The Paris-based OECD think-tank says Ireland's economy is stabilising. But it also believes the Irish labour market will take time to heal after one of the worst recessions in the developed world.
It says the recession left 'significant scars' on the labour market.
Its employment outlook for 2010 also contains a warning that high unemployment will remain if long-term job seekers are discouraged from getting jobs.
Read the employment outlook in full here
Throughout 2007, 2008 and 2009, the OECD says that number of hours worked in Ireland fell by 11.8%. Unlike other European countries, that was almost entirely due to job losses rather than shorter working hours. This, the OECD believes, is due to the relatively low cost of hiring and firing in Ireland and what had been a large concentration of jobs in construction.
The organisation says the Irish recovery will not be vigorous enough to re-employ the 174,000 people who have lost their jobs. It sees a significant risk that discouraged job-seekers could grow permanently disconnected from the labour market.
But as wages fall, there is praise for the reduction in social welfare payments that the OECD says will make it more attractive to work. There is praise also for measures to encourage employers to take on long-term unemployed workers, but the OECD questions whether there are enough resources being devoted to helping jobseekers to find their way back into employment.