STATE RUN job schemes would not deal with the unemployment problem, the Progressive Democrats leader, Ms Mary Harney, said. The Government should provide tax incentives, which had been shown to work in other areas.

During debate on the report of the National Economic and Social Forum (NESF) on long term unemployment, she said the Government should stop making employment expensive through tax and PRSI, especially on low paid work. The Government's aim should he to make it attractive for people to take up jobs rather than remain on the dole.

At present, a person taking a job at £150 a week had to pay £26.50 in tax and PRSI. The employer's contribution to PRSI brought the total State take to £39. Anyone on the dole and in receipt of rent allowance who would have travel expenses to go to work would be only £14 a week better off taking a job for £150. "If we do not change that we will not put a dent in the numbers of long term unemployed."

In areas such as tourism and catering it was difficult to find Irish people willing to take low paid work. In the tourist industry employers were taking on Spanish workers.

A great opportunity was being missed by making employment so costly. It was estimated that for every 10 people at work there were 22 dependants. "The smaller the private sector the more dependants we will have." The Government needed to clear the obstacles to employment and encourage a larger private sector. By persisting with a bureaucratic solution through State run schemes, financed out of taxes, the Government was simply making the problem worse.

The tax breaks given to urban renewal and manufacturing industry proved that tax incentives did work. Why, she asked, did the Government not extend these incentives to dealing with unemployment?

Young people were growing up in households where they had never seen anyone go out to work. "If our society is to be caring and civilised it cannot go on consigning so many young people to unemployment. Idle hands will find things to do. There is a lot at stake for us in seeking to address this problem."

The Fianna Fail deputy leader, Ms Mary O'Rourke, called for proper resourcing of the local employment service. It operated "on a wing and a prayer" in just 14 pilot areas. If it was to be a cornerstone of policy it should be he nationwide. "Without action on long term unemployment now we are enshrining forever, a society of insiders and outsiders.

Regarding the Jobstart scheme announced in this year's Budget, she said the claim that there would he 5,000 places on the scheme proved to be exaggerated. No effort was made to promote the scheme which had to be "relaunched" at a cost of £1 million to the taxpayer.

The NESF had criticised the £6 million allocated to the local employment service, saying this did not provide any additional money to extend the service to new areas in the immediate future. Much more needed to be done to achieve results.

Despite all the promises in the Government's Programme for Renewal the number of long term unemployed was now 3,500 more than it was two years ago. "Ireland continues to have the highest rate of long term unemployment in the OECD. Half of all Irish unemployment is in the long term category and that is a scandalous situation."

Government ministers preferred to quote the Labour Force Survey as a measure of unemployment because it was lower than the Live Register but that was to cover their "abysmal failure on this key issue of policy".

Mr Joe Walsh, Fianna Fail spokesman on social welfare, said the only real growth in jobs was in the number of spin doctors, programme managers and consultants in Government Departments. Indigenous industry had been neglected, leading to increasing imports of products such as food.

There was a lot of boasting about higher economic growth rates but if they were to mean anything there must be more jobs. People in deprived areas had skills and these needed to be channelled through education into employment.

Mr Trevor Sargent (Green, Dublin North) said the taxes on labour should he cut. There was a lot of scope for employment in repair and maintenance but the Government's scheme to scrap cars over 10 years old discouraged that kind of employment.

Mr Ivor Callely (FF, Dublin North Central) said any means of getting someone into a job was welcome.