Massive income support needed
by Niall Shanahan

A new blog post from the union-backed Nevin Economic Research Institute (NERI) says the Government should put up billions in income supports and other emergency economic measures in response to the Covid-19 crisis.


The blog - by NERI co-directors Dr Tom McDonnell and Paul Mac Flynn - highlights the impact of sudden mass unemployment and argues that the long-term impact of this crisis will depend on actions the State takes now.


"The Covid-19 crisis is causing an economy-wide crisis that will require billions in emergency support from government. The immediate economic priority should be to prevent large-scale job losses and a destruction of the economy’s productive capacity.


“Achieving this goal will necessitate large-scale supports for small businesses and manufacturers to cover their wages and maintenance costs for the periods when they are shut down due to Covid-19,” writes McDonnell.


NERI recommends short-time work schemes to preserve jobs and skills for firms experiencing depressed demand: “Such a scheme would allow for reduction of working hours while supporting the income of the workers. These schemes proved effective in Germany and other countries during the 2008 crisis.”


For firms who face closure, NERI says direct government grants of sufficient scale, in addition to a postponement of tax obligations, should be available to all businesses that commit to decent work and to retaining their workforce. They also say zero interest loans should be made available to tide over businesses and households with cash flow problems.



Once we get past the emergency phase of the Covid-19 crisis, NERI says debts owed by businesses and households to their respective governments, who can show permanent loss of income due to Covid-19 related shutdowns, should be cancelled: “This would help deal with certain payments such as mortgage, rent, utility and insurance without causing knock-on problems for other householders and businesses that would arise from postponements or cancellations of these payments.”


Social dialogue

NERI says almost all policy responses to date have emphasised the need to retain the connection between employers and employees: “We have the potential to make a rapid recovery from this crisis, but it is dependent on keeping as much of our economic infrastructure in place as possible.”


In Denmark government and employers agreed to 75-25 split in wage support for employees in impacted sectors while France has suspended rental payments, easing the burden on household incomes.


NERI further recommends that representatives of employers, employees and government should come together to work out the appropriate firm and sector specific details. This level of tripartite cooperation hasn’t been seen in Ireland since the collapse of social partnership in 2009. Long before the Covid-19 crisis struck the country, Fórsa’s General Secretary Kevin Callinan has been pressing the case for substantial social dialogue, and repeated that call over the weekend.


The employer’s body IBEC has also been strongly advocating a new social dialogue model in recent months.


Read the full NERI blog HERE

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