Education standards and high cost base ‘undermining competitiveness’

DECLINING education standards and a high cost base continue to undermine Ireland’s attractiveness to foreign investors, the American Chamber of Commerce in Ireland has warned.

It has also stressed the need for this country to defend its right to a 12.5% rate of corporation profit tax.

The low tax rate helped counter the loss of competitiveness in the economy suffered through higher energy costs (35% above EU average) and other charges that are out of line with competitors, it said.

The chamber also said the decline in numbers taking high level maths and science was an ongoing concern.

Five years ago it called for the introduction of “bonus points” for those who took higher maths in their Leaving Cert, but nothing has been done in the meantime, it said.

Following his election as president of the American Chamber, Lionel Alexander said Ireland needed to “transform and reinvent itself” if it is to get back to sustainable growth levels.

Europe’s closeness to us with its market of 600 million people is a “key strength”, he said.

The future of the economy will depend on combining strong manufacturing base with research and development to deliver high added value to the markets on our doorstep, he said.

Developed economies cannot compete on the basis of manufacturing alone against low cost economies elsewhere in Europe and Asia.

It was essential that Ireland evolves into a “smart economy” that is built on the back of a core manufacturing base.

That kind of strategic development is needed to ensure the future success of the US companies located here.

“The focus must be to protect and grow the 100,000 plus direct jobs created by the 600 US companies in Ireland,” he said.

Mr Alexander, who is vice president and managing director of Hewlett Packard (Manufacturing) also said the Government must not relinquish the 12.5% corporation tax rate.

“Being a competitive tax jurisdiction has helped to mitigate the fact that Ireland has been uncompetitive from a cost perspective,” he said.

It would be wrong to try and use “our lower corporate tax as a silver bullet in relation to higher costs and we must address our overall cost competitiveness” he added.

The chamber warned also we cannot afford any “disruption” in the period ahead from strikes or any other form of protest against the recent budget.