Bernard Durkan (Kildare North, Fine Gael)
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188. To ask the Minister for Enterprise, Trade and Employment to indicate 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. [30840/24]

Peter Burke (Longford-Westmeath, Fine Gael)
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Irish enterprises over the last number of years have faced significant challenges. My Department has been monitoring such developments in the business environment and in particular, developments in business costs. I recognise that firms have faced multiple crises alongside cost increases over the last number of years, including Brexit, the COVID-19 pandemic, the Russian war in Ukraine and the associated supply chain shock, the energy cost crisis and rising inflation along with wage demands, and rising interest rates.

These international developments led to cost rises for many sectors, however the impact of many of these cost factors has now eased, which is evident in the Eurostat Industrial Producers Price Index. Similar to other European countries, Ireland experienced sharp industrial producer price inflation in 2022 of 8.7%, however this was below the EU average of 26.6%. In 2023, industrial produce prices in Ireland fell 4.1%, compared to a 13% average decline across the EU.

The Irish labour market continues to perform strongly. Ireland has had an unemployment rate of under 5% since January 2022 and in terms of labour productivity, Ireland is a strong performer internationally, consistently ranking among the top economies across the EU27 and OECD. Indeed, our strong employment rate points to an economy which is operating at capacity, with the demand for labour exceeding its supply. This in itself has contributed to cost increases.

Developments in input prices, including wage developments, ultimately feed into consumer price inflation. While inflation has eased considerably in recent months (projected to be 2.1% for 2024), we are still operating from a high price level. A recent Eurostat survey found that Ireland has the second highest level of consumer prices in the EU, with prices here 42% above the EU average. Ireland’s high price position reflects its relatively high-income position, but other factors also determine its position including economic growth contributing to (excess) demand factors in a constrained market, deliberate policy decisions (such as taxes on alcoholic beverages), and transport costs associated with our geographic location.

Input cost levels, particularly energy costs and those influenced by energy costs, remain high and have an impact on industry. I will continue to monitor cost developments and their bearing on Ireland’s competitiveness.

Each year, the National Competitiveness and Productivity Council (NCPC) prepares and submits to the Taoiseach and the Government, through my Department, an annual report – Ireland’s Competitiveness Challenge - outlining the challenges to Ireland’s competitiveness and productivity over the medium term and the policy responses required to meet them. The 2024 Challenge report is being finalised for publication, and I look forward to reviewing it and considering its recommendations to Government in relation to Ireland’s competitiveness.