Vol. 301 No. 10
asked the Minister for Economic Planning and Development whether the subject of a 5 per cent pay guideline to follow the expiry of the present national wage agreement was discussed at his recent meeting with the Employers' Confederation; if any alignment of views was reached on this matter; and if any indication was given to the employers that tax reduction and job investment proposals are contingent on the implementation of 5 per cent pay guidelines.
5.
asked the Minister for Economic Planning and Development if the Government's taxation reduction and job investment proposals depend on a 5 per cent pay policy being adhered to after the expiration of the present national wage agreement; if he has communicated this view to the trade unions and employers; and with what result.
With the permission of the Cheann Comhairle, I propose to take Questions Nos. 4 and 5 together.
At the recent meetings between the Taoiseach and other Government Ministers and representatives from the Irish Congress of Trade Unions and the Irish Employers' Confederation the issue of the Government's proposals in the areas of pay, tax reliefs, social insurance contributions and employment creation was raised. The Taoiseach emphasised at both meetings that the proposals are part of the same overall package. They are all linked and, therefore, if any were to be settled at a figure other than 5 per cent, the Government would naturally have to consider the adverse effects which such a settlement could produce and to decide upon the consequential action needed to ensure the progress towards the Government's announced targets for reducing unemployment and inflation was not impaired.
While the discussions with congress concentrated on the prospects for the creation of employment and the reduction of unemployment in 1978, the confederation put forward several proposals relating to components of the package. The Government representatives undertook to carefully consider the confederation's views on these matters.
The Minister has indicated that the view was communicated to both sides explaining the contingent nature of the Government's undertakings, contingent on the 5 per cent pay guidelines being adhered to, and could the Minister now indicate what was the result of this communication of this view of the Government to both sides? Depending on the reply of both sides to this communication from the Government, what consequential action is indicated? The Minister indicates consequential action will be necessary if this is not adhered to.
In the event of a new pay agreement producing a figure higher than 5 per cent?
Yes.
Obviously the nature of that action will be determined when the details of the agreement are known.
The Minister explained that the views of the Government in this whole area have been communicated to the employers and the unions. Is the Minister in possession of any reaction from either side to the communication of these views?
In the context of pay discussions, at that juncture there was no indication on the part of the Government to anticipate the outcome of any such talks. I should point out that at that stage it was not clear, for instance, whether the union side would agree to enter negotiations or talks for a new agreement. They have still to ballot on the matter. It would be the Government's position, therefore, to set out simply the economic circumstances as we saw them, the nature of the action required from all sections of the community and then try to indicate some of the consequences, positive on the one hand and negative on the other, of various rates of pay increases and leave the parties then to go away and commence negotiations. If we were to begin by attempting to communicate the nature of the reaction surely we would be guilty of the very act of which we were accused a few minutes ago, namely, trying in effect to hold some particular weapon over the heads of the parties at the table.
The point of these preliminary meetings with the social partners is to communicate the Government's views on the general economic situation and also ascertain what the reaction is and what the prospect of success is for the Government's view in free acceptance on the part of both employers and unions. What I am puzzled about in the Minister's reply is that the Minister does not appear to be in a position to communicate the nature of the reaction, which presumably is all-important, from either employers or unions to the Government's proposals.
I do not think it would be proper for me to communicate what various people felt might or might not emerge from such talks. That would not be particularly helpful.
A Cheann Comhairle, is there a new procedure whereby a Minister can answer a question and then pass on to the next question before I can ask a supplementary? Is this a new procedure?
I am not aware of any change. I think the Minister's answer to the Deputy was that the information he was seeking by way of supplementary question would arise on another question.
Would the Ceann Comhairle not agree the questions could have been taken together if the Minister thought they were relevant?
I have no control whatever over the manner in which a Minister takes questions.
The Minister, with your permission, asks that questions be taken together. It is always with the permission of the Ceann Comhairle. Would the Ceann Comhairle not agree on that?
That is a formality as a matter of courtesy.
A Minister always asks the permission of the Ceann Comhairle to take questions together. Arising from his reply to one question, may I ask the Minister what percentage level of unemployment the Government regard as being acceptable?
I was about to deal with that. I was hoping the Deputy would allow me to deal with it when we come to a later question.
I should like the Minister to deal with it now. What level of unemployment is now acceptable to the Government?
Basically, nil or as close to nil as one can get, but one accepts that in practice there is always some minimum level of what we might call sectional unemployment in any society at any time.
Does the Minister agree that 5 per cent is now being accepted——
Not by the Government.
It has been stated by the NESC.
They gave an indication of what they thought might come to be accepted by the community. It is not a Government figure.
In reply to an earlier supplementary the Minister said that a 5 per cent increase would give approximately £4 per week. How then does the figure £8 to £10 arise? Is he aware that to achieve £8 to £10 a person would require a minimum of £1,200 tax free allowance? Is that the Government's intention?
I made it clear there would be more than one tax reduction from which the majority of workers would benefit. I do not accept what the Deputy has said.
What are those tax reductions in addition to the abolition of rates, which the Minister must know do not apply to workers who are not householders.
Most workers, I believe, live in houses and most of the houses, I believe, were rated. To that extent they will benefit, whether they own them or not. If the Deputy is particularly interested in that aspect I am sure we could arrange to have some specimen table prepared for him.
We will not have a debate on it now.
Would the Minister agree to have such matters brought before the House for the purposes of a debate?
Would the Minister define what precisely he means by a 5 per cent guideline, in view of his repeated statements about a 5 per cent pay increase—an £8 to £10 money increase and an overall 10 per cent increase in earnings? There is a great element of confusion at the moment in regard to those terms. Would he elaborate on what precisely is meant by a 5 per cent guideline?
I thought the 5 per cent guideline was unambiguous —that would be the size on average of the pay increase which should take place under a new agreement for 1978.
Would that not be radically different from the effect of what the Minister said earlier when we were assured it would yield a 10 per cent increase in earnings? It is either one or the other—there is a big difference between 5 per cent and 10 per cent. As the Minister well knows, for the public service it is a difference of between £80 million and £40 million.
All parties in the House wish these talks success. The Minister appeared to indicate that tables would be produced for the information of the House. Will the Minister agree that if statements from the Government side have been made on the desirability of a 5 per cent increase with tax reductions, leading to an income's increase of £8 to £10 per week, the fullest information should be made available to the negotiators and to the House and to the country? Would that not have been helpful, if in the first place one accepted the wisdom of Government Ministers stating what are desirable figures? Since these statements have been made, it would help the talks——
This is a long statement. We have now spent half an hour dealing with three questions. It is not possible. Ceist a sé.
6.
asked the Minister for Economic Planning and Development if, in accordance with the 5 per cent guide lines for workers in respect of proposed income levels under any new wage agreement, the Government will recommend that such a figure be fixed for permissible income levels of bank profits, investment shares and dividends and similar sources of unearned income.
The Deputy's question appears to be based on a misconception in so far as guidelines have not been fixed as envisaged by him in respect of workers' income levels under any new pay agreement.
The Government in their pre-election manifesto and since taking office have indicated the advantages of tax cuts and a reduction in the amount of the social insurance contribution of low-paid workers combined with a pay rise of about 5 per cent——
In reply to a supplementary earlier the Minister said he was agreeable to providing certain information to all interested parties, including Deputies. On a point of order, when will the Minister supply this information?
That is not a point of order. Will the Deputy resume his seat?
Will the Minister say when he will place the table before the House?
Will the Deputy resume his seat?
I raised a point of order.
I have told the Deputy it is not a point of order.
May I present my case?
The Deputy may not. This is Question Time. The Deputy is surely aware of what Standing Orders lay down in respect of supplementaries.
The Minister offered to produce tables.
The Deputy has tabled 10 further questions on which he can ask supplementaries.
Would the Minister mind repeating the reply he had begun to read?
The Deputy's question appears to be based on a misconception in so far as guidelines have not been fixed as envisaged by him in respect of workers' income levels under any new pay agreement.
The Government in their pre-election manifesto and since taking office have indicated the advantages of tax cuts and a reduction in the amount of the social insurance contribution of low-paid workers combined with a pay rise of about 5 per cent as the basis of a national strategy for raising employment and cutting inflation. Taking into account the carryover of pay increases from 1977 into 1978 and the effects of the proposed tax cuts and other measures, workers generally would benefit from a worth-while increase in real take-home pay under the Government's proposals. I am confident that workers in settling pay claims relating to the period after the expiry of the current national agreement, will carefully weigh the advantages of these real benefits against the illusory effects of large nominal increases in pay offset by mounting price rises and continuing high levels of taxation.
In the light of what I have said, the question of fixing permissible income levels of bank profits, investment shares, dividends and similar sources of income does not arise.
The Minister accepts the point I was trying to establish, and which the Taoiseach appeared to be trying to establish, that there is a relationship between a wage agreement and increased employment. Will the Minister not agree that this is a gross over-simplification of the whole thing, and the general principle of permitting unlimited dividends, interests, profits and so on in one sector of the economy and asking another sector to accept limitations appears to create the impression among workers that they are being discriminated against in favour of a minority?
I accept the Deputy's point that such a viewpoint could arise. It is no part of the Government's intention to discriminate unfairly against any sector, be it workers or any other group. There are many complex problems in this area. One of the difficulties is that because many other forms of income are not fixed to any particular base they can fluctuate downwards as well as upwards, and many of the categories of income to which the Deputy referred, such as profits, dividends and so forth, suffered significant declines during the depression of recent years. Therefore, it is not all that surprising that there should be some corresponding increases once recovery got under way. It is a problem of relating categories of income which can vary significantly from one year to another to categories of income which, for very good social reasons, we want to see remaining stable and not subject to very severe short-term situations. That is one problem. The other problem which arises from the Deputy's remarks is the notion that it is too simplistic to relate pay restraint to any expansion of investment in employment.
I take the point that pay restraint of itself does not necessarily lead to increased employment, but on the other hand in the absence of pay restraint it may not be possible to bring about additional employment or increased investment. One could say that pay restraint is a necessary condition but by itself it may not be sufficient to achieve increased investment and employment. It is one part of a series of measures which are needed. While I sympathise with some of the points expressed, I do not believe that we could produce within the short span of a few weeks a satisfactory solution for incomes policy to apply to all sectors of the economy. At this stage when we are already embarking on negotiations for a new national wage agreement, it is necessary to leave aside these complex issues until we have a more appropriate opportunity for developing long-term policy.
Is it not a fact that there has been a continuous decline in workers' incomes as a result of successive wage agreements?
No, it is not a fact.
Is the Minister saying there has not been a decline?
Is it not also a fact that while bank profits are in the region of £70 million a year there should be some attempt to show that workers are treated in the same way as wealthy institutions like banks, that there should be a fixed relationship between investment income and workers' incomes under the wage agreements? If there is a case for fixed wage agreements there is a case for fixed profits and unearned income.
As I have already indicated, to deal with that problem one would have to fix them on the way down as well, in the sense that we would need some system or formula——
That has been done in the wage agreements.
With respect, it has not.
I am glad to note that the Minister accepts that there has not been a decline under recent national wage agreements. I did get the impression from a recent speech that the Minister was critical of previous national wage agreements and I did not think that was wise from his point of view. Would the Minister agree that the likelihood of obtaining a moderate settlement based on the improvement of the economy is enhanced if the trade unions see that this moderation is to be applied evenhandedly across the board and that it will not enhance prospects of securing moderation from wage earners if they see other categories not subject to such moderate standards?
We cannot have long statements.
I have already indicated that these are fairly complex questions which would take some time to resolve and I am quite willing to have them discussed in the context of formulating some longer-run economic planning. I have said in reply to Deputy Browne that it is not a fact that the real incomes of workers have declined under national wage agreements; they have not. We were associated with the earlier agreements. The first one or two national wage agreements during the Coalition's term of office also provided some increase in real incomes. Had the terms of the current wage agreement been held to, there would have been a substantial fall in the real take-home pay of workers. Deputy O'Leary is to be complimented on being the only Minister who was associated with negotiating agreements under which workers were to voluntarily accept a cut in their real take-home pay.
I would not agree with the Minister's assessment of that.
In fact, that fall will not take place because as the year has progressed there have been de facto more unofficial increases taking place—wage drift, if we use the polite phrase—and the net result according to the trade unions themselves is that they estimate that real incomes will rise by anything between ½ per cent and two per cent this year.
In the light of his scathing criticism of the current agreement, would the Minister accept that it is utterly irresponsible to be so effusively critical in the light of increases in earnings for 1977 of 18 per cent and increases in real earnings of 3.4 per cent, a criticism which is completely reversed——
No, it is quite the opposite. We were making those criticisms——
This bears no relation to Question No. 6. I am calling the next question.
The Deputy is being unhelpful in saying that a 5 per cent increase is simply not on. What sort of pay policy does he want to see for next year?
Would the Minister not agree that the first reference to the 5 per cent not being a binding figure was made by the Tánaiste during the election campaign when he said in a broadcast that 7 per cent or 8 per cent might be acceptable?
I said what the real increase might be. I challenge the Deputy to produce evidence.
Is it not being established by various Government spokesmen that the prospect for employment is related to the wage agreement? Would the Minister agree that this is completely fallacious because every wage agreement includes productivity agreements, better overtime and weekend working, shift work, modernisation and re-equipment? All of these lead to a reduction in job opportunity, not an increase.
I cannot accept that this is fallacious.
