Government must get the balance right between supporting jobs and keeping our public finances safe

The last two years have been an exceptional period in our country’s history. So much has happened since 12 March 2020 when the first restrictions were announced by the then Taoiseach from Washington.

Since then, Covid-19 has affected almost every part of how we as a society, as a community, as families, have had to go about our daily lives. The pandemic delivered a severe shock to our economy; it disrupted education and had wide-ranging impacts on the manner in which we conducted politics, religious practices, sports and the arts.

Over 9,000 people have tragically lost their lives due to Covid-19 on this island. Sadly, cases where it was not possible to say a final goodbye in person were far too frequent.

At the same time, our country has responded to the unprecedented challenges in an exceptional way. Our economic response to this health crisis has worked. While the anxiety and difficulty that so many have faced was so intense, we protected income, jobs and the viability of employers. We could do this due to the strength of our public finances going into this crisis and the support from the European Central Bank.

A critical policy in the Government’s response has been the Employment Wage Subsidy Scheme or EWSS. This scheme represented a substantial and key part of the Government’s economic response to the pandemic. It has played a central role in supporting businesses, encouraging employment and helping to maintain the link between employers and employees.?

Other policies such as the Covid Restrictions Support Scheme, and the Tax Debt Warehousing Scheme also played a vital role.

Of necessity, with the unpredictability of the virus, these schemes have run for a longer period than originally anticipated and, while they have been extremely successful in maintaining employment and supporting businesses, we cannot lose sight of the substantial cost to the Exchequer.?

To-date, over €7 billion in support has been provided to 51,900 employers in respect of over 708,300 employees.?When added to the €2.9 billion that was provided through its predecessor, the Temporary Wage Subsidy Scheme, the State has invested almost €10 billion so far in wage supports over the course of the pandemic.

Following the recent welcome advice from NPHET and the Government decisions on the removal of restrictions that followed, it is now time to adjust our focus towards an exit from these exceptional supports.?This must be done in the interests of businesses themselves and their own long term viability.

It is also critical to move to a normally functioning jobs market. The Government cannot subsidise the wage bill of some employers while other employers cannot find enough workers.

As part of Budget 2022, the future of the EWSS, including its exit arrangements was announced. Last month, the Government agreed the final amendments to this scheme.

The majority of businesses have moved to the reduced rate of support under EWSS from 1 February. ?However, some business, in particular those that have been most adversely affected by the public health restrictions that came into effect in last December, may require additional support for a further period as they re-open and emerge from the restrictions. As such, the Government decided to defer the application of the step-down arrangements for EWSS by one month for those businesses.

This means that many businesses will exit this scheme on the 30th of April. Other businesses, impacted by recent public health regulations, will follow a month later.

This will be beneficial to businesses in the hospitality sector that have been impacted by health regulations.?It will provide those businesses with enhanced support for a longer timeframe to support their recovery following the easing of public health restrictions.

The Government is delivering on its commitment to avoid a cliff-edge end to our supports while also winding down these massive schemes that cannot run forever.

We have come on an extraordinary journey over the past twenty-two months or so.??I recall that in my Budget 2021 address in October 2020, I noted that we have faced numerous difficulties since independence, but never one like Covid-19; an invisible enemy that has caused great suffering, and disrupted so much of what is central to our well-being. I also contended that we would come through the experience and that from the ashes of the pandemic, together, we would build a stronger, more resilient Ireland.??

While challenges await, our economy can and will move to this better place. Our economic supports have worked, they were central to our efforts. But we cannot continue to sustain emergency supports as we move to a more normal economy.

These final decisions get the balance right between supporting jobs and keeping our public finances safe.