300,000 ‘will be out of work for years to come’
‘Sobering’ message: Economic crisis ‘more like 1980s than the financial crash’
HUNDREDS of thousands will remain out of work even after the Covid-19 pandemic has eased.
Finance Minister Paschal Donohoe has privately warned there is a risk that unemployment will remain persistently high for years to come.
At a briefing for parties involved in government formation talks, Mr Donohoe said the country is facing into an economic crisis which is more comparable to the 1980s recession than the financial crash.
The minister’s prediction came after Taoiseach Leo Varadkar insisted it will not be possible for the State to compensate every business that collapses because of Covid-19.
“It isn’t going to be possible for the taxpayer to compensate every individual and every business, and every sector for all of the money that they’ve lost as a consequence of this pandemic,” Mr Varadkar said.
During a briefing described as “sobering”, Mr Donohoe laid bare the fragile state of the country’s finances for Fine Gael, Fianna Fáil and Green Party negotiating teams.
There are concerns in Government those involved in the negotiations do not appreciate the scale of the economic crisis coming Ireland’s way.
The parties were told unemployment could still be as high as 15pc by the end of the year and remain high in the coming years with key sectors hit by structural unemployment and unable to recover. With a total workforce of almost 2.4 million, this could equate to somewhere between 300,000 and 350,000 people.
Mr Donohoe’s comparison to the 1980s recession was seen as particularly stark by those at the meeting.
During the 1980s, the State suffered high levels of unemployment and inflation as well mass emigration.
FINANCE Minister Paschal Donohoe has warned there is a risk that unemployment will remain persistently high for years to come as the next government scrambles to restore the economy.
At a briefing for parties involved in government formation talks, Mr Donohoe said the country is facing into an economic crisis which is more comparable to the 1980s recession than the financial crash.
The minister’s warning came after Taoiseach Leo Varadkar insisted it will not be possible for the State to compensate every business that collapses due to the outbreak of the coronavirus.
“It isn’t going to be possible for the taxpayer to compensate every individual and every business, and every sector for all of the money that they’ve lost as a consequence of this pandemic,” Mr Varadkar said.
During a briefing described as “sobering”, Mr Donohoe laid bare the fragile state of the country’s finances for Fine Gael, Fianna Fáil and Green Party negotiating teams.
There are concerns in Government those involved in the negotiations do not appreciate the scale of the economic crisis facing the country in the wake of the pandemic.
The parties were told unemployment could still be as high as 15pc by the end of the year and remain high in the coming years with key sectors hit by structural unemployment and unable to recover.
Tourism and hospitality are expected to be the sectors most at risk of long-term unemployment.
The true scale of the economic crisis facing the country was outlined to the parties as they work towards drafting a programme for government by the end of the month.
Mr Donohoe’s comparison of the challenge facing the country to the 1980s recession was seen as particularly stark by those at the meeting. During the 1980s, the State suffered high levels of unemployment and inflation as well mass emigration, and top income tax rates of up to 65pc.
Green Party leader Eamon Ryan, who was the only party leader to attend the briefing, is said to have pointed out the 1980s recession was badly managed and took a decade to recover from.
Mr Donohoe told the meeting the Government is confident foreign direct investment will remain protected over the coming years.
However, he said he was concerned about the impact of the health crisis on the domestic economy where hundreds of thousands of people have lost their jobs due to social distancing restrictions introduced by the Government to stop the spread of the virus.
The Government has already spent or committed to spending €23.5bn this year as part of the response to the pandemic emergency and this figure could rise to €30bn, the parties were warned.
The meeting heard close to 1.2 million are now on some form of State support through the pandemic unemployment payment, the temporary wage subsidy scheme and normal jobseekers’ allowance.
Business Minister Heather Humphreys stressed the importance of needing to re-skill workers who may need to find alternative employment.
Tánaiste Simon Coveney said the crisis presented an opportunity to be ambitious and make radical changes.
The Greens’ finance spokesperson Neasa Hourigan sought clarity on when the State would have to begin repaying the deficit.
The parties are due to be briefed by the secretaries general of the Departments of Finance and Public Expenditure, Derek Moran and Robert Watt, later this week.
Fianna Fáil and the Greens have also separately been briefed by the Central Bank governor Gabriel Makhlouf in recent weeks.
The three parties are aiming to form a government based on Fianna Fáil and Fine Gael’s policy framework document and the Green Party’s 17 key conditions for entering into government.
This week the parties have held meetings on justice issues, housing and also on the economy.