Two in every five jobs here have been disrupted by the Covid-19 pandemic, according to the accounting and professional services group EY in its latest Economic Eye report.

The jobs have either been lost or are being supported by government interventions, including the Employment Wage Subsidy Scheme and Pandemic Unemployment Payment.

The study found that, despite apparently contradictory data on the severity of the pandemic damage, the level of labour market disruption has been broadly similar across the island.

EY has revised upwards its economic projections for the year owing to the volume of government supports deployed as well as resilience in certain parts of the economy.

The group predicts a 'long and arduous' recovery for some of the worst hit sectors, including retail and accommodation, which have been impacted by repeated waves of restrictions and closures.

However, it concludes that the economic impact during this latest set of severe level 5 restrictions is not likely to be as damaging as the hit during the second quarter.

"This is in large part due to the progress made in health treatments and a more prepared business community, with greater adoption of digital service delivery, where possible," the report states. 

"This will be scant consolation, however, to businesses in the retail, tourism and hospitality sectors in particular, which had hoped for a strong Christmas to make up lost sales."

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The report points to resilience among some services businesses, as many built on the ability to fulfil orders and provides services digitally.

As with the last downturn, the country's export base is proving vital in insulating the economy against the full impact of the downturn, with the pharmaceutical, ICT (information and communication technology) and agri-food sectors providing the greatest support.
"If you had to pick sectors to specialise in during a pandemic, ICT, pharma and agri-food would be top of the list. These will help to maintain Ireland's increasingly predictable place at the top of the European growth charts," Professor Neil Gibson, chief economist with EY said.

"Despite the well documented complexities in Irish GDP figures, the tax receipts data support this resilience, however it should not distract from the damage in the domestic economy which is such an important source of employment. The insulation for this side of the economy comes from the Government's ability to offer financial support, something it couldn't do as easily in the last recession."

The general resilience of certain sectors to enable the economy to withstand repeated waves of pandemic restrictions has prompted the group to revise upwards its outlook to a 3.9% contraction in GDP for this year before returning to growth of 3.5% in 2021.

Mr Gibson said the hit to the Northern Ireland economy was roughly in line with that of the Republic, although there are technical differences in the way things are measured at a macro level.

"In Northern Ireland, the GDP looks a lot worse because it doesn't have that strong export base, but it does have a big public sector, and that acts as a bit of a cushion on the labour markets side. Similar levels of domestic disruption, even though the headline data doesn't tell the story as clearly," he explained.

With the end of the Brexit transition period coming into view, he acknowledged that the agri-food sector was particularly vulnerable, but he said the pandemic experience had thought policy makers and businesses a valuable lesson.

"You have to be ready for everything. The level of resilience, innovation and the ability to pivot has been remarkable across the island. No matter what tough Brexit situation we find ourselves in, we've a very adaptable business base and a government that's ready to support if necessary."