Cost of doing business falls but key expenses still high
THE cost of doing business in Ireland is falling but remains expensive as companies continue to pay over the odds for legal fees, property, waste disposal and broadband, the National Competitiveness Council (NCC) said yesterday.
"Despite progress, Irish costs remain high relative to historic levels and those in other countries," the NCC said in a report.
"Although prices in Ireland have moderated in the past year . . . key business inputs in Ireland remain relatively expensive," it added.
The NCC noted that prices were also declining elsewhere. Industrial rents tumbled 18pc in 2009, but rents remained the third-highest in the 16 countries benchmarked because rents elsewhere also fell, it said.
The report complained that transport costs and taxis were relatively expensive while the cost of legal services had declined very slowly.
Legal costs were still 18.4pc above the average 2006 price at the end of last year, while accountancy costs fell significantly during the same period.
Ireland was also the most expensive benchmarked location for the landfilling of non-hazardous waste in 2008, the report said.
Proposals to increase the landfill levy further and introduce an incineration levy would further raise the cost.
The NCC warned prices could rise again if the economy improves and called for measures to prevent this happening.
"It is critical that we act now to put in place the structural changes that are required to ensure that prices do not rise again and erode competitiveness when the economy returns to growth," the report added.
Many recent price falls were due to reduced demand, spare capacity, falling interest rates and fuel prices rather than a response to structural changes in the Irish economy, the report added.
"We ignore at our peril the very stark message of this report; that structural changes are required," said Joanne Richardson of the American Chamber of Commerce in Ireland.
"As far back as last January, the American Chamber openly questioned the improvements in competitiveness that were being achieved by Ireland.
"It was clear then and remains the case that these were to do with lower inflation and recessionary factors rather than real improvements in our competitiveness," she added.
Irish salary levels were broadly in line with the euro area average, although they were higher than those in the US for comparable positions and for most comparable positions in the UK, the report said.
However, salaries for hospital consultants and nurses were among the highest in the world.