The OECD has warned that that unemployment in Ireland is becoming an "intractable" problem.
In its economic outlook for 2012 published today the organisation however said it is cautiously optimistic about the country's prospects for economic recovery.
"Ireland is continuing to undertake a comprehensive and vital adjustment programme to reduce its macroeconomic imbalances and restore its banking system to health," the report said.
"Despite robust export growth, weak domestic demand and ongoing fiscal consolidation have prevented an economic recovery from unfolding so far.
"As domestic demand stabilises, a modest upturn of output is expected in the course of 2011, with some acceleration in 2012.
"The unemployment rate is likely to stay high, and core deflation to continue."
The report's authors said recovery this year will be gradual, and speed up in 2012.
The OECD said Ireland must adhere to the adjustment programme laid down by the EU and IMF and in particular lowering our budget deficit to below 3% of GDP by 2015.
"Improving competitiveness through wage restraint and structural reforms should remain a priority," the report said.
Minister for Public Expenditure Brendan Howlin said jobs are the Government's top priority.
However Social Justice Ireland has strongly criticised a proposal from the OECD that unemployment payments should be reduced over time to encourage unemployed people to take up employment.
“The vast majority of unemployed people would take up any job that was available” according to Fr Seán Healy, the organisations' director.
“Blaming unemployed people for the failures in the economy and the inability to produce jobs is perverse in the extreme”.