National Competitiveness Council warns of insufficient investment in infrastructure
11 August 2015
The National Competitiveness Council (NCC) has published its annual benchmarking report, Ireland’s Competitiveness Scorecard 2015. The scorecard provides a comprehensive statistical assessment of Ireland’s competitiveness performance with regard to a range of countries with which we compete on international markets for trade and investment.
The Irish economy is the fastest growing in Europe, with GNP growth of 5.2 per cent in 2014 being driven by a strong export performance and increasingly by new enterprise investment, which is underpinned by our improving competitiveness performance.
Ireland has moved from 25th to 16th on the IMD competitiveness rankings, with progress being made in areas such as the environment for start-ups, regulation, and access to credit. This improving competitiveness is contributing to strong employment growth. The unemployment rate has fallen from more than 15 per cent in 2012 to below 10 per cent and employment has grown for three consecutive years, increasing by 2.2 per cent in the year to Q1 2015, with an additional 41,300 employed over the past 12 months.
However, the council warns that sustaining the momentum of employment growth is under threat, and urgent action is needed to improve competitiveness if we are to grow exports, attract investment and achieve a sustainable economic recovery.
The same urgency and commitment that went into bringing down the deficit, stabilising debt levels and securing the banking system must now go into maintaining and improving the competitiveness of the Irish economy as the challenge is not over, it warns.
While we have made progress at national level in improving our competitiveness, our ability to compete in international markets has been boosted by benign external factors – a weak euro against our main trading partners of the UK and US and low energy prices – and these favourable factors could be quickly reversed, eroding the competitiveness gains made to date.
The key areas of concern identified by the council include insufficient investment in transport, energy and broadband infrastructure to meet the needs of a growing economy. A step-up in investment in education and training is also essential, as we continue to have a high proportion of the labour force with relatively low levels of formal education.
Ireland has relatively low levels of investment in workforce training and low levels of engagement in life-long learning. The narrow base of exporting firms and exporting sectors continues to pose a risk for the economy and we need to increase the rate of entrepreneurship and investment in new sectors. The council is concerned about cost pressures, in particular, in the areas of childcare costs, property, insurance and business services.
The council is also warning about the risks of increases in labour costs that are not underpinned by increases in productivity, in particular where these increased costs are being driven by skills’ shortages. Ensuring skills and labour market mismatches do not grow and aligning education and training outputs to enterprise needs both remain critical.
The ICS report is a follow-up to the council’s Cost of Doing Business in Ireland report published in April 2015 which found that while costs have fallen significantly since 2009, Ireland remains an expensive location in which to do business, relative to some of our key competitors, and there is a need to refocus efforts on minimising domestically controllable costs to the extent possible.
Speaking at the launch of the report, Professor Peter Clinch, chair of the council said: “Ireland’s improving competitiveness performance over the period 2011-2014 has been central to the recovery in employment and economic growth. However, we remain a mid-table performer across most benchmarks of international competitiveness.
“External factors – low energy prices and the weak euro – are currently boosting Ireland’s international cost competitiveness. While these factors are currently working in our favour, they can be quickly reversed, eroding the gains made to date. They also serve to shield us from some harsh truths: Ireland’s continuing competitiveness is under threat, and there are indications that pressures are already emerging which are undermining our ability to compete international.”
Prof Clinch highlights six key areas of concern identified in the scorecard report which require immediate policy attention. These are:
- Maintaining fiscal sustainability;
- Investing in physical and knowledge infrastructure;
- Ensuring cost competitiveness;
- Enhancing talent and skills;
- Fostering innovation and productivity;
- Broadening the enterprise and export base.
He added: “The recent economic crisis demonstrated how international and national authorities were watching the wrong indicators and missed significant economic threats emerging. The risk now is that, having concentrated on improving Ireland’s macroeconomic indicators; people will assume the hard work is done.
“The same urgency and commitment that went into bringing down the government deficit, stabilising debt levels and securing the banking system must now go into maintaining and improving the competitiveness of the Irish economy.
“Our future wage rates, our ability to pay for the health service – let alone improve it – our ability to pay for good education for our children, our ability to have a generous state pension and our ability as an economy to survive in the eurozone all depend on the competitiveness of the Irish economy. The challenge isn’t over. In terms of maintaining competitiveness, it has only just begun.”http://www.engineersjournal.ie/2015/08/11/national-competitiveness-council-warns-insufficient-investment-transport-energy-broadband/http://www.engineersjournal.ie/wp-content/uploads/2015/08/Dawson-st-December-2014-P-21-300x3011.jpghttp://www.engineersjournal.ie/wp-content/uploads/2015/08/Dawson-st-December-2014-P-21-300x3011-300x300.jpgNewsinfrastructure,investment