Ibec has called on the Government to provide up to €4 billion in income supports to households that have lost their regular income as a result of the coronavirus.
The employers' group said the Irish Government was "behind the curve" internationally in terms of a fiscal response to the crisis and was in danger of letting a supply-side shock morph into a demand shock which would permanently close businesses.
It said a €4 billion package, which equates to 1.2 per cent of gross domestic product (GDP), could fund replacement rates of at least 70 per cent of net wages lost, for 20 weeks, for up to 500,000 workers.
The call for more extensive income supports comes in the wake of a stark warning that up to a fifth of the working population here could lose their jobs as a result of the crisis.
Minister for Employment Affairs Regina Doherty said that more than 400,000 people – some 17 per cent of the State’s 2.3 million-strong labour force – could lose their jobs if the economy is forced into an extended shutdown.
“While the public health measures remain the absolute imperative, it is vital that Government simultaneously signals confidence for our workforce and businesses,” Ibec’s chief executive 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,” he said.
Two-phase strategy
In its submission, Ibec said European countries were adopting a two-phase strategy to the deal with the crisis, centred on “mitigation and preservation” followed by “reboot and recovery”.
It said the Irish Government must match other European countries in moving from a “safety net” to an “income continuance”approach in its labour market response.
It's a lot of money but you know what – we can afford it. We have come into this crisis in good shape
Ibec’s director of policy and public affairs, Fergal O’Brien, said the group had costed a programme of supports for 300,000 workers in the most-affected sectors at roughly €2.5 billion.
An absolute worst-case scenario involving supports for more than 500,000 workers could cost as much as €6 billion, it said. “It’s a lot of money but you know what – we can afford it. We have come into this crisis in good shape,” Mr O’Brien said.
“We are a high-income and wealthy country in a European context and we should be providing a best-in-class support here,” he said.
Purchasing power
He warned that if the link between businesses and their employees – in terms of income and purchasing power – is broken, “we’re going to have a whole range of other problems across the economy, and it’s going to take an awful lot longer to get out of this crisis economically.”
In its submission, Ibec also noted that other countries have been much more aggressive in terms of state credit guarantees, with many countries putting measures in place which would, if necessary, reach 10 per cent of GDP.
Currently the Irish Government has promised to provide just €200 million through the Strategic Banking Corporation of Ireland (SBCI) and also some Enterprise Ireland supports, which amoiunt to about 0.1 per cent of GDP.
“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,” it said.
