I move:
That Seanad Éireann approves the following Order in draft:
Redundancy Contributions Variation of Rates) Order, 1976.
a copy of which Order in draft was laid before Seanad Éireann on 10th March, 1976.
Redundancy Contributions (Variation of Rates) Order, 1976: Motion.
As and from the 5th April, 1976, it is proposed to effect an increase of 20p redundancy contributions and the draft order is for the purpose of affecting this increase. The increase will be apportioned as follows—12p on the employer and 8p on the employee. The new rates of redundancy contributions will therefore be, on aggregate, 38p for a male worker and 37p for a female worker. The employer will carry 25p or two-thirds of this rate and the worker's share will be 13p and 12p respectively for a man and a woman. The social welfare stamp includes elements in respect of social insurance, health, occupational injuries and redundancy contributions and the ordinary stamp for a male worker will be £6.49 from 5th April next. The redundancy element comprises less than 6 per cent of the total value of the stamp.
During 1975 an income of approximately £4.5 million was derived for the redundancy fund from redundancy contributions. This income was not sufficient to meet the demands on the fund and it became necessary to rely on Exchequer borrowing to help in financing the fund's statutory operations. Up to the present time repayable advances totalling £4.18 million have been made by the Minister for Finance to the fund. The new contribution rates are designed to repay these advances while dealing with ongoing redundancies.
The reasons for the large-scale borrowing from the Exchequer have to do with the scale of redundancies in 1975 and the increased demands made by unemployed workers for redundancy weekly payments. It should be noted that the rate of notification of redundancy so far in 1976 shows a marked decrease over a similar period last year. This is in line with the improving figures of unemployment. However, it is necessary to restore balance to the fund after the very heavy demands that have been made on it during the last two years of recession. I therefore ask the Seanad to approve the increase as outlined in order to restore solvency to the fund.
The Minister concluded by saying that it is necessary to raise these payments from employers and employees in order to restore solvency to the fund. In fact of course the fund is solvent. What he means is that it is necessary to increase these payments in order to pay £4.18 million to the Minister for Finance. The fund is solvent with the aid of the advances from the Exchequer. So, in effect, this is a further continuation of the budget. This is the third time in the past week that we have had a proposal of this kind. Last week we were dealing with extremely heavy impositions under the Social Welfare Acts which included, among other things, an element of profit—if I may use that word—of £8 million to the Exchequer in ease of the budget of last January. Yesterday, we were dealing with increased payments under the health laws and today we have this additional amount on foot of redundancy. As I understand it, the total of the income last year at the old rates was £4.5 million. The total being raised by this motion must be in the neighbourhood of £5 million. Would that be correct? I assume that it would. This is another £5 million taken from the workers of this country — taken also from the employers but essentially taken from the workers because the employers will of course hand this on in increased prices to the consumers and the workers and it may have some further marginal effect in yet further increasing the ranks of the unemployed.
The increases are very large. Their size is particularly startling in view of the Minister's point which he made that so far this year the number of redundancies is running well below that of last year. He did not tell us here, but I think I am right in saying that he told the Dáil, that whereas last year there were 19,000 redundancies this year the figure is running at a rate of about 13,000 per annum. Whether that will continue or rise or fall, one does not know but that is apparently the present position. In the light of this, the startling increases in this motion have no relation at all to any worsening of the redundancy position as compared with last year. The Minister has pointed out that there has been an improvement so far; it is purely a budgetary transaction in order to pay back these funds to the Exchequer which were advanced last year.
I should have thought that in the present recession, the present extremely dangerous economic, financial and social position with a very heavy unemployment total, that this was the time when the repayment of this amount could have been deferred until times were better. Instead, we are loading on an extra £4 million or so beyond what is needed to deal with redundancy— perhaps even more than £4 million— simply in order to ease the problems of the Exchequer or the Minister for Finance. The increases are some 100 per cent in the case of the employer's liability, around 166 per cent in the case of male workers and 200 per cent in the case of female workers. One wonders why this further element of discrimination should enter into it, in regard to women workers, why we are still in breach of the law both of this country and of the EEC in that they are still paid less than the male workers and they have to pay a higher rate of increase on these redundancy payments.
The Minister has spoken of the fall in redundancies this year being in line, as he puts it, with the fall in the general unemployment rate. I would have thought that the fall in unemployment, if it has taken place at all, is marginal. I think it has fallen from 118,000 at peak to just over 116,000. As was pointed out only yesterday by Mr. Connellan, allowing for the situation that one would expect at this time of year, of a seasonal fall in unemployment, the underlying trend is, if anything, upwards, perhaps stable, but certainly not downwards. Indeed, with the problems we are facing, the continuing, ever increasing rate of inflation, the problem being presented by the pay position, the free-for-all that seems to be coming, it seems only too probable that unemployment in the later months of this year may well go up again. So far as the present position is concerned the Minister has pointed out that there are fewer redundancies and yet these very large increases are being loaded on the workers and employers who have already been mulcted almost weekly with increased payments. These type of payments do not appear in the cost of living index. They will not have any effect on it but they are nonetheless increases in everybody's living costs. They make it still less likely that anyone will be willing to accept a pay pause of any kind; they represent the wrong type of decision to take under the present circumstances and, as I have mentioned, the sensible thing would have been to defer the repayments to the Minister for Finance of these payments until such time as the community could better afford them.
The whole position about unemployment appears to be one where Ministers, such as the Minister for Labour, still go around saying that improvements are taking place, still appear to be conveying the impression that there is really no need to do anything constructive about it. We have a very, very high rate of unemployment and the Government appear to have no policy at all to deal with it. The fact that unemployment at the moment is well above the figure for this time last year, and that at the same time the Minister has pointed out that redundancies have fallen, appears to have sinister undertones. In other words, it would appear to me that there are not so many new people coming on the unemployment register as a result of redundancy but that there is a very large number who have been unemployed for a very long time, who were made redundant last year. There are not so many new redundancies but the 116,000 unemployed are increasingly long-term jobless people.
The precise figures seem to bear this out. Recent weeks have shown that there has been only a marginal increase as compared with this time last year in the number on unemployment benefits—I think it is about 500 —whereas there are 12,000 or 13,000 more people on unemployment assistance. This is a state of affairs which can only mean that there are thousands of people who have been unemployed for so long that they have ceased to be entitled to unemployment benefit and are going into the ranks of those who have to exist on the much smaller payments made under unemployment assistance regulations. The position, therefore, is extremely serious. The Government appear to have no policy for dealing with it. The indications are that the position will become worse rather than better. Added to this, there is the imposition of a further £5 million or so in a form of taxation—it is not taxation but it comes to the same thing from the point of view of people who suffer from it—and this £5 million will be taken from the workers. Yet another £5 million is being added to living costs: it will be added to the other payments we dealt with yesterday and the very big increases in social welfare payments that we agreed to last week.
There is apparently no end to the effects of last January's budget. Week by week we find further extensions of the budgetary policy being inflicted upon the people. One could say that a further £5 million compared with what has already been imposed on the people in relatively small but nonetheless it is unwelcome; it is unnecessary; it is not calculated to improve the economy in any way; it is calculated to increase still further the problems of attaining recovery and, in particular, of creating further employment. It will do nothing to create further employment: it will make it more difficult. It may increase in a marginal way the extent of unemployment. Certainly, for the Minister to come in here and say that the fall in redundancies is in line with the falling rate of unemployment is far too casual an approach. It is very doubtful, indeed, if there is any real fall in unemployment. It is even more doubtful whether if there is, it will continue. We cannot agree to these payments because they are not required either by the state of the fund or by the state of the country.
The motion before us enables the Minister to ensure that those who are fortunate enough to have work should contribute towards a fund which will provide the greatest possible support for those who, through no fault of their own are out of work. I am rather surprised at what Senator Yeats said because in the discussion on the Social Welfare Bill last week he expressed surprise that redundancy fund contributions had not been increased. Yesterday, the Minister obliged him by increasing the contributions for the redundancy fund.
I beg your pardon; I said nothing of the kind.
If the Senator, with all due respect, reads the record of the House he will see that he made a reference to the redundancy contributions and was surprised that they were not increased. Today we have a motion to do just that.
Not I.
The Senator also made reference to the number of people on unemployment benefit and unemployment assistance. I agree that there is an obvious sign in the figures that quite a lot of people are what we term unemployable and do not now have sufficient stamps to continue in unemployment benefit.
Unemployable?
There have been 70,000 or so unemployed people in this country for quite a number of years, even in the term of office of Fianna Fáil——
Do you write them off as unemployable?
——reputed to be the booming years of our economy when we were led to accept and accepted, that 70,000 was an acceptable figure. If we break down the balance between the present number of unemployable and unemployed we find that half of the unemployable are farmers in the smallholder category. The most recent changes in the budget will ensure that this anomaly will be removed. The net figure of people who would have lost their jobs over the past couple of years, in spite of the recession, would be comparatively low. Despite the gloom in this respect, there is a certain amount of confidence among us that on the upswing we can recover what we lost through circumstances beyond our control — circumstances which Fianna Fáil when in control accepted—very high figures of unemployment in this country.
Nobody likes to see additional taxation as Fianna Fáil describe it, but no worker who is fortunate enough to have a job will begrudge his less fortunate neighbour the few additional pence that is asked for here to ensure that those who do not have a job have some standard of living protected for them. I think this is the purpose of the Bill and I welcome it.
The Minister for Finance is getting the money.
We on this side of the House very strenuously oppose the motion and we align it, as Senator Yeats pointed out, with the Social Welfare motion and yesterday's Health Contributions Bill as further indirect taxation. The Minister requires very significant increases from both the employers and the employees — in the case of the employer almost 100 per cent and in the case of the male employee almost 200 per cent and in the case of the female employee a full 200 per cent. The fact that those contributions will do nothing to alleviate the state of the economy, on account of the redundancy payments made in the past, is a reflection on the Minister and the Government. The employers and employees are being asked to pay that money on the basis that it should have been reflected in the budget of the Minister for Finance last January. This seems to be a recurring phenomenon, as Senator Yeats pointed out, in both Houses of the Oireachtas.
I cannot see the Government taking any straightforward action to improve the desperate state in which we find ourselves in regard to unemployment. Those increases will place an extra weight on the employer. We are well aware that many employers are finding the burden of all these extra payments a severe test. Here, again, we have drastic increases placed on the employer and the employees. I cannot see what those increases will do to take us out of the desperate economic mess in which we find ourselves. Again, as Senator Yeats pointed out, I cannot see the proposal before the House improving the unemployment situation in any way. The future of industrial development cannot but be hindered by the proposals put before the House today.
This motion before the House is to increase the contribution rates for redundancy. Nobody welcomes increases. We could all share Senator Yeats and Senator Cowen's sentiments about this increase but we must look at the whole situation. When redundancy payments were introduced in 1967 it was during a period of relative boom, as it was called. The rates were fixed at that stage for employee and employer. It was at that time intended that this fund should be self-sufficient and self-supporting. There is a more pressing need today that it should continue on that basis. I do not think, as Senator Ferris said, that anyone in gainful employment would object to ensuring that people who, unfortunately, lose their jobs would be protected with redundancy payments.
Since the introduction in 1967 of redundancy payments, redundancy in the first three years was fairly steady with a pattern of roughly 3,500 people redundant each year. The scheme was brought in because it was realised that our traditional industries were going to go through a period of recession and probably change from the traditional industries we knew to other industries which, at that time, were coming to the fore. This was the idea of the redundancy payments. Since then we have had quite a change. In 1971, if my memory serves me correctly, in the first five months we had as many people redundant as we had in the previous 12 months. We could see that it was escalating. Then we had our entry into Europe and, on top of that, a worldwide recession. This brought about a total change in the whole position of redundancy. We can all glibly say the £4½ million is coming from the Exchequer but money has to come from somewhere. It has to be provided by somebody and, unfortunately, the only method adopted at the outset, in the "good old days" as I call them when we hear so much about them, was that the fund should be able to carry itself. This is to repay the Exchequer. I would agree with that. It is during a time of recession and during a time when we hope recovery may be made this year. Perhaps it is necessary now to ensure that this money is there and it cannot be provided by general taxation. So, the alternative is that the scheme must be self-sufficient and I support the Minister's motion.
The position here is that it is necessary. When I use the term "solvent" I mean to end the dependence of the fund on Exchequer resources. We have arrangements whereby the Exchequer supports us in times of excess demands on the fund. Of course, it is an expensive dependence because loans of this fashion must be repaid and, of course, the interest on such loans at this time of scarce resources is high. Therefore it is necessary to see that the fund is returned to a situation once more where its finances are contributed solely by the employers and employees.
Reference has been made to the rate of contribution by male and female workers. It must be understood that, whatever mileage there may be in it or whatever reasons Senators may have in making this point about discrepancy in the rate of increase, the amount sought for a woman worker is, of course, less at 12p than it is for a man at 13p.
It has been asked whether the sums required are necessary. I believe they are because there is, first of all, this requirement to bring the fund back into a state of stability as between the contributions made by employers and employees. That we do by looking for the extra amount here. We have had these advances from Exchequer sources up to now. We want to end that dependence and therefore the new rates are required to bring in this increased amount of money into the fund.
Very large demands have been made on the fund's resources over the last two years. Senator Ferris was correct to refer to the entire question of unemployment, which is of course a larger question than the question of redundancies, and to put that in the perspective of the sixties and of the present. It is true that we have for too long tolerated unemployment figures that would be regarded as intolerable in any of the other Community countries of Europe. This is not to suggest that the present position of unemployment is one about which any of us can feel complacent. We do not. We can only say that there is evidence of the Government's commitment to end this situation, to hasten the period of recovery. The very same budget that is criticised for its imposition on this category or that category of citizens has made the largest capital advance ever in terms of promotional employment. That we regard as a very genuine commitment on the part of this Government to hasten recovery in this economy and to bring back our unemployed into gainful work.
Indeed this is having an effect. Even allowing for seasonal factors, you can see the steady improvement in unemployment over the past five weeks. I think that is a very significant tendency observable in our figures. In all the economies with whom we trade people look anxiously for the signs of recovery. The first signs of recovery here are evident in those figures. I think it is a realistic expectation that the tendency of unemployment figures to rise will be arrested over the coming months and that we will see a gradual mend in the position over the months of this year.
I know that Members of this House, like the Deputies in the other House, have a case to make the most of the present economic difficulties faced by this Government in common with other Governments. But the £600 million we have put into the capital budget programme is evidence of the serious resolve of this Government to plan our way through the difficulties surrounding us at present and to make jobs available for those out of work.
The evidence of that commitment of the Government is to be seen in the training programmes of AnCO, which come under the aegis of my Department — the number of young people we have coming in to be trained for jobs. While we cannot in all cases undertake that an immediate job is available, we certainly are taking the appropriate measures to ensure that when recovery comes we avail of the opportunities presented by that recovery.
It is clear that over the period of this year, while we will not have, on the figures available to us, the large rate of redundancies we have had over the past two years, we must make arrangements to put the redundancy fund in order. The increased contributions sanctioned by this order are necessary if that is to be done. The demands are there. There is a clear duty on the Government to ensure that those put out of work are maintained in at least minimum comfort. When we look at our present employment situation and when we see what was tolerated in other days, we must understand that in those other days emigration was still relatively high. That was the remedy for those who were out of work. It was the easy option availed of by the authorities at that time, an option which is now no longer available to this Government, an option which we are happy not to have: there is no longer the safety valve of emigration to Britain. Our welfare system means that a person has a free choice of remaining at home even without a job. That choice was not there under our predecessors.
We ended emigration years before the present Government came into office. It is seven years since there was net emigration.
I am talking about the whole decade of the sixties. I am saying that over much of that period Fianna Fáil tolerated an unemployment rate which would not have been tolerated by any of the other European countries.
We eliminated emigration year before this Government came into office.
During most of that period the option was there of emigration. The option had to be there because there were no welfare payments given to people who were out of work. We have ended that situation deliberately. We have decided that as a community we must grapple with this question of providing opportunities for employment for our people in the years ahead. It is going to be a very big challenge even when we come out of this period of recession. Never before in our history has such a huge demand been made by young people looking for work. This will call for a large-scale reallocation of resources.
At any rate, the decision in regard to the redundancy fund is that it must be brought back into balance. The moneys we sought here are required for the demands we think may be made on this fund in the future. These demands will not be as large as they have been in the past two years, but the debts of the last two years must be paid. That is the purpose of this order.
Question put and declared carried.