Having come through the initial economic shock of the pandemic which saw 1.2 million people unemployed or being supported by either the Pandemic Unemployment Payment (PUP) or the Temporary Wage Subsidy Scheme (TWSS) in April this year, there are positive signs indicating that people are now returning to work.
The latest data from the CSO shows the monthly unemployment rate, adjusted to include those in receipt of the PUP, has almost halved from 28.5% in May 2020 to 15.4% in August. The numbers receiving the PUP have fallen from 598,000 at the beginning of May to 206,341 on 22nd September; a decrease of over 65%.
Over 663,600 employees received a subsidy through the TWSS during its operation. By 17th September, over 34,300 employers had registered with Revenue for the new Employment Wage Subsidy Scheme (EWSS). According to the Revenue data, 85.2% of these employers are in their Business Division which is predominantly comprised of small and micro enterprises.
These schemes have played an important role in maintaining incomes throughout the pandemic. The TWSS has helped to maintain that important link between employers and their workers. Furthermore, the design of the TWSS has allowed it to provide vital supports to businesses right across the economy, including many of those who continued to trade despite the extremely challenging trading environment of the past few months.
The EWSS, which was introduced in the July Stimulus, provides a crucial support to businesses as they resume activity in the face of challenges to their business models brought about by COVID-19. It represents a weekly subsidy to each job provided by that business, thereby reducing the costs of labour, which are typically amongst the most significant costs incurred by businesses. The EWSS has broader application than the TWSS; for example it includes employees that were not previously eligible, such as seasonal workers and newly hired personnel. The EWSS will run until 31 March 2021.
In addition to the EWSS, the July Stimulus Package included a variety of measures aimed at retaining jobs and supporting people back into employment through further education and training and labour market activation measures.
Enterprise supports include the extension of the Restart Grant and the Commercial Rates Waiver, the introduction of the Credit Guarantee Scheme, additional resources for MicroFinance Ireland and the Local Enterprise Offices, an expansion of the Future Growth Loan scheme, Enterprise Ireland’s Sustaining Enterprise Fund, and the Online Retail and Online Trading Voucher schemes.
Reskilling and Upskilling supports include 12,500 additional places for short-term skills training and 35,000 additional places in further and higher education (Skillnet Ireland, Springboard+, Human Capital Initiative) including 19,000 on the new SOLAS Skills to Compete programme which will support people in developing and attaining qualifications for emerging growth sectors and occupations. A temporary Apprenticeship Incentivisation Scheme was introduced along with a Retrofit Skills Training Initiative to support the expansion of the National Retrofitting programme.
Labour activation supports include 8,000 recruitment subsidies under the JobsPlus scheme, an increasing of the capacity of the Public Employment Service to support jobseeker job search advice and assistance, extension of the Back to Work Enterprise and Back to Education Allowances to people currently in receipt of the PUP. Some 10,000 additional work placement/experience scheme places for those unemployed for over 6 months are also being provided.
While uncertainty remains as to the course and duration of the virus, as well as a threat of a no deal Brexit, a number of forecasts for the medium-term trajectory of the labour market have been published. The Central Bank in its Quarterly Bulletin, July 2020, under a baseline scenario, projects that unemployment will average 14.5% in 2020, decline to 9.2% in 2021, and decline further to 7.3% in 2022. Under a severe scenario, it is projected that unemployment will average 16.6% in 2020, decline to 12.4% in 2021 and decline further to 9.4% in 2022. The Department of Finance forecast in April that unemployment will reach 10.9% by the end of 2020, and 9% by the end of 2021. The ESRI’s Summer 2020 Quarterly Economic Commentary sets out baseline, severe and benign scenarios for unemployment in 2020, of 17%, 19% and 15% respectively.
The focus is now on sustaining the recovery in the face of uncertainty and disruption while seeking to minimise permanent loss of economic activity and employment. As such, the next steps in our recovery journey will be mapped out in the October budget and the subsequent National Economic Plan.
The National Economic Plan will set out a vision for a post-Covid economy and identify policies and strategies to achieve those objectives. While the focus of Government action up to now has been on protecting workers, households and firms, the plan will look to the future and set out how our economy can be positioned to exploit opportunities for growth in emerging sectors and in areas such as new ways of working, while also addressing how we will prepare for the transitioning of enterprises and workers in response to technology and climate change developments and the acceleration of trends as a result of COVID-19. Anticipating future skills needs, and re-skilling and upskilling of the labour force will be a core element to be progressed under the plan with increased support for job or role transitioning. The plan will be progressed over the coming weeks and I would expect it to launch in November.
In terms of cross government engagement on labour market issues, the Labour Market Advisory Council was set up to provide advice to the Minister and the Government with advice regard to the labour force participation rates, minimising unemployment levels and reducing average unemployment durations. The onset of the pandemic meant that the first task of the Council was to advise on measures to tackle the labour market challenges arising from the pandemic with an aim of supporting broader economic recovery in the State. The Council will also advise on the wider labour market and employment policy challenges that face the Irish economy in the post-pandemic recovery period. Under its Terms of Reference, a central function of the Council is to advise Government on the development of the Pathways to Work strategy.
The forthcoming Pathways to Work 2020-2025 strategy, which is the Government’s overall framework for activation and employment support, is expected to be published in Q4 2020 and will complement the National Economic Plan.
The Labour Employer Economic Forum (LEEF) comprises representatives of employers and trade unions with Government Ministers and is chaired by the Taoiseach. The LEEF was established to bring together representatives of employers and trade unions with Ministers to exchange views on economic and employment issues as they affect the labour market. The aim of the LEEF is to provide a space to discuss areas of shared concern affecting the economy, employment and the labour market on a thematic basis, such as competitiveness, sustainable job creation, labour market standards and equality and gender issues in the workplace.