Issues around the cost of insurance, legal services and credit have not received the urgent attention required to support competitiveness and productivity.
That is according to the state’s competitiveness watchdog, the National Competitiveness and Productivity Council (NCPC).
The Council also says the cost of pension auto enrolment and statutory sick pay need to be balanced with the impact that they will have on businesses.
The findings are contained in the organisation’s latest publication, the Competitiveness Challenge 2021.
The research notes that despite positive forecasts, the Irish economic outlook faces considerable uncertainty.
This makes it even more important, the body states, that the Government controls what it can to improve Ireland’s competitiveness and productivity.
The Council says it recognises supports must remain in place in the short-term, but these should be targeted only at businesses that are viable in the medium to long-term.
Some businesses will need to restructure as the supports are removed, the report says, and a suitable insolvency framework is crucial to help struggling businesses restructure.
Employees who will lose their jobs in firms that shut or restructure and those out of work and in receipt of the PUP, should continue to be supported, it says.
It also states that the resulting high levels of debt could leave the economy vulnerable to future shocks.
Regarding insurance, the NCPC says the impact of new Personal Injuries Guidelines on award levels needs to be assessed and monitored.
An assessment on the introduction of fixed legal fees also should be published, it claims.
When it comes to access to finance, the council says its aware that more limited competition in the banking sector could have negative consequences for market interest rates facing SMEs.
It therefore recommends that any actions to improve competition that arise from the upcoming review of the Irish banking sector are implemented quickly.
On the topic of flexible employment, the NCPC says the Government should develop frameworks around the issue that would help firms introduce such ways of working.
But it adds that to achieve such a shift, necessary infrastructure such as the National Broadband Plan needs to be delivered on time.
In relation to housing, the council says a structural shift in the approach to housing policy is urgently needed.
The “piecemeal approach” to planning reform in the past has failed to deliver tangible improvements in housing delivery, it also states.
Capacity issues in the planning system will also need to be addressed, it says, and planning authorities will need to be sufficiently resourced.
The report claims affordability affects Ireland’s ability to retain and attract skilled workers, with rising costs eroding real incomes for workers and reducing standards of living.
It says the housing market must operate in a way that does not generate “pinch points” that could damage long-run competitiveness.
Bottlenecks in the delivery of other critical areas, including water and waste-water, electricity, communications and transport, also need to be delivered.
The NCPC also says it supports the policy process around tackling climate change and wants to see real evidence of progress made here.
The chair of the National Competitiveness and Productivity Council says if the Government can get its policies right and implement them properly, then the worst effects of the pandemic on industry and employees will be minimised.
Dr Frances Ruane said that a prolonged downturn in an economy results in people becoming de-skilled, while businesses do not have the opportunity to innovate.
These are issues that need to be addressed, she said.
Dr Ruane pointed to tourism as one sector that has been badly damaged and said that upskilling and uptraining will be needed.
Dr Ruane said the Government has good plans in place to deal with the after-effects of Covid-19, adding that these include projects in the digital and green areas.
Speaking on Morning Ireland, she said that the country’s broadband plan, that was slowed down by Covid, must get back up and running.
Dr Ruane said Ireland’s national figures for productivity growth look “really terrific”, but a deeper look at the figures reveal that there is a concentration of the productivity growth in a relatively small number of companies and in a relatively small number of sectors.
Although this is a positive, she said, it masks lower productivity in many SMEs.
She added that SMEs must be given a better opportunity to innovate and that training supports must be given to key SME employees.