The downturn in the economy has provided a timely jolt to complacency on the part of policymakers, business and worker-representatives, Forfas chief executive Mr John Travers said yesterday.

In a statement accompanying the annual report of the organisation, which is charged with overseeing industrial policy, Mr Travers said the reality check which the present downturn in economic prospects provides could be used to put in place the fiscal and supply-side measures to provide the foundations for the next wave of economic growth.

Last year, employment in the client firms of the development agencies which operate under the aegis of Forfas rose to a record level of 316,000 people in full employment, the report said.

This was a rise of 22,900, or 7.8 per cent, on 1999. Foreign owned companies accounted for 16,200, or 71 per cent of the rise. Almost 21 per cent of jobs created in 2000 were located in Objective One regions, compared to 18 per cent in 1999, the report said.

The number of jobs lost in companies supported by Forfas agencies was 21,127, a slight decrease on 1999's figure of 21,541. Job losses in US-owned companies and in associated supplier companies would show an increase in 2001, particularly in the ICT sector, while there would be a reduction in the number of US investment projects attracted to Ireland, Mr Travers said.

But these job losses would be offset by increases, giving a modest net rise in employment in client firms of the development agencies, he said.

The fact that fewer than one in four of the top exporting firms are involved to any significant extent in R&D in Ireland was a cause for concern, Mr Travers said. Irish enterprise policy must shift from generating more jobs to improving the productivity and innovation capabilities of Irish firms, he said.