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Top up scheme for employers to pay €203 to laid-off workers and receive State refund approved by government

This scheme allows employers to pay workers €203 a week and receive a refund from the State.

Minster for Social Protection Regina Doherty.
Minster for Social Protection Regina Doherty.
Image: Sam Boal

Updated Mar 20th 2020, 8:23 PM

A TOP UP scheme for employers who have had to let go of staff temporarily due to Covid-19 to provide some payment to their employees and receive a refund from the State has been approved by the government. 

This scheme allows employers to pay workers €203 a week and receive a refund from the State in the instance that the employer has ceased trading and as a result of financial difficulty have to lay off staff on a temporary basis.  

Minister for Employment Affairs and Social Protection, Regina Doherty, said that employers who engage in the scheme will be able to top up their payments in this way. 

The details are being finalised and will be announced early next week, Doherty confirmed.

“This will further strengthen the viability of the scheme and ensure that many employers can provide some additional income above the basic social welfare payment for their workers,” she said. 

Minister for Business, Enterprise and Innovation, Heather Humphreys said the government will ensure “everything is done” to protect firms sustain their operations as required.

“The Department of Business, Enterprise and Innovation, together with Enterprise Ireland, IDA Ireland and the other state agencies, will also continue to support companies in every way they can,” she said. 

Unions had been calling for top up options to be made available for employers. 

This echoed the calls from Irish business lobby group Ibec which asked that the government create an income compensation scheme which would see the government provide up to 75% of an employee’s income if they were laid off. 

Earlier today, Ibec warned that a package of up to €6 billion to provide “income continuity” for employees impacted by the Covid-19 crisis is needed to insure against the fallout for economy and business sectors.

A report from the group published today details a range of social welfare measures – similar to those in European countries where up to 70% of income is protected through welfare payments – in order to insulate the country against the economic fallout of job losses and lay-offs. 

Employees in the retail and hospitality sectors have already been impacted with many facing a period of unemployment while pubs, restaurants and other businesses shut up shop on the back of government advice. 

Most of those employees will avail of the unemployment benefit of €203 made available by the Government, while those infected with the coronavirus can avail of a €305 illness benefit. 

But Fergal O’Brien, director of policy and public affairs at Ibec, said a more ambitious welfare plan was needed to insure the economy and to keep supply coming within manufacturing. 

“Our core message here is that we obviously see that the Government is incrementally responding to this [and] has had to take some very rapid measures over the past week.

Those measures have been helpful. Our view to date is they have not been enough. 

“So we are calling for much more ambition in terms of the scale of measures required. At the core of that, the philosophy is very much around ensuring that we continue to keep income flowing into households and Ireland is an absolute outlier here in an international context.

“We have a very minimalist social welfare safety net, we don’t have a sophisticated social insurance scheme like you see across Europe… When we look at lower income countries across Europe such as Portugal, they have put very significant income protection provisions in place in response to the crisis. 

“We’re seeing a number of countries protecting up to 100% of income, up to a cap of about €40,000 for a period of three months. In Ireland, both our illness benefit and our Covid emergency payment are minimalist payments. We’re going to need to go much beyond that.”

Proposal

In its proposal, Ibec suggests that in a worst case scenario, where 500,000 people are in need of income continuity as a result of the coronavirus measures, and where the government covers 100% of that income, it would amount to a cost of €6 billion to the State.

Screen Shot 2020-03-20 at 12.16.29 Source: Ibec

In a scenario involving half of that, with around 300,000 requiring income, the cost to the State would be in the region of €3 billion. 

“We’re suggesting that we think the 70% range is about appropriate and the overall costings will depend on what cap you put on it and looking at the average income of workers in the most impacted sectors, we have costed this particular model at around a €30,000 [income] average,” O’Brien said. 

“If we’re providing supports in the region of 300,000 workers at a 70% replacement rate, we’d be looking at about €2.5 billion and that would increase depending on the amount of income that [the government] wanted to preserve.”

Ibec’s research and proposals centre around two stages – the first involving preservation of economic growth as much as possible, protecting employees income and the manufacturing industries to continue the supply of goods through the economy. 

It wants measures to protect those areas before moving to a ‘reboot’ stage once the Covid-19 crisis is over, when inevitably there will be a slowdown in economic growth, but nowhere near the damage caused by the financial crash a decade ago. 

“There is no precise comparator. It shares some of the features of an oil crisis, it shares some of the features of a war without the physical destruction so it really is unprecedented but it is not the type of demand shock that we saw in 2008. It doesn’t have the complexity of the financial crisis that we had in 2008.

“So I think a very different set of responses can bring us out of this very very quickly.”

Losses

Speaking to reporters yesterday, Social Protection Minister Regina Doherty said as the situation is changing so rapidly, it is difficult for the government to put a final number on those expected to lose their jobs as a result of the outbreak.

Already there are 140,000 workers in the hospitality industry affected, 54,000 in the accommodation industry and 200,000 in retail. The minister said industries she had not expected to be impacted are now suffering losses and the government is moving to respond to that.

“We have never experienced a challenge to our welfare system of this magnitude in living memory. Since last Friday, my Department has been assisting an unprecedented increase in the numbers of people seeking income support from the Department,” Doherty said in a statement today. 

“I would also like to thank the public for their patience and forbearance as we try to meet the challenge of a sudden large scale increase in demand for our services,” she said. 

With reporting by Orla Dwyer. 

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