The objective of the Employment Wage Subsidy Scheme (EWSS) is to support employment and maintain the link between the employer and employee insofar as is possible. The EWSS has been a key component of the Government’s response to the Covid-19 crisis. It is an economy-wide scheme that operates across all sectors.
While the criteria for eligibility for business in general is based on a reduction in turnover, as a result of the pandemic and having regard to the importance of maintaining the provision of childcare facilities so as to enable parents to continue in, or to take up, positions of employment, the legislation provided that childcare businesses in possession of tax clearance and registered in accordance with Section 58C of the Childcare Act 1991 are eligible for the EWSS.
The cost to date (18th November) of the EWSS is over €6.3 billion comprising of direct subsidy payments of €5.505 billion and PRSI forgone of €865 million to 51,700 employers in respect of over 687,600 employees.
Government policy has been that there will be no cliff edge to the support, at the same time it is necessary to gradually unwind and phase out this temporary emergency support measure. That is why, on Budget Day, I announced the extension of EWSS in a graduated form until 30 April 2022. This 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.
To address the specific point in relation to sole-traders, subject to meeting the requisite conditions, a sole-trader’s business may be a qualifying employer for the purpose of the scheme, the same as is the case for any other employer. As was the case under the Temporary Wage Subsidy Scheme (TWSS), sole-traders are not able to claim the EWSS in respect of their own employment as they are not employees – and further, may not necessarily be paid via the payroll system unlike proprietary directors who are obliged to have PAYE operated on any payments made to them personally.
Since the introduction of EWSS there has been regular and, where necessary, detailed engagement between my Department and the Department of Children, Equality, Disability, Integration and Youth (D/CEDIY), who have policy responsibility for the childcare sector. Analysis undertaken by D/CEDIY informed the approach taken with regard to the childcare sector. Childcare businesses will continue to benefit from the EWSS exemption until end April 2022.
I understand that analysis by D/CEDIY estimates that the value of EWSS to the sector at the enhanced rates is €34 million per month, €22 million per month at original rates and €11 million at the flat rate. That Department estimates that the cost to the sector of operating in line with the public health guidance is €12 million per month.
As announced by my colleague, Minister O’Gorman, it is intended to put in place a transition fund between May and August 2022, which early learning and childcare providers can access. From September 2022, a major new funding stream will be introduced, to support providers in meeting their operating costs in return for a commitment that fees to parents will not increase. Therefore, I am satisfied that a coherent approach has been taken as regards the exit strategy for EWSS and the introduction of the new funding stream for the childcare sector.
Since the onset of the Covid-19 pandemic, the Government has adopted a proactive and dynamic approach to supporting businesses and individuals insofar as possible during this challenging time.
As regards the EWSS and the current circumstances referenced in this question, the Government continues to monitor developments closely and will consider if any response is required at an appropriate time.