The Tanaiste has introduced a programme to "kick-start" training and development networks for small and medium companies.

The three-year programme will provide £12.7 million (€16.13 million) to address the serious lack of investment by companies in the past.

Ms Harney said Irish firms lagged well behind their European counterparts. At present, 60 per cent of small companies had no training budget at all and this posed serious problems for their long-term survival in a global economy.

"Throughout Europe small to medium-sized enterprises employing less than 50 people invest 35 per cent of payroll in training," the Minister for Enterprise, Trade and Employment said. "In Ireland that figure is between 0.9 per cent and 1.2 per cent."

In an era when products and technology often had a short life cycle, she said, companies which regarded their employees as their most important asset, provided good career structures and engaged in continuous learning were those which would survive. The networks programme would allow companies to pool resources and use their enhanced group-purchasing power to acquire good training programmes.

Skillnets Ltd, the agency set up to develop training network programmes for the sector, will provide funding for innovative programmes involving individual companies, groups of companies and networks that involve companies and third level institutions. Submissions are being invited for funding by Skillnets, in Rathfarnham, Dublin. The closing date is July 16th.

Presenting the Skillnets programme, its chief executive, Ms Maire Hunt, said that only two out of every 10 companies with fewer than 10 employees had a training programme. Skillnets would empower companies to find the training they needed.

Skillnets chairman Mr Domhnall Mac Domhnaill, praised the Tanaiste for introducing the scheme, which had first been mooted in the White Paper on Human Resource Development three years ago. He said it was clear from the figures that "on training and development Ireland is not at the races as yet".

The Irish Business and Employers Confederation has campaigned for such a fund since the decade began. Its assistant director of social policy, Ms Aileen O'Donoghue, said the programme provided an excellent opportunity to demonstrate the effectiveness of enterprise-led training.

"The fundamental rationale for the establishment of the enterprise-led programme is that of reliance." Training programmes under the scheme would be driven by the needs of enterprises and their employees, she said.

An ICTU representative on the Skillnets board, Mr Peter Rigney, said trade unions would participate fully in the scheme. Not only would they co-operate with employers in training and development progranmes, but they would be initiating similar programmes themselves, he said.