Seanad Éireann debate -
Wednesday, 16 Jan 1957

Vol. 47 No. 1

Adjournment Debate—Unemployment Crisis.

Dr. McHugh

I have requested the Government, in view of the serious unemployment crisis, to initiate immediate large-scale unemployment relief schemes. I think I would be failing in my responsibility as a Senator if I simply requested the Government to do this without indicating how, in my opinion, this would be best accomplished. I do not think it is necessary to detain the House long in talking about the gravity of the unemployment situation. I think, apart from the demonstrations which we have heard about to-day, that it is already apparent we are approaching the peak period of the unemployment in 1953 and I think that, by March, it is reasonably safe to assume we will have passed it.

I should also like to say that there appears in my name a motion on the Order Paper concerned with long-term economic planning, although to-night I am speaking on the need for interim action. With regard to unemployment, these interim suggestions postulate long-term planning. I would also say that short-term planning cannot be considered in vacuo. Sometimes measures are common to long-term and interim planning.

The need for dealing with the unemployment situation has been, I think, largely recognised by the Taoiseach in Cork in his speech there on 12th January of this year. Here I am concerned only with that speech in so far as it bears upon the interim planning of large-scale unemployment relief schemes. In that speech in Cork, the Taoiseach said that the increase in unemployment in recent months was largely due to external causes. I am inclined to differ on that point.

The Taoiseach

I think the Senator is misquoting me. I did not say "largely". I said to some extent.

Dr. McHugh

I suppose the Taoiseach included in his reasons that the credit squeeze was to a large extent responsible for unemployment because it is quite certain that, before the Garden of Eden had vanished and Eden along with it, unemployment had begun to mount. The cause of unemployment—I think it is a platitude of the economists — is insufficient total expenditure within the framework of the economy. During a credit squeeze, I think it is equally incontestable that expenditure is reduced within the economy. A credit squeeze thus helps to increase unemployment and I for one do not believe you can stem unemployment by large scale unemployment relief schemes, unless you relax in many respects the credit squeeze. Therefore, the immediate initiation of large scale unemployment relief schemes, in my opinion, calls for the immediate relaxation of the credit squeeze; otherwise. I think you are operating two directly opposed policies. On the one hand, by the granting of, say, £1,000,000 here and there, you are closing or endeavouring to close one floodgate of unemployment, and, on the other hand, by operating a credit squeeze, you will leave open two larger floodgates of unemployment.

I would say that the immediate relaxation of the credit squeeze would involve such steps as telling local authorities to go ahead with certain schemes they have already planned and for which in many cases they have obtained sanction and which are held up through the operation of the credit squeeze. I do not think there is any lack of schemes. Many local authorities have schemes all ready to be put into operation.

I think, further, that such institutions as the Irish Sugar Company and the E.S.B. have schemes that only await sanction or finance to go ahead with. I think that the credit squeeze to a large extent has been responsible for the hold-up of these schemes. The Taoiseach at Cork announced that he recognised the necessity for dealing with the unemployment situation. He announced that £1,000,000 would be made available for immediate works of a productive character as an unemployment relief measure.

While I welcome the granting of that money, I would suggest that it is completely inadequate. In the short space of time at my disposal, I do not propose to speak too long as I am sure there are other Senators who would like to say something on the matter. I think that the £1,000,000 is largely fictitious. When you deduct certain sums payable to certain institutions, as a matter of fact, only between £250,000 and £500,000 are available for productive employment.

Further, I would point out that the effect of this expenditure in reducing unemployment is largely, to my mind, counteracted by the credit squeeze. In one particularly glaring example, there has been a reduction of £600,000 in the moneys available for the provision of employment in rural areas during the winter months — a reduction of £600,000 from the figure granted for these equivalent months during the period 1955-56. I am not sure whether it is necessary to say how that sum is made up. Roughly £500,000 of it was for supplementary road grants and £50,000 for local authority works grants. The other £50,000 is made up of various sums.

The point I am making is that, therefore, the unemployment situation is unlikely, I hold, to be remedied by the measures already proposed and, again, the credit squeeze is largely to blame. What is needed is obviously large-scale unemployment relief schemes necessitating large-scale expenditure. I do not believe this can be provided without an immediate change in financial policy.

This brings me to my last point. Large-scale unemployment relief schemes cannot be introduced, even for an interim period, without immediate financial measures designed to direct capital investment. An Taoiseach in his speech in Cork has correctly argued, I think, that any large-scale reduction in unemployment must be based on national development. He has gone on to argue, in turn, that this must be based on increased investment. He restricted himself a little too much, I think, in emphasising the part which savings must play in this investment and in devoting a considerable part of his speech to an appeal to private investors to repatriate at least part of their foreign investments. I have one or two observations which I intend to make on this point, in conclusion.

First of all, I would say that interim large-scale employment schemes are impossible without adequate direction of capital investment. Capital investment of the kind required, I hold, and hold very strongly, cannot be financed purely out of savings, even if our savings were at present at the maximum figure. On the contrary, they are at present declining, and, over the past four years, they have been reduced by, I think, £70,000,000 in 1953 to something like £47,000,000 in 1956. I hold that, during the credit squeeze, savings are likely to decline further.

Again, we find contrary policies operating. On the one hand, people are urged, and urged very rightly, to save, but, on the other hand, the restriction of credit undoubtedly causes them to eat into their savings. Therefore, I submit, finally, that large-scale unemployment relief schemes necessitating large scale expenditure can be financed adequately only when the Government acts through the Central Bank to control the investment policy of the commercial banks. The establishment of the Investment Board provides some evidence that this may be done, but its power seems to be largely advisory and I think the crisis demands very urgently that power must be used to control the investment policy of the commercial banks. I think that step is as necessary to short-term interim planning as it is to long-term planning for ten or 15 years.

In conclusion, I would say simply that, as part of my request to the Government to initiate immediately large scale unemployment relief schemes, I would urge that in order to do so they should relax the credit squeeze, where relaxation is necessary in order to promote employment and, secondly, that they should take immediate steps, acting in consultation with the Central Bank, to control the direction of policy of investment of the commercial banks.

Mr. Kissane

I would like to add my voice to the remarks made by the last Senator who spoke on this question of unemployment. The reason I do so is that I am afraid the Government have no policy whatever to deal with the serious unemployment situation we have in the country to-day. The figure for unemployment has reached 88,500, which is a near record for this country. When we consider and examine that position and compare it with what the Government once told us, that they had a plan for the relief of unemployment, I am afraid that the present Government stands indicted.

While I have referred to the figure for unemployment, it is also right to refer to the question of emigration from the country, which goes hand in hand with unemployment, because, as everyone knows, the problem of emigration at the present time is much more serious than it has been for years.

An Cathaoirleach

There is no reference to emigration in the question which has been raised.

Mr. Kissane

I would like to point out that the figure for unemployment would be much greater, were it not for the fact that there are people leaving this country by the thousand as a result of unemployment. When they cannot get work here, there is no alternative left to them but to emigrate. Therefore, the figure would be much greater, as I said, were it not for the fact that we have increased emigration.

The Senator has referred to relief schemes. While they in themselves would be welcome, still anyone must be prepared to admit that, while these relief schemes may relieve the situation for the time being, it would be far better if the Government would promulgate some comprehensive policy to deal with the entire question. The people of the country expect it and are looking forward to something being done by the Government, but I myself firmly believe at the present time that the people of the country realise that there is only one remedy to solve this situation which has been referred to by the Senator — and that is a change of Government.

Mr. Murphy

I think it is right that, on this Adjournment debate I should as briefly as possible express the very great concern of the whole Labour movement at the increasing unemployment in this current month. I am conscious of the fact that the trade union movement last autumn gave a warning to the Government that, unless remedial action were taken, unemployment would likely reach 90,000 or 100,000 in the new year. I am very sorry that the forecast appears likely to be realised. I understand that the provisional United Trade Union movement has sought an immediate meeting with the Government on the matter and in those circumstances I do not wish to anticipate any points they would make.

However, I would make two points very quickly. I would reiterate the point I made previously to the Minister for Finance, namely, that the levies have largely accomplished their objective and they should be quickly looked at again, in so far as they affect employment. The second point is that touched upon by Senator McHugh. It is that semi-State undertakings should be called upon immediately by the Government to put in hand quickly a capital programme. I understand that most of those undertakings have capital programmes which have been pigeonholed. Now is the time to draw them out, to "get cracking" at them, and to give some relief in the unemployment situation.

If I have made these points very quickly, I trust the Government will be equally quick in doing something along the lines I have suggested.

Dr. Sheehy Skeffington

I welcome the raising of this matter. We are all concerned with the fact that unemployment has reached nearly the 90,000 mark, and equally concerned that 750,000 workers have now gone to bring their skills over to Britain. I would ask Senators to look about them in this country and ask themselves are there not a thousand tasks and things crying out to be done? Yet, because no short-term individual profit is to be found in them, these things are not as yet done. Despite that fact, we have men standing idle and others are leaving to bring their skills, perhaps permanently, elsewhere.

I would suggest, therefore, that what we ought to do is to plan for the long term profit of the community, to build the schools and go right ahead with it, to create our forests, our co-operative agriculture, our Irish mines — really Irish mines — yes, and even the factories, if necessary. Private enterprise is breaking down in this country and what we require is courageous public planning to take its place. If this were a desert isle on which we had been shipwrecked and if there were work requiring to be done — shelter to be put up, food to be gathered, fuel to be collected — and if hundreds came in from outside, we would welcome them with open arms, and would not ask where the money was to come from before we could put them to work. What we require, then, is a planned economy, not just to "give relief" or "give employment", but to use employment, to use all our resources in manpower and materials, to do the thousand things that need doing in this country to-day, whether or not they can be justified on a short-term, narrow pinchbeck, profit-seeking basis. If private enterprise has failed, as I think it has, let us have the courage to engage in public enterprise, for the public good, set all hands to work and build for the benefit of all the people, the same Workers' Republic for which men like James Connolly lived and fought and died more than 40 years ago.

The Taoiseach

No Senator is more concerned with the problem of unemployment and the growth of unemployment that has overtaken us in the last few months than myself and my colleagues in the Government. We are deeply concerned with the position and we very deeply sympathise with those who have lost their jobs and those who may think their jobs are in jeopardy. We have spent many anxious hours, days and months in the consideration of this problem over the past 12 very difficult months. I hope those Senators who are concerned with the problem of unemployment and the finding of a permanent remedy for unemployment, rather than those Senators who make political points against the Government, will accept from me the fact that we are deeply concerned with this problem and are bending every energy we have to finding a permanent solution to it and to dealing with the immediate situation so far as possible.

Senator Kissane said the Government have no policy. We have a policy and it has been given to the country and accepted by the country. It is the policy which I announced on 5th October last. The trouble about that policy is that it is long-term in its nature, but it is not a long-term policy such as Senator McHugh has in mind. That is something to which consideration can be given hereafter. But we have the immediate problem and the long-term problem that would spread over five, six or ten years, and then we also have the longer long-term problem referred to by Senator McHugh.

We have had to deal with a very difficult situation in the past 12 months. We have had economic problems of great complexity to deal with, and some of those problems, I think, we have handled with some degree of success. So far as unemployment is concerned, I indicated in very broad outline as Senator McHugh has said, our concern in the speech I made in Cork on Saturday night, but he did not have the text before him at the time. Perhaps Senators will pardon me if I quote just a few lines from that speech. What I then said was:—

"The increase in unemployment which has taken place in recent months — due, in part, to external causes — is a matter for great anxiety. Our programme has been designed to promote expanded production and increased employment; and, as an interim measure, the Government have, notwithstanding the present difficulties, taken special steps to make available a sum of £1,000,000 for works of a productive character. We are now examining, with anxious care, the extent to which that decision has had time to become effective and, generally, the present and immediately prospective situation regarding unemployment. Any real and lasting reduction in unemployment must, however, be based on national development. National development, whether private or public, cannot take place without increased investment and increased investment in its turn must be matched by increased savings."

I think that extract from the speech I made in Cork is sufficient to indicate here the Government's attitude.

The £1,000,000 referred to in that speech — I think Senator McHugh misinterprets the application of that £1,000,000 — was made available by the Government on 20th November last year at a time when we had very serious financial difficulties to overcome, but, notwithstanding the fact that there were such serious financial difficulties and the very great difficulty in getting money, we made available that sum of £1,000,000 for the relief of unemployment. That was allocated towards specific items. Senators will, perhaps, pardon me if I give the list because, from what Senator McHugh has said, I think he does not understand how that £1,000,000 was applied.

The purposes for which that sum was allocated were:—

To enable the Electricity Supply Board to purchase further supplies from home sources for the purposes of rural electrification	£100,000
Site-clearance on lands of University College, Dublin, at Belfield, Stillorgan Road, Dublin	20,000
Experimental work at the Peatland Experi mental Station, Glenamoy, Co. Mayo	17,000
Improvement works at Waterford Harbour	60,000
The Land Rehabilitation Project	150,000
The purposes of the Special Employment Schemes Office	150,000
The purposes of the Office of Public Works, namely:
Maintenance works	25,000
New Works, including schools	53,000
Additional provision for schools	70,000
Inland fisheries	5,000
Grants to local authorities for the execution of works under the Local Authorities (Works) Act, 1949	200,000
For the purposes of the Small Dwellings Acquisition Acts, 1899 to 1954	150,000

That was the £1,000,000 which we made available at the end of November for the purpose of allowing work to be proceeded with which would be, as far as possible, productive and which would give employment. I think that the dissemination of that £1,000,000 over these purposes has not yet taken its full effect, and because of that, I think that, included in the figures for unemployment given at present, there are some people who will be absorbed into work when that £1,000,000 takes effect.

I admit straightway that is only a palliative: that it is only something to get over the difficulty in which we found ourselves in the autumn and the beginning of the winter this year——

Dr. McHugh

Will it not be counteracted by the £600,000 reduction?

The Taoiseach

I do not understand what the Senator is referring to.

Dr. McHugh

The £600,000 less for rural employment during the winter months?

The Taoiseach

I do not think there was any such reduction. This £1,000,000 for those specific works which I have enumerated is there, and nothing can be taken from that. I know of certain works which have not yet started or which have started only within the last few days. That is but an interim measure. Our policy was propounded in the speech I made on 5th October last year, a policy of production, a policy designed to increase productivity and production so as to give permanent employment and thus to help towards reducing the adverse balance of our international payments.

We have, then, the long-term policy outlined in my speech of 5th October last year. We have the interim arrangement of £1,000,000 to meet the difficult situation which exists at the present time. We have to arrange for the capital programme for next year, and we believe, as I have already said —and I think it will be accepted by everybody — that the only real way to furnish any permanent solution for unemployment is to expand production. That is what I said in Cork.

Now we have to deal with the question of the capital programme for next year.

What we really want to achieve and the only thing that is really worth while achieving is a permanent increase in employment based on an expansion of productive capital investment. This capital investment can only proceed at the rate at which the community are prepared to support it. That is one of the reasons why we insist so much on savings. It is not so much a question of the Government providing employment: rather is it a question of its being up to the community themselves, by their action and support, to do everything in their power to help the national economy to expand and thus create a progressive increase in the opportunities available for productive employment.

Because of our anxiety in this matter of unemployment and because of the necessity we feel to deal with it in an orderly way, the decision was taken and announced by the Minister for Finance some time ago to bring forward the capital Budget by two months. An early settlement of our detailed proposals for the capital Budget next year will enable the bodies concerned to see very much earlier than they have been ever enabled before where they are going. The completion of the arrangements for financing that capital programme will make possible the smooth working of that programme during the coming year because of that early announcement. Once a decision is taken on that very important matter and the capital programme for next year announced, it will be possible to proceed with economic developments on other fronts. In considering the capital programme we have to deal with a problem which is one not merely of determining the amount of the capital programme itself but also of ensuring that the community will provide the necessary resources to support such a programme.

We have already given anxious and very urgent consideration to the outline of this capital Budget. The Capital Investment Advisory Committee is sitting this week: I think it sat to-day. We have made arrangements that we will have a report from them within a matter of, I think, a week or so, at the latest. When we get that advice from that committee, the Government will consider it and take policy decisions on it. The general lines of policy having been determined, we propose to have discussions with the trade unions and other interests concerned.

As I said a few moments ago, we approach the consideration and formulation of the capital programme with the conviction that it must be done in an urgent but orderly way. Only by formulating it in an orderly way can the economic difficulties really and effectively be dealt with, with some hope of long-term success and with the basic confidence which is the necessary foundation for economic activity.

May I interpolate here what I said in Cork that some of our difficulties arise from causes such as the shortage of petrol but that others are caused by our own internal stresses? Furthermore, this period of the year — January —is the period when there is the peak of unemployment. Thas has been the experience over a large number of years—that it is in January and perhaps February that the peak of unemployment comes and that it tends to go down, in normal circumstances, over the following months. We hope that that reduction in unemployment will be accelerated. At all events, we have the £1,000,000 and the long-term programme which I outlined and which the Government took steps to implement with as great speed as possible.

We still have the problem of the immediate difficulties and of dealing with people who are now out of employment. I do not think Senator Kissane's point is worth bothering about, but he said that the figures now are greater than they were ever before. In that connection, I would refer Senators to the figures for the year 1953 and, having done so, I will pass on. We are fully conscious of the necessity for dealing with the matter on an immediate, interim and a long-term basis. I have given the immediate basis — £1,000,000. The long-term basis was outlined by me in the speech I made on the 5th October last, which has been carried out by the measures passed by the Oireachtas in the last few weeks, so far as it has been possible to carry it out in so short a time.

As I said in Cork, we are examining with anxious care the extent to which the decision to give the £1,000,000 has had time to become effective and generally the present and immediately prospective situation regarding unemployment. We are concerned to see that the immediate problem is dealt with so far as is possible. We are endeavouring to see what further can be done to relieve immediately unemployment, with special reference to the building industry, including the bringing forward of certain schemes which would ordinarily be charged on the capital programme of next year. I have indicated the fact that we are deeply concerned with this problem and that we are doing the best any Government can do to meet a very anxious and trying situation.

The Seanad adjourned at 10.5 p.m. until 3 p.m. on Thursday, 17th January, 1957.