Paying employees higher wages will not threaten the economy's performance if productivity continues to increase and overheads are kept down, the president of the Chambers of Commerce of Ireland has said.

Mr Tom Clarke said that businesses would have no qualms about paying higher wages over the next three to four years, but the economy must prepare for a low-growth period.

He said e-commerce could also play a role in helping to reduce costs. Mr Clarke warned that companies were seeking very flexible economies in which to operate and with the expansion of the EU, countries such as Hungary where people were highly skilled and could speak English, would become attractive to multinationals.

An Irish economy with rising overheads and lower growth could present problems for agencies trying to attract foreign investment, he said.

Mr Clarke is expected to be reelected president of the Chambers of Commerce this weekend, for the second year running. He believes a good educational system is vital to the Irish economy.

Education has played a key role in the Republic's economic success and improving the education system by offering a more flexible approach was the way to stay ahead of competitors, he said.

"We've played well in the first half, now we need to look at what are the things we need to tweak and change things to continue this success," he said.

The chamber's annual conference, which is being held today and tomorrow, will focus on the issue of whether the Republic has become competitive or complacent as a result of its current economic success.

Irish business and the chambers of commerce, in particular, were not complacent about our present economic success but "it is going to be more difficult to maintain success", Mr Clarke said.

Better childcare, grants and supports for mature students to go back to college, tackling the problems of early school leavers and the high drop-out rate of first-year college students were among the issues the chamber would be campaigning on during the next year.

Some parents were facing the decision of either re-skilling themselves by going back into training, or sending their children onto third level education, he said.

Parents would always put their children before themselves but "we need the 45-year-old parents retrained".

More career guidance teachers should be provided in schools to help students make the right decision the first time about the type of course they wanted to do. This would reduce drop-out rates, Mr Clarke said.

A system of deferred grants and scholarships which would allow school leavers to enter the workforce for up to 10 years and then get a second chance at learning later on, would give the education system the flexibility it needed, according to Mr Clarke.

The chambers could do what nobody else could do by providing expertise at a local level with local knowledge, he believed. They could act as an intermediary between business and educational institutions to develop the right programmes.

Large multinational companies in the Republic could afford to fund training programmes for their employees, but smaller companies did not have the same resources available to them, Mr Clarke said.

Small businesses should get tax concessions to encourage them to upskill their employees because they often could not afford to spare the employee for training and to fund the cost of such training. In former times the issues were job building and job creation. Now the issue was about getting people to upskill and retrain so employees could acquire the right skills for the current jobs' market.

The organisation's aim was to have an accredited chamber of commerce, of which there were currently 13, within the reach of every company.

He wanted to increase the membership of the Chambers of Commerce of Ireland which had grown from 5,000 to 11,000 in the space of a few years, to more than 15,000.

With a full-time staff of more than 160, Mr Clarke believed the chamber had the potential to make a real impact and wanted to further develop its flagship programmes, including those on education and e-commerce.

The Plato programme which brings large and small companies together in a mentoring system where they can share expertise, knowledge and experience is the way forward, according to Mr Clarke.

He believes group learning such as the Plato programme and Skillnets, one of the Chamber's training programmes, is the best avenue to advancing e-business in the State. The secret of group learning, according to Mr Clarke, is that rather than smaller companies being told by larger ones how to progress their business - advice that is often not taken on board - a group situation is created where companies will listen to how other companies of a similar size have developed their businesses in different ways.

The annual conference will also discuss how Irish business has reacted to the advent of e-commerce and whether after years of recession Ireland will always be playing catch-up in establishing a good physical infrastructure.

Developing e-commerce has been the main focus of a number of the chambers' initiatives. However, Mr Clarke said the average small company was not using the existing e-commerce infrastructure. The next step was getting those who had been slow to adopt new technology to do so.

"We need a few strong actions to inspire the rest to move. Encouragement has to come from the Government and banks," he said.

If you're in business you have to deal with banks, government and large financial or accounting firms and if these put all their business online quickly then all business would follow.

Most of the countries, which are more competitive than the Republic, have very low telephone call rates.

The reduction of telephone call charges here is vital to e-business development, he said. Questions have been raised about the possibility of completing the National Development Plan on time. Mr Clarke has doubts as to whether the Republic can catch up on infrastructure development.

The biggest problem the State faces at present is improving infrastructure.

Expanding local and regional airports was one way to ensure better regional distribution of companies and employment around the State.

Such development was necessary to attract investment to the west coast in particular.