Editorials

The Irish Times view on pandemic supports: The political battle to come

The PUP – or across-the-board wage subsidies – cannot continue forever

File photograph: iStock

Mon May 3 2021 - 00:05

The Government has set out the anticipated pace of reopening and, while much remains unpredictable, the rollout of vaccines should return some type of normality to our society and economy in the months ahead. Then the challenge turns to the next phase of policy and what looks certain to be the contentious area of running down the emergency supports put in place to protect individuals and businesses. These include the Pandemic Unemployment Payment (PUP), the wage subsidy scheme and a range of other business supports.

So far the Government and Opposition have been shadow-boxing about this. The Government has been saying that there will be no “cliff-edge” withdrawal of supports when their current term runs out at the end of June, but it is not outlining what it intends to do. Presumably because it has yet to decide. Meanwhile, Sinn Féin leader Mary Lou McDonald said last week that supports like the PUP should stay in place for as long as necessary. This again avoids specifying exactly what should happen and when.

Battle will be joined on this before long. The Government has promised to outline its plans by the end of May. It is likely to continue the wage subsidy scheme, perhaps at lower levels, for a period at least. Supports for specific sectors, to help reopening and provide cash to companies which must still remain closed, is also anticipated. In some cases existing supports are likely to be repurposed. Some element of assistance may remain in place right through next year, though the Government will hope that the overall costs start to run down.

The political difficulty here will be that there are some companies that will not survive without wage subsidies even when the economy reopens. Their financial situation, or changed demand in their sector, will make them unviable. Designing a support system to deal with this will be technically complex and politically fraught.

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However, what happens to the PUP looks set to be at the centre of the political debate. Currently some 400,000 are on the payment. If reopening is successful, this number will fall sharply in the months ahead. But a significant number of people will remain on the PUP for two reasons – certain sectors will not reopen yet and those that do reopen will, in some cases, do so on a smaller scale and with fewer staff. As well as cash, assistance will be needed via retraining and other jobs market policies.

The PUP – or across-the-board wage subsidies – cannot continue forever. There is a case, however, for examining how the welfare system deals with such issues and looking at the cost implications of longer-term improvements to social and economic supports. This task will fall to the new commission on tax and welfare. It is due to report in the middle of next year.

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