THE NUMBER of people in employment fell by 108,000 or 5.5 per cent in the 12 months to the first quarter of 2010, according to the Central Statistics Office (CSO).

But the decline in the numbers in work has slowed down, the latest Quarterly National Household Survey (QNHS) shows.

There was also a quarterly decrease of 7,300 in the number of people unemployed, once seasonal factors are taken into account. This meant that Ireland’s official unemployment rate decreased from 13.3 per cent to 12.9 per cent over the quarter.

The unemployment rate has largely fallen because there has been a contraction in the size of the labour force – people of working age who are in work or actively seeking work. The labour force fell by 55,700 or 2.5 per cent in the year to the first quarter and now stands at 2,132,700.

On an annual basis, the number of people officially unemployed is up 52,200 – or 23 per cent – to 275,000.

This annual jump in unemployment has moderated since 2008, hinting at some signs of stabilisation in the economy.

Once again, the collapse of the construction sector accounts for most of the male job losses, according to the Government’s statistic agency. However, the number of people in long-term unemployment has doubled since the first quarter of 2009 and now stands at 112,600 or 5.3 per cent.

The Irish National Organisation of the Unemployed (INOU) described the jump in long-term unemployment as “striking”, while business group Ibec said the Government needed urgently to focus on measures to address this growing problem.

“Reform of labour market policies and continued investment in training and upskilling measures are essential if crippling structural unemployment problems are to be avoided,” said Ibec economist Fergal O’Brien.

The bulk of the decline in the labour force is due to a decline of 38,800 in participation – whereby people return to or stay on in education, look after children or otherwise stop seeking work.

When people who are classed as being outside the labour force (and not, therefore, officially unemployed) but who also show some interest in obtaining work are taken into consideration, the rate of unemployment increased from 14 per cent in the first quarter of 2009 to 17 per cent in the first quarter of 2010.

The Irish Congress of Trade Unions (ICTU) said it believed the “true” unemployment rate to be higher again, at close to 20 per cent. Negative demographic effects, mainly relating to net inward migration, have reduced the size of the labour force by a further 17,000. The foreign national labour force has declined by 53,500, or almost 16 per cent, over the year, according to the CSO’s estimates.

There was an estimated 402,700 foreign nationals over the age of 15 in the State in the first quarter of 2010, down 59,600 or 12.9 per cent annually.

The fall in the numbers of foreign nationals in the labour force has accelerated over the course of the year.

The CSO’s survey confirms that rates of unemployment among the young are substantially higher than the national average. A quarter of people aged between 20 and 24 were unemployed in the first quarter. At the peak of the labour market two years ago, this rate stood at 8 per cent.

Economists noted that the turnaround in the labour market would be a protracted process.

“The bottom line is that the labour market will be the last piece of the jigsaw in the economic recovery process and it will be the end of the year before things start to pick up on the employment front,” said Alan McQuaid, economist at stockbrokers Bloxham.