issues eolas
The Pandemic: One year on with a 10 per cent decrease in the number of people without a third level qualification who were employed in Q4 2020. At the same time, the corresponding figures for those with a third level qualification increased. Each of these disparities has an impact on the long-term policy response. “This time last year, the thinking was that the pandemic was a system-wide, symmetric shock. It now appears that it is more of an asymmetric, sector-specific shock, with unique impacts,” Donohoe observes.
Response Credit: Merrion Street
Addressing the ESRI in March 2021, Finance Minister Paschal Donohoe TD delivered a speech titled The Pandemic: One Year On in which he emphasised the fundamentals of the Irish economy, acknowledged the impending challenges and outlined how these could be overcome while “relentlessly pursuing many opportunities”. Remarking that the labour market has been “turned on its head”, the Minister for Finance emphasises that at the time of his speech, over one million people were in receipt of either the Pandemic Unemployment Payment (PUP), the Employment Wage Subsidy Scheme (EWSS) or were on the Live Register.
Asymmetry Delving into these figures, Donohoe acknowledges the disparate impact the pandemic has had across the labour market in three ways. Firstly, publicfacing sectors have been most adversely affected due to their inability to easily pivot to remote working and social distancing. As such, job losses and business closures have been concentrated in sectors such as a hospitality, leisure, and personal services.
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“To put this into perspective, the number of hours worked in the food and accommodation sector fell at an annual rate of 53 per cent in the fourth quarter of 2020,” the Minister says, adding: “On the other hand, hours worked in the information and communications sector… rose 3 per cent over the same period.” Secondly, he highlights the disproportionate impact on young workers. While the total unemployment rate was 19.8 per cent, the rate of unemployment among the 14-24 age cohort increased to 46 per cent in Q4 2020. This is partly due to the prevalence of young workers in contact intensive sectors. Thirdly, workers with lower educational attainment were also severely impacted,
At the time of speaking, the Minister indicates that a total of approximately €38 billion of government resources had been allocated to support households and businesses, ultimately aimed at mitigating the permanent impacts of the pandemic. As such, at an aggregate level, household income increased in 2020. Indeed, CSO data indicates that during Q2 2020, median household income fell by almost 2 per cent compared with a counterfactual decrease of 20 per cent in the absence of government supports. Simultaneously, consumer spending has decreased in negative correlation to household income. Consequently, as reflected in other advanced economies, aggregate figures for households point to an accumulation of savings. For example, in Q2 2020 the savings rate of the average household increased from €1 in every €10 of takehome pay to €4 in every €10 of takehome pay. In total, €15 billion of the €126 billion household deposits in the domestic banking system has accumulated in the last year. “Importantly, this means that once the virus has been contained, the unwinding of the savings ratio will provide some support for economic recovery, at least in the short term,” Donohoe remarks.
