by Gary Murphy
There seems to have been a remarkable degree of acceptance of the desirability of establishing a free trade area, and what differences there were seemed negotiable. At a European industrial conference in London in 1958, the French did express concerns that the area’s policies could be inconsistent with those of the Common Market, and that any proposed co-operation with the EEC would be illogical. They argued that it would be better to enlarge the six to include projected members of EFTA. Frank Cousins of the British Trades Union Congress, meanwhile, was emphasising the importance of retaining within participating countries ‘the right to take action necessary to retain full employment’, something of a holy grail for the trade union movement. Representatives of the Irish unions, employers’ and farmers’ organisations were present at this conference, and all made reference to the somewhat underdeveloped nature of the Irish economy, and mentioned that Ireland would need to receive some special assistance in such an industrial area. This was a route the Irish Government was itself taking in its negotiations to enter the area. The Irish case did receive some lukewarm endorsement; Ruaidhrí Roberts, in his report to the ITUC on the conference, commented:
It should be noted that endorsement of cases made by underdeveloped countries does not represent a specific endorsement of each proposal put forward but rather an endorsement of the view that these areas should receive adequate special privileges to enable them to participate.7
The attitude of the Irish trade union movement to joining a trading bloc was more circumspect. For its purposes, certain major economic conditions had to be addressed. Primarily, it believed that an increase in Irish exports was vital. Agricultural products still constituted three-quarters of trade exports, with the vast majority going to Britain. If Ireland remained outside a trading area that included Britain, this would create major obstacles in the way of maintaining exports to Britain. The unions further argued that there did not seem to be any real prospect of increasing trade by any considerable magnitude. In an important memorandum by Donal Nevin on the trade union movement’s attitude to the free trade area, it was recognised that the industrial sector of the country was relatively weak. Some industries suffered from inefficiency and bad management, while others were inevitable victims of a small home market. Membership of an industrial area might, it argued, remedy some of the deficiencies, but for too many industries the problems arose out of geographical position, lack of resources, and the absence of traditional export markets for industrial goods.8The memorandum noted that there would be an increasing reliance on external aid in building up big export industries if the country was to make any significant advances in industrial development, while declaring that ‘any uncertainty in relation to Ireland’s participation in the free trade area would make it increasingly difficult to attract outside industries notwithstanding that labour costs in Ireland were among the lowest in Europe’.9
Ultimately, the unions saw Ireland as a small, underdeveloped country that did not represent a threat to other European states. It did, however, face enormous emigration and employment problems that they anticipated would not affect Ireland’s chances of associating with EFTA, as the purpose of such a bloc was to improve economic conditions and living standards:
It is clear that if our economic conditions were to be worsened and our living standards jeopardised by participation, other EEC countries would take cognisance of the fact. Anything else would be markedly contrary to expressed aim of movement to create European co-operation. Ireland cannot hope or expect, nor should she desire, to remain unaffected by these developments on the continent. Our weak economy, beset as it is by acute problems, will be profoundly affected by them. Whatever our ultimate attitude towards the free trade area, we must recognise the necessity for grappling with this new situation, the difficulties as well as the opportunities it presents.10
Thus, on the understanding that a free trade area was designed to improve the economic position of all participating countries, and that small, underdeveloped countries would be afforded the opportunity to reach a high level of economic development, the trade union movement in Ireland was, in principle, in favour of Ireland joining such an area. These remarks were prefaced by the usual union mantras of commitment to full employment and the elimination of the economic compulsion to emigrate, as the unions ‘endeavour to ensure that the policy adopted by our Government will be in harmony with the objectives sought by the international trade union movement in supporting the principles of a free trade area in Europe’.11For the trade unions, better economic organisation had to be regarded as a means towards the end of improving social conditions, and they were insistent ‘that this end not be lost sight of in the welter of economic proposals’. Laurence Hudson, president of the PUTUO, reiterated this point when he declared that alarm at the prospect of the collapse of the industrial arm of the country was not justified either by reason of the likely consequences of a free trade area or by reason of the state of the industrial sector:
By international standards – and not merely the highest American standards – we are not as inefficient as some of our defeatists would suggest. Nor for that matter are the golden opportunities that some seem to think would face our agricultural industry in the event of our joining the free trade area at all certain to be realised.12
In this context, the unions were willing to enter into any trading bloc that brought improved conditions for their members.
There were some in the union movement who were willing to put a different slant on the European issue. John Swift, general secretary of the Irish Bakers’, Confectioners’ and Allied Workers’ Amalgamated Union – a noted radical once described by the police as ‘a dangerous agitator’ – was more responsive to the idea, although from a different angle.13Swift thought that the response to any suggestion that Ireland join a European trading bloc was too timid, claiming that it stressed that the free trade area was still in its infancy and:
Our knowledge of this particular infant is so meagre, the decent thing for us to do is to hold our hand lest rash moves to acclaim its birth might expose us to the risk of seeming to father or foster a spurious progeny. This is a misconception. The real progenitors of the projected body, the Free Trade Area, are the old pioneers of our own movement. That the seventeen Governments of the OEEC are now working out programmes for more production, full employment and higher living standards, for the people of its countries, is proof of the influence these old pioneers have come to yield in world affairs. Our trade union and labour pioneers taught us to clamour and fight for these things. We have been clamouring so long for them we scarcely notice the portends of their coming among us.14
Notwithstanding the flourishing rhetoric, Swift argued that the trade union movement had to serve the European ideal in honour of the line of progenitors who had seen the vision of a united Europe and sought to make a practical reality of the idea. Basically, Swift was calling for the trade union movement internationally to be at the forefront of European economic unity. What was comparatively new was the realisation that the unity of the continent and its peoples could only be built on an economic basis, ‘on a basis of production, distribution and exchange by people who work and who are free to live a full and cultured life’.15The goals of full employment and rising living standards could, he believed, only be achieved if the trade union movement came out strongly in favour of the idea of a free trade area, although he qualified this by stating that any such support would be conditional on the area serving the social purposes envisaged by the OEEC. Swift was not entirely captivated by the romantic prospect of an economically united Europe that would free the downtrodden working classes. He conceded that the process of adjusting to the area would bring serious problems of industrial change, and that some firms would cease to exist once exposed to competition. Thus, he advocated a thorough examination of vulnerable industries to see how they might adjust to the economic rigours of such competition. What was not in any doubt, however, was the fact that the ultimate aim of EFTA
was economic integration, and that the union movement should play an active and central role in it.16
A new era
In February 1959 the Irish Congress of Trade Unions (ICTU) was formally inaugurated, and in July the ITUC – founded in 1894 – and the CIU – founded in 1945 – were dissolved. This was due mainly to the work of a committee of the PUTUO consisting of James Larkin and Ruaidhrí Roberts of the ITUC, and John Conroy and Leo Crawford of the CIU, which had been set up to draft a constitution for a united Congress. The ninety trade unions affiliated to the new ICTU represented a membership of well over half a million workers, two-fifths of them in Northern Ireland.17The healing of the trade union split came at an appropriate time, for a unified body could provide advice and exert influence without contradiction from an alternative voice of labour. This was especially important as Lemass’ views on economic policy were closer to that of the ICTU than those of MacEntee, who had embraced a more conservative economic outlook. A further development in 1959 was the completion of the seventh round of wage increases. This brought to manual workers increases ranging from ten to fifteen shillings in individually negotiated settlements. A number of further settlements were reached during 1960 amongst clerical and salaried workers. These provided for a general revision of the salary structure, but saw widely varying increases at different points of the scale.18
Shortly after becoming Taoiseach, Lemass invited the ICTU to meet him to discuss the question of development, and to consider how co-operation might be generated between the various economic actors. The ICTU, while broadly supporting the premise that Ireland enter a free trade body, called on the Government to adopt a planning strategy that would involve the expansion of the state sector.19In broad policy terms, the ICTU was adopting what Brian Girvin has termed a ‘consumptionist strategy’, which would increase purchasing power, thus increasing demand.20The trade union movement had in fact been stressing such a policy since the dark days of 1952. The ICTU also emphasised that the approach of the employers towards higher productivity was one of aiming at a constant production level with a reducing labour force, instead of increasing overall production and at least maintaining the labour force. It castigated the employers’ approach as fatal to the long-term prospects of economic expansion, and as unlikely to win the support of workers for programmes of higher productivity.21
Expansion of the state sector was welcomed by some industrialists. Pádraic O’Halpin – a businessman and the chairman of the Engineering Development Council – in an address to a meeting of Tuairim (a sort of early think-tank established to examine the problems affecting Ireland), approved of the state’s concern for the increased prosperity of the people:
Where the national grounds for prosperity as our neighbours understand it do not exist here, that the people will press more and more for a better organisation of their existing assets. To obtain a clearer idea of what exactly is meant by organisation of existing assets, it is necessary only to think of the present-day circumstances which were the result of past Governmental actions and to consider how we should stand without them: the ESB, the industrial drive beginning in the early thirties, Bord na Mona and the Irish Sugar Company are examples. We must bear in mind that these advances were not forced on the people but in effect demanded by them through their elected representatives. It is safe to say also that the people have welcomed these events and that their expectation of Government includes the advocacy of similar organisations in the future.22
Lemass seemed to recognise the validity of this approach, but the ICTU argued that Government policy, while broadly correct, would not necessarily bring about quick results, either in employment or export terms. The ICTU insisted that Ireland should not merely wait for export-led expansion but should also infuse capital into the domestic economy to achieve growth. At this stage, the Government was pursuing a cautious fiscal policy, maintaining spending at existing levels but shifting investment from social to capital spending. The ICTU maintained that while capital investment was important, it would not on its own expand the economy. It argued that social spending should not be seen as non-productive, since it injected money into the economy that had a knock-on effect. It was during this meeting that Lemass dropped the first hint that he was unhappy about the EFTA negotiations. The ICTU report of the meeting states:
As far as relationship with the seven [EFTA] was concerned we could come in at any time if we wanted to. He [Lemass] did not see it ever being to our advantage to do so. If an agreement was to come between the seven and the common market, we might change our policy.23
What Lemass was evidently worried about was that Irish industry and agriculture would not be able to expand significantly within such an area, and he thought that for the moment Ireland would be as well off pursuing a policy of maximising trade with Britain. Finance, however, was painfully aware of the country’s over-reliance on Britain. The EEC offered the combined attractions of agricultural and industrial expansion. It also had in place a structure within which Ireland could maintain elements of its protectionist system for a number of years. For Finance, the bottom line was that Ireland should not join unless Britain did so as well.24A downside to any application to enter the EEC was that it would undermine the commitment to planning in any independent, systematic fashion. If Ireland was to accept that international competitiveness was the main aim of policy, then planning on a national basis would, to an extent, be redundant.25
Making the national cake bigger
Notwithstanding this caution on Europe, Lemass had decided to abandon the economic policy he had inherited. Budgets were to expand, and increased investment become a Government priority:
It is necessary that the state as such should participate in development activities to an even greater extent than heretofore, both as a promoter of industrial ventures, in spheres where private enterprise has as yet shown no interest, and as organiser of projects which, while not directly commercial, will contribute to the overall expansion of the country’s economy and help manufacturers and farmers to achieve greater production and planning.26
In consultation with Whitaker, Lemass consequently decided to establish a planning branch within Finance where proposals for new state-investment activity would be examined.27It was to be headed by Charles Murray – Whitaker’s chief collaborator in the writing of Economic Development. Thus, there was an explicit commitment from the Government to shift in a structured sense both output and exports from agriculture to industry. This reduced the impact on the entire economy of the considerable fluctuations in price and volume to which agricultural production was subject in the post-war period.
For both unions and industry, Ireland’s drive to industrialise had enormous implications. At a meeting in May 1960 between the FII and ICTU, J.C. Tonge, president of the FII, argued that both sides ‘should be concerned with making the national cake bigger rather than with the division of the present cake’.28This had been brought up by the unions during their meeting with Lemass the previous September. The lack of significant national economic progress was something each side blamed the other for. The ICTU stated that it was willing to discuss anything with anybody, but it is clear that it perceived the FII as anxious to increase profits in a free trade environment without a concomitant increase in living standards for workers. For example, when a draft agenda for this meeting was being worked out, the FII suggested that an item be added to the itinerary regarding ‘the need for increased productivity and the problem of restrictive practices particularly in the context of changing conditions in Irish industry and the prospects for progressive reduction in protection and of eventual free trade’.29The ICTU rejected this out of hand. As far as the unions were concerned, discussions on Europe and the expansion of production could not be based on an analysis of Irish work practices.
While the Department of Industry and Commerce remained highly sceptical of any reduction in tariffs and of the general thrust of joining a European trading bloc, there was increasing debate withi
n indigenous Irish industry on the European option. The FUE was enthusiastic about the possibility of Ireland entering a type of common market, and saw any moves to increase exports as positive. For the FIM, however, it was a little more complicated. In February 1957 an FIM conference on the proposed free trade area was held to discuss the merits of Ireland entering such a bloc. Divergent views were heard, with one speaker proclaiming: ‘my personal attitude is wholly and entirely against the free trade area.’ Another participant, however, declared that industry had to ‘accept the Free Trade Area, and join with it, but at the same time fight for the best possible safeguards we can get’.30Most industrialists seemed to recognise that there would be a net benefit from Irish entry into a European trading bloc, although they understood that huge tariff cuts could not be withstood by the majority of Irish companies. In June 1957, for instance, A.N. Murray, chairman of the Cork regional group of the FIM, maintained:
Within a very short time Ireland will be forced to join the Area because it will be economic suicide to stay out … we are going to be forced to export to survive commercially and we are going to face the most severe competition. It will truly be a case of survive or perish.31
Even Irish Industry – the journal of the FIM and an ardent advocate of indigenous industry – saw that the free trade issue had to be faced. It insisted in an editorial that manufacturers could give the lead in ‘saving the country. If we must join this union the necessary safeguards must be forthcoming and the obvious concessions must be made to enable us to meet the competition of the European industrial giants.’32It did bemoan the fact that there seemed to be a lack of awareness among industrialists as to the importance of the free trade issue, but at a leadership level the FIM was preparing itself psychologically for a future without protectionism. Looked at from a global perspective, Irish industry was relatively weak, but it had been given some security by protection. This ethos was now being threatened, and native industry realised that it had to face what was going to be an uncertain future.