Ibec chief executive Danny McCoy believes it would be a “great achievement” if the Irish unemployment rate at the end of this year was 10 per cent, more that twice the rate in the State prior to the start of the Covid-19 lockdown last month.
Speaking to Inside Business, a podcast from The Irish Times, Mr McCoy, who leads the lobby group for employers, also predicted that taxes would have to rise to meet the multibillion euro bill facing the State to support businesses and individuals through the period of restrictions.
Unemployment
“We won’t be going back to 5 per cent unemployment any time soon I would have thought,” he said. “I would be encouraged if, at the end of the year, unemployment was only 10 per cent and falling, but that’s still a searing shock.”
The jobless rate was 4.8 per cent before the crisis hit and has yet to be updated by the CSO. However, latest figures from the Government show 507,000 people have lost their jobs as a result of the pandemic, while 207,000 were already on the live register.
Mr McCoy said taxes might also have to rise to meet the cost of the crisis for the State. The National Treasury Management Agency this week raised €6 billion in a bonds auction to meet the cost of the Covid-19 crisis.
Injection
“I do think taxes will have to be part of the equation in terms of paying back what has been the injection into households over this period,” he said. “Effectively, this hibernation phase ...the State is providing a lifestyle support to both businesses and employees. Clearly there needs to be a repayment back...so taxes will need to go up.”
In terms of the supports being made available to businesses, Mr McCoy suggested that they might need to last “possibly for a year to a year and a half”.
“The Government needs to be as aggressive in withdrawing the supports as it was in the injection of them. If you can’t get your business up and running in a year and a half then fundamentally it’s the markets way of saying it’s not sustainable.”
He also said the State might have to take a stake in some businesses to help them survive the current crisis.
“Equity holdings in some businesses will probably be the case. Aviation may well need State equity and some critical infrastructure pieces out there might require it as well.
But he cautioned that too much involvement by the State for too long is “not healthy for a vibrant private sector”.
