Ireland ‘back on its feet’ as it nears bailout exit, OECD says

Ireland is back on its feet and on verge of becoming first EU country to exit its bailout, the Organisation for Economic Co-operation and Development (OECD) has said.

But Dr Angel Gurria, secretary general of the OECD, warned that growth, which has proven frustratingly slow to date, would not pick up unless competitiveness improved and the banks’ balance sheets were cleaned up.

“Indicators all point to recovery taking place now, gives us all confidence that economy is on the mend,” he said. Declining public sector debt will help underscore faith in a “robust recovery,” he added with the achievable prospect of nearly 2 per cent growth next year.

He insisted the OECD “does not tell the Irish what to do with Ireland”, instead it helps make available advice on best international practice.

The OECD’s biannual report, published today, contains a series of strong criticisms of the Government’s reform efforts.The Paris-based think tank bluntly states that “now is the time to implement policies that will promote sustainable growth and job creation”.

Some of the starkest criticisms relate to jobs policies. The report says that “policies still do not focus enough on long-term unemployment” and urged the Government to “prioritise the engagement with long-term jobseekers and increase the number of [Department of Social Protection] caseworkers supporting them, through internal redeployment”.

Repeating calls made by the organisation in its last country report almost two years ago, it called for a review of tax and welfare structures to raise labour force participation of low-wage workers.

It also calls for the content of education and training schemes to be better aligned “so that they provide skills required in the expanding sectors”.

Addressing specifically long-term and youth unemployment, Mr Gurria said rates were unacceptably high. He suggested there should not be a return to a heavy reliance on the contruction industry and said Ireland should move more “from bricks to brains”.

The OECD says that resources should be target on policies “empirically-proven” to improve employability, but that doing so will require greater evaluation of labour-market programmes. Such evaluations should form the basis “to close down ineffective schemes, while strengthening successful ones”.

Echoing the need to shut down failed training schemes, the report also says that the State should “wind down” policy measures that are failing to boost innovation in the private sector, adding that “significant uncertainties (exist) ]about the effectiveness of various innovation policy tools.

It calls on the Government to independently and regularly evaluate all actions in the innovation area, so that programmes with proven higher returns can receive most resources, including funds from wound down schemes.

To counter inertia in the system, the report recommends that “all innovation and enterprise supports have sunset clauses”.

To increase the effectiveness and cost-efficiency of the innovation and research policies and make it easier for businesses to access support, the report recommends that the State’s manifold innovation funding schemes and wider policy supports by consolidation into a smaller number of Government agencies.

“Government support for innovation has grown too complicated for firms to access it easily or for efficient evaluation,” it says.

The organisation advocates centralised legal processes for intellectual property rights transfers and a new central technology transfer office, in a bid to increase capital supply and encourage entrepreneurship.

It also calls for increased competition in legal services, a reduction in licensing costs and waiting times and changes to the examinership process.

Many of the recommendations made in the report have been made in previous studies, including the last one in October 2011.