The National Competitiveness Council, NCC, recently published its Statement on the Costs of Doing Business in Ireland. The publication outlines the key findings of research looking at the cost of doing business at four locations in Ireland — Dublin, Cork, Galway and Limerick — and comparing these to international centres such as Bangalore, Boston and Copenhagen. The data is for one period only, January 2006, but will be updated in two subsequent reports in 2007 and 2008.
The chairman of the NCC recognises that Ireland's competitive position remains favourable. The NCC's recent annual report noted that economic growth in 2005 was one and a half times the average EU 15 GDP growth between 2000-2004 and Ireland is ranked first in the EU 15 for entrepreneurial activity. Ireland ranks highly in the UN's human development index. For 2005, we are eighth in the OECD group and third in the NCC's benchmarking group. This reflects several improvements, including the elimination of employment, improvements in life expectancy and raised life satisfaction. In addition, a recent Price Waterhouse Coopers survey ranks Ireland second in the world in terms of ease of paying taxes, while the World Bank continues to regard our regulatory environment as benign, ranking us tenth out of 175 countries. Ireland has made significant progress both over time and relative to other countries in terms of increasing secondary school participation rates. At 86.1% we now exceed the Lisbon target of 85%.
The NCC Statement on the Costs of Doing Business in Ireland states that it is notable that most successful countries in terms of wealth are generally expensive. In this respect, the report shows that labour costs at 59% dominate firms' business costs. These were followed by property costs at 11%, utility costs at 9% and transport costs at 4%. All other costs accounted for 17% of total costs.
The NCC's cost profiles demonstrate the importance of labour costs for firms across all sectors. However, the analysis by the NCC shows that labour costs, taxes and transport costs are competitive when compared to benchmarked locations in the EU 15 economies or in the United States. Labour costs in manufacturing are marginally more competitive than in the services sectors, compared to other EU 15 and US cities.
The NCC acknowledges that our cost competitiveness is also supported by relatively low taxes on labour. The research highlights the fact that Irish cities show the greatest cost competitiveness compared to others that were looked at in medical technologies, engineering and food processing. These are important sectors for economic development.
Additional information not given on the floor of the House.
The report underlines the competitive position of a large part of our economy.
Looking at the cost of business across all business sectors reviewed, Irish cities are on average 15% more cost competitive than the average of other high income cities. It is inevitable that we will have a higher cost base than low cost cities examined such as Bangalore, but I am confident that our broadest competitive position will remain robust and particularly in those sectors of the economy which will drive economic growth and employment.
