A NEW study by Forfas says 70 per cent of jobs losses are due to firms contracting and reducing employment, as opposed to company closures.

The new study, which analysed job losses during the period 1991-95, shows that overall job losses from both closures and contractions fell by 20 per cent. These figures only relate to permanent full time staff.

In the period surveyed there was an overall gain of 3,980 part time, temporary and short term contract staff. The Forfas report shows these figures to be in line with the rest of the EU.

For example, the figures for contractions/ closures in Germany are 75 per cent/25 per cent, while in Italy the figures are 66 per cent/34 per cent. Mr Eugene Reilly, of Forfas, said the report identified a trend "for more flexible forms of employment, such as part time and temporary, which is evident even in companies sustaining permanent job losses".

Forfas said the report shows the continuing trend for companies to first recruit part time and temporary staff. The main factors cited by Forfas as influencing job reductions are increased productivity, rationalisation and response to market change.

Other factors mentioned are management deficiencies, difficulties in raising finance and the weakness of sterling. The worst affected sectors are food, clothing and footwear, all of which are predominantly Irish owned.

The study also reveals that foreign owned firms performed better in retaining jobs. Irish owned companies accounted for 61 per cent of the jobs lost during the period, while foreign owned firms lost 39 per cent of full time jobs, although they account for 45 per cent of the manufacturing workforce.

The most optimistic finding in the report is the significant reduction in job losses in 1995. The figure of 9,680 represented a 20 per cent drop on average from the previous four years, Forfas claim this was due to the buoyancy of the economy last year.

Despite the continuing contractions in employment, Mr Reilly was optimistic about the future. "The ongoing process of job contractions in some companies is more than offset by an expansion of jobs in other companies and this dynamism is an important feature of a vibrant economy," he said.