COVID-19 presents challenges we have never faced before as a nation. Like other countries, Ireland took necessary measures and imposed restrictions on everyday movement to stem the spread of the virus.
The Government's focus is now shifting to consider:
Answers to these questions involve extremely difficult considerations. While the main priority must continue to be people's health, we now present this summary of our insights into key considerations and potential initiatives to support any 'Restart Ireland' programme.
The economic impact of COVID-19 has been severe for most sectors of the Irish economy. Mass temporary unemployment has resulted from compliance with essential public health measures and restrictions on movement. While the depth and duration of what faces us is still unknown, it is vital that the health and well-being of our people is protected and that the Irish economy can restart.
The complexity of this task should not be underestimated. It calls for a collective response from the government, state agencies, businesses and every one of us. How we kick-start the economy while upholding the overriding principle of health is a substantial logistical and financial challenge.
A phased approach is logical. However, determining which sectors return to work must first assess workplace safety in tandem with the economic impact of sustained closure of that sector. It is assumed that granular protocols around hygiene and social contact will also be in place in advance of any easing of restrictions.
In contributing to this national dialogue, we believe there should be a number of strategic initiatives to help 'Restart Ireland'. These would span four pillars:
From the outset, business leaders have been acutely aware of the impact of COVID-19 on their workforce. Many businesses have adapted ways of working and pivoted to a 'new normal' where possible. As we look forward, evaluating when and how to bring employees back to the workplace is one of the most critical challenges businesses face.
A transparent and pragmatic transition plan for such a decision will set your organisation up for success.
Furthermore, focus needs to be on not only mitigating the effects of the crisis on the workforce, but also on seeking some of the positive effects of the disruption to work, workers and the workplace. Opportunities to evolve how, and where we work should be embraced and supported by organisations, and by the Government.
Many businesses are facing severe cash flow constraints and unprecedented increases in short-term financial obligations. With businesses having to increase overdrafts, defer tax payments and delay creditor payments, there will be a need to refinance these short-term obligations with more long-term funding. If we apply the learnings of the aftermath of the last financial crisis, we know that debt cannot be the only answer. Instead, a range of creative debt and equity focused measures and supports will be required allowing businesses to restart on a stable footing once the country starts to reopen.
We need to change our national approach and culture to rescuing companies. In Ireland, we only seek to rescue 3-5% of insolvent businesses. This figure is over 10% in the UK, and closer to 25% in the US. If companies are not restructured, we will be left with zombie companies, only existing to pay interest with no capital to grow.
These businesses also employ significant numbers of people who are currently in receipt of some form of state income support payment. Ongoing support for these companies will be key to ensure employment levels can be normalised.
After the last recession, it took several years for businesses to restructure their loans, which resulted in many business owners focusing more on debts than recovery and growth. A different restructuring approach is required for medium and large sized companies, compared to that needed for small and micro companies.
Numerous headwinds are facing Ireland and Irish companies:
At both a national and business level, the ability to plan and respond to these challenges with a long-term lens is paramount.
Determining the right actions and priorities to overcome these will ensure we respond swiftly, support operational resilience and develop a national infrastructure for future growth.
What actions can be taken now under the four key pillars to 'Restart Ireland'? How can we position both the country and business to respond and recover as quickly as possible?
This article is a high-level summary of a detailed proposal on the key steps required to restart Ireland's recovery. If you would like to learn more about any of the recommendations, please get in touch with one of our team.