaks for wage earners, which resulted in real increases in take home pay.
The programmes are not legally binding but are overwhelmingly adhered to. Agreements, which have emerged from the programmes, are legally enforceable and in some instances, as in amendments to the tax regime, have found expression in the law.
In the process, social dialogue has deepened, and institutions like the National Centre for Partnership, located within the Prime Ministers Office, have fostered and promoted co-operation at workplace level.
The National Economic and Social Council has provided credible information and research, which the parties have relied upon in the development of their national accords.
While it is true that during this period Ireland has received significant E.U. grants, it is the accords that have been widely credited as the key factor in the country? successful economic transformation.
The size of the economy has more than doubled. Employment has risen from 1.1 million to 1.5 million. Unemployment has dropped from 19% to less than 7%. Unit wage costs have declined but real income has improved. The national debt has reduced from 125% to 52% of G.N.P and the current account has moved from a £2 billion deficit to a £ billion surplus. Inflation has reduced from 4% to 1.7%. Interest rates are at approximately 3.5%.The incidence of industrial action has declined significantly.
There has been a dramatic increase in foreign direct investment. Young skilled people who left the country in the 1980's are returning to Ireland and there is currently net immigration. The economic growth rate has averaged 8.5% since 1994.
The programmes have also led to improvements in housing, education, health and to urban renewal.
Observations: The Netherlands
By the early 1980's, the Netherlands found itself in major economic crisis. Between 1980 and 1983, 100,000 jobs were lost each year. The country was categorised as the Sick man of Europe?.
People spoke of the Dutch disease. Unemployment was high by European standards at 12%.
In 1980 Government took the extraordinary step of suspending collective bargaining.
In 1982, in response to the crisis, Business and Labour leaders, through the Labour Federation, struck an accord known as the Wassenaar accord. A brief one page document (which is annexed), it shaped the business and labour response to the crisis and paved the way, through structured engagement with Government, for economic recovery.
Among the measures adopted were a cut back in Government spending, a reduction in social security benefits (which were generous by European standards), wage moderation, a reduction in working hours, and tax reductions.
There was a commitment by employers to job creation. Dutch industry was undergoing significant restructuring involving continuing job losses, but between 1984 and 1996 the number of full time jobs rose by 880, 000 (19 percent). Measures included a significant increase in part time work, and taking this into account job creation reached 1.2 million. There was a shift in government expenditure from current expenditure to capital expenditure (from consumption to investment). Over time its budget deficit decreased from 9% to 1%. Unemployment fell to 5%. G.D.P per capita rose from 30, 666 guilders in 1985 to 40, 703 in 1998.
Key institutions which have supported the process of economic recovery have been the Social and Economic Council and the Labour Foundation.
The Social and Economic Council is a statutory body (the equivalent of NEDLAC). It consists of 11 each from employer, union and ?rown? representatives (mainly academics appointed by government but including the Governor of the Reserve Bank). Its role has been to conduct research and advise government on social and economic policy.
The Labour Foundation is a private (non statutory) body comprising 8 trade union and 8 business leaders that meets privately to negotiate matters of common interest, for example the parameters which inform the annual collective bargaining round. It also holds talks twice a year (Spring and Autumn) with Government.
Lessons and Insights
The delegation agreed that while South Africa's history and circumstances were different, there were nevertheless important lessons and insights to be derived from the Irish and Dutch experiences. These lessons and insights included: