May 2009 Archives

Unemployment Crisis

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The Minister for Finance told the Dail on Wednesday last that the unemployment rate will hit 15.5 percent next year. This compares with 11.4 per cent last month and just 5.4 percent for April 2008. Unemployment is expected to reach 366,000 during 2010. This is almost 60% higher than the highest level encountered during the dark eighties - it can be no consolation to the unemployed that the labour force has increased substantially in the interval.

If public sector employment remains steady at 360,000 then private sector will continue to bear the brunt of unemployment. This will bring the sector's unemployment rate to almost 19% notwithstanding across-the-board wage freezes and reductions, impaired pensions and substantial rationalisation.

It begs the question as to why, in this unprecedented crisis, the public sector continues to enjoy a substantial like-for-like wage premium, excellent pension arrangements (notwithstanding the recent levy) and near absolute job security. Surely, it is time for the entire public sector to engage, without preconditions, in a major programme of reform and productivity improvement to align itself more closely with the private sector.

For its part, the Government and opposition should set aside their petty party differences and lead an immediate action plan to contain unemployment, reduce public expenditure, unblock the banking system, protect the least well-off and restore medium-term confidence and competitiveness.

In parallel, the social partners parties must get off their ideological high horses; accept that a substantial across-the-board decline in living standards is inevitable; and start working with the Government to ensure that the major surgery needed to restore the economy's health is executed as fairly as possible. The quicker this is done the sooner the recovery can start.

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