Almost, but not quite. Despite all its problems . . . and there are certainly many . . . there is nothing currently wrong with the Labour Party that a good dose of government wouldn't solve.

By the time of the next general election, Labour will have spent 15 years on the opposition benches and that is simply too long for politicians of the calibre of Pat Rabbitte, Ruairi Quinn, Joan Burton, Eamon Gilmore, Brendan Howlin et al.

Rabbitte's announcement on Thursday came as a genuine shock to senior party figures but, ever the political realist, he knew his highrisk strategy of firmly aligning himself to Fine Gael meant he had just one shot at power. Having fallen short, albeit very narrowly, he wasn't going to stick around.

Despite his popularity with the electorate . . . a point confirmed by regular focus-group research conducted by all the parties . . . it is no secret Rabbitte had his detractors in the parliamentary party, who particularly objected to what they saw as the centralised control he maintained over the party.

There has been some talk within the party that Rabbitte's departure will be a chance for old Labour to reassert itself following what was seen as the reverse takeover by Democratic Left. But the bad news for old Labour is that if the bookies are to be believed, Eamon Gilmore is the overwhelming favourite to take over. Ivan Yates's Celtic Bookmakers has Gilmore at 8-13 this weekend, with Brendan Howlin a fairly distant 3-1 and Joan Burton at 6-1. Gilmore's major negative is his DL roots and perhaps a perception he would be too similar to Rabbitte.

But it's hard to believe the 5,000 party faithful, who voted so enthusiastically for Rabbitte five years ago, will be hung up about the old Labour-DL divisions of more than a decade ago.

All is not lost Howlin cannot be ruled out, but his candidature is complicated by the fact he took the Leas-Cheann Comhairle job earlier this summer.

And having twice been beaten for the leadership despite strong backing from the people around Dick Spring, it is a big ask for him to win out at the third time of asking. Joan Burton is unquestionably a big asset for the party but the fact she doesn't have a safe seat in Dublin West may work against her.

Whoever gets the job has obviously a big task ahead of them, but there are grounds for optimism.

Obviously Labour had a very mediocre election and is still in opposition, but its rivals in the left spectrum also did badly. Sinn Fein hit a brick wall, the Socialist Party was left with no TDs, and the Greens failed to make their muchanticipated gains and are now locked into Fianna Fail.

The Seanad elections also gave the party a solid base of young, articulate and telegenic senators which Labour can build on. The other comfort for the party is that unlike the PDs, the Greens or even Sinn Fein, it can face into the next general election knowing that, whatever happens, it has been around for the past eight decades and will be for the foreseeable future. Even a disastrous election where Labour came back with 14 or 15 TDs would still leave it as the third largest party in the Dail, with an evenmoney chance of being in government.

Forget the politics of protest But unquestionably, there are serious issues for the new leadership to address. Pat Rabbitte's comments about the problem with the Labour brand and how the party relates its values to today's electorate have been widely reported. But the issue arguably goes much further than that. The party's values are dearly held by its TDs but it is questionable as to how relevant they are to today's Ireland. As Ivan Yates puts it, the electorate today is "not interested in the politics of protest, or handouts, but is interested in enhanced standards of living".

Labour figures will argue people are concerned with better public services and social justice . . . and of course there is some truth to that.

But the undeniable reality is that the one time the party's poll rating seriously jumped in 2007 was when Rabbitte announced at the Labour conference that he would cut the basic rate of income tax. Rather than engaging in a torturous debate about the future of social democracy and ideology, the party needs to come up with simple, straightforward policies that appeal to its target market.

The tendency of party figures to revert to traditional Labour type whenever any issues relating to the public sector come up also needs to be addressed. That outlook was fine in the 1980s and 1990s, but no longer.

It has the effect of diluting the party's undoubted soundness and competence on economic matters.

The other problem the party has is that while its head office has been excellent in recent elections, it hasn't, in the words of Ivan Yates, "won the ground war" in many of the constituencies. The failure to hold the seats of retiring deputies such as Sean Treacy, Seamus Pattison and Sean Ryan points to serious organisation weaknesses in at least some constituencies. That is particularly worrying given that at least some of the current parliamentary party are unlikely to contest the next general election. Rabbitte's successor will have a big job to do to reinvigorate the organisation.

But ultimately he or she will be judged on whether or not Labour is in government after the next election. Forget the media, forget the old prejudices. The emphasis now needs to be on putting Labour into, rather than getting Fianna Fail out of, government; and on what is best for Labour, not . . . however worthy . . .

what is best for Ireland. The PDs have shown it is possible to dictate government policy with just four TDs; the Greens are there with six.

Labour's new leader must do whatever it takes to make sure their turn comes in four or five years' time.