There will be 10,000 unfilled jobs in information technology in the Republic and 1.7 million vacancies in Europe by 2003, Mr Kevin Dillon, managing director of Microsoft Ireland told delegates yesterday.

He called on the Government to tackle the skills crisis as a top priority. He said a State which managed to fill the gap in information technology skills would become a market leader and attract inward investment.

Reading figures from a Microsoft survey he said the shortfall in IT jobs would reach 13 per cent by 2003. He said the Republic had a shortfall in key skills such as Internet working, with a 43 per cent shortfall against 32 per cent in Britain.

He said this was a global problem but was particularly severe in Europe and was now a serious problem for the Republic. Ireland would soon lose its competitive advantage against the rest of Europe in terms of skilled labour and the statistical trend lines showed future problems.

Mr Dillon contended it was something of a paradox but IDA Ireland should continue to seek high technology investments despite the labour shortage. A state needed to attain a critical mass to attract people and investment.

However, Mr Dillon said tremendous progress had been made in the technology sector in the past two years. He singled out the legal and regulatory environment as excellent and welcomed the publication of the E-Commerce Bill this week.

He said policy makers should concentrate on building infrastructure, promoting strong growth in the indigenous technology sector, attracting inward investment of service providers and market Ireland more aggressively as an e-hub to attain a competitive advantage.

He called on the Government to appoint an "e-envoy" and to form a national e-infrastructure advisory board.

Earlier the conference heard from Ms Gail Fosler, chief economist of the Conference Board, on the new economic realities of business in the technology era.

She said the Republic was doing extremely well in the new economy and was currently top of Europe. However, she said it was important for Ireland to gauge itself against the US economy and put itself truly at the top of the global economy.

It was important for the Republic to increase its IT investment which was currently below the EU average, she added.