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Dáil Éireann debate -
Wednesday, 24 Mar 1976

Vol. 289 No. 2

Social Welfare Bill, 1976: Committee Stage (Resumed).

Question proposed: "That section 13 stand part of the Bill."

This section must be of concern to everyone since it involves increased contributions from both employer and employee. On two occasions already I have spoken here of the disincentive that these new rates will have so far as employment is concerned. I appreciate that Fine Gael have a certain philosophy in relation to employers but it appears that the socialist element in the Coalition consider the employer as one who has two or three heads and that, consequently, he must become an extinct member of society. I would remind the Coalition and, in particular the Labour Party, that by definition an employer gives employment. If people are willing to put their efforts into the running of companies and therefore to give good employments and therefore to give good employment they should not be humiliated, sneered at or harassed either by the Government as a whole or by the socialist element within that Government or, indeed, by the tax people, although I do not intend any disrespect to them since they are only carrying out the wishes of their masters.

The employer seems to be a continuous target for this Government. Without employers there can be no employment but in this section we are being asked to agree to a considerable increase in the cost of the stamp, the total cost of which up to now has been £4.11 in the case of male workers and £4.03 in respect of female workers whereas the new figures are to be £5.64 and £5.56 respectively. This is not good enough especially when one recalls that some firms have had to make representations to the Labour Court to be relieved of payment of the last wage round increase. In some cases the requests were met but now despite the fact that some employees did not receive the last wage round increase they and their employers are being asked to pay more in social welfare contributions.

There are some companies who simply cannot afford to pay wage increases. In those circumstances why should they be asked to pay an increased contribution towards the cost of the social welfare stamp? It is disgraceful that the Government should have included this section in the Bill. It is geared to put businesses out of operation. I have tabled a question to the Minister for Industry and Commerce which I expect will be on the Order Paper for written answer either tomorrow or Tuesday next. It asks how many companies have gone out of business since the date the Coalition took up office. I await the reply with much interest because I am satisfied that if I were to table a similar question in six or seven months' time I should find that, arising directly from this section, there would be a considerable number of other companies out of business.

The charges to the Exchequer in respect of social welfare are being reduced gradually so that the whole burden is falling on the employer and the employee and it is the employee whom the socialist element in the Coalition pretend to protect but the philosophy behind this section is to put people out of work. Is it not ominous that the section is numbered 13? It will be unlucky for many people—on the one hand for people who are giving good employment and on the other hand, for employees. The section is unfair. It is a direct attack on employment. There is hardly any point at this stage in appealing to the Parliamentary Secretary to change his mind but the genius who arrived at these figures will not have the gratitude of the people. Of course, the Parliamentary Secretary must accept responsibility for the decision in the final analysis. The tragedy is that it will result in longer unemployment queues.

Last evening I asked the Parliamentary Secretary for a guarantee that there would be some pause in the mad policy being pursued in placing the full burden of social welfare on the employer and the employee. Do the Government not realise that the stamp has moved outside the realm which was intended for it and has become a crippling tax on those who are struggling to keep their businesses going, as well as on employees? For a man who employs, say, about five people, and who is endeavouring to make ends meet, this increase is a crippling blow. To continue to pursue this type of policy will put increasing numbers of businesses out of operation.

Each of us here must be concerned with this section because we have a duty in regard to both the employer and the employee. So far as possible we need to seek out those who have something to offer by way of the provision of employment. These are the people the country needs. It should be the policy of the Government to encourage development of this kind. Instead, this section will act as a major disincentive in this regard. It is tantamount to a penal tax. Social welfare contributions in so far as the employee is concerned were intended to help him in time of need. Instead of that it is working in the opposite direction. More and more people will lose out as a result of the policy enunciated by the Government. The Parliamentary Secretary must go back to the Cabinet and impress on them the necessity of this. We have heard people in the Government making calls for this and that. We heard the plaintive call of the Parliamentary Secretary this morning asking Fianna Fáil: "Let us have your policy." That is the call of a person in distress. Surely the Parliamentary Secretary will call on the Government to have a change of plan in relation to this matter. There is no point in the Parliamentary Secretary getting up and saying that Fianna Fáil's concern is not for the employee. Fianna Fáil's concern is for every person in the country. Never before did a country require a joining together of all sectors of the community to promote employment and to offer hope. Instead of having a Government behind people backing them to provide employment we have a Government bringing in a penal tax.

(Dublin Central): The increase in the contribution could not come at a worse time. A lot of employees are not aware that an increase in the cost of the stamp is taking place. We hear a lot of talk from the Government about a pay pause. Negotiations are going on at the moment between the Congress of Trade Unions and the employers. When this increase comes into effect on 5th April it is bound to have a detrimental effect. Some employees who did not get their increases last year are down 22 per cent to 25 per cent in their incomes against other people in manufacturing industries. When 5th April comes and this deduction is made from their wages I believe those workers will react very harshly to this aspect of the matter.

When the economy was buoyant and there was expansion generally this iscrease could have been carried quite easily but this time of recession when the Government are calling day after day for a pay pause is not the time to come in with this reduction in wages. This is quite a substantial charge in unit costs. Some manufacturers last year placed their case before the Labour Court and showed they had not the ability to pay the national wage agreement. How will they carry this charge? They will be reassessing their manufacturing unit and their work force to see how they can cut down on overheads. There are only two realities left to a person when he reaches that stage. The first is to go bankrupt and close down and the other is to try to reduce his overheads. I would prefer to stay in business and to keep some of my employees. There is nothing as bad as to see a company closing down.

This year the Government were advised to do everything possible to try to encourage industry and to keep unit costs down in order to promote industry. In last year's budget we gave an employment premium to encourage manufacturers to take on additional employees. I thought at that time it was a good move although it did not work very effectively. We know that something more was needed to encourage people back into industry and to encourage people with money to go into industry. This charge is bound to have an effect on unit costs. This year when the economy is at its weakest point the Government are transferring £8 million from the Exchequer to the employers and employees. I believe the Exchequer should have carried 50 per cent of the contribution at this difficult time. If the economy becomes strong again and starts expanding that will be the time to make this move. I cannot understand why the Government and the Parliamentary Secretary decided that this year the employees and employers should carry this £8 million. Before the budget economists pointed out that something should be done to try to alleviate costs in manufacturing industry.

There was no necessity to transfer this £8 million from the Exchequer. I know there is the guideline with regard to EEC directives but that is something that can be implemented when the economy improves. I do not believe there is any firm directive with regard to the year when it should be transferred. I believe there is an up-swing in other parts of the world at the moment. I believe we will get it here provided the climate is right. It does not make any difference that the up-swing is in America or Japan or any of the EEC countries because if our manufacturing climate, our industrial climate and our wage costs are not right we will not have a similar up-swing. Any manufacturer who intends to come here to start an industry will look at unit costs. Such a man would be anxious to know if the whole unit would be a viable enterprise. Those increases are bound to be disincentive.

The Parliamentary Secretary interested me when he said the pay-related benefit is part of the social welfare fund. I always had a different concept of the pay-related contribution part of the cost of the stamp. Now we find it is cloaked under a different name. It is not kept in any special fund. All these things combined together will have a drastic effect on employment.

I know a group of people who did not get one penny last year of the national wage agreement. The firm in which they were employed proved inability to pay. That is only one group. I am sure the Parliamentary Secretary has reliable figures. A figure of 100,000 is being bandied around of people who did not get any of the national wage agreement last year. I think that figure is a bit high but I can assure the House that a substantial number of people did not get the benefit of the national wage agreement last year. Visualise the effect of that on a household with four or five children with the increase in prices right through 1975 on light, heating, fuel, food, and so on, every day in the week.

These people will be told on Friday, April 5th, by their employers that they have to make an extra deduction. The Parliamentary Secretary should direct his attention very closely to that section of the community. We all know that if we did not get increases last year our standards of living would have been reduced. A reduction of 20 to 25 per cent is very substantial in the case of a lower paid worker. He will be told on 5th April that this amount will be deducted and, on the following morning, he will read that he is expected to agree to a pay pause. It is very hard for an employee to tolerate that position. I am sorry for that section of the community. I do not know how the Parliamentary Secretary will prove his case to them. Has he anything in mind as to how they are to be helped? This extra deduction should not be made from people who did not receive the benefit of the last national wage agreement. If they had received it there might be some justification for what the Parliamentary Secretary is doing.

Deputy Andrews said it is probably too late now to appeal to the Parliamentary Secretary. It is not too late to transfer this expenditure to the central fund. I see nothing wrong with that. Certainly the £8 million he is carrying forward should be transferred to the central fund. It would not amount to a great lot when you consider the total budget. We do not talk about £1 million or £2 million now. We talk in hundreds of millions of pounds. I do not know who advised the Parliamentary Secretary. This was probably a Cabinet decision. There is nothing in this to congratulate him on. I would again ask the Parliamentary Secretary to review the situation.

I wish more than ever that Fianna Fáil would produce the policy I have been asking them to produce.

A plaintive call: help me.

From their contributions they seem to have a policy which, with no increase in taxation, would provide a substantial increase over and above what is provided in the Bill in benefits. Have a cutback of between £20 million and £30 million in social welfare. Do not increase the cost of the stamp. All and sundry are happy. If a policy which allows us to do all those things simultaneously is produced, it will be very well received by everyone.

You are the Government. You produce the policies.

They have no policy.

In my opinion the way in which social welfare is financed is not the best way. I have informed the House that the whole question of the financing of social welfare is being examined. It is a difficult and complex matter. We hope to be able to come up with some proposals in the reasonably near future. I am conscious of the difficulties of some firms and some employees. Unfortunately, it is not possible to come up with ad hoc solutions to difficulties which have arisen because of policies pursued over a long period of years by no less than your good selves.

I thought the Parliamentary Secretary said we had no policies.

I am glad to hear the Parliamentary Secretary say he is having a review. The Minister for Finance has stated it is a policy decision of the Government to take the State out of the system. Does the Minister for Finance know the Parliamentary Secretary is moving in this direction, because he is moving in another direction? Is it another case of not knowing what is going on between one side and the other? The Parliamentary Secretary is in one party and the Minister is in another in this ill-timed misfortunate coalition. I mentioned to the Parliamentary Secretary the possibility of having an occupational injuries stamp for people who wish to take some form of part-time fragmented employment, who do not wish to build up a number which will put them into total benefit, but who want simply a form of cover. This might be achieved by having a stamp to cover occupational injuries only. Could the Parliamentary Secretary offer me some information on that, and I can continue when I have that information?

The Deputy can continue. If he tells me what he wants to know in respect of other things, I will deal with them all together, unless he wants to develop that point.

I would like to develop it further but I want to know if the Parliamentary Secretary has been giving this some thought and if he thinks it is pertinent. It has been brought to my attention by various people. They feel benefits could accrue to them provided they are in some form of continuous employment, and provided they have reached the stage of having 26 stamps. They are not interested in this. They are interested in fragmented occasional employment. We on this side of the House are concerned with each individual in the community. Have the Government considered a system which would cater for these people? They might be catered for by having an occupational injuries stamp only.

There is no intention of fragmenting it.

Business suspended at 1.30 p.m. and resumed at 2.30 p.m.

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