OECD: Irish unemployment likely to rise further

Unemployment in Ireland is likely to rise further in coming months and could even approach 15% by the end of 2010 if the recovery fails to gain momentum, the Organisation for Economic Co-operation and Development (OECD) said in a report today.

The group's latest Employment Outlook report said that from December 2007 to July 2009, 166,000 individuals joined the ranks of the unemployed and the unemployment rate rose by 7.8 percentage points to reach 12.5%, the second-highest level in the OECD after Spain and the highest percentage increase in the unemployment rate witnessed during the current crisis

"Ireland has been hit harder by the jobs crisis than most other OECD countries," the report said.

"The collapse of the housing price bubble, compounded by the global financial crisis and economic slowdown, quickly translated into sharp job losses and increases in unemployment."

Temporary and part-time workers, migrants and low-skilled workers have borne the brunt of rising unemployment, according to the figures.

The report also said that the increase in funding available for active labour market policies has been "modest" compared with the massive rise in unemployment.

"This raises the question whether re-employment assistance to jobseekers is adequate to prevent the sharp recession from turning into a long-term unemployment crisis."`

According to the report, unemployment in leading industrialised nations will hit a new post-war record next year as the global economy looks set for only a timid recovery in 2010.

The jobless rate in the 30 member countries of the OECD will approach 10% - meaning 57 million people out of work – in the second half of 2010.

That compares to the current post-war high of 8.3% as of last June.

Calling the short-term jobs outlook “grim,” the Paris-based watchdog said there is a risk that the rise in joblessness could result in a permanently higher unemployment level that could take many years to bring back down.

“This unwelcome phenomenon occurred in a number of OECD countries in past recessions when unemployment remained at a new higher plateau compared with the pre-crisis level even after output returned to potential, and it took many years, if ever, to bring it down again to the pre-crisis level,” the report said.

Unemployment rates among OECD members range from a low of 3.3% in the Netherlands to 18.1% in Spain, according to OECD June figures. The US unemployment rate was 9.5% in June, above the European Union rate of 8.9%.

Nearly 15 million people have joined the ranks of the jobless since the end of 2007, the OECD said.

“There is great uncertainty looking forward, but labour market conditions appear set to deteriorate further in the coming months,” the OECD said, noting that its own forecasts are for “a rather muted recovery surfacing only in the first half of 2010.”

Under this scenario, the number of unemployed in the OECD will rise by more than 25 million people in less than three years, comparable to the job losses over the 10-year period until the early 1980s, the report noted.

The organisation urged governments to spend more on active labour market policies, such as jobseeker support, training and labour-demand support, that help the unemployed find work.

The OECD said that higher spending on these measures is cost effective and justifiable, even in countries whose public finances are strained from funding stimulus plans to fight the global recession.

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