Commission criticises Government over pension imbalance

The European Commission yesterday criticised the Government for not doing enough to address pensions coverage in the Republic. In a review of member states' strategies for promoting jobs and growth, the commission said the Republic needed to take "more specific measures on pensions".

The analysis also called for greater action on encouraging research and development, science and innovation. More "active measures" are needed to ensure policies are robust to meet targets on this front, according to the commission.

The findings are part of the commission's first annual progress report on the partnership between the EU and member states for jobs and growth, formerly known as the Lisbon Agenda. In general, the commission concluded that the Government had identified and responded to "most of the main challenges facing Ireland".

Yesterday's conclusions were based on a reform programme submitted by the Government to the commission late last year.

This programme referred to pensions initiatives such as the National Pensions Reserve Fund and the National Pensions Review, but the commission said this was not enough.

"Coverage remains significantly below government targets and detail is lacking on how Ireland will address the problem of a growing imbalance between income in work and in retirement," the review concluded.

The commission believes "more attention could be given to the issue of pension coverage as a key element behind financial and social sustainability".

It did not, however, offer suggestions on how the matter could be addressed.

Last week, the Government raised the prospect of mandatory pension coverage by asking the Pensions Board to study proposals on this type of scheme.

The Government was also told yesterday that it had given "relatively little information" on how it would address the Republic's comparatively high price levels, even though these "tend to underline the problem of overall competitiveness".

Commission president José Manuel Barroso called on all 25 EU states to "move up a gear" on promoting growth and job creation.

"We have come a long way since last year and the right foundations are now in place... Now the spotlight moves to delivery."

Specifically, Mr Barroso said investment in higher education should be lifted from the current 1.28 per cent to 2 per cent of GDP by 2010.

He also called for a greater share of state aids and structural funding to be spent on research and development and said a European institute for technology should be established by the end of 2007.

Also by next year, said Mr Barroso, the average time to set up a business should move towards one week or less. Every school leaver or graduate in the EU should be offered a job, apprenticeship or training within six months of becoming unemployed, he added.

The commission's recommendations will be discussed at the European Council in March.