The Government is to invest €7.7 billion in "upskilling" the work force over the next seven years.
Approximately €4.9 billion will target employment and training services for groups outside the workforce, such as the unemployed, people with disabilities, women, lone parents, Travellers and ex-offenders.
The other €2.8 billion will be invested in upgrading the skills of those working but who have been affected by industrial restructuring.
It will also expand and enlarge the apprenticeship system and further training courses for school leavers.
The funding is part of the Department of Enterprise, Trade and Employment's contribution to the new National Development Plan.
Minister for Enterprise, Trade and Employment Micheál Martin said: "Without significant investment we cannot meet the labour skills required to compete in the knowledge-based, innovation-driven global economy of today."
He said a key labour market initiative in the next planning period will be the implementation of a National Skills Strategy based on the findings of the Expert Group on Future Skills Needs.
"The objective of this strategy is to ensure that we have, over the period to 2020, the skills required to remain competitive in the global marketplace."
The strategy seeks to have 48 per cent of the labour force with National Framework Qualification (NFQ) levels of between six and 10.
The investment is part of the National Development Plan 2007-2013, entitled Transforming Ireland - A Better Quality of Life for All- under which the Government plans to invest €184 billion to secure the State's future economic and social progress.
Taoiseach Bertie Ahern said the investment would ensure that those most vulnerable in society to pressures of change are appropriately supported and protected.
Another €54.7 billion is to be invested in economic infrastructure, including the completion by 2010 of the Cork-Dublin road to full motorway standard and improvements to local and regional roads and bus and rail transport links.