Vol. 558 No. 6
33 Mr. Sherlock asked the Tánaiste and Minister for Enterprise, Trade and Employment the implications for industrial development and job creation of the recent figures showing that Ireland suffered the sharpest drop in industrial production during September 2002 of all Eurozone countries; and if she will make a statement on the matter. [24882/02]
According to the latest statistics from the Central Statistics Office (CSO), the volume of industrial production for manufacturing industries in September 2002 was 13.2% higher than in September 2001. The seasonally-adjusted volume of industrial production was down by 6.3% for the three month period July to September 2002, when compared with the previous three-month period. This relates predominantly to a fall in the production of basic chemicals over the summer months, possibly relating to a number of company closures. Other sectors, such as food and beverages, clothing and textiles and electrical machinery, including semiconductors, have also suffered small declines in output over the same period.
The decline in industrial output has also been accompanied by a small decline in industrial employment. Industrial employment was 258,700 in June 2002, the latest data available, a decrease of 10,300 from June 2001. Despite the employment decline in industry, unemployment, estimated at just 4.3% of the labour force in October 2002, remains low.
The decline in industrial production in the July-September period is of concern, and is regarded as relating primarily to two factors, the slowdown in global demand for manufactured goods, and fast growth in costs for Irish manufacturing industry. Over the past 18 months, the global economy has undergone a marked slowdown, and industrial production throughout Europe and the USA has slowed over the same period. According to data from EUROSTAT, the volume of industrial production, seasonally adjusted, in the eurozone declined by 1% in the year to the second quarter of 2002 – the latest data available. The slowdown is not just an Irish phenomenon.
Given the current global economic climate, the Government and the development agencies are concerned at the impact of fast growth in wage and non-wage costs on national competitiveness and the attractiveness of Ireland as a location of investment in manufacturing industry. Nominal wage costs in Ireland are rising at around three times the EU average. While, in the past, gains in labour productivity justified significant growth in incomes and wages, recent falls in productivity growth indicate that wage inflation will have to ease if low unemployment and competitiveness are to be sustained, both for manufacturing and other industries. Growth in non-wage costs, such as office rental, electricity, insurance and telecommunications also needs to be addressed.
