Wage demands deter multinationals

DUBLIN has become less attractive as a location for multinational companies because high living costs have pushed up wage demands, top economists have warned.

Colin Hunt, of Goodbody stockbrokers, said that if companies were looking for a reason to pull out of Dublin, livings costs were a factor.

“It is a negative if multinational companies have to pay ex-pats more to work here, it erodes profits,” he said.

Dublin has emerged as the third most expensive EU capital city in recent survey by Mercer Human Resource Consulting. The survey, which covers 144 cities, measures the comparative cost of more than 200 items in each location. These include housing, food, clothing and household goods, together with transport and entertainment. The data is used to assist multinational companies in determining compensation allowances for their expatriate workers.

Alan McQuaid, chief economist with Bloxham stockbrokers, said the high living costs could put the squeeze on more traditional manufacturing companies, such as clothing and footwear, but that they were unlikely to discourage multinationals with a high profit margin.

“If you have a company with high profits they will be attracted to locate here anyway because of the low Corporation tax.”

IDA spokesman Colm Donlan said the young, highly skilled workforce, the population base and the high standards of education in Dublin were further assets likely to attract investment.

Mr Donlan said wage costs and not cost of living was the main concern.

“Wages are rising rapidly and the cost base for doing business here is rising steadily, making Dublin and the rest of Ireland less competitive.”