The economy risks slipping back into the dark ages of high unemployment and emigration unless radical steps are taken to tackle wage inflation and establish a progressive research and development culture, employers' group IBEC has warned.
In a grim assessment of the Republic's future prospects, IBEC said a continuation of the heavy lay-offs witnessed this summer cannot be ruled out in the absence of far-reaching infrastructural and ideological reform.
Responding to the Tánaiste, Ms Harney's establishment of an Enterprise Strategy Group, which will recommend ways of restoring competitiveness, IBEC said prosperity can best be guaranteed through investment in research and development and by fostering a culture of entrepreneurship.
The consequences of not confronting the Republic's waning attractiveness to overseas companies could be dire, said IBEC director of enterprise Mr Brendan Butler.
With job losses for 2002 already approaching a 15-year high as traditional manufacturers such as Waterford Crystal shed workers to lower costs, it is apparent that low-skill industries are increasingly struggling to compete effectively, Mr Butler said.
"The Irish economy is at a crossroads," he added. "We have moved from a low-cost, low-wage environment to a high-cost, high-wage one.
"If we can take key strategic decisions over the next six months to a year, then future prosperity can be protected. However if things are allowed to slip in the way they have over the last year and a half, it could all unravel for us."
The establishment of an Enterprise Strategy Group was a positive step but the Cabinet must be prepared to act quickly on its recommendations, said Mr Butler. If not, the decimation of traditional manufacturing jobs is likely to continue unchecked.
"We have to be realistic. Ireland can no longer compete with low-wage economies. We have to set ourselves against the likes of Sweden and the US and must match their standards. Unless traditional industries learn to diversify, the progress of the past 15 years will be impossible to maintain."
The Government must borrow for infrastructure, while the planning process should be speeded up to facilitate the fast-tracking of projects of national importance, IBEC argues.
Steps must also be taken to accelerate the level and pace of commercialisation of research and licensing of patents.
"If we have highly trained people they can be employed in higher-income activity," Mr Butler said. "Better infrastructure and services will make it more desirable to work and live here. This will cause more high-income earners to live and locate their businesses in Ireland."
The Enterprise Strategy Group was announced last week by the Tánaiste. It will be chaired by Mr Eoin O'Driscoll, managing director of consulting group Aderra, and will present its first report to Government in six to nine months.
