Work permits should only be granted for skill gaps instead of for specific job vacancies, FÁS said yesterday.

Stating that youth unemployment may be rising due to employers' preference for work permit recruits, the State training and employment body said the number of permits being issued was too high and needed to be reduced.

Its director general, Mr Rody Molloy, said: "We have to call a halt and say that, when long-term unemployment starts to rise again, we need to take a look at that system."

Immigrant workers were still required to fill particular skills shortages, but the system should be tailored to meet specific demands for skilled professionals and manual workers.

In the current system, permits are issued to help fill specific vacancies, but a new FÁS review of labour market conditions said many work permit applications were based on factors other than skill availability.

It said such a system could be used to fill skill deficits in niche areas, such as civil engineering and project management.

But while FÁS said it would discuss its proposal with Department of Enterprise, Trade and Employment, a Department spokeswoman said there were no plans to change the system.

"The system that we currently have is is flexable, receptive and responsive to our needs at the moment," she said.

The call by FÁS for change in the system represents something of a turnaround for the State body, which mounted job fairs in major global cities in 2000 and early 2001 seeking workers to fill vacancies in the booming economy. The programme - Jobs Ireland - was suspended when the economic slowdown commenced.

It is thought that value-for-money issues arose in relation to the State's funding of an initiative to provide workers for private firms.

The review stated that the State had issued more than 36,000 permits last year. Despite the slowdown, the number of permits issued this year would be higher than in 2001. Such permits are issued to individuals from outside the European Economic Area, comprising the EU and a handful of smaller states in which there is free movement of labour.

Certain employers, in low wage sectors especially, are believed to favour permit-holders because such individuals have lower wage expectations. FÁS said 60 per cent of job notifications in the hotel, tourism and catering sector were for permit-holders.

While companies are required to show they have searched unsuccessfully for European Economic Area workers before a permit can be issued, Mr Molloy said there was anecdotal evidence that permit-holders were hired instead of suitable unemployed people who had been recommended for interview by FÁS.

High demand for labour when there was full employment meant many unemployed people described as "unemployable" had proved the term invalid when they secured work, Mr Molloy said.

Said FÁS: "While employers are undoubtedly benefiting from the work permit scheme and costs are being moderated because of it, there would seem to be a need to move to a new system based on nationally identified, occupation- or skill-linked, immigration needs or procedures."

The body favoured the introduction of a system based on the Australian model, in which applicants for its migration programme were allocated points on their capacity meet skill, education and language requirements.

"There seems to be a clear need to move to a new system which focuses on clearly identified skills shortages when issuing work permits," Mr Molloy said.

"There are still skills shortages in some crucial areas of the economy and these need to be addressed. In the short-term, as the demand for labour falls, we will need to adopt a more targeted approach to immigration in occupations where there are critical skills shortages."