87,000 new jobs were created last year, representing the highest annual rate of growth in five years.
The latest Quarterly National Household Survey by the Central Statistics Office shows employment grew by 4.7% last year, compared with 3% in 2004.
The labour force grew by more than 92,000 to just 2 million. Half of this growth was accounted for by migrant workers, who are now estimated to make up 9% of the labour force.
Demographic factors, such as an increase in the population of working age, made up 62,000 of this (three quarters of this figure represents inward migration).
The other 30,000 came from increased labour force participation, with the number of married women in the labour force rising sharply.
Despite the rise in migrant workers, CSO Director Gerry O'Hanlon said that, with the exception of the food sector, there was no evidence of Irish workers being replaced by migrants in the economy.
1.98 million people were working in the final quarter of 2005, according to the survey. When seasonal factors are taken into account, the number working was 17,500 higher than in the previous three months.
Unemployment was 91,300, up 5,700 on a year earlier. The seasonally adjusted unemployment rate moved up from 4.3% in the third quarter of 2005 to 4.4%.
More than 65,000 people from the ten new EU member states are now in the labour force, more than double the figure recorded a year earlier.