THE country is back on its feet, but there is a risk of "losing a whole generation" to long-term unemployment, an international think-tank has warned.
In a major report on the economy, the Organisation for Economic Cooperation and Development (OECD) praised the Government for meeting its budgetary targets.
But the Paris-based body warned the Coalition was not doing enough to combat the scourge of youth and long-term unemployment, which risks leaving thousands of "permanent casualties" of the recession. And employers are wary of hiring people who have been out of the workforce for a long period.
A government minister last night claimed there was no budget for more staff to provide unemployment services.
Social Protection Minister Joan Burton accepted there was an unacceptably high level of youth unemployment.
But the minister said her department didn't have the funds to increase staffing levels in unemployment services.
The OECD claimed the country was "back on its feet" – but it said current government plans to tackle unemployment left the long-term out of work without support.
Its latest economic survey of Ireland also highlighted that a staggering one in five children were living in households where no one worked, warning this is the highest proportion in the EU. The global economic body said that the "slow recovery of the Irish economy is leaving behind far too many for far too long".
"Six years after the crisis began, multiple steps in the right direction are being made, though current plans leave the long-term unemployed without appropriate activation and support," it said.
"Thus, there is a high risk that these people will be simply left behind as permanent casualties of the recession as new and better-qualified job seekers, including immigrants, take advantage of the recovery."
The body said that "decisive interventions" were needed in the labour market to avoid the unemployment rate remaining high for many years to come.
In an interview with the Irish Independent, OECD Secretary General Angel Gurria said there was a risk that employers would be wary of hiring people who had been out of the workplace for a long period.
"They're afraid that somebody disconnected with labour market too long may have lost the edge," he said.
"We need to get these people back into jobs, and we need to make the private sector realise that we are in danger of losing a whole generation of people."
Mr Gurria said the OECD was working with the Government on a youth guarantee to ensure young people out of work were offered a job within four months of being on the dole.
But the think-tank chief acknowledged that Ireland was "back on its feet" with the economy expected to grow by 2pc next year.
The report, which comes out every second year, stated that Ireland had met or bettered its fiscal targets, and would beat those targets if it stuck with plans to take €3.1bn out of the economy through tax increases and spending cuts.
It said that to "protect hard-earned credibility and reap the benefits of improved market confidence", the Government must stick to the targets to slash the deficit. "Most of the heavy lifting has already been done," Mr Gurria said.
"This is why you're now about to finish the programme with the troika with enhanced confidence that the markets now have in Ireland." The report, which was launched by Mr Gurria and Tanaiste Eamon Gilmore, also backed government plans to seek a precautionary credit line, a form of overdraft, from the troika when it leaves the bailout.