Employment growth will stall next year, according to the latest labour market commentary from State training and employment agency Fás. Dominic Coylereports.
While 70,000 jobs are expected to created this year, the number is forecast to be just 21,000 in 2008, held back by a 25,000 fall in the numbers working in construction-related business, it says.
However, the third-quarter report, published yesterday, says reduced immigration and a decline in the workforce participation rate should lessen the impact on Ireland's unemployment rate, according to the report.
The Irish economy has added 78,400 jobs in the past 12 months, according to Fás economist Brian McCormick, a 3.9 per cent increase, with the fastest rate of growth in the business and insurance services. That growth is projected to decline to 3.4 per cent for 2007 as a whole and just 1 per cent next year.
"The Irish labour market appears to be entering a transition phase as the era of rapid employment growth subsides and is replaced by more modest job creation," Mr McCormick says in the report.
He notes that 50 per cent of the jobs created in the 12 months to the end of June were accounted for by immigration, with the number of accession state citizens holding Irish PPS numbers topping 400,000 in September.
However, with earnings growth of about 5 per cent so far this year, broadly in line with inflation, and the unemployment rate here edging up just as it starts to fall for the EU as a whole, Mr McCormick sees a change ahead in migration flows.
More than 90,000 PPS numbers have been issued this year alone, but the commentary says the rate of inflow has already started to slow after peaking in June.
"We take the view that migration will be sensitive to the economic slowdown and are forecasting migratory inflow to halve in 2008. While that will soften the impact on the unemployment rate from the decline in the construction sector, the commentary expects the rate to rise to 5.3 per cent next year from 4.6 per cent in 2007."
The services sector will continue to see employment growth next year, according to Fás, although the extent will depend on the impact of the forthcoming budget on public sector employment and on the unravelling of the credit crunch on financial services.
