Limerick Chamber” “The COVID-19 outbreak is an exceptional situation that requires an exceptional policy response”

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LIMERICK Chamber today (March 24th) published the most comprehensive set of proposals from an employer’s body for government supports to help business through the COVID-19 crisis.

The largest business representative body in the Mid-West, which submitted the recommendations today, said that while initial measures from government were welcome, they do not go far enough.

Crucially, they said, the government should take bigger steps to protect the economy and the relationship between the employer and employee.

The proposals are stacked to provide critical support business in the short-term but also look at long term economic policy. Among the measures suggested are that government would:

  • Deliver a ‘COVID-19 Employee Protection Scheme’ similar to the Danish business support model, where the Irish state covers 70-80% of an employees salary (to a maximum gross salary of €40,000) or 90% of hourly wage where the employee is part-time
  • Align the COVID-19 Emergency Pandemic Scheme with this new scheme so that employees who have already been laid off receive the same entitlement as those who are likely to be laid off in the coming weeks
  • Align the treatment of employed and self employed individuals whereby self employed people receive 70-80% of monthly income (as per their last filed tax return, subject to the same overall €40,000 annual cap)
  • In tandem with the above measures, encourage the redistribution of skilled workers,who are part of the scheme above and not working, to public sector entities that require increased resouces during the crisis period
  • Similar to the UK, introduce an SME business Rates discount scheme whereby a 100% discount will be applied to all retail, hospitality and leisure businesses for a period of one year
  • Allow a full waiver on water charges (including standing charges) for businesses that have temporarily closed for the duration of the closure and for a period of three months following reopening
  • Extend the Micro Finance Ireland COVID-19 interest free business loan to all SMEs
  • Reduce Tourism and Hospitality VAT for a period of two years
  • Introduce a waiver of bank fees and charges for businesses that are temporarily closed
  • Introduce a Retail and Hospitality Voucher Scheme whereby every household in the state is given a set amount (e.g. €250 or more) to spend in local Irish businesses when the crisis is over (the voucher should be issued in three monthly installlment and should not be redeemable online). Amount subject to review, the net catalytic impact of introduction of vouchers should be targeted at €1 billion (at least).

The Chamber also proposed a number of long-term measures, including that government:

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  • Does not introduce austerity measures in a misguided effort to reduce the increased deficit that is an inevitable consequence of the pandemic
  • Delivers on capital commitments made as part of Project Ireland 2040
  • Creates a State-owned business continuity insurer that would indemnify businesses, both corporate and self-employed, against a defined percentage of losses caused by a public health crisis
  • Provides additional supports to reskill and train people whose jobs have been irrevocably lost

Limerick Chamber’s Chief Economist Dr Catriona Cahill said: “The COVID-19 outbreak is an exceptional situation that requires an exceptional policy response. Although public health measures must remain an absolute priority, we must now also begin to consider the most effective policy response to support the economy during and beyond the crisis period,” she said.

“Limerick Chamber called for several initial and immediate actions at the onset of this crisis. The government has responded to these calls by implementing a range of business supports. While we welcome the Governments swift response, the measures represent what was necessary in terms of immediate action but do not go far enough.

“During a normal recessionary period, we might pause to consider the budgetary repercussions of excessive spending. Such budget considerations cannot be a priority on this occasion however. While the pandemic shock is expected to be transitory, the economic shock could be persistent if we fail to act swiftly.

“Borrowing rates for sovereigns are at historical lows and Ireland should take advantage of this. It is imperative that the COVID-19 response is funded from additional borrowing and not from previously committed public funds.” she explained.