Covid wage subsidy increased to 85% of wages for lower paid
Posted on 15th April 2020 at 21:16
Paschal Donohoe announces increase amid concern that part-time workers are better off unemployed
The Government is increasing the amount it will pay under the coronavirus wage subsidy scheme in a bid to keep more part-time and low-paid workers on the payroll.
The subsidy, introduced as an emergency measure last month, will be increased from 70 per cent to 85 per cent for employees who earn less than €24,400 per year.
Under the changes, the scheme will also be extended to higher-paid workers – those earning over €76,000 – in a bid to reduce the number of people being laid off, which the Minister for Finance Paschal Donohoe said could reach one million without a major state intervention.
The move comes after employees said that some of their part-time staff were not working because they could earn more from the Covid-19 emergency payment.
The unemployment payment is a flat €350 while the temporary wage subsidy committed to pay 70 per cent of a worker’s wages up to a maximum payment of €410 a week – a sum that could be topped up by employers who could afford to do so.
There were no changes for those earning between €31,000-€38,000 a year, who will continue to receive a subsidy of up to 70 per cent, up to a maximum of €410 per week.
Mr Donohoe said that for employees with previous net pay in excess of €586 per week – equivalent to €38,000 a year – a tiered approach will apply, but the maximum subsidy payable for those earners remains €350 per week.
The scheme is now also available to employees who had a pre-Covid salary greater than €76,000, also on a tiered basis.
Mr Donohoe said if an employee was earning over €76,000 gross and has now been reduced to below €960 net pay a week, and their reduction is more than 20 per cent, then a subsidy of up to €205 would be payable and if the reduction was more than 40 per cent, a subsidy of up to €350 would be payable.
The Revenue Commissioners said more than 255,000 employees have already received at least one payment under the scheme, and that approximately 84 per cent of employees have also received a top-up payment from their employer.
“Without an intervention by the State of this scale, we could have in the region of one million citizens either on the Live Register or accessing the Pandemic Unemployment Payment,” Mr Donohoe said.
Figures published earlier this month showed that over 700,000 people were claiming a form of unemployment benefit.
The subsidy is payable to employees who are kept on the employer’s books even if they are working reduced hours or even temporarily furloughed.
However, unions have argued that, for workers on low pay or low hours and where an employer was not topping up the amount paid under the scheme, it could be more financially beneficial for them to be laid off and receive the Government’s €350 per week Covid-19 unemployment payment.
Mr Donohoe said the scheme was designed and introduced at great speed “to ensure the greatest number of employees maintained the link with their employee during this difficult time”.
“It stood to reason that there were anomalies that needed to be ironed out to ensure greater fairness and implementation of the scheme,” he said.
Mr Donohoe said the State was likely to see a decline in economic activity this year that is comparable to or potentially greater “than what we experienced a decade ago”.
“We are in uncharted waters, facing a new kind of challenge, facing new economic difficulties,” he said. “If we can protect the income of employees who otherwise would not be working, it gives us a fighting chance of saving the businesses for which they work,” he said.
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