The levels of immigration to the Irish Republic is set to drop dramatically in the coming year as the creation of new jobs falters.

The state training agency, FÁS is forecasting that there will be 50,000 fewer new jobs added to the Irish economy next year compared with the previous 12 months.

Specifically, employment in the construction sector will fall by 25,000 next year, which in turn will lead directly to the level of immigration being halved.

In its latest Quarterly Labour Market Commentary FÁS said the recent level of job creation is not sustainable in the short to medium term.

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However, the picture is complex, as the agency points out that immigrants 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 have been issued with 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.

Conversely, the 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.

(BMcC)