Forget part-time jobs – real unemployment rate is 24pc, says IMF
UNEMPLOYMENT would be over 24pc if "discouraged" workers and those forced to work part-time were taken into account, the International Monetary Fund has said.
The Washington-based body poured cold water on the fall in the unemployment rate to 13.7pc in the first three months of the year, claiming it was due in large part to a shrinking labour force.
And it claimed most new jobs were part-time roles for employees looking for full-time work.
The tenth review of Ireland's bailout also claimed regional disparities exist in unemployment rates, with the difference between Dublin and the South-East at around 7.25 percentage points.
The 90-page report praises Ireland for sticking to its targets but warned high private sector debt and continuing austerity was a drag on recovery.
The Fund said the ability of banks to lend is being hindered by non-performing loans and low profitability, as well as low turnover in the housing market.
"It is therefore essential for the authorities to hold banks to achieving the public targets for mortgage arrears resolution, and to closely monitor the sustainability of resolution arrangements in practice," it said.
While it warned the Government not to use the savings from the promissory note deal to ease up on its austerity programme, it claimed "adjustment fatigue" had set in after six tough budgets. It said the promissory note savings should be used to "build buffers against potential shocks".
"Any reassessment of the medium-term consolidation path should await Budget 2014, and focus on safely achieving the medium-term fiscal consolidation targets in a growth friendly manner, while using interest savings from the promissory note transaction to help build buffers against potential shocks," the review said.
The IMF also gave details of how a preliminary assessment of the banks will be carried out this year ahead of the next round of stress tests in 2014.
An asset quality review will be carried out, followed by a review of risk-weighted assets and finally a balance sheet assessment.
The Fund also once again threw down the gauntlet to European politicians to stick to their pledges.
"Overall, Ireland still has much work ahead, but even with continued strong policy implementation, its durable return to the markets would benefit substantially from timely and forceful delivery on European pledges," the Fund said.
The Fund said a number of potential one-off shocks could impact on the budgetary process this year, including the scale of any potential compensation to the National Asset Management Agency (NAMA) in relation to the IBRC loans it acquired following the liquidation of the former Anglo Irish Bank.
"Also, the payment of Allied Irish Bank's dividends on preference shares held by the Government via the issuance of ordinary shares may be reclassified as a deficit increasing transfer, as was the case in 2012," the IMF said.