The Central Statistics Office has reported that average weekly earnings in the construction industry rose by 19.1 per cent in 1997. For skilled operatives, electricians and bricklayers, the rise was 26.6 per cent.

These increases happened at a time when consumer prices rose by 1.7 per cent in the same period.

Such increases have been driven by the continuing growth in the Irish construction industry. For the past five years, the construction industry has recorded significant growth each year and the output has almost doubled over that period.

In the early years of this growth, the industry was at a low ebb and was easily able to absorb an increase in volume.

More recently, the results of continuous growth have begun to show and the Construction Industry Federation and Irish construction firms have embarked on recruitment drives in the UK and further afield.

The influx of returned emigrants has helped cope with the ever increasing demand but the supply is not inexhaustible and it is getting more and more difficult to attract skilled workers to return to Ireland at a time when the UK construction industry is beginning to show signs of growth.

The position has been greatly exacerbated by the small number of apprentices recruited over the past decade. This was partly the result of the growth of sub-contracting and particularly labour-only sub-contracting within the industry. The major contractors who had previously directly employed skilled operatives such as bricklayers and carpenters had a good track record in recruiting and training apprentices.

Sub-contractors were less prepared to train apprentices and particularly less inclined to release them for training by FAS.

The situation was initially masked by the decline in the industry in the early 1990s but became very apparent when growth began.

For a number of years, there was a stand off between the CIF, FAS and the unions with everyone blaming everyone else for the situation but doing little to solve the problems of apprentice recruitment and training.

However, it would now appear that reason has prevailed and a significant number of apprentices have entered the system - the problem is that it will be another year or so before they begin to enter the workforce.

The substantial wage increases recorded for 1997 are part of the picture of an industry that is under stress. For any industry to double its output over a five-year period is a remarkable achievement.

All the projections are that growth will continue for another year or two. The ESRI projects a volume growth of 13 per cent for 1998 while the Central Bank suggest 11 per cent.

INITIALLY, much of the construction growth was fuelled by the EU Structural Funds but in recent years these have been of less significance as private sector investment has grown so strongly.

The Structural Funds will continue in a reduced form until 2006 and as long as the Irish economy continues to grow, the construction industry will do likewise.

The ESRI projects single-figure growth in construction volume for the next five years. Single-figure growth is probably achievable without undue stress but the 11 per cent to 13 per cent achieved over the past three years has placed the construction industry under considerable stress.

Wage rates and overall demand have meant that construction prices are increasing at a rate four to five times inflation.

Average tender levels as measured by the PKS Tender Level rose by 8 to 10 per cent in 1997 and are expected to rise by a similar amount in 1998 - this at a time when general inflation is less than 2 per cent.

Participants in the industry's recent phenomenal success are loath to suggest it is overheating but an objective analysis of the facts would suggest otherwise.

The alarming rise in average weekly earnings in 1997, the very significant increases in tender levels, the increasing lead times for ordering manufactured goods and the continuing projections of real growth must all suggest an industry that is overheating or at a minimum put at its wits end to cope.

The Bacon report may help to stabilise the housing sector, which accounts for 50 per cent of the industry's output. The private sector will continue to be driven by the overall success of the economy.

The Government should consider slowing down any non-essential investment so that it may be carried out at more realistic prices in the years ahead.

The rush to complete Structural Fund projects may make this difficult but surely even the Brussels bureaucrats can be persuaded that a year or so delay in expenditure could be beneficial if it gives better value for money in the long term.

In parallel with some better management of demand, the supply side should also be considered - apprentice training being at the forefront of the list, perhaps linked to more cross-Border trade.

Michael Webb is managing partner of Patterson Kempster & Shortall (PKS), one of Ireland's leading chartered surveying/construction cost economist firms.