Seanad Éireann debate -
Wednesday, 10 Dec 1986

Vol. 115 No. 6

Worker Participation (State Enterprises) Bill, 1986: Second Stage.

Question proposed: "That the Bill be now read a Second Time."

Minister for Labour (Mr. Quinn)

The Bill now before the House provides a legal framework for the introduction of worker participation at sub-board level in State enterprises subject to the consent of a majority of employees. It also extends provision for worker director elections to the boards of three further State enterprises, Aer Rianta, Foras Forbartha and the National Rehabilitation Board. The Bill also amends certain features in the Worker Participation (State Enterprises) Act, 1977.

Nine years ago the Worker Participation (State Enterprises) Act, represented a novel form of legal support for industrial democracy and a breakthrough in Irish labour legislation. It involved no genuflection either to British precedent or to any directive from Brussels. It reflected the translation into statute of a set of policy objectives which had been developed and promoted for public debate by the Labour Party since the mid-sixties. Economic democracy is about the right of working people to know that their views and the wealth of their experience will be taken into account in the important stages of management planning. This is important not alone for immediate economic recovery, but is in the interest of the long term viability of firms and the security of jobs.

The Worker Participation (State Enterprises) Act represented a balance between State intervention in the interests of establishing basic rights of representation and the provision of voluntary mechanisms which leave it up to workers to decide whether or not to exercise those rights. It was intended to serve as a guide to industry as a whole, demonstrating what might be done in a range of diverse situations. Uniquely, the experience of the operation of new statutory provisions was the subject of an independent monitoring study conducted under the aegis of the European Foundation for the Improvement of Living and Working Conditions. The outcome of this exercise has thrown light on the role of elected directors and their relations with other board members, and the management, employees and unions within their companies.

The operation of the original legislative model has revealed two striking features: first, the manner in which the primacy of union authority and responsibility in the collective bargaining field was accommodated in the nomination process; secondly, the fact that the election of worker directors has generated pressures for greater accountability and highlighted the need for more progressive corporate communications policies, greater disclosure of information and agreed reporting back procedures.

Unfortunately, many of the lessons of this experience have been slow in getting through to both sides of industry, with the emphasis on both sides whether in the public or the private sector.

The worker director experiment, initially confined to the seven State companies covered by the 1977 Act and subsequently adopted in An Post, Bord Telecom and ACOT when those bodies were established by statute, has been adjudged largely successful. Nevertheless both management and unions have been reluctant to consider the effects of the experiment on developments at lower levels in the enterprise. For their part, the elected worker directors recognise the need for more support in reporting back and in maintaining contact with other employees. Across the State sector generally the information issue has been tackled in a piecemeal fashion. The outcome on all fronts has, by any standards, reflected limited success, limited awareness and hardly any integration within a wider philosophy of what workplace relationships should be about.

My own approach since I became Minister for Labour has been to try to shift attention away from the sterile debate about "top down" or "bottom up" approaches to industrial democracy. To this end I established a broadly representative advisory committee to advise me on the scope for the development of employee participation at sub-board level with terms of reference agreed with both ICTU and FUE. I also made clear my intention to advance the original legislative model by extending it on a parallel level to some additional State enterprises and to reinforce it by mobilising support for sub-board structures.

Accordingly, the Bill before this House gives support to employee influence without regulating in detail how decisions should be made or what decisions should be reached. This should enable complementary agreements to be developed through the State companies which will provide for differences based upon company size, type of production, local interests etc.

The Bill before the House will provide a stimulus to State enterprises which have not yet embraced joint consultative procedures to take steps to introduce such practices; for others, it will provide a framework within which exemplary practices can be developed nationally; where satisfactory participative arrangements are already in operation, the legislation will lend statutory support to such initiatives.

The Bill gives a statutory right of initiative to the employees in the State enterprises covered by its provisions enabling them to invoke procedures for the setting up of below-board arrangements. The details of the trigger mechanisms are set out in the Bill but, essentially, the process is set in motion where a majority of the employees are in favour of below-board participation. I must emphasise that nothing in the Bill will detract from or weaken existing sub-board arrangements. Nor should it deter the management of any State enterprise from devising its own blueprint for sub-board arrangements for purposes of discussion and agreement with its employees.

The Bill contains no prescriptions about particular forms or types of participation. The emphasis is on flexibility and on stimulating labour-management accord at enterprise level on the most appropriate form participation should take. It may be that many of the larger State enterprises will opt for some representative form of participation involving the establishment of a joint consultative committee or works councils or such like. In other State enterprises, particularly the smaller ones, a formal structure may not be necessary.

The Bill requires that the participative arrangements to be introduced must be the subject of a collective agreement and must be set down in writing. The Bill does not set out to regulate the content of these agreements in detail. This offers both sides the opportunity to start with a limited range of issues and gradually extend the scope of the participative arrangements to cover wider aspects of the business of the enterprise.

I have stipulated in the Bill that these agreements must contain certain essential features which I believe are fundamental to the concept of participative arrangements. The Bill provides for the regular exchange of views and information between the enterprise and its employees; the communication in good time to employees of information likely to significantly affect employee interests; and the dissemination to all employees of feedback on the operation of the participative process itself.

This initiative affords all State enterprises adequate flexibility to select and implement the type of arrangments which are best suited to their specific circumstances. I have kept the prescriptive element in the legislation to a minimum so as to ensure that the parties at enterprise level have the maximum degree of discretion available to them in framing participative proposals themselves.

The ambivalence of the organisations of employers and trade unions on the question of worker participation has up to now undoubtedly reflected a preoccupation with the narrow focus of their traditional adversarial concerns. In this regard, at least, they mirror the reactions of many shop stewards and middle managers to the worker director experiment. There has been no significant history in this country of the social partners coming together to issue joint declarations on issues extending beyond the narrow wages front. Our situation differs from Norway, for instance, where the social partners have entered upon highly visible commitments on worker involvement in the introduction of new technologies and work organisation initiatives.

For this reason the report provided to me by the Advisory Committee on Worker Participation, which was chaired by Fr. Tom Morrissey, marks a very important development. The report, which has been published, indicates that a broad consensus of thought and action has been achieved between the representatives of the social partners on a wide range of issues. The report of the advisory committee will, I believe, greatly assist in removing the puzzlement and the disinterest and also some of the myths which have bedevilled the discussion of participation in recent years.

It is clear from the report of the committee that it was divided over the question of the prospect of the promotion of worker participation in the private sector by statutory means. I believe that many progressive firms and managers in the private sector will see that this Bill represents a catalyst for change. It is intended to operate on the basis of agreement and is sufficiently flexible to accommodate a diversity of circumstances. Nothing could be further removed from the old bogey that legislation necessarily entails the imposition of a "straitjacket" upon firms that would divert them from pursuing more appropriate voluntarist methods.

In this Bill I am extending arrangements for worker director elections to three further State enterprises. As I already mentioned, these are Aer Rianta, An Foras Forbartha and the National Rehabiltation Board. Two of these bodies are State enterprises whose purpose is non-commercial in nature. I have decided that there are no grounds for restricting the election of worker directors to State bodies of a commercial or quasi-commericial character. However, in taking this step, I have had to look again at the formula which stipulates that not less than one-third of board members should be worker directors. Employees are only one element among a diversity of representational interests which have to be accommodated at board level in the non-commercial State enterprises. All of these interests are directly concerned in developing the board objectives and strategic decisions of the enterprise. It would not be acceptable if the accommodation of these interests were to suffer as a result of adherence to a rigid formula.

There are also pragmatic considerations relating to optimum board size and the necessity of providing a balance at board level between a diversity of interests. These considerations call for the introduction of more flexibility than existed under the 1977 Act particularly in the case of some non-commercial State enterprises, for example, those with very large diverse representation on their boards such as An Foras Forbartha. The Bill provides that the Minister for Labour may, by affirmative order, vary the number of worker directors providing, of course, that there are not less than two and up to a ceiling of one-third of board members.

The Bill also enables the Minister for Labour, with the approval of both Houses of the Oireachtas, to add to the number of State bodies in which worker director elections can be held without recourse to further legislation. By facilitating future extension on the basis of an affirmative order, I hope I have removed any necessity to wait another nine years before additional bodies can be brought within this statutory scheme.

In framing this Bill, I have also introduced a number of improvements in the original model which have been prompted by the experience of its operation. The Bill will allow for the right to participate in worker director elections to be extended to the employees of subsidiaries in certain circumstances. The initative for an extension of this kind will rest with the state enterprise concerned. No action may be taken without such a proposal in writing being sent to the Minister for Labour and the views of staff representatives must be communicated to him at the same time.

It is only at this stage that the Minister for Labour, in consultation with other Ministers concerned, will consider the enfranchisement of the subsidiary. If it were decided to proceed, any draft order would require the approval of both Houses of the Oireachtas. I have also sought to extend the range of those eligible to take part in worker director elections by broadening the scope of the definition of "employee" to cover part time employees working at least 18 hours a week.

To ensure a greater degree of stability and continuity in worker representation at board level, I have extended the term of elected board members from a three year to a four year term of office. This change is favoured by the worker directors themselves and also by a number of the designated enterprises. I have also included a provision that worker directors who cease to be employees of the State enterprise should relinquish board membership. This provision is intended to forestall a situation where employees are represented at board level by someone who is no longer one of their number, and appropriate in the context of the extension to the term of office of worker directors.

The Worker Participation (State Enterprises) Act marked a unique development in our industrial relations model. It still has important lessons for us about what the law can hope to achieve in the wider realm of industrial relations. In spite of its limitations it teaches some lessons about how attitudes and traditions can be changed.

It shows that change can come about through the favourable experience of legal support for new developments rather than from any direct challenge to established practice. The limited success which we have had in pursuing and concluding participation agreements begs some questions about the need for structural reform in our industrial relations system. I am convinced that the prospects for advancing worker participation will ultimately require a change in our system of regulating industrial relations.

We have to ask whether the attitudes of organisations on both sides of industry are realistic and adaptable enough. We came late to industrialisation and yet we seem to have drawn on British cultural heritage for our industrial relations conventions. The trouble with some traditions, of course, is that after a time they become inflexible and a substitute for thought. In the face of the constantly changing patterns and power relationships of the modern industrial community, caution and tradition can become blinkers which serve to inhibit progressive developments. It is not only the prospects for worker participation but good industrial relations in general which require policy innovation, accommodation, flexibility and know-how.

I hope that workers across the range of State enterprises will recognise that this Bill offers them an opportunity to become involved in the decision making process of the enterprises for which they work.

I hope, too, that managers at all levels in our State sector will have the foresight and commitment to respond positively to this initiative; their support is essential if the benefits which can flow from these arrangements are to be realised. I commend this Bill to the House.

Professor Hillery

The Fianna Fáil attitude to the Bill before us is positive although I must register keen disappointment at the delay in bringing it before the Seanad. The Bill aims to facilitate, as the Minister has outlined, the introduction of sub-board participative arrangements in a wide range of State enterprises and, secondly, it is intended to extend the arrangements for the election of worker directors to three further enterprises.

First, let me take the worker director aspect of the Bill. Up to now the only aspect of worker participation which has been underpinned by legislation is that of the worker directors. Worker directors, it is worth pointing out, enjoy the same status as other directors in that the same rules of company law apply to them in respect of disclosure of interest, confidentiality and voting. Seven State enterprises were designated in the 1977 Act and all have held at least two elections; some have held three elections. The application of the Act in full, in the case of these seven enterprises, and the holding of elections in accordance with the Act provide evidence of a degree of satisfaction with the system of worker directors, especially from the viewpoint of trade unions and workers.

Unfortunately, it is not possible to assess the success or failure of the system of worker directors because no comprehensive study has been carried out to date. Preliminary research was conducted by Murphy and Walsh of the Irish Productivity Centre and the results were published in 1980. This study reported on the attitude of worker directors to a range of issues at the time of the first elections or shortly thereafter. Among the findings they reported that the worker directors experienced little difficulty in fitting into their new roles.

They also reported that support for them was forthcoming from other board members and from management and supervisors, but rather less enthusiasm was found among trade union officials and shop stewards. Trade union officials were concerned that the collective bargaining process should not be adversely affected and shop stewards felt that there was insufficient feedback from worker directors. The worker directors themselves in the same study showed concern about the need to develop sub-board structures to link them with their constituents. To the extent that the Bill today covers sub-board structures it is a step in the right direction.

The worker director model is, of course, only one form of worker participation. Other forms include works councils and worker self-employment. Many people would hold that collective bargaining — that is, direct negotiations between trade unions and management on pay and an ever-widening range of conditions — has been a particularly potent form of worker participation. Given the dominance of collective bargaining in this country it is not surprising that the IPC study found a lack of enthusiasm by trade union officials and shop stewards for the worker director system. Irish trade unions, like their British counterparts have for many decades catered for worker interest through collective bargaining with the emphasis on economic issues as opposed to board representation. Trade unions can argue with justification that much indeed has been won for workers through collective bargaining without having to rely on other forms of participation like the worker director model. For their part, trade union officials and shop stewards will continue to ensure that workers do not conflict with traditional collective bargaining arrangements.

It must also be said that management too have long experience in negotiating with trade unions in the collective bargaining context. The adversarial relationship which collective bargaining implies has been understood by both sides to exclude worker representation on the board. Over the years management have opposed worker representation at board level because they have viewed it as being incompatible with the collective bargaining process. The traditional management argument has been that a conflict of interest is inevitable if workers are on the board which, in turn, they argue leads to ineffectiveness in decision-making at board level.

This obviously raises the question as to whether the fears of trade union officials and, for that matter, senior management have been justified by the experience of worker directors in State enterprises. Trade union anxieties have been largely catered for in that trade union activists have typically been the successful candidate in the various worker director elections. Moreover, most of those elected continue to hold some trade union office which, in turn, serves as an important link between the position of worker director and the trade union.

Despite some trade union officials and shop stewards reservations, from the evidence available there is no indication that the worker director system is likely to become a seriously divisive issue. The worker directors see themselves as representing all employees in the organisation, not only their own trade union constituencies. This greatly reduces the possibility of inter union rivalry or conflict in this particular area although, as we all know, inter union rivalry is a source of concern in the general negotiating area under collective bargaining.

In summary then the worker directors seem to be successful in fulfilling their role as board members while, at the same time, not challenging the collective bargaining process and the associated trade union interests. So far as can be ascertained, worker directors appear to have integrated well into decision making on the boards of the designated State bodies. Clearly, a comprehensive study of the worker director model over the past six years or so would provide a firm foundation for legislation and policy making. Unfortunately, no such study has been conducted and I would, therefore, suggest to the Minister that such a study, perhaps funded by his own Department, would be a valuable exercise for all concerned.

I now want to turn to the Bill itself and to express disappointment at the long delay in bringing the Bill before the House. This has been frustrating, for example, for the workers in Aer Rianta who have been preparing for worker directors through their industrial democracy council for some time past. In fact, they were rather losing heart not knowing whether the legislation would arrive at all, despite their very serious efforts to prepare literally sub-board structures for the arrival of the worker directors through the election process. Indeed, I might add in the context of Aer Rianta that they are to be commended for the work they have done because one of the lessons we have learned in relation to the introduction of worker directors is that those organisations who have thought about, studied and prepared for worker directors have been in a better position to launch the system. In the context of this delay I would like to think that the Minister in replying to Second Stage would indicate why there was such a long delay in bringing the Bill before the House. Furthermore — and the Minister might take this up when replying on Second Stage — why is it that only three further bodies are designated in the Bill when in fact six, that is to say three plus three, were long since promised including An Bord Gáis.

I want to raise a query on section 12 of the Bill which requires that a worker director who ceases to be an employee of the State enterprise concerned shall at the same time cease to be a worker director. That seems perfectly sensible. My query is this. The section goes on to say that the resulting vacancy will be treated in the same way as a casual vacancy, that is to say, that the vacancy may be filled by the appropriate Minister who shall have regard to the results of the previous election in making an appointment. I am a member of the Joint Committee on Commercial State Sponsored Bodies which recently examined B & I. In the course of the evidence to the committee the trade union representatives expressed very considerable concern that two worker directors who had become redundant had not yet been replaced. I recognise that the Minister for Communication is the appropriate Minister in respect of B & I, but I would ask the Minister for Labour to take up this issue as a matter of urgency with his Cabinet colleague so that the rights of the workers in B & I will be honoured under existing legislation.

I note that in section 13 the definition of "employee" in the Principal Act is amended to include "part time staff working at least 18 hours a week". The need for part time workers arises for a number of reasons, including the redistribution of skills brought about by new technology. A number of studies have pointed to the likelihood of a dual workforce. It is envisaged that there will first be a critical workforce or core group who will be responsible for carrying out the more specialised activities of the organisation. Side by side with this highly qualified critical workforce will be the peripheral workforce. These peripheral workers will be working part time or will be sub-contractors or workers who are on fixed term contracts. That is one explanation for the number of part time workers. Only this morning on radio I heard of the very major growth in the number of part time workers which has arisen primarily because of the shortage of full time employment. I must say, therefore, that I welcome the extension of the right of part time staff who work at least 18 hours a week to participate in the elections for worker directors as provided in section 13. It is a recognition of current realities.

I now want to turn to the second thrust of the Bill, namely, sub-board participative structures. The 1977 Act indeed gave an impetus to worker directors at board level. It is true to say that employee participation schemes, be they of the worker director model or sub-board structures, do not enjoy a high priority among employer associations or trade unions generally. The sub-board participative arrangements envisaged in the Bill represent a modest step in this area. Clearly, the Minister wants to leave it to both sides to work out their arrangements. Let us hope they will. An underlying assumption of participation is that the subjects of participation are those in which there is a mutuality of interests as opposed to a divergence of interests.

This contrasts with the concept of collective bargaining which assumes that management and workers have conflicting interests which can only be solved through structures based on an adversarial approach, a power relationship. We can anticipate that trade unions will be reluctant to co-operate in the establishment of sub-board structures unless they are founded on existing trade union structures. It goes without saying, therefore, that those forms of sub-board structures which complement collective bargaining arrangements rather than replacing them offer the best prospect for success in the Irish situation. This should not exclude the right of management to communicate directly with their employees on various issues if they so wish.

If the sub-board structures are to succeed they must enjoy strong support from the trade unions. Worker directors could play a particularly valuable role in advancing the establishment of sub-board structures precisely because they are worker directors. Sub-board structures should enjoy a higher profile within the organisation and a greater degree of commitment from other board members because they will have the backing of worker directors. Such commitment from the top of the organisation should help to ensure that the sub-board structures are taken seriously by all concerned. There is a pretty long history at attempts of sub-board structures and works councils and so on where the items for the agenda have turned out to be very trivial. Let us hope that the sub-board structures envisaged in the Bill will come up with more than that. Full consultation should take place with line management before the establishment of sub-board structures, because they are the people who will be actively involved in the operation of these arrangements. They should, therefore, have a substantial input at the design stage of these structures.

Section 6 of the Bill outlines the essential features of the sub-board participative arrangements which will be drawn up jointly between the State company concerned and its employees. These concern a regular exchange of views and information between management and employees; secondly, the giving in good time by management to employees of information about certain decisions which are liable to have a significant effect on employee interests; and finally the dissemination to all employees of information and views arising from the participative arrangements. Presumably management will ensure that employees are briefed on relevant matters and trade union representatives of these sub-board structures in turn will hopefully ensure that management, in turn, is made aware of staff and union opinions and attitudes. Subjects of interest — and these are not named in the Bill — will probably include budgets, results, manpower policies, strategic plans, redeployment of labour, productivity and wage costs. These are all legitimate topics for discussion in these potential sub-board structures.

I welcome the provision in section 7 of the Bill which will require the State enterprises to describe in their annual reports any action taken during the year to introduce sub-board participative arrangements and any participative arrangements made during the year. As a member of the Joint Committee on Commercial State Sponsored Bodies, I feel the more relevant information that is provided in their annual reports the better.

In conclusion, on the whole I welcome the Bill but must criticise the Minister for the exceptional delay in its introduction. The worker director as a form of worker participation has been a worthwhile experiment. The worker directors can and do make a valuable contribution to policy-making in our State enterprises. We would need further research on their experiences to gauge how successful they have been in meeting workers' needs for participation and in contributing to an improvement in the operation of the State companies. The worker directors themselves are acutely aware of the need to improve communications with their worker constituents and the provision for sub-board arrangements in the Bill represents a modest but welcome step in meeting that challenge. I will reserve further comment and criticisms for Committee Stage.

Mr. J. Higgins

Like Senator Hillery, I would like also to welcome the provisions in the Bill. I know he has been critical in relation to the delay but I would point out to him that the Minister, Deputy Quinn, is a relatively recent appointee to this portfolio and in a short period he has demonstrated his commitment to this area. He has a very thorough grasp of his portfolio and is dealing with an area which has been strewn with misfortune because it has been the victim of generations of suspicion and very much riven through and through by the wholehearted endeavours, on the one hand of people representing labour, and on the other hand, people representing employers. Down through the years there has been a natural adversarial attitude or atmosphere which was not so much cultivated as developed in this area. I compliment the Minister. While Senator Hillery has described it as a relatively modest proposal in that we are dealing with the extension of workers directors to a mere three other companies and sub-board participation to a whole raft of other companies in the Second Schedule, I do not think, taken in the overall context of our past history of industrial democracy, it is necessarily by nature or by concept such a modest role. I see it as a definite step forward in a long progression which lies ahead of us and which will have to be undertaken by future Administrations.

I compliment the Minister and I welcome the Bill. As the Minister has stated, this provision is the natural off-shoot of a report of a committee established by the Minister which was given a very limited timespan within which to produce its recommendations, that is, the report of the Advisory Committee on Worker Participation. Having read this document and taken cognisance of the fact that the committee was given a very brief duration within which to produce its recommendations, I find it a very concise and worthwhile document, a tremendous reference document for people who want recourse to (a) the past history (b) the present state, and (c) the aspirations for the future in relation to what developments should take place on the industrial relations front. I unreservedly compliment the chairman and members of the committee on having produced an excellent bibliography, dictionary or reference book to which we can all have recourse to seek out what has happened, what is happening and what will happen hopefully in the future in industrial relations democracy.

The document deals not alone with the topic in front of us — indeed it was the genesis of this Bill — but it also deals with the other models, other options, or the other examples of industrial democracy in which we have participated, or in which other countries have participated, in most case with benefit. There are, as the committee pointed out, various options in relation to industrial democracy. There is the business known as "circles" where groups of employees, 12 to 14, come together sit down, parse, analyse, examine, scrutinise the strong points, the weak points, the areas requiring development, modification, improvement within a particular enterprise. It is an example that has been borrowed from the UK which it was borrowed by the US and by the Japanese and has worked with significant success, particularly in the United States of late.

Recently I had the pleasure of visiting the Salt River project which is an Arizona irrigation electrification and power structure. Having seen the manner in which it works I have no doubt that it is the type of experiment that we could justifiably take on board.

While there I had the experience of seeing the development of the "better way" concept which is where a company offers its employees the necessary incentive to come up with ideas for better work practices, time saving devices, expense saving devices and so on. I note that in year one of its operation alone, enough ideas and initiatives came from the shop floor to save the company in the region of 280,000 dollars.

I welcome the committee's report because it provided the necessary stimulus to get this legislation under way. It is a comprehensive document. It sets out the history and evolution of employee participation. It sets out the scope of development for the future. It sets out the need for education and training participation by people on both sides of the industrial sphere; on the management side and on the employees side. It points out that there are models other than those outlined in this document, even though this document is largely flexible in relation to the type of models that can be undertaken.

First, as the committee pointed out, there is the open door policy and, secondly, there is the more indirect policy of work councils as has been alluded to by Senator Hillery. There is no doubt that in harnessing the goodwill, energies and abilities of both sides, we have been very remiss in leaving a lot of untapped potential on the sideline. This has arisen from the fact that there is by nature an adversarial attitude that people's domains have been threatened, people's preserves are under threat and, on the other hand, by giving an inch, one is giving something to the other side to the mutual loss or negligence of the particular enterprise. It has been proven time and again that where there has been a relaxation a flexibility and a culture of understanding built up in the industrial relations sphere, not alone has the enterprise benefited, but the workers have benefited, job satisfaction has benefited, productivity has benefited and, by and large, the whole atmosphere and thrust have been very positive. Participation brings benefits to everybody but in trying to inculcate and sell this message we are trying to allay suspicions that have been built up over a considerable period of time.

There is a dual obligation here. There is an obligation on the part of the workers to ensure that they understand the process and participate in it wholeheartedly and that employees, in electing people to sub-board positions of responsibility, will ensure that they do so for the best reasons and pick the best people possible to represent them. On the other hand, they should ensure that the people who represent them do not allow a vacuum or a void to build up over a period of time. The people who are elected to responsible positions by workers to represent their interests at board or sub-board level should not allow a void, a vacuum or a psychological gap to develop between them and those who elected them in the first place. That would be tragic for democracy and it would undermine the whole concept, genesis and aspiration on which this measure was founded.

There is also the responsibility that, while the reporting back process is very important, the employers would ensure that they participate with trust, confidence and without reservation giving wholeheartedly of themselves not only to the practice, but to the spirit that is contained in this document, to ensure that the necessary finance is made available by the company and that no stone is left unturned to ensure that the best possible structures develop therefrom. There is a dual benefit from the point of view of employers and employees. It can provide the employees at board level, and indirectly by exercising their influence on the people they nominate to the board, with opportunities to influence the course of action of the enterprise in which they are involved.

On the other hand, it can and does generate commitment and hopefully will continue to generate commitment on the part of those participating. It creates a sense of work satisfaction by drawing on the knowledge and skills of their employees. Managers are not only flattering their employees but are being practical and pragmatic in ensuring that much of the experience, skills and reservoir of knowledge these people have, and which have been untapped thus far, are now being drawn upon to the mutual benefit of everybody.

It is understandable that there would be reserve and caution and, in some cases, possibly hostility to any changes. People who enter into this arrangement should do so in the knowledge that they are doing so for the benefit of each mutually or collectively as a unit and that they are not undermining their respective roles. In fact, they have the benefit of the participants, the benefit of the enterprise and the long term survival of the enterprise very much at heart. Full commitment is necessary from all concerned employers, the trade union side and from a person put in a position to ensure that the necessary procedures — in this case the secretary of the company — are adhered to. All people should enter into the spirit of the agreement wholeheartedly to ensure that the necessary aspirations set down therein are fulfilled.

The committee produced a very worthwhile document. It deals with the considerable developments that have taken place thus far and it is only right that it should target in on the public sector. If we cannot achieve a level of industrial democracy in the public sector, where people by way of contractual obligations, documents and so on have guaranteed jobs in this sphere of our national economic activity, it is very difficult to expect the private sector to take these recommendations on board. As has been the experience, if something is left to the voluntary volition of people, irrespective of how magnanimous their intentions might be, irrespective of how generous their verbalisations might be, irrespective of how good their intentions might be, it simply will not happen.

Therefore, it is as a result of lots of pious platitudes in the past, lots of aspirations and lots of verbal commitment that this enabling legislation finds its way into the House. It is based on the Worker Participation (State Enterprises) Act, 1977, which has been successful. The Minister has been cautious in his acknowledgment of its success but it has set the tone, the seeds and the ground work for this legislation. It involves a whole process, an evolution, a series of measures and a breaking down of traditional suspicions and inherent latent tendencies to suspect the other side. D Day is very near and unless we begin to get our act together in relation to industrial relations participation it will be forced upon us from the outside. We have already debated at considerable length two measures on industrial democracy: the Vredeling Directive and the Fifth Directive on Company Law. We have seen that it is expected of us to get into line with the rest of Europe. Therefore, we should get down to the business of devising models that suit our requirements rather than having the full weight of the European Community brought to bear on us.

We have discussed the Vredeling Directive and the Fifth Directive and we have seen that we have a mammoth task in front of us. In looking at the recommendations from the various bodies, we have seen that two of the greatest areas of reservations came not come from the trade union side but from the Department of Industry and Commerce. They felt that by taking these measures on board, by greater democratisation, by making available to workers various facts, indepth information, analysis of the performance of the particular company, matters that would have a bearing not only on the long term survival of the company but the day to day welfare of the employees — there was an attitude evident in these documents very much in the direction of the belief that by relaxing the rules, by giving greater worker participation, by providing free access to information — all of this together would prove a deterrent to foreign investment in this country.

We had set out for us by the IDA or by the Department of Industry and Commerce, as a result of figures provided by the IDA, the degree to which we, as a country, are indebted to the Japanese, the American and the Continental investors in this country. There seemed to be the underlying message or theme that if we are in fact to democratise, give greater participation and greater involvement this could do irreparable damage to the salesmanship job being done abroad by the IDA and the Department of Industry and Commerce. That judgment is sad because again it copperfastens what is very much underlying the whole principle which has given rise to this Bill, that there is not enough voluntary commitment on both sides to undertake the development of the necessary roles without the stimulus, the prod, the probing or the overseeing, managerial influence of the Minister or the Department of Labour.

I am optimistic that what has been undertaken here or has been begun here, while it is not quite as modest as Senator Hillery would say, will provide the necessary headline for the private sector to get on with the job further. While this measure extends participation to a whole raft of semi-State agencies and gives them sub-board status etc. One notices that in the public sector where I think there are a total of 210,000 employees, there are huge areas precluded — huge areas where there would be this difficulty with, for example, the Garda Síochána, the teaching profession, etc. In due course irrespective of the inherent difficulties, these will have to be included.

I believe that in passing this Bill we are fulfilling a fairly vital obligation; we are going a fairly conspicuous and fairly significant step down the road to industrial democracy; we are setting the headline for the public sector; we are breaking down these suspicions to which I have alluded previously. It will lead to a heal-their atmosphere overall in the industrial relations sector. There will be greater productivity which will be one of the main allurements, attractions or magnets from the employer's viewpoint. There will be greater job satisfaction and the whole atmosphere of industrial relations will become such that we can justifiably market ourselves abroad as an industrial democracy where the best of all worlds prevails and have a solid good base for investment by foreign enterprises in this country.

Professor Hillery

In the interests of clarification, could I just pick up a point Senator Higgins made? My criticism of the Minister in regard to the delay in bringing in the Bill did not relate, in fact, to sub-board structures, because they were the subject of the Morrissey Report, which was compiled in excellent time. What I was referring to was the Minister's delay in extending the worker-director remit to other State-sponsored bodies, something which he promised the best part of two years ago. I just want to get that on the record.

Mr. McGonagle

I think I can claim to occupy a fairly unique position here today. On the one hand, I have had a fair amount of experience as a trade union official since 1947. On the other hand, I was a director of the sugar company in the Republic and the Management Development Service in the North, an organisation set up to train and equip especially young business management in how to do it. So, I have some experience in that field. I do not know of anybody else here who was actually a worker director. So, drawing on the experience both as a trade union official and a worker director, I obviously would have something to say about this progressive step. The first thing I have to say is that I welcome it. I welcome the language in the Minister's address and the important part of his speech today is the way he deals with the psychology of industrial democracy, what he really means by worker participation, what he really means by involvement of the workers. We did have examples in the world of worker democracy to a far greater degree than imagined here. If we can remove from our minds the bias against the Communist countries, worker democracy there does its best to get right down to where worker democracy really belongs — and it is not at the top. It belongs on the factory floor. It belongs at the point of production or the point of distribution. It belongs in involving the worker, as such, not necessarily a trade union. It means involvement of workers. I have looked at the worker director experiment here — the early one — with favour. I said it was a step in the right direction, but it does not go far enough. That is what I said at that time. I would like to see much more progress towards our ultimate goal.

Again, we have not travelled far enough and fast enough and I note that, in the advice to the Minister in this report of the Advisory Committee on Worker Participation, reservations were held by the representatives from the FUE. They said they preferred the voluntary effort rather than the legislative effort. Now, I understand this perfectly from the point of view that anything that is volunteered is much better than anything that is conscripted. Consequently I looked at it again and I believe — Knowing something of management's attitude to worker participation — that that is not a true statement of the real feelings of the employer side: I believe it is a stall. I do not think the employers' association has told the full truth by stalling on that and saying that the preference was for the voluntary method. I believe the voluntary method is better than legislation. Volunteers are better than conscripts at any time, if you can assume that by legislating for something it is conscripting people — it is not.

The voluntary method put forward by the FUE representatives on the advisory committee is not the full truth and that is what I have to say about that attitude. I have looked after various enterprises in Derry and Donegal for the Irish Transport Union and in any of the enterprises for which I was responsible on the workers side, I set up, where the management would agree, a system whereby workers would be involved in a representative way. If I had five shop stewards, ten shop stewards, three shop stewards, they would almost automatically be the front line representation, but whatever committee I set up, I also made provision for the co-option of workers and — or management side as well. So, if the workers on the factory floor were involved in the way the Minister has said, his knowledge of the psychology of worker involvement and participation is "dead on" distinct from the language which was used about the legislation and the mechanics of elections, the committees and the communication.

We are talking about democracy in industry and by democracy I mean, in any case, openness — open management in this case, the opening of the books, opening especially of the knowledge that is not retained inside the management files for their professional advisers. That is what I mean by involvement in decision making. You cannot make decisions responsibly, you cannot make them intelligently, unless they are based on knowledge. If that knowledge is kept within the closed book of management, the closed book can cause more problems than the closed shop. Until these books are opened and the workers are sufficiently educated, not only to actively participate but to participate in a way that is meaningful and is based on knowledge, worker involvement does not mean very much, especially to the worker who might become disillusioned and frustrated.

One of the things that can flow from worker involvement in any enterprise is good industrial relations, but that is not the main objective. Of course it is a desirable end; it is not the end in itself. There are many other things that can be discussed inside the worker involvement enterprise experiment. They can talk about unit costs — that means talking about efficiency. They can talk about measurement and that can be a troublesome matter and was a troublesome matter in this country in 1952 when very few on the management side and the trade union side knew very much about it. Everybody claims they know all about it now, but in 1952 they did not and that is on record.

I had to face that problem. One of the ways in which I faced it was that I got management to agree that the workers would become actively involved in anything that was being proposed or drawn up. I then went about drawing up model rules in the various enterprises where I was meeting this problem and the problems flowing from and related to that specific problem. I drew up model rules and not only did they discuss unit cost efficiency, they discussed incentives, productivity, quality control, training and retraining, and health and safety measures.

Again I am adverting to the socialist countries. In the socialist countries, not only did they discuss educational facilities, medical facilities, and especially preventive medical facilities, but they actually set up the facilities and applied them. That is worker involvement on an intelligent plane. That is what I mean by worker involvement. It is best that it might come from voluntary, model rules, from the factory floor and not from the top down.

Being a worker director in the sugar company at that time, 1972-73, I was more or less told to prepare myself to carry out pilot schemes inside the sugar company and I did that. One of the things I did first was address the workers. I told them that as far as I was concerned they were going to become involved. The representative method is one method and that did not mean that we could not have factory floor people involved provided we set up a proper communication system inside the plant. As well as industrial relations having to improve — I will come back on that — all these things can be discussed. Where is there a factory in this country where there are educational facilities, preventive medical facilities, facilities for the enjoyment of leisure pursuits? If I were on the factory floor these are the things I would be pressing for.

For all strains of management — I will come to the trade union attitude — the management attitude in the conflict of interest arena is they cannot see further than their noses and realise that the greatest resource to tap is their own manpower because nobody knows better than a worker the best, the quickest and the most efficient way to do any job from digging turf in the bog to the finest engineering feat at a lathe. The worker knows the answer and, provided he is given the right to speak or to write suggestion even for a box — as simple as that — you have worker involvement. Could I remind the Seanad, and indeed the public at large, that when the Single European Act is ratified, this will become a very important instrument with which to face what might look, to some people like unbridled competition. I am not saying it is going to be unbridled.

In 1972-73 when we went into the EC, I was president of the Irish Congress of Trade Unions and I am one of the people who said: "We do not want to go into the EC at this stage because we are not ready; we are not against the principle but our industries are not ready". Fortunately for Ireland we got a breathing space in 1973 and there is no use in whinging that we are not ready now. It is too bad that we are not ready.

An Leas-Chathaoirleach

We are not taking the Single European Act until next week.

Mr. McGonagle

Thank you for reminding me of that. What I am saying is that this Bill, and what is going to be set up under it, will help industry in a lot of ways that we do not see as yet. It is a good Bill. What I would like to see following this Bill is that the whole private sector, which is basically the main area of potential development and investment and growth, would actually adopt something on their own voluntary basis which they say they prefer. They said they would prefer the voluntary basis rather than the legislative one. What I want them to do is to set up on a voluntary basis any model scheme they can produce. That will be the test. In this conflict of interest situation it does not inevitably follow that it has to continue as a conflict of interest for the very simple reason that it is not a conflict of interest on real examination of it.

At the point of production in producing a commodity for the consumer, and likewise in distribution, a service for the people we must establish that management and workers must be partners in that context. There can be and will be disagreement about the sharing of the wealth so produced through what is called the collective bargaining system. The disagreements need not necessarily lead to confusion in thinking and the ultimate strike. When I met young Jim Larkin in 1947 he told me that when you get to a strike situation it means that you as a trade union official have made your contribution to a failure. I never forgot that lesson — a strike is a failure in resolving the conflict between the partners — and they are partners; in any work place, any point of distribution, they must be partners. The objective is that they both be there together and the place must be managed. Can you imagine a perfect situation where the workers actually elect management? That is done in the world too. Supposing we elected management, that management would still have to manage. They would still have to give instructions and, provided the worker is sufficiently and intelligently involved in the process, he will understand why the instructions are coming in such a way from management and he has recourse to whatever is laid down in the model rules, if he is offended or they are offended, and he has his trade union.

I might now come to the trade union attitude. Anybody who is afraid of change is indicating quite clearly to me that he is afraid of his own ability to control the changes. That is all that means to me. There are many cases in history where people did not even know they could control the change, but they took the plunge anyhow. Perhaps some of the fears we are expressing about the Single European Act may come into that category. The trade unions are afraid the collective bargaining system might be interfered with and that the structures they have patiently built up could be wrecked. That fear is not well founded. I am not saying that because I am suggesting to the trade unions for one moment that they should control the workers inside the plant who are taking part and participating. I would not like that kind of control.

Obviously, we must have some influence to exert but I would not like the word "control" or the idea that workers who are participating on the factory floor at the proper level from the bottom up should be under any kind of control. That could be dangerous. The workers must understand what their trade union policy is. They must not subvert it and they must not do anything that would interfere with it. I do not see the possibility and, therefore, the fear is unfounded of the collective bargaining system being set aside or seriously hurt by worker participation models such as I have outlined.

The Bill, as I said, provides leadership. We in this country, management and trade unions, have not acted with sufficient appreciation of what needs to be done in the area of worker involvement and participation. While the Bill is welcome for the distance it goes, the language used and the edifice and structures it sets up for the election of the bodies and so on, it simply must be regarded as a headline. It is going in the right direction — down towards the factory floor. I would like to see all public and private establishments, enterprises and whatever we have, taking on board the basic idea, applying the principle and implementing it along the lines I have indicated and the Minister has indicated and the lines Senator Hillery and Senator Higgins have clearly indicated. We might then be ready for the competition which might come out of Europe.

Trade unions are, I think, very nearly at the point of having a look at their traditions and ideas. The trade union movement in Ireland aims at efficiency to the best of their ability. That must be said about them. While many of them did not understand in 1952 what work measurement was about, when it was revealed to them that it was good for industry, for workers, for incentive measurement, they opted for it. They have done their best to broaden the industrial base, to provide an industrial relations picture or scenario so that actually the potential investor would not be worried. The big thing is the lack of investment. If this Bill in its operation makes that kind of contribution, it is a very good Bill from that point of view also. I compliment the Minister on the Bill and on the details of it and his grasp of the psychology of real industrial democracy and especially on how he spells out participation and the involvement of the workers.

Mr. Cregan

I shall not keep the House long with the few points I would like to make. I note the report of the Advisory Committee on Worker Participation and that the Minister is adding to the number of State enterprises included for worker participation. One of them, in particular, is Aer Rianta. In the Cork area we suffered more than anybody else perhaps over the last few years through the problem of people losing their employment. It is not pleasant to have a situation where many people at the one time are losing their jobs.

I was impressed by the previous speakers' remarks on worker participation. I sometimes wonder — I suppose there is a certain amount of truth in it — whether there is a lot of theory in it rather than action and practice. I do not see it operating in many areas. I was visiting a trade union official's office some time ago and I thought we were preparing for an early general election because many faces were displayed with big print naming people seeking to be elected to the board of a State body. If worker participation means people are going to advertise in a big way and, indeed, spend in a big way, to make sure they get back on a particular body, the impression created among the general body of workers is that there is something in it for these people only. I do not like that. That impression was created in Cork where there was advertising for a position on the board of CIE through worker participation. There were lovely photographs with fine big print and they certainly were not made for a few bob or, for that matter, for a few pounds. When you see that happening — as a worker it struck me quite hard — you get the impression straight away that there is something in it for this person. Is it working out so that this person, if he does get on the board of CIE, is going to have more than everybody else? When I checked out the facts the answer was, yes. At the end of the day, whether that person on that board and the workers on the board have done anything better for the vast majority of workers is questionable.

I am glad to see on page 42, section 119 of the report of the Advisory Committee on Worker Participation a reference to something I think could bring about a better position for all the workers. The previous speaker made a very important point and I did see it exemplified, sadly in the Cork area over the last few years, where many jobs were lost because of the non-involvement of workers and the attitude of management in failing to pass down information. I feel these jobs should not have been lost. If the workers were kept involved in the ongoing situation, it could be emphasised that if the plant were to go we might rationalise rather than eliminate. We might point out what we would have in five or ten year's time. Nothing like that is going on anywhere that I know of. Aer Rianta are now being added to these State bodies and Aer Rianta last year made something in the region of £11.2 million.

Our State bodies are often "knocked". Where bodies like Aer Rianta, Aer Lingus and, in particular, CIE are getting a world of abuse from the general public and, I suppose, on many occasions rightly so. I am speaking here only for myself. I worked for CIE for 11 years. The vast majority of workers in CIE just could not care a damn and these are the facts, whether we like it or not. The impression is given that whether they like it or not, or whether we like it or not, the job is there anyway.

When can we say that shares should be given to workers? In CIE it would be hard, but in Aer Rianta it would not be half so hard, or in other State bodies, for example, Irish Steel where much money was spent over the past few years. Shares could be given to workers rather than have participation by a particular group. Why can we not say to the workforce, if we are so confident or if there are so many excellent people on a committee set up by the Minister to come in with a report on development and worker participation, that this will be done? Why was the ball not put in the court and the workers told: If we want to keep this company together, let both of us invest. I know of a private concern in the Cork area where shares are allocated to workers over a period, a certain number of shares or a certain amount of money, and that company has gone from strength to strength. There is never a problem, never any disputes or shortage of money and there is certainly no discontent felt by anybody.

An example like that, I feel, could be followed in Aer Rianta. Are we going to say at this stage to the workers in Aer Rianta that if all of us together, management and workforce and Government get our act together so as to be competitive against everybody else in Europe and in the world, this is what it is worth to you if things go well? But this is not being said. It is being said to the few. "Get on the board and make sure discussions go on and say we look after people who are sick and so on." The concept in many of these situations is good. Much of it, whether we like it or not, is theory and I do not see it working in practice.

I have seen in my area more than in any other area the dilapidation in places in a very short period of time where many workers had been working and are now idle. We have an area in Cork where you could throw a bowl — the Marina — and no more than three years ago we were talking about 4,000 extra people working in that area. Now they are gone. Participation, proper discussion and, probably, proper negotiations could have brought about a rationalisation programme.

I am very embarrassed and I am certainly not proud of the fact that £25.5 million was spent to eliminate 800 workers in Cork city. That is immoral in my eyes. All belonging to me are trade unionists. I would not say as a trade union official that we must eliminate a company because it is worth so much to us. That is exactly what happened. They can say what they like but the management in this company were wrong to a point because proper negotiations did not go on. If we had sold the idea of a rationalised programme rather than an elimination programme probably 400 people would be still working. About £10 million could have been spent on the elimination of 400 workers and £15 million on updating the plant. That is proper thinking. Why is this not happening?

There are other areas where we bawl about many plants, companies like Irish Steel, and State bodies in liquidation having money pumped into them. Up to last year Irish Steel made a profit for the last three or four months. What the Minister is saying is excellent in some areas but there are other areas where it is not going to work. Let us not just put up the carrot but the whole bunch of carrots and say: "This is what it is worth at the end of the day provided you do this, that and other." We are not doing that. We are not showing any example to workers or management. We are not showing any example to our State bodies either. In private sector companies in Cork where shareholders and workers are involved get their share capital or bonuses back every year because the companies are doing well. Everybody is involved because people are spending money on Friday.

I see no reason why we cannot tell the workers in Irish Steel that there are shares available which they can purchase. That would be much better than worker participation. The person who is advertising in a trade union office because he wants to get on a State body does not interest me. Like all politicians he is dedicated. I see no reason why we cannot say to the workforce in Aer Rianta that we will give them shares. They made a profit of £11.2 last year and I understand they are doing better this year thanks to the prices at their local duty free shops. That is the area we can get workers involved in, especially in State bodies, by offering them £5 or £7 a week. That also applies to people on part time work who work more than 18 hours a week. There is no reason why we should not tell them they can participate. The general impression is that worker participation is there for the few. I advocated two years ago when we were allocating something like £12.5 million to Irish Steel that we should implement a scheme of shares in Irish Steel. The Minister, Deputy J. Bruton, had no objection to it. I do not know whether the board have to put it before the workers of Irish Steel.

These are my ideas on worker participation where the workforce are totally committed. The proof is in the pudding in the Cork area where shares have been given out by private companies. The companies have gone from strength to strength and there are no problems.

Mr. O'Leary

There are a number of points I would like to make to the Minister in the consideration of this Bill. It is a complex piece of legislation which obviously will have to be considered in great detail on Committee Stage and I look forward to doing that. I will confine myself broadly to the principles the Minister has outlined both in the very fine explanatory memorandum which was circulated with the Bill and also in the Second Stage speech which the Minister made here.

There is one area of worker participation in the State sector in respect of which the Minister and myself are in fundamental disagreement. I will come to that later. There is a large area in which we are in agreement and I should emphasise that this large area of agreement exists. I am firmly of the belief that commercial undertakings of all kind, both State and private, will in the long run benefit from the participation to the greatest possible extent of workers in the running of these enterprises.

There is a certain category of non-commercial undertakings to which that might also apply. I am, however, unable to produce a definition which would satisfy both the Minister and myself with regard to the areas in which such participation makes sense. This is where I find myself in some disagreement with the Minister. There is a problem with regard to definition which I think the Minister also appreciates. The Minister in his speech makes the following pronouncement:

In this Bill I am extending arrangements for worker director elections to three further State enterprises. As I already mentioned these are Aer Rianta, An Foras Forbartha and the National Rehabilitation Board. Two of these bodies are State enterprises whose purpose is non-commercial in nature. I have decided that there are no grounds for restricting the election of worker directors to State bodies of a commercial or quasi-commercial character.

I agree with the Minister that there is no automatic reason just because something is not commercial that there should be no worker directors. There is a category of organisation in which worker directors should play little or no part. For example, one would not suggest that the workers in Leinster House should be able to nominate members directly to the Dáil and Seanad. There are bodies which, of their nature, are representive themselves where the nomination by those whose duty it is to work in the enterprises of some of the "boards of directors" would not make much sense. I am doubtful whether many of the companies included in Part III of the First Schedule could be usefully included in the group of people where worker directors would form a useful part. I realise, of course, the fact that they are in part III means, for the time being, they are not included in that Schedule. There has been a certain amount of movement from Part III to Part II with regard to Aer Rianta, An Foras Forbartha and the National Rehabilitation Board. I would like to ask the Minister whether the workers in the Central Bank, for example, have any useful contribution to make as directors of the Central Bank? There are many other examples like that where the service which is being provided is essentially a community service and where the interests of the staff may be directly opposite to the interest of the community at large. In those circumstances we have to be very careful about putting these people as staff representatives in great numbers or at all, perhaps, on the boards of bodies like this.

RTE is another example. I have no objection to any person working in RTE being nominated a director of RTE but in an organisation like RTE there is a clear difference between the public interest and the staff interest. They are not necessarily the same. It is important, when you are providing a service of that kind and character that that distinction should be recognised and appreciated.

The Minister might share with us when replying on the Second Stage the reason he believes An Foras Forbartha should be included in the Schedule. An Foras Forbartha is a body, the purpose of which is to supervise the making of various physical plans and to establish various criteria to aid the Minister and the various public bodies throughout the country in their physical planning. I wonder how the staff of that organisation fit into something which is essentially national in character and where the interests of the staff of An Foras Forbartha might be very different from the interests which the organisation as an entity wish to serve? I do not know enough about the National Rehabilitation Board to be able to say anything about them but I suspect that it is quasi-commercial in character. There is a commercial dimension to it which does not excite me. The question of Aer Rianta is a matter I leave to the Minister. I wish over a period of time to contribute towards preserving a situation where we categorise public sector companies differently and where we recognise that in certain cases the interests of the community may be in conflict with the interest, of those who are working there. I want to preserve that situation and recognise that limitation in the exercise we are carrying out.

I know that in the State bodies where worker directors have participated over the last few years and have been elected many of the outside directors and the non-worker directors are fairly frustrated with the attitude of worker directors. In a number of cases they feel that the working directors allow their interests as trade union representatives, to outweigh their other duties and responsibilities. I am not very worried about this because in the long run it is a developing process. It is something which over a period of time, is going to establish itself. There is a problem with worker directors where something is in discussion at the board of directors which is of considerable importance to the members of a particular trade union or to the people working in the company. It is only because these discussions are taking place in secret that there is pressure put on the worker directors which they respond to in different ways. In some cases they keep quiet about it and in other cases they let the cat out of the bag fairly quickly. I do not mind them letting the cat out of the bag in cases like that. The conflict, which undoubtedly exists between themselves as workers and representatives of the workers on the one hand, and as parts of the corporate identity, which is the board of directors, on the other hand, will over a period of time sort itself out. They have sorted themselves out in other countries and I have no reason to suppose they will not sort themselves out in this country.

With regard to the remaining portion of the Bill and the enabling portion of the legislation — that is the portion of the legislation which deals with the establishment of what is inelegantly called: "sub-board participation arrangements"— that is something which is certainly worth enacting. I wonder in the long run how widely used it will be? I look forward to an assessment by a committee, like the advisory committee on worker participation who produced such an excellent report. I would like an assessment by that committee after a period of four, five or six years to see how these sub-board arrangements have worked. There may be a reluctance to participate in these arrangements.

I welcome the Bill in general and assure the Minister that on Committee Stage we will examine it on a section by section basis. We will go in greater detail into the various powers that are being given to the Minister and to the other organs of State in this matter. I will be pleased to support the Bill at the end of Second Stage.

Minister for Labour (Mr. Quinn)

I would like to extend my appreciation to the House for both the courtesy and the welcome that has been extended to this legislation and for your co-operation in enabling me to conclude Second Stage. Committee Stage will enable us to go into greater length on many of the points that have been raised. I am conscious of the time that is available to me now.

No one piece of legislation can be, and certainly is not proposed by me to be, a comprehensive panacea for the problems of economic growth or for labour management relations. We have made some progress in the general area and what are required, in no particular order of priority, because they are interconnected, is worker participation both within the State sector and in the private sector, too, we hope, a modernisation of our Companies Acts in the broader sense of the word, the taking on board of some of the new measures that are emanating from Brussels, including specifically the question of access to information and the sharing of information both for the public at large and for participants within companies and, finally, modernisation of industrial relations legislation and procedures. I am not coming to this House with this Bill suggesting that this of itself will solve all the problems in the State sector. That would be a mistake.

I want to put on record my regret at the delay which was properly voiced by Senator Hillery in his opening and welcoming comments from the Opposition. The delay is deeply regretted by myself politically. It is regretted because of the wear and tear on the intellectual and physical resources of the staff in the Department of Labour and in the Bills office who have been worrying this through. Largely, because of its complexity one would think that the measure to be extended the 1977 Act and to provide a mechanism for appropriate sub-board structures is pretty much a straightforward measure. The complexity of the legislation was not willed upon by some Byzantine mandarin desire to produce complex puzzles called legislation but was the product of what became necessary. The alternative would have been three or four separate legislative measures which I do not think any of us would have wanted. There is an attempt at consolidation in this legislation. I apologise for its complexity but it was not voluntarily offered.

The general remarks made centre round a number of points. I will try to deal with them in general terms without going into the specifics of individual contributions but I will refer to them where they have arisen. The premiss of participation rests on the belief that everybody in an enterprise has a contribution to make. The very fact that an employer hired that person in the first instance is a recognition that they have a contribution to make. As Senator McGonagle said, the person at the coalface doing whatever skilled job happens to be required of any nature has a view as to how good that job can be done and how better it can be done if anybody wants to come and ask him. It does not necessarily mean that the person on the lathe wants to be managing director. It does mean that the person on the lathe might have a better view as to how that expensive piece of machinery could be used all of the time instead of some of the time. Tragically in many cases, we have not had a system that asked that person the question which they wanted to have asked of them.

As I said in my opening speech, and it was referred to by others, we came late to industrialisation. We inherited the Victorian attitudes of adversarial conflict between worker and employer. They are inappropriate in a State company sector where the communal interest of the management and worker is similar. We need to develop within the State sector a participatory structure, not only on the commercial side, but right through the entire array of semi-State companies because the way in which people make their contribution, and the productivity of that contribution, very much depend on whether they are being utilised to maximum capacity, if one wants to maintain an engineering or a mechanical analysis.

I do not think that our experience to date would show that relying entirely on a voluntarist tradition which, of its nature, produces a system whereby information would flow from top to bottom, or that workers in a particular area would be asked what their view was on how best to achieve a management objective is the best course. There is no evidence to suggest, despite the protestations of the FUE of their belief in voluntarism, that members of the FUE have come forward in any significant degree with a voluntarist system. As Senator Cregan already indicated, in those small tentative companies where that has occurred, those companies have been the beneficiaries of that kind of participation. This legislation is designed to provide a framework which will act as an impetus on the one hand and not as a prescriptive straitjacket on the other. In trying to strike that balance we have ended up with family complex legislation to which I have already referred.

There were some specific points made and I shall relate to them. There is no conflict in what Senator Cregan said about having elected worker directors and having full participation by all of the participants in an enterprise, be it as large and as monopolistic as CIE, although in reality it is not all that monopolistic because there are many competing modes of transport for that company, be it rail, freight, or road passenger. There is a need to motivate people and you can do this by giving the kind of remuneration they require or giving them a sense of being involved in a process that takes account of their own knowledge and skills.

Hopefully the reorganisation of CIE about which this House had a long and substantial debate will provide a framework within which management can achieve some of the objectives that will motivate people. If you look at the motivation of a company like Aer Rianta who have an exclusive monopoly of the services they provide as distinct from CIE, the difference in the motivation and the performance of the workforce in different conditions and locations to that of other State companies cannot be attributed to the legal framework within which they operate. Clearly there is a factor of management at work and management on both sides — the management of the workforce by the trade unions involved in the sense that they represent them, and the management of the enterprise by management itself.

As I said in my introductory comments, this is not a panacea. There are other factors which will have to be taken into account in the exercise of industrial relations and economic growth. We have excluded a number of companies — and reference was made to this by Senator Hillery — from our original intentions. The VHI have been excluded because the Minister for Health has appointed a worker director directly and there is revised legislation coming through with regard to the VHI. It was felt appropriate not to put them up immediately in the present context, but to wait until the new legislation was in place. Irish Steel have been experiencing difficulties and the Government have decided to defer the question of extending the arrangements to these enterprises. However, the Bill allows, when the matter of their current difficulties has settled down and been resolved, with the agreement of the Minister concerned, for the worker participation provisions to be extended to those companies.

The question of confidentiality and conflict of interest has been raised in recent times, particularly in management circles, with regard to worker directors. It is amazing how people always say there is a conflict of interest for a worker director to be on a board of a public company, particularly a large commercial semi-State one, or a non-commercial semi-State one. Nobody seems to worry about the potential conflict of interest that might arise in relation to directors who have been appointed by successive Governments. In many cases there are potential conflicts of interest with regard to the activities of those companies. I recall, and I am subject to correction, that for many years a representative of the beet growers was appointed to the board of the sugar company. Clearly, there was a potential conflict of interest here in the sense that this person was representing, in a very formal capacity, a major supplier to a company who was effectively the only purchaser and, therefore, matters relating to the price of beet was something that could cause a conflict of interest. We will not avoid the difficulties of conflict of interest in any human society unless we recognise that we are human and that there is a potential conflict of interest for everybody who participates in any activity and that the only safeguard to avoid abuses of that conflict of interest is to have proper and adequate information.

This is why we have required in this legislation that one of the provisions will be that the semi-State companies will have to give a report in their annual accounts each year of how they have been promoting the concept of information exchange and participation at the appropriate level. I agree with what Senator O'Leary said in relation to the necessity to review this process. There is no guarantee that because the idea appears to be good in theory, as Senator Cregan said, it may automatically work. In all probability it will work very unevenly because the motivation or the personalities of people at particular points in time in different enterprises will vary in such a way as to perhaps show little or no interest in some companies but a very active interest in another. For example, the management of Aer Rianta have expressed concern to me on a number of occasions at the delay in the introduction of this legislation because of their desire to proceed with the sub-board structures. They have virtually anticipated the legislation because they have moved ahead on a number of fronts. That is clearly a function of personal motivation on behalf of the management and the unions participating in that company and not a question of legislation on its own.

Legislation, as I think the House will agree can only provide a just and orderly framework within which human activity and human relations can be conducted. It cannot determine totally or absolutely the outcome of those relations. For the reasons that Senator O'Leary raised, it would be very useful that we should have a review. We have people in the universities and in the RTCs and elsewhere who can do it in a scientific and productive manner.

It would be a mistake to confine worker directors exclusively to the commercial semi-State companies. The economic activity indirectly related to the work that is done by many non-commercial semi-State companies has enormous potential. The skills and general education levels of workers throughout the entire workforce, particularly in many of those enterprises, require that the way in which they are asked to contribute their skills and the method of delivery of those skills is as important a factor as the elaborate procedures of qualification, interview and selection we have established to hire them in the first instance. It seems a contradiction to go through one very elaborate process of selection and then to ignore, in many cases, the capabilities of these people to decide how best the work can be done.

In conclusion, I should like to thank Senators for the general welcome that has been given to the legislation and to express my agreement with their regret at the delay which has occurred. I have given an explanation as to why the delay was there and the House, when it goes into Committee, will recognise the legitimacy of that explanation. We have created, on balance, something that is particular to our own economic and social culture and which is not borrowed from somewhere else. We should draw confidence and strength from this experience to-date and extend it, where appropriate, in the areas of the broad public sector where it can have a positive effect. In doing this, the House is interacting correctly with the broad public sector. We are providing a framework within which these things must happen, but we are not providing a strait jacket which states: "Not only must these things happen, but they can only happen in a particular way". The very principle of participation is that people should be urged to participate but the way in which they do so and the methodology of it clearly, by definition, must in the final analysis belong to them and not to this House. This is why we have done this in this manner. I thank Senators very much for their support.

Question put and agreed to.

Acting Chairman (Mr. Daly)

When is it proposed to take Committee Stage?

Professor Dooge

It is unlikely that time will be available next week for the taking of Committee Stage but in case a hole does open up in the programme, perhaps we could order it for Wednesday, 17 December if that is suitable to the Minister.

Committee Stage ordered for Wednesday, 17 December 1986.

Sitting suspended at 5.30 p.m. and resumed at 6.30 p.m.