Many of the people wondering what relief the Budget may bring them will also be those most fearful of further unemployment, writes Laura Slattery

WEDNESDAY MORNING at the International Manufacturing Conference in Dublin was awash with talk of innovation, collaboration, sustainable growth trends and skills. But one scheduled speaker was missing: Minister for Finance Brian Lenihan.

As the crisis in public finances lurched to the top of the agenda at a Cabinet meeting later that morning, the sanguine conference organisers announced that Mr Lenihan had discovered "more pressing" matters to which to attend - like the ear-catching announcement of an early Budget.

With income tax receipts thinning as fast as the social welfare bill bloats, the freshly calculated surge on the Live Register of unemployment benefit claimants - described as "frightening" by business group Isme - will have been on the Cabinet's collective lips that morning as they began the unenviable task of damage limitation.

Unemployment has increased to an estimated rate of 6.1 per cent and some economists believe it will tip 8 per cent next year.

The length of the dole queues - growing at almost 2,200 a week over the last two months - may still seem short compared to the jobless traumas of the economically defeatist past. In 1986, the unemployment rate was 17 per cent and it remained high into the 1990s.

But that was then. Today's generation of school-leavers would have barely progressed to solids by that stage. Weaned onto the boom, many younger workers only know about mass forced economic migration from watching Reeling in the Years.

Now, not only has the construction sector finally cracked, but once-reliable multinationals are closing costly manufacturing plants and hotel conference rooms are discovering a ready new trade in creditors' meetings as once-thriving businesses hit the wall.

Monthly surveys of activity in the manufacturing sector sketch a grim scene of economic malaise: as firms discover no one wants their goods any more, suddenly the backlogs are cleared and then there is nothing to do except wait for the phone to ring. Lay-offs inevitably follow.

According to trade union Siptu, a "serious skills mismatch" is developing between those who have been made redundant from traditional manufacturing and construction, and the qualifications demanded by areas like financial services. This is a sector which, notwithstanding the credit crunch and Hibernian's scheme to outsource 580 jobs to Bangalore, Ireland is judged to have a reasonable chance of hanging on to.

But in these days of "necessary prioritisation of expenditures", what, if anything, is going to be done for the laid-off workers caught up in the crisis?

"Reskilling" is now the buzz-word on everyone's press release.

"But what does it going to actually mean in practical terms?" asked Bríd O'Brien, speaking to The Irish Times from Government Buildings as she waited to be called into an Oireachtas committee meeting on retraining schemes for the unemployed.

"Construction in rural areas was a big employer. It's going or gone now, and the international climate doesn't lend itself to big investments by manufacturing companies. But we need to be in a position to exploit the market and ask what niches can we fill."

After Hibernian, the biggest job-cut announcements this year have come from Allergan, Dell and Diageo, with two massive cuts announced late last year at Waterford Crystal and Abbott. Most of these companies plan to switch production to eastern Europe or Asia. But it's not just about the Republic's higher costs. There is also, in the case of Dell and Waterford Crystal, simply lower demand for their products. And to some extent, simple technological efficiencies were also at play.

"Manufacturing is going to become more capital-intensive. It's not going to be producing the same number of jobs," O'Brien said.

Meanwhile, the "real mishmash" of industries that forms the services sector has served 30 per cent of 2008's official redundancy notices. Even if this recovers, service sector jobs "go from the seriously low-paid to the very well-paid", O'Brien noted. "How do we create the right kind of jobs?"

Despite all the reports, forums and conferences on the need for education-exploiting, high-level job creation, it is also entirely plausible that the legacy of the recession will be the wrong kind of jobs: strictly temporary ones.

CSO figures show the numbers of people in full-time work was already in decline on an annual basis by last spring, with 4,300 fewer full-time jobs. But this was offset by a swelling of more than 11,000 part-time workers.

"Is it people choosing to work part-time or is this arising from the economic circumstances?" asked O'Brien. Some workers who accept reduced hours "in order to keep the show on the road" have subsequently had difficulty in accessing welfare payments.

A permanent casualisation (if that's not a contradiction in terms) of the labour force could turn out to be a long-term side-effect of recession. But there are more immediate problems for households across the State: the Budget is not going to line their pockets. It is highly likely that increases in social welfare payments, if there are any, won't keep pace with the stubbornly high Irish inflation rate, while taxpayers could see more of their static salaries diverted into the public kitty.

Employer groups are now confident future pay talks won't involve too much pain on their part.

But back at the Lenihan-less manufacturing conference at the Dublin Institute of Technology, one speaker suggested that salary increases could, rather than dig the economy into a price/wage spiral, actually help the State get back to business - by encouraging school-leavers to study science.

"Why should an accountant or lawyer earn more than someone with a PhD in science? I'm not talking about escalating wage rates, but we have to look at the rewards," said Joe Harford, pharmaceutical industry veteran and chairman of the High Level Group on Manufacturing.

Innovators in biopharmaceuticals and other modern manufacturing industries need their supply of job-creating talent, but accountancy and law "seem to be getting the cream", Harford said.

"Maybe it's just not sexy," he concluded.

If there is a way to find the path back to that elusive sustainable growth trend, it will probably come from the mix of academic innovators and cash-rich entrepreneurs who attend these industry shindigs.

"I don't have to tell you we're in troubled and turbulent times. The phrase 'challenging times' is something of a cop-out for what's going on," Harford told his audience.

Right now, as the economy unravels with unprecedented speed, just one thing seems certain: with only six weeks to go before his big briefcase moment, Mr Lenihan will doubtless be cancelling a few more entries in his diary.