Failure to address the labour shortage could "destroy" the Republic's economic growth, the Tanaiste has warned.

Ms Harney also indicated the Government would consider in the Finance Bill applying the standard income tax rate of 20 per cent to profits from employee share ownership plans.

Encouraging companies to widen their ownership in this manner would foster the loyalty of employees, she said.

Citing increased tightening in the labour market, the Tanaiste said the principal concern of multinational companies considering investment in the State was the availability of skilled workers.

In an interview, she added: "If labour was to become a problem then that would be as big a disadvantage as trebling our corporate tax rate."

The Government plans reducing corporate tax rates to 12.5 per cent in 2003 and this is seen as a crucial competitive advantage for firms operating in the Republic.

Share ownership schemes should not be confined to "high fliers" within companies, Ms Harney said.

"It's necessary to hold on to the right people and to motivate them." Other means of encouraging retention included the provision of childcare and healthcare facilities.

Of recruitment difficulties in the Civil Service, she said the availability of performance based remuneration was crucial to attract and retain staff.

Stating that the booming economy would need 200,000 additional workers by the time the National Development Plan was completed in 2006, Ms Harney said such demand would require increased immigration by Irish people living abroad and by others within and outside the European Economic Area (EEA).

The EEA comprises the 15 EU members - and Norway, Iceland and Liechstenstein. Citizens of states in this zone do not need visas or permits to work in the Republic.

Such authorisations are required by non-EEA citizens. Ms Harney said about 18,000 work permits were issued this year, in addition to 1,000 work visas.

Work permits are granted to individuals by the Department of Enterprise, Trade and Employment following applications from employers. Ms Harney said about 30,000 such permits could be granted next year.

Visas are issued directly to people with specific skills by Irish Embassies and Consulates. Ms Harney said up to 10,000 of these might be issued next year.

Boosting the labour force in this manner was crucial for the successful implementation of the National Development Plan.

The Government intends infrastructure built in the plan to provide the foundation for the State's future economic development. In this context, Ms Harney said she would encourage Irish construction contractors to take foreign staff and to form partnerships with firms based outside the State.

While people with IT, nursing and building sector qualifications are entitled to work visas, Ms Harney suggested this scheme might be expanded to include accounting and financial services professionals. She said last month that the Government may outsource processing such visas and permits to the private sector or to the State training authority FAS.

That body plans to fill private-sector vacancies next year through its international Jobs Ireland programme, which will seek workers in Australia, Canada, Russia and Europe.

When asked whether the high cost of accommodation and property, in Dublin particularly, would deter people from coming to live in the Republic, Ms Harney said many Irish-based firms were offering relocation packages to workers with high qualifications. It was common also for groups of workers to share rented accommodation, she said.

In addition to labour from outside the State, the Government saw employment opportunities for Irish women aged more than 35 years and among the long-term unemployed.

She believed long-term unemployment - which affects 25,000 people - could be eradicated by the end of the Government's term in office.

Given training under the Government's Employment Action Plan, she said there was no reason why such people would not have opportunities to join the workforce in the next 18 months.

"There should be nobody unemployed in the long term," she said. Ms Harney accepted, however, that people in peripheral areas would have fewer job opportunities than those living in urban centres.

When asked whether long-term unemployed people who had not already secured jobs may face greater difficulty than those who have, she said training was crucial.

This was also the case for women absent from the workforce for many years. The labour force participation rate of women aged under 35 was very high, but fewer Irish women aged more than 35 worked than in other European states.

She added that work and training opportunities were not confined to women.

Another element of Government policy was to provide training to upgrade the skills of people already in the workforce. Certain multinationals with Irish operations have embarked on in-house "upskilling" programmes.

This area is seen as crucial because the Republic faces increasing competition from low-wage economies for foreign direct investment, especially in the low-productivity sectors.

In addition, Ms Harney said apprenticeships should be made available to people in their 40s and 50s. She accepted that people would require compensation for income lost during training. The Government also wanted to provide resources to train disabled people, Ms Harney added.