Employers can expect to face growing wage and staffing pressures over coming months as the economy moves close to full employment, according to an analysis from Bank of Ireland Business Banking.

The bank's latest jobs index shows the number of positions advertised in the national press in the first quarter of 2004 was 11 per cent up on the same period in 2003. Some 17,404 jobs were advertised in March, up 9 per cent on the same month of the previous year.

The private sector has taken over from the public sector to lead jobs growth, according to Bank of Ireland's analysis.. Private firms account for 80 per cent of all jobs advertised, up from 75 per cent at the same stage last year, the bank says.

"The overall level of jobs advertised suggests that we are effectively now seeing full employment in Ireland, which brings its own challenges," said Mr Tom Comerford, Bank of Ireland director of business banking.

Mr Comerford is concerned about the wage inflation problems that could result from high employment growth at a time of low jobless levels.

Bank of Ireland is expecting the unemployment rate to "level out" at 4.5 per cent for the year, with employment to grow by about 2.5 per cent.

"There is only so much the economy can afford," said Mr Comerford in direct reference to the national pay talks that got off to a shaky start last week.

Bank of Ireland has concluded that the maximum "affordable" pay increase under the second leg of "Sustaining Progress" is 3 per cent. A similar level was suggested by the Economic and Social Research Institute in a commentary last week.

"Anything more than that might have a competitiveness impact," according to Mr Comerford.

He also believes that an approach towards full employment will have implications for the State's migration policy. The accession of 10 states to the EU next month should be welcomed because it will satisfy the Republic's "low-level" jobs requirements, Mr Comerford said.

The most buoyant sector during the first three months of the year was manufacturing, which advertised 138 per cent more jobs than in the first quarter of 2002 as firms in the sector experienced a cyclical recovery.

Professional sectors were up 20 per cent while demand for workers in the retail sector was up 15 per cent.

The increases came in contrast to parts of the public sector, such as healthcare and education, where job advertisements were down 10 per cent and 17 per cent respectively.