The National Competitiveness Council has said the Government needs to stimulate vigorous productivity growth and restore cost competitiveness in major markets.
In its annual report, the council warns that we now face a more challenging and uncertain external environment.
The Minister for Enterprise, Trade and Employment, Micheál Martin, says Ireland's competitiveness remains a priority, but there is more work to do.
The NCC warned that Ireland's growth in output per hour has dropped 18 places in six years. The country is now 22nd of 28 OECD countries in this area. It also found that our overall price level is the second highest of 15 other EU countries.
The cost of living is now 20% above the EU average and that gap is widening. Infrastructure, according to the report, ranks very poorly. The quality of infrastructure such as roads, rail and ports is 25th lowest out of 28 OECD countries.
Against that, living standards in Ireland measured by GDP per capita measured 4th highest out of 28 OECD countries surveyed, an improvement of two places since the year 2000.
The report was presented by NCC chairman Dr Don Thornhill, who said that improvement in exporting sectors is vital to drive growth and living standards.
The council suggests that an inflation target should be set close the ECB's 2%, and added that the upcoming social partnership wage talks need to be carefully managed to protect job creation and keep costs down.
