Economic Crisis and Public Sector Reform: Lessons from Ireland

Reception and implementation of public sector reform ideas varies across countries. Westminster-type systems (Britain, New Zealand, Australia, and Canada) adopted New Public Management ideas most enthusiastically. Ireland was slower to do so. Continental European countries were the least enthusiastic. This gives us some insight into the political and organizational conditions that underpin adoption of NPM, and of post-NPM, which now coincides with international economic difficulties. The Irish experience provides a useful prism for analysing the issues involved in seeking to alter the ‘public service bargain’ under conditions of economic crisis. Membership of the Euro provides protection against currency collapse, but also entails severe cost adjustment measures without the cushion of devaluation. The reassertion of central management of budget allocations involves making stark choices between the numbers employed, the volume of services delivered, and the rate of remuneration of employees. The options facing government depend not only on the scale of fiscal problems, but also on the manner in which the crisis is politically managed and the legitimating strategies available.

Bringing Domestic Institutions Back into Understanding Ireland’s Economic Crisis

The Irish economy has had one of the worst experiences of economic crisis within the EU since the onset of international financial crisis in 2007/8. That the crisis has an international dimension is beyond question. What needs to be explored further is the contribution of domestic political factors which weakened the capacity of the Irish political system to respond and which exposed Ireland to a worse crisis than might otherwise have occurred. Three institutional clusters are analysed: the political priorities and decision-making routines underlying the Irish growth model; the configuration of the public administration system; and the management of the domestic cost base. In all three, urgent priorities for reform are identified. The paper does not advocate reform of the electoral system, which tends to attract more media attention than is warranted. Rather, it argues that energy and intelligence needs to be devoted to reforming the quality of decision-making, limiting government’s fiscal discretion, and opening up transparency in the distribution of the costs of adjustment.

Politics and Social Partnership - Flexible Network Governance

This paper reassesses the relationship between social partnership and the broader Irish policy process. What has developed may be conceptualised as “flexible network governance”. While pay regulation may be less strongly institutionalised than in other countries with national-level pay deals, social partnership has created networks for establishing and maintaining priorities that matter to those involved in the process. These have not replaced conventional methods of developing policy. Nor do they displace government prerogative - politics can trump partnership. Social partnership is open to some criticism on grounds of both effectiveness and legitimacy. But is has proven robust to date on the core issues it deals with.

European Economic Crisis: Ireland in Comparative Perspective

The current economic crisis has hit all European countries hard, but some are much more severely affected others. The problems manifest in European peripheral countries, especially Ireland, Spain, and Greece, have roots in domestic policy mistakes. However, the European context of these policy profiles also needs to be taken into account. The creation of the Euro initially yielded large credibility gains for the weaker economies, extending low interest rates across the Eurozone. But it also introduced a set of perverse incentives toward fiscal expansion which were supposed to be managed at domestic level. Weak European coordinating capacity meant there were few effective external disciplines on national decision-making. The sanctions built into the Stability and Growth Pact proved more controversial and therefore less constraining than originally envisaged. The problems accumulating in the weaker economies made them particularly exposed to crisis when the downturn came. The crisis is not merely one of peripheral economies’ policy errors, but extends to the design of European decision-making and the management of monetary union. These issues are explored with reference to the Irish case: the crisis of the Irish and other peripheral economies points to a crisis at the heart of European politics.

Organising for Growth: Irish State Administration 1958-2008

This paper analyses some key features of Irish public administration as it has developed since the foundation of the state, paying particular attention to the period from the late 1950s onward. During these decades, notwithstanding successive waves of concern expressed over the need for public sector reform, the evidence suggests an underlying lack of coherence in the evolution of the public administration system that resulted in a poor capacity for effective policy coordination. Yet the drive toward economic modernisation also resulted in the creation of new state competence to support industrial development both directly and indirectly. These changes can be tracked organisationally, drawing on the database of the IRCHSS-funded Mapping the Irish State project.

Governing the Irish Economy : A Triple Crisis

The international economic crisis hit Ireland hard from 2007 on. Ireland’s membership of the Euro had a significant effect on the policy configuration in the run-up to the crisis, as this had shaped credit availability, bank incentives, fiscal priorities, and wage bargaining practices in a variety of ways. But domestic political choices shaped the terms on which Ireland experienced the crisis. The prior configuration of domestic policy choices, the structure of decision-making, and the influence of organized interests over government, all play a vital role in explaining the scale and severity of crisis. Indeed, this paper argues that Ireland has had to manage not one economic crisis but three – financial, fiscal, and competitiveness. Initial recourse to the orthodox strategies of spending cuts and cost containment did not contain the spread of the crisis, and in November 2010 Ireland entered an EU-IMF loan agreement. This paper outlines the pathways to this outcome