Recognising Recognition

Raise corporation tax? Introduce legal right to trade union representation? Whoever makes these arguments are usually met with a coup de grace: even thinking about doing these things will drive all multi-nationals out of the country. It’s stated as if it were the end of the argument – QED and all that jazz. However, when one investigates the terrain, things are not so quite clear cut and the room within which we can manoeuvre may be somewhat larger than is generally thought.

.I’ve already laid out the arguments against, in the short-term (I emphasise short-term), increasing corporation tax. Not that I believe such low-rates are essential to future growth (even the Enterprise Strategy Group doesn’t buy that line). Rather, the main issue is to develop a native enterprise base – something that will take a considerable amount of time. During that developmental period we will need all the instruments at our disposal to maintain foreign direct investment. Once we’ve broken our addiction to multi-nationals, then the corporate tax rate can be revisited.

But what about trade union recognition? Would that harm our ability to win foreign direct investment? I, of course, start from the premise that such a legal right to representation is both advantageous to a modern economy, and a necessity in vindicating the economic rights of citizens. But would my own QED chase off multi-nationals (MNCs) which we assume are inimical to such rights?

The Industrial Relations News (IRN) reports on research paper written by Jonathan Lavelle, Patrick Gunnigle and Anthony McDonnell, from the University of Limerick, entitled ‘Charting the contours of employment relations in foreign-owned MNCs: survey evidence from the Republic of Ireland’. What they find casts a more complex light on the topic.

First off, over 61% of all MNCs – Irish and foreign-owned – recognise trade unions at some level of negotiation. There is, however, a country-of-origin difference. Well over three-quarters of European MNCs negotiate with unions. This drops substantially with American MNCs but still represents a sizeable proportion – over 40%.

The question that the authors of this paper consider is not, however, ‘recognition of trade unions’ but rather the number of MNCs that ‘engage with trade unions at some level’. This raises the possibility that a higher percentage of MNCs would recognise trade unions if their employees insisted. Of course, there are many reasons why such insistence is not forthcoming (apart from coercive union avoidance strategies). As pay and conditions are usually much better than in native firms, many employees may have no incentive to see out the assistance of a trade union. However, it begs the question – if they did so insist, would those MNCs who currently do not ‘engage’ resist? It’s a speculative question.

So given that the majority of MNCs already engage with trade unions what would be the effect of a legal right to trade union representation on foreign direct investment? Probably a mixed bag. For the simple reason that American MNCs, which are less likely to engage with trade unions, make up a considerable bulk of foreign capital.

It would appear that the problem is getting worse (for workers and trade unions, that is). More and more MNCs are actively pursuing union avoidance policies – either through ensuring that wages and conditions are so high that workers have no incentive to be unionised, or through the ‘bludgeon workers’ approach championed by Ryanair. The paper reveals the extent of ‘double-breasting’ – the phenomenon whereby unionised MNCs don’t recognise trade unions in new plants they open.

Of the unionised MNCs, only 41% recognised unions in their new plants. One-quarter did not whereas the rest recognised unions at some but not all the new plants. Again, it was the US MNCs that were the most aggressive in pursuing union avoidance strategies.

Just as we shouldn’t over-estimate the problems associated with the impact on MNCs of providing workers a legal right to trade union representation, neither should we under-estimate it. A popular phrase among some on the Left is that, ‘We shouldn’t be enticing reactionary MNCs into Ireland in the first place.’ That’s all well and good (we shouldn’t be promoting dinosaur companies at any level – foreign or domestic).

But with the economy slowing down, with native enterprise unable to take up the slack, with greater competition among countries for foreign capital (the vast majority are cutting corporate tax rates) – we may not be in a position to pick n’ choose. Imagine telling a community, devastated by job losses, that we decided not to chase after a MNC because of their industrial relations policy – imagine how that would go down. T

his is not an argument against recognition, but rather that the Left and trade union movement will have to confront this question head-on – on the economic grounds – and not merely rely on rights-based arguments. Given that we have one of the fewest ‘days lost due to industrial disputes’ in the EU, given that our social partnership model precludes local action on wages, we can be confident that we will be able to show, in concrete terms, that vindicating people rights and providing an attractive environment to MNCs are not mutually exclusive and can actually be mutually beneficial.

After all – a considerable majority of MNCs already negotiate with unions. It’s not quite a QED – but it’s closer than anything the Right have.

Comments

The statistic about 'no days lost' really took me aback when I heard it last month. Social partnership does actually work reasonably well for business... some reciprocity seems only logical.

Posted by: WorldbyStorm | November 27, 2007 at 08:57 PM

Good post. I am just back from Finland...where 70% of software engineers are unionised!

Posted by: Aidan OSullivan | November 29, 2007 at 11:30 AM

Good post. I am just back from Finland...where 70% of software engineers are unionised! And Finland has one of best economies in world.

Posted by: Aidan OSullivan | November 29, 2007 at 11:31 AM

I absolutely agree with every word the author has written in this article!

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