What Level 5 lockdown will mean for Irish business

Six weeks of Level 5 restrictions will cost the Irish economy €1.5bn and could impact thousands of jobs. Can Irish businesses weather the storm?

Ireland’s move to Level 5 lockdown may be seen as a harsh and necessary measure that will ultimately save lives and may even save some kind of a Christmas, but businesses and their employees will be impacted.

In a televised address Taoiseach Micheál Martin, TD, said that the restrictions of recent weeks that slowed down the virus were not enough “and further action is now required.”

“We didn’t want to be here a second time, but to avoid further uncertainty and further costs, now is a time to fully commit once more”

Tánaiste and Minister for Enterprise Trade and Employment Leo Varadkar, TD said that the Level 5 restrictions will cost the Irish Exchequer €1.5bn and will also cost some 150,000 jobs.

The three Government schemes – the pandemic unemployment payment (PUP), the Employment Wage Subsidy Scheme (EWSS) and Covid Restrictions Subsidy Scheme (CRSS) will all add up to €200m a week.

The bottom line

The bottom line is that firms that made it through the first shut down may struggle to make it through the second, with sectors such as hospitality, tourism, retail, sport and leisure expected to be hit the hardest.

The restrictions from midnight t (21 October) will have impact social and sporting lives in fundamental ways:

  • No visitors between households, you can only meet with one other household in an outdoor setting, no organised gatherings should take place, no organised outdoor gatherings, up to 25 guests can attend a wedding ceremony and receptions, only up to 10 people can attend a funeral and people will be limited to staying within 5km of home.
  • The schools and childcare facilities will remain open and only elite sport and GAA inter-county championships will be played. Children will be allowed to train in small groups.
  • Public transport will be limited to 25pc capacity. People are being urged to walk or cycle where possible. Public transport should be for essential workers and essential purposes only.

The impact on businesses will be severe:

  • Non-essential retail businesses and services such as hairdressing will be forced to close.
  • Construction will remain open, meaning for now at least the jobs of 147,000 construction workers and around 50,000 others involved in the supply chain will remain secure. 
  • Manufacturing, machinery supply, repair and installation, agriculture, horticulture, forestry, fishing and many other services have also been deemed essential enough to continue.
  • Restaurants will only be allowed to offer take away or delivery and wet pubs will also only be allowed to offer take away or delivery only.

According to Varadkar, Ireland is the first country in Europe to go back into a national lockdown. He described it as a “pre-emptive strike” that was needed “before it is too late.”

He told business leaders they had done nothing wrong and “in in fact, you’ve done everything right.” He also called on commercial landlords to give tenants a break and follow a recently published code of conduct.

It is understood that the Government is going to consider a new range of fines and penalties to ensure the regulations are followed.

Business reaction

Ibec CEO Danny McCoy described the move as “a clear emphasis on lives rather than livelihoods, with the evidence, such as it is, still based upon unmitigated growth projections and predicted hospital capacity constraints. We still lack clarity on the cost-benefit analysis of the national strategic goal of suppression. The alternatives of mitigation or elimination have not been clarified in terms of their trade-offs.”

McCoy called for everyone to play a part. “Given that the decision on further restrictions has now been made and that the costs for livelihoods has once again been committed, it is now up to all of us all to deliver so that the benefits are achieved. This will require remote working in most cases to ensure that schools, manufacturing and construction can continue. The repression of so-called non-essential retail, hospitality and personal services are a huge cost for the individuals involved. This makes it all the more important that this intervention works and works quickly.”

He said that businesses own resources and schemes like the PUP and EWSS will underpin these supports.

“We didn’t want to be here a second time, but to avoid further uncertainty and further costs, now is a time to fully commit once more. As businesses we must work collectively to present the necessary leadership to ensure stability in the coming weeks for all stakeholders: be they employees, customers, suppliers and the wider communities in which we operate.”

Dublin Town, which represents Dublin city businesses, said its members were dismayed by the decision and said it had sealed the fate of many. 

The Construction Industry Federation welcomed the Government’s decision to allow construction remain open describing it as an “awesome responsibility.”

Retail Excellence, the largest retail body in Ireland, representing over 2,000 retail businesses, expressed its deep disappointed with the Government’s decision to close all non-essential retail by moving the country to Level 5.

Duncan Graham, Managing Director of Retail Excellence said: “Retailers have been contacting us throughout the day extremely concerned and upset at closing their business for six weeks at the most important trading period of the year,” Duncan Graham, managing director of Retail Excellence said. “Non-essential’ retailers generate over 70pc of annual turnover over this quarter and these further restrictions will inevitably push many more businesses into insolvency.”

He said many retailers invested heavily to make their premises safe and were fully compliant with Government guidelines. He also cited low transmission of Covid-19 in many of the largest retailers’ workplaces.

“Despite far higher infection rates, retailers in Northern Ireland continue to trade relatively normally compared to their counterparts in the Republic. No other European country has locked down retail in the way this government has done with retailers in Ireland.

“We estimate over 60,000 retail employees will lose their jobs as a result of these new measures joining the 30,000 retail workers who have already been laid off this year.”

Christmas is coming

Graham said that the lockdown will create “unprecedented pent up demand” for the month of December, resulting in a frenzied shopping experience in the final weeks before Christmas.

“There will be a massive upsurge in online shopping this year and we know that 70pc of this is spent with retailers based out of the country. Retail stores are fully stocked for the Christmas period and failure to move this stock will create cash flow issues and impact payment to suppliers and other creditors.”

He called for a “crystal clear” road map to reopening, that online retailing is totally unrestricted, that the TWSS is reintroduced with immediate effect and that further supports are made available to retailers to help with legacy debt such as rent payments.

By John Kennedy (john.kennedy3@boi.com)

Published: 20 October, 2020