The OECD has called for wage restraint in Ireland to improve economic competitiveness and to avoid a serious weakening in our export performance.
It also called for mortgage interest relief to be phased out, or for a new property tax to be introduced. It said that Ireland's existing housing tax system is among the most generous in the industrialised world.
In its Economic Survey of Ireland for this year, the Paris-based economic think tank warned that state old age pension scheme is unsustainable in the long run and the standard retirement age here should be raised in line with life expectancy.
The OECD report says that Ireland's economic fundamentals remain strong, but that we have lost competitiveness and it is now becoming very important that workers restrain their pay demands.
The survey points out that prices and wages are already high in Ireland, and that multinational companies operating here, as well as those who might consider coming to Ireland, would be put off if wages were to continue rising strongly.
It says that would damage the economy which has also been hit by adverse exchange rate movements.
The report warns that in the long run Ireland will have to improve productivity and get a greater proportion of the population into the workforce if the recent pace of improvements in living standards is to be maintained.
The report also puts forward some fairly radical policy suggestions for the Government. It says child benefit payments do not encourage women to participate in the workforce, and that child support needs to be tied to the actual use of childcare.
It also says that Ireland's housing tax system is too generous, and that tax breaks for home owners have contributed to making housing expensive in Ireland. The report calls for mortgage interest relief to be phased out or else for a new property, or capital gains tax, on homes to be introduced.
It says the Government should avoid expensive commitments on public sector pay. It says that future improvements in public services need to be based on public sector reform and better value for money rather than on increases in the number of public servants.
The OECD also warns that our state old age pension system will become unsustainable and that retirement ages should be raised to reflect the fact that people are living longer. It says that steps should be taken to ensure that disability is not used as a route into effective early retirement.
Controversially too, the report says that the pension tax-breaks given to high earners should be reduced. It suggests a capped SSIA-type scheme to encourage people to save for pensions as well as some degree of compulsion to raise savings for private pensions.
