The Government is facing renewed international pressure to do more to tackle the jobs crisis and boost economic growth.
Amid difficult talks on next month’s budget, the Paris-based Organisation for Economic Co-operation and Development (OECD) is calling for more action from the Coalition to help the long-term unemployed back to work.
While saying labour market policy is moving in the right direction, the OECD argues that new policies still do not focus enough on people who have been out of work for a long time. Ineffective labour market schemes should be closed and successful ones should be strengthened, it says.
The observations from the OECD, whose mission is to promote prosperity, are contained in its annual economic survey of Ireland, which will be published this morning in Dublin by its secretary general Angel Gurria.
Mr Gurria has meetings today with Taoiseach Enda Kenny, Tánaiste Eamon Gilmore, several Ministers and the business lobby Ibec.
With three months to go before the end of the bailout, the OECD report says the Government should further reduce the burden of the national debt to help retain access to financial markets under sustainable and affordable terms.
“The debt-to-GDP ratio, which has been rising sharply, is now approaching a turning point and, at somewhat above 120 per cent, the budget strategy rightly aims at putting it on a sustained downward path.”
Safety net
The OECD also backs moves by the Government to seek a financial safety net to guard against any sudden loss of confidence after the bailout.
Its report comes amid fresh signs that the recovery in the jobs market may be strengthening. Minister for Social Protection Joan Burton informed the Cabinet yesterday that 7,700 people left the Live Register last week and told reporters that economy is now "firmly in recovery mode".
The OECD review recognises that the State is emerging from its difficulties and gradually regaining access to market financing.
Such findings chime with remarks by European Commission president José Manuel Barroso, who said in a speech to MEPs yesterday that he expects 2013 to be the third successive year of growth here.
Legacy of crisis
However, the OECD says a reinvigoration of long-term growth will be essential to shake off the legacy of the crisis in Ireland.
“Despite gradual improvement, unemployment remains high, emigration has resumed, and poverty has increased, adding to heavy debts and financial distress,” it says.
“Although the recovery is reducing unemployment, this is likely to be a gradual process and people having been unemployed for a long time risk being marginalised and discouraged. Those previously working in the construction sector, many of them young, need retraining if they are to participate in a more knowledge-intensive economy.”
The priority for the Government should be to engage with long-term jobseekers and increase the number of case workers assigned to them, the OECD says.
With funding very tight, its report goes on to say the Government’s effort should focus on employment policies empirically proven to improve job prospects.
