Ireland should aim to have one of the highest proportions of third-level graduates in the world and the quality of educational awards should be benchmarked internationally, according to the Enterprise Strategy Report.
However, the report stops short of recommending the reintroduction of third-level fees, which had been included in earlier drafts .
According to the Strategy Group, the proportion of graduates in Ireland should be in the top 10 per cent of OECD countries.
It has also called for a national "one-step-up initiative" to encourage the workforce, especially those with low levels of qualifications, to engage in on-going learning.
In a series of eight recommendations on education and skills, the report has also called for a reform of the governing bodies of third-level institutions, which should also have to compete with each other for part of their public funding package.
The State provides 80 per cent of funding for higher education in Ireland, the Strategy Group found. "An element of this public funding should be tied to performance and allocated on a competitive basis".
Universities and other third-level colleges should also pursue private funding from "diverse sources" including collaboration with the private sector and commissioned research and development.
The private sector should have an increased role in the governing bodies of third-level colleges, which are currently dominated by academic and political appointees, according to the report. "To maximise efficiency and enhance responsiveness, such bodies should be reduced in size," it says. Ireland should also be aiming to have 90 per cent of secondary school students completing their Leaving Certificate.
New work-study programmes should also be established to provide training for a range of occupations for those not completing the Leaving Certificate.
The report recommends the establishment of a competitive innovation fund to encourage third-level institutions to encourage them to "exploit knowledge and deliver innovative services to enterprise".
Asked about why the group dropped a recommendation in earlier drafts that third-level fees should be reintroduced, chairman, Mr Eoin O'Driscoll, said there had been a lot of debate and discussion around fees and the appropriateness of the fees.
"We felt the important thing for us to focus on was outcomes. What we're asking for and what's important is that Ireland produces graduates and the quality of those graduates is a hallmark for others to follow and that in itself is a key recommendation."
While the report recommended that third-level colleges should seek funding from diverse sources, the group felt it was "inadequately qualified to decide exactly what shape it should take, where it should come from".
However, it did believe that the fact that evening or part-time students have to pay fees was unfair. "We feel that is not the kind of message we should be giving around the whole concept of life-long learning."
The Higher Education Authority welcomed the recommendations, which were fully endorsed by the authority's chairman, Dr Don Thornhill who said the report "provides a convincing argument for continuing investment in the higher education and research sector".
Age Action Ireland also welcomed the report's "stress on the importance of life-long learning and that older people have been regarded as a group whose participation should be sought in employment".