'Hollow victory' if end of Covid-19 wage subsidy triggers unemployment surge says Paschal Donohoe

Minister for Finance Paschal Donohoe has said that the Covid Wage Subsidy Scheme will not end abruptly and hinted that it could last until the end of the year.

Mr Donohoe told RTÉ radio’s Morning Ireland that he would be looking at all options, but that the scheme would not come to an abrupt end as that could lead to jobs being lost.

The objective of the July stimulus will be to take action in 2020 that is successful in “keeping jobs that we have and allowing new jobs to be created,” he added.

The Finance Minister said it would be a "hollow victory" if ending the temporary wage subsidy scheme triggered a rise in unemployment.

The Wage Subsidy Scheme is now responsible for keeping over 400,000 people in a job, he said and the government is looking at options in relation to the future of it.

“What I can confirm now is that it will not come to an abrupt end because were that to happen, that itself creates the risk of jobs being lost.

“In relation to the Pandemic Unemployment payment, the last government outlined that across the month of August we would begin to make changes in relation to that payment, as our economy reopens.

“We've in fact made one such payment this week in relation to those who would have been on part time work in the past.”

When asked if the scheme would be extended to the end of year, Mr Donohoe said that was a decision that needed to be taken by the government.

As I said, I and the last government, brought in these payments, the value of them and the value of the Wage Subsidy Scheme in particular is recognised very strongly by the government, I'll be working with the Tánaiste Leo Varadkar and with my new colleague Michael McGrath to come up with the right plan now for those schemes.

As a former Minister for Tourism, Mr Donohoe said that he was very aware of the strains and pressures the sector is under.

He said he would be keeping the option of a reduction in VAT under review when making decisions for the July stimulus and could look at the matter again in the Budget in October.

“When we have the July stimulus done the government will launch a national economic plan as part of the Budget for next year, the challenges are great, the challenges in relation to jobs, the income, to people's futures are great, I and the government understand that, but we have the measure of this.

“There is a journey ahead of us that is long, that is difficult, but we will be able to complete it, we will get Ireland and our country back to work.”

Mr Donohoe said that job creation and job retention had to be prioritised over other options.

“We need to get the balance right and implement a stimulus plan that makes a difference to the keeping of jobs, but it isn't of such a scale in combination with all of the other spending decisions that we will make that doesn't unravel confidence in our public finances.”

640,000 businesses have registered for the initiative which was set up in March in response to the Covid-19 pandemic.