The increasing number of women at work has prevented wages from rising excessively, the Minister for Justice, Equality and Law Reform said yesterday.
Mr O'Donoghue was speaking in Dublin to representatives of 25 community child-care projects which his Department is grant-aiding for two years.
Women made up a quarter of the labour force in 1971, but that proportion had gone up to 37 per cent and was rising, he said.
"The increasing number of women in the labour force has been a key factor in Ireland's economic growth because it has allowed the economy to continue to expand without rampant wage inflation or major skills shortages," he said.
"Employers do not want to lose highly-trained and skilled women and are looking at ways of retaining them in employment."
But the economic boom meant that fewer women were minding children in the home as more attractive or lucrative employment was becoming available to them, the Minister said.
"The need to ensure continued growth is putting the employment and the retention of women in employment at centre stage. This is now not only an equality issue but an economic one, too," he said.
Mr O'Donoghue said the Expert Working Group on Child Care, established under the Partnership 2000 agreement, was expected to complete its report next month.
The 25 community child-care projects, of which 11 are in Dublin and three in Cork, are receiving £2 million between them over two years to pay for two senior childcare posts each. They are receiving an extra £1.12 million for capital costs.
They are mainly serving disadvantaged areas.
The Department is also working with IBEC to develop model childcare projects in selected companies. IBEC called on the Government earlier this week to provide tax reliefs and other incentives to increase the number of child-care places available outside the black economy.