Our costs are fastest rising among OECD
Ireland's unit labour costs accelerated at the fastest pace of any member of the Organisation for Economic Co-operation and Development (OECD) during the final quarter of 2009, even as thousands of workers endured pay cuts and the country witnessed the deepest deflationary period since the Great Depression.
Releasing the figures yesterday, the OECD think tank reveals that unit labour costs -- the average cost of labour per unit of output -- jumped 2.4pc during the fourth quarter of 2009. That was on top of a 2.5pc rise in the third quarter.
The increase in unit labour costs in the fourth quarter, though not in itself a comprehensive measure of competitiveness, was significantly ahead of that recorded in other OECD member states such as the US, the UK, and even battered Greece, and is likely to cause concern in government circles.
Ireland's unit labour costs declined 1.8pc between the third quarter of 2008 and the final quarter of 2009, however, and it was one of just four member states to record such a fall.
But the rapid rise in costs during the second half of last year came as Ireland slipped two places on an international competitiveness table just released by a leading Swiss business school, Institute for Management Development (IMD).
IMD has ranked Ireland number 21 among nations it surveyed, down from number 19 last year. It's now deemed less competitive than countries such as Finland and Israel, and is even pipped by China (excluding Hong Kong), which ranked just behind Ireland last year. The UK also slipped once place, and is now ranked just behind Ireland. For the first time in decades, Singapore and Hong Kong, now ranked number one and two, were deemed more competitive than the US.
IMD economists also predicted that Ireland's ratio of debt to GDP won't drop to a "bearable" 60pc until 2021 at the earliest. Taxpayers are being saddled with billions of euro in debt to bail out the country's banks.
Fine Gael deputy party leader and finance spokesman Richard Bruton charged the Government with abdicating its responsibilities to the economy and called on it to implement a so-called 'Competitiveness Pack' to tackle the country's cost base.
"Unless Ireland can tackle this competitive deficit, we are looking at the prospect of extended economic stagnation which will make it even harder to correct the public finances," claimed Mr Bruton.