Unemployment will rise to 5.5 per cent this year and rise significantly in 2009, according to the latest quarterly commentary from State training and employment agency Fás.
It estimates that 37,000 construction jobs could be lost by the end of this year and notes that apprenticeships in the sector are down 50 per cent with earnings also decelerating.
Coupled with slowing net migration and a manufacturing sector under pressure due to the strength of the dollar and sterling, Fás estimates that unemployment could rise to 6.6 per cent next year.
This is a more downbeat assessment than that from the ESRI, which last month forecast that unemployment would peak at 6 per cent this year and then stablise.
This year Fás expects the services sector to absorb some of the building-relating losses, saying it could provide 46,000 new jobs, creating a net jobs growth of 24,000.
Fás notes that the number of foreign nationals coming into the State in March had fallen by almost 50 per cent compared with 2006, suggesting that immigration was slowing due to fewer job opportunities.
The report says there is evidence that significant number of immigrants who have lost their jobs are choosing to stay in the country.
Fás senior economist Brian McCormick said the recent drop in vacancies and apprentices coupled with falling immigration suggests realignment of labour demand and labour supply.
"While slower labour supply growth will mitigate some of the impact of
the employment slowdown, a noticeable increase in unemployment now seems
inevitable in the short-term."
He said males were likely to be worst affected by this new reality given their preponderance in the construction and manufacturing sectors.
