Number employed falls for first time in 17 years

Real rate of unemployment underestimated, CSO finds, write LAURA SLATTERYand DAVID LABANYI

THE NUMBER of people employed in Ireland fell for the first time in 17 years over the 12 months to August, according to new figures from the Central Statistics Office (CSO).

The Quarterly National Household Survey (QNHS) published yesterday also shows that previous estimates of the unemployment rate based on data from the Live Register of benefit claimants underestimated the real rate of unemployment.

The number of unemployed people jumped to more than 160,000 in the third quarter of 2008, an increase of 53,000 or almost 50 per cent in the year. Meanwhile, the number of people in employment dropped by 25,200 over the year.

The official, seasonally adjusted unemployment rate in the June-August quarter was 6.3 per cent, compared to 5.4 per cent in the previous quarter.

This is the first time since 1983 that employment has contracted at the same time that unemployment has increased sharply.

Fine Gael employment spokesman Leo Varadkar dubbed the day "freefall Friday" and said that, while the Government remained in place, there would be no end in sight to the "unravelling" of the Irish economy.

Labour Party leader Eamon Gilmore said the loss of 27,000 jobs in the construction sector over the last 12 months was the "direct result of the reckless and irresponsible policies promoted by Brian Cowen as minister for finance in puffing up and bloating the construction sector".

Davy Research economist Rossa White forecast that the unemployment rate would hit 10 per cent by the end of 2009.

The estimated jobless rate of 5.8 per cent in July is expected to be revised up to 6.3 per cent as a result of the survey, while economists said the October jobless rate of 6.7 per cent was likely to be revised up to 7.2 per cent.

Business group Ibec said it was disappointed that the official unemployment rate was higher than the standardised unemployment rates previously estimated. Usually, the QNHS revises downwards earlier unemployment estimates.

Migration levels are now a major determining factor in calculating the unemployment rate, Ibec economist Fergal O'Brien said. "At present, no one actually knows precisely how many Irish nationals and non-nationals have left the country in the past few months due to the deteriorating economic situation.

"Seeing as we underestimated migration inflows over recent years, when immigration was growing rapidly, we may well be underestimating the current emigration flows as well," he said.

Small and medium enterprise representative body Isme said the quarterly increase of 45,000 in the number of people unemployed revealed an economy in "meltdown". Isme chief executive Mark Fielding said a lack of access to credit for businesses and a lack of confidence were contributing to the fall in employment.

Elsewhere, Siptu warned that many of those who have recently been made redundant could be unemployed for some time.

"In the absence of serious action by the Government, we face the very real prospect of long-term unemployment, particularly for workers in the construction and manufacturing sectors," said Siptu economist Marie Sherlock.

"Budget 2009 gave an additional 3 per cent in funding to Fás for training those in employment and for its employment programme. As a response to the unemployment crisis that we now find ourselves in, this is hugely insufficient," she added.