Ireland is said to lack the institutional pre-conditions for the emergence and institutionalisation of national-corporatist policy making structures. However, between 1987 and 2008, policy concertation became the default position of industrial relations and Irish politics. Seven social-wage pacts were negotiated between the representative interests of labour, capital and state. Whilst wage bargaining was central to negotiations the social pacts covered a wide variety of public policies including fiscal, social security and labour market policy. The nature of the bargain was not premised on a wide distributional agenda of social democracy but market competition. It was an institution of labour relations, constructed by political-economic actors, to manage the constraints of market liberalisation and Europeanisation. Irish corporatism was the outcome of a political strategy to embed the politics of neo-liberalism and a low tax regime via policy networks of communicative action with organised interest groups in civil society. It is a case of how the state, within a liberal oriented market economy, constructs and embeds a domestic institution of socio-economic governance. But, why would the government of the state in a liberal market economy actively choose to share its policy making prerogatives with organised labour and what are the causal factors that explain this process of institutional change? Social pacting, it will be argued, is a coordinated strategy by government to increase the legitimacy of its public policies in a context of declining parliamentary democracy. It is less a case of weak government but a process of strategic governance that consolidated power in the core executive of the administrative state. Ireland, in this regard, is a critical case of embedded neo-liberalism that challenges the core functional-institutional hypothesis in the study of varieties of capitalism. To understand the dynamics of change in this domestic institution of labour relations we need bring power and politics back into the analytic study of capitalist development.
