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High Irish unemployment keeps lid on recovery hopes
DUBLIN (Reuters) - Ireland ended 2011 with a shrinking services industry and average unemployment close to a 20-year high, data showed, leaving the government with an uphill task to engineer a long-awaited economic recovery.
Bailed out by the EU/IMF in late 2010 and midway through a punishing eight-year austerity drive, Ireland recorded an unemployment rate last year of 14.2 percent, its highest since 1993 and more than three times the level of 2007.
Numbers claiming jobless benefit - including part-time, seasonal and casual workers - dropped by 3,300 in December to put the seasonally adjusted total at 443,200, the lowest level since April.
But the stabilisation is partly down to jobseekers leaving the country and there is little hope that an unemployment rate that remains double that of Germany will fall any time soon.
"There is a little bit of relief in those numbers that they weren't showing a continuing upward trend but it's still pointing towards continuing weakness and is likely to remain so through 2012," Austin Hughes, chief economist at KBC Bank said.
"It's very difficult to see any meaningful improvement in unemployment until you get into 2013."
With the euro zone's worsening debt crisis threatening a regionwide recession, separate data on Thursday showed that Ireland's services sector shrank for the first time in a year in December.
The jobless rate held steady 2011 due to a slowdown in the pace of layoffs and a steady stream of people leaving the labour force to return to education or find work abroad, a subject covered emotively on local TV this week as a new wave of emigrants left tearful parents behind following the Christmas holidays.
The government sees unemployment dropping a touch to 14.1 percent by the end of this year before falling back to 13.5 percent next year and 11.6 percent by 2015, a long way from the 4.5 percent recorded in 2007 before the country's fiscal and banking crises took hold.
The number of people in employment in Ireland peaked at over 2 million in 2008 and the exit of some 150,000 from the workforce has helped the jobless rate avoid jumping closer to the eye-watering 23 percent recorded in fellow euro zone struggler Spain and the near 18 percent in default-threatened Greece.
(Editing by Carmel Crimmins; Editing by John Stonestreet)
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