OECD praises Irish commitment to promoting ‘robust recovery’
Think-tank points to labour market reforms and need for more competitiveness
Dr Angel Gurría, secretary-general of the Paris-based think-tank, warned that growth, frustratingly slow to date, would not pick up unless competitiveness improved and the banks’ balance sheets were cleaned up. Photograph: Reuters
Ireland’s economy is showing encouraging signs of recovery from the financial crisis but more is needed to reinvigorate growth and create jobs, the OECD has recommended.
Its biennial report on Ireland talks up economic prospects and the hope of nearly 2 per cent growth next year. It also praises the commitment shown to lower debt and promote more balanced growth.
However, the report, formally released at Government Buildings yesterday, also says more needs to be done to address serious unemployment, especially among the young and those out of work long term.
“Ireland is back on its feet and on verge of becoming first EU country to exit its bailout,” Dr Angel Gurría said.
But the secretary-general of the Paris-based think tank warned that growth, frustratingly slow to date, would not pick up unless competitiveness improved and the banks’ balance sheets were cleaned up.
“Indicators all point to recovery taking place now, gives us all confidence that economy is on the mend,” he said.
Declining public sector debt will help underscore faith in a “robust recovery,” he added.
Dr Gurría insisted the OECD “does not tell the Irish what to do with Ireland”, instead it helps make available advice on best international practice.
Addressing the problems of long-term and youth unemployment, he said rates were unacceptably high. There was no better way to help avoid poverty and reliance on welfare than to find a job, he said. He suggested there should not be a return to a heavy reliance on the construction industry. Instead there should be a renewed focus on the knowledge economy.
Criticising Government policy, the OECD report states: “Policies still do not focus enough on long-term unemployment”, adding there was a need to “prioritise the engagement with long-term jobseekers and increase the number of [Department of Social Protection] caseworkers supporting them, through internal redeployment”.
Dr Gurría’s organisation boldly restates its call, first made in its last report on Ireland in October 2011, for a review of tax and welfare structures to raise labour force participation of low-wage workers. It also calls for the content of education and training schemes to be better aligned “so that they provide skills required in the expanding sectors”.
The OECD says resources should be targeted on policies “empirically-proven” to improve employability, but that doing so will require greater evaluation of labour-market programmes. Such evaluations should form the basis “to close down ineffective schemes, while strengthening successful ones”.
The report says the State should “wind down” policy measures that are failing to boost innovation in the private sector. It calls on the Government to evaluate independently and regularly all actions in the innovation area, so that programmes with proven higher returns can receive most resources, including funds from wound down schemes. To counter inertia, it recommends that “all innovation and enterprise supports have sunset clauses”.
“Government support for innovation has grown too complicated for firms to access it easily or for efficient evaluation,” it says.
The organisation advocates centralised legal processes for intellectual property rights transfers and a new central technology transfer office to increase capital supply and encourage entrepreneurship.
It also calls for increased competition in legal services, a reduction in licensing costs and waiting times and changes to the examinership process.