There is more than enough column inches devoted to the ups and downs of Ireland’s vaccine rollout, and understandably so. In what feels like a never-ending lockdown, we’re all desperate to start tying vaccine dates and deadlines with reopenings and restriction removals as soon as possible. However, widespread vaccine distribution, family dinners, and a “pint in some rural pub” is only the next step in what will be a continuing crisis for Ireland. Any pandemic is not just a public health crisis, but an economic one as well - and we’re about to emerge from one and into another.
Unemployment at record levels in Ireland
Last month, Ireland’s Central Statistics Office released their latest monthly report on the Live Register - a record of all jobseekers registering for employment supports, largely due to unemployment e.g. Jobseekers Allowance, Jobseekers Benefit etc. In March 2021, we had 183,096 people on the traditional Live Register, with another 443,247 in receipt of the Pandemic Unemployment Payment (PUP). The PUP being a separate employment support scheme that helps jobseekers directly impacted by the pandemic and associated restrictions.
Collectively that’s 626,343 people in need of support from the state. Put another way, these numbers equate to an unemployment rate of roughly 24.2%. For comparison’s sake, that’s about 9 percentage points higher than we experienced in the Great Recession. At first glance, you might still think vaccine rollout is the answer right? Get the shot in as many arms as possible, reopen the economy, and get those folks off the PUP. But it’s not going to be that simple.
Vaccines will help, but they will not solve this crisis
First, not every PUP recipient is going to go back to work. Despite state supports, businesses have taken a real hit in the past 12 months, with many taking on more debt while simultaneously seeing a reduction in their revenues. Put simply, when they’re asked to start paying staff again, they won’t. Redundancies will rise, and the traditional Live Register figures will increase as the PUP scheme winds down in Q3/Q4. Don’t take my word for it - the Department of Finance this week submitted their ‘Stability Programme Update’ to Brussels that outlined their own projections for unemployment over the next 5 years. Below is a look at past rates coupled with these future predictions:
Probably worth pointing out here that the Department doesn’t exactly have the best record at predicting unemployment rates associated with this crisis - in October of last year they predicted a Q4 2020 unemployment rate of 12.25% (actual rate ended up being 20.5%). In that same budget speech, Minister Donohoe predicted an unemployment rate of 10.25% for 2021. 6 months later he’s now revised that number to 16.3%.
However, let’s assume that these numbers are correct. A 16.3% rate for 2021 would suggest that roughly 186,740 people currently on PUP return to work. Leaving roughly 393,000 people out of work for another year. Again, still more than the worst unemployment figures we saw during the Great Recession.
Not only will these folks be out of work, they’re also going to move from an average welfare payment of €297.67 per week to the standard €203. This is going to be painful, for everyone. While 2022 will apparently see the unemployment rate half again, we’ll still be looking at 194,000 people unemployed. That's 61% higher than pre-crisis levels.
Long-term and youth unemployment will rear their head yet again
While the numbers alone are terrifying, the story within the numbers is far more concerning. In February 2020 we had 120,100 people out of work. As we’ve seen above, that number then jumped to more than 600,000 in Q1 2021, is expected to drop to around 400,000 in Q3/Q4, and eventually to just under 200,000 in 2022.
In short, there are going to be a lot of people who haven’t worked in at least 12-24 months looking for help. Long-term unemployment is itself a massively difficult barrier to overcome. A study by the World Economic Forum showed that workers out of work for 12 months or more were 50% less likely to find a job compared to somebody already in employment.
We’ve already seen other governments react to this impending tsunami of long-term unemployment. The Department for Work and Pensions in the UK has invested £3 billion into the Restart Scheme - the UK’s largest employment support scheme aimed at supporting long-term unemployed jobseekers over the coming 4 years.
Similarly, we already know that younger workers have been disproportionately impacted by this pandemic. Youth unemployment rates across Europe have skyrocketed; 18.9% in France, 29.6% in Italy, and 40.3% in Spain. The average across the EU is now 17.1%, with Ireland’s rate standing at 16.8%. This is already the highest we’ve seen in 5 years, and doesn’t include the numbers currently masked by the PUP system.
While there are a number of other stories to tell within this looming employment crisis, these two act as useful case studies to justify significant investments into the workforce development and employment support spaces in Ireland over the coming years. It seems like budget increases across areas like Health and PUP welfare payments will soon need to be redirected to address the next phase of this crisis. The next big threat from this pandemic is the assumption that a reduction in case numbers means the war is won.
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