Dáil Éireann Debate, Tuesday - 9 November 2021
87. Deputy Ged Nash asked the Minister for Finance if his Department has carried out a risk assessment regarding the winding down of the employment wage subsidy scheme and the potential impact on employment levels and the risk of corporate insolvencies; if his Department is considering a replacement scheme based on the principles of the successful German Kurzarbeit short-time work scheme; and if he will make a statement on the matter. [54316/21]
View answerSection 28B of the Emergency Measures in the Public Interest (Covid-19) Act 2020 provides for the operation of the Employment Wage Subsidy Scheme (EWSS). It provides a subsidy to qualifying employers based on the numbers of paid and eligible employees on the employer’s payroll and charges a reduced rate of employer PRSI of 0.5% on wages paid which are eligible for the subsidy payment.
The cost to date (4th November) of the EWSS is almost €6.2 billion comprising of direct subsidy payments of €5.349 billion and PRSI forgone of €843 million to 51,600 employers in respect of over 681,000 employees.
It is important that, as the recovery gains further momentum, supports are further re-calibrated in the longer-term interests of businesses that are in receipt of those supports and in the interests of the wider body of taxpayers.
Government policy has been that there will be no cliff edge to the support, at the same time, it is necessary to unwind and phase out this temporary, emergency support measure.
As the Deputy will be aware, on Budget Day, I announced the extension of EWSS in a graduated form until 30 April 2022, which ensures there will be no sudden end to the EWSS and also provides clarity and certainty to business.
The following are the broad parameters of this extension:
- The current arrangements, including the enhanced rates of subsidy, will remain in place until November 30 2021;
- For December 1 2021 to February 28 2022, the original two-rate subsidy of €151.50 and €203 will apply;
- For March and April 2022, a single flat rate of €100 will apply and the reduced rate of Employers’ PRSI will be reinstated for these two months;
- Businesses availing of the EWSS on 31 December 2021 will continue to be supported until 30 April 2022. The scheme will close to new employers from 1 January 2022.
With the extension of EWSS to end April 2022, continued support will remain in place for six months after the lifting of most public health restrictions and two months after the planned cessation of the PUP. It also means that a wage subsidy scheme will have been in place for over two years. By signalling the changes to EWSS at this time, it ensures there will be no sudden end to the EWSS and also provides clarity and certainty to business.
In determining the appropriate approach to adopt with regard the recalibration of the EWSS and the ultimate phasing out of this temporary, emergency support measure, appropriate data were not available at sufficient breadth and depth across the various sectors of the economy to enable the type of risk assessment mentioned by the Deputy to be carried out.
At the same time, consideration was given to a range of factors. Such factors included the impact of the economic recovery on particular sectors, recent trends in EWSS statistics across different sectors, number of employers and employees supported by EWSS, the levels of employment and the trends in PUP, including the interaction and the flows between the EWSS and the PUP. In addition, Revenue operational experience and insights in relation to the scheme, duly interpreted and provided at a macro level, also informed the process.
More broadly, as outlined in the Budget 2022 Economic and Fiscal outlook – current data confirms that the Government’s policy response to the pandemic – essentially keeping workers close to the jobs market – has paved the way for a rapid rebound in the labour market. In addition, as part of the risk assessment published in Budget 2022, the risks related to SME indebtedness are taken into account.
All of the factors and elements mentioned helped to inform the Government’s decision to extend the EWSS in graduated form until 30 April 2022.
I am satisfied that the revised arrangements for EWSS strike a balance between helping those businesses which continue to need support, while recalibrating the scheme in light of the wider economic recovery.
In relation to a replacement scheme similar to the German Kurzarbeit short-time work scheme, I would note that the Department of Social Protection, in addition to the PUP and other jobseeker payments, currently provides a Short-Time, Work Support scheme to support employees. This is a form of Jobseeker's Benefit and is an income support payment for people who have been temporarily placed on a shorter working week by their employer.
It is widely acknowledged that the EWSS has been an extremely successful policy intervention during the pandemic and it played a central role in supporting businesses, encouraging employment and helping to maintain the link between employers and employees during this pandemic. I understand that, in relation to income supports and wage subsidy schemes, plans are being developed at official level to ensure that lessons learned from the crisis are captured for the longer term and that arrangements are put in place to be able to respond appropriately to any future large labour market shock.
