Business group Ibec has called for the creation of a €4bn fund to replace wages of up to 500,000 workers and their households, if needed, that could be affected by the economic fallout of the Covid-19 outbreak.

Last week Ibec launched a major new report that details the range of proposals for Government to effectively address the profound economic fallout of the COVID-19 crisis.  

Analysing measures adopted by other European countries to date, the report outlined a two-phase strategy of Mitigation and Preservation and Reboot/Recovery.

“This is a substantial exposure for the State but it is one that is essential and that we can afford”

“While the public health measures remain the absolute imperative, it is vital that Government simultaneously signals confidence for our workforce and businesses,” Ibec CEO Danny McCoy said.

“Now is not the time for reticence. Our European counterparts are well ahead in terms of levels of income continuance and scale of fiscal packages.

 “Now is the time for courageous leadership and a comprehensive response to prevent a supply side shock cascading into a demand shock which would permanently close some businesses and challenge the recovery.” 

Keep incomes flowing, Ibec urges

McCoy said the Government must now focus on acting as an income source of last resort for households who have lost their regular income.

“Such income support measures could require up to €4bn of funding (1.2pc of GDP) which would fund replacement rates of at least 70pc of net wages lost, for 20 weeks, for up to 500,000 workers, if needed. This is a substantial exposure for the State but it is one that is essential and that we can afford. Government’s response strategy must focus on keeping firms alive, keeping their employees engaged with them and protecting the income of individuals.

“Other countries have been much more extensive in terms of State credit guarantees, with many countries putting measures in place which would, if necessary, reach 10pc of GDP and greater. Significant measures will need to be put in place in Ireland in order to guarantee liquidity and prevent escalation of cash-flow issues throughout the supply chain.

“Both immediate and medium-term fiscal stimulus measures will also be required and this approach will require significant deficits by the State in 2020 and beyond with international fiscal rules and other EU measures to reflect this.”

Last week the UK’s Chancellor of the Exchequer Rishi Sunakannounced sweeping measures for full and part-time members of staff to have up to 80% of their wages paid if they lose their jobs.

If the support – of up to £2,500 per month – is claimed for 10pc of employees in the UK, it could cost the government £10bn over three months.

A similar package is being called for the armies of self-employed freelancers in the UK at risk of losing their livelihoods during the Covid-19 pandemic.

Written by John Kennedy (john.kennedy3@boi.com)

Published: 23 March, 2020

Recommended