The economy risks a skills crisis unless more students study science and engineering at third level, a Government report has warned.

With the biotechnology, engineering and logistics industries primed for rapid growth over the next half decade, the predicted skills shortfall in these fields may undermine future prosperity, according to a study by the Export Group on Future Skills Needs.

Key recommendations of the report include improving vocational education to facilitate re-training, combating the decline in science take-up at second level, establishing a more targeted immigration policy and making it easier for those from disadvantaged backgrounds to gain entry to third level.

At the launch of the report, the fourth produced by the group, the Tánaiste, Ms Harney, said there would be a pressing demand for engineering and science graduates in the medium-term. Ambitions of developing a prosperous "knowledge" economy hinge on an adequate supply of appropriately skilled workers, she said.

With the creation of a vibrant R&D business culture vital to hopes of the Republic moving up the value chain, its ability to call upon a field of international-class graduates and highly trained workers was crucial, she said.

Dr Daniel O'Hare, chair of the group, said decisive steps were needed to redress the emerging skills shortage. Adopting a short-term approach to training that discriminated against sectors currently in decline but with strong potential for recovery was imprudent, he said.

The expert group comprises representatives of Government, industry, employers' body IBEC, the Irish Congress of Trade Union and the enterprise development agencies.