High wages give rise to Rip-off Ireland

IT is wrong to blame producers and service providers solely for the “Rip-off Ireland” tag this economy has rightly earned in recent years.

A key reason why we pay so much for what we buy in shop or are served up in restaurants is due to the high wages we pay ourselves.

While the term may be justified, economist Shane Garrett of the Economic and social Research Institute says the long and the short of it is that we pay ourselves too well and the cost has to be recouped by service and product providers.

Without doubt the pubs and other protected sectors have got away with murder over the years.

Included in the list are the legal and medical professions, where restricted access has kept supply restricted and prices high.

But that’s beginning to change. Pub prices are being slashed in some Dublin pubs, with some offering prices as low as those available down the country.

But we need to do more, he says in a recent review of the current state of the Irish market.

“The phrase ‘Rip-off Ireland’ is one of the less complimentary contributions of the Celtic Tiger to the English lexicon,” he said.

People returning from holidays abroad never cease to be amazed at the prices that greet them on their return.

Everything from bottles of beer to the inferior restaurant cuisine and the price of clothes in our shops jump out at the returned holiday makers, he says.

Ireland’s expensiveness has even become part of popular culture, he said.

In a recent survey, “The Cost of Living” was identified as one of the more negative aspects of last year in RTÉ television’s 2004: How Was it for You? programme.

But Mr Garrett said we need to be wary of conspiracy theories.

Mass swindle theories have mass appeal, he said.

However, over the last number of years, prices have been growing faster in Ireland than in the countries it competes with.

In its most recent Quarterly Economic Commentary, the ESRI forecasts that this trend will continue in 2005.

The available evidence indicates that Ireland’s price level is close to pole position in the developed world’s league table.

Nobody can credibly argue that Ireland is anything other than an expensive country.

“To infer from this that a culture of profiteering and greed has taken hold is tempting, but not fully correct,” he said.

To get closer to the truth, we must look at ourselves: Irish people are expensive to employ! Given that labour is a sizeable input into almost all firms, particularly in the service sector, expensive workers will invariably translate into high prices on our shelves.

The phenomenon of costly Irish labour is relatively recent.

The era of Celtic Tiger economic growth in the 1990s gnawed into Ireland’s once vast reservoir of unemployed people.

The diminished supply of jobless people in the economy resulted in employers having to compete for workers by bidding higher wages.