Unemployment rate rises to 6.7% in October

Unemployment rose to an estimated rate of 6.7 per cent in October, up from 6.3 per cent the previous month, as the number of people claiming unemployment benefits rose by 15,800 to 260,300.

The seasonally adjusted jobless rate has now increased to its highest percentage since September 1998 as the normal dip in October due to students returning to third-level education failed to materialise, according to data published by the Central Statistics Office (CSO) today.

The number of people claiming job seekers' benefits has risen by 60 per cent to 94,502 so far this year and at 260,300 is at its highest since March 1997.

Alan McQuaid, chief economist with Bloxham Stockbrokers said the data reflect the sharp downturn in recent months.

He described the year-on-year increase as "alarming" and said the rise of almost 35,000 in the past three months did not augur well for short-term job prospects.

"Redundancies notified to the Department of Trade, Enterprise and Employment were up almost 114 per cent in the year in October at 4,644, while in the year to date, redundancies notified totalled 32,076, up just over 50 per cent on an annual basis", he said.

Pressure on the male-dominated building sector was reflected in the 11,100 men who joined the register compared to 4,800 women last month.

Mr McQuaid said the deteriorating labour market had "blown a massive hole in the public finances through both lower tax receipts and increased social welfare payments." He estimated that every 1,000 people joining the live register cost the economy €11 million.

Mr McQuaid expects the jobless rate to hit 7 per cent in the near future before rising to over 8 per cent in 2009.

The pace of labour market deterioration also raises questions about the recent budget, he said. "The sooner the Irish government wakes up to that fact and implements fiscal stimulus measures to boost the domestic economy, the sooner we will see an improvement on the labour market front."

Isme described the October data as calamitous and said cash flow difficulties were being magnified by a lack of small business bank credit resulting in jobs being lost.

Labour Party leader Eamon Gilmore said the job losses were shocking and unemployment "spinning out of control". October was first time since 1997 that the live register had exceed a quarter of a million, he said.

"The huge increase in the numbers out of work is greatly adding to our economic difficulties. We are losing the tax revenue that people in work would be paying, while we are facing significant additional costs for unemployment and secondary benefits for those who could be in work and who want to be in work," Mr Gilmore said.

He said budget "did not contain a single significant initiative to deal with the unemployment".

Leo Varadkar, Fine Gael enterprise spokesman said there are now more people on the live register than when Fianna Fáil came to power in 1997.

The live register is not designed to measure unemployment, as it includes part-time workers (those who work up to three days a week), and seasonal and casual workers entitled to jobseekers benefit or allowance.