Bernard Durkan (Kildare North, Fine Gael)
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85. To ask the Minister for Jobs, Enterprise and Innovation the extent to which he is satisfied with the competitiveness of the industrial cost base; and if he will make a statement on the matter. [2522/16]

Richard Bruton (Dublin North Central, Fine Gael)
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Ireland’s improving competitiveness performance since 2011 has been central to securing the recovery in economic growth and employment. Improved competitiveness has made Irish firms more cost competitive internationally and made Ireland a more attractive location in which firms can locate and expand their operations. The Government’s Action Plan for Jobs, which is co-ordinated and developed by my Department since 2012, has set out a comprehensive set of measures to improve our competitiveness performance. Substantial progress has been made in terms of improving Ireland's competitiveness in recent years. As a result of our concerted efforts to improve competitiveness, Ireland’s relative international competitiveness as measured by a range of international indices has improved since 2012. Ireland moved from 24th to 16th 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 NCC’s 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. Measures that ensure open and competitive markets are essential. Improving productivity performance is also key.

Addressing Ireland’s international cost competitiveness, therefore, remains a key economic priority for Government. We will continue to progress actions that improve Ireland’s competitiveness position, though for example, the Action Plan for Jobs 2016 which contains a range of actions to making it easier for firms to conduct business in Ireland and to reduce costs across a range of business inputs.

The immediate challenge is to sustain the strong recovery underway by remaining competitive. While growth prospects for the Irish economy are strong, we must continue to deliver aggressively the structural reforms required to support competitiveness, productivity and growth. An updated Costs report is currently being compiled by the NCC and will be available for consideration in Q2.