[ad_1]
This week, there was more good news about vaccines and treatments for Covid-19, bringing with it a welcome dose of optimism about the world.
Several vaccine trials now offer hope that, in the not too distant future, Covid-19 can be brought under control and life can return to normal.
But in the meantime, various economic reports have surfaced to remind us that even though our possible salvation is near, our current state of moving forward may, in fact, postpone a dismal economic reckoning.
The CSO Labor Force Survey is the official source for much of our information on the number of people who work and what they do.
The work of the CSO, like many other things, has been affected by Covid.
There is an internationally agreed method for calculating the number of employed and unemployed. But there are also hundreds of thousands of people who are now dependent on pandemic unemployment pay (currently about 350,000 people).
Indirectly, approximately the same number depends, through your employer, on the Employment Wage Subsidy Plan.
The internationally comparable official unemployment rate, adjusted for seasonal factors, was 6.7% in the third quarter, which is equivalent to 164,300 people. But the CSO also produced an unemployment figure when it adjusted for Covid-19, which at the end of October stood at 20.2% or 501,640.
There is a large difference of just over 337,000. That’s a large number of people for whom the government’s continued response to the pandemic will continue to be a vital lifeline.
So what is really going on in the job market?
The “official” figure is probably too low and when Covid-19 recedes, the adjusted figure is expected to drop drastically so it may be too high. The answer to the puzzle depends, as it always has, on the path the virus takes and how long companies can hold out there with various government support. This week we’ve seen how quickly the trajectory of infections can change.
The CSO also measured actual hours worked.
They had fallen 16.8 million or 22% annually in the second quarter, but had recovered in the third quarter. But they are still down four million hours or 5.4%. Simply put, that means there is hidden unemployment.
Additionally, the percentage of PUP beneficiaries surveyed who considered themselves unemployed was just over 28% compared to Covid’s adjusted unemployment rate of 15.3% in the third quarter.
All of this leads to the conclusion that a considerable number of those receiving PUP payments may indeed be unemployed now or in the future.
There was further evidence from a study by the Central Bank on business registrations and insolvencies that the economy is in a state of suspended animation. The report detailed how the number of insolvencies remained at pre-pandemic levels, despite the severe economic impact of Covid. He concluded that government support and tolerance from banks and creditors are preventing a bad day for many companies.
The European Commission noted in its autumn economic report on Ireland this week that the supports have meant that the “adverse impact of Covid will only be delayed” and recommended that Irish banks prepare for more loans to fail.
Even though Covid-19 feels like a huge psychological and emotional burden for everyone, it is actually a fast-moving phenomenon for economies. There have been some nice surprises too, like how well our tax base has held up. Getting a consistent picture of what is happening has not been easy.
But it would be very unwise to believe that a vaccine will protect us from harm that may have already been done, even if we cannot yet see it clearly.
[ad_2]