Remember a record rise in the unemployment benefits claimants of 33,000 in January? Today’s figures show that the new claims rose by an additional 26,700 in February. But do not get your ‘Out of the Recession’ placards yet. January figures were negatively impacted by the cumulative lay-offs following the Christmas holidays. In other words, when seasonal factor is controlled for, February layoffs were probably as bad, if not worse, than the already abysmal January numbers.
Overall, the Live Register now stands at 352,800, the largest on record up 165,000, or almost 90% y-o-y. Now, each new 1,000 claimants cost the Exchequer some €15ml in social welfare and lost tax revenues. This implies that y-o-y the Exchequer lost €2.475bn. Surely, raising taxes (and thus undercutting employment in the private sector) is not a way forward?
Even without any new tax measures, I expect that the number of unemployment benefits claimants will rise to 450,000-480,000 by the end of 2009 (in annual average terms – 465,000). This will imply a social welfare spending overshoot of some €1.3bn and a tax loss of ca €630mln relative to January DofF budget estimates (here).
The Live Register-based estimate of the unemployment rate was 10.4% in February, up from 9.6% in January. We are back in 1997 world and falling.
Without too many dull details, the official unemployment figures (QNHS) show an unemployment rate of 7.7% for September-November 2008 (just like everything else in the world of the CSO’s apparatchiks, Q4 in unemployment statistics is not the same as Q4 in the real world). Now, the Live Register for this period showed 7.4% unemployment rate – an underestimate on QNHS. And we are now seeing the second quarter of continuous underestimates of the true unemployment rate being produced by the Live Register.
What does this mean? Well, it means that an army of part-time workers that resulted from ‘hidden’ layoffs in 2008 – when large number of construction and other workers were forced into part-time employment – is now becoming full-time unemployed. And the labour force itself is shrinking. By 15,000 in Q4 2008.
Hmmm… Ulster Bank now predicts 14% unemployment rate by the end of 2009. In January, I claimed that the unemployment will rise to 11-12% by December. Oh, how wrong was I. My new estimate – in light of Live Register for the last two months and QNHS for Q4 2008 is that we will be somewhere around 13.8-14.6% and that is assuming that laid-off foreigners leave in bus loads…
And, sadly, that is the fate of our fabled uber-educated Irish labour force, as the Government likes to point out… In immortal words of the Hitchhiker’s Guide:
"Please relax," said the voice pleasantly, like a stewardess in an airliner with only one wing and two engines, one of which is on fire, "you are perfectly safe."
Oh, no, we are not!