State training agency FÁS is forecasting that there will be 50,000 fewer new jobs added to the Irish economy next year compared with this year.

It expects the net level of immigration to be halved as a result.

In its latest Quarterly Labour Market Commentary, FÁS says the recent level of job creation is not sustainable in the short to medium term, and that employment in the construction sector will fall by 25,000 next year.

The agency points out that immigrants to Ireland accounted for half of all the new jobs created in Ireland over the past year.

It also said that so far more than 400,000 people from the 10 EU accession states of 2004 have been issued with Personal Public Service numbers, entitling them to work in Ireland.

FÁS said that lower levels of immigration will help to reduce the increase in unemployment that will result from the slower rate of job creation next year.

However, the agency is still expecting unemployment to rise by 16,000 in 2008.

Today's report suggests that as many as 38,000 new service sector jobs could be created.

But it warns that the impact of December's Budget on public service recruitment, as well as the impact of the credit crisis on financial services employment, could yet undermine this forecast.

Overall FÁS is forecasting a total of 21,000 net new jobs in 2008, down from 70,000 this year.