Bernard J. Durkan
Question:153 Mr. Durkan asked the Minister for Finance his plans to counter job relocation to low wage economies; and if he will make a statement on the matter. [2690/05]
View answerTuesday, 1 February 2005
Questions (154)
Written answers
In the future Ireland will face constant and unavoidable competition from other economies, some of them low wage economies, for jobs and investment. To ensure that we are best placed to retain existing jobs and to attract new investment we must remain focused on restoring and enhancing national competitiveness.
Developments in prices and wages are an important component of competitiveness. Recent trends in the euro-dollar exchange rate and the resulting negative impact on competitiveness emphasise the need to keep domestic costs down. Government policies are focused on this. The downward trend in the rate of consumer price index inflation in 2004 is welcome from a competitiveness perspective and my decision not to increase indirect taxes in the budget will further help curb inflation in 2005. Sensible incomes policies and a greater role for competition are also critical to keeping domestic costs competitive.
The consensus approach to wage determination, therefore, has a crucial role to play in ensuring that wage developments evolve in a manner that is supportive of our competitive position. In this context wage increases must be limited to those negotiated under Sustaining Progress. It is also important to maintain spending growth in line with revenue growth, thus keeping the burden of taxation low in order to maximise our economic growth potential.
Ireland, however, like other high income economies, cannot seek to compete with lower wage economies on the basis of wages alone, and we must be cognisant of other factors which enhance our attractiveness as a business location. These include skills, the quality of our infrastructure, regulatory structures and the stability of the business environment. In the future, Ireland must seek to continue moving up the value chain attracting investment increasingly from high value added sectors such as information technology, business services and pharmaceuticals, for example, where the skills of the available workforce and the quality of the business environment and the available infrastructure are critical.
That is why the Government remains so committed to maintaining capital expenditure at the current high levels relative to GNP in order to reduce the existing infrastructural deficit. As outlined in the budget, over the 2005-09 period we will maintain our high level of investment in infrastructure at nearly twice the European average. Investment in education is also important to ensure that the Irish workforce possesses the skills to compete successfully in the future.