Wednesday, 3 February 2021
Emergency Measures in the Public Interest (Covid-19) Act 2020: Motion
Cuirim fáilte roimh an Aire. An tAire will recognise that my party and I worked constructively to address many of the gaps in the old temporary wage subsidy scheme, ensuring a higher rate of subsidy for low-paid workers and the inclusion of women returning from maternity leave. As he will know, I was critical of the new scheme that was introduced in September of last year on the grounds that it significantly cut the levels of wage support for workers. I warned the Minister at the time, and have consistently done so since, that the Government was walking into a jobs crisis if the rates of wage support were not enhanced. I am thankful that, on 20 October, the Government changed direction and enhanced these rates in a decision which I welcomed. However, the Minister made clear at that time that the enhanced rates would only last until 31 January, after which they would again be cut to the lower rates of €203 and €151.50, arbitrary rates that risked another cliff edge. As I said on 6 January, to make this cut during the period of level 5 restrictions, which were all but certain to continue beyond January, would be reckless and would lead to wage subsidies being cut for more than 300,000 workers. At that time, I called on the Government to extend the existing rates until at least 31 March 2021. I welcome the fact that the Government has now done so with this motion.
In January alone, payments of €331 million were paid out to 44,800 employers, supporting the salaries of 315,200 workers. This is money well spent. Had the Government not supported incomes and businesses through deficit spending, it would be a different story. What is now a supply shock would have become a demand-side crisis with permanent job losses and business failure. The deficit has served its purpose and we must now turn our attention to the future.
Recovery will take time. In its most recent quarterly bulletin, the Central Bank suggested that employment will not recover to pre-pandemic levels until 2022. Given that this is the case, wage supports must remain a feature of our economy in the medium term. Workers and employers cannot afford uncertainty, cliff edges or last-minute announcements from Government. Workers and businesses need assurance that wage supports will remain in place beyond March.
We must also be ready to put in place longer term solutions. There is no need to reinvent the wheel. While we introduced schemes that subsidise a fixed proportion of wages, others utilised short-time working schemes whereby employers pay their employees for hours worked while the State compensates employees for a portion of their pay for lost hours. Germany had such a scheme in place for more than a decade, which helped stave off the high levels of unemployment seen elsewhere during the previous recession. Short-time working schemes are a well-known and successful labour market tool to reduce unemployment which the Minister should consider as a long-term tool.
I will finish by commenting on an issue which has affected a great many workers. It must be remembered that the Government calculated the subsidies under the wage subsidy scheme as a percentage of net earnings or take-home pay after tax. These earning have now been taxed and workers are subject to what is, in effect, a double deduction from their pay. In the North, in Britain and in Denmark, wage subsidies were calculated as a percentage of gross pay, which was then subject to tax. There was no double deduction in those jurisdictions and no taxing of net pay, which is in itself an oxymoron. The decision by Government to act differently here was foolish and unnecessary.
I cannot overstate the level of anger and frustration felt by many of these workers. The fault lies squarely with the Government.
I will finish by saying that as we move forward, I look forward to working with the Minister to ensure we have the supports in place to support workers, employment and our economic recovery. Gabhaim buíochas leis an Leas-Cheann Comhairle.