I beg to move the Second Reading of this Bill. It is necessitated by the fact that a number of unemployed workers, now in receipt of unemployment benefit, exhausted all their rights on various dates between 4th April and 1st July, and will not be in a position to draw benefit after 1st July, except to the extent that they have contributions to their credit. In view of the high present rate of unemployment it is considered necessary to amend the existing emergency provision, and place it on a new basis for the period between now and 17th October next. It is unavoidable that the Bill, which is mainly an emergency Bill, should contain a number of references to existing legislation. Legislation by reference is to be avoided if possible, but where a permanent scheme is being temporarily modified it is the only practicable course.
There are at present two concurrent schemes of unemployment insurance— (a) the permanent scheme, under which benefit is payable strictly in proportion to contributions, and (b) an emergency scheme, under which benefit, known as uncovenanted benefit, is allowed in advance of contributions to be repaid when the workers obtain insurable employment. It is a question open to much doubt whether the general compulsory State scheme of insurance, inherited from the British Government, is appropriate to the conditions which exist in Ireland. This scheme was primarily designed to meet the needs of an enormous industrial population and large areas devoted almost entirely to industrial production. In Ireland a much smaller proportion of the population is engaged in industry, and industrial establishments of a comparatively small type are widely scattered over the country. The Dáil will, in due course, have to consider the future of unemployment insurance under normal conditions in Ireland. But, at present, normal conditions do not exist, and the rate of unemployment is so high as to necessitate special temporary provision. Whatever opinions may be held about the suitability to Ireland in normal times of the general compulsory state scheme of insurance, with its machinery of Employment Exchanges, it may be said that in the abnormal conditions which have existed ever since the end of the European War some such scheme, if it had not existed, would have to be improvised.
At the end of March approximately 33,000 persons were in receipt of unemployment benefit. This number is twice as large as the estimated number in insurable occupations under normal conditions, such as existed before the European War began, notwithstanding that a greater number has, for the time being, been absorbed into the Army and other Forces, of whom a proportion would normally be engaged in an insurable occupation. It will thus be appreciated that unemployment is serious at the present time.
The abnormal conditions of the last two or three years have been dealt with in the following way:—Up to November, 1920, Unemployment Insurance was limited to some seven trades, in which the rate of unemployment was normally severe, and to workers who became employed on munitions works during the European War. In November, 1920, an Act was passed bringing practically all manual workers and all other workers in receipt of less than £250 per year into insurance. The only two large classes not brought in were the farm labourer and the private domestic servant. Except for these two classes, the Unemployment Insurance Scheme covers the same scope as the Health Insurance Scheme.
The Act of November, 1920, provided that workers should be entitled to benefit in proportion to the number of contributions which stood to their credit, one week's benefit being payable for every six contributions, subject to the worker having twelve contributions paid for him in each insurance year. Unemployment was, however, at that date so abnormal, and it has continued to be so abnormal ever since, that very large numbers of those whom the Act brought into insurance for the first time could derive no advantage from it, since they had no employment during which they could have been placing contributions to their credit. The solution adopted for this difficulty was to allow workers who could show that in normal times they used to work in an insurable occupation, and could be expected to resume that occupation when trade improved, to draw uncovenanted benefit—that is, benefit on account of contributions which they had not yet paid, but which they might be expected to pay when they were able to resume their ordinary occupation.
This scheme of uncovenanted benefit has, with periodical modifications, been in operation since early in 1921, and there is at present running in Ireland the fourth special period of benefit during which a worker having exhausted his right to covenanted benefit, is entitled to receive a certain amount of uncovenanted benefit. It was intended originally that this fourth special period should terminate on the 1st July next, and thereafter to resort entirely to covenanted benefit. But considerable numbers of persons who were in receipt of benefit at the end of March will have exhausted their rights some time before the 1st July, and even when 1st July comes, will not have a sufficient number of contributions to their credit to entitle them to benefit for more than a few weeks.
It is estimated that the 33,000 persons in receipt of benefit at the end of March exhaust their fourth special period of benefit on the following dates:—
8,000 on 10th April; 6,000 on 18th April; 2,000 on 24th April; 2,000 on 30th April; 2,000 on 7th May; 3,000 on 15th May; 3,000 on 1st June; 3,000 on 15th June; 4,000 on 1st July.
In other words, by the end of April over 50 per cent. of those in receipt of benefit will have exhausted their right to benefit, and can draw no more until after the 1st July. At the end of May 75 per cent. will have exhausted benefit.
If from 1st July onwards the ordinary scheme of covenanted benefit is resumed at the rate of one week's benefit for each six contributions, it is estimated that 66 per cent. of those in receipt of benefit at the end of March would have sufficient contributions to their credit to allow for 26 weeks' benefit, or more, while 15 per cent. would have sufficient contributions for 6 weeks only, and 12 per cent. for 4 weeks only. The remaining 7 per cent. would be eligible for benefit for indeterminate periods. By the middle of August next some 10,000 persons would have exhausted all their contributions, and would have no rights to benefit. In these circumstances it is considered that for the next six months some special provision must be made. But the provision that can be made is to be considered in relation to the other heavy burdens to be borne by public funds. Uncovenanted benefit is expensive, and while in theory the resulting deficit in the Unemployment Fund, that is the fund created by the contributions from employers, employees and the State, will ultimately be made good by the enhanced contributions that the insured contributor will pay when he resumes his insurable employment, this theory is not a sufficiently firm basis to justify too heavy a present drain on public funds, which can ill afford it. In Great Britain it is understood that the payments out of the Fund are now approximately balanced by the revenue of the fund from contributions. In Ireland that is far from being the case, and the contributions now being received are not much more than 50 per cent. of the amount that is being paid out. For the financial year terminating on the 31st March, 1923, the deficit in the Unemployment Fund, met by advances from the Central Fund, is approximately £550,000, and the continued payment of uncovenanted benefit is impossible in the face of such a deficit.
The deficit is greater than it should be, due to non-compliance with the obligation to pay contributions under the Act, on the part both of public bodies and private employers, and it will be necessary to take steps to secure that the considerable arrears due are paid. To some extent, non-compliance is due to disapproval by employers, and in some cases by employes, of the whole system of Unemployment Insurance. But some such scheme, if it had not existed, would have had to be created to deal with the abnormal conditions of recent years and, whatever be the views of individual employers or of sections of workpeople on the appropriateness of the scheme to normal circumstances, they cannot expect the rest of the community to bear the cost of their non-compliance.
Apart from the merits of a Compulsory State Unemployment Insurance Scheme on points of principle, complaints are made that the Scheme is abused by those for whose advantage it was introduced. There has certainly been some abuse, though nothing like as much as is alleged; but the greatest administrative vigilance cannot prevent some abuse when the system of paying benefit on stamps alone has to be departed from. The conditions of the last three years have made it difficult to carry on the investigation into claims necessary to detect and prevent abuse, and not infrequently complaints that the scheme is being abused come from those who, if they had performed their duty, could have prevented abuse. Some employers are disinclined to co-operate in supplying information that would enable improper claims to be disallowed, and it is often difficult to secure from critics of the Insurance Scheme the facts on which, it is presumed, they base their criticisms. At the same time, I am glad to acknowledge that, in many cases, employers have done their best to provide the Exchange with all the information it should have and also that Trade Union officials have, in many districts, undertaken special enquiries in order to detect and prevent wrongful or fraudulent claims by their members. It must be recognised that unemployment is a problem of which the community in general, and the employing and employed sections of it in particular, must take serious account. During the last three years it has been a problem so large as to need the central resources of the State to deal with it and where the State has had to maintain machinery for the purpose, it is making no unreasonable demand in asking the employing and employed sections of the community to give the fullest assistance and cooperation that is possible. They are, after all, interested in the efficient administration of funds to which they themselves specially contribute.
It is generally said of all proposals relating to Unemployment Insurance that they fail to cure the evil of unemployment. But they are not intended to do so. Of necessity, Unemployment Insurance contemplates that unemployment exists and it has no wider purpose than to secure that while unemployment does exist provision is made for its relief. Naturally, as the country returns to its normal condition the present unemployment will greatly diminish, and when the Commission on Reconstruction and Development reports the Government will proceed, so far as proves practicable, to give effect to its recommendations and thus expedite the provision of work for the unemployed. Arrangements are under consideration for instituting at once an inquiry into the effect on Industry and Trade in the Saorstát of the fiscal system we have inherited and as to whether any modifications in, or additions to, the duties comprised in that system are desirable in order to develop Industry and Trade. Everything to secure extensions in the present scope of employment, consistent with a careful examination of all the factors of the problem, will therefore be done, but the proposals contained in this Bill will still be required to deal with the unemployed of whom there must necessarily be a number during the period to which the Bill applies.
The main purpose of the Bill is the reversion to covenanted benefit—that is, benefit supported by contributions— and the termination of the system of uncovenanted benefit, the disadvantages of which are popularly, though inaccurately, summarised in the description of it as "The Dole." This description is not accurate since no person receives the "Dole" who is not liable at a later date to make up for what he receives by his subsequent contributions. But if the general Compulsory State Scheme of Insurance is not ultimately maintained in this country—and there are strong arguments against maintaining it—uncovenanted benefit at the present date does tend to be in the nature of a Dole.
In returning to the basis of contributions, two main difficulties have to be met—firstly, the fact that during April and May large numbers will exhaust all present rights to benefit, and, secondly, that when the 1st July comes large numbers will have so few contributions to their credit as to be entitled to little benefit on account of them.
It is proposed to meet the first difficulty by providing that the Fourth Special Period shall terminate on the 16th May, 6th June or 1st July, according to the date on which the worker exhausts his right to benefit in the Fourth Special Period. He then will be entitled to draw covenanted benefit in proportion to the contributions to his credit. It should be appreciated that, under the provisions of the existing Unemployment Insurance Acts, no account is taken for the purpose of determining what contributions remain to a worker's credit, of any benefit he has drawn against these contributions since the introduction of the general Unemployment Insurance Act of November, 1920. The purpose of this was to secure that a worker who had contributions to his credit and had to draw benefit on them before he was entitled to any uncovenanted benefit, is not put in the position of exhausting all these contributions and obtaining in total no more benefit than a person who had no contributions to his credit and drew uncovenanted benefit during all of the same period. It is not proposed to alter this provision in the existing Acts, but even when that position remains, one-third or more of those at present unemployed would have exhausted their contributions in six weeks after the 1st July on the basis of one week's benefit for every six contributions. To meet this difficulty it is proposed in the Bill that power should be taken during the period ending on 17th October next to reckon each unexhausted contribution as equivalent to three contributions, and thus to break the transition from uncovenanted benefit to covenanted benefit on the strict one-in-six basis. If each unexhausted contribution is reckoned as equivalent to three contributions it is estimated that 12 per cent. of the unemployed will have sufficient contributions for 12 weeks' benefit, 15 per cent. for 18 weeks' benefit, and the remainder, all but 7 per cent., for longer periods in the interval between May and 17th October next. This 7 per cent. (or 2,310) represents persons whose precise position in respect of contributions it is not yet possible to ascertain, but all except 1,000 of them have some contributions to their credit. The 1,000 would be persons who have had no insurable employment for 2½ years, and who, therefore, have no strong claim to be kept within the Insurance Scheme. In this way all but a very small proportion will be enabled to draw at least 12 weeks' benefit in a period which at its maximum is 22 weeks and at its minimum is 15½ weeks. This artificial enhancement of the value of a contribution will involve provision out of public funds to meet the charge on the Unemployment Fund, though the provision will ultimately be less than if uncovenanted benefit were continued. In order to restrict it within reasonable limits it is proposed that no person should be enabled to draw in the period from May, June, or 1st July to 17th October more than a total of 15 weeks' Benefit. This compares favourably, from the point of view of the worker, with the total of about 10 weeks' benefit which would be the average proportion appropriate to that period by comparison with the normal maximum of 26 weeks' Benefit in a period of 12 months.
One consequence of the reversion to the basis of contributions is that when the First Benefit Year terminates on October 17th about one-third of these unemployed will, if they continue to draw benefit, have no contributions left unexhausted with which to start a new Benefit Year. It is hoped, however, that by that time economic conditions will have so improved as to have absorbed all, or nearly all, of these workers into employment, and workers whose unexhausted contributions are few in number should lose no opportunity of securing employment. There is one direction in which both parties in industry can do much to absorb some of those now unemployed, and that is by putting their heads together so as to try to secure the reduction in the costs of production and distribution that are now overdue, and that must bring about a revival in business.
So much for the main provisions of the Bill. There are other points that may be mentioned now. The reason for adopting 17th October next as the end of the First Benefit Year is to meet the situation that in practice has been found to arise when the Insurance Year and the Benefit Year are the same. It is the practice in July of each year that all Unemployment Books are exchanged for new Unemployment Books and the year from July to July is known as the Insurance Year. It has hitherto been the Benefit Year also, but it has been found that the exchange of books is never completed in July as intended and that it is near the end of September before this process is finished and the accounts of each insured contributor for the Insurance Year ending in July are made up. It is, therefore, more convenient that the Benefit Year should begin in October and in the particular circumstances of the present time the period, May to October, is a convenient period in which to deal with the abnormal conditions now operating and to allow of further consideration being given to the permanent future of Unemployment Insurance.
It is frequently urged that the payment of Benefit to men who remain idle is unsound, and that better results could be obtained by devoting the money spent in Benefit to providing work. This contention overlooks the fact that while the average rate of Benefit paid to men is something less than 20s. per week, the cost of putting a man to work could not be less than 60s. per week, if wages, materials, supervision, etc., are provided for. In other words, the money paid out in Benefit if applied to works instead would provide only for one-third of the unemployed and the remaining two-thirds would either have to be left without provision at all or be paid Unemployment Benefit as at present. The latter alternative would mean that the State would have to find, in addition to the sum it now finds for Benefit, a further amount equivalent to two-thirds of that sum. There is undoubtedly an indirect gain to the community when the unemployed worker can be found work instead of being paid Benefit, but the gain is indirect, while the result of adopting the suggestions made with that object would be to involve the State in an immediate liability to find nearly twice as much money as the large amount it now has to find.
This question of applying Unemployment Benefit, in some form or other to promote practical work, has often been examined, but it has generally been concluded that such a proposal is inconsistent with the conception of an Insurance Fund, to which employers, employés and the State contribute, and could not be adopted without abrogating the insurance principle. It is nevertheless considered that, within certain limits, it is possible to make arrangements on these lines, and a Clause has been included in the Bill for that purpose. The Clause will be considered in detail at a later stage, but it may be explained now that the idea underlying the Clause is this: A certain number of workers are either in receipt of Unemployment Benefit or are about to have their employment terminated in circumstances that would entitle them to Unemployment Benefit. The prospect before them, then, is to remain idle and draw something less than 20s. per week on the average. If an employer proposes either to start new work or to retain in his employment men whom he would otherwise have to discharge, providing he obtains in relief of his expenses the sum that the men would receive as benefit, the Clause contemplates that the men should be in a position to exercise a choice whether they receive Unemployment Benefit and remain idle or obtain work and for the period during which they work lose a proportionate part of their right to benefit. This involves no extra expense to the State, and no compulsion on the worker to accept employment if he prefers to exercise his legal right to draw Benefit and remain idle. Any such compulsion would be inconsistent with his rights under a Contributory Scheme, assuming always that in the terms of the Act he does not refuse "suitable employment" and thus disqualify himself for Benefit. The proposal is confined to works of public utility since it would not be proper to apply an Insurance Fund to works out of which a private employer would make a profit, and it rests in the discretion of the Minister to approve or not any particular proposal as in his view the public interest requires.
The only other provision in the Scheme to which it is necessary to refer is that whereby soldiers enlisted on short service, who before enlistment were normally employed in an insurable occupation, are secured the minimum number of contributions in each Insurance Year that are necessary before they can qualify for the Benefit at all. Their position under the Insurance Scheme is thus left no worse and probably somewhat better than if they had not joined the Army. When the time for general demobilisation approaches, the question whether special provision under the Insurance Scheme should be made for soldiers on discharge will have to be considered.
It is estimated that the proposals in the Bill will involve an expenditure out of the Unemployment Fund—after allowing for contributions received from employers and employees—of £250,000. This amount, as the Fund is now in debt to the extent of £550,000, will have to be provided by advances from the Central Fund. Naturally, the reversion to Convenanted Benefit will, by exhausting contributions now standing to the credit of the insured, reduce the future liabilities of the Unemployment Fund, but the present expenditure will be of so serious an amount as to justify the Government in representing to the Dáil that it is the maximum which the State could afford to expend on this purpose within the period to which the Bill applies.
