Remarks by Tánaiste Mary Harney at the Dublin Chamber of Commerce Breakfast Meeting on Tuesday 14th September, 1999 at the Davenport Hotel, Dublin.

Pay moderation has been central to the Irish economic success story of recent years.

We have greatly enhanced our competitive position as a nation by ensuring, through the medium of social partnership, that pay increases were kept to moderate levels.

As a society, we have benefited enormously as a result. We have created new jobs at a record rate. We have dramatically reduced the numbers of people on the dole. We have greatly reduced the burden of taxation on hundreds of thousands of working people. We have effected huge increases in all areas of social spending.

Without social partnership there are 500,000 people who would not be in jobs today. Without social partnership there are tens of thousands of people who would still be languishing in long-term unemployment. Without social partnership the young people who emigrated in the 1980s would not be returning home to a land of opportunity in the 1990s. Every sector in Irish society should take note of these facts before deciding to ditch social partnership for good.

The experience of the last twelve years shows that when we in this country work together everybody gains. The experience of earlier times shows that when we don't work together, when each group pursues its own narrow self-interest, everybody loses. Let's learn from those different experiences.

In retrospect it was perhaps easy to get people to sign up for social partnership back in the late 1980s. The country was in dire straits and everybody could see the need for a new way of doing business as far as pay determination was concerned.

The situation is very different now. We have achieved tremendous social and economic success. There is a tendency to take prosperity for granted and to assume that pay moderation no longer matters. It does, and it would be a great mistake to think otherwise.

Pay moderation is essential if we are to maintain economic growth. Pay moderation is essential if we are to eliminate social exclusion. Pay moderation is essential if we want to deliver improved living standards for all sections of Irish society.

Pay moderation does not mean that working people are not entitled to share fully in Ireland's economic success. What it does mean is that we cannot trigger a spiral of wage inflation that will destroy the Irish economic miracle and leave us all worse off within a very short period of time.

The challenge facing us now is to devise new ways to ensure that all sections of society are able to share in our economic success. In the private sector there will have to be a much greater emphasis on profit-sharing and employee share ownership than has hitherto been the case. Both employers and employees can benefit from the introduction of such arrangements; and Irish firms would become more flexible and responsive to changes in the international business environment. I believe that the concept of gain-sharing will have to be central to any new partnership agreement.

The situation in the public sector is much more complex. Profit-sharing can happen, and is happening, in many of the semi-state companies: but profit-sharing is not an option in most areas of the non-commercial public service.

If social partnership is to continue we will have to modernise our whole system of public-sector pay determination. We will have to devise new and imaginative mechanisms for the management of change and the introduction of new technology.

I am willing to explore new options in this area and the government is willing to explore new options in this area. Such options could be an integral part of a new agreement, Partnership 2003.

But we cannot build a new agreement unless we honour the present one. We tried free-for-all collective bargaining in this country back in the 1980s and it didn't work; that is why we embraced the social partnership model.

We in Ireland have made great progress on every front over the last decade. I think we have made sufficient progress to recognise that we all have much more to gain from co-operation than confrontation.