Brian Lenihan Jnr (Dublin West, Fianna Fail)

The latest forecasts for EU labour market developments are those published by the European Commission in January. At the time, the European Union unemployment rate was forecast to average 8.7% this year. On a survey basis, the latest data show a sharp contraction in employment in the final quarter of last year — employment in this quarter was over 4% lower than in the same quarter a year earlier. In the addendum to the stability programme update published in January, unemployment was forecast to average 9.2% in 2009. The assumed end-year figure was for an unemployment rate of around 10%.

The quarterly national household survey was published last month. Unemployment on a survey basis rose from 4.5% in the final quarter of 2007 to 7.7% in the same quarter of last year. Although not designed to measure unemployment, live register figures give an indication as to more recent developments. On this basis, when account is taken of seasonal factors, the number on the live register rose by 33,000 month-on-month in January, and by 26,700 in February. The implied unemployment rate, using this measure, in February was 10.4%.

My Department will publish revised unemployment projections in the forthcoming supplementary budget and these will involve a significant upward revision to the January forecasts. The sharp increase in unemployment is the most worrying aspect of the economic downturn and I want to assure Deputies that the Government is doing all in its power to limit the loss in employment.

First and foremost, we are working to generate the conditions necessary for an economic recovery, which includes the restoration of order to the public finances. We have brought in additional fiscal measures and will bring in more in the forthcoming supplementary budget in order to put the public finances on a more sustainable structural path. This will help restore international confidence in Ireland as a place to invest. We are working to improve competitiveness through investing in infrastructure and in education and skills. The recent pension levy in the public sector will also have a favourable impact on competitiveness through a positive demonstration effect.

Finally, we have taken measures to get credit flowing. For example, as part of the recapitalisation package announced on 11 February, Allied Irish Bank and Bank of Ireland reconfirmed their December commitment to increase lending capacity to small and medium enterprises by 10% and to provide an additional 30% capacity for lending to first time buyers in 2009. If the mortgage lending is not taken up, the extra capacity will be available to small and medium-sized enterprises. Allied Irish Bank and Bank of Ireland have also committed to public campaigns to actively promote small business lending at competitive rates with increased transparency on the criteria to be met. Compliance with this commitment will be monitored by the Financial Regulator.

We are also taking measures to ensure those losing their jobs have access to retraining. The Department of Enterprise, Trade and Employment in conjunction with FÁS are working together to respond quickly and effectively to the rising numbers of people who are now unemployed.

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