Exploiting conditionality: EU and international actors and post-NPM reform in Ireland

Published date01 April 2020
Date01 April 2020
untitled Special Issue: Public Sector Reforms in a Changed EU Governance under Conditions of Fiscal Consolidation
Public Policy and Administration
2020, Vol. 35(2) 179–200
Exploiting conditionality:
! The Author(s) 2019
Article reuse guidelines:
EU and international
DOI: 10.1177/0952076718796548
actors and post-NPM
reform in Ireland
Muiris MacCarthaigh
Queen’s University Belfast, UK
Niamh Hardiman
University College Dublin, Ireland
Between 2008 and 2015, Ireland undertook unprecedented and systemic public sector
reforms in a polity not traditionally considered a prominent reformer. While some of
these reforms comprised part of the loan programme agreement with EU and inter-
national actors, many others did not. This article argues that the crisis in Ireland
provided a window of opportunity to introduce reforms that political and administrative
elites had previously found difficult to implement. The authority of the Troika was
invoked to provide legitimacy for controversial initiatives, yet some of the reforms
went further than the loan programme strictly required. A number of these concerning
organisational rationalisation, the public service ‘bargain’ and transversal policy coord-
ination are considered here. Agreements were negotiated with public sector unions
that facilitated sharp cuts in pay and conditions, reducing the potential for opposition to
change. The reform effort was further legitimated by the reformers’ post-New Public
Management, whole-of-government discourse, which situated considerations of effect-
iveness and efficiency in a broader framework of public service quality and delivery.
Global financial crisis, Ireland, post-New Public Management, public sector reform, Troika
The global f‌inancial crisis (GFC) has reinvigorated the study of administrative
cutback strategies, as a new generation of scholarship examines how governments
Corresponding author:
Muiris MacCarthaigh, Queen’s University Belfast, UK.
Email: m.maccarthaigh@qub.ac.uk

Public Policy and Administration 35(2)
and administrative systems have responded to the Great Recession. This work
includes cross-national approaches (Bideleux, 2011; Coen and Roberts, 2012;
Kickert, 2012; Peters et al., 2011), longitudinal perspectives (Hood et al., 2014),
and targeted studies of particular elements of national responses, including f‌iscal
contraction (Cepiku and Savignon, 2012; Dougherty and Klas, 2009), and the
changing public service bargain (Bach, 2012; Lodge and Hood, 2012). In practice,
there have been ‘as many responses as countries’ (Peters, 2011: 76), with govern-
ments adopting a variety of cutback strategies either in tandem, or switching
between modes as circumstances demand. Levine (1979), for example, found that
in contexts where retrenchment lasts for a long time and cuts are severe, it is more
likely that a centralized approach will displace a decentralized approach. And in
their survey of European states, Kickert and Randma-Liiv (2015) also found a
‘staged’ approach, evolving from incremental ‘salami-slicing’ to more targeted cuts.
Less attention has been given to the ef‌fects of the role of the EU institutions and
international actors on the administrative reform ef‌forts, including cutbacks, of
individual member states. This is surprising, since within the countries that were
subject to loan programmes managed by the Troika of the European Commission
(EC), the European Central Bank (ECB) and the International Monetary Fund
(IMF), there was a good deal of incremental learning and cross-pollination of ideas
concerning the content of conditionality to be adopted. However, what is particu-
larly striking is that in some instances, strong national ownership of the terms of
the loan programmes provided the occasion for implementation not only
of those conditionalities demanded by lenders, but for a more extensive adoption
of reform initiatives.
Moury and Standrig (2017) identify this ef‌fect in Portugal, where the govern-
ment is reported to have legitimated dif‌f‌icult reform priorities with reference to the
obligations of the loan programme. We f‌ind a similar pattern in Ireland: the pres-
ence of the Troika provided a ‘shadow authority’ and a scapegoat in relation to
some of the more politically challenging spending cutback measures.
The Irish experience is dif‌ferent in some important respects however. Ireland
entered the crisis with a large backlog of government and of‌f‌icial commitments
to public sector reform that had not been implemented. Trade union resistance,
equivocal political commitment, and weak implementing capacity had combined to
produce a situation in which a notional commitment to New Public Management
(NPM) reform ideas had seen very little follow-through. This all changed in the
context of the Troika loan programme agreement.
The presence of the Troika was considered to be a thoroughly unwanted con-
straint on domestic policy autonomy. At the same time, there was broad-based
consensus across the main political parties on implementing f‌iscal retrenchment
and banking sector reform, so the response was to take domestic ownership of the
terms of the loan programme. In some areas of administrative reform they went
beyond the terms of the Troika’s conditionality: in the spirit of ‘never waste a crisis’,
they initiated a strong push for more extensive public sector reform initiatives than
were strictly mandated by the international actors. In some instances, there is

MacCarthaigh and Hardiman
evidence (as is also said of the Portuguese case) that of‌f‌icials sought to redirect the
priorities of the Troika away from measures the national actors believed were not
important and inserting objectives that they designed themselves (Hick, 2018).
The period of the crisis saw Ireland move rapidly from a ‘pre-reform’ situation
to introducing a range of measures that were consistent with the post-NPM prio-
rities of whole-of-government reform, cross-Departmental coordination, and ef‌f‌i-
ciency priorities in both administrative and industrial relations practices
(MacCarthaigh, 2017; Reiter and Klenk, 2018). We argue that this was in large
part made possible by the presence of the Troika, because it permitted the Irish
government and the administrative elite to engage in a two-level game, invoking the
Troika’s force majeure to strengthen their own hand vis-a`-vis a public sector work-
force weakened by the impact of the f‌iscal crisis; meanwhile government could
negotiate domestically set reform priorities with the international lenders. The
Troika did not itself actively seek to exercise what Sharpf has termed ‘the
shadow of hierarchy’ (Scharpf, 1994), or require compliance in any f‌ield outside
the reform programme itself. However the presence of its of‌f‌icials and loan pro-
gramme played a vital role for government in ‘the blame game’ (Hood, 2010) in
ways that made potentially far-reaching changes possible (Farrell, 2017: 165).
Ireland’s exit from the loan programme that lasted from November 2010 to
December 2013 deprived the Irish of‌f‌icial sector of its external legitimator. While
administrative reform initiatives were still undertaken, they were notably less con-
tentious and less ambitious, particularly in the context of recovery of public sector
trade union bargaining power.
Ireland provides a particularly interesting case study of temporally compressed
yet wide-ranging public service reform, legitimated in the shadow of an external
authority and facilitated by crisis conditions (cf. MacCarthaigh and Hardiman,
2017). In order to examine this further, the research in this paper is based on a
series of elite interviews with Irish of‌f‌icials and other stakeholders conducted by the
authors following the completion of the Troika programme. Primary data from
of‌f‌icial Irish and Troika sources, and secondary literature, are also used.
The paper proceeds as follows. The f‌irst section outlines the stasis in public man-
agement reform ef‌forts prior to the crisis. The subsequent section summarises the
reform measures implemented in the early stages of the crisis, showing that this was
focused primarily on f‌iscal measures. The following section prof‌iles the conditionality
built into the Troika’s loan programme. Here we consider the ways in which this
conditionality provided the means for introducing other reforms, notably in terms of
organisation, the public service ‘bargain’, and transversal policy coordination. A f‌inal
discussion section considers the cumulative ef‌fect and the signif‌icance of these exter-
nally and internally devised developments from a post-NPM perspective.
The Irish case in context
Despite sharing many of the politico-administrative features of trailblazing NPM
states such as New Zealand and the UK, as well as strong exposure to international

Public Policy and Administration 35(2)
market inf‌luences as part of its economic development strategy since the 1960s,
Ireland was a comparative latecomer to the global NPM movement. There had
been little signif‌icant adoption of market-type practices such as privatisation or
performance measurement in the Irish case. The weak left-right cleavage in Irish
politics muted the scope for ideologically motivated agenda-setting about the
organisation and function of the public service (Hardiman and MacCarthaigh,
2011; MacCarthaigh, 2012). So too did the fact that from the late 1980s reform
initiatives were mediated through triennial pay negotiations with public service

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