Government extends wage subsidy scheme to aid Covid-hit businesses
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The Government has reversed cuts to the Employer Wage Subsidy Scheme (EWSS).
The Department of Finance had announced that from December 1 to February 28, 2022, the original two-rate subsidy of €151.50 and €203 would apply, prompting criticism from business organisations and the hospitality sector after the re-introduction of Covid-19 restrictions on the sector.
For March and April 2022, a single flat rate of €100 will apply and the reduced rate of Employers’ PRSI will be re-instated for these two months.
The Government had intended to support businesses affected by last Friday's set of Covid restrictions through a new targeted scheme, but Finance Minister Paschal Donohoe today announced that plan had proved to be potentially costly and may not have been in place before Christmas.
"As announced last week, it was intended to develop further targeted support for those sectors that are most affected by these restrictions and to have this support in place quickly. Upon further analysis of the proposal by my department and the Revenue Commissioners, it became clear that it would be complex to develop an appropriate and effective scheme in the immediate term," the minister said.
"Instead, I have decided to extend the enhanced rates of EWSS for the months of December and January to give certainty to businesses when they need it most.
"The Government and I have been clear that there will be no cliff edge to supports for employers but we have also been clear that the EWSS cannot run indefinitely, nor is it sustainable to continue with the enhanced rates for a prolonged period of time given the very substantial costs to the Exchequer."
Mr Donohoe defended the length of time taken to reverse the cuts, with industries calling for the cut to be scrapped as early as the beginning of November. He said that he believed that a targeted scheme was possible in the long-run, but that it could not be done before Christmas. He said that any company which can demonstrate a 30% loss in business can avail of the higher rate.
From February 1, 2022, the original two-rate structure of €203 per week and €151.50 per week will apply; for March and April 2022 the flat rate subsidy of €100 per week will apply and the scheme will end on 30 April 2022.
The CRSS will be extended until January 31, 2022, to allow nightclubs that are closed under Health Regulations until January 9 to access the support.
Public Expenditure Minister Michael McGrath said that supports were necessary because public health messaging had caused cancellations and impacted business across the hospitality industry. He added that the commercial rates waiver would continue for hospitality, events, tourism and entertainment sectors at a cost to the Exchequer of €62m.
Mr McGrath said, however, that business supports linked to the pandemic will have to end. He said that EWSS and its predecessor had cost €9bn since last March. However, he said today's reversal of cuts was the right decision.
"We have seen a strong rebound in the economy and strong economic growth. The level of unemployment has fallen below 7% and the public finances are in a better place than envisaged a year ago. However, it is clear that the hospitality and live entertainment sectors have been impacted significantly and they have carried the burden of much of the public health restrictions and must be supported."
The Restaurants Association of Ireland welcomed the move saying: "This was the correct decision due to severe loss in business due to Public Health advice.
"The Restaurant Association of Ireland is calling on the government for a medium to long-term plan for recovery and viability of Hospitality due to Covid."