Ireland can learn from German economic response to Covid-19, says Paschal Donohoe

Ireland can learn lessons from the success of Kurzarbeit, Germany's short-time work scheme, Minister for Finance Paschal Donohoe told the Oireachtas budget oversight committee on Thursday.

The Minister acknowledged the swiftness of the German economic response to the Covid-19 crisis in March this year, which it was able to achieve by quickly resurrecting and expanding the Kurzarbeit scheme used in the wake of the global financial crisis.

While the Irish employment wage subsidy scheme (EWSS) would not be kept “always on”, ensuring “elements” of it are ready to be reactivated in the future might make “a big difference in terms of saving jobs”.

The Government introduced its first subsidy scheme, the temporary Covid-19 wage subsidy scheme (TWSS), on March 26th.

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“Even if something like that had been available a couple of weeks earlier, or even a week earlier, it could have made a difference to thousands of people’s lives,” Mr Donohoe said.

The Minister appeared in person in the committee room after the sound quality on his virtual link was deemed insufficient by Neasa Hourigan, the Green Party TD who chairs the committee.

He reiterated to members that the economic projections underpinning the budget, due to be announced on October 13th, will not extend beyond 2021 because of the difficulty involved in forecasting for the medium-term in light of Brexit and pandemic uncertainty.

Mr Donohoe said he would be "very cautious about putting a figure" on any multi-annual stimulus – such as that recommended by the Irish Fiscal Advisory Council – as it would only be closer to the date of implementation that the necessary size of stimulus measures became apparent.

Dublin city centre

Although he said “clearly now isn’t the time” given the current prevalence of Covid-19, the Minister he believed employers should eventually be encouraged to reopen their workplaces if they can do so under safe conditions.

“I hope this is something we can make progress on next year.”

Mr Donohoe was responding to a question from committee member John Lahart, Fianna Fáil TD for Dublin South-West, on what was being done to support a "dying" Dublin city centre.

The Minister said he would like to see all local authorities be as flexible as possible in facilitating the outdoor dining that is permitted under Level 3 restrictions.

But he added that physical workplaces were “so important from a wellbeing point-of-view” and that the custom workers brought to city centre cafes and restaurants was not the only rationale for returning to the office.