The labour market still looks good, says FÁS
However, the FÁS quarterly labour market commentary also warns about the over-reliance of the economy on the construction industry, with almost as many people now working in the sector as in manufacturing.
The author of the report, FÁS economist Brian McCormick, said the fact that construction also accounted for almost a third of all new jobs created in 2006 was “a cause of some concern”.
He claimed such a reliance on the sector was worrisome as recent interest rate hikes combined with the likelihood of further increases this year were likely to have a negative impact on the demand for housing.
Despite such concerns, Mr McCormick forecast that the labour market would grow by 2.8% in 2007 with the creation of 57,000 jobs.
“The primary source of jobs growth should continue to be in the services sector,” he added.
However, the report also highlights how immigrants from eastern Europe, many of whom work in the services sector, are earning considerably less than their Irish counterparts.
On a more positive note, the gap in pay between native Irish employees and migrant workers is narrowing as the average weekly earnings for the latter grew by 12% in 2005.
The report also points out the demand for workers was so strong last year that not even the arrival of large numbers of migrants from the enlarged EU was sufficient to fill the record 144,000 vacancies advertised with FÁS.
The figure represents an 18% increase on the number of jobs filled by the State employment agency during 2005.
“The ability of the labour market to absorb the large inflow of migrant workers bears testimony both to the strength of the labour market and the employability of the migrants,” said Mr McCormick.
The FÁS economist said the Irish labour market outperformed the rest of the eurozone in 2006 by delivering exceptional jobs growth combined with an extremely low unemployment rate.
The number of people at work grew by 85,000 last year to a record 2.07 million, while unemployment at 4.1% reached its lowest figure in the past five years with just 88,700 people officially classified as jobless.
