Unemployment rate rises to 4.8%

The number of job losses has risen steadily over the past year and the trend looks set to continue, writes Cliff Taylor, Economics Editor

The unemployment rate looks certain to top 5 per cent over the next few months after another increase last month. Seasonally adjusted unemployment rose by 2,300 in July to reach 178,500, bringing the unemployment rate to 4.8 per cent, its highest level since late 1999.

The Taoiseach, Mr Ahern, said that, while the figures are "a matter of some concern", Ireland's unemployment rate is still four percentage points below the euro-zone average of 8.8 per cent.

However, the Labour Party said the figures showed that the economy was on the verge of a "jobs crisis", while Fine Gael said the Government's mismanagement of the public finances was "driving the economy into a competitiveness quicksand".

Unemployment has risen steadily over the past year and recent redundancy announcements indicate that this trend is set to continue. The seasonally adjusted total has risen each month this year, with the exception of a small fall in May. The live register has increased by 13,400 over the past year and is 38,500 higher than July 2001.

Unemployment normally rises during the summer months for seasonal reasons but increases of 11,800 in June and 7,600 last month were greater than normally expected. The seasonally adjusted total calculated by the Central Statistics Office rose by 4,000 in June and 2,300 in July.

Davy Stockbrokers yesterday forecast that the unemployment rate would reach 5.5 per cent by year end, with redundancies remaining high.

The number of women on the live register has risen by 8,100 since the end of last year, compared to a 5,200 rise in male unemployment. A contributory factor may be that fewer part-time positions are available, according to the Davy analysis.

Mr Ahern, responding to the figures, said that "any increase in unemployment, irrespective of scale, concerns the Government". However, with unemployment here below the euro-zone average he said that, "in relative terms. . . our labour market performance is quite strong".

He said it was vital that competitiveness, in all its forms, was nurtured "in this period of ongoing international uncertainty".

Labour spokesman Mr Brendan Howlin said the figures "provide the starkest warning yet that we are on the verge of a major jobs crisis and they demand an immediate response from the Government".

An increase of almost 20,000 in a two-month period is virtually unprecedented in recent economic history, he said, and, together with the latest figures for economic growth, "make dismal reading indeed".

When the economy was going well, the Government was happy to claim credit for increases in employment, he said. "Now they must accept their share of responsibility for the alarming increases in the live register figures."

Mr Richard Bruton of Fine Gael said that, in relation to Government spending, competition policy and infrastructure provision, "the Government has failed to do its share of managing the economy with the result that we are losing competitiveness".

The World Competitiveness Report showed that Ireland had slipped from fifth to 11th place in terms of competitiveness since 2001, Mr Bruton said. "The Government continue to wring their hands and wait for the next strategy report to drag them out of the mess they created," he said in a statement.