Government charges make Irish business uncompetitive

GOVERNMENT charges are a major factor in making Irish business uncompetitive against international peers.

That is the finding of the National Competitiveness Council (NCC), which is the Government’s adviser on such matters. Non-pay costs compared poorly with other countries, it said.

Ireland had the second most expensive industrial electricity prices in the euro zone – 34% above the average – at the end of last year.

There are signs that cost competitiveness is starting to improve, but the overall cost base remained high, it said.

It noted also that the annual inflation rate in state services – such as public transport, health insurance and education – was expected to average 13.2% this year despite sharp falls in overall consumer prices.

It also concluded that our broadband service left a lot to be desired despite our clams of being a high-tech driven economy.

Eircom offered “relatively low speeds at a relatively high cost compared with other countries”, the NCC said.

It also found that the cost of borrowing for most loans “were more expensive than the euro zone average in the first quarter of this year”.

The report also contains a number of positive points.

Ireland continued to have a range of strengths, including a young and well-educated workforce, improving infrastructure and growing levels of research activity.

Ireland scored above the EU average in a measure of innovation.

It also said taxes on profits and labour were still relatively low compared with other countries, despite recent rises.

The report also said competitiveness has not changed “dramatically” in the past year, but the cost of doing business is beginning to fall if at a slow pace, said the NCC.

The country is also making progress in innovation, improving its performance and achieving a score on the summary innovation index that is above the average of the 15 EU countries in the benchmarking report.

The NCC also pointed out that the country continues to build on its strengths as an innovative economy.

That is reflected by the latest figures showing the total amount spent on research and development has risen from 1.26% of GNP in 2000 to 1.68% in 2008.

Given the concerns over cost competitiveness the report said export performance was noteworthy given the exchange rate challenges and the general decline in exports in the OECD region.