The Irish labour market improved last year and the unemployment rate declined, according to a new report.

The Expert Group on Future Skills Needs (EGFSN) today published the National Skills Bulletin 2015, an overview of employment trends. The EGFSN advises the Irish Government on skills needed and other labour market issues.

Earlier this week, the Department of Public Expenditure and Reform and the Department of Finance prepared a paper for the “national economic dialogue”, two days of budget talks that began on Wednesday. That paper said a core challenge to the economy over the next five years will be to increase the labour supply.

According to today’s EGFSN report, employment increased by 1.2 per cent to 61.7 per cent, and the unemployment rate declined by 1.8 per cent to 11.3 per cent.

The strongest employment increase was in skilled trades. The construction sector grew the most, at 13 per cent, followed by the financial and education sectors, at five per cent each.

Employment in the construction sector is 16 per cent lower than it was five years ago, and financial sector employment is five per cent lower.

Despite the recent growth, unemployment figures for people who previously worked in the construction sector remained above 30,000 in the last quarter of 2014.

The report identified a number of challenges, including a 6,500-person decline in the labour force; the outward migration of 29,200 Irish nationals and high unemployment in certain segments of the market, including people with lower secondary or less education, under 25s and former construction workers.

According to the report, there is a high turnover rate in some occupations, including care workers, sales workers, general clerks, elementary occupations (e.g. waiters, cleaners, catering assistants, security workers), as well as in some highly skilled occupations (e.g. IT professionals).

The IT sector accounted for 43 per cent of all new employment permits issued in 2014 to people outside the European Economic Area.

EGFSN chairperson Una Halligan said, "The report shows that, with the economic recovery strengthening, shortages are intensifying in the previously identified areas such as ICT, engineering, sales/customer care, logistic, health, business and finance, and emerging in new areas such as hospitality and construction. With improved job prospects across all sectors of the economy, issues with attracting and retaining staff are emerging in some areas (e.g. hospitality, care and meat processing)".

Ms Halligan said policy efforts should continue to address the shortages.