UNEMPLOYMENT COULD rise to 400,000 by the end of the year according to Taoiseach Brian Cowen, who said cost-saving measures such as the public service pension levy were vital to turn the economy around.
Mr Cowen told the Dáil yesterday that unemployment had risen by 36,500 in January to 327,900 and said it was an indication of the rapid change in economic conditions.
“The official figures on where finances will need to be at the end of the year could well incorporate an unemployment figure of up to 400,000, which is well over 10 per cent of the total workforce,” he said.
Fine Gael leader Enda Kenny described the unemployment figures as “catastrophic” and said they were the worst monthly increase in the history of the State. “This is a horrendous situation. I am often struck by the shock on the faces of people who become unemployed suddenly with no prospect for the future for themselves or their families,” he said.
Labour Party leader Eamon Gilmore said if the job loss rate continued, the Government would not be able meet its targets, as the €1.4 billion raised by the pension levy would be swallowed up in extra welfare payments. He described the Taoiseach’s approach to the economic crisis as “stabilise the public finances and the economy will recover” and argued it should be the other way around.
The Taoiseach rejected this assessment, saying the economy could not be stabilised if the budget deficit continued to rise at the present rate.
“I am not trying to stabilise the public finances for the sake of doing so. It must be done because we are spending more than we are earning. Revenues decreased by €8 billion last year and will drop by a further €4 billion this year.”
He rejected claims his Government was being defeatist and said they were doing everything they could to ensure 1.7 million people were kept working. “The number of people working in the economy 10 years ago was 1.2 million. We brought that figure up to two million.” Mr Cowen also rejected the claim by Mr Kenny that unemployment of over 300,000 was the worst ever in real terms.
He also said the Government’s capital programme represented an economic stimulus that would have the benefit of retaining the equivalent of approximately 80,000 jobs.
Mr Cowen also told the Dáil yesterday that bank directors’ fees should be cut by 25 per cent and upper limits be placed on the pay of top bank executives following recapitalisation. “If there were to be recapitalisation, I would expect the directors’ fees to be cut by 25 per cent, and I would expect that when they appoint their top executives, there would be an upper limit on remuneration. I would expect that whatever it is at the moment would be cut by at least another 25 per cent as well,” said Mr Cowen.
The Cabinet has agreed the heads of a Bill allowing the Government to invest larger sums than originally planned in the recapitalisation programme but negotiations with the banks on the details are continuing.
Also yesterday, a number of Ministers strongly criticised the management of the ESB for giving its workforce a 3.5 per cent pay rise. Tánaiste Mary Coughlan said on RTÉ’s Six-One News the Government was “very annoyed that it was paid”.
Green Party leader and Minister for the Environment John Gormley said the ESB decision was “entirely inappropriate”.
Dublin North Fianna Fáil TD Michael Kennedy has called on judges to take a 10 per cent pay cut: “It is important now, more than ever, that everyone plays their part in leading us out of this recession and I would strongly urge our country’s judges to step up to the plate and agree on a universal 10 per cent cut.”