Almost 40 per cent of businesses have jobs vacancies and nearly a quarter of companies trying to fill jobs are seeking staff abroad, according to the Labour Force 2000 survey from the Chambers of Commerce of Ireland.
Manufacturing companies have the most difficulty finding staff, followed by the tourism and catering sectors.
The president of the chamber, Mr Tom Clarke, called on the Government to put in place a more constructive immigration policy and to establish quotas based on the sectoral needs of the economy.
The chamber's chief executive, Mr Simon Nugent, said "a non-bureaucratic, straightforward environment" was needed in which employers could recruit abroad.
While the report does not detail what inflationary pressures the labour shortage is having on wage rates, it does show that 47 per cent of companies with vacancies are paying overtime to cope with workloads, compared with 41 per cent last year.
Some 37 per cent of respondents are managing to distribute the extra workload amongst existing staff without paying extra. This compares with 36 per cent last year.
There is a significant increase in the number of companies reporting that staff shortages are restricting business opportunities. The number this year is 25 per cent, compared with 16 per cent in 1999.
There has also been a significant increase in subcontracting and the use of temporary staff. A quarter of companies experiencing staff shortages hired people on a temporary basis, compared with 11 per cent in 1999. Some 18 per cent contracted out work this year, compared with 10 per cent in 1999.
Retraining of existing staff has been resorted to by 21 per cent of companies to compensate for shortages, compared to 13 per cent last year; but only 4 per cent tried to automate or down-skill jobs. This was still double the 2 per cent in 1999.
Thirty per cent of respondents with recruiting difficulties said it was because of a lack of people with relevant skills, while 14 per cent said they could not compete with larger companies offering better terms. Only 8 per cent reported they could not fill jobs because applicants had "unrealistic expectations". Twenty-two per cent of employers attributed their difficulties filling vacancies to the overall buoyancy of the labour market. Eighteen per cent said they could not get people with the necessary experience.
Five per cent of employers felt the long-term unemployed were an unsuitable group. Another 13 per cent said the long-term unemployed lacked the necessary skills. But by far the greatest number, 46 per cent, said they had received no applications from the long-term unemployed.
Fellow EU member-states were by far the most favoured for finding foreign recruits. Fifty-five per cent of companies with shortages had recruited staff in England, Scotland and Wales, and the same percentage had recruited staff in continental EU states. Seventeen per cent of companies had recruited staff in North America.