| 10.8°C Belfast

Coronavirus: Expert forecasts unprecedented job cuts in Northern Ireland after axing of furlough scheme

Close

Warning: economist Paul Mac Flynn

Warning: economist Paul Mac Flynn

Warning: economist Paul Mac Flynn

Northern Ireland must brace itself for a significant spike in job losses "unlike anything" experienced during the last recession a decade ago, an expert has warmed.

There is likely to be a "second spike or wave of unemployment if and when the furlough scheme ends", economist Paul Mac Flynn told Stormont's economy committee yesterday.

Mr Mac Flynn, the co-director at the Nevin Economic Research Institute (Neri), said the full scale of job cuts would not be known until it was clearer what impact the coronavirus pandemic would have on the different sectors of the economy.

It has been estimated that approximately 200,000 local workers are on the Government's job retention scheme, which covers 80% of wages up to £2,500 a month.

The scheme is to continue until October, but it is believed the Government's contribution will be reduced at some point during the summer.

"We need to be prepared for the fact that a lot of people on the furlough scheme... will fall into unemployment," Mr Mac Flynn told the committee.

He said it was likely that many workers in sectors such as leisure and tourism would "not be able to come back" and that a "certain amount will be permanently lost".

Also addressing the committee, Owen Reidy, assistant general secretary of the Irish Congress of Trade Unions (Ictu), said the future and importance of key jobs in society must be re-examined, including those in areas such as food, retail and cleaning.

He also raised the case for bringing in collective bargaining for some sectors, which would see certain industries paying workers a set amount across different businesses.

On the issue of the Government's job retention scheme eventually coming to an end, Mr Reidy said it was "vital that there is no cliff edge".

"Tapering off has to be gradual with the reopening of the economy," he added.

Addressing concerns around childcare problems, Mr Reidy said the State should "assist childcare provision in the short term" to allow parents to be able to return to work when they are able to do so.

Meanwhile, Northern Ireland's recovery "should occur as a gradual and phased unfreezing alongside a parallel phasing out of government income and liquidity supports".

That's according to a new report by the Ictu which was also discussed during the committee meeting.

"Crucially, there can be no cliff-edge removal of these supports," the document says.

"Central banks will need to make whatever-it-takes commitments to ensure that governments are able to continue to act as income and liquidity sources of last resort.

"Both economies on the island of Ireland are facing a sharp economic downturn.

"The need to prevent large-scale permanent job losses and a destruction of productive capacity is second only to ensuring sufficient resources for health services as an economic imperative."

Belfast Telegraph