The cost of Covid-19 in Ireland – just in terms of unemployment support – is looking like it going to work out at around €1 Billion Euro every 3 weeks.
The rate of unemployment in Ireland was running at around 4.5% in the last quarter of 2019. This was the lowest it had been since 2005 .
At the height of the financial crisis, unemployment reached a high of 15.9% in Ireland in the first two quarters of 2012.
The current Covid-19 crisis has resulted in the Department of Employment Affairs and Social Protection paying 591,000 people the €350 weekly Covid-19 Pandemic Unemployment Payment. (figure from April 29th)
According to the Dept. there are also 212,000 people on the Live Unemployment Register.
On top of this – just over 46,000 employers have registered for the Covid-19 Wage Subsidy scheme. Revenue said on April 29th that 427,000 workers were benefiting from the scheme.
That is a total of 1.2 MILLION workers now getting assistance from the state. (An increase of a Million.) That is about 48% of the workforce.
Even if we ignore those getting wage subsidy – that still leaves 800,000 getting Covid-19 Unemployment Payment or Jobseekers. That is 32% of the workforce. (Total workforce 2,471,000)
In 2012 Ireland spent €6 Billion on working age welfare supports – or €115.4 million a week.
In 2019 this figure had reduced to €3.26 Billion as unemployment fell. (€62.7 million a week) . (2020 was probably going to be similar before Covid-19.)
The 594000 Covid Unemployment payments of €350 a week will work out at €208 million a week .
If we assume the wage subsidy claims also average €350 a week – then 281,000 of those will come to €149 million a week.
An estimated grand total of €357 million a week
This is in addition to the 212000 people on the live register getting at least €203 a week – a grand total of €43 million a week.
So – total spend is now €400 million a week.
Which is €337 million extra per week compared to the weekly average for 2019.
Over 12 weeks – the extra spending will come to €4.1 billion extra compared to the same 12 weeks in 2019. Or roughly an extra €340 million every week .
Of course, there are also extra costs – such as the loss of income tax revenue from the workers that are no longer earning. We haven’t attempted to calculate that. (Many of the workers affected may be on the minimum wage and they pay a small amount of tax.)
Can Ireland Afford It?
It seems that the estimated overall cost of the Covid 19 crisis in Ireland will be very high perhaps up to €30 billion or almost 10% of GDP.
According to PublicPolicy.ie -the costs of the additional borrowing necessitated by the crisis are affordable. Thay say that refinancing some of Ireland’s existing debt at lower interest rates would save enough in interest payments to pay for an extra €30 billion of borrowing.