Job losses in June increase at fastest rate since 1986

The unemployment rate could rise above 5 per cent for the first time since the end of 1999 following last month's surge in the…

The unemployment rate could rise above 5 per cent for the first time since the end of 1999 following last month's surge in the jobless total.

The latest live register figures from the Central Statistics Office (CSO) show that the number of people claiming unemployment benefit grew at a faster rate in June than at any point since 1986.

The addition of almost 12,000 new claimants to the dole queue lifted the live register to 177,852 - the highest level recorded since the end of 1999 and equivalent to 4.7 per cent of the labour force.

The growth is consistent with figures issued by the Department of Enterprise, Trade and Employment earlier this week showing that 21 per cent more redundancies were notified last month than in June 2002.

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The latest numbers also offer a clue to the source of a growing hole in the Exchequer's tax revenues. The Minister for Finance, Mr McCreevy, warned on Wednesday that there would be a €500 million shortfall in tax receipts by the end of the year.

Economists said worrying trends were evident in the live register numbers and predicted the jobs market would deteriorate further over coming months.

"Even if we get the global economy picking up in the second half, there will still be a lagging effect on the live register," said Mr Alan McQuaid, chief economist with Bloxham Stockbrokers.

Mr McQuaid attributed much of the rise in the register to sustained competitive pressures on firms active in the export market.

"It's the effect of the general global and domestic downturn," he said, predicting that the unemployment rate would rise to 5 per cent over coming months.

The live register rose in all parts of the Republic last month, with the largest increase of 8.7 per cent recorded in the midlands. In the mid-west, the total rose by 8.1 per cent. The lowest rise came in the south-east, where the register grew by 6.1 per cent.

The worst-affected county was Westmeath, where dole queues expanded by 11.4 per cent.

The CSO said that almost three-quarters of new applicants on the live register last month were female. The rate of growth in female claimants was also significantly faster than that for males.

Friends First chief economist Mr Jim Power said this trend could have serious social implications, suggesting that most of the women departing the workforce had joined as a result of the introduction of individualisation in 2000.

"Many of those women are being laid off again and are being forced to return to the home. Not alone are they losing their salary, but also the more favourable tax treatment the household enjoyed because two people were working. This will cause considerable financial distress," he said, calling for the reversal of the individualisation policy.