Unemployment to rise further, says expert

The unemployment rate, now up at 353,000, is set to rise further according to economist Rossa White of Davy Research, a leading provider of stockbroking, wealth management and financial advisory services.

The number signing on in January was 326,100.

The Live Register figure at the end of last month showed an 87.1% increase in a year, the fastest rise in unemployment ever recorded.

White said that the rate of increase for February was not as bad as January, but this was of little consolation.

Unemployment benefit claimants rose 26,700 in February or 8.2% compared with January.

That followed the record sequential increase of 33,000 or 11.3% the previous month.

In February, claimants were fully 20% higher than in December.

The pace of layoffs, especially in construction, retail and financial and business services, intensified early in the year.

“We may not quite see a month as bad as January, but the monthly increases will remain significant until mid-year at least,” she said.

Last week, the household survey for September-November confirmed that the unemployment rate had risen to 7.7% by October.

In relation to this, Ms White said the Central Statistics Office estimated that the rate was now 10.4%.

It was important to recognise that the Live Register included a large number of part-time and casual workers that were not unemployed.

Davy’s latest forecast was for unemployment to breach 12% by October. They still expected the unemployment rate to reach that figure.

That would mean a near-eight percentage point increase in two years - the rate was only 4.5% in October 2007. The last euro area country to see an equivalent jump was Finland in 1990-1992.

Ulster Bank said the latest Live Register figures add to the Government’s fiscal headache.

Although the monthly increase was lower than last month (8.2% versus 11.3%), they expected that this would be the case, given that the January figures were impacted by a pronounced shakeout in employment after the Christmas holidays.

The Live Register total now stands at 353, 000, the largest on record.

Compared with a year ago, the total was up 165,000, or almost 90%. Given that they estimated that each additional 10,000 workers on the live register costs the Exchequer about €150m in social welfare benefits and lost tax revenue, the cost so far has been on the region of €2.5bn.

Article courtesy of the Evening Echo newspaper.