Economic Life and COVID-19 in Ireland, 2020-2021

COVID-19 Adjusted Measure of Unemployment

One of the main economic effects of the COVID-19 pandemic in Ireland was the impact it had on unemployment rates. The CSO began publishing a COVID-19 Adjusted Measure of Unemployment as part of the Monthly Unemployment Estimates (MUE) release in March 2020. This is calculated by adding the number of recipients of the Pandemic Unemployment Payment (PUP) for the last week of each month to the non-seasonally adjusted estimate of the number of unemployed people. When looking at this estimate over time, users should consider the impact of Government restrictions on the number of people receiving the PUP.

The COVID-19 adjusted measure of unemployment demonstrates the significant impact of the pandemic on the labour market. When public health restrictions were initially imposed in March 2020, the COVID-19 adjusted rate of unemployment was 21.3%. It then peaked at 31.5% in April 2020, before falling steadily to 16.0% in September 2020. See Table 2.1 and Figure 2.1.

Public health restrictions were re-imposed at the end of 2020 and the start of 2021, which led to a rise in the COVID-19 adjusted measure of unemployment to 27.1% by January 2021. The rate fell steadily from February 2021 onwards to 15.8% by June 2021, the lowest rate since the beginning of public health restrictions in March 2020.

Standard Measure of Unemployment

While the COVID-19 Adjusted Measure of Unemployment classifies those who are in receipt of the PUP as unemployed, the Standard Measure of Unemployment does not. The results of the CSO's Labour Force Survey (LFS) provide the basis for the Official series of quarterly labour force estimates, including unemployment rates. In Q4 2019, just before the pandemic started, the unemployment rate was 4.5%. This increased to 7.4% in Q3 2020, before reducing to 5.9% in Q4 2020. As many COVID-19 public health restrictions were re-imposed at the beginning of Q1 2021, the official rate of unemployment rose to 7.1%, before rising to 7.3% in Q2 2021. See Figure 2.2.

Although there were ongoing public health restrictions in the second quarter of 2020, the number of persons unemployed fell by 9,800 (-7.5%) in the year to Q2 2020. However, the numbers unemployed rose in the year to Q3 2020 by 51,100 (+39.9%) and by 31,200 (+28.2%) in the year to Q4 2020. See Table 2.2.

Following the reintroduction of many public health restrictions, the number of persons unemployed increased by 55,800 (+48.6%) in the first quarter of 2021 compared with one year earlier and was 56,000 higher than in Q1 2019.  In the second quarter of 2021, there were an extra 63,000 persons unemployed compared with one year earlier and 53,200 more than two years earlier.

Although the rate of unemployment was higher in both Q3 and Q4 2020 than the same quarters one year previous, the Gross Domestic Product (GDP) (at constant market prices) of the State increased by 10.8% in Q3, and 4.5% in Q4 2020 when compared with Q3 and Q4 2019. This trend continued into 2021, with the rate of unemployment in Q2 rising to 7.3% compared with 5.4% one year previous, and GDP growing by 21.1% in Q2 2021 compared with the same quarter of 2020 (see Impact on macro-economics).

Live Register

The Live Register is a monthly series of the number of people registering for Jobseekers Benefit or Jobseekers Allowance. See Background Notes for more information. It is not designed to measure unemployment.

The seasonally adjusted Live Register fell by 15,800 in the year to January 2020, and by 14,100 in the year to February 2020, to stand at 182,800. From March onwards, when the pandemic started, the number of people on the Live Register was consistently higher than in the same month in 2019. See Table 2.3.

The numbers on the Live Register peaked at 230,500 in May 2020. From July onwards, there was a steady drop each month, apart from one increase of 2,700 in September. See Table 2.3.

The number of people on the Live Register in January and February 2021 was less than the number in the same months of 2019, but higher than in 2020. From March 2021 onwards, the monthly Live Register was below the comparable month in both 2019 and 2020. See Figure 2.4.

Employment

As COVID-19 affected the rate of unemployment, the numbers in employment also changed. The number of people in employment aged 15 and over rose by 48,900 (2.1%) in the year to Q1 2020, to 2.35 million. After the COVID-19 public health restrictions were introduced in Q2 2020, the numbers in employment fell by 158,100 (-6.9%) in the year to Q2 2020. There were subsequent falls in the year to Q3 2020 (down 73,400 or 3.2%) and in the year to Q4 2020 (down 80,500 or 3.4%).

In Q1 2021, the numbers in employment were 116,600 fewer than the same period in 2020 and 67,700 less than in Q1 2019. However, there were strong signs of recovery in the second quarter of 2021, with the numbers in employment 211,000 higher than the same period of 2020 and 52,900 above Q2 2019. See Table 2.4 and Table 2.5.

Many economic sectors experienced falls in employment throughout 2020. The largest percentage decreases were in Accommodation & food service activities, with falls of -39.1% in the year to Q2, - 22.4% in the year to Q3 and -30.4% in the year to Q4. In Q1 2021, there were 40.9% fewer people employed in this sector compared with one year earlier, but in Q2 2021 there was a rise of 9.8% in the numbers employed compared with the second quarter of 2020.

The impact of the pandemic and subsequent public health restrictions was not experienced uniformly across all sectors. Despite restrictions, some sectors such as Information and communication, Public administration and defence, compulsory social security, Education, Industry and Financial, insurance and real estate activities recorded higher employment levels in Q1 and Q2 2021 than the same period of 2019. These sectors also predominantly experienced greater employment levels in Q1 and Q2 2021 than the same periods of 2020. See Table 2.5.

Employment levels in the public sector were less affected by the pandemic and subsequent public health restrictions. Employment numbers in public sector health fell by 8,200 (6.0%) to 127,600 in the year to Q2 2020. However, this fall was followed by a rise of 1,700 (1.2%) in the year to Q3 and 4,700 (3.4%) in the year to Q4 2020.

In the first quarter of 2021, there were an extra 6,500 people employed in public sector health compared with Q1 2020, and 10,800 more than in Q1 2019. In the second quarter of 2021, there were 19,300 more people employed in public sector health than one year earlier and 11,100 more than two years earlier. See Table 2.6.

The total number of job vacancies in each quarter of 2020 was below the comparable figure in 2019. However, there were signs of a recovery in employment opportunities in Q1 2021, when the number of vacancies was 17,900 compared with 14,700 in Q1 2020. This, however, was still 300 fewer than Q1 2019. By Q2 2021 there were 24,200 job vacancies, compared with 13,700 one year previous, and 21,500 two years previous. See Table 2.7.

Hours Worked

The number of hours worked is a useful indicator of how the pandemic affected people in their daily lives.

The number of hours worked per week fell sharply from 76.3 million to 61.0 million between Q1 and Q2 2020, based on LFS data. This change coincided with the beginning of the pandemic and the start of public health restrictions.

The number of hours worked then rose in Q3 2020 to 72.7 million before dropping to 70.8 million in Q4 2020 and falling again to 68.7 million in the first quarter of 2021. However, there was a recovery in the number of hours worked in Q2 2020 to 75.9 million. See Figure 2.5 and Table 2.8.

The fall in the total number of hours actually worked per week in Q2 2020 coincided with a decrease in the total number of people in employment. See Table 2.4.

There were 68.7 million hours actually worked per week in Q1 2021. This was 7.6 million hours (9.9%) fewer than Q1 2020, and 9.1 million (11.7%) less than Q1 2019. While the number of actual hours worked per week in Q2 2021 remained below the same period pre-pandemic (2019) by 2.6 million hours, 14.9 million additional hours were worked per week in comparison to Q2 2020. See Table 2.8 and Table 2.9.

The Accommodation & food service activities sector experienced the highest percentage fall in total number of hours actually worked in each quarter of 2020 when compared with 2019. This coincided with declines in employment numbers recorded in the sector throughout 2020. The total number of hours actually worked per week in the sector was 2.7 million (61.5%) less in Q1 2021 than Q1 2020 and 3.4 million (66.5%) less than Q1 2019. Some signs of improvement were evident in Q2 2021 with 1.5 million additional hours worked per week in comparison with Q2 2020, an increase of almost 125%. However, this was still just over half the number of hours worked per week in the same quarter pre-pandemic (2019) for this sector.

All sectors of the economy had more hours worked per week in Q2 2021 compared with Q2 2020, which is linked to all sectors also having higher employment numbers in the second quarter of 2021 compared with one year earlier. See Table 2.4, Table 2.5 and Table 2.9.

The Information & communication and Public administration & defence, compulsory social security sectors both recorded increases in the number of hours worked per week of greater than 10% in Q1 and Q2 2021 in comparison with the same periods pre-pandemic (2019). This coincided with increased employment numbers working in these sectors over the same time periods.

COVID-19 Income Supports

In March 2020, the Government introduced a range of measures to provide financial support to individuals and businesses who were impacted by the COVID-19 pandemic. The main COVID-19 income supports made available were:

- The Pandemic Unemployment Payment (PUP)

- The Temporary Wage Subsidy Scheme (TWSS)

- The Employment Wage Subsidy Scheme (EWSS)

Please see the Background Notes for further information on these income supports.

(Note: the TWSS closed on the 31 August 2020 and was replaced by the EWSS. Therefore, many individuals who were supported by the TWSS were also supported by the EWSS.)

The highest number of people supported by one of these supports (between the week ending 22 March 2020 and 29 August 2021) was 1,011,204 in the week ending 03 May 2020, of which 605,671 were PUP and 422,224 were TWSS. This peak was during the first wave of the pandemic. After May 2020, the numbers receiving the PUP fell steadily, while the TWSS dropped at a slower pace or remained steady until its replacement by the EWSS. See Figure 2.6.

The lowest number of people supported by a Government COVID-19 income support in 2020 was in the week ending 13 September at 524,252. This broke down into 213,047 on the PUP and 318,143 on the EWSS. The numbers benefitting from these income supports then increased to 611,081 in the week ending 15 November 2020 before dropping to 564,665 during the week ending 20 December 2020. The numbers supported by some COVID-19 income support increased to 777,170 in the week ending 31 January 2020, which was the highest number since the week ending 05 July 2020. See Figure 2.6.

At least one pandemic unemployment payment was availed of by 871,469 people between the week ending 22 March 2020 and 29 August 2021. During this time period, 664,098 were supported at least once by the TWSS. The EWSS supported an estimated 680,569 people between its creation and 29 August 2021. See Table 2.10.

Of those where a NACE sector was available, over one in five (22.7%) PUP claims between March 2020 and the end of August 2021 were from people employed in Accommodation & food service activities. This sector was heavily reliant on Government income supports and accounted for 28.8% of EWSS and 16.8% of TWSS supports of those with a known NACE sector. See Table 2.10. This sector also had the largest percentage drop in hours worked per week in 2020 compared with 2019.

Other sectors which accounted for large shares of PUP, (where a NACE sector was available), were Wholesale & Retail Trade; repair of motor vehicles and motorcycles (18.2%) and Construction (11.2%). In contrast, very few claims were from Agriculture, forestry and fishing (1.2%), Information & communication (1.8%) and Public administration & defence; compulsory social security (2.0%) sectors.

Earnings

While the COVID-19 pandemic had impacts on unemployment rates and hours worked, what effect did it have on earnings? In answering this question, the significant change in employment in some sectors needs to be considered. Across and within economic sectors the impact of the pandemic has been experienced very differently. The analysis below represents only the average earnings of those remaining in employment in the Irish economy, including those supported by the Temporary Wage Subsidy Scheme (TWSS) and the Employment Wage Subsidy Scheme (EWSS) i.e. those who are in receipt of the Pandemic Unemployment Payment are not included.

When considering the estimates from the Earnings and Labour Costs (ELC) release examined below, the reader should also be aware of the CSO's complementary Labour Market Insight Bulletin series, see Background Notes for details.

The CSO’s ELC release, based on the results of the Earnings, Hours and Employment Costs Survey, shows that average weekly earnings were higher in each quarter of 2020 compared with the same period in 2019.  Average weekly earnings in 2020 rose from €800.31 in Q1 to €817.55 in Q2 before falling to €794.89 in Q3 and then rising to €847.21. The first quarter of 2021 had another rise to €860.19, followed by a drop to €850.80. Average hourly earnings followed a similar pattern. See Tables 2.11 and 2.12.

While many people working in Accommodation & food service activities availed of the PUP scheme, this sector also had annual increases in average hourly earnings from Q1 2019 to Q1 2021, for those who remained in employment. In 2020 average hourly earnings of this sector increased by €2.41 (18.1%) in Q2, €2.01 (15.0%) in Q3 and €1.99 (14.6%) in Q4 compared to the same quarters one year previous. Average hourly earnings in Q1 2021 were €2.32 higher than in the same quarter in 2020, and €2.78 more than the same quarter in 2019. However, there was a fall of €0.07 in average hourly earnings in Q2 2021 compared with Q2 2020, at a time when the numbers working in the sector were rising quickly. See Table 2.12 and Table 2.13.

Annual increases in average weekly and hourly earnings occurred at the same time as annual falls in employment and actual hours worked in many economic sectors up until Q2 2021. These changes in earnings may be impacted to some degree by those employments that have left or joined a sector having lower/higher average earnings than those employments that remained in the sector in both quarters.