Report from the National Jobs' Summit

Over the course of the last year, as it became clearer that we were sinking deeper into crisis, Congress has demanded that Government treat the jobs crisis with at least the same sense of urgency as it has devoted to the banking crisis.

On May Day, Congress called for a €1 Billion Job Creation & Protection Plan, which would see Government actively intervene to protect existing jobs while also unveiling new initiatives - in the Green Economy, for example - that would see the creation of new jobs.

As part of our ongoing campaign, Congress organised a National Jobs' Summit in Dublin, on November 26 last. The following short report looks particularly at the contribution of three key speakers: from Germany, Holland and Denmark.

All three are countries that have successfully tackled job crises and unemployment with new and innovative measures.

The conference was opened by the Lord Mayor of Dublin, Councillor Emer Costello. Having taken up office in June, she has prioritised jobs and unemployment. Furthermore, she and other city councillors have instigated the Dublin Jobs Commission which will focus on jobs and the protection of existing employment. Unemployment affects individuals, families and wider society. It threatens people's livelihoods, their self esteem and sense of self worth.

The Lord Mayor firstly congratulated Congress on the conference, stating that it was not only timely, but necessary. She pointed to the current's Government failure to tackle unemployment arguing that they had focused on the financial crisis and NAMA almost to the exclusion of everything else. Indeed, Ireland is in need of 'strong and creative' leadership that prioritises not only job retention but job creation. Currently Dublin, which she argued must be the engine of national recovery, is 'haemorrhaging' jobs with a 140 percent increase in the number of people signing on.

She detailed the role of the Dublin's Jobs commission whose first task was to identify the scope of the problem. The commission has four key priorities: Unemployment and Employment; Business, Entrepreneurship & Finance; Education Skills & Training; Volunteering & the Social economy. While she argued that the scope of work is huge, there are solutions. For example, potential growth sectors such as the creative and culture industries and the green sector are avenues with untapped potential that could develop the Irish economy. She also urged Government support for small and medium enterprises by putting pressure on banks to release the appropriate funds that would keep these companies afloat. She placed particular focus on the proposed DIT Grangegorman Campus arguing that its construction could 'unlock so much for the city'. A high-class educational facility such as this would not only put Dublin on the academic map but also attend to the capital's future educational needs.

She commended the work of Trade Unions and of Congress in particular, stating that they had put forward good and worthwhile ideas. Indeed, the consensus is clear - savings should not be made at the expense of public services. Tax should be paid by those who can afford it. And a situation that leads to further unemployment and further deflation should be avoided at all costs. She highlighted in particular Congress' proposed €1 Billion investment in jobs, the National recovery bond and proposals for the short working week as worth exploring in this crisis.

1. The German Example: Sharing the Burden

Click here to download Christain Steffen's presentation (PPT format 176k)

Christain Steffen, a representative from the DGB (German Trade Union Confederation) then addressed the conference. Speaking from the perspective of his own Union, IG Metall, he remarked how they are the largest union in the world with over 2.3 million members. They have over 70,000 shop stewards and 50,000 work councils!

Germany like all her European counterparts has been hit hard by the recession. However, she has fared better than most on the job front. Indeed, 1.4 million have been retained at work through active government intervention in the labour market.

Before divulging the secrets of Germany's success, Mr. Steffen first wished to explain the German Labour market. While it can be used as a reference model, there are some puzzles to its success and furthermore, all is not perfect. For example, while unemployment has dropped from 5 million in 2005 to just 3 million in 2008, it did not come without a price. Christian remarked that Germany still experiences inequality; an uneven distribution of income and marginalisation of certain groups, such has single mothers and the long-term unemployed. He then went on to say there is a need to distribute this wealth more evenly.

Responding to the downturn

But even during the worst of the crisis the German labour market did prove to be quite resilient. The fall in German GDP was indeed quite steep. Should this have been reflected in the labour market a further 3.2 million people would have been unemployed. This is far from the reality however. The negative GDP growth of 6.8 percent largely driven by the fact that Germany is an export led economy, has not been mirrored in the labour market. Indeed the German labour market has proved to be quite successful. In Steffen's sector alone, metals and electrical goods, orders and utilization etc have dropped by over 20 percent and yet employment levels have only dropped 5 percent.

The gap between these two macro figures is indeed quite puzzling. While economic stimulus packages instigated by the German government, such as the car scrappage scheme, had undoubtedly had some effect, the measures taken by both the government and companies to secure employment have proved more effective in keeping unemployment low. A lot of these measures can be designated as a sort of internal flexibilisation.

They include; decreases in overtime hours worked, withdrawal of hours in recession with the ability to 'store up hours' in good times, short-time work, reallocation of employees, and paid leave arrangements. Pay and benefit cuts are the last items on the agenda.

Some of these arrangements are obviously more desirable than others. He advocated short-time work as one of the more promising policies. Although the costs of this scheme are quite expensive - a staggering €5 billion in 2009 - they are significantly less expensive than unemployment. Thus this initiative to save jobs is both desirable and effective from even a purely market perspective.

'A bridge over the crisis'

When taking into the consideration the social costs of unemployment, this scheme proves to be even more valuable. Instead of lumping all of the unfavourable consequences of the recession on the most vulnerable, it is a system of burden sharing between employers and employees. And what is even more interesting is the fact that these mechanisms are based on voluntary agreement. For this, employers must be given some credit for making such a strong commitment. Indeed, some regard it as a big gamble for Germany but Steffen is optimistic because all indicators suggest that the worst pain of the recession is over.

Steffen said that trade unions enjoy a good position in Germany. Indeed they have strong legal protection and the German Chancellor has met with them on occasion. Some has remarked that German's laour markets are too rigid, however perhaps this 'rigidity' has helped employment stay afloat during the recession. For example, considering Germany's functional labour relations, Steffen remarked that the balance of power is not as uneven as one might suspect. There is co-determination with the proliferation of work councils who have access to the relevant data of business. These work councils also comprise of a lot of technical expertise and are assisted to both research and the negotiation process if required. They therefore have the skill and ability to play major roles in discussing employment issues and have even instigated certain initiatives such as short-term work schemes.

Although the outlook for Germany is uncertain, Steffen remarked that the mechanisms in place helped build a bridge over the crisis for 'once you fall off a cliff, you can't change direction'. The main goal was to keep people in jobs and make use of their skills. It was and is important from both an economic and social perspective. He finally went on to state that German unions still face a tremendous challenge particularly in regard to what happens after the crisis. Ultimately it is a question of democracy he stated. Indeed, Democracy cannot stop at the company gate. Mechanisms whereby employees have a bigger say in what is produced and how, is the key element in overcoming this crisis and those that they may face in the future. Perhaps democracy in enterprise is a romantic notion, but it has proved an effective solution with regard to Germany's success story in the face of the current worldwide recession.

2. Lessons from Holland: Dialogue the Key

Click here to download Elco Tasma's presentation (PPT format 511k)

Elco Tasma, General strategic advisor of FNV Trade Union Federation. Unemployment in Holland is much lower than in neighbouring countries, ranging between 5.5 and 7 percent.
He stated that the key to tackling the recession was with social dialogue. This type of interaction is deeply rooted in Dutch history and serves as a vehicle for successful co-operation between employees and employers, trade unions and government during times of crisis. Unions, employers and Government officials all take part (some of whom have a political colour so parliament feels that they are represented too). These types of roundtable discussions led to breakthroughs in healthcare, disability and unemployment. However things become more difficult when the balance between employers and employees is not equal. During times of crisis political parties tended to turn to social dialogue in Holland.

Tasma said the position of unions is very important in Holland. This gives them scope to manoeuvre and in times of crisis - such as the current recession - the ability to instigate schemes which protect employment.

Trust is key

For example, trade unions recently secured an agreement on a plan for education and upskilling that affects half the working population. Some argue that Dutch employment protection only keep weak companies alive and these types of measures interfere with 'natural selection' in the economy. However Tasma pointed to the fact that these measures were in fact used by healthy companies who only had to resort to these options because of the crisis.

He then went on to say that the situation in Holland is not perfect and criticized the government on grounds such as the national pension which he argued was 'not a balanced deal'. However, this only brought him back to his original point - Balance of interests is a necessity. He furthermore went on to emphasize trust that is the key: It comes by foot but disappears by horse'. It is therefore of paramount importance that dialogue takes place systematically so as to build of a relationship of trust and reciprocity. It can lead to such fruitful results as - no panic and uproar, not radical steps when not needed and relatively mild consequences for unemployment. Dialogue, Compromise and a balance of interests are therefore all key components of Holland's success in the current recession.

3. Lessons from Denmark: A New Labour Market Model

Click here to download Poul Nyrup Rasmussen's presentation (PPT format 286k)

Keynote Speaker: Poul Nyrup Rasmussen, Leader of the Party of European Socialists and former Prime Minister of Denmark He is considered the architect of Denmark's Flexicurity System, which has become a model for many other countries in terms of active labour market policies and upskilling.

Rassmussen was quick to remark that the robust model on which he would be speaking operates in a Danish/Nordic /Scandinavian context. Some 70 percent of people in Denmark are in trade unions.

He stated that globalisation is an irreversible trend. Indeed its effects are far reaching and no facet of society is exempt from its grasp. Rather than the feeling of permanence and security that jobs engendered in the past, they are now characterized by uncertainty.

Permanent change is the new dynamic that globalisation has created. Rasmussen stated that amelioration of this situation must come in the form of social security. While the same job may not be promised for the duration of one's life - employment must be promised for the rest of one's life. In this way, we must have more interplay between the public and private sector and the focus is on a combination of rights and obligations. Indeed it is possible to continue to have high competitiveness with Social Security. The Nordic Welfare model confirmed this. They were the global frontrunners in competitiveness, technology and creativity until of course Rasmussen two came to power and altered this welfare system.

Removing fear & uncertainty

Rasmussen then went on to highlight the importance of growth. Active Labour Market policies require the resources to pursue the strategies they imply. Indeed there is an impossible contradiction between high unemployment and high social security. As such, dynamic and productive labour markets are essential.

When Rasmussen came to power, unemployment was at 13 percent. Recourses were being used in a passive way. Unemployment benefit could be received up to 12 years. This was not activating people. Indeed it cost the government a lot of money. He therefore resolved to establish a combination of a new growth strategy and a new reform. Both were essential because you need growth for reform and trust and cop-operation are indeed two sides of the same coin. He used some of the following measures; new investment strategy, tax incentives for research and development, education, public care and the flexicurity system. Most importantly, the aim was to activate people. This was the fundamental idea. By creating a new springboard for people the economy not only became more efficient but it became more socially responsible.

He did this by creating a coherent system of rights and duties. It is based on a contract and an individual action plan that is formulated through one to one interviews. This contract is comprised of mutual rights, duties and expectations. The most interesting aspect of this contract is that people can influence it themselves thus engendering a sense of importance and responsibility. Rassmussen argued that these contracts are very important for long-term unemployment. They make the journey between jobs short, economically acceptable and furthermore expand people's competencies. Thus a system of life long learning is put in place. Fear is removed and no complete point of departure from the educational system is evident. People are able to expand their capabilities and at the same time have security.

New skills crucial

Rasmussen said both the social partners have a responsibility in maintaining the system. They must ensure that people's skills are updated by the implementation of training programmes. Furthermore there must also be a Youth Guarantee as young people can often be overlooked in the employment system.

The success of Rasmussen's scheme is evident when we consider unemployment dropped from 13 percent to just 3.5 percent. By recognising that people have choices, by allowing them to influence their own contracts and expand their capabilities with security, a clear consensus was reached which fundamentally changed the direction of Denmark's labour market. While Rasmussen did not recommend that Ireland copy Denmark he said we can take inspiration from her direction and philosophy.

Rasmussen spoke about the current situation in wider Europe. Indeed European employment has reached 9.5 percent that implies almost 22 million people out of work. Furthermore, it is heading toward 10.5 percent or 30 million people out of work! The prognosis is indeed very depressing. However Rasmussen argues that there is a solution. There must be financial reform. He proposes an international financial transaction tax on a volume basis of just 0.05 percent. He points to the fact the Greek and Australians Governments and even Gordon Brown have warmed to the idea. Instead of rectifying deficits by punishing the most vulnerable in society, we must target the financiers who got us into this mess in the first place.