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Donohoe doesn't rule out coronavirus pay cuts for ministers

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Minister for Finance Paschal Donohoe. Photo: Gerry Mooney

Minister for Finance Paschal Donohoe. Photo: Gerry Mooney

Minister for Finance Paschal Donohoe. Photo: Gerry Mooney

FINANCE Minister Paschal Donohoe has not ruled out pay cuts for Cabinet members as the coronavirus crisis continues.

It comes after New Zealand's prime minister Jacinda Ardern said she and her ministers will take a 20pc pay cut for six months in solidarity with people who have lost jobs.

When asked if ministers here will take a pay cut, Mr Donohoe said the government will look at what other governments are doing and suggested it will be discussed in the coming weeks.

Taoiseach Leo Varadkar is paid €185,350 a year.

His salary is set at €207,000 but Mr Varadkar and other office holders have not taken pay increases due to ministers under the public sector pay restoration process.

Ministers get €157,000 though they would be paid more than €175,000 if they didn't waive the pay rises of recent years.

Mr Donohoe said that the government hasn't discussed the issue of pay cuts for ministers so far.

He said: "We will look at what other governments are doing" but also said: "It is the case that the wage increases the recent years have not applied to office holders."

Mr Donohoe added: "I absolutely understand now that many people all over the country are facing a very severe loss of income that they are having to deal with.

"And I'm sure that the government will discuss this and other matters in the coming weeks."

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Mr Donohoe said the question of a pay reduction for TDs - who get €96,000 - or Senators - who are paid €68,000 - has not been examined.

"I haven't to date considered whether reductions are merited or needed for TDs or Senators. It is the case that a number of TDs and Senators are handing back to the state increases which they were due. It's also the case that some of us cannot do that," Mr Donohoe said.

He also responded to reports that some TDs are seeking additional expenses for working from home.

Mr Donohoe said that the Houses of the Oireachtas has said they're not planning to bring in any new expenses system and that he supports that position.

"I would make the point that now for many years the Houses of the Oireachtas have been making laptops and mobile phones available to those who are in the Dáil or the Seanad to allow them to work in different places.

"That is the way that equipment should be used now," he said.

Meanwhile, Mr Donohoe has warned that the coronavirus wage subsidy scheme can't stay in place "indefinitely" as he announced changes that will see lower paid workers get a higher percentage of their pre-crisis pay.

The scheme is aimed at helping businesses hit by the emergency to retain staff and ensure that workers still get a large proportion of their salary.

Under the measures announced by Mr Donohoe there will be changes to the entitlements of lower paid workers but also bring higher paid people whose salaries have fallen below €76,000 into the scheme.

For those will net pay of less than €412 per week, the subsidy will increase from 70pc to 85pc of their previous weekly pay.

Employees who had a previous average net salary of between €412 and €500 per week will get the subsidy paid up to €350-per week.

The changes mean that more employees will now receive a subsidy of €350 per week - which is equal to the emergency payment for people who have lost their jobs.

For employees with a previous net pay of more than €586 per week or €38,000 per year, a tiered approach will apply.

The maximum subsidy payable for these remains at €350 per week.

The tiered approach takes into account both the amount paid by the employer and the level of reduction in pay borne by that employee as follows.

In instances where up to 60pc of an employee's previous average net weekly wage is paid by the employer, the subsidy available is up to €350-a-week.

Where between 60pc and 80pc of the previous pay is covered by an employer, the subsidy on offer is up to €205-a-week.

If an employer is paying more than 80pc of a workers' wage, no subsidy is payable.

Tapering of the subsidy will apply to all cases where the gross pay paid by the employer and the subsidy exceed the previous average net weekly pay.

This is calculated by subtracting the amount paid by the employer from the previous average net weekly pay.

This is to ensure that no employee would be better off under the scheme.

Mr Donohoe has also announced that the wage subsidy is now available to support employees where the average net pre-Covid salary was greater than €76,000, and their gross post-Covid salary has fallen below €76,000.

The tiered arrangement applicable to gross incomes in excess of €38,000 will apply in such circumstances.

Mr Donohoe said the measures build on the scheme that has already been introduced and is in use by more than 40,000 employers and is designed to help businesses and staff at a time of "unprecedented difficulty".

The aim of the scheme is to protect the income of employees and offer a "fighting chance" of saving the businesses they work for.

Mr Donohoe also cautioned that it is an exceptional scheme with the potential to cost hundreds of millions of euro a week and "We will not be able to continue these kinds of measures indefinitely".



He said the ability is there to sustain it for the full 12-weeks that it is to be implemented for but it is being monitored and assessed.

"It's not possible at this point, to put down a very specific end date, beyond this, because so much of what we'll have to deal with just depends on where we want to be with Covid-19," Mr Donohoe said.

"We can sustain this scheme for now but when we get to a point of seeing our public health improve and seeing as a result of that our economy improve the wage subsidy scheme and the way in which it operates will be reviewed and then tapered."

Mr Dohonoe also referenced on the International Monetary Fund (IMF) warning that the economic fallout from the coronavirus crisis may lead to the worst downturn since the Great Depression.

He said: "This underlines the scale of the challenge facing us. But this is a challenge that here in Ireland with our economy,

with decisions that we can make, that we have the ability to help navigate this country through."

He said it's possible Ireland could see a decline in economic activity that's comparable to and potentially greater than the crash of a decade ago.

"We are in uncharted waters. We're facing a new kind of challenge, facing new economic difficulties.

"So this is why the response of the government must be commensurate with challenge that citizens and which our economy now faces."


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