Dáil Éireann debate -
Thursday, 14 Feb 2002

Vol. 548 No. 4

Written Answers. - Economic Growth.

John Bruton

Question:

129 Mr. J. Bruton asked the Minister for Finance his views on the finding of the National Competitiveness Council that wages here are now rising faster than productivity; and if he will quantify the gap in this regard. [5157/02]

Minister for Finance (Mr. McCreevy)

I have noted the comments of the National Competitiveness Council.

In presenting the budget to the Dáil in December 2001, I forecast that real GNP growth of the order of 3.5% was likely for 2002, and that the Irish economy would gain momentum during the second half of this year. Given the likely developments in employment over the short- term, I expect labour productivity growth, as measured by real GNP growth per person employed, to be of the order of 2% for 2002. With wages expected to grow in excess of productivity growth, I expect to see a gap between wages and productivity of the order of 5% in 2002.

At budget time, I said that there were considerable down-side risks to my forecasts. In particular, the stronger pace of cost growth here than in many of our competitor-countries was a cause for concern. I indicated that one of the key priorities for policy makers was dealing with this weakening of competitiveness on the cost front and, more broadly,inter alia, by adhering to the current agreement with the social partners, the PPF.