Unemployment will remain stable at 4.4 per cent this year before dipping slightly to 4.3 per cent in 2006, the Organisation for Economic Co-operation and Development (OECD) has forecast.

This would leave the Republic with a continuation of virtually full employment at a time when the average jobless rate across the pre-accession EU 15 is averaging at between 8 and 9 per cent.

The projections are contained within the OECD's new Employment Outlook. The Paris-based organisation highlights problems in France's jobs market, advising French policymakers to step up efforts for reform. One in four French job seekers have been out of work for more than a year, the OECD said. France's government has made cutting unemployment from five-year highs a priority.

"There is consensus that this situation calls for renewed efforts to reform the French labour market," the OECD said. The organisation calls for "more dynamic employment policies" within all of its member states.

More flexibility is needed if countries are to reap the full benefit of globalisation and avoid a backlash against open trade, the analysis finds. The OECD is projecting continued strong economic growth for the Republic, pencilling in a gross domestic product growth rate of 5.3 per cent for 2005 and 5 per cent for 2006.

The OECD as a whole is forecast to grow by 2.6 per cent this year and by 2.8 per cent next year.

Accompanying the Republic's outperformance however will see stronger growth in labour costs, according to the OECD. The new study finds that the cost of paying staff is climbing by 5.9 per cent this year and will climb by the same measure again next year.

Average labour costs across the OECD are set to climb by 3.2 per cent in 2005 and by 3.3 per cent next year, the analysis predicts. The number of people in employment in the Republic is forecast to climb by 1.4 per cent in 2005 and by 1.3 per cent in 2006. This would be significantly lower than the 4.1 per cent average growth between 1992 and 2002.