* Rate of increase slowest since April 2008
* Reinforces view that recession is bottoming out
* Boost for govt ahead of EU vote; next budget
* Unions to hold nationwide protests on Nov.6
(Recasts with plan for nationwide protests)
By Carmel Crimmins
DUBLIN, Sept 30 (Reuters) - The number of people claiming unemployment benefit in Ireland rose by just 600 in September, the slowest rate in nearly a year and a half, bringing relief to the government two days ahead of a crucial EU referendum.
Official data on Wednesday showing 429,400 people claiming the dole, barely changed from last month, bolstered expectations of a surprisingly fast end to recession but did not deter trade unions from announcing plans for a nationwide protest over pay and job cuts.
"This is about the government's utter failure to do anything about the jobs crisis," said Macdara Doyle, spokesman for the Irish Congress of Trade Unions (ICTU), which has called on its 650,000 members to demonstrate on Nov. 6 against government cutbacks planned for the December budget.
Unions in the private and public sector have already threatened to strike ahead of the next austerity budget if Finance Minister Brian Lenihan cuts pay or jobs.
While the estimated unemployment rate barely rose in September to 12.6 percent, it is nearly double the rate of a year ago and is expected to keep climbing, angering an electorate grown used to full-employment during the go-go years of the "Celtic Tiger" economy.
Widespread disquiet over the government's handling of one of the worst recessions in the Western world has made officials nervous of a tight referendum on the Lisbon Treaty on Oct. 2 despite opinion polls suggesting it will be ratified.
NOT AS BAD AS FEARED
Economists said the government could use the latest labour market data as proof that there was light at the end of the tunnel.
"The government can point to the fact that the economy hasn't turned out to be quite as bad as was feared and at the margin that helps their cause," said Simon Barry, senior economist at Ulster Bank.
"It clearly represents the continuation of an encouraging trend and it is reinforcing the message from other indicators that are pointing in the same direction."
Analysts have warned Ireland's borrowing costs will balloon and its international reputation will tank if the country rejects the Lisbon Treaty for a second time.
Some economists are now forecasting average annual growth next year in Ireland, compared with previous expectations that 2011 would be the first full year of recovery, after a slew of indicators, including retail sales and exports showed signs of resilience.
The significant slowdown in the numbers signing on -- 600 in September compares with an average monthly increase of nearly 17,000 in the January-August perid -- will also mean much-needed savings ahead of a tough budget in December.
"For 2010, the updated projections for the budget will pencil in the number of people signing on in 2010 as being on average 100,000 lower than the government had anticipated in April," said Ronnie O'Toole, chief economist with National Irish Bank.
"This will result in significant savings in the social welfare budget, and should support income taxes and VAT revenues next year." (Reporting by Dublin bureau, editing by Stephen Nisbet)