Ireland's drop in a ranking of global competitiveness should serve as a wake-up call, the head of the state's competitiveness watchdog has told the Irish Independent.
Ireland slipped one point in the annual IMD rankings to 16th place.
Peter Clinch, National Competitiveness Council chairman, said Ireland's ability to pay good wages and to support spending in health, education and social protection all depend on its ability to sell goods and services abroad.
"The IMD results showing a drop in Ireland's overall competitiveness ranking should be a wake-up call to everyone that the sustainability of the recovery in the economy and employment is under threat if we do not redouble our efforts to improve our competitive position relative to other countries," he said.
Mr Clinch said the Council, in its 2015 Cost of Business report, pointed out that Ireland remains an expensive place in which to do business, and that competitiveness gains have relied largely upon factors beyond the State's control, such as the fall in the value of the euro and lower oil prices.
"These external factors are masking problem areas such as domestic energy prices, property costs and availability, the cost of business services, waste costs and the general cost environment for employees which is driving wage demands," he said.
"As the public finances and employment improve, improving Ireland's competitiveness must be a priority." Enterprise Minister Richard Bruton said the slippage in the ranking "is confirmation that the battle is far from won, and must serve as a reminder that competitiveness is a constant battle".
He added:"Competitiveness is what allows us to attract extra multinational investment, and win new jobs in Irish exporting companies.
"We must take action to improve our competitiveness, and avoid any actions that could cause further slippage."
The minister noted that between 2011 and 2014, the State's performance in the IMD ranking improved steadily, up from 24th to 15th.
The US remains in the number one slot in the ranking, thanks to its "strong business efficiency and financial sector".
Hong Kong in second place and Singapore in third place move up, overtaking Switzerland, which drops to fourth place. Canada (5), Norway (7), Denmark (8), Sweden (9) and Germany (10) remain in the top 10. Luxembourg moves to the top, in sixth place, from 11th place in 2014. Luxembourg isn't the only country to enjoy a big gain. Lithuania moves up six places to 28; the Czech Republic rises four places to 29; Portugal is up seven to 36; and Italy rises eight to 38.
The countries that have suffered the largest falls include Japan, which has fallen six places to 27; France, down five places to 32; war-torn Ukraine, which slipped 11 points to 60; and Russia, down seven points to 45.
The least competitive country in the ranking is Venezuela.