More than 22k pub jobs under threat as sales expected to fall by 50%
As many as 22,500 jobs could be lost in the pub trade due to Covid-19, with sales set to fall by 50%.
The report by Dublin City University Economist Anthony Foley warns “countless more” jobs could be lost in supporting trades like catering, security, and entertainment.
Mr Foley's most optimistic prediction is that on-trade pub alcohol sales will decline by 50% or more for the second half of 2020.
The gloomy forecast comes as one third of Dublin pubs and nearly two thirds of pubs outside the Capital remain closed. This is despite the recent June 29 ease of Covid-19 restrictions.
Since then, pubs have been allowed to open if they serve alcohol to customers who buy a "substantial meal” costing at least €9. Those who don’t do this have to stay closed until Phase 4 starts on July 20.
Government guidelines mean a significant change in how pubs are supposed to operate, with reduced capacity and time-limits on customer visits.
That is going to have a devastating impact on the pub trade, says the report commissioned by the Licensed Vintners Association (LVA), the Vintners Federation of Ireland (VFI) and Ibec representative group Drinks Ireland.
They all now want the Government to reduce VAT in the hospitality sector and extend it to pubs and bars until December 2020.
And they point out that a European Commission directive - 2009/47/ EC - makes it possible for a member state to apply a lower VAT rate on on-trade alcohol with immediate effect.
The vast majority of drinks and hospitality businesses are small, family-owned businesses, the report notes.
They have been closed for almost four months, and many will be closed for longer. As they prepare to reopen, the costs are significant.
The combined cost of social distancing regulations, new overheads - like PPE and perspex screens - reduced capacity with time-limited customer visits, together with already high consumption taxes like VAT and excise will make reopening these businesses in the present market “commercially very challenging”.
The report notes: “The current outlook is grave. Even if pubs regain half their usual capacity by year’s end, which is an optimistic scenario, as many as 22,500 jobs could be permanently lost, not to mention countless more in supporting trades like catering, security, and entertainment.
“It is a fallacy to presume that businesses that do close as a result of the Covid-19 recession will simply reopen in a different form next year.
“The impact of mass closures will be long lasting, especially in regional parts of the country. Indeed, the impact of this is more than economic; it is socially and culturally significant.”
Of the country’s 19,205 pubs, restaurants and hotels operating in the hospitality sector, just under 80% or around 15,328 employ less than 10 people.
In addition, around 3,923 of them have annual sales of more than €190,500.
Patricia Callan, Director of Drinks Ireland said a VAT reduction "will deliver immediate and tangible support for an industry that is a substantial economic contributor".
