The measure is part of a drive aimed at making work pay.

People who have been on the unemployment register for two years or more will keep receiving benefits for three years after they find a job, as part of a set of measures aimed at tackling long-term unemployment.

Under this scheme, the benefits will gradually go down over the first three years of employment: 65 per cent of their benefit in the first year, 45 per cent in the second year and 25 per cent in the third year.

Moreover, the company employing them will also receive 25 per cent of the benefit during these first three years.

The Finance Minister said the measure was part of a drive aimed at making work pay and encouraging an increase in the labour force. He said the measure would not cost the Government anything extra but would incentivise work.

He also announced a measure addressed at the unemployed aged 45 to 65. Companies hiring people in this category will receive a tax break of up to €5,800 for two years. They will also get a further 50 per cent of training costs, up to a maximum of €400.

The company employing them will also receive 25 per cent of the benefit during these first three years

The Budget also includes measures encouraging part-time work through fiscal incentives.

Currently, part-time timers pay a preferential rate of 15 per cent on the first €7,000. The threshold will now be raised to €10,000. For those who work part-time on a self-employed basis, the threshold will go up to €12,000.

On top of this, for the first time part timers will be able to employ up to two people with them without losing any of these benefits. So far they were not able to employ anyone.