The pandemic unemployment payment is being partially blamed for businesses being unable to get employees.
At least 38% of people are earning more from the payment than they were from their jobs.
An announcement on how long the scheme will be extended is expected by the end of the month.
Ibec's Fergal O'Brien says companies that are expanding during the outbreak are struggling to get staff.
"With the level of payments that are now being provided, we do have some challenges to make sure there is a proper incentive-to-work model and that our labour market is working well," said Mr O'Brien.
"We need to make sure that people are being encouraged and that where people are getting job offers that they are taking them up."
Almost 4 in 10 people claiming the pandemic unemployment payment are financially better off than they were in their job.
The €350 payment is costing the exchequer €200 million per week.
The Taoiseach is warning people who refuse their old job back that they will no longer be eligible for the pandemic unemployment payment