20,000 jobs may go, report claims

UNEMPLOYMENT will rise again with 20,000 jobs set to go next year, a new report predicts.

The study by the independent think tank, ESRI, and separate findings by the Central Bank bare out budget day warnings by Finance Minister, Charlie McCreevy, that 2003 will be tough year.

Both studies indicate sluggish economic growth, rising prices, and growing dole queues. The ESRI report says unemployment will get worse before it gets better. With the total jobless toll rising to 184,000 people. In 2001, the jobless figure was 142,000 people or some 4% of the workforce.

By next year the unemployment rate is expected to be 5.2% and could hit a high of 5.5% during the year before falling back.

The ESRI also sees inflation staying stubbornly high and predicts it could average 5.1% for the entire year - compared with a current rate of 4.8% which is the highest in the eurozone.

Rising house prices, education and services will continue inflationary pressures while the 1% increase in VAT on budget day also adds to the problem.

Overall, the ESRI says 2003 appears uncertain due to the weak state of eurozone economies and concerns in the USA about war with Iraq.

The Central Bank in its winter bulletin lowered its growth forecast for next year to just 2.5%. This projection for GNP, which excludes multi-national profits, is much lower than the forecast of 4.25% just three months' ago.

Tom O’Connell, the Central Banks head of economic research, suggested this prediction may be optimistic given the threat of a war with Iraq.

But the Central Bank remained more optimistic about inflation suggesting it might even decrease slightly thanks to the 0.5% cut in interest rates by the European Central Bank earlier this month.

However the Central Bank said it remained concerned about the risk of inflation which they say had been a problem since 1999.

The bank is also concerned about the high levels of mortgage lending.

A Finance Department spokesman last night said the Government remained confident about its own projections for the coming year and said the economy was quite strong.

“We believe that we will meet our budgetary predictions on spending target in 2003 in much the same way as we have done in the past 12 months.”

The latest news comes as efforts to strike a new national pay deal have reached an impasse. Talks between unions, employers and the Government broke down on Wednesday and all sides have so far said they see little point in resuming negotiations.

The country is entering a difficult economic period without a national pay deal to deliver badly-needed stability. It is the first time in 15 years a pay deal had not been in operation.