Irish COVID-19 Wage Subsidies To Last Into 2022

Ireland will continue to subsidise the wage bills of firms hit hardest by the COVID-19 pandemic into 2022 before gradually unwinding all support that has kept many afloat, Public Expenditure Minister Michael McGrath told Reuters on Wednesday.

Ireland, which had one of Europe’s longest COVID-19 lockdowns, will drop almost all pandemic restrictions on 22 October  following a successful vaccine rollout.

The government has so far extended the wage subsidy scheme until the end of 2021, and McGrath said ministers had an open mind about what other specific support would be needed for individual sectors in 2022.

“It is fair to assume that it (the wage subsidy scheme) is not going to disappear overnight, that there will have to be a transition away from, and a tapering off from, the scheme over a period of time,” McGrath said in an interview.

“In broad terms the plan is to unwind the emergency-related expenditure over the course of next year,” McGrath said, adding that next month’s budget for 2022 would also probably include unallocated contingency funding to deal with the pandemic.

McGrath also expects the number of people claiming temporary coronavirus-related jobless benefits to fall below 100,000 from 143,000 within the next couple of months.

Housing Challenge 

The government decided last month to cut its budget deficit more gradually than planned as it prepares to increase capital spending on housing and climate change.

It will unveil its plan on Thursday to tackle a years-long dearth of housing, record high rents and a fresh spike in house prices that have been compounded by two COVID-19 shutdowns of the construction sector.

McGrath said the plan would shift the state’s focus towards investing in affordable housing, tackling vacant homes and ensuring that developers cannot sit indefinitely on land zoned for residential housing.

McGrath will also launch a long-term capital investment plan by the end of September, marking a shift towards sustainability in energy, transport, agriculture and enterprise policy.

“This is about to get really serious,” he said, calling for a “decisive shift in policy, in our culture and our thinking” to tackle climate change.

The amount of money available could be impacted by proposed new global corporate tax rules that Ireland is one of only a handful of countries yet to sign up to. No substantive progress has been made recently on low-tax Ireland’s concerns, he said.

“There is still a distance to travel on this. We continue to have very significant reservations about what is emerging in respect to Pillar 2 (introducing a global minimum corporate tax rate),” McGrath said.

“We want to be part of any final agreement but it will not be at any price.”