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Investment in Quality6.6.3 Adapting Ireland’s Partnership System to a New ContextWith or without national partnership agreements on the currentmodel, Ireland has to devise a wage and reward system that issuitable for its type of economy and which achieves its social goals.The key danger in wage bargaining at present is that average wageand price inflation continue up to the point where there is a significantloss of competitiveness, resulting in a rise in unemployment.The pay determination system must meet a number of objectives. Itmust achieve outcomes that maintain cost competitiveness and fullemployment, including the ability to respond to shocks, such aswould occur as a result of a sharp appreciation of the euro. It shouldavoid embedding inflationary expectations into the system andachieve outcomes that are consistent with a reduction in inflation. Itmust provide for an acceptable sharing of the benefits of growth. Itmust be consistent with high-performance work practices andassociated reward systems. It must be consistent with a sustainablepublic finance position.Wage Bargaining in Competitive EnterprisesThe Council’s conclusion is that these objectives are best metthrough co-ordinated wage bargaining, in which there is an elementof co-operation and a focus on long-term interests. This implies apartnership approach to both the current conjuncture and longerterm structures.In the short-term, an effective system of wage bargaining mustachieve a consistent and viable outcome, given the pressures ofprices, housing costs, public service levels, rents, taxation, rewardsystems, international competition and profit levels. This wouldinclude taking into account wage developments in other euro zonecountries and Ireland’s principal trading partners. During the 1990s,this approach, used in many EU member states, did not seemappropriate in Ireland, given the rapid pace of economic growth andthe dynamic structural change in the Irish economy. Now thatgrowth has slowed—and Ireland’s competitiveness is not automaticallymaintained by the virtuous circle described in Chapter 1—286