To be checked against delivery

James Connolly would have grinned ruefully at the thought that a lecture to commemorate his outstanding memory is to be delivered by a subject of Her Majesty the Queen.

Yet it is a mark of the modern Ireland, and the distance travelled, that a Mancunian can give a lecture in the name of a great Irish patriot and martyr who was also a trade unionist and socialist. Connolly’s repbulicanism unlike some of the other founding fathers of modern Ireland, was never “republicanism in one country”.

James Connolly once said that “England’s danger is Ireland’s opportunity” - continuing an old Irish revolutionary tradition.

Well there’s no link any more between danger and opportunity and long may it continue that way. Ireland has emerged from its chrysalis as a glittering economic success, admired and respected the world over. And while Connolly might be hard pushed to find his Socialist views reflected strongly in modern Ireland, he would have been proud of the international spirit and the importance of the trade union contribution, most recently expressed in Irish National Workplace Strategy - an excellent and exemplary exercise. He would certainly have been proud about the transformation of the lovely city of Galway.

Ireland is now the exemplar for many countries of the South and East of Europe. For me too, it has lessons to teach its British neighbour still to a degree suffering a past 1945 identity crisis about “are we European or not, and what is the relationship with the USA?” Despite the Irish debate about Boston and Berlin, - and you can feel that on these Atlantic shores - it’s a more positive sense of opportunity which pervades this side of the Irish Sea.

Ireland is one of Europe’s and especially the eurozone’s exceptions - it is doing well when others are struggling especially the three giants - Germany, France and Italy.

Let’s be honest about it - the European social model is under pressure. Not just in the debate over the Lisbon reform agenda but elsewhere as well. We pull it apart at our peril. It must remain at the heart of everything we do.

I say this not out of dogma but out of the fact that the founding European treaty - the European Coal and Steel Community Treaty - had social partnership, social dialogue and the social model, as well as the free market, designed in, precisely to preserve the peace in Europe. The two strategic industries, which underwrote global, industrialised warfare twice in the space of one generation, were placed at the centre of the European project by Robert Schuman and Jean Monnet.

The Consultative Committee which organised the restructuring of coal and steel - together with the Commission’s forerunner, the High Authority - was made up by equal numbers of employers and trade unionists. A balanced committee, just like the EU Social Dialogue Committee today.

Then there is the global level of key influences. Partly as a result of globalisation, the 25 member, enlarged EU is going through a turbulent period - but which region of the world is not? Are not the issues the same internationally, albeit with different impacts for developing and developed countries?

The debate of our time is not between communism and capitalism. Rather, it revolves around two modern economic and social choices: the more neo-liberal, deregulated US business model or a European style social model. Moreover, the debate involves a choice in favour of a more sustainable development for all of us - what and how fast.

The present debate in the EU is especially sharp, over Lisbon, over the services directive, over a raft of social and employment legislation and over the Constitutional Treaty. How we in Europe resolve these debates, and how we implement our already agreed policies will determine the course of the next decade in the EU and influence other countries elsewhere.

For my third main point I will touch on the future of trade unions. Some commentators say bluntly that trade unions have no future; that the economic aftershocks of the globalisation process will sink all the old dreams, held so passionately by James Connolly and millions of others.

We, as you would expect, take a different view. It is one that accepts the formidable challenge to find solutions and takes an optimistic view. It is quite clear from the actual situation in all of our societies that millions of working people would be much worse off, if trade unions simply disappeared. There are already far too many working people with insufficient protection right now.

The EU social model and the German conundrum

So back to my first point: the challenge to the EU social model can also be called the German conundrum. Why is Germany, the biggest and apparently the most ‘social’ economy in Europe in the doldrums? Is it true that only radical reform will turn the situation around? To answer these questions to any satisfaction, would take a whole lecture in itself. But suffice it to say at this stage: the first key problem with the German economy is lack of demand and the second is the huge 70 billion euro plus annual cost of re-unification.

Just before the election of the first Schroeder Government, the wealthy and prestigious Bertelsmann Foundation, based on the media empire of the same name, organised a high level conference of the German social partners. They invited some of the cabinet-in-waiting together with social partners from the rest of Europe. The debate was counter-posed in the starkest possible terms: on the one side, Ruth Richardson, the former neo-liberal Finance Minister from New Zealand called for radical deregulation, across the board, and especially in the labour market, while on the other side, Dutch Prime Minister, Wim Kok presented the Dutch model, as a possible alternative for Germany.

Times change. Helen Clark, New Zealand’s Labour Prime Minister, is successfully running the country in her second term (4.2% growth in 2003/4), like a European social democrat. The famous Dutch consensus seems to be fraying over economic, social and especially migration policy. Germany has yet to find its way through the conundrum created by the powerful backwash of re-unification, and Wim Kok has been brought back to the cockpit, this time at the European level.

In presenting the High Level Group’s (HLG) Report to the Brussels European Council he started the real stock-taking process that was completed at the Spring European Council, under the Luxembourg Presidency. The Lisbon mid-term review, fittingly, was being guided by Prime Minister Jean Claude Juncker, leader of the country that launched the European Employment Guidelines in 1997. I have had some excellent meetings with both Prime Minister Juncker and President Chirac on the importance of the EU social model.

We need to take care over the results of the mid-term review process and the Spring Summit. There was some unwise presentation by President Barroso of the review of the Lisbon strategy when he apparently referred to social policy being in the ‘back seat’ of Europe. Well that does not appear to be the case in his own country, Portugal, where his old socialist opponents have just won a thumping majority.

If we are to convince those countries organising a referendum on the Constitutional Treaty to follow the Spanish example, then we will need to be braver than that in facing down neo-liberal pressures. Ireland understands what’s at stake better than most countries, not just because its political skills guided the final settlement of the Treaty in the Council but because you have been there before, with Nice!

The European social dialogue - crucial to the outcome

The Kok Report recognised that social dialogue is essential to Europe’s productivity and adaptability to change. The Partnership for Change, launched by the Irish Presidency last year involves the social partners, as do the national action plans (to be subject to debate with the national social partners rather than merely rubber-stamped by them) and the Commission’s social action programme. These must work, if Lisbon is to be implemented.

The social partner negotiation track in the Social Chapter provides a highly flexible means of implementing social and employment policy. But this very flexibility is being systematically undercut, with confidence in it falling, as a result of the radically negative positions taken by the UK Government against successive European Commission proposals for the employment domain. The UK Government says it supports voluntary social partner agreements under the Chapter while vigorously opposing legally binding agreements. But generalised UK opposition to effective European level social dialogue creates scepticism and doubt among the European social partners about the viability of even the voluntary agreement route.

However, it is undeniable: under the Treaty, the potential is there. The social partners can negotiate a whole variety of measures. These could be used to re-invigorate the social and technical processes of both product and work process innovation. Social dialogue can truly be a factor for comparative advantage in competitiveness, which neither the Americans at the first world end of the global economy nor the Chinese at the developing end, presently share.

Kok’s five policy areas for action

In summarising the HLG report, Wim Kok suggested that for Europe to increase its living standards, it needed to accelerate employment and productivity growth via a wide range of reform policies as well as a wider macroeconomic framework as supportive as possible for growth, demand and employment. ‘No single action will deliver higher growth and jobs.’ Urgent action would be needed across five areas of policy. It is worth looking at how the social dialogue can play a role in these:

  The knowledge society - European trade unions organise a large percentage of research and development professionals. Quite apart from this, with their interest in industrial policy and in both product and work process innovation a wide variety of trade unions can play a constructive role in enriching the innovation process. But at the European level the way must be open, as the Irish Presidency wished it to be, in Partnership for Change.
  The internal market - European trade unions supported the single market with a matching social dimension. Inevitably, the process of creating an internal market is uneven, and social impacts cannot always be judged accurately in advance. There is a need to find an agreed approach. This can be contentious, as with the services directive.

Current social provisions are not sufficient to deal with the negative forces unleashed by unrestricted liberalisation of services across borders; more will need to be done. The ETUC firmly rejects the liberalisation as proposed by former Commissioner Bolkestein. In particular the country-of-origin principle risks opening the door to social dumping. A European internal market for services must not be allowed to undermine labour law or social legislation. That way lies chaotic beggar my neighbour policies.

The three core values of the EU, it is worth reminding ourselves, are competition, co-operation and solidarity. To put competitiveness before the social and environmental pillars of Lisbon, risks undermining competitiveness itself.
  We have recently scored a win in a significant battle on this, with some help from Charlie McCreevy by the way.
  The business climate - demands for deregulation trip off the tongues of a growing number of European politicians and business leaders. But the starting point here must be the fact that only around 7% of the total package of Single Market legislation is social and half of that is on health and safety. What is business really saying about the other 93% of economic, technical and commercial ‘red tape’. Until this is clear, the social dialogue cannot be engaged in solving any real problems.
  The labour market - there is much to be done here, and Kok has listed many important areas. The most refreshing contributions from outside the HLG have come from Goran Persson, the Swedish Prime Minister - on the need to adapt the working environment in order to make it sustainable for older workers to remain at work longer, if they wish. This is classic territory for the social partners. So is a related one. Persson, recently supported by Trade Commissioner, Peter Mandelson, identified another crucial area: well designed family policy to encourage participation of women in work and make it easier to raise children. It is no surprise to see that the impact of equal political representation of women in Scandinavian countries has had an effect. Resources have been allocated for children and for women in order to help society as a whole. This is the value-added effect of equal opportunities. It is an economic plus, not an economic burden.
  Environmental sustainability - trade unions have been seen traditionally as defensive when it comes to environmental improvements - defensive of their members’ jobs, and employers have been worried about costs and the loss of competitiveness. While these responses are sometimes still there a new mood of growing support for environmental innovation and the diffusion of new environmental technologies. This is in the context of a sustainable development balanced between the social, economic and environmental. It is already the subject of the social dialogue.

Finally, Kok called for the social partners to take up their responsibilities and actively participate in the Lisbon strategy. The ETUC, for its part has always been willing to do this, through the Social Partners’ Work Programme. Will the employers’ organisations really pick up the challenge? Will the Member States work together to encourage this and will they co-operate in the implementation of measures as they are negotiated by the social partners, autonomously?

How will the UK and Ireland in particular implement the information and consultation of workers directive? Will they enact its full provisions and thereby help to change the atmosphere in millions of workplaces in EU countries? A wide range of issues will be subject to the new process: the introduction of new technology, skill upgrading, job redesign, new pay systems but the crucial aspect is the requirement to consult over restructuring - a constant in today’s world. Employers will be required to inform and consult over anticipatory measures in the event of a threat to employment. They will have to inform and consult with a view to reaching an agreement on decisions likely to lead to substantial changes in work organisation and contractual relations.

The Nordic model at European level?

Although the European social model has a number of common elements, its evolution has moved at variable speeds and over considerably different time scales in the different member states. This is even truer now in the enlarged Union. On balance it has been enormously successful. Where it has renewed itself, as in the Nordic countries, it has combined competitiveness, growth and social justice into a highly effective formula for modernisation. But can it be translated to the European level?

One Finance Minister you might expect to support moving the Nordic model to the EU level is the UK’s Gordon Brown. But he has let it be known that the UK Presidency, after Luxembourg’s, will be pressing even harder for economic reform, especially for structural reform. To lump together the reform of product, capital, services and labour markets misunderstands the different nature of these markets. To treat the labour market as no different to a market for computer chips or fish and chips, to a market for tea bags or for tea making or for buying and selling shares is quite ludicrous.

The most relevant economic reform that Gordon Brown and his UK colleagues have already encouraged is that of the Growth and Stability Pact - even if he was piqued because as a non-euro member - he was left out at the crucial stage of making the changes. A macroeconomic framework that really supports growth, demand and employment is essential for a revitalised EU. The HLG recognised this and also that, without it, the delivery of Lisbon was less likely to take place. The ETUC has been a long-term advocate of fiscal policy appropriate to the current downtown, and the reform of the Pact so as to allow effective investment in key priorities such as innovation, lifelong learning, social policies, quality of work and sustainable development.

There is nothing to indicate that the ETUC would find it any more difficult in reconciling the tensions between competitiveness, social solidarity and sustainability than its Nordic affiliates have done, as long as the security of a strong, modernised social model remains in place, as in that region, to enable new flexibilities of all kinds to take shape. But put the trade union movement onto the defensive, either by inaction, European level indecisiveness and muddying the waters over key policies or worst of all through confrontational positioning by some governments or employers, then the movement will fight hard. It will work systematically with its allies to defend what it understands as the European model of society, an evolving project which is also of great relevance for the rest of the world.

It’s a global debate with global consequences

In recent years, the UK government has often advocated the view that the European social model was designed just for a new post-war trade bloc. It is now ‘time-expired’ by globalisation.

The growing presence of China, India and Brazil in the global economy is naturally challenging, but it does not force a fundamental design change on the EU, any more than it does in the Nordic region, which has been traditionally internationalist.

Moreover, the three largest developing economies are themselves searching for a social model to either replace earlier ones (China) or to develop a modern one that adequately fits their situation. For these reasons the European experience is more relevant for them in an age crying out for sustainable development, than the American business model which favours the economic over both the social and environmental dimensions. I believe, however, that our American friends will have to come into line - first on the environment and the Kyoto process and second on the social dimension. They cannot run the modern world like the Wild West. Robber barons may have appeared in former communist countries, but that is no option for the developed economies in the OECD. That way lies many Enrons. And corporate social and financial irresponsibility.

It is no option either for the big three developing countries. Take China - in 2003 China contributed one third of world economic growth. Its GDP is growing at 8-9% per year and it expects to quadruple its GDP by 2020. Inward investment is running at over $50 bn a year, from the US, from Europe, from Japan and even more importantly from the overseas Chinese. Few non-Chinese manufacturing companies can ignore the question - do we enter the Chinese local market and do we create a re-export base? Outsourcing is happening daily; jobs are fleeing to the East. But a word of caution here. We are not getting into a protectionist panic.

There are few reliable studies yet completed on the numbers involved. In France one detailed study showed that more jobs are lost annually as a result of divorce among couples running small businesses than are lost to China. The steel industries in the West, the machine tools industry in Germany and several other industries are booming on the China trade. European firms can keep migrating up the value chain; they can work on boosting their productivity and innovation and the public authorities must support them. Unions have a role to play here, too. We must maintain the pressure on both the companies and public authorities alike; for the European social model based as it is on a set of obligations and benefits means they cannot just be left at the EU border by travelling CEOs.

And not least, the Chinese themselves, in developing a new social model, will have to introduce effective trade unionism and international labour rights. I suspect that what the elite in that country is struggling with is not if, but how and when. Once again, we need to engage with them on this. Managing a country of 1.3bn people that is growing that fast is no easy project.

The EU contribution to China has struck the right note - it is based around practical projects, substantial cash support and effective diplomacy from an independent stance, which the Chinese respect. The world is so interdependent these days that we sometimes forget the effects of this: between China and Japan, they own much of US public debt, thereby helping to sustain the US economy as an import base for their goods.

The Chinese have asked the EU for help, too, in developing a new social security system. The old ‘iron rice bowl’ is largely shattered. The state-owned enterprises that provided the social security in the past are fast disappearing. Where do the authorities go now? Private pensions? Equity shares? What can they promise such a large population for the future? To solve this problem re-enforces the perceived need to keep growing the economy at a rapid rate.

We face global governance issues, too. Joseph Stiglitz, the Nobel Prize winning American economist has called for a whole series of reforms to the way the global governance system works. These include changes in the governance of the World Bank and the IMF to give developing countries a more effective voice; changes in the governance of the WTO including more transparency and an alternative, independent research backup for developing countries. China, India and Brazil should be at the table in a G8, expanded to a G24. The financing for global public goods could be based on revenue raising from the use of global goods, like fishing, greenhouse gas emissions, environmental taxes. Stiglitz has made other proposals, within an overall package for the optimists emerging into the light of day. Our global issues may seem complex, sometimes overwhelming for small countries, but to put them into a direct human dimension can open the way to a solution.

The future of trade unions

On my final general point - the future of trade unions - I am an optimist.

I am optimistic that the Chinese will sort out the trade union question. It may take time, but in the developed countries trade unions face tremendous challenges, too.

Let me start with a quote from an American trade union colleague:

“The resources the American labour movement must spend on organising would absolutely boggle the minds of most European trade union leaders. And despite the expenditure, we’re not even standing still - if we organise 400,000 new members each year (as we have in each of the past several years, roundabout), we lose 600,000 members from plant closures and layoff. In the private sector we need to organise one million new members NET each year just to raise our density figures one percentage point. We simply cannot do what we are doing now, better, and expect that we will have a future. We have to change the paradigm. Doing that within the context of autonomous, democratic institutions, all with their own proud traditions and diverse cultures, against a serious and resurgent right-wing/corporate agenda that would really like to obliterate us, is our challenge - and it’s formidable.”

To solve this set of problems in the US is likely to take as much time as the Chinese may require to solve theirs’. When we compare the American or the Chinese situation we can see that we are much better off. However, trade unions are losing membership in many European countries, as the economy is restructured, as the workforce changes in composition, as large scale plants disappear. The only countries that are increasing their membership levels are - once again, guess where - the Nordic countries. Recently a Finnish trade unionist said that the reason they were interested in the US, Australian and British ‘organising models’ was because they wanted to raise their membership levels from 85%!

In coming to a conclusion, let me say something quite clear: Europe cannot work without social Europe. Social Europe is not a fixed, immutable project. Its values may be fixed but its nature and variety across different countries is subject to change. It is both most dynamic and constructive when it is well-supported politically. What we need to avoid in Europe is the sense of siege and threat that exists in daily industrial relations in the US. We may see this developing in the near future in Australia, but in the broad sweep of things the planet is not going in that direction. We, in the ETUC are acutely aware of our European inheritance. Not only has Europe caused severe agony in the world, it has laid the basis for many advances for humanity. We have proven to ourselves that we can create peace on our continent. Can we prove, continually, that that peace can be socially just. And can that social justice be an inspiration to others just as our peace has been?