A new report has found that the current COVID-19 unemployment supports could cost the Exchequer €5bn over three months.

The Economic and Social Research Institute said the measures will significantly reduce the number of families who see extreme reductions in their incomes as a result of the outbreak.

It finds that the Pandemic Unemployment Payment will cut the number of people who lose more than 20% of their income by almost a third.

It said 600,000 people could lose their jobs in a ‘medium’ unemployment scenario and warned that this would cost the State €4.8bn every three months it remains in place.

It found that the Temporary Wage Subsidy Scheme is less expensive to the Exchequer – in part because it offers lower earners less than they would receive if they were laid off and had to apply for the unemployment payment.

06/12/2012. Pictured is the Department of Social Protection on Elsfort Terrace in Dublin. Photo: Sasko Lazarov/Photocall Ireland

ESRI economist Karina Doorley said the Government should do everything it can to encourage employers and staff to make use of the subsidy.

“A central aim of the Temporary Wage Subsidy Scheme is for companies to retain links with their employees so they can resume activity faster once necessary public health measures have been relaxed,” she said.

“Ensuring that both employees and employers have an incentive to take up this payment is important to ensuring it achieves this objective.”

It comes as the Central Statistics Office found that Ireland’s unemployment rate reached 16.5% as thousands lost their jobs.

It noted that the figure includes everyone receiving the Pandemic Unemployment Payment.

The figure rises to 34% among people aged 15 to 24-years-old and stands at 14% for people aged 25 and over.