The Republic is viewed as a "model country" by the Organisation for Economic Co-operation and Development (OECD) due to the success of the State's employment market policies.
Addressing a Fás conference yesterday, Dr Paul Swain of the OECD described the Republic as a "poster child" for the organisation's labour market guidelines.
Dr Swain said the Republic had implemented more of the OECD's "Jobs Strategy" recommendations than any other country.
The State has been particularly successful in the area of tax-benefit reform, which Dr Swain said was the key to lowering unemployment levels. "Ireland has been at the frontier in reducing unemployment," he said.
However, despite the State's "exemplary performance" in recent years, he said there was still room for improvement. For example, Ireland's labour policy should focus on improving access to childcare, he said.
In addition, he recommended that the Early Childcare Supplement, which was introduced in last year's budget, should be made "conditional on both parents working and/or the purchase of childcare".
This would act as a strong fiscal incentive for women to enter the workforce. The pensions system is another area which requires further reform, he said.
An "educational upgrading" of the State's workforce is also necessary, he added.
A concerted effort is necessary to reduce early school-leaving, he said, pointing out that 17 per cent of Irish pupils leave school without completing their Leaving Certificate.
Expanding third-level education is also key to maintaining the State's recent levels of success, Dr Swain said.
Fás labour market economist Brian McCormick predicted that future employment growth would be driven mainly by the services sector. "The contribution of the construction sector is expected to diminish," he said.
Mr McCormick highlighted immigration as a contributing factor to the Republic's economic success. Since EU enlargement, almost 300,000 people from accession states have begun working here, but according to Mr McCormick there was little evidence to suggest this had caused job displacement.
However, he warned that there were "worrying signs" that the Republic was becoming less competitiveness in comparison to its trading partners.
