Around 132,000 jobs could be lost in a worst-case economic depression if the coronavirus shutdown lasts until August, a prominent economist has said.
The forecast by business advisory firm EY also said the economy would shrink by 10% if the economy remains mothballed until August in an extended lockdown to contain the spread of coronavirus.
But EY’s chief economist Neil Gibson said further policy levers such as Vat cuts could mitigate the economic damage.
And if the disruption ends as soon as May, there would potentially be 78,000 job losses and 97,000 people put on furlough for part of the year — paid 80% of their wages by the Government if their employer has no work to give them.
The economy would shrink by around 6.7% in that scenario.
The figures for projected job losses include self-employed jobs - so that some of the figures could cover individuals who hold more than one job.
In its worst-case scenario, EY also predicted that a further 125,000 people would be ‘furloughed’ for part of the year if the shutdown continues into August.
The hope would be that we would be able to get a significant number back relatively soon.Neil Gibson
With 910,000 total workforce jobs in Northern Ireland, the worst-case scenario of 132,000 job losses could mean that one in seven posts is at risk.
Speaking to the Belfast Telegraph, Mr Gibson said that the job losses would affect a range of sectors.
“The obvious areas that will take a significant impact are those which are customer-facing, such as tourism, culture, arts and high street retail. There are parts of retail doing very well, but when you think of high street shops, you also have to think how quickly will people feel willing to go into a shop as we may keep social distancing measures in place for some time.”
But he said many jobs could come back towards the end of 2020 and into 2021.
“The hope would be that we would be able to get a significant number back relatively soon.
“But that is the biggest unknown — whether this will turn out to be a relatively short-lived hiatus or whether lasting damage has been done.”
The government has been adopting support very quickly and rapidly.
He said the timing of the lockdown in the spring and early summer months would also hit the housing market, during a traditionally busy time for house sales, as well as affecting the construction sector, which also carries out a lot of work in the spring and summer.
And he said that when the extent of the economic effects become clearer later in the year, there would also be further policy options which could be adopted by the government.
“The government has been adopting support very quickly and rapidly but by the time we get to autumn, there may be some further policy requirements - for example, which might tide over tourism until spring 2021.
“That might mean extensions to the pay roll support, or more direct grants, or perhaps even choices on Vat cuts and the Executive could extend the rates holiday.
" When we get to autumn we’ll know much better how badly sectors have been hit and then might be the time to consider more tailored measures for those sectors affected the most. The policy message so far has been ‘whatever it takes’ and we would expect this approach to continue and hopefully avoid some of the most damaging potential economic impacts.”
An estimated 10,000 jobs were lost when the effects of a close-down in non-essential retail, restaurants and pubs were first felt. Manufacturers have also made major job loss announcements, with Thompson Aero in Portadown cutting 350 jobs. Quinn Industrial Holdings in Co Fermanagh has also announced it’s putting 600 staff onto the government’s furlough scheme.
Graham Reid, partner at EY Ireland, said: “Businesses across the country are grappling with the challenge of making the right decisions in this time of huge uncertainty.
“The challenge we’re facing is unique and in stark contrast to previous recessions.
“We are now experiencing both a supply side and demand side shock.
“Very few businesses contemplated the impact a pandemic would or could have.”
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