The public sector, including education, health, public administration and defence, has accounted for almost all jobs growth in the first three months of 2003 while new jobs in the private sector have risen only marginally.

The latest Quarterly National Household Survey, compiled by the Central Statistics Office, for the first quarter of this year has recorded a 26,500 increase in new jobs, up 1.5 per cent on the same period in 2002.

The biggest single increase was in the public sector where some 9,000 jobs were created. Over the year the total intake rose by 8 per cent to 27,300 and was boosted by the recruitment surge in the run-up to the last general election. The Government announced a cap on the numbers employed in this sector in the budget and has pledged to reduce the overall figure by 5,000 over three years.

A Department of Finance spokesman could not say what progress had been achieved on this but said it initially involved attrition through natural wastage. "As the figure is to be achieved over three years you would not expect a massive achievement in the short-term," he said yesterday.

The survey is considered the most accurate measure of employment in the economy. Mr Aebhric McGibney, an economist at the Irish Business and Employers Confederation (IBEC), estimated that the growth in new public sector jobs could be costing the Exchequer €250 million at a time when the economy can least afford it.

Some 2,000 of the jobs created in the first quarter were in public administration and defence sectors, 2,500 were in education and 4,500 in health. New jobs in the private sector were relatively flat in the first quarter of this year. Over the year the numbers employed in private services rose by 1.1 per cent to 8,600 while 5,300 construction jobs were created, a 2.9 per cent rise on the same period last year.

Employment in industry declined by 7,200 or 2.3 per cent with a further 7,400 jobs lost in the agriculture sector, equal to a 6.1 per cent fall.

The growth in the Irish labour force has slowed in recent quarters. For the year it grew by 31,600 yielding a relatively modest overall increase in unemployment. The number of unemployed rose by 4,900 to 84,900, increasing the unemployment rate to 4.6 per cent from 4.4 per cent and stands one percentage point above the 3.7 per cent rate which proved to be the lowest point in the cycle in 2001. Labour Party spokesman Mr Brendan Howlin said the Government seemed to have no sense of the potential problems facing the economy.

Davy Stockbrokers said the numbers showed employment levels in the economy were holding up much better than might have been expected given the slowdown that has occurred in the real economy.

IIB Bank suggested the data were consistent with an economic growth rate of 2.5 per cent in the early part of this year. Its economist, Mr Austin Hughes, cautioned however that the outlook for employment over the remainder of the year was likely to be somewhat poorer.

"We now expect Irish employment to fall by about 20,000 in 2003." This compares to Mr Hughes's previous forecast for a 15,000 decline.