Unemployment is set to rise for the immediate future and will become more deep-rooted unless corrective steps are taken, according to a review carried out by FÁS.
It also finds that young people, and especially men, have been most affected by the rise in unemployment which began last year.
The internal review, carried out by Mr Brian McCormick of FÁS's planning and research unit, says all the indicators are that unemployment will continue to rise in the short-term, even if there is a recovery in the economy in the near future.
It suggests the underlying rise in unemployment has been masked by the recent rapid growth in public sector recruitment.
"There is a real danger that cyclical unemployment will turn into structural unemployment if appropriate interventions are not in place to reskill those who become unemployed during the downturn," the review says.
It calls for a "more flexible approach" to national wage bargaining to help lessen cyclical unemployment in the future.
Cyclical unemployment is caused by short-term economic changes, whereas structural unemployment covers a range of situations including a mismatch between the skills of the labour force and the available jobs.
The review, based mainly on statistics in the Quarterly National Household Survey, describes the fall in unemployment between 1997 and 2001 as "dramatic".
In that period the unemployment rate fell from 10.4 per cent to 4 per cent.
While no particular age group or gender had benefited from the decline, younger members of the labour force have been "hit worst" by the downturn, it says.
"Turning to the gender breakdown, it is clear that males have fared worst in the recent slowdown, accounting for 9,000 of the increase in unemployment compared to the 2,700 accounted for by females."
"The number of males who have begun signing on the live register has also increased dramatically."
It is reasonable to assume, the review adds, that the recent rise in unemployment has been largely due to a "short-term cyclical decline in output". Cyclical unemployment, it adds, is likely to increase and might even be more pronounced in the future.
"The continued rise in notified redundancies would certainly suggest that unemployment will continue to increase in the short-term," it says.
"Given that the recent growth in public sector employment has kept unemployment to a minimum, the slowdown in the growth of public expenditure is likely to reveal a higher underlying unemployment rate than is currently apparent."
A rise in structural unemployment, the review adds, would be to a large extent subject to labour market policies.
