Dáil Éireann Debate, Wednesday - 17 December 2014
73. Deputy Bernard J. Durkan asked the Minister for Jobs, Enterprise and Innovation the extent to which he continues to monitor the cost base for Irish industry with particular reference to comparison with other adjoining and EU jurisdictions; and if he will make a statement on the matter. [48699/14]
View answerCost competitiveness is an important aspect of Ireland's overall competitiveness. Substantial progress has been made in terms of improving Ireland's competitiveness in recent years.
The real Harmonised Competitiveness Indicator (HCI) is a measure of the trade-weighted exchange rate for Ireland, adjusted for relative price developments. In October 2014, Ireland's real HCI fell by 3.9 per cent year on year. A fall indicates an improvement in price competitiveness and leaves Irish-based firms better equipped to compete on the international market. Relatively low consumer price inflation over the last five years has meant that Irish price levels have fallen considerably relative to our euro area peers.
There has been a significant improvement in economy-wide cost competitiveness. The European Commission in its autumn forecasts estimate that real unit labour costs in Ireland will fall by 4.3 per cent annually in 2014 which is the largest decline across all EU Member States and compares with a fall of 1.2 per cent in the UK, and increases of 0.1 per cent in the EU, 0.2 per cent in the US and 0.3 per cent in the euro over the same time period. Competitiveness has been achieved through wage moderation vis-a-vis trading partners as well as productivity improvements.
We continue to monitor Ireland's cost competitiveness on a regular basis. This is specifically required under the Action Plan for Jobs 2014. Action 94 requires the National Competitiveness Council to “Benchmark key business costs and publish a report highlighting areas where Irish enterprise costs are out of line with key competitors”.
The report concentrates on the costs that are largely domestically determined such as labour, property, energy, water, waste, communications and business services. The NCC note that Ireland’s cost base has improved across a range of metrics over the last four or five years. This has made Irish firms more competitive internationally and made Ireland a more attractive location for firms to base their operations in. However, despite these improvements, the NCC note that it is essential that we continue to focus on reducing costs that comprise a significant percentage of business costs and that are out of line with those in competitor countries.
Addressing Ireland’s international cost competitiveness, therefore, remains a key economic priority for Government.
