About 240,000 people in the State could remain jobless in 12 months’ time despite a spending boost sparked by Covid-19 vaccinations, experts warn.
An Economic and Social Research Institute (ESRI) report published on Thursday predicts that wealth could grow by 4.9 per cent as shoppers spend €9 billion of the cash they have hoarded through the pandemic.
However, the institute’s economists say that unemployment could remain high through 2021, running at 15 per cent during the year, while it is likely to fall to 10 per cent in 12 months’ time.
Ahead of the report’s publication, ESRI research professor Kieran McQuinn said 10 per cent unemployment would amount to about 240,000 people out of work.
His colleague, senior research officer Conor O’Toole, noted that while there were signs of businesses beginning to invest, there was likely to be an increase in the number being wound up as they grappled with the pandemic’s fallout.
“There may be some increase in business failures, so that’s something to keep a watch on for next year,” he added.
Mr O’Toole, who co-wrote the report with Prof McQuinn, said the Government should tie cuts to supports such as the pandemic unemployment payment to the rate of economic recovery.
He said these payments, ranging from €203-€350 a week, should be reduced more slowly if activity returns at a more sluggish pace than expected.
Quarterly commentary
The institute’s Quarterly Economic Commentary – Winter 2020, published on Thursday, shows that overall, the number of people at work this year fell to 1.95 million from 2.32 million in 2019.
Employment is likely to recover to 2.07 million if the EU and UK strike a trade deal ahead of Brexit on January 1st, which would still leave one in seven workers, or 14.5 per cent, out of a job.
However, if the sides fail to agree, employment should come back to 2.06 million, leaving 15 per cent of the labour force without work.
The commentary shows that Government Covid-19 restrictions hit lower paid workers and young people hardest. Of the 352,000 people getting the pandemic payment on November 24th, some 170,00 were under 34 years.
Almost 89,000 of them were under 25, making this the biggest single age group on the payment, given to those who lost their jobs as a result of steps taken to contain the virus. Similarly, an analysis of those receiving the payment show that 190,000 of them were in lower paid groups.
The report estimates that Irish people will have saved €25.5 billion in total by the end of this year, but this could fall to €16.8 billion through 2021, boosting economic growth by 4.9 per cent. However, the institute predicts that a no-deal Brexit will cut this expansion to 1.5 per cent.
