Ireland should look to attract immigrants from central and eastern Europe to fill some of the 200,000 jobs required to address the labour shortage, Mr Brian Callanan, director of IBEC said yesterday.

Speaking at a trade seminar to promote investment in eastern and central Europe, Mr Callanan said there was not just a skills shortage in the Republic but there was a labour shortage.

He said this was putting pressure on the domestic economy and could not be solved in an immediate way without looking to eastern and central Europe as a source of immigrant labour.

Mr Callanan identified supply constraints in infrastructure and housing and any clawback on the terms of the Programme for Prosperity and Fairness as potential threats to the economy.

He said the Budget had been a contributory factor to inflation and maintained that it should have been a part of the discussions for the PPF.

However, he said wage costs were not yet adding to inflation but were at realistic prices. He said these reflected the structural change in the economy from traditional sector to value added services.

He said companies in the Republic should be looking to outsource the more traditional aspects of their businesses such as food and textiles to eastern Europe.

"As far as I believe there hasn't been a major investment in the food industry for some time," he added.

Earlier, the Minister for Foreign Affairs, Mr Cowen, said there was need for a greater understanding of the trade and investment opportunities presented by the enlargement process of the European Union.

He said Irish investment in Poland already exceeded $1 billion and exports to the central and eastern European region were worth some £586 million in 1999.

Ms Catherine Day, from the European Commission, told delegates that opportunities for the Republic in the area included lower wage costs, access to skilled labour force, potential markets for software and consultancy skills.