Civil Society Roundtable

When 26 April 2021 11:00 AM
Where Webex

26 April 2021: Civil Society Roundtable

Summary of meeting

The Central Bank held a virtual roundtable with representatives from a range of civil society organisations on Monday, 26 April 2020.

The meeting was chaired by Governor of the Central Bank of Ireland, Gabriel Makhlouf, and was attended by members of the Central Bank’s senior management. The civil society organisations in attendance work across a range of areas including social justice, housing, human rights, workers’ rights, LGBT rights and the rights of older people. The discussion was held under Chatham House rules and this is reflected in the summary of the discussion below.

The Governor introduced the meeting with some opening remarks. A presentation on “The Diverse Effects of COVID-19 on Employment, Income & Savings” was delivered by Mark Cassidy, Director of Economics and Statistics, followed by discussion. A presentation was also delivered in relation to the development of the Central Bank’s next Strategy Plan, as well as its current Consultation Paper on Enhancing Stakeholder Engagement.

Remarks by Governor Makhlouf

Civil Society Presentation

Consultation Paper: Enhancing Stakeholder Engagement

Discussion between Central Bank and attendees

The discussion touched on a range of issues, which can be broadly summarised as follows:

• Longer term unemployment and government supports:A participant highlighted the need to consider structural inequalities which exist in our labour market which have been exacerbated by COVID-19. People require supports to access high quality jobs. Will the nature of work change permanently or will working from home become more prevalent? Those working in some sectors and those with a higher level of education may have more resources to do this.A participant highlighted the importance of the Pandemic Unemployment Payment but reflected that existing unemployment payments are insufficient. A return to existing payments may cause a shock. Income adequacy and labour market inequality will be big challenges in coming years. The need to consider adequacy when considering social welfare payments post-pandemic was also highlighted. The masking effect of government supports was also discussed with the expectation that financial issues related to income adequacy will come to the fore in coming months. In response, the Central Bank agreed that the negative effects of the pandemic have been offset by government supports and the longer-term effects remain uncertain. The Central Bank also commented that it expects that unemployment will remain at twice the pre-pandemic levels for the next year and employment could take a number of years to recover. There has been a wide range of pandemic-related effects, from the effects on income and savings, indebtedness, diversity of experience of home working, differences in experience between the genders which all need to be considered by policy-makers and economists.

• Reasonable living standards in terms of adequacy: in spite of government-funded income supports, one participant highlighted that there are still many households living in poverty. The need to keep in mind income adequacy was highlighted, along with the need to measure the standard of living when thinking about income adequacy.

• Debt: The accumulating levels of personal or unsecured debt, rent and utility arrears for some households, which have increased over the last year and the need to focus on reducing these was also highlighted. An increased number of divorces or separations due to COVID-19 could cause difficulties in terms of debt and housing in the next few years. Levels of mortgage arrears as a result of the pandemic were also highlighted. The need for the Central Bank of Ireland to take steps to support debtors was also emphasised.In responding to the issue of debt the Central Bank discussed the challenges that exist in relation to pandemic-related debt as well as legacy debt issues. The Central Bank’s focus has been on its role in supporting borrowers and engaging with lenders during the shock of the past year and this work has prioritised secured debt, household mortgages and SME debt but there are clearly other effects of the pandemic that we need to be mindful of. The Central Bank is also focused on engaging with lenders to deal with legacy debt issues. Tailored support is required for all affected borrowers with an emphasis on early, active engagement.

• Next steps for the economy: One participant discussed the future as the economy reopens and government policy evolves in relation to dealing with public debt and the provision of public services - high unemployment levels will affect those on the lowest incomes the most. The participant expressed concerns that there may be austerity-type policies introduced by Government. There’s a need to consider people who are unemployed, the impact of insolvencies and the treatment of workers.

• Impact on specific groups within the population: One participant highlighted the impact of the pandemic on one parent families who are often more likely to live in poverty and have lower levels of savings and have been adversely affected by the pandemic.Work, schooling and a lack of ability to work from home affect lone parents more than others, particularly given the predominately female nature of one parent homes. Another participant highlighted the impact of the pandemic on people aged over 55 with a particular focus on those carrying mortgage debt or continuing to rent into retirement. In response to this the Central Bank recognised that there are a broad range of issues for this group including pension provision, demographic changes, and reduction in home ownership. The Central Bank has published research in relation to this group to inform wider discussion of these issues but there is more to do in terms of looking at short-term issues and longer-term risks.

• Savings and housing: The Central Bank also highlighted its work in considering levels of savings from a structural point of view and its potential impact on housing buying and renting, as well as the impact of home working on the housing market; particularly in larger cities.

• Future of banking: One participant highlighted the fact that two banks will leave the Irish market and the need for action in relation to mortgage interest rates in Ireland.The Central Bank of Ireland highlighted the complexity of the issues in the Irish banking market, the impact of reduced competition, and the evolution of the Irish banking sector.The Central Bank’s role and powers in relation to the banking market were also explained.

Developing our next Strategic Plan

In the next section of the meeting, Head of Strategy and Foresight, Glenn Calverley spoke about the development of the Central Bank’s next Strategic Plan

In response to the presentation, participants highlighted the following:

The issue of financial inclusion should be considered in the context of the strategic direction of the Central Bank. Issues such as the switch to non-cash, closure of retail shops which affected those without digital access or debit and credit cards, the closure of bank branches is also a concern that was highlighted.

The use of the services of moneylenders as a lifeline for some households was also highlighted. Other sources of financial support such as the credit union should be promoted.

The need to consider the distribution of income and its effect on how our economy operates was also highlighted. In response the Central Bank highlighted work underway by the ECB as part of its Strategy Review to consider what has happened to the distribution of income since the last review in 2003. These considerations are increasingly relevant to central bankers and they will likely play a more and more significant role in thinking about policy’s effects on the ground. The Central Bank also highlighted work underway to highlight the fact that financial wealth and income are not the only indicators of wellbeing of an economy. Other factors such as health, education, access, and public services are also important.

In response to the presentation, participants highlighted the following:

It is important that the outcomes of consultation and engagement are communicated and reflected in the Central Bank’s analysis and research which is observed by Government. The Central Bank responded confirming that it is committed to building its engagement with stakeholders and to ensuring that the results of that engagement are communicated.

The need to consider the economy in terms of both economic and social issues was also highlighted. The need to consider both sides of these coins was highlighted.

The session closed with the Central Bank thanking attendees for their contributions and looking forward to ongoing engagement.