Bernard Durkan (Kildare North, Fine Gael)
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115. To ask the Minister for Jobs, Enterprise and Innovation the extent to which his Department continues to monitor the cost-base in the manufacturing and services sectors, with particular reference to the need to remain competitive vis-à-vis European and non-European competitors; if particular costs have been identified as being a disincentive in this regard; and if he will make a statement on the matter. [29282/15]

Richard Bruton (Dublin North Central, Fine Gael)
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Ireland’s competitiveness position must remain a key economic priority for Government and as set out in the Action Plan for Jobs, a range of initiatives are in train across Government Departments to support competitiveness. The National Competitiveness Council and my Department and its agencies are continually engaged with relevant stakeholders on the particular policy needs required to support cost competitiveness. The stakeholders include other Government Departments, regulatory bodies and public and private bodies. We continue to monitor Ireland's cost competitiveness on a regular basis. This is specifically required under the Action Plan for Jobs 2015. Action 247 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 National Competitiveness Council’s Costs of Doing Business in Ireland 2015 report shows that Ireland’s cost base has improved across a range of metrics over the last five years, and driven by reforms set out in the Action Plan for Jobs, Ireland’s competitiveness position has improved in recent years.

As noted in the Government’s Spring Economic Statement, this improvement in competitiveness has facilitated a reallocation of resources towards the tradeable sectors of the economy. Job creation has been the stand-out impact of this improvement. However, as the Council report makes clear, Ireland remains a high cost location for a range of key business inputs and there is a significant risk that recent competitiveness gains may be eroded.

The Costs of Doing Business in Ireland report published in April 2015 benchmarks key business costs across over 50 indicators and focuses on areas where Irish enterprise costs are out of line with key competitors, and on costs that are largely domestically determined.

The 2015 report concentrates on the costs that are largely domestically determined such as labour, property, energy, water, waste, communications and business services. The report finds that while relative cost competitiveness is improving (i.e. although costs are increasing, they are increasing at a slower rate than in many of our competitors), this improvement is largely being driven by external factors beyond the control of domestic policymakers. In particular, a weak euro exchange rate, low ECB interest rates, and low international fuel prices have all combined to improve Irish cost competitiveness.

The NCC report concludes that Ireland’s industrial cost base has improved 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.