Dáil Éireann Debate, Wednesday - 20 July 2016
449. Deputy Bernard J. Durkan asked the Minister for Jobs, Enterprise and Innovation the extent to which the cost base in Irish industry remains in line with that in other adjoining and European jurisdictions; and if she will make a statement on the matter. [23278/16]
View answerIreland’s improving cost competiveness performance has been central to securing the recovery in economic growth and employment. The improved competitiveness of Ireland’s exporting sector has been one of Ireland’s greatest strengths in recent years and has been key to economic growth and job creation. Improved cost competitiveness has made Irish firms more competitive internationally and made Ireland a more attractive location in which firms can locate and expand their operations.
As a result of our concerted efforts to improve national competitiveness, Ireland’s relative international competitiveness as measured by a range of international indices has improved since 2012. Ireland moved from 16th to 7th in the IMD’s World Competitiveness Yearbook, from 29th to 24th in the WEF Global Competitiveness Report and 17th out of 189 countries, up two places on last year as assessed by the World Bank. The Bank’s latest report shows Ireland is now ranked 4th in the euro area in terms of ease of doing business.
Cost competitiveness is an important aspect of Ireland's overall competitiveness and we continue to monitor Ireland's cost competitiveness on a regular basis. The National Competitiveness Council’s Costs of Doing Business in Ireland report published in April 2016 benchmarks key business costs and focuses on areas where Irish enterprise costs are out of line with key competitors, and on costs that are largely domestically determined.
The report points out that recent external factors have been in our favour in terms of cost competitiveness such as a weak euro, historically low interest rates, low oil prices and positive global growth. However, as we know these are factors which are beyond our control and can change quickly and the recent UK Referendum result on leaving the UK increases the uncertainty in the external environment. The report concludes that Ireland’s industrial cost base remains competitive but pressure points are emerging in labour, property and business service costs. We must therefore focus intensely on reducing costs that are out of line with those in competitor countries. There is a role for both the public and private sectors alike to proactively manage their cost base and drive efficiency, thus creating a virtuous circle between the costs of living, wage expectations and cost competitiveness. Measures that ensure open and competitive markets are essential. Improving productivity performance is also key.
I share the Council’s view that high costs have the potential to undermine recent economic progress and it remains our goal to continue to develop a competitive and productive economy. The immediate challenge is to sustain the strong recovery underway by remaining competitive. Therefore a general policy of vigilance and a willingness to take action on costs is essential. To protect the gains achieved to date, to further embed and sustain employment growth, and to ultimately spread the benefits of economic growth to all, we must continue to enhance all aspects of our competitiveness, including costs.
Addressing Ireland’s international cost competitiveness remains a key economic priority for Government. While growth prospects for the Irish economy are strong, we must continue to deliver aggressively the structural reforms required to support cost competitiveness, productivity and growth. We will continue to progress actions that improve Ireland’s cost competitiveness position, by implementing Action Plan for Jobs 2016 and in the development of the Action Plan for Jobs 2017.
