Provide support to all who need it

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Pearse Doherty, Sinn Féin Finance Spokesperson, looks at government policy in the South as the financial implications of the Coronavirus become clear.

 

The past two months have been a testing time for all of us.

To contain COVID-19, we have had to upend our daily lives while avoiding friends and loved ones in order to keep each other safe.

For our heroic frontline workers, it has meant putting their own health and that of their families at a heightened risk.

For others, it has meant job loss, financial insecurity and unprecedented levels of anxiety.

The necessary public health measures deployed have an immediate impact on jobs and incomes.

We have essentially shut down entire sectors of our economy, with tens of thousands of workers being laid off and households throughout the country seeing their finances decimated.

Figures published this week reveal the extent of the damage, with more than 700,000 people now receiving income support as a result of the COVID-19 containment measures.

To put that into context, 356,000 were classified as unemployed back in February 2012 when the economy was deep in recession.

Figures published last week by the CSO and Parliamentary Budget Office provided a glimpse into the reality faced by those most affected by the economic fallout from this crisis, with those working in retail, hospitality and recreation most likely to have lost their jobs.

Workers in these sectors are more likely to be low-paid and financially insecure.

This crisis has also shown us that workers who have often been overlooked and undervalued are those we rely on the most - like our hauliers and our retail workers who distribute and sell our food, or the nurses who provide care to our loved ones and most vulnerable in society.

So while we are all in this together, it is clear that some are more exposed to the sharp edge of this disruption than others.

In the face of this immediate challenge, the government must act fast and do whatever it takes to protect these workers and their families.

On March 23rd, I wrote to the Minister for Finance Paschal Donohoe outlining proposals to support household incomes, protect workers and prepare for a sustainable recovery.

Among the measures proposed was an Income Support Scheme to ensure that workers would receive pay and maintain employment whether they were in self-isolation, suffering from illness or had been temporarily laid off.

It would have involved the State subsidising 100 percent of workers’ wages, up to a maximum of €525 per week and applied retrospectively from the March 9th.

Crucially, this scheme would have included the self-employed and those working in the perilous gig economy.

The Temporary Wage Subsidy Scheme announced by the Government on March 24th fell short of these proposals.

While Sinn Féin welcomed the fact that the government acted to support workers’ incomes, we have also raised serious flaws in the scheme that require immediate reform.

An effective wage subsidy scheme should achieve three core objectives.

The first is to support the income of workers and households. Over 700,000 people now find themselves unemployed because of a crisis that was not of their making. They require urgent and adequate income support.

The second is to provide liquidity to business by covering a portion of their wage bill. Supplemented by other supports through either loans or grants, this would ensure that as many viable businesses survive this crisis as possible.

The third is to maintain the relationship between workers and their employers, so that when this public health emergency ends, workers can return to normal employment rather than languish in long-term unemployment.

If these objectives are not achieved, the consequences will be dire, with a deeper recession and long-term unemployment inevitable.

The current wage subsidy is set to fail on all three fronts, with low-paid workers the most exposed.

Under the scheme, the government will provide 70 percent of workers’ salaries up to a cap of €410 per week, with employers obliged to pay no more than 1 cent on top of that.

This has massive consequences for those on low and modest pay.

For any full-time worker who had been earning less than €500 in weekly take-home pay, they are set to receive less than €350 per week under the wage subsidy scheme.

For a full-time worker on the minimum wage, this wage subsidy will fall almost €100 below the COVID-19 Pandemic Unemployment Payment.

From this, two things are sure to follow.

Firstly, low-paid workers will face a sharp cut to their income despite having bills to pay and families to feed. Without sufficient income to get by, they could be forced to borrow and build up further private household debt.

Secondly, employers and employees will question the benefits of a wage subsidy scheme that penalizes low-paid workers who would be better off were they to be laid off and in receipt of the COVID-19 Pandemic Unemployment Payment.

Far from gaming the system to get ahead, as Leo Varadkar suggested last week, these are low-paid workers facing sharp pay cuts and increased financial strain under a scheme that penalises the low paid.

The economic impact of a failed wage subsidy scheme cannot be overstated. The longer the relationship between worker and employer is broken, the more likely it is to remain permanently severed. That means higher unemployment in the long-term and a deeper recession.

Instead of vilifying low-paid workers who are worse off under a flawed wage subsidy scheme, the best course of action is to fix it.

But that requires immediate action both to protect the incomes of those affected by this crisis and to ensure that the damage is not lasting.

Last week I called on the government and the Minister for Finance to introduce a minimum payment to the wage subsidy scheme of €350 per week, paid through the employer.

This would strengthen income supports for low-paid workers and encourage more employers to sign up for the scheme.

The government isn’t listening.

Failure to act will threaten the security of low-income households and dent the prospects of a fair recovery that puts the interests of workers and families first.

Low-paid workers cannot be the losers bearing the brunt of this crisis.

And Sinn Féin will work on their behalf to ensure that they are the winners of the recovery.

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