I move:
That Seanad Éireann approves the following Order in draft:-
Redundancy Contributions (Variation of Rates) Order, 1975.
a copy of which Order in draft was laid before Seanad Éireann on 12th March, 1975.
Redundancy Contributions (Variation of Rates) Order, 1975: Motion.
The purpose of this order is to increase as from the 7th April, 1975, the rates of weekly contributions to the redundancy fund. The authority to make this order is contained in section 28 (3) of the Redundancy Payments Act, 1967. There is an obligation under section 5 (1) of the same Act to obtain an affirmative resolution from each House of the Oireachtas and I am now complying with this statutory requirement in this House today.
The purpose of the Redundancy Payments Acts is to compensate employees who lose their jobs through no fault of their own. Our system of redundancy payments recognises that employees build up property rights to their jobs and that when they lose those jobs they are entitled to compensation for this loss. Compensation is paid in the form of a lump sum payment and a series of weekly payments related to length of service, age and previous earnings.
Western economies are at present suffering from the most severe disruption experienced since the Second World War. Unemployment in the United States of America is now over 8 per cent, an increase of almost 100 per cent on 1973 levels. The recession in America is the deepest experienced since the war and the OECD suggests that real GNP could fall by 4 per cent. For the OECD area as a whole the estimates of growth have been reduced indicating the worldwide nature of the present recession. All countries of the EEC have been affected by the slowdown in world trade brought about by the increase in oil prices.
Unemployment in the United Kingdom is now more than 750,000. In France unemployment is higher. Germany now has almost 2 million unemployed and on short time. Ireland has also been affected and during the last three quarters of 1974 unemployment rose and brought with it a large increase in the number of redundancies.
The necessity for seeking increases in contribution rates arises in part from the fact that the incidence of redundancies which qualified for payments under the Redundancy Payments Acts was greater in 1974 than expected and the reserves of the redundancy fund have accordingly been depleted.
In 1973 statutory notifications of 7,504 qualified redundancies were received from employers. The figure notified for 1974 was 11,202.
The reason for increases in the contribution rates is not entirely due to the employment situation. Because of the exhaustion of the reserves of the redundancy fund I have had to make the interim arrangement with the Minister for Finance, under section 27 (2) of the Redundancy Payments Act, 1967, for what I might describe as overdraft facilities from the Exchequer. Money borrowed in this fashion must be repaid with interest and I must provide for this repayment.
The payments out of the redundancy fund are to a large extent dependent upon the rate of wage increases and social security benefits. Contributions to the fund are however not linked to increases in other areas.
Wage increases were a factor in the depletion of the fund's reserves during 1974 inasmuch as higher lump sums and weekly payments were payable to redundant workers. In a situation of increased unemployment expenditure on weekly payments tends to reflect economic conditions. In the second half of 1974 expenditure on this front increased and I am providing for a continuation of this trend into 1975.
A contributing factor in the depletion of the fund's reserves, coupled with the other factors already mentioned, were the improvements which I effected in the redundancy scheme last April. These improvements brought non-manual workers' earnings over £1,600 a year into the redundancy scheme, thus increasing the numbers eligible for payment. I also increased the number of weekly payments payable to workers over 51 years of age. I also raised the limit of the total of weekly redundancy payments plus social welfare benefits to 100 per cent of pre-redundancy pay. These improvements have added substantially to the cost of the scheme and are in line with the Government's commitment to protect the living standards of the less well off sections of the community.
The redundancy fund was established under section 26 of the Redundancy Payments Act, 1967. Section 27 of the Act provides that the fund will be financed by way of weekly contributions by employers and employees.
In the draft order which I have laid before the House I am proposing an increase of 5p in the weekly contribution, divided as to 3p for employers and 2p for employees, with effect from the 7th April next. Accordingly, if both Houses approve of my proposals, the contribution rates as from the 7th April will be as follows:
male worker 18p, of which the employer will pay 13p and the worker will pay 5p,
female workers 17p, of which the employer will pay 13p and the worker will pay 4p.
I expect the new rates of contribution to bring in an additional £1.3 million to the fund over 12 months.
Within the statutory obligation to have a redundancy fund, the general aim is to try to maintain the fund at a level sufficient to meet the necessary expenditure and to have a modest reserve in hand at normal times. It has not been my intention that the redundancy fund should build up a large reserve and consequently in times of economic setback it is necessary to increase the contributions to meet increased obligations. An element of uncertainty is of course implied, related primarily to the employment situation, and changes in the rates of contribution become necessary from time to time.
The Industrial Development Authority last year approved projects which will provide more than 25,000 jobs. This is the largest ever number of jobs approved in any year since the inception of the IDA. The present year will be extremely difficult due to the fall-off in investment which is evident in all major economies, but the IDA are intensifying their marketing activities and have set themselves a target of 23,000 job approvals for the current calendar year. In his recent budget speech the Minister for Finance announced increases in the public capital programme designed to create employment. The allocation for capital investment in and loans to industry was increased by £26 million. The purpose of this increase is to create new jobs to replace those which have been lost.
In response to growing unemployment Córas Tráchtála Teo initiated in January a special action programme to assist exporters experiencing short-term difficulties in their main markets. Vigorous marketing drives are being undertaken in 17 countries with a special emphasis on those economies which have the capacity to import Irish goods, notably oil-producing countries including Nigeria and the Middle East. The initial response is encouraging and the number of different marketing activities in which CTT are engaged is about three times the level of recent years.
On the question of manpower policy I stated publicly last year that, in the event of unemployment increasing, the Government would increase the amount of money available to AnCO. This commitment has been honoured and the total provision made in the budget was for £5 million. This was an increase of £3 million on the amount for the nine months' period up to December last. Since much of the expenditure is supplemented by grants from the European Social Fund, AnCO will have available to them a total sum of about £9 million for current expenditure in 1975. This provision will enable an extra 2,000 adults to be brought into full time training and will mean that the total number trained by AnCO during the present year will be more than 6,000. A major benefit of this increased training is that when the upturn in the world economy which is expected towards the second half of this year takes place, Ireland will be better placed to take advantage of the economic recovery with a more skilled work force.
Recent indications from the monthly survey of business opinion and from the trend of unemployment statistics would suggest that we have passed the worst period of unemployment. The situation is likely to improve substantially in the immediate future.
It is my opinion that our best plan in this manpower situation is to use the recession period to increase the stock of skilled manpower so that we may avail adequately of the upturn when it takes place.
I ask the House to approve of the draft order.
First, I should like to express dissatisfaction with what is a discourtesy to the House in that the Minister read rather rapidly a long speech containing a considerable amount of statistical material, but he did not do us the normal courtesy of distributing copies of his speech. Secondly, I am surprised to find that on a relatively small matter such as this, a very limited matter of increase in rates of redundancy payments by employers and workers, the Minister read us an extensive wide-ranging speech covering Government policy with regard to unemployment, the provision of employment and the training of workers.
We would be entitled to continue on this line and have a large scale, extensive debate on all these matters.
I should like to reassure the Minister and the House that, despite the opening he has given and the rather strange way in which he has introduced this, I do not propose to deal with the matter in this way. It is not a suitable peg on which to hang a wide-ranging debate of the kind the Minister introduced. I will deal with the draft order before us. We are prepared to agree with it.
It is obvious that a redundancy fund must be provided with sufficient money for it to be able to continue. I should like to express surprise at the rapid way the payments into the fund have been rising even allowing for the increase in redundancies and the increase in benefits that are paid to redundant workers.
In comparing the new figures proposed by the Minister with the original ones set out in 1967, one finds that the employer's payment in respect of men has gone up by some 330 per cent and in the case of women by over 400 per cent. Employees' payments in the case of both men and women have risen by well over 300 per cent. These seem to be very large increases and I would be glad if the Minister could give some explanation as to why they are so large.
An Leas-Chathaoirleach
It is now 10 o'clock. Does the House intend sitting beyond the normal time?
I do not intend to go on for a long time. I need only about two minutes more.
We shall carry on.
I take it that these increases are away beyond the actual increases in payments out to workers and the actual increases in redundancy. One wonders have there been miscalculations made all along the line. However, we are prepared to agree to this order. It is clearly one that requires to be made.
I thank Senator Yeats for his approach to the matter. The increase is necessary for the solvency of the fund, which has been affected by both the increased redundancy and also by the improvements which we have brought about in the fund itself. I have referred to the improvements in respect of people earning over £1,600 and the enhanced benefits now payable to older workers.
I regret that my speech, so late at night, seemed to be referring to matters outside what Senators might feel to be the proper scope of redundancy. Since they did have some connection with the general employment situation, I thought it best to refer to what are the forecasts from the main State agencies — the IDA and CTT — for the creation of new jobs. The news from both of these fronts is modestly encouraging. I hope we have passed the worst of this unemployment recession phase. Most of the experts see some recovery occurring near the end of this year or early next year. I thought that one should put on record what the connections are between our economic recession and those of our neighbours and our trading partners in the European Community. The situation is that all of these countries suffer in varying degrees from the same economic malaise as we have been suffering from. I thought it necessary to indicate what the Government have been doing to meet that fall in home demand by the kind of investment we put into the capital programme. All of these things I thought necessary to mention, I thank the Senator and I thank the House.
Question put and agreed to.
The Seanad adjourned at 10.05 p.m. until 10.30 a.m. on Thursday, 20th March, 1975.