Retention and creation of jobs central focus of Budget 2021
Jobs were always going to be centre stage in Budget 2021 – not just creating new ones, but clinging on desperately to the imperiled ones that already exist.
The figures cited by Minister for Finance Paschal Donohoe in his budget speech were stark.
The Government is forecasting a total loss of approximately 320,000 jobs in 2020, but estimates that this will recover by approximately 155,000 jobs next year.
While any recovery is welcome, that still leaves around 165,000 people who will be long-term casualties of Covid-19’s impact on the workforce – though the Government is basing this on conservative assumptions, including longer term Covid-19 impact, no vaccine and a no-deal Brexit.
It is estimated the annual unemployment rate for 2020 will pan out at just under 16%, while next year’s rate is projected to be around 10.25% – still a far cry from the enviable 4.8% of last February.
“However, this figure could change depending on the overall path of the virus,” the minister told the Dáil.
In other words, more virus equals more restrictions which equals more job losses.
Mr Donohoe cited the peak youth unemployment rate of an appalling 64% in May, now fallen to a still staggering 37% – figures which he described as “unimaginable a few months ago”.
“The key to reducing our deficit and managing our debt will be through building employment”, Mr Donohoe states.
So where will the jobs come from?
Capital investment allocations totaling €10.1 billion should boost employment on infrastructure projects including housing, schools, roads, transport, broadband, retrofitting, and climate change measures.
The public service workforce – already at around 345,000 – is set to grow, including through promises of 16,000 health sector posts, 990 additional Special Needs Assistants, 403 extra teaching positions and An Garda Síochána authorised to hire 620 new garda recruits, and 500 civilian staff.
There is also provision for 500 staff to do tasks related to Brexit checks from 1 January.
The cut in the VAT rate for hospitality and tourism to 9% may also help that sector, again assuming that the virus is tamed, and that public confidence returns.
However, until jobs re-materialise, income supports will be crucial.
Minister for Public Expenditure and Reform Michael McGrath forecast that the Department of Social Protection will be supporting the incomes of at least 370,000 jobseekers in 2021, while a further 350,000 individuals will require support through the Employment Wage Subsidy Scheme.
There was a welcome for the assurance that the Employment Wage Subsidy Scheme – or a similar successor – will be extended to the end of 2021, to avoid any “cliff-edge”.
Also getting a positive reaction was the assurance that self-employed PUP claimants will be entitled to take up intermittent work without losing their benefits, and that most recipients will be entitled to a Christmas bonus.
However, there was no confirmation of how long the PUP scheme would continue – and the Budget was also silent on any hoped-for restoration to the previous top rate of €350.
The minister also announced the extension of debt warehousing provisions to include the 2019 balance and 2020 preliminary tax, which will allow such taxpayers to defer payment for a year with no interest applying.
Meanwhile there was a broad welcome for the Covid Restrictions Support Scheme – which will allow businesses whose activity has dropped below 80% of normal due to Covid restrictions to receive payments of up to €5,000 per week until 31 March 2021.
Neil McDonnell, Chief Executive of the small firms group ISME, described this is critical for job retention.
But for all of these planned jobs, it is vital to have the right recruits available – and the Government is planning an extensive education, training and upskilling programme to assist those currently out of work.
The July Stimulus had already provided for a €200m package of supports for training, apprenticeships, skills development, work placements, recruitment subsidies and job search and assistance measures, along with 35,000 extra places in further and higher education.
However, experts in the labour market warn that urgent implementation of these measures is of the essence.
Dr Tom O’Donnell, Co-Director of the Nevin Economic Research Institute, warned it could take months or up to a year to put employment support measures like training schemes in place – and that while that was going on, it was vital to preserve incomes.
He echoed the calls of others for the PUP to be restored to €350.
He criticised the lack of assurances about the continuation of the pandemic payment, saying this would create a lot of worry for households, with a risk of poverty.
Mr McDonnell noted that the employment situation was still very grave, and it could take until 2023 to get back to 2019 levels – again assuming the virus was brought under control.
Brid O’Brien, Head of Policy and Media at the Irish National Organisation of the Unemployed, said the question of how and when these training and other supports would actually be rolled out was critical.
She said that unfortunately, it was clear that many people were going to be out of work for the foreseeable future – and that unemployed people needed to be clear on what exactly was on offer, how they could access it, and whether it would actually help them to secure a decent job.
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