Dáil Éireann díospóireacht -
Wednesday, 8 Apr 1992

Vol. 418 No. 5

Adjournment Debate. - Waterford Industry Employees' Pay-Related Benefit.

Mr. O'Shea

First, I would like to thank you, Sir, for giving me the opportunity to raise this very important matter.

The Minister for Social Welfare and his Department could not have been aware of the devastating consequences of the decision taken last Monday and communicated by his Department to the ITGWU on Tuesday that, with immediate effect, the more than 2,000 employees at Waterford Crystal on short time working, who are working a week on and a week off, will no longer be paid pay-related benefit. The Minister has effectively signed the redundancy notices for a large number of Waterford Crystal workers. This decision is anti-worker Thatcherism in its vilest form. Workers at Waterford Crystal have been huge PAYE-PRSI payers for many years until two years ago. Now, for a niggardly £17.40 every second week, they are being stripped of this income, vital in terms of financial survival and of keeping jobs alive. All the sacrifices that have been made by the workforce to protect and maintain jobs, in a company which yesterday announced a profit for the first time since 1986, are to be set at nought. The problems which the employees have in relation to their finances and, in particular, in relation to house mortgages are legion. Repossession is a word which has become all too familiar in relation to the family home. People are surviving or worse. At a time when the Minister should be implementing measures to financially assist the workers in the short term in relation to their family homes, he is in effect crushing them and their families down.

I am speaking here on behalf of all workers throughout the country who are working a week on and a week off. However, the dimensions of the effect in Waterford and Dungarvan are enormous. The Minister and his Department cannot persist with this ill-conceived, unjust and inequitable measure, which is forcing people on to full time unemployment benefit and housing lists. It is economic madness. I demand that the Minister pulls back before utter devastation is visited on the economy of the Waterford constituency. This is not just one of the many and varied cutbacks since 1987; this is a fundamental attack on employment. I understand that the Minister is new to the job and is into an enterprising economy, but this measure which is neither cost effective nor jobs orientated is a kick in the teeth to workers who have made a large contribution to this State.

I am sorry the Minister is not present tonight. He may have been afraid to face this issue because this has been a dastardly mistake. The Minister must pull back from the folly before real damage is done. There is still time. The employees at Waterford Crystal have lived in mounting uncertainty as to their future for two years and the Minister by this Act has added greatly to that uncertainty. Has the Minister any comprehension of the suffering that families have been through and are going through? What sense is there in employers being forced to take on the redundancy option because the Government have chosen to reduce benefit, and workers being forced to take up that option? Does it not give the complete lie to the Government's commitments to tackle unemployment? Where is the legality in cutting off pay-related benefit this week, based on the four previous weeks when the Social Welfare Act only passed into law in recent days?

I look to the Minister to address this measure which will have a devastating effect on Waterford, Dungarvan and the whole economy of the Waterford constituency. This is a dastardly attack on a workforce who have contributed so much to this State. For God's sake, Minister, pull back now before the constituency is devastated.

Minister of State at the Department of the Gaeltacht (Mr. Gallagher)

Ba mhaith liom leithscéal a ghabháil thar cheann an Aire Leasa Shóisialaigh, an Teachta McCreevy, os rud é nach bhfuil sé ar a chumas bheith anseo anocht.

The change in entitlement to pay-related benefit referred to by the Deputy arises as a consequence of section 30 of the Social Welfare Act, 1992 which has just been enacted. The effect of the legislative change is to extend to workers who systematically work a pattern of work that includes periods of lay-off, such as week on-week off, fortnight on-fortnight off, the restriction on payment of pay-related benefit that already applies to workers working three days on-two days off or a similar rota each week.

This issue was dealt with extensively during the passage of the Social Welfare Bill in this House in the past two weeks. I welcome this opportunity to again explain on behalf of the Minister, the rationale underlying this measure.

Prior to 1983, short time working usually took the form of a short working week, that is a two or three day working week on a systematic basis for a certain period of time. Until then workers had full entitlement to unemployment benefit and pay-related benefit for all days not spent working. In addition, many workers on short time could qualify for income tax refunds because of their reduced earnings.

The overall effect prior to 1983 was that short-time workers were very often better off working short-time than working a full normal week.

The Social Welfare Act, 1983 addressed that problem through new provisions including the discontinuance of payment of pay-related benefit to workers working these short-time arrangements. This restriction on pay-related benefit has been applied since 1983 to people who, for the time being, are systematically working for a number of days which is less than normal in a working week.

In recent years, it has become apparent that some industries faced with reduced demand have devised work patterns to maximise the social welfare entitlement of their workers through the imposition of a week on-week off or similar pattern of short-time work. Indeed, there have been instances of firms which were already engaged in short-time working switching from a short working week to a week on-week off situation. There have also been instances of overtime working occurring concurrently with short-time working so as to replace earnings lost during the period of temporary lay-off.

These trends have been closely monitored by the Department of Social Welfare. I would not go so far as to say that such practices amount to a conscious abuse of the social welfare system but they are unacceptable. This is particularly so where the arrangements are continued over a long period.

I have no doubt that the two patterns of short-time working, that is the short working week and week on-week off working, are for all practical purposes identical and, therefore, the same arrangements in regard to benefit entitlements should apply equally to both. Section 30 of the Social Welfare Act, 1992 seeks to achieve that objective. It provides that workers who systematically work a reduced working pattern such as week on-week off or fortnight on-fortnight off are no longer entitled to pay-related benefit while still employed with the same employer.

The effect of the provision is that where, in a four week period, and having regard to the normal working days, the number of days worked is equal to or greater than the number of days laid off the claimant will not be entitled to pay-related benefit in addition to his unemployment benefit.

However, employees who work for less than the number of days that they are laid off will continue to be entitled to pay-related benefit. I am aware of the difficult trading conditions being experienced by the company mentioned in the Deputy's question and that employees have been put on a systematic pattern of reduced work for over a year. The result of this pattern of lay-off in the company is that most employees work more than half the normal working days in any four week period and so will not be entitled to pay-related benefit from this week on.

I understand that due to the high level of earnings in the employment concerned most of those affected have been in receipt of the maximum pay-related benefit entitlement of £17.40 per week. Therefore, most will lose £17.40 a week from the introduction of this measure. However, let me put that loss in some perspective. A married man with two children employed by the company concerned and working a week on/week off system would have, in respect of the week he is laid off, received a social welfare payment of £124.40, made up of £107 unemployment benefit and £17.40 pay-related benefit. In addition, a tax refund of £35, the average figure, would be payable, thus giving total income for the week of about £159.40.

Under the new arrangements the same worker would lose his pay-related benefit reducing total weekly income to £142. Gross weekly wages for the company in question range from £240 for general operatives to £470 for craftsmen.