Covid19: State ‘should cover’ 75% of workers' pay in hospitality sector
Significant income support and working capital are key to the survival of Ireland’s hospitality sector, according to a report from PwC.
The hospitality sector is worth up to €7.6bn of the Irish economy annually, represents up to 2.3% of GDP, and employs 180,000 people across all regions.
Due to the global pandemic, almost all pubs, restaurants, and hotels have been forced to close or limit their operations, and it is estimated that 100,000 people have already lost their jobs.
The report by PwC, entitled Covid-19 and the Irish Hospitality Sector — Impact and Options identifies two step-change actions the government could take.
The report recommends that the Government keep hospitality employees in their jobs by covering 75% of their net take-home pay.
PwC estimates that supporting the hospitality sector via the current Covid-19 unemployment payment of €203 per week could cost the State €36.5m per week.
However, the true cost of this approach is €41.7m per week once the lost exchequer payroll taxes are accounted for.
Implementing the 75% income continuance package proposed by PwC will cost €44.1m per week, and has been calculated based on a 20-week shutdown of hotels, restaurants, and pubs.
This benefit would be capped at the equivalent of an annual salary of €50,000 per annum and would cease one week after the end of social distancing.
PwC’s report also recommends an interest-free loan mechanism for the sector, to provide working capital for the industry to restart itself after the crisis is over.
The report reveals that an unsupported business in Ireland’s hospitality sector could take up to 62 weeks (from the onset of a Covid19 closure) to return to profit and recoup losses.
“These proposals are aimed at being constructive and supportive to the efforts Government is already seeking to provide at this vulnerable time,” said Owen McFeely, director, PwC Ireland Retail and Consumer Practice.
“Hospitality is core to our DNA and goes to the heart of brand Ireland.
“Without major step-in supports, we will see significant human, economic, and societal stress, particularly for areas outside the Dublin region where hospitality is often the cornerstone of local communities.
“We recognise that this is a significant action over and above current supports, however bold steps are necessary now to ensure that we do not have a delayed recovery.”
