The Employment Wage Subsidy Scheme would cost an extra €3.7 billion if extended beyond March to the end of this year, Finance Minister Paschal Donohoe has confirmed.
Responding to a Parliamentary Question from Labour Finance Spokesperson Ged Nash, the Minister pledged that there would be no "cliff-edge" to the scheme, which he described as a key component of the government's response to supporting viable firms, and encouraging employment in challenging times.
He noted that the legislation governing the EWSS allows him to extend the scheme until the end of June 2021, subject to certain conditions, but indicated support would probably be needed for longer.
"It is likely that continued support will be necessary out to the end of 2021 to help maintain viable businesses and employment and to provide businesses with certainty to the maximum extent possible," Mr Donohoe stated.
He said decisions on the form of such support will take account of emerging circumstances and economic conditions as they become clearer.
Mr Donohoe said EWSS which was launched last August had cost €1.8 billion so far: €1.5 billion in subsidy payments, and a further €270 million in PRSI relief.
This was in respect of 41,600 eligible employers, and 467,000 employees.
He noted that the scheme is demand-led, and the final cost will depend on a number of factors, including the number of employees making valid claims and the number of employees in respect of whom such claims were made.
However, based on the average value of EWSS claims to date, if maintained in its current form, the additional cost would be €350 million per month in direct subsidies, and €61 million in PRSI relief.
If continued to 31 December, the additional cost would be €3.15 billion in direct subsidies, and a further €550 million in PRSI relief.
Responding to further queries from Mr Nash, Paschal Donohoe confirmed that so far, €3 million in non-compliant payments has been recouped from certain employers participating in the Temporary Wage Subsidy Scheme (TWSS), which ran from March to August last year.
Further investigations have yet be concluded.
The Minister said compliance checks had been carried out on over 92% of participating employers, while the remainder of the investigations are in process.
He said the checks indicated a "high level of compliance" by most employers, with a relatively small number identified as being ineligible.
As regards the current EWSS, the Revenue Commissioners are currently carrying out real time reviews of participating employers, and where issues are identified, they engage with the business in question to ensure they are quickly rectified.
The Minister reiterated a pledge to publish the names of all employers availing of the EWSS before the end of January.
The list of TWSS employers have already been published.
In a statement, Ged Nash said that the Minister's commitment to continuing the wage subsidy scheme beyond the 31 March cut-off date is reassuring for businesses and workers at this very uncertain time.
He said this "is the right thing to do to".
"We now need to look at what the future of those companies will look like, the prospects for their employees in a post-pandemic Ireland and how the scheme might ultimately be reformed to leverage better long-term outcomes for jobs, businesses and economy," he said.
He added that "we are very likely to have forms of wage subsidies in place for some time to come".
"The government must start work now on designing new schemes, such as the Obair Ghearr initiative proposed by Labour and modelled on the successful German 'Kurzarbeit’ scheme which would link future subsidies to firms with conditions and targets around training, re-skilling and innovation and a halt to lay-offs if they continue to benefit from such subsidies."
Mr Nash said this kind of approach "would help position companies and workers to take full advantage of a post-Covid economic upswing and would represent a sound investment by the State in the future".