IN THE year to May, unemployment rose by some 15,200 reflecting the slowdown in the economy and the contraction in the construction industry as fewer houses were built and more building workers joined lengthening dole queues.
The Central Statistics Office's Quarterly National Household Survey showed seasonally adjusted unemployment at 5.1 per cent in the March to May period. Jobless numbers jumped as activity in the building sector slowed markedly. A year ago employment in construction was expanding by more than 6 per cent annually. By the second quarter of 2008, the numbers employed in the sector had fallen by 26,800, a decline of nearly 10 per cent.
These latest figures are disappointing and illustrate again the serious imbalance in the structure of the economy. The Government has been over-reliant on the construction sector as the engine of growth, as a source of extra tax revenue and as the main employment generator. Now, as the economy edges closer to recession, we are paying a heavy price for this imprudence. As the CSO figures demonstrate, the necessary economic adjustment in the construction sector is proving painful. That adjustment will take some more time to complete and is certain to involve further job losses - as shown yesterday by the announcement of layoffs in Tullamore and Cork.
This gloomy outlook for unemployment provides little encouragement as the Government faces two immediate challenges. One is for the Cabinet to agree the detail of a cost-cutting plan announced last month. The intention is to reduce spending by €440 million this year and a further €1 billion in 2009, whether by savings or cutbacks. But with unemployment rising faster than anticipated, the Government - which last month made provision for an additional €500 million in welfare payments for the unemployed - may well have to raise that figure again.
As a measure of the Government's seriousness about cost containment it should - as Fine Gael finance spokesman Richard Bruton suggested yesterday - set an example. It should abolish the extra three Ministers of State posts that it established last year. If others are being asked to shoulder the burden of economic adjustment in difficult times and in the national interest, it is hard to see how the Government can exempt itself from the same strictures and sacrifices.
Indeed, its willingness to share the pain may well be raised when it faces its second major challenge later this month. Then, Taoiseach Brian Cowen will attempt to revive national pay talks that have broken down but which Ministers are hoping have not yet failed. Mr Cowen is correct to try and secure a settlement particularly given the marked deterioration in the outlook for the world economy in recent weeks.
At a time of unprecedented global economic difficulty, where all the major (G7) economies are on the edge of recession, the last thing a weakened Irish economy needs is a further setback to competitiveness due to the failure of social partnership and resultant uncertainty about future pay costs.