According to the NCB, Ireland is becoming more competitive
November 21, 2009 in News by Stephen Hewitt
According to a report by NCB, Ireland is becoming more competitive relative to its eurozone counterparts.
The core Consumer Price Index is falling by approximately 1% year on year compared with the eurozone core inflation rate of +1.1%.
However, Ireland needs to improve and maintain a competitive advantage given the Weakness and instability of domestic demand.
The stockbrokers report uses evidence and data from the second quarter earnings which only covers 18% of the private sector workforce to suggest that the private sector is reducing Unit Labour Costs (ULCs) which has allowed for increased competitiveness.
Chief Economist at NCB, Brian Devine said that,
“Firms in the private sector have become more competitive by becoming leaner (i.e. reducing workforce) and/or cutting pay in order to reduce unit labour costs.”
Increases in productivity (stemming from employee and hours cuts), sharp falls in irregular bonuses (as firms pare back margins) and steady hourly wages rather than deep cuts in basic hourly pay are the ways in which ULCs are falling in Industry and the Financial services sector.
The second quarter earnings data show that there was a large 4.8% quarter on quarter fall in earnings in industry and in the Financial & Insurance sectors which was -6.1%.
NCB said that a ‘large part’ of the fall was seasonal and related to irregular earnings declining.
Devine said,
“On a year to year basis hourly earnings in Industry were still up +4.2% while they were down -11.6% in the Financial sector,”
As of the second quarter in 2009 there were 1,938,500 persons in employment in the State, with approximately 1,581,900 of those in employment in the private sector and 365,600 in employment in the public sector.
“For the second quarter of this year, we now have employment and earnings data for 254,000 public sector employees and 295,700 employees from Industry and the Financial Services,”
The 295,700 employees are largely in the private sector but the data does include 14,600 workers from the Electricity, Water Supply & Waste management sectors.
NCB’s chief economist then added,
“Thus, we have earnings on 69% of the public sector employees and approximately 18% of private sector employees, ”
