The Government's new Employment Wage Subsidy Scheme will cost the State over €0.5 billion less that the Temporary Wage Subsidy Scheme, despite running for two months longer, according to the Minister for Finance.
Responding to a Parliamentary Question from Labour Finance spokesperson Ged Nash, Paschal Donohoe confirmed that the TWSS cost the State over €2.8 billion between March and August of this year.
But the Minister said that bill would have risen by a further €0.5 billion a month if the scheme had been extended beyond then.
By contrast, the EWSS which replaced the TWSS on September 1 is expected to cost a total of €2.25 billion by the time it is due to expire at the end of next March.
The Department of Finance estimates that under the EWSS, €1.35 billion will be paid out in 2020 (inclusive of seasonal workers), with the remaining €0.9 billion being spent in the first three months of 2021.
Paschal Donohoe forecast that the EWSS would support around 350,000 jobs "into the beginning of 2021" - but cautioned that the cost could spiral if the scheme were extended for the full year of 2021.
"All things remaining the same, a tentative estimate of the additional cost if the EWSS was to be extended for the full year 2021 would be in the region of €3 billion, " he stated.
He told the Labour spokesperson that for every additional 50,000 qualifying employments, the cost of the scheme would increase by €250 million, adding that these cost predictions would therefore be subject to review.
The Minister noted that the scheme is demand-led, and that a significant surge in claims "may require a policy review and re-evaluation of the terms of the scheme."
Minster Paschal Donohoe said that the TWSS had delivered at least one subsidy to around 663,100 employees working for 65,000 employers.
Mr Donohoe noted that while many of the strictest public health restrictions on the economy had been eased, for many businesses, economic outputs were unlikely to return to normal for much of the rest of this year due to the continued need for measures including social distancing.
"The Government is therefore committed to a wage subsidy scheme to maintain the link between the employee and employer insofar as is possible into 2021," he concluded.
Under the EWSS the maximum weekly subsidy an employer can claim per worker falls from €410 to €203 and the turnaround for employers to receive the payroll support rises from around 48 hours to up to six weeks.
In addition, qualifying employers must now have tax clearance - which was not required under the TWSS.
"This adaptation from the TWSS will allow employers to rely on the continuation of support over a longer period of eight months while also ensuring such support is sustainable and affordable," the Minister said.
By last Monday over 30,000 employers had registered for the EWSS, according to the Minister.