April 30, 2020 / 11:25 AM / in a month

UPDATE 1-Irish wage subsidy recipients jump as retail sales slump

* Irish state supporting almost half of total labour force

* Retail trade fall due to motor trade, others fare better

* Survey shows 85% of businesses have closed to some degree (Adds retail sales, business survey)

By Padraic Halpin

DUBLIN, April 30 (Reuters) - The number of workers on Ireland’s wage subsidy scheme for firms hit by the coronavirus pandemic jumped to 400,000 on Thursday, as data showed retail sales fell 12.7% month-on-month in March when the economy began to gradually shut down.

Ireland instructed people to stay home almost six weeks ago and ministers expect the severe restrictions that led to the closure of all but essential operations to remain largely or entirely in place after the current expiry date next Tuesday.

To help limit the economic damage, the state agreed last month to pay 70% of wages up to a maximum of 410 euros ($445.83) a week for an initial 12-week period. Claimants under the scheme stood at just under 350,000 on Monday.

Together with recipients of regular jobless benefits and a higher emergency payment to those who have lost jobs or had hours cut due to the disruption, the state is now supporting around half of Ireland’s 2.47 million labour force.

Finance Minister Paschal Donohoe said on Thursday that the subsidy scheme would “clearly play a big part” in the economic recovery and that he was looking at whether that could involve a different role in different sectors beyond June.

“It’s had a massively positive effect. Given the positive effect, I understand that if we turn that scheme off quickly, much of that good work will be undone and many employers that are hanging on for dear life at the moment will be pushed over the edge,” Donohoe told Ireland’s Midlands 103 radio station.

“I clearly don’t want that to happen but on the other side of the coin, the different income support schemes we have in place now cost between 300 to 400 million euros per week.”

Donohoe’s office forecast last week that the economy would shrink by at least 10% this year and, while the headline drop in retail sales reflected the sudden contraction, sales volumes were only 1.9% lower month-on-month when the motor trade was excluded.

That was due to a 30.7% month-on-month drop in the sale of vehicles and, while bar sales fell 53.1% and clothing, footwear & textiles were 49.2% lower, supermarket sales were 14% higher, electrical goods rose by 5.9% and pharmaceuticals and cosmetic sales were up 8.8%.

However the Central Statistics Office noted that most retailers were open for either a part of or most of March. Pubs were shut down in the middle of the month, followed by all non-essential operators a week later.

A survey by Chambers Ireland, the country’s largest business organisation, showed on Thursday that 85% of firms have closed to some degree. That broke down as scaled back activity among 27%, staff working from home in 24% and 34% shut completely.

“The question for many business owners is soon going to become not ‘Can we keep going?’, but ‘Can we afford to reopen’,” Chambers Ireland Chief Executive Ian Talbot said in a statement. ($1 = 0.9196 euros) (Reporting by Padraic Halpin; Editing by David Goodman and Alex Richardson)

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