Vol. 566 No. 2
20 Mr. J. Bruton asked the Tánaiste and Minister for Enterprise, Trade and Employment her views on the finding of the National Competitiveness Council that Ireland is now the seventh highest of 16 countries in terms of nominal compensation per employee, and that the rate of growth in nominal compensation is three times the EU average; and if she will make a statement on the impact of this on competitiveness. [12255/03]
42 Ms O. Mitchell asked the Tánaiste and Minister for Enterprise, Trade and Employment the steps her Department has taken in response to the report of the National Competitiveness Council published in November 2002, particularly in the area of inflation and wage costs; and if she will make a statement on the matter. [12243/03]
45 Mr. Durkan asked the Tánaiste and Minister for Enterprise, Trade and Employment if her attention has been drawn to the extent to which business and industry has become less competitive since 1997; the reasons for this trend; her proposals to deal with the issue; and if she will make a statement on the matter. [12257/03]
I propose to take Questions Nos. 20, 42 and 45 together.
The National Competitiveness Council, which was established in 1997 as part of the Programme for Prosperity and Fairness, reports to the Taoiseach and myself every year on key competitiveness issues for the Irish economy.
In its most recent Annual Competitiveness Report, in 2002, the council acknowledged that, over the last decade, the Irish economy has enjoyed significant advances, allowing convergence across key areas with many of our competitors. A virtuous circle of low inflation, moderate wage increases, lower taxes and higher productivity was maintained and, as a result, the economy has been extremely competitive in recent years. This can be observed when assessing the level of GDP or GNP per capita in Ireland compared with other countries. OECD data shows that Ireland now has the second highest level of GDP per capita amongst member countries. While GDP measures overstate Irish income, the data indicate that Ireland is now amongst the richest countries in the world.
In particular, it should be noted that in the period 1997 to 2002 the five year percentage change in total employment in Ireland was the highest recorded, at 25.3%, and ranked us first amongst all the comparator countries.
It is true that the report finds that Ireland is seventh highest out of 16 countries considered in relation to ‘nominal compensation per employee'. However, the council themselves recognise that labour costs as an indicator can be viewed in two ways.
First, and from the point of view of competitiveness, lower labour costs can be seen as having a positive impact. On the other hand, labour costs reflect what employees earn, in turn reflecting the overall standard of living. The overall objective of policy is to improve living standards. Accordingly, higher sustainable wage levels and improved quality of life are the objectives of policies to improve competitiveness.
