FÁS has predicted that the unemployment rate will hit 7% next year.
In its latest quarterly commentary, the State employment and training agency, says that, while Ireland has continued to experience above average jobs growth, the slowing economy now means that a 'short-run correction' in the labour market is imminent.
It predicts that the average unemployment rate will increase from 4.6% in 2007 to 5.5% this year, before rising to 7% in 2009 - reaching the EU average.
It says that the total number of unemployed will reach 170,000 by the end of next year.
However, it also points out that the country's long-term unemployment rate continues at an historical low of 1.2% and the employment rate of 69% continues to be above the EU average of 66%.
FÁS says the average number of jobs in the economy will grow by 24,000 this year, but this growth will be reversed next year with net job losses of 31,000 predicted. It says the main drag on the labour market will continue to be the construction sector.
The agency says that 2009 will also see the number of emigrants exceed the number of migrants as migrant workers from Central Europe return home as their own economies improve.
The external problems facing the economy are already impacting the labour market here, FÁS says.
Employment in the transport and communications sector has stagnated due to higher oil prices, while manufacturing employment has fallen was exporters trim payroll costs to the appreciating euro.
'A significant migratory response should soften the blow of negative employment growth on unemployment,' commented Brian McCormick, senior economist at FÁS.
'Nevertheless, the numbers on the Live Register will rise further and are likely to reach 250,000 by the end of the year,' he added.
