IBEC believes Govt's financial supports will need to be 'increased quite significantly'
IBEC's warning new financial supports will need to be scaled up significantly over the coming weeks if Irish companies are to weather the Covid-19 crisis.
It comes as a report from the ESRI says that the Pandemic Unemployment Payment (PUP) "will significantly cushion incomes" of anyone who has lost their job temporarily due to the pandemic.
Yesterday, the Government announced it was adding €450m to two loan schemes, bringing the total available to firms to €1bn.
IBEC has welcomed the announcement, but estimates up to €30bn will ultimately be needed by the tens of thousands of firms around the country.
Fergal O'Brien, from the employers' body, said the new scheme will be of benefit in the short time.
Mr O'Brien said: "Companies that are still trading they really will need those supports for working capital which will be very significant.
"The credit guarantee element of the schemes will also give companies more comfort and will support bank lending to try and keep credit moving across the economy.
"But overall, we think that the scale of the supports provided to address the cashflow crisis will need to be increased quite significantly coming weeks."
However, the Government measures to support workers impacted by the pandemic "will significantly cushion incomes", according to a new study published today by the Economic and Social Research Institute (ESRI).
The research simulates the impact that large numbers of job losses will have on families’ incomes, with and without the additional measures announced by the Government.
It finds that the flat-rate Pandemic Unemployment Payment (PUP) of €350 per week does most to support incomes, reducing the number who lose more than 20% of their disposable income by around a third from 400,000 to 281,000.
Barra Roantree, an author of the report and an economist at the ESRI, said: “The government’s policy response will significantly reduce the number of families who see extreme reductions in their income as a result of job losses related to the ongoing Covid-19 pandemic.
"However, the rise in unemployment will bring significant costs to the exchequer: around €800 million per quarter for every 100,000 individuals who lose their job.”
The research also finds that the additional cost of the government’s Temporary Wage Subsidy Scheme may be minimal, in part because its current design is less generous to lower earners than the Pandemic Unemployment Payment they would receive if laid off by their employer.
Karina Doorley, an economist at the ESRI and another author of the report said: “A central aim of the Temporary Wage Subsidy Scheme is for companies to retain links with their employees so they can resume activity faster once necessary public health measures have been relaxed.
"Ensuring that both employees and employers have an incentive to take up this payment is important to ensuring it achieves this objective.”
