Social partnership caused enormous damage to the Irish financial system, Minister for Finance Brian Lenihan said today.
Mr Lenihan was referring to a report being prepared by external consultants on the operations of the Department of Finance that identified the social partnership process and unsustainable financial promises given by political parties in the run-up to elections as being particular problems.
Speaking on RTÉ radio today, Mr Lenihan said the report is almost complete and has identified failings that would lead to a restructuring of the department and how it carried out its work.
Asked whether balls had been dropped in the department, Mr Lenihan said he had an "extraordinary cadre of hardworking individuals” working for him with a huge amount of work to deal with. He denied they were overworked.
“The department is very conscious of the need to review itself and reform itself. The current secretary general initiated a process this year where an external consultancy group has been examining its work and compiling a report on it,” he said.
Ictu general secretary David Begg expressed surprise at Mr Lenihan’s comments.
“I’m surprised by his comments in the context of a financial crisis facing the country which is pretty exclusively down to the failures in the banking system. The Irish banks were borrowing the equivalent of ten per cent of GDP in 2003; by 2008 they were borrowing 60 per cent abroad and feeding that into a property bubble here,” he said.
“That’s the essence of it and now we’ve a €85 billion bill to handle, and we’re looking at a black hole situation when we don’t know how long it will take to get us out of this, so I'm quite surprised his remarks were made in that context.”
Mr Begg said every Minister for Finance before Mr Lenihan had been “extremely well disposed and is on the record as attributing a great deal of merit to the social partnership process”.
“The average pay award given under benchmarking was 8.9 per cent. The government has taken back 15 per cent from everybody since then,” he said.
“I disagreed strongly with the Government over the years on the trajectory this country was on. I favoured following a social market economy model which is normal in Europe. We wanted Berlin, they wanted Boston and we got Boston."