If the Central Bank’s latest quarterly bulletin highlights one thing, it is the two-tier nature of the Irish economy.
The regulator expects up to 100,000 people to permanently lose their jobs as a result of the pandemic and the current lockdown measures.
Low-paid workers in consumer-facing sectors of the economy – hospitality, retail – are the principal economic victims of this crisis. They are victims not just of the pandemic, but of the increased level of digitalisation that it has ushered in.
Many of the firms or sectors they work in are gradually becoming obsolete or will operate more online with fewer staff going forward. At the same time the Central Bank is expecting recovery in the second half of 2021 to be aided by the unwinding of up to €15.7 billion in savings, built up over the past year by households that have been financially unaffected, even boosted, by the pandemic.
The average earnings of those who didn’t lose their jobs in the pandemic rose by 4-5 per cent last year.
Pent-up consumer spending combined with multinational exports is expected to see the Irish economy grow by nearly 6 per cent this year.
Uncertain future
The Central Bank’s report underscores the fact that we now have two distinct economies. One is uber-rich and driving forward, the other is lagging further and further behind.
The former, led by the world’s leading pharma and tech giants, is seemingly Covid-19-resistant, the other is limping and injured and facing an uncertain future.
While Ireland has had one of the most severe and extended lockdowns in Europe, the wages of a great many workers have been unaffected and their fortunes boosted. At the same time, up to 100,000 workers are facing into long-term unemployment.
The gap between these two economies is going to play out politically as well as economically in the years to come.
