2007
Press Release
Wednesday 23 May 2007
For Immediate Release
Exporters Priorities for new Government to ensure Export Growth
Our competitive position as an exporting nation has been severely eroded over the past 5 years stated the Irish Exporters Association (IEA) in their Priorities for the next Government document released today, 23 May 2007.
The major challenge for both Government and the export industry is, stated the IEA;
- Reverse the decline in manufacturing export and employment which has fallen by €3.9 billion in the 5 years since 2001, with the loss of 29,000 employed in the sector.
- Create the conditions to expand manufacturing exports by a further €33 billion per annum. This is the level needed to absorb the 108,000 employees attracted to the construction sector over the past 5 years.
- An export growth level of 7% per annum in the manufacturing sector over the next 5 years will ensure that the targeted €33 billion export sales and 108,000 increased employment is reached.
- An export vision of this dimension will, if effective, absorb the inevitable redundancy in the construction sector as it returns to the more sustainable levels seen at the beginning of the decade.
- An export vision of this dimension will prevent the severe economic consequences of rapidly falling output and employment expected over the next 5 years in the construction sector.
According to Mr John Whelan, Chief Executive of the IEA, the booming construction sector over the past five years has masked the decline in merchandise exports. In that period merchandise exports fell by €3.9 billion and employment fell by 28,000. “In earlier decades such a decline would have had an immediate impact on Exchequer funding and immediate action taken to address the reasons for the fall,” said Mr Whelan.
Mr Whelan said that Ireland is no longer a low cost economy as pay costs have increased at a rate double that of the other EU 15 countries. He noted that non-pay operating costs – electricity, waste disposal, industrial and office accommodation – are also rising far faster than our European competitors. “When all of that is considered with the fact that road, seaports, airports and ICT infrastructure are all below the standards of advanced economies it is easy to understand why Irish exporters have suffered a significant loss of international price competitiveness,” said Mr Whelan.
The Irish Exporters Association believes that regaining competitiveness will require many changes. It will require changes in industrial relations practice, changes in the balance of capital investment, changes in the speed and direction of new product development, changes in attitudes towards energy usage and changes in inflationary control mechanisms. “These changes cannot be achieved by export industry alone, a new focus from a new government will also be necessary,” said Mr Whelan.
The Irish Exporters Association forecasts strong growth opportunities in the decade ahead, but fears that these growth prospects may not be realised unless the many internal barriers to growth are tackled urgently, efficiently and effectively. From this perspective the Irish Exporters Association puts forward priorities that all political parties would do well to take on board in forming the next government.
Competitiveness of Labour: Wage inflation in the public sector has been a major factor behind the general excessive wage inflation affecting both the manufacturing and services sectors. The next government must commit to benchmarking Irish wages against wage levels in our trading partner countries, for both public and private sector employment.
Competitiveness of Public Services: Energy costs are now at critically high levels for manufacturing business. Electricity prices in Ireland are 11% higher than the EU average. Postal services and the businesses that rely on them are held back by the failure to implement a modern post code system which companies in other jurisdictions enjoy. There is no barrier to introducing a post code system other than the political will to do so.
World Class Competitive Infrastructure: The National Development Strategy 2007-2013 must be revisited to provide provision for Ireland’s seaport development. Airports, especially Dublin, must be refurbished and enlarged as a matter of urgency and regional airports must be upgraded. Rail freight must be given a higher priority and the decision of Irish Rail to abandon its freight service must be reversed to ease congestion at ports and on our roads. A more extensive next generation nationwide broadband network must be a priority of the next government to bring broadband penetration in Ireland up to the standards in our main trading partners.
Trade Facilitation: Trade Facilitation is the name given to measures to simplify and reduce the impact on exporters of import and customs procedures, security procedures, international payment and insurance formalities, and port and transport processes. A Single Window programme must be developed and introduced as soon as possible.
Competitive Environment for Inward Investment: Tax harmonisation moves at EC level are a major threat to the 12.5% corporation tax regime that has served Ireland so well. It is essential that any new government gives top priority to aligning support for independence of tax regulations within the EC.
Services Export Development: The services export sector has experienced exceptional growth over the past five years, achieving double digit growth each year despite the cost-base problems and international competitive pressures. The main opportunities for Irish export growth in the future may lie in the internationally traded services sector. To help the sector achieve its full potential the incoming government must realign R&D programmes which are currently heavily geared to manufacturing product innovation; put tax credit definitions in place that are specific to services innovation and incentivise state enterprises to award ‘reference contracts’ to Irish services companies.
Mr Whelan concluded by saying that international trade, not property trading, is the driving force in the global economy. “The measures the IEA have outlined above must receive high priority by the incoming government if the future growth of our export industry is to be secured in a robust manner,” he added.
ENDS
For further information contact: John Whelan
For full supporting text, please see here
Telephone: 01 661 2182 – Fax 01 661 2315
Email: jfwhelan@irishexporters.ie
23/5/07
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