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Dáil Éireann debate -
Thursday, 29 Nov 1956

Vol. 160 No. 12

Ceisteanna—Questions. Oral Answers. - Causes of Increased Unemployment.

asked the Minister for Finance whether the Government have made, or caused to be made, an assessment of the causes of the steep rise in over-all unemployment; and if he is in a position to indicate the extent to which (a) the import levies, (b) the curtailment of public works, and (c) the credit squeeze, have been significant factors in causing the steep increase in unemployment.

The issues raised by the Deputy, in so far as they concern the Government's financial policy, are wider than can be dealt with satisfactorily within the customary limits of a reply to a parliamentary question.

I might point out, however, that the percentage unemployed last year was the lowest ever recorded. The increase as compared with last year in the number registered as unemployed is due to a variety of factors, of which changes in the pattern and volume of home requirements and in external market conditions have been of considerable importance. Changes of this nature obviously cannot be ascribed to Government action.

The latest industrial analysis of the live register, that for mid-October, 1956, shows that the increase in unemployment as compared with mid-October, 1955, has occurred mainly in such broad categories as building and construction, agriculture, the distributive trades, motor assembly, the footwear and food industries. Two-thirds of the increase occurred outside Dublin and Dún Laoire.

In building and construction one of the causes is that the demand for houses has inevitably shown a downward trend according as arrears of housing needs have been satisfied. In the motor assembly industry, as I indicated in reply to a question on the 25th October, factors other than the levy—in particular the collapse of the second-hand market in Britain—have been largely responsible for the decline in motor car sales. Other industries, including the footwear and food exporting industries, have been affected by factors, including in some cases external factors, which are entirely unconnected with the import levies. In fact, as I stated in the reply on the 25th October, the levies have had the incidental effect in some industries of conserving and increasing home employment.

It must, of course, be recognised that the levies cannot achieve their purpose unless they reduce imports. The reduction in less essential consumer imports which is necessary to avert national insolvency must cause some contraction of trade and business which can be offset only in so far as domestic production is increased. A significant increase in home production and in exports is one of the most important and urgent objectives of Government policy and national endeavour. To secure it various measures have been and are being taken, including those contained in the Finance Bill now before the House. Meanwhile, however, the Government could not allow the deficit in the balance of payments to continue unchecked. Employment dependent on excessive spending on imports, at a rate entailing the rapid exhaustion of our available external reserves, would be extremely short-lived and would be superseded by widespread unemployment and hardship when we found ourselves, as we quickly would, without adequate resources to pay even for essential raw materials.

As regards employment on public works I need not add to my replies to the various questions concerning the additional sum of £1,000,000 recently allocated by the Government for productive works of a public character. I would inform the Deputy and the House, however, that the public capital programme on its present scale— and consequently the employment it affords—is not being sustained by the voluntary savings of the public, even as supplemented by the proceeds of the special import levies. The deficiency has had to be made good by sales of sterling investments by the Government and the banking system, sales which have reduced these external assets to a low level. The maintenance of the public capital programme has now become directly dependent on the current savings of the community, supplemented for the time being by the proceeds of the import levies. For this reason, and because of the inadequacy of the present level of savings, a savings campaign has been initiated, various incentives have been granted and Government policy is actively concerned with the stimulation of savings.

I have indicated at some length in reply to another question by the Deputy on to-day's Order Paper the position in regard to the supply of bank credit within the State.

Will the Minister not agree that it is not possible to secure an expansion in production or an expansion of constructive employment if a credit restrictive policy is pursued at the same time? Will the Minister not agree that in view of the fact that in the last three months the commercial banks have accumulated approximately £10.6 million in sterling assets that there is no necessity for persisting in a restrictive credit policy?

Deputies should realise that there is a significant difference between supplementary questions seeking information and questions asked with a view to advancing arguments. Supplementary questions are designed merely to elicit further information.

I thought I was merely asking for information.

So far as the first part of the Deputy's question is concerned I can only repeat what I said in relation to Question No. 26—that I feel that credit should be available for constructive purposes to the maximum extent permitted by available banking concerns. So far as the second part of the question is concerned, in considering the available external resources these are not only the resources of the commercial banks which must be considered but also the external assets of Governmental funds, the Central Bank and the commercial banks. The increase in the external assets of the commercial banks has arisen virtually in full because of the transfer of sterling by the Central Bank and the transfers from Governmental funds to the commercial banks.

The Central Bank increased its holding by £1.4 million.

Almost all the increase is due to the transfers as I have stated.

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