Further Government Action Needed to Tackle Economic Impact of Covid-19

Everything has changed, changed utterly.

Our new normal would have been unthinkable just a few short weeks ago. Social distancing measures are absolutely necessary to slow the spread of Covid-19. They help us buy time and avoid our creaking health service becoming more swamped than would otherwise be the case. Still, medical practitioners face difficult decisions, between life and death, who to treat first, to whom should scarce ventilators be assigned. These are unenviable choices to have to make.

It should go without saying that our frontline medical staff deserve our unquestioning support and cooperation in the weeks and months ahead. Right now, money should be no object to ensuring they have all the resources they need to avoid unnecessary deaths. To be fair, the caretaker government is taking resolute action. Of course, our health system should not be left short of resources at the best of times, but that is an important debate for another day. Even the best, most egalitarian health services in the world are now bracing for the worst.

A global recession is likely inevitable. As a trade-dependent economy, Ireland will be hit hard. But, the first to be affected are those service sectors that depend on social interaction: bars, restaurants, cinemas, airlines and the like. More than 100,000 jobs have already been lost, with up to half a million potentially at risk in the coming months. This crisis is different to 2008, but in some ways the economic effects could feel somewhat similar. And recessions and poverty are killers too.

Those of us earning a steady salary who can continue to work from home are the lucky ones who are unlikely to suffer an imminent fall in income. But, they are likely in the minority. On top of measures already taken, we need urgent, targeted support for those at most economic risk. Attractive as it might sound, sending everyone a cheque in the post at a time when they are being actively encouraged to hunker down and self-isolate does not fit the bill. At least not now. We will likely need phased interventions.

Right now, we need to protect as many jobs and incomes as possible, temporarily paying workers and small business owners to do nothing if needs be. This can prevent a collapse in demand cascading through the economy, causing businesses to close for longer than necessary, even permanently. Germany´s short-time work programme is credited with saving half a million jobs during the global financial crisis. In response to Covid-19, Sweden and Denmark are already introducing their own temporary short-time lay-off schemes which protect most of workers´ net incomes while slashing employers´ labour costs.

Looking to the future we need to make our welfare system resilient and relevant to the 21^st century. Innovations such as a Universal Basic Income are worth looking at, but not in the heat of the coronacrisis.