Dara Calleary
Question:342. Deputy Dara Calleary asked the Minister for Jobs, Enterprise and Innovation if Ireland’s international cost competitiveness improved during 2013; and if he will make a statement on the matter. [4190/14]
View answerTuesday, 28 January 2014
Questions (342)
Written answers
Forfas’s most recent report on Ireland’s cost competitiveness, “Cost of Doing Business 2012”, published in April 2013, indicates that our cost competitiveness has improved markedly over the last number of years.
Between January 2000 and April 2008, Ireland recorded a 22.5% loss in competitiveness, fuelled by an unsustainable consumption and property boom. Since 2008, Ireland has regained some of the competitiveness it had lost.
There have been falls in relative prices in a number of areas. Labour is the most significant cost for most businesses and the latest Eurostat figures show that the labour cost index in Ireland fell by 1.6% in Quarter 3 of 2013, compared with Quarter 3 2012. Over the two year period 2011-2012, there has been a very significant improvement of almost 20% in our unit wage costs relative to the rest of Europe.
Construction costs and rental costs for both office and industrial space have fallen dramatically for new businesses since the collapse of the property bubble. Rental costs for office space, for example, declined by 45% between 2007 and 2011. Other property related costs such as stamp duty have also been reduced.
Similarly, the Forfás report shows that the cost of the majority of business and professional services in Ireland has fallen since 2006.
My Department has identified measures to simplify the administrative burden on businesses to the potential value of over €207 million per annum, by cutting out paperwork, revising rules for small businesses and making better use of online services. Programmes such as Enterprise Ireland’s LEAN Business offering and innovation supports are helping companies to address competitiveness issues and improve productivity. The reform of statutory wage setting mechanisms has also improved competitiveness in a number of sectors.
In terms of Ireland’s overall international competitiveness position, we have seen a significant improvement in recent years. The latest IMD World Competitiveness Yearbook, published in May 2013, shows Ireland improving to 17th position in the rankings, up from 24th in 2011. Ireland is ranked 15th in the World Bank’s Doing Business 2014 report and was recently named by Forbes magazine as the “Best Country for Business”. However, there is no room for complacency, and policies to improve cost competitiveness are vital if we are to continue to increase employment.
Through the Action Plans for Jobs in 2012 and 2013, the Government has focussed on creating a supportive environment for businesses operating in Ireland. The Action Plans have included a range of concrete measures to address issues which impact on our competitiveness position. The implementation of these actions, combined with the Government’s exit from the Troika programme and its return to international funding markets, will play a key role in improving our competitiveness further and realising our ambition of making Ireland the best small country in which to do business.
I am currently finalising the 2014 Action Plan for Jobs on behalf of the Government, which will build on the progress made in recent years and will include further measures aimed at reducing costs for business.