Irish Unemployment Rises to 10-Year High

Unemployment in Ireland has reached a 10-year high of 6.7% as the economy sinks deeper into recession, heaping pressure on the government to increase its deficit spending. October's rise from the previous rate of 6.3% returned Ireland to a level last experienced in Oct. 1998. The Central Statistics Office report published recently said the number of people claiming unemployment benefits had grown 60% over the past year to over 250,000. In a statement, the PM said the rise in joblessness was "regrettable but unfortunately not surprising given the dramatic slowdown in the global and national economy." The government's returned to heavy deficit spending this year to cover the swelling bill of unemployment payments at a time when tax revenues have slumped. It marks a stunning reversal from more than a decade of the "Celtic tiger" boom marked by record-high tax collections and budget surpluses. The move also violates Ireland's commitment under European Union budget rules to keep its deficit spending within 3% of its GDP. Ireland expects to violate that limit by at least double. But opposition leaders appealed to the government to go even deeper into the red by cutting sales tax and putting the unemployed to work on state-funded construction projects. They warned that the Irish work force was losing one job every three minutes, and soon could face levels of unemployment and emigration last suffered in the 1980s. A Labour Party leader called the recent figures "truly shocking and suggest that unemployment is now spinning out of control." He called for the government to employ thousands of laid-off construction workers in building schools and insulating homes. The PM said the government was doing everything it could without risking punishment from the European Union over deficit spending. He noted that American companies continued to pick Ireland as their preferred base within the 15-nation euro zone, including projects unveiled recently for a Marriott Hotels customer call center and a vaccine production plant by Merck Sharp & Dohme Ltd., a British sub. of NJ-based drugmaker Merck & Co. Both projects received confidential levels of state aid. But economists also argued the government must spend more to combat the recession. The chief economist at Bloxham Stockbrokers in Dublin said it was "hard to be anything but negative on the Irish labor market." He forecast unemployment would top 8% next year.