The rate of job creation here will remain well above the international average, according to forecasts in a new OECD report. However, this will not be enough to stop unemployment rising to over 5 per cent of the workforce.
The total number of people at work here will rise by 0.6 per cent this year and 1.3 per cent next year, according to forecasts in the annual employment outlook from the Organisation for Economic Co-Operation and Development.
This rate of job creation is well ahead of the expected EU average, which is for no change in total job levels this year and a small 0.7 per cent rise next year. It also outpaced the average for the 30 industrialised countries that are OECD members, where total employment is predicted to rise by 0.5 per cent this year and 1.1 per cent next year.
The Irish jobs market has been the strongest in any OECD country over the past decade. Total employment here grew at an average rate of 3.8 per cent per annum between 1990 and 2001, compared to a 1 per cent annual average for all OECD countries. Looking at current figures, Spain is the only other EU country now strongly outperforming Ireland on the jobs front, according to the report from the Paris-based body.
While the number of people at work is predicted to increase, the OECD does not believe it will do so quickly enough to absorb the likely increase in the labour force from students leaving education and others areas.
This means that unemployment will continue to edge upwards. The OECD predicts an unemployment rate of 5 per cent this year and a small rise to 5.2 per cent next year. While this year's forecast looks slightly high in the light of recent figures showing the unemployment rate at 4.5 per cent, most analysts do expect unemployment to continue to rise gradually into next year.
The forecast rise in Irish unemployment will be in contrast to a small expected fall in the OECD average unemployment rate. However the rate here remains well below the OECD average - forecast to be 7 per cent this year and 6.8 per cent next year.
The report contains other comparative data highlighting the extraordinarily strong performance of the Irish jobs market over the past decade. Total employment as a percentage of the adult population rose from 52.1 per cent in 1990 to 65 per cent last year, the biggest rise in any OECD country.
Employment participation here had been low by international standards and the total here is now in line with the OECD average.
The report also says that jobs growth here - and in other better-performing countries such as the Netherlands and the US - has been relatively strong in high-paying industries and occupations.
Earnings inequality - the gap between higher and lower earners - has nonetheless tended to increase in many countries, it says, although it does not have longer-term data for Ireland.
Over a longer time period, the report shows strong increases in productivity in the business sector here compared to other countries, probably largely reflecting the impact of some high-performance multinational sectors.
Meanwhile real wage growth in the business sector was a little above average from 1980 to 1995 and - at 1.1 per cent per annum - fractionally below the 1.3 per cent OECD average since 1995. The combination of these two factors has lowered the wage share of business sector output from 63.9 per cent in 1980 to an estimated 41.5 per cent last year, compared to the OECD average of 55.5 per cent.
Looking at international developments, the OECD says that governments in industrialised countries must do more to expand their workforces or risk economic growth being choked by the cost of ageing populations.
It says governments should not settle for the expected small drop in unemployment as economies recover and needed to draw more people into work to help fund the growing demands of ageing populations on national pension schemes, the think-tank said.
