Dáil Éireann debate -
Tuesday, 3 Apr 2001

Vol. 533 No. 6

Written Answers. - Economic Competitiveness.

Enda Kenny

Question:

94 Mr. Kenny asked the Tánaiste and Minister for Enterprise, Trade and Employment her views on the competitiveness of Irish industry; her further views on Ireland's ability to retain competitiveness in the face of much lower labour rates in developing and applicant countries to join the European Union; and if she will make a statement on the matter. [9766/01]

Tánaiste and Minister for Enterprise, Trade and Employment (Ms Harney):

Lower cost economies in Eastern Europe and Asia have a certain labour cost advantage over Ireland and other European economies. However, recent wage growth in Ireland reflects our economic success and our achievement in improving economic welfare generally. At present, it also reflects a labour market which is nearing full employment, an outstanding achievement when compared with the appallingly high level of unemployment in the late 1980s and early 1990s.

However, it is misleading to look at wage rates alone as a factor in our ability to retain competitiveness. A key focus of Government policy has been to strengthen overall economic competitiveness which involves a range of actions.

A major feature of the activity of our enterprise agencies has been to re-orientate industry towards higher value added sectors and restructuring in the indigenous and foreign owned industrial base. This has led to a shift in employment into higher productivity sectors thereby maintaining competitiveness. For example, in 1999 Irish productivity per employee per annum was over five times that of the Czech Republic, over four times that of Hungary, and almost three times that of Korea. Moreover, for the last decade, including the last year, Irish productivity growth has been amongst the highest in the OECD. These characteristics of high productivity levels and productivity growth associated with increasing wages indicate that Irish economic effort is increasingly focused in high value added sectors. For this reason, simple wage comparisons with developing countries and EU applicant countries are not appropriate.

The accession to the EU of our eastern European neighbours will give rise to increased competition in certain sectors, and for this reason it is imperative that we continue to develop into a high skill, high value added economy. This Government has put policies in place to ensure the achievement of this transition. Furthermore, this dimension is more than balanced by the opportunities which enlargement presents. The single market will expand to over 500 million people and the opportunities for our exporters are obvious. Ireland is well placed to take advantage of the benefits offered by the enlargement of the Union.

We will continue in this way to focus on factors such as the skills level of the population, the quality of our physical infrastructure, the costs facing business, the services needed by business, the regulatory environment and the effectiveness of public administration. I am confident that determined application of these approaches in the coming period will ensure that the conditions and incentives for enterprise in Ireland will remain favourable, thereby underpinning our competitiveness into the future.