Unemployment increases to 6.1%

UNEMPLOYMENT HAS increased to an estimated rate of 6.1 per cent after another large jump in the number of people claiming jobseekers' benefits last month, according to data from the Central Statistics Office (CSO).

Large-scale layoffs in the construction sector and further job losses in manufacturing, retail and financial services forced the number of unemployment claimants up by 9,100 in August. This followed an increase of 26,800 in the number of people on the Live Register over the previous three months, which has seen a sharp deterioration in the economy.

There were more grim statistics pointing to a deepening recession yesterday, as activity in the services sector hit a record low and new data showed the number of new home starts plummeted 70 per cent annually to a near standstill in August.

The number of people on the Live Register has increased by more than 73,000 to 245,000 over the past 12 months - a climb of 42 per cent.

Business group Isme described the increase in claimants as "frightening", while Fine Gael employment spokesman Leo Varadkar said they could not be "explained away by the global credit crunch and rising oil prices". Labour Party spokesman on employment Willie Penrose said new training and reskilling programmes were urgently needed for laid-off workers.

Turlough O'Sullivan, director general of business group Ibec, said he looked forward to meeting the Taoiseach tomorrow to discuss the revival of the national partnership process.

"If people have jobs, they are so much better placed to ride out the current crisis. It is therefore incumbent on all to deliver a new agreement that is moderate and underpins job security," he said.

The standardised unemployment rate of 6.1 per cent in August rose from an estimated rate of 5.9 per cent in July. This is the first time the rate has exceeded 6 per cent since December 1998. The last time the number of claimants was so high was in March 1998.

The annual increase of 73,000 is the largest since records began in 1967. However, the labour force has doubled in size since that time.

Davy Research economist Rossa White said each release of the Live Register was generating "an unwelcome sense of deja vu".

Worse is still to come, commentators forecast yesterday. Davy estimates the process of construction lay-offs is not even halfway complete.

The weakening labour market has had a knock-on effect on public finances, lowering tax receipts and increasing social welfare payments. Pat McArdle, chief economist at Ulster Bank, said it was likely that the average number of jobseeker benefits claimants for the year would be over 10,000 more than the Government's revised estimate. This would add €100 million to the social welfare bill and compound the pressures on the exchequer, he said.

Data published on Monday by the Department of Enterprise, Trade and Employment revealed that the number of statutory redundancies has risen 36 per cent over the year.

Apart from the plunge in construction employment, sectors such as manufacturing, retail and financial services are "starting to feel the pinch too", according to Alan McQuaid, economist at stockbrokers Bloxham.

The Live Register is not designed to measure unemployment, as it includes part-time, seasonal and casual workers entitled to State assistance. The last official measure, for the period March-May, put the number of jobless at 115,100, or 5.1 per cent.

But this figure looks set to increase. Economists now expect unemployment to rise to 6.4 per cent by the end of the year, and to reach 7.1 per cent by the end of 2009.