The €3.7bn cost of the package of income and business supports the Government announced last week was estimated on the “worst-case” basis of 800,000 people having lost or on the verge of losing their jobs by late June, theunderstands.
The estimate is much higher than the 500,000 many economists anticipated will be effectively unemployed or on Government income supports by the summer as the Covid-19 emergency takes its toll on jobs and the economy.
Analysts believe that the bulk of the 147,000 who work in construction will effectively be laid off and apply for the Covid-19 income-support measures after the Government on Friday night announced additional restrictions including the closure of most building sites.
Thehas also learnt that the Government still believes that the €3.7bn price tag for the 12-week support programme will be sufficient to meet its costs because it maintains that the 800,000 lost jobs is a worst-case scenario and will not be exceeded.
It also expects that a significant number of the people who may initially qualify for a payment of €410 a week, designed to keep people on the payroll, will drop down to a lower payment as they lose their jobs.
The Government has also acknowledged that the €3.7bn scheme for the 12 weeks will more than likely be extended with a similar or revised scheme at the end of the 12-week period, as many countries prepare for some sort of restrictions or lockdowns to last through the summer.
The Economic and Social Research Institute in the first authoritative study of the Covid-19 crisis on the Irish economy published last week, before the weekend restrictions on building sites were announced, estimated unemployment would peak at 18% by early summer.
Economists expect that the cost of the supports will be higher than €3.7bn over the 12 weeks.
Jim Power estimated that based on similar schemes in the UK, the US, and Germany, the exchequer will need to spend €30bn in a full year.
He said that spending on that scale will be justified to save many employers and to ensure there will be jobs when the crisis eventually passes.
“Can the State afford €30bn over 12 months? It is not unique to Ireland; most governments around the world will face significant deficits. I would turn the question on its head. We cannot afford not to spend on the supports,” Mr Power said. He said the costs of the business supports will quickly increase as more people lose their jobs.
He said most of the 147,000 workers employed in construction will join the Government schemes, and many of the hundreds of thousands working in retail and accommodation and food services will also be effectively unemployed.
Neil Gibson, chief economist at accountants EY Ireland, said that a prolonged shutdown lasting more than 12 weeks is increasingly a realistic outcome.
EY estimates a peak of 675,000 people will lose their jobs in Ireland, an estimate that does not include the construction workers who will lose their jobs.
In the North, he estimates 257,000 people will lose their jobs under a prolonged lockdown.