Unemployment will continue to fall in the 10 years after 2000, although the rate of decline will be lower than in the 1990s, the medium-term review says. The ESRI expects that 430,000 more people will be working in 2010 than in 1998.

Forecasting an unemployment rate of 5.1 per cent in 2006, the ESRI says this will be well below the European average. The unemployment rate in 1998 was 6.5 per cent, when 157,000 people were out of work. This had fallen from 223,000 in 1993.

The fall in unemployment is "particularly impressive in the light of huge growth experienced in the labour force in recent times coupled with net immigration". The ESRI says immigration flows will accelerate more rapidly if the unemployment rate falls much further, leading to uncertainty in its unemployment forecast.

The number of workers will rise by 2.1 per cent each year between 2000 and 2005, down from an average yearly increase of 4.4 per cent between 1995 and 2000. A further decline in the growth rate is expected between 2005 and 2010, when the yearly increase will average 1.6 per cent.

By 2005, the ESRI expects that 1.75 million people will be working in the State, up from 1.55 million in 2000 and 1.13 million in 1990.

Most of the expected employment growth between 1998 and 2006 will be in capital intensive "high-skilled" financial, high-tech, health and education sectors. This reflects continuing strong demand for such labour, which has grown significantly since 1995.

Education will be a key factor. Forecasts according to educational attainment suggest that the supply of skilled labour - workers with at least a Leaving Certificate - will increase continuously from 2000 to 2015. The percentage of workers with a Junior Certificate and below will decline accordingly.

"After 2010, we expect that the vast majority of workers will be educated to at least a Leaving Certificate standard, with a substantial proportion having third-level qualifications," says the report.

"Within industry as a whole the proportion of skilled workers is forecast to rise from 54 per cent of those employed in the 19962000 period to reach 68 per cent over the 2011-2015 period.

"The percentage of unskilled workers is expected to decline rapidly to 8 per cent by 2011-2015. Similarly, at present approximately one-third of all those employed in industry would be classified as `semi-skilled' labour and we expect that this proportion will fall to approximately one-quarter between 2011 and 2015."

This will have implications for employers. "Firms, who in a era of high unemployment have been able to avail of a pool of educated labour, will be forced to lower the educational requirements of jobs and concentrate more on training if they are to fill vacancies."

Overall, the ESRI says employment in the high-tech sector will have grown by 8.9 per cent each year between 1995 and 2000. This will slow to an annual growth rate of 2.5 per cent between 2000 and 2005 and to 1 per cent each year between 2005 and 2010.

"As a direct result of this growth, we expect that by 2010 roughly 191,000 people will be employed in this sector as compared with 93,000 in 1990, a 105 per cent increase."

The number of workers in the building sector is expected to reach 140,000 in 2000, up 69 per cent from 83,000 in 1995. "Employment growth in the sector is expected to be far less rapid over the next decade as bottlenecks in the labour market begin to become more binding."

Employment in the market services sector is expected to reach 894,000 in 2010, roughly half those at work and more than twice the 416,000 employed in the sector in 1990.

The decline in employment in the agricultural, traditional manufacturing, food and unskilled sectors is likely to continue.

Only 104,000 people are forecast to be working in agriculture in 2006, down from 169,000 in 1990, a decline of 39 per cent.

"The decline in agriculture and in the traditional manufacturing industries will impact disproportionately on unskilled labour, although this should be counterbalanced to some extent by the anticipated growth in the personal services and distribution sectors," says the review. "These latter sectors tend to have a high proportion of lesser skilled as well as part-time labour."