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Immigration, Social Dialogue and Economic Growth in the Old Periphery of Europe: The Celtic and Latin Tigers?

By Oscar Molina


More importantly, a close look at these two countries serves to dismiss some of the claims of a well-known globalisation thesis, according to which sustained economic growth can only be attained through opening spaces for market competition and removing barriers to the free movement of the factors of production, including protection of employees. Even though I will show how the opening of the two economies to inflows of capital and labour has been critical to achieving higher growth levels, these processes have been managed, albeit in different ways and to different extents, through the mechanism of social dialogue between trade unions, employers, civil society actors and the state. The Spanish and Irish experiences hence show that there are benefits to cooperation and that globalisation cannot necessarily be reduced to a zero-sum game. In the following paragraphs I will explore the three ingredients for growth and will discuss their role in the two countries. Finally, I will discuss some of the problems that lie ahead and will stress the need to search for innovative solutions within the consensual framework of national social dialogue in order to manage the challenges posed by global competition and migration.

The keys to success:
1. Social Pacts and Concertation

According to some of the more enthusiastic supporters of globalisation, this process is changing the shape of the world as national governments are losing their capacity to manage their economies autonomously. The increasingly interconnected character of economic and social activities as well as the significant role of multinational corporations, the argument follows, are imposing binding constraints upon the set of policies available to national actors. As a consequence, governments are powerless, and are forced to adopt a market logic in the design of their economic policies in order to suit the demands and preferences of mobile capital. The corollary of this trend is the extension of neo-liberal economic policies that according to the so-called Washington Consensus developed in the 1980s, deliver higher economic growth and employment rates, though at the cost of an increase in social and economic inequalities. More specifically, by forcing the de-regulation of labour markets and cuts in social policies, capital will be able to increase profits at the expense of increasingly lower levels of protection for employees.

The success stories of the Irish and Spanish economies in the past fifteen years however show that there are ‘third ways’ to achieve growth in addition to the neo-liberal one. As a matter of fact, developments in these two countries portray a very different picture to the one suggested by the neo-liberal path and the hyper-globalist thesis. Hence, rather than simply giving in to the pure market demands of transnational capital, both the Spanish and Irish government have engaged during the last twenty years in processes of tripartite social dialogue with trade unions and employer organisations whereby they have – rather successfully judging by their results - managed external pressures through domestic processes of consultation, concertation and social pacts. The first objective of these processes has been to achieve macroeconomic stability through wage moderation and the negotiation of cuts in the welfare state. The second main objective has been to introduce structural reforms in the economy aimed at enhancing their growth and employment potential. Finally, these agreements have also tried to re-distribute the benefits derived from economic growth.

Table 1: Social Pacts and Partnership Agreements in Ireland and Spain

Table 1 shows the most important steps in social dialogue in the last twenty years. The experience of national tripartite social dialogue was initiated in Spain in the late 1970s and early 1980s in the context of the country’s transition to democracy. It has been argued that a strategy of consensus with all the relevant social and political actors became the cornerstone for a successful political transition. However, social pacts in these years also had an important economic role, as the Spanish economy only started to suffer from the full effects of first oil crisis in the late 1970s. Accordingly, the social pacts served to find negotiated or consensual solutions to a situation of political, economic and social emergency. From a political perspective, social pacts served to show the strong determination of all social and political forces to consolidate democracy in Spain after more than three decades of dictatorship. The political role of social pacts became particularly clear in 1983 when a new agreement was signed right after a failed coup d’etat. However, the most visible contribution of social pacts and tripartite agreements was to economic stability. Even though these pacts covered a large number of issues ranging from social policy to union recognition and the labour market, the central theme to all of them was the reduction of inflation through wage restraint and changes in wage setting mechanisms.


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Copyright © Society for Irish Latin American Studies, 2007

Online published: 29 August 2007
Edited: 07 May 2009

Molina, Oscar, 'Immigration, Social Dialogue and Economic Growth in the Old Periphery of Europe: The Celtic and Latin Tigers?
' in Irish Migration Studies in Latin America, 5:2 (July 2007), pp. 112-116. (www.irlandeses.org), accessed .


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