Up to 100,000 people could permanently lose their jobs due to the Covid-19 pandemic, according to the Central Bank's latest quarterly bulletin.
The regulator expects the rate of unemployment to remain elevated even after restrictions are eased, The Irish Times reports, however, the growth forecast for the economy has increased to almost 6 per cent.
The increased optimism surrounding the economy's ability to bounce back later this year largely relates to improved economic conditions around the world which is expected to boost Irish exports.
The Central Bank has warned changes in consumer preferences brought about by the pandemic will lead to permanent declines in "consumer-facing sectors", which their director of economics and statistics Mark Cassidy said will lead to long-term unemployment in these areas.
"Of the current 445,000 people on the Pandemic Unemployment Payment (PUP) we think all but around 80,000-100,000 will return to work very quickly, and that will be the extent of the more lasting damage,” Mr Cassidy said.
The Central Bank estimates the unemployment rate will stay at approximately 8 per cent next year, adding it will be 2023 or 2024 before the labour market fully recovers from the pandemic.
Currently, the unemployment rate stands at 24.2 per cent, a figure which includes PUP recipients, while the number of people increases to 960,000 when those in receipt of the Employment Wage Subsidy Scheme (EWSS) are also taken into account.
While the bulletin remarked the outlook for the first half of 2021 remains subdued, if the vaccine rollout goes to plan and restrictions ease, the economy is set to pick-up in the later half of the year, with the bank upgrading the growth forecast from 3.8 per cent to 5.9 per cent.
"The high level of savings that have been accumulated over the past year as well as improving consumer and business sentiment will support stronger domestic demand," Mr Cassidy said.