Coronacrisis
As businesses are left in limbo about getting back to normal, Fine Gael leader Leo Varadkar is embracing populist rhetoric and actions, writes Nick Mulcahy
Fine Gael leader Leo Varadkar sees a populist opportunity in changing the traditional office work pattern and heaping more cost on business
The spectacle of football grounds across Europe teeming with fans brought home to people in Ireland just what a laggard the country is when it comes to living with Covid. Ireland was scheduled to host a number of Euros matches but that was a step too far for Taoiseach Micheál Martin and his super-cautious colleagues. Even with two-thirds of the population having received at one least one vaccine jab, including everyone who might possibly die from the virus, the government shows little appetite to remove restrictions on the hospitality, travel and live experience sectors.
The abundance of caution starts at the top, with the Fianna Fáil prime minister and his Fine Gael deputy, Leo Varadkar. Both men are former health ministers and neither has any experience of business. Martin (60) has been a full-time politician for 36 years and has never held a businessrelated portfolio in government.
Varadkar (42) qualified as a doctor in 2003 and was elected to the Dáil four years later. When the coalition government was formed in 2020, Varadkar took on the ministry of Enterprise, Trade and Employment. In a very short time, he has overseen the sharpest rise in unemployment in the history of the state, and he doesn’t seem to be in much of a rush to do anything about it.
At the end of May, there were 172,000 people on the Live Register of weekly unemployment payment claimants, and in mid-June 244,000 people were claiming the Pandemic Unemployment Payment. In addition, there were an estimated 302,000 employees supported by the Employment Wage Subsidy Scheme.
Without that subsidy, tens of thousands more people would be on the dole or claiming PUP.
There’s some dispute in official circles about the extent of unemployment. The Central Statistics office calculated its Covid-adjusted unemployment measure for May – which includes PUP recipients – at 21.9%. In this CSO measure, the unemployment rate is nearly 60% for 15-24 year olds.
Last January, Department of Finance mandarins argued that there is some double-counting in this Covidadjusted measure. “The ‘true’ underlying rate of unemployment in the Irish labour market remains unknown,” the officials opined. Whatever the reality, it’s not good,
especially for individuals who depend for their income on sectors that are still locked down.
On the latest jobless data, Leo Varadkar commented that the government is aiming to have 2.5 million people in work by 2024 with its Economic Recovery Plan, more than the pre-pandemic number. “Things are looking up but today’s numbers are a stark reminder of the cruelty of the virus and how many people have been impacted,” he stated.
However, it’s not the virus that has shut down aviation, weddings, concerts, restaurants and pubs. That’s down to ministerial diktat and prioritising the demands of hospital administrators over citizens’ freedoms. The cavalier treatment of business owners in a number of sectors also speaks to a growing disregard for the SME sector.
This was evidenced by the dithering over the scheduled reopening for indoor dining and drinking on Monday, July 5, with a decision promised on Friday, July 2. Vintners’ Federation chief executive Padraig Cribben commented that the fact that government was minded not to deliver a decision until three days before the planned reopening “illustrates how detached ministers are from the realities of running a business”.
Heading into July and August, there is still no official signal from Martin and Vardakar as to when they want civil servants to return to the office. Corporates and business generally take their lead on the office return from the state, and certainly employees do too. It’s increasingly apparent that Martin’s timeline on this and other reopening decisions is linked to metrics on vaccinations. Whatever those metrics are, they are not being shared, so employers are left to make it up as they go along.
Anecdotal evidence abounds of large and small employers encountering serious difficulty in persuading even vaccinated staff to return to their desks. Resistance is most entrenched among parents in their 30s and 40s, who have become used to a much easier lifestyle than was the norm before March 2020. Employers report that many twentysomethings are of the same view.
Varadkar sensed a populist opportunity early on, and has been in the vanguard of championing the end of the five-day office week. The Fine Gael leader told his party’s Ard Fheis recently: “When it comes to the workplace, I don’t believe we should return to the old normal. We need a new normal in which people are facilitated to work from home or work from a hub near to where they live. It’s about choice.”
Varadkar’s goal on this issue is to enshrine remote working rights in law, which would be a crowd pleaser but won’t impress the US multinationals whose investment provides the tax bounty for politicians to spend.
Before their political marriage, there seemed to be some space between Fianna Fáil and Fine Gael, with the former promising limitless freebies and the latter protesting that fiscal responsibility is important too. Now it seems the Taoiseach has brought his younger colleague around to the FF way of thinking.
At the FG party conference, the Tánaiste declared that a legacy of the pandemic must be better pay, terms and conditions for all public and private sector workers. “Fine Gael will take the lead on this through the introduction of statutory sick pay, the move to a living wage, and access to an occupational pension for all employees,” Varadkar stated.
What these three pledges have in common is more cost being heaped on employers. From next year, staff will have an annual entitlement to three days annual sick pay at a rate of 70% of their pay, up to a daily threshold of €110. The entitlement will increase to five paid sick days in 2023, seven days in 2024 and 10 days from 2025. The Tánaiste estimates the measure will be equivalent to a 2.6% pay increase.
The promise on the Living Wage would see the National Minimum Wage increase from €10.20 an hour currently to €12.30 an hour. In April, the enterprise minister told the Low Pay Commission to devise a roadmap for this extra employer cost.
Compulsory employer payment into staff pensions has been kicked to touch many times, most recently last year due to government actions decimating commercial activity. The autoenrolment scheme envisages 6% of salary paid by employees and 6% by employers, phased in over a number of years.
Varadkar is as enthusiastic about public spending as he is about raising business overheads. Though the state is currently spending €1,000m more a month than it receives, the Tánaiste believes the additional staff, resources and billions in extra funding provided to the health service to respond to the Covid-19 pandemic should be retained and redeployed.
The virtual delegates at the Fine Gael conference were told: “We must implement the Sláintecare promise of affordable healthcare for all by reducing out of pocket expenses for medicines and hospital charges and expanding medical card eligibility. Let’s make it our mission to build a public health service that can be ranked amongst the best in Europe by the end of this decade.”
Varadkar referenced Fine Gael heritage with allusions to building a Just Society. His vision is for a society “in which everyone has the opportunity to grow and prosper – to get a good education, to find a job and get promoted, to own a home, to raise a family, to build a successful business, to be looked after when sick, and grow old in security and dignity”.
Such rhetoric won’t do Fine Gael any harm when it comes to looking for Fianna Fáil and Sinn Féin transfers at election time. It may not be so enthusiastically received by FG supporters who wonder about tax justice when the top 27% of income earners pay 84% of total income tax and USC.
This cohort may be somewhat reassured that finance minister Paschal Donohoe is more pragmatic than his party leader. A couple of weeks before Varadkar was dishing out motherhood and apple pie to the Fine Gael audience, Donohoe introduced legislation to update the Local Property Tax. Revising the rates won’t increase this tax burden by much in the short-term, but c.100,000 property owners are being brought into the LPT net for the first time.