Contractors who get construction jobs from the State will have to employ a certain number of unemployed building workers under new Government proposals on "social clauses" to be announced soon.

Minister of State for Public Expenditure and Reform Brian Hayes told the Dáil he would be bringing proposals to Government shortly demanding that a percentage of people in contracts being awarded, will be ones who have suffered unemployment as a result of the downturn in the construction industry.

The Minister said much work had been done on the issue in recent months.

It was not part of tendering as such he said. It is more to do with the State requiring that a certain percentage of people on construction contracts would come from the live register.

He said their work on the issue had been helped by what had happened in other EU countries, particularly those with a significant increase in unemployment. They had examined how they could ensure social contracts were part and parcel of the system in the spending of public money or through public private partnerships.

Mr Hayes was responding to Sinn Féin deputy leader Mary Lou McDonald who asked about the inclusion of a social clause for public contracts, to make provision in the procurement process to address youth unemployment and long-term unemployment.

She said the EU procurement regime and legislation was tight and prescriptive but it gave scope for contracts to have terms and conditions about social clauses. Ms McDonald said this had been successfully pursued in Northern Ireland.

The issue was raised during Dáil question time when Mr Hayes highlighted that in 2011 there were a total of nine central government contracts valued at €138.8 million along with 71 local and regional authorities valued at €863.966 million.

The Minister said 95 per cent of the value of what the State spent remained in the country. "We want to see Irish businesses not just win contracts in this country but in other countries," he said. "The EU market was valued at €2.5 trillion and we want to see out companies getting a larger percentage of that.

The Government was actively encouraging small and medium-sized enterprises to pitch together for business and they were improving data collection through e-tenders, Mr Hayes said. But he also warned of what he called a legal cottage industry challenging every single decision the Government takes.