Responding to a changing economy

The significant rise in the Live Register figures for May was a sharp reminder of the way our economy is changing. The total number on the Live Register has now increased by 30 per cent in just 12 months.

Following a pause in the increase in the Live Register in April, the trend of rising unemployment returned in May. Slightly surprising was the fairly even split between the number of both males and females joining the Live Register. This indicates that the economic slowdown is now affecting a much broader range of businesses than just the construction sector.

The regional disparities in the labour market trends are still evident in the most recent data. In Dublin, the number on the Live Register has increased by 22 per cent in the past year, while in the West region, the increase is over 30 per cent.

We have had an average of 225 redundancies every month in the West region alone (Mayo/Galway/Roscommon) over the period January to May 2008. A spiralling cost base in areas such as labour, insurance, energy, commercial rates, rents and service charges have all played their part in putting increased pressure on job retention and expansion.

The rising cost of doing business is having a crippling impact on both manufacturing and service industries. The ongoing strength of the Euro vis-à-vis both the Dollar and Sterling also presents significant difficulties for Irish exporters. It is now time to focus on controlling the costs that are within our control and to ensure that Irish business can compete effectively in the market. Ireland achieved success because we all recognised the need to be competitive. We understood that we were price takers, not price makers. This is the mindset we need to rediscover.

Pay is one of the few economic factors that we have within our own direct control. As attempts to negotiate a new pay deal continue, parties need to be conscious of the realities. The Irish labour market is facing its most significant challenge in many years and further job losses are likely. The suggestion from some commentators that pay should chase inflation is disappointing. Inflation is a problem for all of us, consumers and businesses alike. Businesses cannot seek an automatic inflation adjustment in the marketplace. No sensible person would suggest that the more difficult it becomes for Irish companies to do business, the more we should push up costs and further damage our ability to trade and to protect jobs.

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