The Economic and Social Research Institute (ESRI) says pandemic pay supports will “significantly” cushion the incomes of affected workers but will cost nearly €5 billion over three months.
The institute’s analysis comes as new figures show the Republic’s unemployment rate trebled to a record 16.5 per cent in March, which equates to just under 420,000 people being out of work.
The headline rate eclipses the 16 per cent recorded at the peak of the financial crisis in February 2012.
Since the virus hit last month, the Government has introduced several income supports including the Covid-19 Pandemic Unemployment Payment and the Temporary Wage Subsidy Scheme.
The ESRI’s research found the flat-rate pandemic payment, which pays €350 per week to those who have lost their jobs, would have the biggest impact in terms of supporting incomes.
In a medium unemployment scenario of 600,000 job losses, that payment reduces the number of workers who lose more than 20 per cent of their disposable income by about a third.
The wage subsidy scheme, which provides a subsidy of up to 70 per cent of an employee’s take home pay up to a weekly limit of €410, may be minimal cost to the State, ESRI said, describing it as “less generous” to lower earners than the other scheme. More than 39,000 employers have registered for the Covid-19 wage subsidy scheme so far.
The ESRI noted that the cost of both schemes, under the 600,000 job losses scenario, would cost the Government €4.9 billion over three months.
"A central aim of the Temporary Wage Subsidy Scheme is for companies to retain links with their employees so they can resume activity faster once necessary public health measures have been relaxed," said ESRI economist Karina Doorley. "Ensuring that both employees and employers have an incentive to take up this payment is important to ensuring it achieves this objective."
The CSO’s latest unemployment data, meanwhile, showed there were 419,637 people effectively classified as unemployed in March, up from 119,600 in February.
The total, however, includes those claiming the Government’s new pandemic unemployment benefit, which amounted to 283,037 at the end of March.
Many of these people are likely to return to work once the social-distancing restrictions are lifted.
Nonetheless the new headline rate eclipses the 16 per cent recorded at the peak of the financial crisis in February 2012 when 356,600 people were classified as out of work.
Leaving aside those on the special pandemic payment, the standard measure of unemployment for March was 5.4 per cent, up from 4.8 per cent the previous month, it said.
A breakdown of the figures showed the adjusted unemployment rate for those aged aged 15 to 24 years was as high as 34 per cent.
"Today's Covid-19 influenced unemployment rate really demonstrates the unique nature of the challenge we face," Minister for Employment Affairs and Social Protection Regina Doherty said.
She noted that the State’s jobless rate had trebled in a month and it was likely to rise further once this month’s recipients of a Covid-19 payment are factored into the April data.
“Despite today’s stark figures, we must remember this is a temporary health emergency and we must ensure that it is also a temporary employment emergency for as many people as possible,” she said.