Unemployment rose to 11 per cent in March with a record 372,800 signing on for jobseekers' benefit, according to CSO figures published this morning.
However, the rate of increase in the numbers signing on eased somewhat, with a seasonally adjusted rise of 20,000. This compares to a rise in the number of people claiming benefits of 26,700 in February and a record 36,500 increase in January.
Live Register data is not designed to measure unemployment as it includes some part-time and casual workers. Just over 16 per cent of those on the register last month had some form of employment.
Alan McQuaid, senior economist with Bloxham stockbrokers, said the jobless rate of 11 per cent last month was double that of March 2008, when it was 5.4 per cent. The last time the standarised unemployment rate was at 11 per cent was November 1996.
Due to seasonal factors unemployment usually falls in March.
While the slowdown in the seasonally adjusted monthly increase was "good news" he said the numbers signing on for unemployment assistance were likely to rise over 500,000 by the end of the year. "The likelihood is that things will get a lot worse before they get better".
What had started out as a construction problem had spread to all other sectors with retail, transport, tourism and financial services all suffering, he added.
It costs the Exchequer an estimated €20,000 for every person on the register due to loss tax revenues and welfare payments and Mr McQuaid said it imperative next week's Budget include stimulus measures to promote employment and boost growth.
In the Dail this morning, Taoiseach Brian Cowen said the Government would do everything possible to protect jobs at a time when the economy was contracting considerably. "This is a real concern to all of us," he said.
He said next week's emergency budget would seek to provide other opportunities for the unemployed.
Fine Gael leader Enda Kenny said most of the "domestic mess" was due to Government "incompetence".
He called on the Government to cut the lower rate of VAT from 13.5 per cent to 10 per cent to help the struggling construction and infrastructure sectors. This would help protect and create jobs, Mr Kenny said.
He said a reduction in VAT would have to be sanctioned by the European Union. However, he argued that "nobody in Europe" would deny Ireland emergency approval for a VAT cut, given that Ireland has to make a decision later this year on a second Lisbon Treaty referendum.
Mr Cowen declined to respond, saying he did not want to "pre-empt" next week's budget.
Labour Party leader Eamon Gilmore said the rising jobless figures were spreading "fear" throughout the country.
"I don't accept that we have to simply thrown in the towel on saving jobs as you and your Government appear to be doing and accept that jobs that can be saved are going to be lost."
Willie Penrose, Labour Party enterprise spokesperson, said protecting jobs was a key requirement in addressing the deficit in the public finances.
He said the cost to the exchequer of the 173,000 people who joined the Live Register over the last 12 months was almost €3.5 billion.
"There are up to 900 jobs that could be saved in SR Technics at a cost to the state of around €25 million yet the Government has refused to take any action.
"The loss of 900 jobs at SR Technics would cost €18 million in extra social welfare and lost tax", he said.
Isme, the representative association for small and medium-sized firms, said wages need to be cut and PRSI rates lowered to avert a "labour market disaster".
Mark Fielding, Isme chief executive said employment costs act as a deterrent to hiring and called for the cancelation of the national wage agreement and the establishment of an employment subvention fund.
"The Government also needs to address the ludicrous situation of a two-year signing on period, for those unemployed to benefit under the Back to Work Enterprise Allowance Scheme, should they wish to set up their own business. This should immediately be reduced to three months," he added.
Fine Gael's enterprise spokesman Leo Varadkar said: "Ireland now has one of the highest unemployment rates in the eurozone, higher than Germany, France, Italy, and the Netherlands."
He called on the Government to adopt Fine Gael's €11 billion rebuilding Ireland proposals which he said would create 100,000 jobs.
Business body Ibec warned the numbers unemployed could hit close to 500,000 by the end of the year if the amount out of work continued to increase at last month's rate.
David Croughan, Ibec chief economist, said the findings revealed the urgent need for recession-hit companies to be provided with temporary supports.
"This further large increase in unemployment of 20,000 was not unexpected given the continuing fallout from the
construction sector, the weakness of domestic demand and the difficult trading conditions being experienced by business," Mr Croughan said.
"A continuation of the rate of unemployment increase recorded in March would result in close to half a million on the Live Register by the end of the year.
"This underlines the urgent need for government to provide temporary enterprise supports to help viable companies to survive the recession and the competitiveness losses brought about by the fall in sterling."
Additional reporting by PA