There is still potential in the domestic labour supply to help address shortages, according to a report by the National Economic and Social Forum (NESF).

Attracting people already in the Republic into the labour market would have benefits over increasing immigration, as the latter option would put extra demands on infrastructure, such as housing, the report adds.

"In the present context of supply constraints, this may have significant negative consequences," the report says.

Given the 5 per cent annual growth forecast for the economy until 2005, employment opportunities will increase by 176,000 and the employment participation rate will have to increase from 59 per cent today to 61 per cent by 2005.

The NESF's four recommendations for mobilising domestic labour are:

support for older people in the labour market;

removal of barriers to the employment of mothers;

ensuring the right to work of people with disabilities;

improving the situation of the least skilled.

With regard to the least skilled, the report says there should be targeted tax relief, in-work benefits and training. Retirement practices should involve the choice to withdraw gradually from the labour market.

"Tax and the social welfare systems incorporate specific disincentives to women returning to work," the report says. While disabled people constitute a relatively large proportion of the working age population, employment among this group is significantly lower than for the population as a whole.

The report calls for the Department of Social, Community and Family Affairs to set up a welfare-to-work policy unit to enhance access to paid employment.

The report says consideration should be given to extending the duration of working visas. Visas in the Republic are issued for two years whereas those in Britain and Germany last three years.

Mr Manus O'Riordan, head of research at SIPTU and a member of the NESF, says the report shows the principal contribution made to the booming economy has been made by working women. Mr O'Riordan says the Government must deliver on its promise of tax relief on childcare expenses in the coming Budget.