Unemployment isn’t expected to return to pre-Covid “normal” levels until at least 2025, meaning income supports similar to the PUP will very likely be with us for years, according to new official forecasts from the Department of Finance.
The projections, which have been prepared by the Department for the European Commission, indicate that even with a successful vaccine rollout, Ireland’s unemployment rate will still rest around 5.5% by as late as 2025. Before the covid pandemic struck in early 2020, Ireland’s unemployment rate was 4.8%.
During the first lockdown in 2020, the economy saw record unemployment, at a staggering 28%. Now, that figure is hovering around 24%.
The government’s Draft Stability Programme Update is anticipating that unemployment will stoop to 8.2% in 2022, followed by 6.7% in 2023, 6% in 2024, and 5.5% in 2025, at which point things should start to smooth out.
These predictions are based on the assumption of a “very gradual” easing of restrictions, and the belief that there will be very minimal health restrictions next year.
The report also notes that the accommodation and the food service sectors were the worst hit economic areas by the pandemic and lockdown, along with the wholesale and retail trades – a finding which was backed up by the Central Bank and the ESRI.
Though income supports are scheduled to expire at the end of June, both Finance Minister Paschal Donohoe and Minister for Public Expenditure Michael McGrath have said that there will be no abrupt end to the supports.
To date, around €12 billion has been spent since the start of 2020 on both the PUP and the Employment Wage Subsidy Scheme (EWSS).