Richard Bruton (Dublin North Central, Fine Gael)
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Question 4: To ask the Minister for Finance his revised forecast for the numbers and rate of unemployment for end of year 2009; the way this forecast compares with the forecast unemployment rate for the EU as a whole; and if he is considering measures to stem the rate of job losses. [12767/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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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.

Richard Bruton (Dublin North Central, Fine Gael)
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I am sure the Minister was disturbed to see the latest GDP figures published today.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Yes.

Richard Bruton (Dublin North Central, Fine Gael)
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They show that compared to the same quarter last year, GDP has fallen by 7.5%, with investment falling by 30.5%. The consequences of these trends are extremely worrying. Reflecting that, we are seeing unemployment numbers rising by 1,000 per day.

Does the Minister agree that it is not sufficient for the Government to chase down the economy with further tax cuts? There must be a positive investment plan designed to protect and create employment. Fine Gael has today put forward proposals for such a plan, which would make investments on a commercial basis that would not draw on the Exchequer. Will the Minister consider the need for such a programme so that parallel to the fiscal correction, we can have a genuine job strategy?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I agree with Deputy Bruton that the protection of existing jobs and the retraining of those who do not have jobs must form the cornerstone of our job strategy. We already have programmes in place to protect businesses already providing employment through the Department of Enterprise, Trade and Employment. We already have training and retraining arrangements in place. We must examine how appropriate and focused these are in current circumstances.

I also agree with Deputy Bruton in that there is clearly a shortage of investment funds available for the Government for the implementation of the national development plan. In that context I will examine any constructive proposals for alternative financing for important public projects.

Richard Bruton (Dublin North Central, Fine Gael)
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I welcome the Minister's willingness to do so as we have put forward a detailed programme that focuses on key arteries that are vital to long-term competitiveness, like the communications and power networks. The Minister has indicated we have strategies to protect jobs but if we are seeing an attrition rate of 1,000 jobs lost per day, it does not sound like the strategies are very effective. Is the Minister considering specific proposals designed to help employers get through a very difficult period and protect jobs in the short term?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Again, I am examining various proposals but Deputy Bruton will appreciate that these matters are not easy to resolve because the reason for the drop in the numbers in employment is the international downturn which has impacted severely on a small open economy such as ours. There is clearly a global banking crisis which is not unique to this country. There was a pre-existing housing contraction which impacted on the construction industry before the global downturn began, but it is now clear that we are in a global downturn and this has had a severe impact on our small, open economy.

The measures open to the Government in these circumstances are limited but one of the most important initiatives that has been taken is that taken by businesses and workers themselves, namely, their willingness to take pay reductions to maintain the competitiveness of the goods and services they provide and to attend to their cost base. That is being done in many private enterprises in Ireland and it is being done by the State as well. It is essential the State does this in order that the general competitiveness of Ireland can be improved on the global stage.