Neasa on the Challenges Facing Irish Businesses

Thu, Jul 2, 2020

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Neasa spoke on the Government’s efforts to support Irish businesses, highlighting the need to ensure our support is invested into labour intensive work - particularly when it comes to the building industry - and that the quality of jobs protected remains a central concern.


Neasa Hourigan TD: I have a number of questions. I know we would normally go back and forth but, given the nature of the convention centre room and the fact we are only two days in the job, I might go through as many questions as I can before hearing the replies.

There is some worry among consumers that businesses are in a vulnerable state and, obviously, it is incredibly important that we support local businesses by booking where we can and by shopping local. I agree with the previous speaker that it is lovely to see businesses start to open up again. The issue is that consumers need to know businesses are supported by the State as much as possible, in particular where advance booking is required, and that future support and stimulus packages for businesses are on the horizon. Perhaps we should look for more widespread attention on that issue because we need to increase not only business confidence but also consumer confidence in those businesses.

As the global recovery picks up, global warming will not slow down, unfortunately. Ireland faces emissions challenges but we now have an opportunity to ensure that our investment strategy supports a just transition, reduces emissions and rebuilds a fair and circular economy. Has the Tánaiste plans to ensure that the most carbon intensive sectors of our economy that currently or in the future might be in receipt of public money will increase their contributions to emissions reduction targets? Have “strings attached” supports been considered that may require emissions reduction business plans, environmental management strategies or certifications such as ISO 14001, which is very effective in achieving that?

We must also ensure we get those on low incomes back to work as soon as possible and that we support labour intensive work, particularly in the building industry, rather than what we tended to do in past recessions, which was to focus on large-scale investment projects. To facilitate this, we need to ensure we are giving people training in new industries, such as renewable energy, insulating homes and rewilding projects. Properly insulating homes will be vital for meeting existing targets and is very labour intensive, and it would also create additional jobs in supply chains and help those most affected by fuel poverty. Will the Tánaiste outline his plans to support the labour intensive SME energy retrofitting industry to create jobs in every town, cut fuel poverty and avoid climate change penalties?

As the Tánaiste will be aware, the Future Jobs Ireland initiative was published last year. It highlighted the need for public policy to be directed to the enhancement of the quality of jobs in Ireland, given we have a high level of precarious work, to allow for a better standard of living.

Crucial in this will be the need to provide incentives and supports for SMEs, particularly for those businesses that provide local employment, which tends to be immune to offshoring, and for those businesses that pay the living wage. What are the Tánaiste’s plans to ensure Government support will be used to keep the quality of jobs created and retained a central concern, as any failure to do so many only further the job quality divide in Ireland?

Given the potential for both a global recession and an increase in protectionism such as we see emerging in certain countries, there is a chance that new foreign direct investment may reduce and existing foreign direct investment may be scaled back. Has the Department modelled scenarios in which there is more of a focus on growing indigenous business rather than continuing to rely on foreign direct investment?

I will talk for a moment about community solidarity, which is the opposite of foreign direct investment in some ways. There is a number of fantastic businesses in the central Dublin area. I am particularly thinking of a zero-waste whole foods business in Drumcondra in my constituency. This business has started to help out adjacent businesses such as cafés and restaurants by allowing them to set up concessions on its own premises, which are now emptier as the Covid requirements force businesses to space things out more. This business is helping small businesses to set up concession stands. It is a small way in which businesses in the community can support each other. It is marvellous to watch it happen. Will the Department consider the supports that could be offered to such initiatives through LEOs or Microfinance Ireland? As circumstances change, there may be ways to innovate within our SME sector.

We are still at an early stage in our recovery and in our experience of living with the Covid pandemic and operating our economy within it. We were already grappling with a crisis in the insurance industry, which presents its own challenges to the business sector. If there is an outbreak or Covid cluster in a business such as a café or restaurant, will the owners face any insurance liability? Has the Department considered this or how it might support businesses experiencing such impacts?

Businesses are struggling with cash flow. The collapse in consumer spending and the resulting cash flow problems for businesses were not, however, the result of instability in our financial system or a collapse in the property bubble but rather the result of the social distancing restrictions, the lockdown and the consequent closing of our retailers and hospitality businesses. Over this time, consumers have saved a large amount so there is capacity in our financial system. We propose that advantage be taken of that situation and that we look to co-operative business models and promote community-based economic organisations. This, again, speaks to the issue of community solidarity. This will not just provide a place for Irish savers to invest their money and allow employees to take a stake in the businesses they want to hold on to and support but will also provide a new source of finance. The co-operative business should be an integral part of rebuilding our economy post Covid-19. Co-operatives are guided by principles of solidarity and economic democracy and are rooted within their local communities. They are run according to the interests of their members rather than those of unknown stakeholders.

How could the Tánaiste develop a supportive financial ecosystem for co-operatives? Currently, the legal, regulatory, auditing and financial institutions of our economy are designed for private companies and tailored to their needs. We see this done better elsewhere. In economies such as that of the UK, there are much clearer supports for co-operative systems. By contrast, co-operatives in the country operate under a framework that disadvantages them and burdens them with a layer of rules and regulations equivalent conventional firms do not face. Can something be done to address the competitive disadvantage faced by co-operatives?

Studies in the UK, where the system is more supportive, have shown that employees of co-operatives report higher levels of jobs satisfaction and economic well-being and higher rates of productivity. Compared with conventional businesses, co-operatives also have lower staff turnover, which represents a major cost for SMEs, as well as lower rates of pay inequality and absenteeism. Will the Minister consider introducing right-to-own legislation to support employee buyouts and the co-operativization of existing businesses?

Tánaiste Leo Varadkar: I thank the Deputy for her contribution. I may be able to answer a few of her points but I will have to come back to her on others. As things stand, the grants and loans offered, including the restart grant, the wage subsidy scheme and the various loan schemes, are not tied to any particular environmental or social obligations. That may well be the case in the future. Down the line, we might decide not to bail out polluting industries, for example. For the moment, we have taken a blanket approach to try to support every job and every business rather than establishing mechanisms to discriminate between the jobs and businesses we want to save and those we do not. We have taken a blanket approach to date, which has been necessary given the blanket impact the pandemic has had on all sorts of businesses and employment.

With regard to the consideration of labour-intensive options for the July stimulus package, the Deputy has made a very valid point. For July, we need to consider Government investment in labour-intensive sectors in which we can get people back to work quickly. I agree that retrofitting, insulation and rewilding may be among those sectors. Even though construction activity has been under way for six weeks and we are told that 80% of sites are now open, 45,000 construction workers are still in receipt of the pandemic unemployment payment. There is something not right there. I do not know what it is but we need to dig down into that and get people back on site. We also need to provide alternative construction employment for those who cannot return to sites for various reasons. Retrofitting would certainly be top of the list of such alternative jobs.

With regard to Covid insurance, I am not sure whether the Deputy was asking whether employers are liable for people who get Covid on their premises or whether she was asking about business disruption insurance. All of these issues have yet to be sorted out in the courts. I am not of the view, however, that a business is liable for somebody contracting Covid on its premises unless it was somehow grossly negligent or responsible for it. To my knowledge, nobody has every successfully sued a business or crèche because they or their kid got chickenpox or the flu on its premises. I do not see why that would apply to Covid but stranger things have happened in the courts with regard to compensation claims.

The issue of business disruption insurance will play out with the Financial Services and Pensions Ombudsman and in the courts in the coming weeks and months. Some businesses are arguing that they should be paid for disruptions to business, while some insurers are saying that such claims are not covered. That will need to be teased out.

On co-operatives, I have visited many of them but I do not know much about their business model. I am not really au faitwith the competitive disadvantages they face that traditional companies do not. I am keen to find out more about the area and to learn a bit more about it. If there are ways to rebalance the system and the law in their favour to give them a fair crack of the whip, I am very much open to doing so.