Unemployment is likely to surge to more than 18% by early summer as the economy hurtles into recession.
Employment could take more than a year to get back to its pre-crisis levels depending on the success of measures to rein in the Covid-19 pandemic here and globally, according to an assessment from the ESRI think-tank.
The ESRI warns that the economy is facing a shock that could, in some parts, rival the fallout experienced from the onset of the banking and property crash in 2008, in terms of the speed of the job losses and the suddenness of the strain it puts on the public finances, as Government expenditure soars and its tax revenues plummet.
It comes as economists at S&P Global Ratings and other analysts predict that the British and eurozone economies are heading into recession too.
Here, the job losses over a “very short period” hit workers in the wholesale and retail trades, and accommodation and food services, which together employed 480,000 people only a few weeks ago, says the ESRI.
“This speed of change in the fortunes of the domestic and international labour markets is unprecedented,” according to research professor, Kieran McQuinn, and senior research officer, Conor O’Toole, the ESRI report co-authors.
“The likely increase in Irish unemployment will be substantial in size and rapid in nature”, surging to 18% by early summer before falling to 11% late this year, amid a deep recession as GDP contracts by over 7%, the report says.
The speed of any recovery here will likely depend on the success of pandemic control measures elsewhere because, “while the domestic authorities may be successful in limiting the spread of the virus, the performance of the recovery of the Irish economy will now also depend on the effectiveness with which other countries deal with Covid-19”, the ESRI warns.
And the ESRI sees the crisis putting the public finances under great strain: The 2020 budget slumps into a deficit of €12.7bn, equivalent to a deficit of 4.3% of GDP.