Jobless rate of 15.5% by end of 2010 - Lenihan

SOME 250,000 more people are likely to lose their jobs by the end of next year, bringing unemployment rates to 15.5 per cent, Minister for Finance Brian Lenihanhas told the Dáil.

However, he said the ESRI prediction of 13.3 per cent this year “seems excessively pessimistic” because latest data showed unemployment in April at 11.4 per cent. Live Register figures “provide tentative evidence that the rate of increase has slowed somewhat”.

He also said unit labour costs in Ireland were no longer the highest in the euro zone. They were second highest. Yet people had to face facts, and the Government’s course of action was aimed at “making ourselves more competitive”.

The Budget was based on an assumption that employment would drop by 7.8 per cent this year and a further 4.6 per cent in 2010, said Mr Lenihan. “This is the equivalent of a quarter of a million job losses between this year and next. As a result, an average unemployment rate of 12.6 per cent is projected for this year, rising to 15.5 per cent next year.”

Current consensus “is that the unemployment rate at the end of 2010 will be 15.4 per cent”.

The Minister warned that “we are in for a very sharp fall in economic activity and unemployment has risen sharply as a consequence”.

Labour finance spokeswoman Joan Burtonclaimed Government leaders seemed not to have "any imagination concerning what unemployment figures of 380,000 – possibly heading for 500,000 – will do to Irish society". She said measures the Minister announced amounted "at most to about 90,000 places on various initiatives".

But Mr Lenihan pointed to praise for Ireland’s efforts from the European Commission, which “warmly welcomed the Budget introduced here, and was very supportive of it”.

“Both the commission and the chairman of the finance ministers at Eurogroup have praised the approach taken by this country with regard to budgetary matters.

“The commission, the European Central Bank and the Council of Finance Ministers made very clear to me that they believe the Irish Government has taken the correct course of action given the scale of the difficulties we face. That has been made abundantly clear in recent days and it is important we notice that as a country. It means that international confidence is being restored in Ireland.”

Mr Lenihan acknowledged the “very severe social crisis caused by the increase in joblessness”.

“That is why the Taoiseach has continued to engage with the social partners to see whether they can work towards a common approach in addressing this social crisis.”

Ms Burton said she met people who attended a credit union conference the Minister addressed and they claimed Mr Lenihan “boasted that Irish people took pain that would cause riots in other countries”.

The Minister rejected the claim, he said he was acknowledging the pain taken and “I was certainly not boasting about it”.