The number of jobs lost last year in companies supported by IDA Ireland, Enterprise Ireland, Shannon Development and Udaras na Gaeltachta was at its highest level since the 1980s, the State-owned industrial advisory board Forfas said yesterday.
The body, which co-ordinates the functions of IDA Ireland and Enterprise Ireland, said 22,000 jobs were lost last year. This reflected rising competitive pressures and a shift from lower to higher value-added activities in the industrial sector.
But Forfas added that the four employment companies created 35,000 jobs last year - more than in any of the 10 previous years. The net rise of 13,000 jobs compared with the net employment increase of some 102,000 in the entire economy.
In its annual report, the body - which also advises the Government on trade, science and technology - added that the shift from low-productivity jobs to higher level work was crucial to raising income levels and living standards in the State.
Its chairman, Mr Peter Cassells, said in a statement that "urgent and sustained action" needs to be taken to address the labour shortage and infrastructure bottlenecks. High rates of economic growth could not be guaranteed unless these issues were tackled," he said.
Mr Cassells, who in his role as general secretary of ICTU is seeking a review of the Programme for Prosperity and Fairness, said these deficiencies were putting upward pressure on wages and, in turn, house prices.
Forfas' chief executive, Mr John Travers, said rising inflation was a cause of concern. But he added that "inflationary expectations" should not become ingrained in the economy, if the competitiveness of the traded goods and services sectors was to be preserved.
"This would be particularly important in the event of a reduction in the value of sterling and the US dollar against the euro, which would give rise to significant competitive pressures for large sectors of the traded goods and services sectors particularly those in the older traditional sectors."
While Mr Travers said companies in the electronic and pharmaceutical sectors could withstand rising wage pressure, this put increased pressure on low-productivity firms which were less capable of sustaining rising labour costs.
"We're getting towards the limit of what is possible in terms of net job creation. We're virtually at full employment. Clearly there's a tightening up and this is giving rise to that sort of pressure," Mr Travers said.
"Immigration has helped to alleviate pressure but there is a limit to what is possible in this area and a need to match potential immigrants with the identifiable skills needs of the economy."
