Cabinet was privately warned earlier this month that tens of thousands of jobs could be lost and that thousands of businesses could roll back when the Employment Wage Support Scheme (EWSS) expires next April.
The Sunday Independent can reveal details of a classified memo prepared for ministers outlining how nearly 300,000 jobs at nearly 25,000 companies depend on government subsidies, many of them in the hospitality sector.
The memo states that « the continuing importance of the EWSS to support employment raises questions about the ultimate viability of these jobs and indicates that another shake-up will occur once the EWSS is withdrawn. »
Tremor refers to the situation in which people lose their jobs or companies stop doing business due to economic hardship. The memo notes that a « very large proportion » of former Pandemic Unemployment Pay (PUP) recipients have now moved to EWSS-supported jobs.
“This underscores the continued reliance on state support for a large share of employment, with certain sectors such as hospitality being particularly dependent,” the report states.
The latest revenue figures show that 24,300 employers were dependent on EWSS in November at a temporary cost of €332.6 million to the treasury, supporting wages for 280,300 employees.
Nearly a quarter of employers using water and sanitation services work in the accommodation and food services sector, with more than 40% of employees benefiting from state-subsidized wages who work in the same sector.
Finance Minister Paschal Donohue last week extended the EWSS at the current rates of between €203 and €350 per week, depending on earnings, until the end of January in light of new restrictions imposed on the hospitality and live events sectors.
However, payments will be scaled back from February onwards and the scheme will close on April 30 under current plans. While Donohoe cautioned that this would be a « risk moment, » the classified memo paints a clearer and troubling picture.
« We have a moment of reckoning, » one minister warned this weekend.
Direct government support for businesses and employers has been among the most generous in the EU and is partly responsible for the country’s strong economic performance.
The chief economist at the state’s budget watchdog, the Irish Financial Advisory Board, Eddie Casey, acknowledged that there are concerns in some quarters that the government « supports so-called ‘zombie companies’; that there may be some companies that profit from it that will not be viable. » for life in the long term.”
Donohue’s senior adviser, Ed Brophy, said there was an expectation in the Treasury that the EWSS would not be required until the end of this year, not until 2022.
« I think at some point in the next year, that talk will be inevitable about which businesses we can continue to support and businesses we need to let go, » he told The Sunday Independent.
« And how we can use the money in better ways to grow new businesses. »
« Spécialiste de la télévision sans vergogne. Pionnier des zombies inconditionnels. Résolveur de problèmes d’une humilité exaspérante. »