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[00:00:00]

Today with Claire Byrne on RTG, Radio one sort of move now to money matters and big and important changes to the wage subsidy scheme, they're going to be introduced from next Tuesday. The scheme has cost the state two point seven dollars billion so far. It was introduced back in March when we went into lockdown. And the aim was to encourage business owners to keep employees on their payroll at the height of the pandemic. Well, on the line now, joined by Neil MacDonald, the chief executive of Isme.

[00:00:26]

Thank you for joining us today. And good morning to you. Sorry to hear so many listeners will have heard the finance minister, Pascal Donahoo, speaking earlier on Morning Ireland. He was talking about what's coming down the track here from next week. But for those who didn't hear it or are still a little bit unclear about it all, because it is complex enough. Can you remind us what changes are being introduced?

[00:00:45]

Neil, the the level of support are being significantly reduced. So currently employers can pay employees up to a maximum of 410 euros per week to a maximum of 70 percent of what their previous net wage was at. The maximum coverage under this scheme will now fall to two hundred and three euro on anyone who makes more than a weekly growth of fourteen hundred and sixty two. That would that would roughly equate to someone on 76000 euros a year. Those employees will attract no support at all.

[00:01:25]

And then there are some other administrative issues like businesses will have to have tax clearance and the repayment periods, the lag will be up to six weeks. So there are significant changes.

[00:01:37]

They are significant. And what impact are they, those changes likely to have on businesses in the country?

[00:01:43]

I suppose to a large extent we're going to have to wait and see. It really does depend on those sectors. I think there are those sectors that have been most severely affected and continue to be affected. And I think the newsmen for today suggest that some of those sectors like hospitality, accommodation, restaurants and bars, are going to continue to be affected for a long time. I think we have to look at this in context. So some employers have been able to top up the existing wage supplement scheme, those that have not and can pay people a maximum of of 203 as a subsidy.

[00:02:26]

Under this scheme, the retention of those people then becomes marginal, both for the employer and the employee. We have to remember that the restriction, the sort of moratorium that's in place under the emergency legislation on redundancies seeks to ceases to have effect on the 17th of September. So you could have both employers or employees seeking to be made redundant after hours are significantly reduced from the third week of September.

[00:02:55]

Do you believe that this is going to lead to job losses? That's the bottom line. That's what you're saying? Yes.

[00:03:00]

I think it's inevitable that in the more in the more restricted sectors, I think accelerated job losses are inevitable. I mean, if we look at what's happened in Germany, they have decided to extend their wage coverage scheme to the end of next year and not just put it in context what's going on in the job market. So, look, we hope it doesn't, but our concern is that that will be an outflow of this.

[00:03:27]

Well, I don't know where they're getting the money from, but, you know, as you know, the reality is there is no bottomless pit. That's true, but I mean, the I'd have to respond to that, because that's that's that's is that we get all the time, you know, there's no bottomless pit. And every person who loses a job and goes on to the job seekers benefit is an immediate charge to the state of 10000, 556 euros per annum.

[00:03:58]

And that excludes the losses that the state incurs from those people in lost taxes and social contributions. So you could be looking at a net loss to the states, to the to the exchequer and overall swing of over 20000 euro for every employee that, you know, leaves full time or even part time employment. So you have to contact you contextualize the supports that are currently given to employers to maintain people on the payroll in that way.

[00:04:29]

So this costs either way is there is what you're saying and what's your sense in talking to your members? How are they looking at the next couple of months? How do they feel it's going to play out? Are these are some sector stabilising? Are they thriving? You know, what's your sense of what's going on out there?

[00:04:46]

Yeah, I mean, we do know of sectors that are doing very well. Obviously, Farmer is doing well. Businesses that are involved in cleaning, the cleaning, hygiene and that sort of thing are also doing very well. But, you know, they're quite restricted sectors. Obviously, anyone who's engaged in online sales is doing quite well as well. But a lot of the what is the domestic economy we've seen alone in Europe? We've seen Irish exports rise during Q2, but the domestic economy is very much service based.

[00:05:21]

They have been extremely impacted by covid. And I think it's in those areas where employers are saying to people, look, we're not going to be able to top up this 203 euro. Then those employees are going to say, well, if you're saying I'm going to get 203 euro for working and I'm also going to get 203 euro, if I don't work, I think some people will draw the inevitable conclusion.

[00:05:46]

From Neil MacDonald, chief executive of Esmie, thank you for joining us. Coming up in just a moment, we'll be talking about the Manchester United captain and an interview he has given about his arrest in Greece, emailed today, ECB and RTG, RTD.