Ireland has consistently been regarded amongst the most competitive economies in the world for supporting enterprise. Reports such as the ‘ IBM Global Location Trends Annual Report 2009’ that was published in October of last year ranked Ireland 1st for attracting FDI on a per capita basis. They listed our key strengths in services and R&D as the reason for topping the list. Similarly, the World Bank’s ‘Ease of Doing Business 2010’ ranks Ireland 7th out of 181 countries, unchanged from a year previously. Last week Ireland was ranked the third most globalised nation, according to an index published by Ernst & Young at the World Economic Forum in Davos. The index is measured by a country’s openness to trade, movement of capital, exchange of technology and ideas, labour movements and cultural integration. So, even though we face significant challenges, it is important to point to these enduring strengths. Ireland is still recognised as a prime location for enterprise to develop.
In Government, we are conscious that further improvement in Ireland's competitive position will foster economic growth. By maximising our resources, our job is to provide a suitable framework that will encourage enterprise development and opportunities. Energy costs have fallen over the past year. The drop in industrial energy prices in Ireland in the twelve-month period to June 2009 was the third largest in the EU. Elsewhere, 22 out of 27 EU countries experienced increases in industrial energy prices over the same period. In fact, the rate of decline in gas prices for industrial users fell by almost 16%, double the European average. A report by Sustainable Energy Ireland (SEI) published on January 24th, showed that gas prices are now 7 per cent to 10 per cent below the EU average in the two main consumption bands for business.
In fact, prices across the economy have fallen substantially. The last Consumer Price Index data from the Central Statistics Office show that prices fell by 5 per cent in December 2009 compared to December 2008. A further reduction in prices is forecast for next year, meaning our competitive position in relation to our trading partners is improving.
Labour costs also constitute a substantial cost for businesses. CSO data show that earnings across the private sector have fallen. Public sector pay has also been reduced. In recognition of these trends, the latest European Commission forecasts for Unit Labour Costs show Ireland's competitiveness in this area is expected to improve considerably relative to the European average over the forecast period.
The National Competitiveness Council released its latest report on ‘Ireland's Competitiveness Challenge' last month. It identified a number of key areas that can boost Ireland's competitiveness, namely: labour market supports and activation, reducing business costs and investing in infrastructure. The Government are already taking action in all these areas.
For example €364 million has been allocated to training and integration supports for the unemployed. €114.5 million is available in 2010 for the Employment Subsidy Scheme, which already helped protect more than 43,000 jobs last year. As I've already illustrated, business costs in the form of labour and energy prices have fallen. Survey evidence also shows that companies are shopping around more to find the best deals to suit their needs. A survey from the mobile operator 3 found that almost two-thirds (64pc) of Irish businesses have switched their phone, internet or electricity supplier, with 62pc of those that switched achieving savings of over 10pc.
Infrastructure investment is a key pillar of the government's policy. The 2010 Budget includes a commitment of exchequer capital investment of over €39 billion for the period 2010-2016. Indeed, at 5% of Gross National Product, the 2010 allocation of €6.4 billion is proportionally very high in comparison to levels of capital investment across the EU.
