State training agency FÁS says unemployment this year will increase to 5.5% and will reach 7% next year.

FÁS forecasts that 31,000 net jobs will be lost in Ireland next year, and that by the end of 2009 there will be 170,000 fully unemployed, and 300,000 on the live register.

In its quarterly labour market commentary, FÁS says that in 2009 emigrants will outnumber migrants by 20,000 as workers from Central Europe respond to changes in employment prospects both in Ireland and in their home countries.

FÁS Economist Brian McCormack says external factors influencing the economy are having a direct impact on jobs, with employment in the transport sector stagnating because of the high price of oil.

Manufacturing jobs are under pressure because of the strength of the euro against sterling and the dollar.

It says that while the construction sector has been shedding jobs, the agricultural sector has seen an increase of 7,000 jobs in the past 12 months.

It expects 19,000 jobs will be lost in construction this year, and 24,000 next year.

Earlier today, the Central Statistics Office confirmed a drop in the number of people working in the construction sector.

The CSO's construction employment index fell by 14.8% in the 12 months from May last year to May 2008.