Unemployment crept to a three-year high last month, prompting predictions that the jobless rate could breach the 5 per cent watershed this year. Edward Power reports.
Numbers claiming benefit increased by 4,559 to 170,701, a 2.7 per cent rise on December, the Central Statistics Office said.
Seasonally adjusted, the total climbed by 2,300 to 167,000, pushing unemployment up one point to 4.5 per cent, its highest level since early 2000.
The year-on-year level of increase moderated marginally to 6.7 per cent from 9 per cent. Some 10,741 more people signed on last month than in January 2002.
The figures are published at the end of another bleak week for the labour market. On Wednesday, Technicolor Home Entertainment Services, the Co Cork CD manufacturer, announced it was shifting production overseas with the loss of all 230 jobs.
Monthly notified redundancies figures issued on Thursday showed a 12.2 per cent annual rise, slightly ahead of forecasts. Analysts say the results suggest the economy has stalled and that contraction in the jobs market is likely to accelerate.
The unemployment rate would rise to 5.25 per cent by year's end, said Mr Jim Power, chief economist at Friends First. "While still low by historic standards, such a level would represent a marked deterioration in the labour market and one that could prove difficult to arrest in the economic climate that is likely to prevail over the next couple of years," he said.
Redundancies were heaviest in Dublin and the mid-east, where jobless levels climbed by 4.4 per cent, the live register data shows.
Unemployment data masked the full extent of the downturn on the labour force, Mr Power said.
"Jobs are being lost, but more significantly, overtime hours and bonuses are falling sharply, and despite the charade that is social partnership, many workers in the private sector will face wage freezes this year," he explained.
Part-time and seasonal workers were leaving the labour market in large numbers, a trend which diminished unemployment figures, said Mr John Beggs, chief economist at AIB group treasury. The economy was in the throes of a long-term erosion that boded ill for its long-term prospects and the jobless rate could rise as high as 5.5 per cent by year-end, he said.
"The manufacturing industry in particular needs to take a long hard look at itself. Further redundancies were announced in Youghal this week and more are likely as companies withdraw from Ireland in search of cheaper workers."
The effect of the euro's rising strength had not yet trickled through to the markets and was likely to lead to job losses when it did, said Mr Austin Hughes, chief economist at IIB bank.
Competitiveness was crumbling, posing a severe threat to inward investment, said Mr Phil Hogan, Fine Gael spokesman on enterprise, trade and employment.
"It is essential the Tánaiste publish a package of anti-inflationary measures immediately so that Ireland can recover its competitive position which ultimately will lead to a growth of employment," he said. The live register is not considered the most accurate barometer of unemployment. The latest Quarterly National Household Survey, regarded as the truest indicator, shows 86,700 out of work, a 9.5 point quarterly rise.
