Sustained focus needed on Jobs and Domestic Economy
- Supports must be maintained to help indigenous jobs and businesses.
- Vaccine programme crucial for jobs and business recovery.
- Plan needed to tackle youth unemployment levels .
Responding to today’s publication of the Stability Programme Update, Labour’s Finance spokesperson Ged Nash said he wants to see a sustained focus on jobs and the domestic economy to address the high unemployment projections for the next few years.
Deputy Nash said:
“Figures published today by the Department of Finance show that Covid Ireland is a tale of two economies. A generation of young people are at critical risk and we must ensure they have a future in Ireland. The projected unemployment rate of 16.25% this year and 8.25% in 2022 is really concerning.
“The forecasted growth of 4.5% in GDP anticipated for the economy this year contrasts with the picture for modified domestic demand which, depending on a best-case scenario in terms of vaccine rollout, is set to rise by 2.5% in 2021.
“In truth and given the added uncertainty over the programme and the likely additional delays in reopening the economy a more honest and less optimistic view of indigenous economic performance is required at this stage.
“The severe impact of the pandemic on main street jobs and businesses illustrates the need for important State supports to be maintained to allow viable firms in sectors such as retail, hospitality and the entertainment and arts sectors to have a shot at survival.
“All of the international evidence from the IMF and others clearly demonstrates that such supports like the EWSS and enhanced welfare payments to support those who have been made jobless by the pandemic helps economies to recover more quickly.
“Sector-specific and targeted supports will be required to help maintain jobs in the early to middle stages of recovery, with the Central Bank predicting that employment levels will not return to pre-pandemic levels until 2023 at the earliest.
“A reformed wage subsidy scheme which we have termed Obair Ghearr and which is based on the successful German Kurzarbeit model should be embedded into the system to provide such supports to help firms to viability and to keep people in work.
“Focused and continued support, with conditions around decent work, for our domestic economy has never been more urgent. Corporation tax and resilient income tax receipts from our successful multinational sector have helped to ensure that revenues have not fallen as far as anticipated his time last year. However, in light of pressure on the system internationally and policy developments in the US, our over reliance on the corporation tax take from a small number of firms is simply not sustainable.
“With in excess of €5billion in additional State expenditure firmly in the base of ongoing multi-annual spending on health, education, housing and social protection for example, it is high time the tax system was reformed. I repeat Labour’s call made last year for the creation of a system of net wealth taxes that can be carefully designed so as not to impact on the productive enterprise economy in order to build and sustain the kind of services we should expect to see as we emerge from the pandemic.
“The government has tied its own hands by making a Programme for Government commitment that has excluded tax from the debate. They cannot have it both ways.
On the jobs crisis, Deputy Nash added;
“Concerted action is urgently required on a jobs and training plan to ensure that we can address the disturbingly high levels of youth unemployment that risks leaving an entire generation behind. A new deal for a new generation must be a cornerstone of the government’s long promised National Economic Plan. In terms of deficit reduction and economic recovery there is a real danger of reaching for old and discredited weapons to refloat the economy, bring down public debt and reduce the deficit. On this we must proceed with caution.
“This is not 2008-2010. The ECB, EU and IMF have learned lessons. The monetary and fiscal stars have been aligned to support government investment and borrowing conditions are likely to remain supportive for some time. It is eminently possible to grow our way to the other side of this crisis if the government chooses to invest wisely now.
“Ireland’s future prospects and those of economies across the EU are also dependent on revised EU Fiscal Rules. The current one-size-fits-all rules are suspended until at least 2023 and there is a growing demand to renegotiate these rules to allow for greater public investment over the next decade. This is an approach that Labour advocates.”