A new economic model to serve workers
When attention turns to the ‘economy’ usually the first things mentioned are tax and spend issues. This, however, is not an economic discussion — it refers to how we distributed what the economy produces.
We rarely get a discussion of the economy as such. Ironically, much of what passes for a debate about the economy misses the point; namely, the economy itself.
We should look to the example of the Swedish trade unionists. After the second world war, they began a debate over an economic model that would achieve their goals of growth, full employment, equality and price stability (low inflation). From this discussion emerged what has been called the ‘Swedish model’. A lot of people mistakenly assume this model is about high tax, high spend and universal services. But that’s just a consequence of the model’s success which is focused on the productive economy — what people produce and how they produce it.
One of the key goals of the Swedish model was to support productive companies and sectors. This would enable the economy to grow and wages to rise (and allow for the high taxes that paid for strong public services).
Of course, the international context has changed and many of the instruments that the Swedish model used would not be applicable today. So how can we achieve these same goals with the tools that are applicable today?
The first instrument is collective labour rights; in particular, collective bargaining. While we often present collective bargaining as a labour right (and it is), it is also a key productivity- enhancing tool. Companies that engage in collective bargaining are likely to be more productive and have higher wages than companies that don’t.
But collective bargaining — at firm and sectoral level — is just a start, the first rung on the productivity ladder. Collectively agreed employee-participation measures, co- determination and co-management, worker- directors — all these promote productivity, all these make for better companies.
There are two important implications here.
First, whenever we organise a workplace, we are increasing productivity throughout the economy as well as empowering members. Second, employers who obstruct collective bargaining in the workplace — and politicians who refuse to give legal effect to collective bargaining — are actually undermining economic growth.
The second goal is to initiate sectoral planning. There is already a basis for this in the Programme for Government’s commitment to establish Sectoral Taskforces.
These taskforces are to be made up of the main stakeholders (employee and employer representatives), supported by ‘experts’ and chaired by the line Minister.
These committees would be tasked to assess sectoral challenges (low productivity or investment, labour shortages, high input costs, weak infrastructure, etc.). They would also be important to meet the impacts of climate change, automation and Artificial Intelligence (AI) in order to achieve a Just Transition.
An excellent example of how trade unionists would approach such analysis can be found in ICTU’s ‘Ireland’s Meat Processing Sector’ report. This exposed a low-value, low-waged, low- investment, low-road sector and put forward proposals to put it on the high road of productivity.
Sectoral planning is about creating a ‘negotiated economy’ rather than a free-for-all that drives wages and working conditions towards the bottom.
Third, how do we direct resources towards productive companies? We could start by reforming Ireland’s business subsidy regime. Forty government departments and public agencies distribute billions in public subsidies to business along with billions more in public procurement contracts. We should prioritise grant-funding and public procurement to companies that possess a ‘Good Company Seal’; that is, to companies that demonstrate that they are ‘good’ companies.
To do this, we need to establish the components of a ‘good company’: collective labour rights, investment over value-extraction such as dividends and share buy-backs, financial transparency, environmental measures, in-work training & career development, gender pay equality, inclusive policies on digitalisation. There are a range of benchmarks for a good company. By directing subsidies and contracts towards good companies we would be rewarding productive business activity and incentivising other companies to up their game.
These are just some of the instruments and goals in a new economic model. Equally important is creating quality employment, driving wage equality, reducing living costs and preparing for a Just Transition.
It is vital that the trade union movement enters and takes charge of this debate. This is the best way to deliver for our members and create an economy that serves the interests of the producers of goods and services, namely, the working class.
This article appeared first in Liberty and was written by SIPTU Researcher, Michael Taft.
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