Changes in the demography of Irish society will have serious consequences for the Irish labour market and economy, Dr Garret FitzGerald has said.
At the department of health and tropical medicine at the Royal College of Surgeons yesterday, the former Taoiseach said the Government should acknowledge a looming labour shortage.
"For three-fifths of that growth has in fact come about through increasing employment - more people at work - the remaining two-fifths being the outcome of improvements in productivity."
According to Dr FitzGerald, the fact that the Irish birth rate peaked in 1980, several decades later than the rest of Europe, meant the workforce was able to increase rapidly in recent years.
Between 1980 and 1995 the birth rate fell by more than one-third. "The impact of the bulk of that decline is going to hit us during the next seven years." Unemployment has also fallen to 3.5 per cent, signifying the drying up of an important annual renewal of the labour force.
Dr FitzGerald said two other sources - the movement of women from home into work and immigrant workers - would also come under pressure. "Already our employment participation rate for women in their 20s is the highest in Europe." The market would have to rely on older women returning to work.
Commenting on immigrant workers, he said the rise in house prices had already begun to slow the growth in immigration.
"Changes in these four demographic factors affecting our workforce are not going to choke off our economic growth overnight. But we certainly cannot go on expanding our economy by 8 per cent a year for much longer."
Dr FitzGerald highlighted the "unique instability" of Irish demography and how 160 years ago the population was twice the European average while it was currently two-fifths of that average due to immigration and low mortality rates in the past.