Some 78,000 people each year are expected to be required to fill the jobs that employers are likely to offer up to 2005. Of this number, 41,000 are for new jobs and the remainder, 37,000, to replace workers who die, emigrate or retire.

Where will these people come from? Will there be skill shortages? If domestic sources for some occupation groups cannot meet the demand, how many immigrants will be required to bridge the gap? These are some of the questions which we address in a recent FAS/ESRI report in which we provide a comprehensive analysis of gross flows in and out of the labour force.

Starting with the 1997 labour force total of 1,517,000, it is estimated that outflows from the labour force (or attrition) over the period from 1997 to 2005 will reduce this total by 292,000 - leaving a residual labour force stock of 1,225,000 in 2005. On the basis of the ESRI Medium-Term Review labour force forecast for that year, 1,846,000, it would require a gross inflow of 621,000 workers to realise this stock level.

The table below shows the requirement classified by broadly defined occupational groups. While all the requirements are substantial (except that for agricultural workers), the highest are indicated for professional workers and semi-skilled and unskilled operatives (both of the order of 150,000). The professional category includes those with both degree and diploma level qualifications.

Will supply be sufficient? Given the scale of the inflow required, there is concern as to whether it can be met. This depends on how the pattern of inflows to the labour force from the main sources of supply (education, immigration, home duties) evolve over the period. Projecting the trend in recent years from these sources provides independent estimates of inflows by occupational group for the period up to 2005. The forecast (614,000) is very close to the estimated labour force requirement.

About half of those expected to enter the labour market are likely to be school-leavers or college graduates. Around a quarter are expected to be labour force returnees previously engaged in family responsibilities or in retirement, while the remainder (a further quarter) are likely to be immigrants.

Heretofore these have been mainly Irish citizens returning after working abroad. However, recent official estimates indicate that about 55 per cent are of foreign nationality, equally divided between UK, EU and non-EU citizens.

The pattern of the forecasts across occupations is also similar to that for labour force requirements, but there are some differences. The balances between required and estimated inflows (see col. 5) are relatively close for agricultural workers, professionals and those in clerical activities.

However, there is a significant shortfall of 28,000 for skilled manual workers and an excess of 34,000 for those in semi-skilled and unskilled employment (other than sales personnel).

Steps have been taken to increase the supply of skilled workers through the apprenticeship system. The first-year intake of apprentices has increased from 4,200 in 1996 to over 8,000 in 2000.

Inward migration of skilled workers has also been encouraged by FAS in co-operation with employers and employers' organisations. What role is inward migration likely to play in meeting requirements? The final column of the table shows inflow excess or deficiency excluding immigration. These calculations indicate a significant dependence on immigration. All occupations, except agricultural activities and unskilled or semi-skilled work, show significant shortfalls. Professional activities and skilled manual craft work will be heavily dependent on inward migration.

For professionals the inflow requirement between 1997 and 2005 is nearly 60,000. For skilled manual workers the deficiency is nearly 28,000 even when immigration is taken account of, but it rises to 45,000 when inward migration is excluded. For semi-skilled and unskilled occupations (including sales staff), if immigration is excluded, the estimates indicate a small inflow deficiency of about 11,000 over the 1997-2005 period, or less than 2 per cent of the 2005 labour force total.

While demand in the Irish economy in recent years indicates that the steps taken to promote immigration of less skilled workers were reasonable, these figures do not indicate a significant immigration requirement for such labour between now and 2005.

This is, of course, based on an acceptance of the ESRI MediumTerm Review employment forecasts of a significant moderation in jobs growth.

Nevertheless, employers are expected to have up to 78,000 jobs on offer each year up to 2005. Approximately the same number of people will enter the labour market to fill these jobs from domestic and external sources. The strong demand for labour in medium and high-skill groups indicates that a great opportunity exists for Ireland to follow a high-skills route to the development of its labour force.

Jerry Sexton and Gerry Hughes are research professors at the Economic and Social Research Institute