The Government's tax individualisation policy has received a significant boost in a European Commission report which urges more of the same for next year. The Commission also encourages Ireland to "facilitate inward migration aimed at addressing skills shortages".

Although critical in the past of the inflationary effects of his general fiscal strategy, the Commission has warmly welcomed the Minister for Finance, Mr McCreevy's, attempts to enhance the participation of women in the workforce through tax individualisation and "a broad range" of childcare initiatives.

An as-yet-unpublished report from the Employment and Social Affairs directorate says the policies are "a very promising response but will also require a comprehensive follow-through, not least in the area of tax individualisation if the large gender gap is to be reduced".

The Government should also focus on the modernising of indigenous industry through upgrading in-company training and lifelong learning, it says.