SOME GOVERNMENT officials believe significant amounts of extra public funds may be needed this year to pay the rising cost of unemployment benefit.
The slowing economy sent Live Register figures to an eight-year high last month, with 16,300 people signing on in the first two months of this year. The ESRI now projects that the unemployment rate - the numbers out of work as a percentage of the labour force - will increase from 4.6 per cent last year to 6 per cent this year. Government officials anticipated a rise in unemployment this year, setting aside an extra €200 million for unemployment assistance.
However, the pace of the increase in unemployment has surprised many, with senior officials warning that the funds may not be sufficient to meet demand for unemployment assistance.
However, a spokeswoman for Minister for Social and Family Affairs Martin Cullen said it was too early to say whether supplementary funds would be needed.
"If additional funding is required for a social assistance scheme, such as jobseeker's allowance, it can be sought through a supplementary estimate when that requirement arises," she said.
"Additional funds may be drawn down from the social insurance fund for social insurance schemes such as jobseeker's benefit, if and when this becomes necessary." Provisional figures for last year show the department spent about €1.42 billion on unemployment benefit on the jobseeker's allowance and jobseeker's benefit. The department set aside €1.64 billion for these payments for 2008.
The jobseeker's benefit (formerly known as unemployment benefit) is for those who are out of work and who have been paying social insurance or PRSI. The jobseeker's allowance is for people who are unemployed or who work for less than 16 hours a week and are looking for full-time work. Department officials were unable to provide figures on the payment of unemployment assistance for the first two months of 2008, but it is up on the same period in 2007.
No increase in employment is expected this year, while the numbers out of work are projected to rise by 33,000 to 135,000 in 2008.
Any attempt to find extra public money to pay for unemployment benefit is bound to push the public finances deeper into the red, with the ESRI forecasting that the exchequer will have a deficit of €7.5 billion by 2009.