Seanad Éireann debate -
Wednesday, 27 May 1981

Vol. 95 No. 20

Employers' Employment Contribution Scheme Bill, 1981: Second and Subsequent Stages.

Question proposed: "That the Bill be now read a Second Time."

Minister for Labour (Mr. Nolan)

The Bill provides for a scheme which will be funded by employers to help maintain employment in the textile, clothing, footwear and leather industries. Employers will fund the scheme on the basis of a contribution of 0.2 per cent of their payroll for the contribution year running from 6 April 1981. The amount collected will be paid into an FUE/CII account, the State retaining a sum in respect of tax. The total amount involved is estimated at £6.5 million net of tax. The scheme will provide for a payment of £5 per person employed per week in the eligible industries, the numbers involved running to over 25,000 in about 370 firms. It will be temporary, lasting one year.

The scheme represents a response by employers as a whole to the need to help certain sensitive industries in the present temporary period of recession. Payment of the contribution will not be an enforceable liability. The FUE/CII will be responsible for the administration of the scheme and will issue payments to eligible industries.

I believe that what is being presented to Senators in this Bill is a positive and praiseworthy response by employers as a whole to particular problems being encountered by firms in the clothing, textiles, footwear and leather industries. These industries are basically viable, many of them having been restructured in recent years, but require temporary assistance, if further redundancies are to be avoided. There already exists a wide range of structural assistance to industry, including the industries in question in this Bill. This includes: IDA grants for fixed asset investment in new undertakings, the expansion of existing ones and re-equipment; research and development grants; and loan guarantees and interest subsidies on funds borrowed to finance fixed assets.

The ICC also provide a range of loan facilities for industry. Under the second national understanding, the Government are committed to an intensification of services to improve the structural capacity of existing firms to compete in changing market conditions. The objective of all of these provisions is to provide for the continued strengthening of our industrial base, so that industry can become more competitive and thus help create sustained employment opportunities.

Senators will also be aware that a Sectoral Development Committee representing employers, unions and the Government have recently been established and one of their tasks is to evaluate sectors which are experiencing particular difficulties at present in trying to expand, or maintain output, or to maintain employment. I believe that this evaluation will help in developing policies for the longer-term viability of many of our vulnerable industries.

This employers' scheme — representing a solidarity approach on their part to the problems of these industries — will complement the Government's efforts to encourage industrial expansion and to maintain employment. I commend the Bill to the House.

Mr. Staunton

I will be very brief. The Employers' Employment Contribution Scheme Bill went through the Lower House on Thursday, 21 May and I want to assure the Minister that the Bill has the support of the Fine Gael Party. Obviously it deals with a particularly critical area in so far as industrial output and industrial employment are concerned relating as it does to the textile industry and the shoe trade of which I have a considerable amount of experience coming from a town with substantial textile and shoe industries. Undoubtedly these industries have been weathering a ferocious storm for a very long time and any Bill which can alleviate the specific problems in that very vulnerable sector is very welcome.

This Bill is in a sense a ratification of agreements already made within the industries by the Federated Union of Employers and the Confederation of Irish Industry. Last week on the Industrial Development Authority Bill we had a very substantial debate on Industrial Development Authority policy. I do not propose on this occasion to extend the scope of my remarks, apart from what I said.

This payment of £5 per week per person in the eligible industries from April is a significant contribution and we welcome it.

Mr. Lambert

I am very glad the Minister acknowledged the praiseworthy response by the employers to these industries. I want to highlight the fact that it now costs the employers 10.5 per cent contribution to the pay-related social insurance bond, which means, I want to emphasise, that the cost of employment is going up. This is an extra cost. I am not disputing the fact that it is a very worthy one but it does add to the total contribution which is now 10.5 per cent on the total cost of employment. Otherwise, I commend the Bill and the Minister's remarks.

Mr. Mulcahy

I welcome the Bill and the help that if offers to industries that are finding it very difficult to trade in these circumstances. It is another way of ensuring that Irish industry can hold its strength and its skill together until such time as the market picks up again. As I said last week in the Seanad, it is picking up in the steam engine countries which lead world economies. This scheme will hold the clothing, textile, footwear and leather industries together. In the EEC questions about these special supports are always causing trouble but we know very well that other countries in the EEC have their own way of getting around these regulations. We discussed how it was done recently in relation to the tobacco industry, so it does not worry me that we will have to give this support. I welcome it. It is good to see employers are behind the scheme and have taken a cut out of the added value of industry generally to help one of the sectors which is in trouble.

Mr. Cooney

I join in the welcome to the Bill and the compliments that have been paid to the employers for this act of solidarity, as the Minister so rightly describes it. It may be a measure that is unique in the history of Parliament. It would be interesting to know if there are any precedents. I wonder too why it is necessary to have an Act of Parliament to provide for this. It may have something to do with tax implications and EEC consequences. Possibly the Minister will enlighten us on that. I note, too, that it is to help a sector of our industry which has been especially vulnerable for some years now, principally the textile industry and, to a lesser extend, the footwear industry. I come from a town which has a strong textile industry and from that point of view I welcome it as helping to guarantee continued employment there.

We are all aware that the main grievance of the people in the textile industry has been the high levels of national wage agreements. I think spokesmen for that sector of industry have been the most vocal in complaining that the high levels of national wage agreements are forcing a rise in their costs which is reflected in prices, adding to their difficulties in what is already a most difficult market. A measure such as this is a temporary palliative. The root cause of the industry's difficulty, inflation, has to be tackled. When inflation is tackled the circle of wages chasing prices, which seems to especially affect the textile industry, might be broken. I hope the temporary relief that this gives will not blind anybody to the reality of the situation or the urgency of effectively tackling inflation.

Our inflation has been too high for too long. We are too inclined to say that it is due to the recession worldwide and the impact of foreign or imported energy costs. They are factors, but all the competing nations have similar external factors to contend with. We have been at fault in our domestic internal budgetary and financial policies which have contributed our own percentage input to our inflation figure. If that were removed, our textile industry would be on all fours more or less with their competitors. We would not have to have emergency measures such as this.

This is a heartening measure in the sense that it is a gesture of solidarity by industry towards one of its weaker sectors. On the other hand, on the question of avoidance or evasion if those terms are used in the sense which we have just been hearing them used in relation to the Finance Bill, you can take your pick whether it is avoiding or evading our EEC obligations. While not quite acknowledging that, I think it is breaking the spirit of it and would be unnecessary if we had been managing our affairs properly.

Professor Doolan

I join in the welcome for this Bill. I salute the contribution that the employers are making and the ingenuity of the social partners who have been involved in assisting weaker sectors, which, as the Minister said, are in the textile, clothing, footwear and leather industries. The further assistance that is being provided to these industries may help them to survive a very difficult period. One hopes they will find ways of improving their productivity and perhaps redirecting themselves whereby they may get on to a track that has a long-term viability, because part of the threat to these industries comes from developing countries. If one sets different industrial sectors in a worldwide framework, one may reach the conclusion that the more technologically advanced industries operate in the more developed countries of which we are one. Over the decades, there may be a change in the relative emphasis in the most developed as opposed to the less developed part of the world where some of these industries are concerned. While this Bill is welcome, its effect is temporary and may last only one year, perhaps. It may need to be extended. But one wants to set it in a framework in which the different industries will be self-sustaining.

One hopes that this further subsidy will enable them to become stronger. They may need to redirect and re-orient their products and their development and I am setting that in the wider framework of worldwide trend which perhaps requires the less-developed part of the world—the Third World—to gain access to the more developed part of the world which may devote itself progressively to the development of the technologically more advanced type industries rather than the more traditional ones that are here mentioned. In saying that, I in no way suggest that these industries are destined to go to the wall, far from it. It appears that, with rationalisation and proper product development and, perhaps, specialisation, they can and will survive.

Minister for Labour (Mr. Nolan)

I welcome the support of the Members of the House for this Bill and, particularly, am very pleased to hear the contribution made by each leader in thanking the employers for their contribution to this. We, in the House, are all aware that a time of recession is not a very good time to go to employers seeking a contribution of 0.2 per cent to help other industries. In this case, however, a new development and a new problem have arisen and this sort of neighbourly contribution to industries which are having problems is to be welcomed. I am glad that all sides of the House have welcomed it and have laid emphasis on it.

In opening the debate, I sincerely thanked the employers, on behalf of the Government, for helping us on this particular point and repeat that thanks. Senators and others queried whether we could attain this situation without legislation. Of course, where the Revenue Commissioners are involved, as Members of the House are aware, one must have legislation, though some might have hoped otherwise. We had to have discussions with the EEC because they would object to State aid being provided to support problem industries as it would contravene the Treaty of Rome and the regulations governing trade. In a situation like that where there is international trading in the textile and other industries, if one state subsidised, a subsidy war would result. We are not entitled, under EEC regulations, to use State funds to subsidise these ailing industries. You will notice that I said that the figure was £6.5 million nett, with the gross figure somewhere in the region of £8 million. However the Commission went as far as to say to us that if we take in this 0.2 per cent money, employers have not paid tax on that, therefore its tax content must be deducted by the Revenue Commissioners so as to ensure that, even indirectly, there would be no State moneys used to fund the industries mentioned.

Question put and agreed to.

Bill put through Committee, reported without amendment, received for final consideration and passed.