Jobless rate 'will rise to 10pc in next three months'
Wednesday December 31 2008
THE country is facing the bleakest three months since the mid-1980s, as opposition politicians warned it could be worse if the Government does not take action to halt the downward spiral.
The country's main body for personnel managers, the Chartered Institute of Personnel and Development (CIPD), predicted yesterday that redundancies will soar to about 2,270 a week in the period between New Year and Easter, sending unemployment above the 10pc mark.
CIPD Director Michael McDonnell said employees would feel the full effect of "the triple whammy" of the bursting property bubble, the global recession and the crisis in financial markets. "The ripple effects are already spreading out from the construction and property market epicentre to hospitality, retail, travel, personal and professional services firms", Mr McDonnell said.
"Our current expectation, based on available survey evidence and employer soundings, is that the number of redundancies will jump sharply in the early months of 2009, once employers take stock of the economic outlook. The period between New Year and Easter is likely to be the worst for redundancies since the mid-1980s," he added.
Employers who have held back from job cuts but access to bank credit, falling consumer demand and the relative strength of the euro against a weakened sterling will force their hand.
But Labour's Enterprise spokesman Willie Penrose said the human resource body's predictions may actually not be pessimistic enough and unemployment could exceed 10pc by Easter.
"The Government is playing footsie with the banks and getting nothing in return when it should be dictating the terms to them," he said, arguing that injecting significant amounts of money back into the economy through loans to small and medium businesses should be a condition of the recapitalisation programme and the banks' guarantee deal.
"It is very simple. Many of those businesses are profitable but because of a lack of cash flow, they can't meet payments," he said, noting there were 800,000 jobs at stake in SMEs, 200,000 of which were in the troubled retail sector.
Mr Penrose accused the Government of simply "putting new clothes on" the National Development Plan during the talks in Farmleigh and stressed the need for strong leadership. "The ship has been a bit rudderless up to this point," he said.
Leo Varadkar, Fine Gael's enterprise spokesman, said that given unemployment was already at 7.8pc, it would not take much to reach the 10pc mark. He expressed particular concern for staff in retail and finance and in hotel and catering sectors.
"A lot of employers kept people on for Christmas, hoping for the best but in January and February, people's pay packets will be smaller," he said, adding that further lay-offs were inevitable.
Mr Varadkar said a first step for the Government would be "a bit of acknowledgement that there is a problem".
He renewed Fine Gael's proposal for exempting employers from paying PRSI for additional staff they take on in 2009 and for a reduction in the new VAT rate. "That was a disaster," he said.
The public sector pay increase should be frozen, he said.
- Grainne Cunningham
