Dáil Éireann Debate, Thursday - 15 September 2022
2. Deputy Aodhán Ó Ríordáin asked the Tánaiste and Minister for Enterprise, Trade and Employment the actions that his Department plans to take to quantify and address the threat to jobs created by the massive increases in costs for energy-intensive enterprises across manufacturing, hospitality, tourism and other service industries. [45080/22]
View answerI wish to ask the Tánaiste about what is probably the biggest issue the Department will face over the coming months, which is rising energy prices and their impact on small and medium enterprises, SMEs, and the potential knock-on impact on employment. What sort of analysis has the Department made on the potential impact on employment in the coming months? What supports will be put in place to prevent businesses going under and unemployment increasing as a result of that?
It is fair to say that the Government has not been found wanting when it comes to helping businesses to get through difficult periods and indeed saving jobs. The multibillion euro financial assistance provided by the Government during the pandemic was unprecedented whether it was to help businesses with their wage bills so that they could keep staff on, or their overheads, or with the introduction of a cheaper easier way to restructure and survive that examinership. The commercial rates waiver and the reduction in VAT for the hospitality and retail sectors are other examples. I am conscious of how worried businesses are as they go into the winter and the real concern about energy costs. Putin’s invasion of Ukraine is having significant consequences for the whole of Europe and not just Ireland. We are working on new proposals to help businesses with rapidly rising energy prices and I expect to be in a position to make announcements about these in and around budget time.
We will also be looking to raise awareness around energy efficiency, helping businesses to reduce the amount of energy they use in the first place and improving take-up of approximately 20 different schemes we have already have in place for business. For example, in June we announced a new €55 million green transition fund to help businesses move away from fossil fuels and towards more sustainable cheaper alternatives. To date, about 120,000 people are directly employed in gas-intensive manufacturing sectors. That is where 40% of final energy consumption is in the form of gas. Gas-intensive manufacturing sectors include the basic metals and fabricated products subsector, chemicals and man-made fibres subsector, which includes the pharmaceutical plants, food and beverage subsectors as well. This represents 41% of the total final gas consumption nationally in 2020 and the majority of industry use.
While it is useful to consider the numbers employed and the energy intensity of the economic sectors to gain a broad understanding of sectoral exposure to energy, it would be incorrect to imply that all jobs in energy-intense sectors are at risk. It is also difficult to forecast the impact that higher energy costs might have on the staffing of energy-intense firms as any potential job losses would depend on decisions taken at individual firm level and therefore it is very difficult to predict given the unique nature of each firm’s cost base.
We need to see from the Tánaiste’s Department some kind of projections and worst-case scenario as to what sections of the economy are more at risk from higher energy prices and the knock-on effect of unemployment. I am sure that there are senior officials in his Department who can have some kind of an opinion as to what we are facing into in a worst-case scenario and what supports may be needed to be prepared for in such a scenario. Has the Tánaiste spoken to the energy regulator when it comes to energy prices right across the board, but particularly, in this instance, for small and medium-sized enterprises? Could the Department have a scheme that it may be able to roll out which could prevent job losses? It could have some kind of employment support scheme, as it had in the past. As the Tánaiste is aware, some businesses across Dublin, across the country and in my own constituency, did not survive the Covid-19 pandemic and some that did might not survive this crisis. I ask the Tánaiste again about the type of analysis that his Department may be doing as to worst-case scenarios.
We certainly can do analysis, we have and we will do more. We can make projections but, unfortunately, I do not believe that these projections can be particularly helpful. The truth is that no one of us can guess how long this energy price crisis will go on for and no one can say how high gas and electricity prices will go. That is the reality of the situation. One can make one’s projections but they are entirely based on assumptions and those projections essentially, to be polite about it, are going to be guesswork if prices double, treble, quadruple or increased tenfold. One can do it oneself but it will not be particularly helpful for decision-making.
We are developing three schemes that will help a business. One is a loan scheme similar to what we had for Brexit and Covid-19. The second is a grant scheme for manufacturers and exporters who are the higher energy users, again similar to what we had during the Covid-19 period. Then we have a broader measure to help small businesses, in particular, namely, the retailers, hospitality sector and so on. That is what I am trying to put together between now and budget day.
I appreciate that we have experience through the Covid-19 period as to what is necessary and we are going to have to do that at least but I hope the Department may be in a position to prepare for that worst-case scenario because it is going to need to have some plans in place that, hopefully, it will not have to revert to. If we have a situation where businesses go under and unemployment increasing, that is a winter that none of us really want to face into. As I have said, many of these businesses have been wounded during the Covid-19 period. Some of them came out of the financial crash ten years ago, Covid-19 has hurt them deeply and now they are facing into this. We do not want to see businesses struggling but, if they do survive, doing so on the basis of laying people off. While I understand that none of us can predict how long this is going to last or how deep it is going to be, we nonetheless need to give some comfort to businesses and to workers that they will not be left alone and stranded by any Government or potential Government scheme.
I do not disagree with what the Deputy is saying. We did not put all of the resources into saving so many businesses and jobs during the pandemic to have those businesses fail now during this energy crisis.
What I have learned from experience from helping to lead the country through a number of crises: the bailout and the banking crisis ten or 11 years ago with the Labour Party; Brexit and avoiding a hard border and no deal; and more recently the pandemic, is that one needs to be dynamic in one’s response. The worst-case scenario, which is highly unlikely, is of gas being unavailable or totally unaffordable, in which case businesses cannot operate. We then would something like the employment wage subsidy scheme, EWSS, or the Covid restrictions support scheme, CRSS. The businesses would be surviving and the staff would continue to get paid but they would not be able to operate. I hope we are not in that worst-case scenario. The more likely scenario is of businesses still operating but having to do so with very high energy bills. That is why one’s intervention would be more linked to helping them with the bills than an employment subsidy. It depends on where we end up and we will need to be flexible and dynamic.
