Financial participation by employees through profit-sharing, employee share ownership and gain-sharing in the Republic is below the EU average, according to the National Economic and Social Council (NESC).
A research paper - Profit-sharing employee share ownership and gain-sharing: what can we achieve? - found the State was below the EU average despite evidence that profit-sharing improved productivity.
The paper found previous attempts to promote related schemes during the 1980s were largely unsuccessful.
But it noted many companies had recently introduced such financial participation schemes or were considering introducing them and the current buoyancy in profits provided a more favourable environment.
The paper found profit-sharing contributed to increased productivity and that employee participation in workplace decisions appeared to enhance its effectiveness.
Profit-sharing also held the potential to help stabilise the economy by enabling employees and companies to share benefits and risks in a more flexible way, the paper found.
"At a time of economic boom and given Ireland's adoption of the euro, a move to profit-related pay could lessen the risks associated with an economic slowdown in the future," it said.
The evidence on the relationship between employee share ownership and productivity was found to be weaker than the case for profit-sharing.
There were, however, indications that a combination of employee share ownership and employee participation improved performance, the paper said.
Gain-sharing, an incentive scheme in which gains from cost savings are shared with employees, has recently been introduced by several companies to the Republic, according to the report.
Research from the US suggested it could increase productivity, it added.
The paper acknowledged that tax incentives might encourage employee financial involvement, but warned these should be carefully monitored as they could make tax reform more difficult.
