10 years of jobs misery looms, report warns
IT may take over a decade for Northern Ireland’s jobs market to recover from the damage inflicted by Covid-19 and lockdown, economic experts have warned.
The Ulster University Economic Policy Centre has predicted that unemployment will take at least 10 years to return to the recent low of around 2% and forecast that the jobless levels could rise as high as 13%.
Its report also said Northern Ireland will need up to five years to recover to pre-pandemic levels of economic activity.
The number of people who are claiming unemployment benefits more than doubled during the months of lockdown.
NORTHERN Ireland’s jobs market may take over a decade to recover from the damage inflicted by Covid-19 and lockdown, economists have claimed.
The Ulster University Economic Policy Centre today (UUEPC) said it would take Northern Ireland up to five years to recover to pre-pandemic levels of economic activity.
Its Pathways to Recovery report also predicted that unemployment would take a decade or more to return to recent lows of around 2% and forecast a joblessness rate of 13%.
The number of people claimprobably ing unemployment benefits more than doubled in the months of lockdown, going from 29,700 in March to 63,100 in June.
According to the latest labour market statistics, local companies proposed 2,500 redundancies in June, the highest monthly figure on record.
It brought to 4,900 the total number proposed since the start of March — more than for the whole of last year.
HMRC said that 241,000 people in Northern Ireland had been placed on furlough, with 80% of their monthly wage packet covered by the government, up to a maximum of £2,500 per month.
However, the scheme is being tapered off and will close entirely at the end of October.
Ulster University estimated that around half of people have returned to work.
UUEPC director Gareth Hetherington said: “Although this current economic contraction is much more severe than the recession following the financial crisis, the period of recovery is likely to be shorter.
“The economy took seven years to recover its lost economic output last time but will take four to five years this time around.
“This is primarily explained by the much shorter contraction period in the current recession and the economy entering the recovery phase much more quickly.”
Mr Hetherington said the government would face a challenge in minimising job losses in the hospitality, leisure and non-food sectors, where staff and customers normally operate in close proximity.
“Those sectors were the slowest to reopen after lockdown and had increased pressure on employment,” he added.
“Furthermore, these sectors tend to employ a lower age demographic and people with lower levels of qualifications.
“Consequently, this group could find it more challenging to move into more high-skilled employment.”
Dr Eoin Magennis, also an economist at the centre, added: “We are likely to be looking at unprecedented numbers of people becoming unemployed, with all the challenges that this causes for personal lives and household incomes.
“The decisions taken over the length of time that the furlough scheme continues are likely to be a critical factor in the number coming into job centres.
“The full resourcing of job centres and adopting methods to assess the future risk of longterm unemployment will be just as important to ensure that the labour market recovery is as fast as possible and that the level of scarring is minimised.”
Mr Hetherington said that while the furlough scheme had been discussed a great deal, there was little known about how many workers were now emerging from the scheme and back into employment.
However, on the basis of the UK model, he estimated that around half of Northern Ireland’s workforce was likely to have returned.
Other employers are continuing to use the scheme on a parttime basis.