The Commons Home Affairs Select Committee has recommended that low-skilled jobs be given to ex-offenders, rather than to Eastern European migrants.
The committee’s report said inmates should take part in after-work programmes and training while in jail before entering industry.
It recommended that former prisoners should work in the hotel and catering sector and the horticultural industry, which have traditionally relied on foreign migrant workers.
The Chartered Institute of Personnel and Development (CIPD) has warned that a tight labour market and upward wage pressures in 2005 will mean businesses might be forced to employ migrant labour.
CIPD chief economist John Philpott said: “Low unemployment and ongoing high levels of demand for labour are focusing the minds of employers on workforce issues.
“Recruitment and retention have been big problems this year, so employers have adopted a combination of measures to hang on to existing staff, while widening the net when recruiting, often bringing in overseas workers to fill vacancies.”