Continuing failure to stem unemployment the real political crisis

Each month, the Central Statistics Office (CSO) publishes the latest live register figures and, two days later, releases detailed figures for the numbers signing on at every one of more than 120 social welfare offices around the country. Since the start of the year until early summer, the numbers of people signing on was doubling from the same month a year earlier. The same pattern could be seen county by county and in the smallest social welfare offices, such as Achill, to the single largest in Cork City. By June, the unemployment rate had climbed to 12.1 per cent of the workforce from under six per cent the previous summer. Then the reporting of the figures on the television bulletins took a bizarre turn. The jobless numbers are the most important of the economic indicators because, after all, real live people experience recessions and slumps not through statistics measuring fiscal deficits or the contraction of GDP, but whether they keep or lose their livelihoods. Reporting over the summer months focused instead on the slowing of the increase in the jobless count. The rate of increase has indeed slowed considerably - indeed, last month the count showed a small welcome fall to 423,639 people on the register. But it remains startling just how many people have either lost their jobs altogether or who are now working part-time. Taoiseach Brian Cowen, at the beginning of the summer, warned that the the live register could reach 500,000 by the end of the year. It now looks that, although the rate of increase has slowed, the total will continue to rise and breach the politically-sensitive half a million level early next year. The unemployment rate, which was once feared to peak next year at 17 per cent (well over 600,000 on the live register) may reach about 14-15 per cent at worst. There are two main reasons for this. First, the predictions were made in early spring when the world and, specifically, the Irish economy were looking extremely shaky. The other explanation is that it appears some recent migrants, who since 2004 filled the boom-time jobs in construction and retailing, have gone home. So, the reporting of the figures has struck an upbeat tone in recent months, perhaps encouraging a sense of complacency among Government officials. Many people, because of the property crash and spending slump in the shops, continue to lose their jobs in in construction and retailing. The under-25 age group has been badly hit - 20 per cent of males under the age of 25 and 23 per cent of females were on the live register last month, levels way above their population shares. It is also difficult to understand why people leaving the country should be reported so favourably. The phenomenon of non-nationals leaving the live register is reported in terms of the money saved for the exchequer, and little attention is given to the deflationary effects of emigrants who still have jobs deciding to leave. The unemployment crisis here is still building. If proof is needed, then look no further than the IMF World Economic Outlook report published last week. As the title suggests, it is an analysis of the prospects for the world's economies, big and small, advanced and developing, to emerge from this deep recession. It is surprising, then, that Ireland attracts 16 major references - an economy that accounts for less than one per cent of the eurozone - across the 226 pages of the IMF report. Outside the financial pages, the report got little attention, which is a pity because understanding the prospects for recovery here can only be understood by understanding where we are compared with the rest of the world. "Starting from a higher level, the (jobless) rate in the euro area rose by two percentage points to 9.5 per cent. Countries that experienced particularly large real estate-related shocks, for example, Ireland and Spain, have seen much larger increases in unemployment because of the sharp contraction in construction jobs," says the IMF. "The more moderate increase in the unemployment rate in Europe reflects these economies' greater tendency to adjust payrolls in response to changes in demand by lowering hours worked rather than the number of workers, a practice encouraged in part by labour market policies and institutions. "However, because the euro area is expected to make only a sluggish recovery, more job cuts are likely," adds the report. The IMF forecasts that Ireland, at 15.5 per cent, will have the second highest unemployment rate, after Spain, in Europe next year. That compares with an average rate of 12 per cent in the 16 eurozone countries. Among the lowest across Europe, the IMF sees jobless rates peaking at just 4.5 per cent in Switzerland, in Slovenia at about six per cent, in the Netherlands and Austria at 6.5 per cent, and in the Czech Republic at about 10 per cent. The forecasts show that the unemployment crisis here is failing to get the political attention it deserves. A Government coalition distracted by the urgent task of saving the banks and dealing with huge public spending deficits needs now to give its full attention to stemming private sector job losses and encouraging employers to create jobs. The paralysis over unemployment needs to end now.