When the Irish economy hit the rocks in the financial crisis more than a decade ago, Jim Lahiff felt “really lucky” to keep the hotel night porter job he has held since 1984. But any illusion that he could ride out the coronavirus pandemic was shattered when the hotel in the southeastern town of Wexford shut last Friday.
“In the crash we took a pay cut and we managed to get through it without being laid off,” said Mr Lahiff. But the coronavirus downturn was as abrupt as it was severe. Many workers will struggle to get by on a weekly welfare payment from the government, he added. “It’s not substantial enough for a lot of people, especially with families. It’s just not going to cut it.”
Mr Lahiff’s experience echoes that of hundreds of thousands of workers in Ireland, still recovering from the 2008 global financial crisis, and millions more worldwide.
With social distancing measures hitting some of the most labour-intensive, low-wage parts of the service sector hardest, economists predict a dramatic surge in global unemployment.
Kristalina Georgieva, managing director of the IMF, warned this week the world faced a recession “at least as bad as during the global financial crisis or worse”. In the worst-case scenario put forward by the International Labour Organization, nearly 25m people globally could lose their jobs. That compares with 22m job losses during a crisis in 2008 which unfolded over a much longer period.
Job losses are materialising at speed. According to data released on Thursday nearly 3.3m Americans filed a claim for jobless benefits last week — four times more than ever recorded. Germany expects 2.4m people to draw on state funds under its Kurzarbeit scheme, which subsidises wages for workers who would otherwise lose their jobs, compared with 1.4m at the height of the post-crisis recession.
Only last month, Ireland was in full employment with a 4.8 per cent jobless rate and an estimated 2.36m people at work.
Now it faces the elimination within weeks of as many jobs as were gained over several years in the rebound from the last crisis. “Ireland created about 330,000 jobs over the last five years. Some of our early estimates suggest that between 250,000 and 350,000 people would find themselves out of work as a result of the Covid outbreak,” said Neil Gibson, economist at EY Ireland.
Coronavirus job losses have multiplied at a dizzying rate: 20,000 private childcare jobs were lost when the government closed schools; 50,000 bar jobs when pubs shut; 70,000 restaurant jobs in the closure of that sector this week. A further 200,000 losses are feared in the retail trade as spending on non-essential items dries up.
Under a job protection scheme unveiled this week, the government could pay 70 per cent of wages in private companies hit by the pandemic. The proposal, the government estimates, could cost the state €3.7bn in the next 12 weeks.
“We’ve had a tsunami of temporary lay-offs since this began and unfortunately it’s not going to improve. it’s only going to get worse,” said John Douglas, chief of the Mandate union for retail and bar workers.
And in struggling industries that just about survived the last crash, the losses have been immediate. Paul Fitzpatrick, journalist at a county Cavan regional newspaper that has been published since 1846, was laid off last week. “I thought it would be tight but not this,” he said.
“The company has done well to maintain our jobs over the years. The industry has been struggling, especially local papers, for so long that you kind of get immune to it. We thought we were over the worst of it.”
The downturn came as a shock to Dalata, the country’s biggest hotel group which has 44 sites in Ireland and the UK.
Just one month ago, Pat McCann, chief executive and founder, said there had been “no material impact” to date on its business from Covid-19. Now Mr McCann has already laid off “in or around half” of the 5,000 workers in the business. “Unfortunately we’ve had to let a sizeable number of people go,” he said. “Everything was relatively OK until Italy got hit. Then we could see the very sudden decline almost overnight.”
A five-decade veteran of the hotel business, Mr McCann said he has never seen a crisis this bad. “This is the worst by a mile, absolutely. It’s like a combination between 9/11 and the financial crash — the suddenness of it in many ways and the uncertainty as to the length of it,” he said.
Tim Herlihy, a house manager in a hotel in the southern city of Cork, was put on a three-day week after a sharp decline in business. “Within one week the whole thing fell apart . . . You can’t blame the employer, ” he said.
“I’ll have to go into the bank looking for a mortgage break. I’ll have to sign-on to the social welfare for the first time in 38 years — and we’ll have to watch what we’re buying week to week until we come out the other side.”
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