TAOISEACH BRIAN Cowen confirmed that unemployment surged by 36,500 last month.

The latest figures brings the jobless total to 327,000 or 9.2 per cent of the workforce. Moreover, this number could rise to 400,000 by the year end, Mr Cowen warned. He said that 2009 is the year “where we will see the most contraction in the Irish economy. This will be the most difficult year”.

Opposition leaders said the focus should be on job creation and saving jobs rather than cuts. Fine Gael leader leader Enda Kenny described the statistics as “an unemployment bloodbath”, the worst jobless figures in the history of the State and the equivalent of 1,500 jobs a day. “There will be horrific social consequences for those tragically caught in this bind,” he said.

Every job lost costs the exchequer €20,000 a year said Labour leader Eamon Gilmore. Mr Gilmore said that based on figures from the Taoiseach, every job lost costs the exchequer €20,000 and the 36,500 extra unemployed last month would cost the exchequer €730 million in a full year. The 120,000 jobs lost last year cost €1,386 million in a full year in social welfare and lost tax of €960 million.

He said the Taoiseach was guilty of “some old fashioned thinking” because the Government was fixated on cutting public expenditure. That was “a fundamental flaw in the Taoiseach’s approach”, and the focus should be on saving jobs and getting people back to work.

But Mr Cowen insisted it was not a case of “either/or” and “we must bring stability to the public finances and without that the question of progress or regaining prosperity and growth does not arise”. He believed it was “old fashioned thinking” to believe that the economy could be stabilised if deficits were rising to 10 per cent, 11 per cent or 12 per cent. “We must stabilise the public finance position.”

He said that “if the gap in the public finances which could be over €18 billion this year is to be closed, it will either be done through expenditure savings and/or taxation measures”.

Mr Kenny raised the unemployment issue during Leaders’ Questions, before the debate on the economy. He said it was a “horrendous” and “catastrophic” situation and he was “often struck by the shock on the faces of people who become unemployed . . . the Taoiseach’s emphasis and concentration on cuts yesterday did nothing in raising confidence, hopes or prospects for people to either retain or obtain jobs”.

Mr Kenny called on the Taoiseach to put the schools-building programme on the “critical infrastructure list”. A “schools-building programme would allow for the employment of substantial numbers of tradesmen, craftsmen and construction workers”.

Mr Cowen replied that the “level of school building . . . is at record levels when compared to even the best of times experienced in the past”.

Mr Gilmore called on the Taoiseach to “prioritise the saving of jobs and getting people back to work”.

“Stabilise the economy and the public finances will recover,” he said, because “unless we get people back to work, business moving and the economy growing again we will be faced with a problem the Taoiseach will not be able to solve”.

Rejecting the claim that he was “fixated” on cuts, Mr Cowen said the Government would do everything it could to maintain jobs