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Economic issues must be put back at top of political agenda, Gilmore tells meeting of SIPTU executive

Issued : Friday 25 January, 2008

Colleagues and Friends

Thank you for your kind invitation to meet with you today.

I want to use this opportunity to outline some views I have about where we find ourselves as a country today; about the challenges facing us as a society, but also the many great opportunities.

We have the very mixed blessing of living in interesting times. I heard one commentator during the week describe the world economy as being at an inflexion point. A point in time when one trend is coming to an end, and a new one has not yet emerged. In Ireland, I think you can say the same thing about many aspects of our national life. There is uncertainty in the world economy, and about how Ireland will be affected by it. Will the intervention by world central banks be able to steer the world economy through the present crisis, and if not, how will Ireland be affected? We are facing into more difficult economic times, but how difficult and for how long it is hard to say. How soon can we expect the property market here to stabilise, with the knock on consequences for employment in construction? Many people are quite rightly concerned for their jobs, and are looking at the implications of financial turbulence for their pensions. In our society, there are new, sometimes disturbing trends, such as the new level of violence associated with gangland crime, and the onset of cocaine as a serious and widespread threat.

In our politics also, we are living through a time of transition. We have a Government that was tired and out of ideas even before it was re-elected. Its coalition partners show no sign of imposing themselves on the process of Government in a serious way, and the political system as a whole is fixated on the personal affairs of the Taoiseach.

No more than anyone else, I can't ignore the fact that the Taoiseach doesn't provide credible explanations to a Tribunal, that he can't produce a tax clearance certificate or that his party is engaged in a sustained assault on the Tribunal itself. As an opposition leader, I have a duty to pursue the Taoiseach on these issues. That's what parliamentary accountability requires. But I have no intention of turning a political duty into a personal obsession. There are other, important issues that also demand our attention, and while the political system is focused on the financial affairs of one man, the economic affairs of 4.2 million other people are being neglected. I want to put the related issues of the economy and of social progress back to the top of the political agenda.

In all of this uncertainty, in the fog of impending change, I want today to advance three propositions that I think, we, the Labour movement, can agree on.

Firstly, that while there is much for us to look back on in the past two decades with great satisfaction, our economic success has not yielded the social progress that it should have. One in nine of our children still in poverty, a two-tier health system that doesn't provide an adequate health service to either tier, crumbling poorly resourced schools, one in three children in some areas with literacy problems. I don't have to rehearse the statistics - you know them as well as anyone. That is not to say that there has not been social progress, but it has not been sufficient when compared to the success of the economy.

Secondly, while there is uncertainty about the Irish economy, we should be neither unduly pessimistic nor inactive. The Government's mismanagement of the economy has certainly added to our difficulties. Their refusal to intervene in the property market has left a serious imbalance which is now being painfully corrected, and their ineptitude both in capital investment and in regulation has added to our competitiveness losses. Nonetheless, There are still many economic strengths in Ireland on which to build. We need to act, both to deal with the present downturn in an effective and timely way, and to lay the foundations for future jobs and growth and prosperity. Ireland has lost competitiveness and we need to restore it. One short-term measure, for example, is the urgent necessity to put in place pathways for people coming out of the construction sector to get new training and find jobs in other areas of activity. Ireland's reliance on construction to generate new jobs was never going to be sustainable. Now we need to be sure that people can make the transition from that sector to other areas of employment. We should also be looking more actively at facilitating the development of the indigenous high-tech sector, shifting the balance of advantage within the tax code towards high-risk, high-tech investment.

Thirdly, as the present problems in financial markets point up, we live in a technologically advanced and economically integrated world. As has been shown over the past six months, the money lent in sub-prime mortgages in the US came from banks and savers right across the world. Ireland is one of the most open economies in the world, and we must make our living as a trading nation in that globalised world economy.

The countries that will succeed economically and socially in the 21st century, will be those who understand how to combine competitive advantage with social solidarity - not as alternatives, but as essential complements. The countries that understand how to turn technological and intellectual advances into goods and services that people want to buy, and who understand that an inclusive society is a vital part of that process, will be the countries that others look to in the future. I want Ireland to be one of those countries.

One of the best examples of that is in the area of education and training. As a country we are proud of our education system and so we should be. But that doesn't mean we can be blind to its failings. One in every eight children in this country leaves school without a leaving cert or an apprenticeship. In the past few years, there has been a significant increase in the unemployment rate for early school leavers. In a world where the work that people do is constantly changing, our young people have to be equipped with a strong underpinning of basic education and skills, if they are to adapt and change with the times.

That problem is part of a much broader question. Three out of every five people who will be working in Ireland in 2020 are already in the workforce today. Forfas estimate that more than one third of those people will have to enhance their qualifications while they are still at work. That's half a million people. How do we achieve that goal? How do we address the shortage of students coming out of second level with adequate mathematics to study science and technology at third level? Of the Leaving Cert class of 2007, only 6,700 students scored grade C or higher on the Honours Maths paper. The problem with that is, that Grade C in higher Maths is the minimum standard for entry to a lot of science and technology courses at 3rd level. When you take out the number of those students who want to do other things, you are falling back on a very small pool from which to draw some of the key people that this economy will need in the future.

How do we make provision for an extra 100,000 children who will need primary school places over the next decade? And what of the urgent need to provide pre-school education?

We are proud of our education system, but we still have a long way to go before we create a learning culture in Ireland. A culture which accepts as common sense that there can be no limit to our educational ambitions, and no end to the requirement to continue learning throughout our lives. For the Labour movement, it is also common sense to say that education is a vital element of building a more equal society. It is an issue of equality and one where Labour has a strong record. It was Labour who first proposed the idea of free second level education (as part of the 1965 manifesto), Labour which abolished third level fees, and Labour that is now advancing the idea of universal third level education.

The question of equality has been to the fore of late, in discussion of the two recent benchmarking reports, which, taken together, proposed substantial pay increases for those who already enjoy large salaries and little or nothing for those on lower wages. The effect of these reports is to translate trends towards more unequal private sector pay into the public sector. And while it is certainly true that a pension is an important part of anyone's pay package, the effect of the benchmarking process is to ensure that the erosion of pension rights in the private sector should be passed onto the public sector.

This trend is by no means confined to Ireland. It is part of a broader global trend towards greater inequality, which is affecting the US in particular, but other countries also. In the US, for example, the change in the distribution of income between 1980 and 2004 means that the top 1% of income earners is now $640 billion dollars better off, at the expense of the bottom eighty per cent. One US study last year found that a CEO in a Fortune 500 company can expect to earn as much in one day as the average American worker does in a year. For the top twenty earners in hedge funds and private equity, that day shrinks to a mere ten minutes.

It was interesting to see the issue of pay has become part of the US presidential contest this week. It has also been looked at in France, Germany, and a number of other European countries. I think it should be an issue in Ireland too.

We also have to look at the implications of widening pay gaps for people who have to live at the lower rungs on the pay ladder. If we are to maintain a flexible labour market in Ireland, then we must also look at the provision of services which offers security and social protection to the people who actually work in it. We need, in my view, to re-cast the health service so that we are guaranteeing a world class health service to everyone, providing care based on need. We need to make sure that people can buy a house, even if they are working on a low income. We need to extend universality in education, to include pre-school, and to open up more pathways for advancement through education and training.

I spoke earlier of how each country has to grapple with the problem of how to combine competitiveness and social solidarity in the global economy. In Denmark, they have pioneered the idea of 'flexicurity', which has been taken up by the European Commission. This is the concept that labour markets should be flexible in the face of global trends, and that social protection should be concentrated on protecting the person, rather than the job. It is an idea that is being advanced by Labour's sister parties in the PES, and which Labour intends to develop in the Irish context. It means both investing in the individual, and ensuring that families have the back-up of strong universal public services. It is not, and must not be, an alternative to a strong core of employment rights.

In my speech to the Labour Party conference last November, I spoke of Labour having a new purpose. Of how we must arrest the sense of drift in our country, and restore a sense of vision and purpose. Re-building the health service, ending poverty, providing third level education to everyone, reducing our carbon emissions, and building a strong economy. These are but some of our goals.

What I am talking about is Labour restoring to the centre of the national political agenda, the socio-economic priorities which are at the core of our mission as a party. Building a society where social solidarity and economic prosperity go hand in hand.

I believe that goal is obtainable. I believe that we can work towards an Ireland, which in 2020, can look back on social progress to match its economic progress. I also believe that the Labour movement will be pivotal to achieving this goal.

My immediate task is to build up the Labour Party, and ensure that Labour is part of the next Government. My ambition is to make Labour competitive in every constituency, and to build up the party, step by step, brick by brick. Labour wins seats the hard way, by hard graft. Building up candidates for the local elections, being out in the community, actively campaigning, knocking on doors and wearing out shoe-leather. I am asking for the support of all workers in Ireland, including those who are members of trade unions, for the Labour Party in that work.