The main domestic risk to Irish jobs comes from the housing sector, according to a report from the European Commission (EC).

The market, which has been experiencing a steep decline from its peak in 2006, "may fall further and faster than expected".

The EC, in its Joint Employment Report for Ireland, also said that the worsening international environment, alongside a real exhange rate appreciation, represents a considerable risk for exports.

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However, the generally upbeat report praises Ireland's progress in implementing its National Reform Programme from 2005 to 2007 and its comprehensive and coherent national strategy. It also identifies future challenges for Ireland: pension reform; a medium term target for R&D for 2010; getting more people into the labour market by improving child-care systems; labour market and social integration of migrants; support to older and low-skilled workers

"As the fiscal outlook is expected to deteriorate over the medium term, a careful prioritisation of public expenditure and the promotion of reforms that strengthen higher-productivity growth, through expanding physical and human capital and reducing inflationary pressures will increase the capacity of the Irish economy to adjust to lower though more balanced growth," the report said.

(VB/JM)