New Partnership Needed in Response to Global Financial Crisis

11 Nov 2008

Investors and pension funds could enjoy greater security and certainty through the creation of a new form of social partnership in response to the global economic crisis, a high level pension conference heard today (November 11).

Speaking at the 8th Annual UK & Irish Pensions and Investment Summit in Dublin, economist Paul Sweeney said that if governments and others responded correctly to the current crisis they could create more secure and certain conditions for investors and pension funds by providing for greater oversight and tighter corporate governance that would guarantee against any future outbreaks of 'irrational exuberance' by companies.

Mr Sweeney, an economic advisor to the Irish Congress of Trade Unions told the conference that we were "witnessing a sea change in how we do business on a global level. We now see institutions like the IMF - the former advocates of 'slash and burn' - demanding that governments stimulate economies through greater public spending. This is a remarkable reverse of policy, brought on by the current crisis.

"The old order is dead and the world is a very different place," Mr Sweeney said. "It was always an experiment that was bound to end in tears, whereby the market was so 'free' and unregulated, that the big players effectively wrote their own rules.

"And many people have been hurt by the blind faith that was placed in the market - it has delivered profound insecurity for older people who have lost hugely on their pensions."

This loss, said Mr Sweeney, had been compounded by the trend in recent years whereby many employers had transferred their pension risk to their employees, through the shift from defined benefit to defined contribution schemes.

"Workers and pensioners are victims of the crisis and have been left holding the toxic debt of irresponsible financial institutions," he explained. "The 'shareholder value' model has failed. It was biased in favour of top management and not the stakeholders."

Mr Sweeney said new regulation and oversight should provide for greater consumer, employee and union input into business in an new form of social partnership, to act as a bulwark against the type of practices that caused today's crisis.

 

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Congress Communications' Officer

Irish Congress of Trade Unions,

31-32 Parnell Square, D1.

Tel: (00 3531) 889 7799/ 087 917 4171

www.ictu.ie