Wednesday, 10 November 2010
Dáil Éireann Debate
79. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which his Department continues to monitor the competitiveness of the economy; the way this now compares with other EU member states those within the eurozone and without; the number of corrective measures if any proposed or intended; and if he will make a statement on the matter. [41654/10]
155. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which this economy is competitive in comparison to the most competitive within the EU; and if he will make a statement on the matter. [42036/10]
The standardised methodology for monitoring relative competitiveness across the euro area is the Harmonised Competitiveness Indicator. While it cannot be denied that Ireland had its competitive edge eroded relative to our European peers, as a country we are regaining this competitiveness. Since mid-2008, the Harmonised Competitiveness Indicator (HCI) for Ireland, as measured by the Central Bank of Ireland, has been falling more or less constantly, indicating an improvement in our international competitiveness. This improvement comes despite the renewed appreciation of the euro against the dollar and sterling in the wake on quantitative easing measures in both the US and UK.
Ireland, as a member of a currency union, must focus on improving competitiveness at home. In this regard, we are seeing the benefits of our labour market flexibility: much available evidence points to recent downward pressure on wages in the economy, eg. average weekly earnings in the first of half of 2010 fell by 1.6%. Furthermore, unit labour costs — wages adjusted for productivity — are forecast by the European Commission to fall in Ireland next year. In addition, Ireland has had the biggest decline in consumer prices of the euro area which has had a considerable positive impact on our competitiveness.
While the falls in domestic prices, easing wage pressures and improvements in productivity are helpful, we must not be complacent as further improvements in our competitiveness are essential to take advantage of the global recover. To this end, the Four-Year Plan will outline a programme of structural reforms which will help to further restore competitiveness and support economic growth. The Plan will be published later this month.
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