The proportion of unqualified people of working age in Northern Ireland is the highest in the UK, the Public Accounts Committee has said.
More than a fifth had no qualifications and many showed low levels of literacy and numeracy which could harm overall economic competitiveness, the committee report added.
At the current rate of progress it could take the Department for Employment and Learning (DEL) decades to overcome Northern Ireland's literacy and numeracy deficit. This does not necessarily mean workers lack skills but there needs to be more work on improving education levels, the report said.
The document said: "The proportion of unqualified people within the working age population in Northern Ireland is still the highest in the United Kingdom and needs to be substantially reduced to improve our economic competitiveness.
"The committee recommends that DEL sets annual targets for a progressive reduction in the qualifications differential with the rest of the UK, with an ultimate aim to better the United Kingdom average."
The 81-page committee report, Improving Adult Literacy and Numeracy, made 14 recommendations. It said the Stormont Executive's economic ambitions "cannot be fully realised while significant numbers of the working population have no qualifications and many experience low levels of literacy and numeracy".
It added: "While indications are that the percentage of the workforce without qualifications has been falling, it remains significant - for example, at June 2010, the figure was 22%."
The DEL told the committee that employers said they have skilled but not necessarily qualified workers. It hopes, therefore, to create a system whereby it can assess a person's skills and accredit them.
PAC chairman Paul Maskey said basic skills were still a problem for many adults. He said: "Literacy and numeracy is a major problem in our society; it has no boundaries and no easy solution.
"Tackling this problem is not simply about improving education - there are much wider social and other issues involved which impact on the local economic, health and justice systems."