The National Competitiveness Council has emphasised the need for wage moderation and greater flexibility in future partnership agreements.

In its Report on Costs document issued yesterday, the council states that while labour costs here are below the OECD average, they remain significantly higher than those in many countries with which the Republic competes for trade and foreign investment.

Employers' PRSI costs are higher in the Republic than social insurance costs in Britain but are lower than in most other EU states, the council says.

It also points to the relatively expensive cost of telecommunications, industrial and office accommodation and higher public liability insurance costs in the Republic.

The council, set up by the Government under the Partnership 2000 Agreement in May 1997, must report to the Taoiseach on key competitiveness issues for the economy together with policy recommendations.

From a company perspective, the council has stressed the need for wage moderation coupled with alternative rewards systems to achieve improved productivity. Among the measures it recommends are increased flexibility, better working practices, training and upgrading of skills.

It also calls for greater participation in information and communications technologies by Irish companies. Meanwhile, from a policy perspective, the council warned that future partnership agreements must be able to accommodate the challenges posed by a rapidly-growing economy.

"They must provide greater flexibility through the identification of innovative reward mechanisms such as performance payment systems, skill-based pay and gain sharing," the report states.

The council also recommends an acceleration in the deregulation of utilities such as electricity, gas and transport.