THE NUMBER of people claiming unemployment benefit has topped 400,000 for the first time, but the monthly rate of increase at which people are signing on has slowed down.
The latest seasonally adjusted live register shows that 402,100 people claimed jobseekers’ benefit or assistance payments in May, up 13,500 on April, according to figures from the Central Statistics Office (CSO). This takes the estimated rate of unemployment to 11.8 per cent, up from 11.4 per cent in April.
Fine Gael enterprise spokesman Leo Varadkar said the rise in claimants “puts paid to Brian Cowen’s spurious claim that the economy is showing green shoots of recovery”. Labour Party enterprise spokesman Willie Penrose described the figures as “truly shocking” with the prospect of “long-term unemployment doing untold damage to communities all over the country”.
David Croughan, economist at employers’ group Ibec, said the rate of unemployment was still “worryingly high” and more Government supports for enterprise were needed to reduce job losses.
The number of unemployment benefit claimants, which includes some part-time and casual workers, has doubled over the past 12 months. However, the monthly rate of increase fell for the fourth month in a row and is now running at the slowest pace of increase since this time last year.
“This gives us further confidence in our view that January of this year represented the peak in [the rate of] claimant increases,” said Ulster Bank economist Lynsey Clemenger. However, she said the total number of claimants would still exceed 500,000 by the end of the year.
Brian Devine, economist at NCB Stockbrokers, said the slowdown in people signing on reflected both a rapid adjustment in wages in the private sector and the fact that many companies had already put in place their redundancy programmes in anticipation of the plummet in economic activity.
Davy Research economist Rossa White said the widespread wage reductions in the first quarter of the year would continue in the months ahead, which he said meant the Irish economy was becoming “slowly and steadily more competitive”.
Bloxham economist Alan McQuaid said wage deflation was the key to preventing further job losses, and forecast that the live register total would fall shy of 500,000 this year.
“All in all, though, these latest figures are likely to add to the Government’s unpopularity as the country goes to the polls to vote in the local and European elections,” Mr McQuaid said.
Economists expect the rate of unemployment to peak at 15-16 per cent in 2010.
However, several commentators have found some chinks of light in a series of separate figures published this week.
The rate at which tax revenues collected by the Government are falling has moderated slightly from 24 per cent to 21 per cent, according to the Exchequer returns, while purchasing managers’ indices in the manufacturing and services sectors, which are early barometers of economic activity, suggested that the rate of contraction has slowed down.
