Cost of Doing Business in Ireland · 2019-10-22 · As a member of the euro area, maintaining cost...

Cost of Doing Business in Ireland April 2019

Costs of Doing Business 2019

1 April 2019

Introduction to the National Competitiveness Council

The National Competitiveness Council (NCC) reports to the Taoiseach and the Government, through the Minister for Business, Enterprise and Innovation on key competitiveness issues facing the Irish economy and offers recommendations on policy actions required to enhance Ireland’s competitive position.

In accordance with the European Council recommendation of September 2016 on the establishment of National Productivity Boards by Eurozone countries, in March 2018, the Government mandated the National Competitiveness Council as the body responsible for analysing developments and policies in the field of productivity and competitiveness in Ireland.

Each year the NCC publishes two annual reports:

▪ Ireland’s Competitiveness Scorecard provides a comprehensive statistical assessment of Ireland's competitiveness performance; and

▪ Ireland’s Competitiveness Challenge uses this information along with the latest research to outline the main challenges to Ireland’s competitiveness and the policy responses required to meet them.

As part of its work, the NCC also publishes:

▪ The annual Costs of Doing Business report;

▪ An annual Productivity Review report; and,

▪ A series of competitiveness bulletins and other papers on specific competitiveness issues.

The work of the National Competitiveness Council is underpinned by research and analysis undertaken by the Enterprise Strategy, Competitiveness and Evaluation Division of the Department of Business, Enterprise and Innovation.

The NCC’s Competitiveness Framework

The Council defines national competitiveness as the ability of enterprises to compete successfully in international markets. This is a significant factor influencing economic growth, jobs, wage rates and the quality of public services. National competitiveness is determined by a diverse range of factors. The Council uses an evidence-based “competitiveness pyramid” to illustrate the various factors (essential conditions, policy inputs and outputs), which combine to determine overall competitiveness and sustainable growth. Under this framework, competitiveness is not an end in itself, but a means of achieving sustainable improvements in living standards and quality of life.

2 April 2019

National Competitiveness Council Members

Professor Peter Clinch Chair, National Competitiveness Council

Pat Beirne Chief Executive Officer, Mergon Group

Kevin Callinan Senior General Secretary designate, Fórsa

Micheál Collins Assistant Professor of Social Policy, University College Dublin

Isolde Goggin Chair, Competition and Consumer Protection Commission

David Hegarty Assistant Secretary, Department of Business, Enterprise and Innovation

Fergal O’Brien Director of Policy and Chief Economist, Ibec

Seán O'Driscoll President, Glen Dimplex Group

Margot Slattery Country President, Sodexo Ireland

Martin Shanahan Chief Executive, IDA Ireland

Julie Sinnamon Chief Executive, Enterprise Ireland

Ian Talbot Chief Executive, Chambers Ireland

Patrick Walsh Managing Director, Dogpatch Labs

Jim Woulfe Chief Executive, Dairygold Co-Operative Society Limited

Departmental Advisers

John Conlon Department of Employment and Social Affairs

Patricia Cronin Department of Communications, Climate Action and Environment

Kathleen Gavin Department of Education and Skills

John McCarthy Department of Finance

Conan McKenna Department of Justice and Equality

David Moloney Department of Public Expenditure and Reform

Ray O’Leary Department of Transport, Tourism, and Sport

John Shaw Department of the Taoiseach

Sinead McPhillips Department of Agriculture, Food and the Marine

Maria Graham Department of Housing, Planning and Local Government

Research, Analysis and Secretariat

Marie Bourke Department of Business, Enterprise and Innovation

Manus O’Donnell 23 Kildare Street, Dublin 2, D02 TD30

Santosh Aryal Tel: +353-1-631-2121

Email: [email protected]

Web: www.competitiveness.ie

mailto:[email protected]

http://www.competitiveness.ie/


3 April 2019

Table of Contents

Preface 5 Executive Summary 6

Chapter 1 – Broader Cost Competitiveness Environment 10

Chapter 2 – How Do Costs Impact on Enterprise? 14

Chapter 3 – Labour Costs, Earnings and Tax 19

Chapter 4 – Property Costs 27

Chapter 5 – Transport Costs 31

Chapter 6 – Utility Costs 38

Chapter 7 – Credit and Financial Costs 44

Chapter 8 – Business Services and Other Input Costs 47

Chapter 9 – Focus on Residential Property and Childcare Costs 52

4 April 2019

Chairman’s Preface

After two years of difficult negotiations, the exact outcome and implications of the Brexit

process are still unclear. However, we know that Brexit uncertainty is costly, exchange

rate movements have damaged the competitiveness of Irish goods in the UK market, and

all forms of Brexit are unfavourable to the Irish economy with hard Brexit scenarios

particularly damaging to key sectors.

Compounding this - the latest reports from a number of key international organisations

suggest that global econ0mic growth is slowing, and will continue to slow. Storm clouds in

the international economy, in addition to Brexit, include: growing tension regarding

international trade; a poor outlook for growth in the euro area with further risks emerging;

the danger of the persistent current account deficit in the US; and, slower growth in China. Some combination of these

could have a destabilising effect on the global economy and, as interest rates are near historic lows, there is one fewer

lever available to address a future economic slowdown. Meanwhile, any increase in interest rates would put downward

pressure on growth.

Slow growth in the euro area is particularly concerning. Germany, the engine of the European economy, has been

sluggish. In Italy, the third largest economy in the euro area, concerns about sovereign and financial risks have been

weighing on domestic demand and remain a threat to the entire euro area.

Ireland’s economy is performing well. This is very welcome in the face of these international threats. As a small open

economy, however, Ireland is particularly vulnerable to a slowdown of the global economy, which underscores the

importance of maintaining an internationally competitive cost base. This is a key lever within our control that would

ameliorate the negative impacts from more turbulent economic conditions. On the whole, Irish prices are high relative

to other EU countries, but are increasing at the slowest rate in the whole of the euro area. This is good news, as

relatively slow price growth makes Ireland more competitive compared to the rest of the euro area.

Headline figures may be misleading, however, as they paper over large price increases in key areas. The most

concerning observation is that, after years of moderate growth, labour costs have increased by 2.9%, four times faster

than average prices. Without similar increases in labour productivity, this increase in costs will simply put pressure on

Irish prices, particularly for essential consumer products like housing and residential rent, and childcare costs. We also

need to be mindful of the tax system. While Ireland has one of the lowest tax wedges in the OECD for people at the

average income, those on higher incomes face one of the highest marginal tax rates, creating a disincentive to work for

highly skilled employees.

There are other pressure points. The rental price of Irish commercial property continues to increase at a steady pace,

and Irish businesses face higher costs when accessing credit relative to the euro area, and for accessing electricity

compared to the EU average. Interest rates (3.3%) in Ireland are considerably higher than rates in the euro area (2%)

meaning that an Irish business, looking to borrow money to futureproof its operations, faces costs that are on average

65% higher than their EU counterparties. Rising costs have a disproportionate impact on Irish start-ups – creating

challenges for some of our most innovative companies – as well as barriers to investment in management talent,

training and innovation in employment-intensive smaller firms that are currently low productivity.

As valuable as these statistics are – they do not paint a complete picture of the Irish economy. They do not reflect the

hidden costs of operating a business in Ireland, such as increasing traffic congestion in the cities, costs involved in our

(often lengthy) planning permission process, or the transaction costs (e.g. international search and selection,

navigating the immigration system, and finding appropriate housing) involved in filling certain roles in the context of a

tightening labour market. These hidden costs place a further burden on businesses over and above what is presented in

this report.


5 April 2019

In the face of a turbulent international economic backdrop, it is essential we use those levers within our control to

maintain the competitiveness of Irish firms in international trade. This will help to ameliorate the impacts of a slowing

international economy and maintain jobs and living standards. To secure our prosperity, we must not price ourselves

out of international markets.

Professor Peter Clinch

Chair, National Competitiveness Council

6 April 2019

Executive Summary

Competitiveness is a complex concept, which results from many different factors. Two of the most important factors

determining competitiveness performance are productivity (i.e. the efficiency with which factors of production – such

as labour and capital – are used to produce output) and cost competitiveness (i.e. the relative price of employing a

given factor of production).

If prices in Ireland are too high relative to productivity, it damages Ireland’s competitiveness. When this scenario

persists, Irish businesses would find it more difficult to export, and internationally mobile firms would be

disincentivised from locating here. Ultimately, high costs would make international engagement (through trading or

investment) more expensive, reducing the Irish economy’s beneficial exposure to the international economy.

As a member of the euro area, maintaining cost competitiveness in Ireland has an added dimension making it even

more important. Within the euro area, currency devaluations relative to the rest of the euro area are not possible. Were

Ireland to become less competitive, it could result in large current account deficits (meaning that, annually, Ireland

would be spending much more money abroad than it makes, e.g. importing more than we export). In the short term, a

current account deficit can be funded by increased borrowing, or by selling off Irish owned assets. However, in the long

run, any imbalances must be addressed, and loans must be repaid by running current account surpluses (or spending

less money abroad than what we take in).

Ultimately, if competitiveness is lost now, it must be restored in the future. Without currency devaluations, this can

only be achieved by productivity improvements or by painful cost reduction measures (or some combination of the

two).

Bearing all this in mind, the evidence is clear that Ireland is a high cost economy. In 20171, Ireland was the 5th most

expensive economy in the EU and prices were 13% higher than the EU average. Prices in Ireland are comparable to

other jurisdictions that would traditionally be thought of as high cost, such as Japan, the UK and the Netherlands. The

evidence also suggests that Dublin is one of the most expensive cities in the EU. In S1 2018, the cost of living in Dublin

was 18%2 more expensive than living in Brussels. This makes Dublin the 5th most expensive capital city in the EU (and

on a par with Paris and Helsinki).

While the absolute price level in a jurisdiction is important, it is also crucial to observe how fast prices are increasing. In

this regard, Ireland performs quite well. In 2018, prices in Ireland increased by 0.7%3. This was the slowest rate of

inflation of all euro area economies, and it was the joint slowest rate of price increases in the EU (alongside Denmark).

Inflation in 2018 was faster than price growth in previous years (in 2017, prices in Ireland rose by just 0.3%), but still well

below the inflation rate for the euro area as a whole (1.8%) and the UK (2.5%).

On the basis of these observations, the cost profile of Ireland can be described as ‘high cost, slowly increasing’ and in

this regard, Ireland finds itself in the company of countries like Iceland, Denmark and Sweden. The slow growth in costs

– and particularly the fact that it is well below comparator countries - is welcome from a cost competitiveness

perspective.

The overall figures suggest that Ireland is maintaining a cost competitive position, but headline figures tend to mask

important changes in the price of certain goods and services. Indeed, over the last ten years4, the price of goods has

decreased, while the price of services has increased by 13.6%. Drilling down into these figures at a sectoral level

demonstrates further divergences. For example, in 20185, the price of housing, water, electricity and gas increased by

5%, the price of alcohol and tobacco increased by 2.8%, and the price of restaurants and hotels increased by 2.1%. In

the same period, the price of furniture and household equipment fell by 3.8%, the price of clothes fell by 1.5%, and the

1 Eurostat Price Level Index, EU28=100 (2017 figure) 2 Eurostat Correction coefficients (duty station) in the EU (S1 2018 figure) 3 Eurostat HICP annual change (2018 figure) 4 CSO CPI (December 2018 figures) 5 CSO CPI (2018 figure)


7 April 2019

price of food and non-alcoholic drinks fell by 2.0%. That said, average figures can be misleading, understating price

pressures in key areas.

In previous years, the Cost of Doing Business report has also looked in detail at residential property and childcare costs

in Ireland and following on from the Cost of Doing Business 2018 Report, this document includes a specific chapter on

these costs. The EU’s House Price Index6 shows that Irish house prices continued to rise in 2018, with the latest figures

suggesting that property prices had increased 7%7, comparable only to house price increases in the Netherlands,

Portugal and Slovenia. Compounding this is the estimated increases in Irish residential rents. The EU estimates that

Irish rents increased by 6.4%8 in 2018, after similar annual increases in rental prices starting in 2014. Estonia is the only

EU Member State to have experienced faster rent increases. The Irish experience is even more stark when compared to

the annual average increase in the EU, euro area and UK of roughly 1%.

Childcare costs are higher relative to other EU Member States. According to the OECD9, net childcare fees (i.e. when

childcare benefits and any tax reliefs are considered) in Ireland make up 28% of the average wage of a couple. This is

much higher than the EU average, where net childcare costs account for only 12% of the average wage of a couple.

As housing and childcare are necessities for working people, these increases in price put pressure on wages. This is

something we are starting to see in the nominal labour cost data (which have increased by 2.9% in 2018), which is

higher than the inflation rate. Higher real wages are certainly a positive development, and one that the Council

welcomes, but real wage increases need to be matched with increases in productivity to prevent either domestic prices

from increasing faster, or an erosion of the Irish competitiveness position.

Focus on Individual Cost Categories

Labour Costs

Labour costs in Ireland are broadly in line with the euro area average. The total hourly labour cost in Ireland was

€30.9010, which was lower than the corresponding figures for Denmark, Sweden, France and Germany. However, it was

higher than the total hourly labour cost in the UK (€25.70). After remaining flat between 2012 and 2014, Irish labour

costs have started to increase in line with the growth in labour costs in other jurisdictions. The last data shows that Irish

labour costs increased by 2.9% in 2018 – which is concerning as it is four times higher than the inflation rate.

Labour costs vary considerably between sectors. In Ireland, labour costs are highest in the utilities sector (€55/hour)

and are lowest in the accommodation and food sector (€16/ hour). In most sectors, labour costs were greater than, or

equal to, the UK.

The tax burden, as a percentage of labour costs for a single individual earning the average wage stood at 27%11, which

is below the OECD average (36%) and the UK (31%). The tax burden, as a percentage of labour costs, for Irish married

couples (with two children) earning the average income was 11% of labour costs, while the corresponding figure in the

UK was 26%.

While the Irish average tax rate for those earning the average income is very competitive, the marginal tax rate these

earners face tells a different story. In Ireland, a person earning the average wage pays the second highest marginal tax

rate (49%) of the countries examined. High earners (those earning 167% of the average wage) face the same rate in

Ireland as those earning the average income (49%), which means Ireland becomes more competitive relative to the

Scandinavian countries where marginal rate increase dramatically for people in this bracket.

6 Eurostat House Price Index (2018 Q3 data) 7 In the year to Q3 2018. 8 Eurostat HICP, actual rentals for housing (2018 figure) 9 OECD Taxing Wages (2018) 10 Eurostat Labour Cost Levels (2017) 11 OECD Taxing Wages (2018)

8 April 2019

Property Costs

Over the last year, there has been a steady increase in commercial property prices and the cost of constructing office

space. In the office rental market, in the last five years, prices are up 15.9% in Dublin (Suburbs) and up 16.5% in Galway.

The Jones Lang LaSalle Property Index suggests that prices in the Irish commercial property market continued to grow

at a relatively steady pace, with capital values increasing by 3.1% in the year to Q4 2018. The capital values of office

(1.5%), retail (5%), and industrial (5.3%) property all increased over the same period, and vacancy rates in Dublin stood

at 7.4% in Q4 2018 (a fall of 1.7% from Q3).

The rental price of prime office space varies greatly across Europe. In Q4 2018, office rental in Dublin cost €646/m2.

This was lower than Paris (€810/m2) and London City (€804/m2), but considerably higher than Amsterdam (€450/m2),

Berlin (€396/m2) and Brussels(€275/m2).

According to Turner and Townsend12, Dublin is one of the most expensive cities in the world in which to construct

prime office buildings. In 2018, the construction cost per square meter of a prime office building in Dublin was

$3,065/m2, lower only than London ($3,919/m2) among the major cities measured. Similarly, construction costs for a

high-tech factory in Dublin ($2,679/m2) is comparable to London ($2,812/m2), and costs in Dublin have risen by 27%

from 2013 to 2018.

Transport Costs

In recent years, aggregate transport sector prices in Ireland have increased moderately. Prices in all transport sectors

(except sea and coastal transport) have steadily increased, with postal and courier services recording the highest price

increase, followed by warehousing, storage and cargo services.

In 2018, the average price per litre of petrol and diesel were €1.43 and €1.34 respectively. Prices of both petrol and

diesel have fallen off since their peak. Petrol prices in December 2018 (€1.43/litre) were 4.6 % lower than the peak in

November 2018 (€1.50/litre). Similarly, diesel prices were down by 2.8 % December (€1.36/litre) compared to the peak

in October (€1.40/litre). Over the course of 2018, petrol prices increased by 2.8% and the price of diesel increased by

4.6%. After increases at the start of the year, bus and taxi fares remained stable, but fares on other purchased

transport services have increased significantly (3.9%), since the start of 2017.

It is not only transport costs that have been on the increase. Traffic has increased across the road network by 3%. In the

Border and Mid-West regions, traffic increased by almost 4% in 2017. Heavy goods vehicle traffic in the South East and

Dublin increased by 4.6% in the same period. The increased congestion is supported by the fact that 11% of all

commuters spend an hour or more commuting to work in 2017.

Utility Costs

Certain utility costs (including electricity and gas) tend to be higher in Ireland than other jurisdictions, while Ireland is

more competitive regarding other utility costs (telecoms). The EU is among the most expensive locations for electricity

and gas globally – and within the EU – Ireland is one of the most expensive countries for electricity for both large and

small users. In S1 2018, electricity in Ireland (for those in the low consumption band13) cost €0.14/ kilowatt-hour, which

is higher than both the UK (€0.12/ kilowatt-hour) and euro area average (€0.10/ kilowatt-hour) price. In the higher

consumption band14, Irish consumers are still paying more (€0.09) compared to the euro area average (€0.08) but lower

than UK (€0.11). Gas prices15 in Ireland are in line with the euro area average but higher than the UK prices.

Ireland is relatively cost competitive for telecoms. In Q4 2018, the Business Fixed Broadband 60GB Basket (>25Mbps)

cost in Ireland (€42.56) was lower than the UK (€44.4) and slightly above the Netherlands (€41.9)16. However, the high

post-paid mobile broadband costs in Ireland (€30) compared less favourably to the UK (€13.71)17.

12 http://www.turnerandtownsend.com/media/3352/international-construction-market-survey-2019.pdf; 2018 figures 13 Band IV (20MWh < consumption < 500MWh) – prices in euro excluding VAT and other recoverable taxes and levies- 14 Band IE (2000MWh < consumption < 70000MWh) – prices in euro excluding VAT and other recoverable taxes and levies 15 PPS for business consumers 16 https://www.comreg.ie/publication-download/quarterly-key-data-report-q4-2018 17 https://www.comreg.ie/publication-download/quarterly-key-data-report-q4-2018


9 April 2019

Credit and Financial Costs

Businesses in Ireland face higher interest rates than the average business in the EU, or the euro area. This is a

consistent feature of the data regardless of intrinsic features of the loan, whether it is large or small, or whether it is for

a short or long duration. However, this was not always the case. In 2014, Irish companies faced a similar interest rate

(around 3%) to their counterparts in Germany and France, but while the average rate businesses face has dropped in

these economies (to around 2%), overall Irish companies face higher rates now (3.3%) than they did in 2014 (3%)18.

For Irish SMEs, the average interest rate is 3.4%, but there is considerable sectoral variation. SMEs in the transport and

storage (4.2%), construction (4%), and ICT (4.2%) sectors are all higher than average interest rates, and the rates on

gross new lending for Irish transport and storage SMEs stood at 5.1%19 as of September 2018.

Business Services and Input Costs

In Ireland, the overall price of services is rising much faster than the price of goods. In total, the price of services has

increased by 7%20 since 2015, but this masks widely different changes in the price of certain services. For example, the

price of warehouse, storage and cargo handling services increased by 6.2%, while sea and costal transport prices

declined by 0.2%.

When compared to other EU countries, services prices are rising relatively quickly in Ireland, with Luxembourg being

the only economy measured where services prices increased faster than Ireland. In Denmark, services producer prices

declined since 2015, and are now around 4.5% lower than they were in 201521.

Insurance costs, which increased rapidly in Ireland from 2013 to 2016, have decreased since the end of 2016. The price

of car (and other transport) insurance is now roughly what it was in 2015 (like the EU and euro area average)22.

Residential Property and Childcare Costs

Real wages are the key measure of how well-off a person feels – real wages account for what a person can buy with the

wages they receive – and so consider price changes. If prices are increasing faster than nominal wages, then real wages

are declining, and people are becoming less well off. The Competitiveness Council have decided to include a chapter

that looks specifically at residential property costs and childcare costs given the importance of these items and because

of their impact on wage pressures, and the competitiveness of firms and of Ireland as a place in which to do business.

Residential property prices have been growing consistently across the country since a low point in early 201323.

Property prices are now roughly where they were at the start of 2005. Irish rents have also been growing since 2013 and

have been increasing by over 5% per annum for the last four years24. According to the Residential Tenancies Board25,

the average rent in Dublin was €1,527 in Q1 2018.

18 ECB, MIR dataset 19 CBI, Trends in SME and Large Enterprise Credit and Deposits 20 CSO, Services Producer Price Index 21 Eurostat, Services Producer Prices, Annual Data (2017 figure) 22 Eurostat, HICP (November 2018) 23 CSO, Residential Property Price Index (Nov 2018 figure) 24 Eurostat, HICP 25 Residential Tenancies Board, Rent Index 2018

10 April 2019

Chapter 1 – Broader Cost Competitiveness Environment

Measures of Overall Cost Competitiveness

Cost competitiveness is determined by a combination of exchange rates and movements in relative prices between

trading partners. For example, holding the exchange rate fixed, Ireland would become more cost competitive if the

domestic price of goods and services increased at a slower rate than the price of those goods and services in foreign

countries. Similarly, Ireland would also become more cost competitive if relative prices remained constant, but the

euro depreciated against foreign currencies. Harmonised Competitiveness Indices (HCIs) effectively apply this concept

to the whole economy. The real HCI figures suggest that Ireland experienced a large improvement in cost

competitiveness between April 2014 and April 2015. While there was a decline in cost competitiveness in the second

half of 2017, overall, Ireland is in a relatively competitive position as far as overall costs are concerned.

26 Features of the Irish economy can HCI can affect movements in HCIs and care should be taken in interpreting movements in the indices as a measure of competitiveness. The nominal HCI is affected by exchange rate developments and relative to other Euro area countries a high share of Ireland’s exports are destined for non-Euro area countries (UK and US). Real HCIs consider, relative price movements relative to trading partners. Using consumer prices as a deflator means the impact of intermediate goods and capital goods are not directly considered and the influence of indirect taxes and non-traded goods and services on the CPI limited its usefulness as an indicator of good indication of international competitiveness. See Barry, F, (2017) The Central Bank’s harmonised, competitiveness indicators, users beware, Administration, vol. 65, no. 4.

Figure 1.1: Harmonised Competitiveness Indicators26, Ireland, Jan 2012-Jan 2019

The nominal HCI is

a nominal effective

exchange rate for

the Irish economy

that reflects, on a

trade-weighted

basis, movements

in the exchange

rates vis-à-vis

trading partners.

The real HCI

(deflated by

consumer prices)

takes into account

relative price

changes along with

exchange rate

movements. Real

HCI fell by 1.9% In

the year to Jan

2019.

Source: Central Bank of Ireland

The real effective exchange rate (REER) assesses a country’s price or cost competitiveness relative to its selected

trading partners in international markets. The REER is the weighted average of a country's currency in relation to

a basket of trading countries’ currencies’ deflated by the weighted average of price changes in the various

countries. The decline in the REER indicates the weakening of home currency against the currency of its trading

partners. The REER takes account of relative inflation rates between a country and its trading partners.

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11 April 2019

Broader Cost Environment

In a market economy, relative prices for goods and services are always changing. In any given year, some prices rise,

and others fall. Inflation figures are designed to capture the broad increase in the prices of goods and services, not just

of individual items. It is important to note that inflation measures (i.e. the Harmonised Index of Consumer Prices) are

designed to capture the changes in consumer prices, rather than the prices that businesses face. This means that these

figures will not give a precise estimate of the increase in business costs, but in the absence of a business price index, it

is a useful proxy for the price changes for businesses.

Figure 1.2: Real effective rate (REER), Ireland, deflated by Consumer Prices (42 trading partners)

Source: Eurostat

The UK’s REER has

fallen significantly

since the end of

2015, leading to

increased cost

competitiveness

for UK exporters,

largely due to the

depreciation of

sterling in the wake

of the Brexit

referendum. The

REERs for Ireland

have remained

stable over the past

year whereas the

US REER has

increased

substantially since

2015.

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12 April 2019

Figure 1.3: Annual Changes in Prices, selected economies

The 2018 inflation

for Ireland (0.7%)

figures suggest

that, while prices

are increasing

slightly faster than a

year previously

(0.3% in 2017), price

increases in Ireland

have been relatively

muted when

compared to the

euro area (1.7%) and

the UK (2.5%).

Source: Harmonised Index of Consumer Prices, Eurostat

Figure 1.4: Consumer Price Index, selected indices (Dec 2011 = 100)

While overall prices

in Ireland have been

relatively stable in

recent years

(increasing by 2.4%

since December

2011), there has

been a marked

divergence in the

price of goods

(down 11%), and

the price of services

(up 13.6%).

Source: Consumer Price Index, CSO

These graphs reveal that there are several important narratives that are not necessarily captured by the headline

inflation figure – both within Ireland, and when comparing Ireland to other EU countries. Over the past 5 years,

headline inflation has been relatively low, but when this figure is broken down, there is a marked difference between

-2.5

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0.5

1.5

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4.5

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

%

Euro area Germany Ireland France UK

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95

100

105

110

115

2013 2014 2015 2016 2017 2018

Ind

ex (

Dec

20

11=

100

)

Goods CPI excluding Energy and Unprocessed Food Services All items


13 April 2019

price changes in goods and services. The same can be said about the inflation rates across the euro area, with Ireland

experiencing the lowest headline inflation rate in the EU, at the same time as relatively robust price growth in Germany

and France.

Figure 1.5: Consumer Price Levels and Inflation, selected countries

This chart

demonstrates that

Ireland is a high cost

economy, with

prices higher (13%)

than the EU, and in

line with the

Netherlands, Austria

and the UK.

However, it suggests

that, on average,

prices are growing

slowly in Ireland

(0.7% in 2018),

especially compared

with the UK (2.5%).

Ireland’s current

price profile could

be described as

‘high cost, slowly

increasing’.

Source: PPP (2017)/ HICP (2018), Eurostat

Poland

Lithuania

Czechia

Latvia

Portugal

Spain

Italy

EU

Euro area

Germany

FranceAustria

United Kingdom

Netherlands

Ireland

Luxembourg

Finland

United States

Sweden

Denmark

Switzerland

Norway

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

40 60 80 100 120 140 160

20

18 In

flat

ion

(%

)

PPP, EU 28 = 100, 2017

14 April 2019

Chapter 2 – How Do Costs Impact on Enterprise?

Why Costs Matter

Generating broad-based, sustainable economic growth is fundamental for Ireland’s economic prosperity. As a small

open economy, it is crucial that Ireland’s international competitiveness position is maintained relative to our key

competitors.

Competitiveness is a complex concept, which results from many different factors. Two of the most important factors

determining competitiveness performance are productivity (i.e. the efficiency with which factors of production – such

as labour and capital – are used to produce output) and cost competitiveness (i.e. the relative price of employing any

given factor of production).

An improvement in either of these elements – productivity growth, or relative price improvements – allows Irish

businesses to compete more effectively internationally and as a result makes Ireland a more favourable place in which

to locate international businesses. This exposure to international competition, and international best practice, can

result in further productivity gains.

Cost competitiveness remains a critical determinant of success. Indeed, as a member of the euro area, Ireland has a

fixed exchange rate relative to other euro area members. This means that it is not possible to use currency devaluation

to manage short term competitiveness pressures vis-à-vis other euro area members, and so a combination of cost

competitiveness, essential elements, enhancements in productivity and strong labour force participation must provide

the foundations for sustaining growth. In the longer term, productivity growth is the preferred mechanism to improve

competitiveness as it can support cost competitiveness in tandem with high and increasing real income levels.

A high cost environment weakens competitiveness in several ways:

▪ High costs make Ireland less attractive in terms of mobile investment and business expansion, if unchecked this

could see companies relocating to other jurisdictions;

▪ Higher costs can make firms less competitive when they are selling into foreign markets – this is a concern for

indigenous goods and services exporters;

▪ High costs in areas such as childcare and transport, and a high marginal tax rate, can affect incentives to work and

suppress labour force participation; and,

▪ A high cost environment can impact on firms which may not export, but which rely on the domestic market – their

customers (consumers and other firms) may source cheaper inputs from abroad due to currency fluctuations,

rather than from within Ireland, leading to a loss of market share for Irish-based enterprises.

More broadly, all sectors of the economy are interlinked and interdependent - high and increasing business costs have

implications for the costs of living. These in turn have knock on implications for wage demands, and so the cycle

continues. It remains vital, therefore, that Ireland protects the gains made to date, and that we continue to act to

address inappropriately high costs (i.e. where price increases are not matched by corresponding increases in

productivity) wherever they arise. In this regard, there is a role for both the public and private sectors alike to

proactively manage their cost base and drive efficiency, thus creating a virtuous circle between the costs of living, wage

expectations and cost competitiveness

While cost competitiveness matters to all firms, Figure 2.1 shows that, in 2018, only 11% of Irish SMEs cited costs as the

most pressing issue that they were facing. In the context of a growing economy, Irish SMEs noted that finding

customers (25%) and staff (22%), and pressures brought on because of competition (14%) were all more urgent issues

than increasing costs.


15 April 2019

Figure 2.1: Most Pressing Problems faced by Irish SMEs

In 2018, the most

pressing issue for Irish

SMEs was finding

customers (25%). In

Ireland, 11% of SMEs

identified costs as the

most pressing issue

they were facing.

Given the structure of

the survey questions,

it is difficult to

determine whether

this is due to an

absolute decline in

importance of costs,

or a relative increase

in the importance of

other factors.

Source: SAFE Survey, ECB/ European Commission

Figure 2.2: Costs as the Most Pressing Problem faced by European SMEs

Across the EU, 12% of

all SMEs consider costs

to be the most

significant issue they

are facing. In Italy,

roughly one in every

five SMEs consider

costs to be the biggest

issue. A slightly smaller

proportion of Irish

SMEs (11%) consider

costs the most

significant issue when

compared to the EU

average (12%), and

roughly on par with

the Netherlands (10%). Source: SAFE Survey, ECB/ European Commission

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

EU

28

Bel

giu

m

De

nm

ark

Fin

lan

d

Fra

nce

Ger

man

y

Irel

and

Ital

y

Lat

via

Ne

ther

lan

ds

Po

lan

d

Sp

ain

UK

2018 2017

0

20

40

60

80

100

20

10H

1

20

10H

2

20

11H

1

20

11H

2

20

12H

1

20

12H

2

20

13H

1

20

13H

2

20

14H

1

20

14H

2

20

15H

1

20

15H

2

20

16H

1

20

16H

2

20

17H

1

20

17H

2

20

18H

1

Access to finance Regulation

Other Costs of production or labour

Competition Availability of skilled staff or experienced managers

Finding customers

16 April 2019

Box 1. Data

In each chapter, a range of internationally comparable, enterprise-focussed cost indicators are examined

for Ireland and key trading partners, particularly the UK. We have endeavoured to collect data from high-

quality, internationally respected sources, and where necessary, caveats on data are set out. Nonetheless,

there are limitations to comparative analysis:

▪ While every effort is made to ensure the timeliness of the data, there is a natural lag in collating

comparable official statistics across countries. As much of this data is collected on an annual basis,

there may be a time lag in capturing recent changes in cost levels;

▪ The Council is also constrained in terms of the availability of metrics and their impact on enterprises of

different sizes and sectors, and across several important areas such as water, transport and

international freight, waste, commercial insurance and Local Authority rates;

▪ Where possible, Irish cost levels are compared to a relevant peer group average (e.g. the OECD and

euro area average). Given the importance of the UK as a trading partner and the potential implications

of Brexit on the economy, the UK’s performance is also benchmarked.

▪ It is also worth noting that individual cost metrics have strengths and weaknesses (i.e. in terms of

definitions used, in how the data is collected etc.). When analysing the individual metrics, it is

important to consider all the data as the analysis of the individual metrics combine to tell a coherent

story about Ireland’s current cost competitiveness performance.

There are no generic strategies to achieve an optimum level of cost competitiveness, as countries face trade-offs and may be at different points in the economic cycle.


17 April 2019

Interest Rates

Interest rates are the primary method by which policymakers react to prices, with the desired goal of maintaining price

stability. In most advanced economies, the responsibility to set interest rates has been delegated to independent

Central Banks. In the euro area, the European Central Bank (ECB) – which is independent from policymakers – is

responsible for maintaining price stability and setting the interest rate. The ECB aims at maintaining inflation rates

below, but close to, 2% over the medium term.

Higher interest rates increase the relative cost of holding cash, and so encourage saving and discourage borrowing,

thereby taking money out of the real economy, which reduces prices. Lower interest rates have the opposite effect.

In the wake of the Global Financial Crisis, the ECB – like other major Central Banks – reduced interests rates to mitigate

against deflationary pressures (where prices decrease year-on-year).

Figure 2.3: ECB Marginal Lending Facility (1999 – 2019)

This figure charts the

ECB’s rate on the

marginal lending

facility, which offers

overnight credit to

banks from the euro

area. The large decline

in the interest rate that

took place in the wake

of the Global Financial

Crisis was mirrored in

other jurisdictions.

Source: Financial Market Data, ECB

Administered prices

In the EU, Governments have tended to avoid setting prices directly, choosing instead to allow market forces

determine the appropriate price level for most goods and services. However, there are several areas where product

prices are either directly set or influenced to a significant extent by the Government.

Where prices are completely set by the Government, the EU classifies them as directly administered. Where prices are

influenced to a significant extent by the Government, the EU classifies them as mainly administered.

As this classification will depend on the role the Government of each Member State chooses to play in a given market,

the markets where prices are directly or mainly administered by the Government vary in each Member State.

In Ireland, there are no prices that are directly set by the Government. However, some prices are influenced by

Government (generally through the regulator for that market). The goods and services classified as ‘administered’ (i.e.

the products that are either fully or mainly administered, in Ireland’s case this only includes goods that are mainly

administered) represent a small subset of the overall Irish CPI basket. Table 1 outlines the services categories defined

as mainly administered prices in Ireland.

0

1

2

3

4

5

6

01/

01/

20

06

01/

01/

20

07

01/

01/

20

08

01/

01/

20

09

01/

01/

20

10

01/

01/

20

11

01/

01/

20

12

01/

01/

20

13

01/

01/

20

14

01/

01/

20

15

01/

01/

20

16

01/

01/

20

17

01/

01/

20

18

01/

01/

20

19

%

18 April 2019

Table 1: Mainly-administered prices in Ireland

COICOP Sub indices Mainly administered prices Date of inclusion

04.41 Water Supply From 2015

04.43 Sewage From 2015

06.3 Hospital services

07.31 Passenger transport by railway From 2011

07.32 Passenger transport by road

07.35 Combined passenger transport From 2011

08.1 Postal services


Figure 2.4: HICP and mainly-administered prices in Ireland, 2012- 2017

Price changes have

been much more

volatile for

administered prices

than they have been

for prices in general.

In 2015, there was a

massive jump in the

price of water supply

and sewerage

collection followed by

a subsequent

decrease in 201627.

These movements in

water prices drove the

overall result for

mainly administered

prices.


27 Domestic water charges were introduced in 2015 for homes that were connected to a public water supply or to public wastewater services. This system of domestic water charging has now been repealed and a new system of charging is being introduced.

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2013 2014 2015 2016 2017 2018

An

nu

al a

vera

ge

rate

of

chan

ge

(%)

HICP Administered prices


19 April 2019

Chapter 3 – Labour Costs, Earnings and Tax

Fig 3.1: Total economy hourly labour costs, 2017

Source: Eurostat, Labour Cost Database28

Figure 3.1 shows

total hourly labour

cost across selected

countries. In 2017,

hourly labour costs

in Ireland (€31) were

higher than the euro

area (€30.30) and

the UK (€25.70).

Wages and salaries

accounted for 86%

of total labour cost

in Ireland compared

to 74% in the euro

area and 82% in the

UK.

Figure 3.2: Employer and employee social security contributions, 2017

Source: OECD, Taxing Wages 2018

Ireland has one of the

lowest rate of social

security contributions

among OECD

countries (14.75%). In

Ireland, total revenues

from employee and

employer SSC29 equals

to 16.2% of total tax

revenue30 which is

lower than OECD

average (24.6%) and

UK (18.69%).

28 Labour cost levels by NACE Rev. 2 activity [lc_lci_lev] 29 Employer & employee social security contribution 30 (SSC revenue/total tax revenue *100)

0

5

10

15

20

25

30

35

40

45

Den

mar

k

Sw

ed

en

Fra

nce

Ne

ther

lan

ds

Ger

man

y

Au

stri

a

Fin

lan

d

Ire

lan

d

Eu

ro a

rea

Ital

y

EU

UK

Sp

ain

Po

lan

d

Lat

via

To

tal H

ou

rly

Lab

ou

r C

ost

(€

)

Wages and salaries Labour costs other than wages and salaries

0

5

10

15

20

25

30

35

40

Ger

man

y

Fra

nce

Est

on

ia

Sp

ain

Ne

ther

lan

ds

Lat

via

Ital

y

Fin

lan

d

Lu

xem

bo

urg

OE

CD

- A

vera

ge

Ko

rea

Sw

itze

rlan

d

Un

ite

d S

tate

s

Sw

ed

en

Un

ite

d K

ing

do

m

Ire

lan

d

Isra

el

Den

mar

k

Ne

w Z

eal

and

Rat

e o

f ta

xati

on

(%)

Average rate of employer social security contributions

Average rate of employee social security contributions

20 April 2019

Figure 3.3: Growth in nominal labour costs, Labour Cost Index, 2018

Source: Eurostat, Labour Cost Database

This chart shows the

growth in nominal

labour costs. In

Ireland, nominal

labour costs have

been increasing

since 2015.

Cumulatively, labour

costs have increased

by less than the EU,

euro area and the

UK. In 2018, growth

in nominal labour

cost in Ireland

(2.9%) was far

above the rate of

inflation (0.7 %).

Figure 3.4: Hourly Labour Costs, Business Economy, Detailed NACE sectors, 2017

Source: Eurostat

This chart shows

hourly labour cost

in the euro area,

Ireland and the UK

(by sector). In

Ireland, hourly

labour cost are

highest in the

utilities sector (€55)

and lowest in the

accomodation and

food sector (€16).

Compared to the

UK, hourly labour

costs are higher in

Ireland in all sector

execpt the mining,

and financial

services, sectors.

98

100

102

104

106

108

110

112

114

116

2012 2013 2014 2015 2016 2017 2018

Lab

ou

r co

st in

dex

(2

012

=10

0)

EU 28 Euro area Ireland UK

0.0

10.0

20.0

30.0

40.0

50.0

60.0

Ele

ctri

city

& G

as

Fin

anci

al

ICT

Pro

fess

ion

al

Min

ing

Man

ufa

ctu

rin

g

Bu

sin

ess

eco

no

my

Tra

nsp

ort

atio

n

Co

nst

ruct

ion

Art

s

Wat

er

& W

aste

wat

er

Re

tail

trad

e

Ad

min

. Ser

vice

Acc

o. a

nd

fo

odTo

tal l

abo

ur

cost

(€

per

ho

ur)

Euro area Ireland UK


21 April 2019

Figure 3.5: Annual change in nominal hourly labour cost (by sector), 2018

Source: Eurostat

In 2018, year-on-

year hourly labour

costs recorded

growth in all

sectors of economy

in the euro area.

Sectorally, hourly

labour costs grew

by 6.1%, 4.5% and

4.3% in ICT,

Construction and

Financial sector

respectively in

Ireland compared

to 4.1%, 5.4% and

2.4% in the UK.

Figure 3.6: Average hourly earnings in Ireland, 2013 Q4-2018 Q4

Source: CSO, Earnings & Labour Costs Statistics

Figure 3.7 compares

Irish average hourly

earning across

sectors between Q4

2013 and Q4 2018.

Since Q4 2013, hourly

earnings in Ireland

have increased in all

economic sectors. In

Q4 2018, average

hourly earnings were

highest in the

education sector

(€35.81) .

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0W

ate

r &

Was

te w

ater IC

T

Tra

nsp

ort

atio

n

Min

ing

Co

nst

ruct

ion

Fin

anci

al

Acc

o. &

fo

od

Bu

sin

ess

Eco

no

my

To

tal E

con

om

y

Ad

min

. se

rvic

e

Man

ufa

ctu

rin

g

Re

tail

trad

e

Pro

fess

ion

al

Art

s

Ele

ctri

city

& G

as

%

Euro area Ireland UK

0

5

10

15

20

25

30

35

40

Ed

uca

tio

n

Fin

anci

al &

insu

ran

ce ICT

Pro

fess

ion

al

Pu

blic

ad

min

.

Min

ing

Re

al e

stat

e

All

sect

ors

Hu

man

he

alth

Tra

nsp

ort

atio

n

Man

ufa

ctu

rin

g

Co

nst

ruct

ion

Re

tail

Ad

min

istr

ativ

e

Art

s

Acc

om

.& f

oo

d

€/h

r

2018Q4 2013Q4

22 April 2019

Figure 3.7: Percentage change in average hourly earnings (by sector), Q4 2018


Annual earnings

across all sectors

have increased in

the last five years

to Q4 2018. Year-

on-year, all sectors

of the economy

recorded growth to

Q4 2018 with the

transportation &

storage sector

recording the

highest growth

(9.2%) and arts &

entertainment

sector recording

the lowest (0.88%).

Figure 3.8: Growth in average hourly earnings (excluding irregular earnings) by size of enterprise, Ireland Q4

2015-Q4 2018


This graph shows

average hourly

earnings by size of the

enterprise between Q4

2015 and Q4 2018. The

average earnings in

enterprises with ≤ 50

people have been more

volatile during the

period compared with

earnings in large

enterprises. Earning in

enterprises employing

50 - 250 people

recorded the highest

year–on-year growth in

the year to Q4 2018

(4.12%).

0 2 4 6 8 10 12

Arts

Professional

Public admin.

Human health

Retail

ICT

Financial

All sectors

Education

Accom. & food

Construction

Administrative

Mining

Transportation

% change

5 year 1 year

-2

-1

0

1

2

3

4

5

20

15 Q

4

20

16 Q

4

20

17 Q

4

20

18 Q

4

Ave

rag

e h

ou

rly

earn

ing

s (%

ch

ang

e)

> 50 50 - 250 >250


23 April 2019

Figure 3.9: Monthly minimum wage PPS (biannual) 2014 - 2018

Source: Eurostat, Labour Market Earnings Database

Figure 3.10 shows the

trend in monthly

minimum wages in

selected EU countries

for the period 2014-

2018. The minimum

wage in Ireland is

greater than the UK

and Spain, but the

UK’s minimum wage

(€1,269) has caught

up with Ireland’s

minimum wage

(€1,287) recently.

Figure 3.10: Average Income tax plus employee and employer contributions less cash benefits - Single (no children) &

married couple with two children, earning 100% of average income31, 2017

Source: OECD Taxing Wages 2018

In 2017, average income tax

in Ireland for a single

person (and married

couples with two children)

earning 100% of the

average wage was one of

the lowest in the OECD.

The tax burden as a

percentage of labour cost

for a single individual (27%)

was slightly below the UK

(30%) and substantially

below the OECD (36%), and

significantly lower for

married couples with Irish

couples paying 11%

compared to 26% in the

UK.

31 Universal Social Charge is included in the Irish data, where applicable

800

900

1,000

1,100

1,200

1,300

1,400

1,500

20

14S

1

20

14S

2

20

15S

1

20

15S

2

20

16S

1

20

16S

2

20

17S

1

20

17S

2

20

18S

1

20

18S

2

Mo

nth

ly m

inim

um

wag

e (P

PS

)

Ireland UK France Spain

5

10

15

20

25

30

35

40

45

50

Ger

man

y

Ital

y

Fra

nce

Fin

lan

d

Sw

ede

n

Lat

via

Sp

ain

Ne

ther

lan

ds

De

nm

ark

OE

CD

-ave

rag

e

Po

lan

d

Jap

an US

UK

Irel

and

Ko

rea

Sw

itze

rlan

d

Ne

w Z

eala

nd

Rat

e o

f ta

xati

on

(%)

Single person (No Children) Married Couple (2 children)

24 April 2019

Figure 3.11: Average tax wedge, single individual earning average wage, no children32, 2017


For the average earner, the

tax wedge in Ireland has

been low compared to

other OECD countries. In

2017, at 27% , it was below

the UK figure (31%) and the

OECD average (36%). New

Zealand is the country with

the lowest tax wedge

(18%) for average earners.

Figure 3.12: Average income tax rate, single individual earning 100 % of average earnings,2017


The average income tax

rate in Ireland for a single

person earning 100% of the

average wage has been

consistently lower than the

OECD average, and the US

UK rates since 2007. After

the significant jump in

2010, the Irish rate steadily

rose and peak in 2014

(27.9%) before starting to

fall. In 2017, Irish rates

(27.2%) were lower than

the UK (30.9%), the US

(31.7%) and the OECD

average (35.9%).

32 The tax wedge is defined as the ratio between the amount of taxes paid by an average single worker (no children – 100% of average earning) and the corresponding

total labour cost for the employer (including employer social insurance cost)

0

10

20

30

40

50

60

Ne

w Z

eala

nd

Sw

itze

rlan

d

Ko

rea

Irel

and

Can

ada

UK

US

A

Jap

an

Po

lan

d

OE

CD

-ave

rag

e

De

nm

ark

Lu

xem

bo

urg

Ne

ther

lan

ds

Sp

ain

Lat

via

Sw

ede

n

Fin

lan

d

Fra

nce

Ital

y

Ger

man

y

% o

f la

bo

ur

cost

20

22

24

26

28

30

32

34

36

38

2000 2007 2010 2011 2012 2013 2014 2015 2016 2017

Rat

e o

f ta

xati

on

(%)

Ireland UK US OECD-Average


25 April 2019

Figure 3.13: Marginal rate of income tax plus employee and employer contribution less cash benefits, Single individual,

no children, 2017


Ireland has a progressive tax

system33. A person earning 67%

of average earnings pays a

marginal rate of 29%, below the

UK (32%) and OECD average

(31%). However, at the average

wage, the marginal rate of

taxation is quite high (49 %),

which remains the same when

earning 167% of the average

wage, unlike Denmark or Sweden

where rates increased.

Figure 3.14: Marginal income tax, married couples with 2 children, earning 100%, 133%, or 167% of average earnings

Source: OECD Taxing Wages, 2018

In Ireland, the marginal tax

rate for married couples

with children is 29%, and

remains at that rate in all

incomes examined, in

contrast to the rate for

single individuals. However,

this rate is lower than the

OECD average (35%) & the

UK (32%).

33 The average tax rate increases as the taxable amount increases. It means that lower incomes are taxed at a lower marginal rate than higher incomes.

0

10

20

30

40

50

60

Sw

itze

rlan

d

Fra

nce

Ko

rea

Po

lan

d

Jap

an

Ire

lan

d

US

Sp

ain

UK

Lat

via

Sw

ed

en

OE

CD

-Ave

rag

e

Ital

y

Den

mar

k

Ger

man

y

Fin

lan

d

Ne

w Z

eal

and

Ne

ther

lan

ds

Rat

e o

f ta

xati

on

(%

)

Married (2 Ch), 100 % avg earnings Married (2ch),100-33 % avg earnings

Married (2 ch),100-67 % avg earnings

0

10

20

30

40

50

60

70

Ko

rea

Sw

itze

rlan

d

Po

lan

d

Jap

an

Ne

w Z

eal

and

UK

Lat

via

Sw

ed

en

Sp

ain

OE

CD

-Ave

rag

e

US

Ital

y

Den

mar

k

Fra

nce

Fin

lan

d

Ne

ther

lan

ds

Ire

lan

d

Ger

man

y

Rat

e o

f ta

xati

on

(%)

Single person at 100% of Average wage, no child



26 April 2019

Figure 3.15: Corporation Tax Rates, 2009-2018

Source: OECD Tax Database

Ireland has one of the

lowest corporation tax rates

among the OECD countries

(12.5%) and has remained

unchanged since it was

introduced. Most of the

countries examined

continue to lower their

corporation tax rates in the

last decade with the UK

rate down from 28% in

2009 to 19% in 2018 and

the US rate down from 35%

to 21% in the same period.

Labour costs in Ireland are broadly in line with the euro area average. The total hourly labour cost in Ireland was

€30.9034, which was lower than the corresponding figures for Denmark, Sweden, France and Germany. However, it was

higher than the total hourly labour cost in the UK (€25.70). After remaining flat between 2012 and 2014, Irish labour

costs have started to increase in line with the growth in labour costs in other jurisdictions. The last data shows that Irish

labour costs increased by 2.9% in 2018 – which is concerning as it is four times higher than the inflation rate.

Labour costs vary considerably between sectors. In Ireland, labour costs are highest in the utilities sector (€55/hour)

and are lowest in the accommodation and food sector (€16/ hour). In most sectors, labour costs were greater than, or

equal to, the UK.

The tax burden, as a percentage of labour costs for a single individual earning the average wage stood at 27%35, which

is below the OECD average (36%) and the UK (31%). The tax burden, as a percentage of labour costs, for Irish married

couples (with two children) earning the average income was 11% of labour costs, while the corresponding figure in the

UK was 26%.

While the Irish average tax rate for those earning the average income is very competitive, the marginal tax rate these

earners face tells a different story. In Ireland, a person earning 100% of the average wage pays the second highest

marginal tax rate (49%) of the countries examined. High earners (those earning 167% of the average wage) face the

same rate in Ireland as those earning the average income (49%), which means Ireland becomes more competitive

relative to the Scandinavian countries where marginal rate increase dramatically for people in this bracket.

34 Eurostat Labour Cost Levels (2017) 35 OECD Taxing Wages (2018)

0

5

10

15

20

25

30

35

40S

wit

zerl

and

Ire

lan

d

Can

ada

Ger

man

y

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lan

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UK

Lu

xem

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lan

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via

US

Den

mar

k

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en

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el

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an

Ital

y

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rea

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ther

lan

ds

Sp

ain

Ne

w Z

eal

and

Fra

nce

Co

rpo

rate

inco

me

tax

(%)

2018 2014 2009


27 April 2019

Chapter 4 – Property Costs

Figure 4.1: Quarterly change in capital values in Ireland, Q1 2016-Q4 2018

Source: Jones Lang LaSalle, Irish Property Index

This graph shows the Irish

capital value index in the

left axis and overall Irish

property index (capital +

rental value) in the right

axis. The overall property

index recorded a return of

8.4% for the year to

December 2018.

Sectorally, capital value

grew by 5%, 1.5% and

5.3% in Retail, Office and

Industrial capital

respectively during the

period.

Figure 4.2: Cost of constructing a prime office unit36, $/m2, 2018

Source: Turner and Townsend Construction Cost Survey

In 2018, the cost of

constructing a prime

office unit in Dublin

was $3,065/m2, almost

a 29% increase from

2013 ($2,382/m2) .

Among the selected

cities, the cost of

construction of prime

offices was highest in

London ($3,919/m2).

Singapore and Beijing

recorded a fall in

construction costs of

prime offices during

the period.

36 A prime office unit refers to a city centre, self-contained building of a size and height typical of major cities in a country; prices quoted are upper boundary of the cost of

construction.

0

2,000

4,000

6,000

8,000

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14,000

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400

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18

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rall

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ital

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ital

Val

ue

Ind

ex

Office Capital Retail Capital

Industrial Capital Overall (Right Axis)

0

1,000

2,000

3,000

4,000

5,000

UK

(L

on

do

n)

Ire

lan

d (D

ub

lin)

Ne

ther

lan

ds

(Am

ster

dam

)

Ger

man

y (M

un

ich

)

Can

ada

(To

ron

to)

Sin

gap

ore

So

uth

Ko

rea

(Se

ou

l)

Po

lan

d (W

arsa

w)

Ch

ina

(Bei

jing

)

Ind

ia (

Ban

gal

ore

)

$/m

2

2018 2013

28 April 2019

Figure 4.3: Cost of constructing a High-Tech Factory, €/m2, 2018

Source: Turner and Townsend Construction Cost Survey

This figure shows

the considerable

variation across

cities in the cost of

building a high-

tech factory/ or

laboratory. In

Dublin in 2017, the

cost was

estimated at

$2,679/m2, a 27%

increase since

2013. The

comparable figure

for London was

$2,812/m2. The

highest cost was

recorded in Seoul

($3,130/m2).

Figure 4.4: Rental Price of Prime Office Properties (in €/m2) 2018 Q4

Source: Cushman and Wakefield, Office Snapshot Reports

As of Q4 2018,

London was the

most expensive

city in which to

rent a prime office

property (West

End- €1,311).

Dublin (2/4), at

€646m2 was the

third most

expensive city in

terms of rental

price of prime

office properties

among the

benchmarked

countries. Brussels

was one of the

cheapest at €275/

m2.

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Sou

th K

ore

a (S

eou

l)

UK

(Lo

nd

on

)

Ire

lan

d (

Du

blin

)

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gap

ore

Ger

man

y (M

un

ich

)

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her

lan

ds

(Am

ste

rdam

)

Can

ada

(To

ron

to)

Po

lan

d (

War

saw

)

Ch

ina

(Be

ijin

g)

Ind

ia (

Ban

galo

re)

$/m

2

2018 2013

275

285

306

396

408

450

580

646

804

810

1,311

0 200 400 600 800 1000 1200 1400

Brussels

Warsaw

Vienna

Berlin

Madrid

Amsterdam

Milan

Dublin

London (City)

Paris

London (West End)

cost per sq.meter in euros


29 April 2019

Figure 4.5: Level & Five -year growth in rental price of a prime office unit in Irish cities, December 2018

Source: Cushman and Wakefield, Office Snapshot Reports

In Dec 2018, demand

for prime offices was

high in Dublin. In the

capital, the rental

price of a prime

office unit was

€646/m2. In the five

years to Dec 2018,

rental prices

increased across Irish

cities – Dublin

Suburbs (15.9%),

Cork (11.8%),

Limerick (10.8%)

with Galway (16.5%)

recording the highest

rental price.

Figure 4.6: Prime Retail (Zone A) Rent levels in selected Irish & UK cities, December 2018

Source: Cushman and Wakefield, Retail Market Snapshots

In Ireland,

Dublin was the

most expensive

location to rent

a prime high

street retail unit

(€6,750/m2). In

the sample,

London’s West

End was the

most expensive

location

(€16,084/m2)

and Limerick

was the least

expensive

location

(€1,000/m2).

0

2

4

6

8

10

12

14

16

18

0

100

200

300

400

500

600

700

Du

blin

(2/4

)

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blin

(su

bu

rb)

Co

rk

Gal

way

Lim

eric

k

gro

wth

(%

)

€ p

er s

q.m

5-year

0

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4000

6000

8000

10000

12000

14000

16000

18000

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nd

on

(W

est

En

d)

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Gal

way

Co

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Lo

nd

on

(C

ity)

Ed

inb

urg

h

Man

ches

ter

Lee

ds

Bri

min

gh

am

Car

dif

f

Lim

eric

k

€ p

er s

q. m

per

yea

r

30 April 2019

Figure 4.7: Prime Retail Rental growth, Ireland, December 201837

Source: Cushman and Wakefield, Retail Market Snapshots

Demand for prime

city centre retail

units and shopping

centres across

Ireland continued for

the fourth quarter of

2018. Retail rent

prices remains

highest in Dublin city

centre with rental

prices up by 11% in

the last five years.

Limerick recorded

the highest retail

rent growth with

9.1% in the year to

December 2018.

Figure 4.8: Time and Cost of Dealing with Construction Permits in building a warehouse, 2017

Source: World Bank, Doing Business 2019

Ireland scores well on

building control and

regulatory quality, but

poorly on time and

cost to build. It takes

149.5 days to build a

warehouse in Dublin

compared to 86 days

in London, and 65 days

in Finland. This means

that building a

warehouse in Ireland

takes the 3rd longest

amount of time of all

countries selected.

37 5-year growth data for Dublin (out of Town) is unavailable

0

2

4

6

8

10

12

Dublin Cork Galway Limerick Out of Town(Dublin)

gro

wth

rat

e (%

)

1-year 5-year

0

50

100

150

200

250

300

0

1

2

3

4

5

6

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lan

d

Jap

an

Lat

via

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xem

bo

urg

Sw

itze

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d

Fin

lan

d

US

UK

Ger

man

y

Den

mar

k

Isra

el

Can

ada

Sw

ed

en

Ne

w Z

eal

and

Fra

nce

Ital

y

Ne

ther

lan

ds

Ire

lan

d

Ko

rea

Sp

ain

Tim

e (d

ays)

Co

st (%

of

War

eho

use

val

ue)

Dealing with Construction Permits - Cost

Dealing with Construction Permits - Time (Right Axis)


31 April 2019

Figure 4.9: Time and Cost of Registering a Property, 2017


This graph shows the

time and cost involved

in registering a

property using a

standardised case of

an entrepreneur

purchasing land and a

building already

registered and free of

dispute. In terms of

cost as a percentage

of value, Ireland

(6.5%) is costlier than

UK (4.8%) to register

a property, and the 5th

most expensive of

selected countries.

The process takes 31.5

days in Ireland

compared to 21.5 days

in the UK and 2.5 days

in the Netherlands.

Over the last year, there has been a steady increase in commercial property prices and the cost of constructing office

space. In the office rental market, in the last five years, prices are up 15.9% in Dublin (Suburbs) and up 16.5% in Galway.

The Jones Lang LaSalle Property Index suggests that prices in the Irish commercial property market continued to grow

at a relatively steady pace, with capital values increasing by 3.1% in the year to Q4 2018. The capital values of office

(1.5%), retail (5%), and industrial (5.3%) property all increased over the same period, and vacancy rates in Dublin stood

at 7.4% in Q4 2018 (a fall of 1.7% from Q3).

The rental price of prime office space varies greatly across Europe. In Q4 2018, office rental in Dublin cost €646/m2.

This was lower than Paris (€810/m2) and London City (€804/m2), but considerably higher than Amsterdam (€450/m2),

Berlin (€396/m2) and Brussels(€275/m2).

According to Turner and Townsend38, Dublin is one of the most expensive cities in the world in which to construct

prime office buildings. In 2018, the construction cost per square meter of a prime office building in Dublin was

$3,065/m2, lower only than London ($3,919/m2) among the major cities measured. Similarly, construction costs for a

high-tech factory in Dublin ($2,679/m2) is comparable to London ($2,812/m2), and costs in Dublin have risen by 27%

from 2013 to 2018.

38 http://www.turnerandtownsend.com/media/3352/international-construction-market-survey-2019.pdf; 2018 figures

0

10

20

30

40

50

60

0

2

4

6

8

10

12

Ne

w Z

eal

and

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rlan

d

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k

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via

US

Can

ada

Fin

lan

d

Sw

ed

en

Ital

y

UK

Ko

rea

Jap

an

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ther

lan

ds

Sp

ain

Ire

lan

d

Ger

man

y

Isra

el

Fra

nce

Lu

xem

bo

urg

Tim

e (d

ays)

(% o

f p

rop

erty

val

ue)

Registering Property - Cost Registering Property -Time (Right Axis)

32 April 2019

Chapter 5 – Transport Costs

Figure 5.1: Europe Brent Spot Oil Price, USD per Barrel

Source: US Energy Information Association

As a primary benchmark

for global oil prices, the

movement in the price of

Brent crude has a

significant impact on

Irish businesses. Since

2016, the monthly oil

price continued on stable

upward trend, with price

peaking in Oct- 2018,

($81.03) before falling to

$57.36 per barrel in Dec-

2018. The oil price has

since started to recover

with prices 11% higher in

Feb - 2019 ($63.96)

compare to Dec- 2018

($57.36).

Figure 5.2: Average petrol and diesel cost costs per litre in Ireland, January 2016-December 2018

Source: European Commission, Energy Statistics

Figure 5.2 shows the

trends in consumer

prices for petroleum

products in Ireland

over the period Dec

2015 - Dec 2018. Both

petrol (November

2018) and diesel prices

(October 2018) have

fallen from their peak.

In December 2018,

petrol prices were

€1.43/litre and diesel

prices were €1.36/litre.

0

10

20

30

40

50

60

70

80

90

Dec

-15

Fe

b-1

6

Ap

r-16

Jun

-16

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g-1

6

Oct

-16

Dec

-16

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b-1

7

Ap

r-17

Jun

-17

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g-1

7

Oct

-17

Dec

-17

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b-1

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Ap

r-18

Jun

-18

Au

g-1

8

Oct

-18

Dec

-18

Fe

b-1

9

US

$ p

er b

arre

l

Monthly Price

1

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1.8

De

c-15

Feb

-16

Ap

r-16

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-16

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g-1

6

Oct

-16

De

c-16

Feb

-17

Ap

r-17

Jun

-17

Au

g-1

7

Oct

-17

De

c-17

Feb

-18

Ap

r-18

Jun

-18

Au

g-1

8

Oct

-18

De

c-18

pri

ce p

er li

tre

(€)

Petrol Diesel


33 April 2019

Figure 5.3: Petrol and Diesel costs per 1,000 litres, December 2018, selected countries

Source: European Commission, Energy Statistics

In December 2018, Italy

(€1,540) recorded the

highest petrol price,

Poland had the lowest

(€1,135). Sweden

(€1,491) had the

highest diesel price,

while Spain (€1,179)

recorded the lowest.

Compared to the UK,

the final price of petrol

was higher in Ireland

(€1,436), but the price

of diesel (€1,359) was

lower. Overall taxes39

on fuel prices were

similar in Ireland (62%)

and the euro area (also

62%).

Figure 5.4: Trends in Transport Related Prices in Ireland, 2015-2018 (2015 = 100)

Source: CSO, Services Producer Price Index

Between 2015 and 2018,

Irish transport sector

prices have increased

moderately. Though

Sea & Coastal transport

prices have fallen

sharply (11.4%), prices in

all other sectors of

transport have steadily

increased. Postal &

Courier services

recorded the highest

price increase (18.4%),

followed by Air

transport (17.1%) &

Warehousing, storage &

cargo (17.1%).

39 Includes VAT and all indirect taxes

0

200

400

600

800

1000

1200

1400

1600P

ola

nd

Lat

via

Sp

ain

UK

Sw

ed

en

Eu

ro a

rea

Fra

nce

Ire

lan

d

Ger

man

y

Fin

lan

d

Den

mar

k

Ital

y

Ne

ther

lan

ds

€/1

,00

0 li

tres

Petrol (incl taxes) Diesel (incl taxes)

Petrol (no taxes) Diesel (no taxes)

80

90

100

110

120

130

20

15

20

16 Q

1

20

16 Q

2

20

16 Q

3

20

16 Q

4

20

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1

20

17 Q

2

20

17 Q

3

20

17 Q

4

20

18 Q

1

20

18 Q

2

20

18 Q

3

20

18 Q

4

All Sectors Freight & Removal by Road

Sea & Coastal Transport Air Transport

Warehousing,Storage & Cargo Postal & Courier

34 April 2019

Figure 5.5: Administrative Costs and Time to Export, 2018


In Ireland, the

total cost to

export a

standardised

cargo is $380,

higher than the

UK ($305) and the

OECD high

income average

($174). It takes 25

hours to complete

the compliance

processes in

Ireland - slower

than the OECD

average (15 hrs)

but quicker than

the UK (28 hrs).

Figure 5.6: Administrative Costs and Time to Import, 2018


At $328, the cost of

importing a

container to Ireland

was significantly

higher when

compared to the

OECD high income

average ($104). The

total hours required

to complete the

various compliance

forms was 25 hours

in Ireland, compared

to 11.4 hours for the

OECD high income

average.

0

10

20

30

40

50

60

0

50

100

150

200

250

300

350

400

OE

CD

hig

h in

com

e

Lat

via

Ko

rea

Isra

el US

Sw

itze

rlan

d

Fin

lan

d

UK

Jap

an

Can

ada

Sin

gap

ore

Irel

and

Ch

ina

Ger

man

y

Ne

w Z

eala

nd

To

tal T

ime

to E

xpo

rt (

Hrs

)

Co

st o

f E

xpo

rtin

g (

US

D)

Cost to export : Border compliance Cost to export: Documentary compliance

Total Time to Export (border+compliance)

0

20

40

60

80

100

120

0

100

200

300

400

500

Lat

via

Fin

lan

d

UK

Ger

man

y

OE

CD

hig

h in

com

e

Sin

gap

ore US

Sw

itze

rlan

d

Irel

and

Can

ada

Ko

rea

Isra

el

Jap

an

Ne

w Z

eala

nd

Ch

ina

To

tal T

ime

to Im

po

rt (

Hrs

)

Co

st o

f Im

po

rtin

g (

US

D)

Cost to import : Documentary compliance Cost to import : Border compliance

Total time to import (border +compliance)


35 April 2019

Figure 5.7: Growth in traffic by region, Ireland 2017

Source: Transport Infrastructure Ireland

In 2017, there was a

3% increase in traffic

across the road

network40. Growth

was highest in the

Border and Mid-west

regions (3.9%). All-

vehicle traffic grew by

2.8% in Dublin

whereas the Midlands

and the Mid-east

recorded 3.5%

growth. For HGVs,

both the South-East

and Dublin recorded

the highest regional

growth with 4.6% and

the West recorded the

lowest (0.9%).

Figure 5.8: Travelling time for persons at Work, School or College, by region, 2016

Source: CSO, Census 2016

In 2016, nearly

200,000 commuters

(almost 11% of all

commuters) spent an

hour or more

commuting to work.

This was an increase

of 50,000 persons (or

31%) over the five-

year period. The

average time for

travel for work in 2016

was 74 minutes.

Commuting times

rose in every county,

but with significant

variation in times

travelled depending

on where people

lived.

40 http://www.tii.ie/tii-library/strategic-planning/nra-road-network-indicators/TII-National-Roads-Network-Indicators-2017.pdf

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5

Border

Mid-West

Midlands

Mid-East

South-East

Dublin

West

South-West

Annual Percentage Change (%)

HGVs All Vehicles

0

10000

20000

30000

40000

50000

60000

1 h

ou

r -

< 1

½ h

ou

rs

Bo

rder

Mid

lan

d

Wes

t

Du

blin

Mid

-Eas

t

Mid

-We

st

So

uth

-Eas

t

So

uth

-We

st

1½ h

ou

rs a

nd

ove

r

Bo

rder

Mid

lan

d

Wes

t

Du

blin

Mid

-Eas

t

Mid

-We

st

So

uth

-Eas

t

So

uth

-We

st

Po

pu

lati

on

ag

ed 1

5 ye

ars

and

ove

r at

wo

rk

Travel Time by Region

2011 2016

36 April 2019

Figure 5.9: Trends in Transport fares, Ireland (2016 = 100)

Source: CSO, CPI Transport Cost

After increases in

late 2017/ early 2018,

taxi fares have

remained relatively

stable up to early

2019. The bus fares

recorded 1.28%

increase in the last

three month to Feb

2019. The fares on

other transport

services have fallen

by 1.15% in the same

period reversing the

singinificant

increase recorderd

from June 2017 to

Dec 2018 (3.9%).

Figure 5.10: Traffic congestion levels, Europe 2016

Source: Tom Tom International, Congestion Index 2017

Traffic congestion

based on Tom Tom’s

Congestion Index

shows that, on

average, journey

times in busy

periods in Dublin,

Cork and Limerick

take 43%, 34% and

27% more time

compared to free

flow. With morning

and evening

congestion times

80% and 86% higher

compared to a free

flow, Dublin is one of

the most traffic

congested cities in

Europe.

98

99

100

101

102

103

104

105

20

16M

12

20

17M

2

20

17M

4

20

17M

6

20

17M

8

20

17M

10

20

17M

12

20

18M

2

20

18M

4

20

18M

6

20

18M

8

20

18M

10

20

18M

12

20

19M

02

ind

ex (

20

16=

100

)

Bus fares Taxi fares Other purchased transport services

0

10

20

30

40

50

60

70

80

90

Bel

fast

Du

blin

Ed

inb

urg

h

Lo

nd

on

Ro

me

Par

is

Bru

ssel

s

Man

ches

ter

Ath

ens

War

saw

Lis

bo

n

Co

rk

Lu

xem

bo

urg

Zu

rich

Vie

nn

a

Bar

celo

na

Ber

lin

Sto

ckh

olm

Fra

nkf

urt

Lim

eric

k

Car

dif

f

Mad

rid

Co

pen

hag

en

Am

ste

rdam

%

Congestion Level Morning Peak Evening Peak


37 April 2019

Figure 5.11: Traffic Congestion levels, Ireland, 2012-2016

Source: Tom Tom International, Congestion Index 2017

This figure shows the

trend in traffic

congestion level

during the period

2008-2016 in the

three major Irish

cities. Increasing

numbers of people at

work, and a higher

number of people

using private cars

relative to public

transport, have

resulted in increased

traffic congestion

levels in all cities

since 2013.

In recent years, aggregate transport sector prices in Ireland have increased moderately. Prices in all transport sectors

(except sea and coastal transport) have steadily increased, with postal and courier services recording the highest price

increase, followed by warehousing, storage and cargo services.

In 2018, the average price per litre of petrol and diesel were €1.43 and €1.34 respectively. Prices of both petrol and

diesel have fallen off since their peak. Petrol prices in December 2018 (€1.43/litre) were 4.6 % lower than the peak in

November 2018 (€1.50/litre). Similarly, diesel prices were down by 2.8 % December (€1.36/litre) compared to the peak

in October (€1.40/litre). Over the course of 2018, petrol prices increased by 2.8% and the price of diesel increased by

4.6%. After increases at the start of the year, bus and taxi fares remained stable, but fares on other purchased

transport services have increased significantly (3.9%), since the start of 2017.

It is not only transport costs that have been on the increase. Traffic has increased across the road network by 3%. In the

Border and Mid-West regions, traffic increased by almost 4% in 2017. Heavy goods vehicle traffic in the South East and

Dublin increased by 4.6% in the same period. The increased congestion is supported by the fact that 11% of all

commuters spend an hour or more commuting to work in 2017.

20

25

30

35

40

45

2012 2013 2014 2015 2016

Incr

ease

d in

tra

vel t

ime

com

par

ed t

o a

fre

eflo

w

situ

atio

n (%

)Dublin Cork Limerick

38 April 2019

Chapter 6 – Utility Costs

Figure 6.1: Non-household electricity prices (excluding VAT and other recoverable taxes and levies), Band IB41, S1 2018

Source: Eurostat Electricity Prices Data

Figure 6.1 compares

electricity prices in

selected EU countries in

S1 2014 and S1 2018.

Prices in Ireland have

fallen almost (9%) since

S1 2014, but still remain

highest among the

benchmark countries.

In 2018 S1, the

electricity price for non-

household customers in

Ireland (€0.14/kilowatt-

hour) was higher

compared to the euro

area (€0.10/kilowatt-

hour) and the UK

(€0.12/kilowatt-hour).

41 Band IB (20 MWh< consumption<500 mWh) 42 Euro area data is only up to 2017 S2

0.00

0.04

0.08

0.12

0.16

0.20

Irel

and

UK

Sp

ain

Lat

via

Ital

y

Fra

nce

Eu

ro a

rea

Ger

man

y

Po

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d

De

nm

ark

Sw

ede

n

Fin

lan

d

Ne

ther

lan

ds

€ /k

ilow

att-

ho

ur

2018S1 2014S1

Figure 6.2: Non-household electricity prices (excluding VAT and other recoverable taxes and levies), low

consumption bands, 2014 S1-2018 S142

Source: Eurostat Electricity Prices Data

In Ireland, the price of

electricity for non-

household consumers

in the most populated

band (IB, 20-

500MWh) fell from

€0.14 (PPS) in S2 2013

to €0.13 in S2 2017

before increasing to

€0.14 in S1 2018.

Prices in the UK have

risen steadily during

the period ( S1 2018,

€0.13), and have now

caught up with Irish

prices.

0.10

0.12

0.14

0.16

0.18

0.20

0.22

20

14S

1

20

14S

2

20

15S

1

20

15S

2

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16S

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16S

2

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17S

1

20

17S

2

20

18S

1

€ k

ilow

att

ho

ur

(PP

S)

Euro area < 20 MWh Ireland < 20 MWhUK < 20 MWh Euro area 20 MWh to 500 MWhIreland 20 MWh to 500 MWh UK 20 MWh to 500 MWhEuro area 500 to 2000 MWh Ireland 500 to 2000 MWh


39 April 2019

Figure 6.3: Non-household electricity prices (excluding VAT and other recoverable taxes and levies), high consumption

bands, 2014 S1-2018 S1

Source: Eurostat

This graph shows the

trends in the price of

electricity in three bands

of non-household

customers over time. The

price of electricity in

Ireland in two of the three

bands has been

consistently below the

euro area average until S1

2017 when the prices for

customers in band (20 000

to 70 000MWh) deviate

significantly upward from

the euro area average. UK

prices in all three bands

have increased during the

period and were above

the euro area average and

Ireland in S1 2018.

Figure 6.4: Gas prices for non-household consumers, excluding taxes and levies,2041 S1-2018S1

Source: Eurostat

Until S2 2016, Irish gas

prices were lower than the

euro area average.

However, since then price

levels have converged.

The cost of gas for all

categories of non-

household consumers in

Ireland have fluctuated

and are trending

downward over time. UK

prices categories have

been below the euro area

and Ireland since 2013.

0.0600

0.0700

0.0800

0.0900

0.1000

0.1100

0.1200

20

14S

1

20

14S

2

20

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1

20

15S

2

20

16S

1

20

16S

2

20

17S

1

20

17S

2

20

18S

1

€/k

ilow

att-

ho

ur

(PP

S)

Euro area 2 000 to 20 000MWh Ireland 2 000 to 20 000MWh

UK 2 000 to 20 000MWh Euro area 20 000 to 70 000MWh

Ireland 20 000 to 70 000MWh UK 20 000 to 70 000MWh

Euro area 70 000 to 150 000MWh Ireland 70 000 to 150 000MWh

UK 70 000 to 150 000MWh

0.015

0.020

0.025

0.030

0.035

0.040

0.045

0.050

0.055

0.060

S12

014

S2

20

14

S12

015

S2

20

15

S12

016

S2

20

16

S12

017

S2

20

17

S12

018

€/k

ilow

att

ho

ur

(PP

S)

Euro area (< 1 000 GJ) Ireland (< 1 000 GJ)

UK (< 1 000 GJ) Euro area (1 000 GJ to 10 000 GJ)

Ireland (1 000 GJ to 10 000 GJ) UK (1 000 GJ to 10 000 GJ)

Euro area (10 000 GJ to 100 000 GJ) Ireland (10 000 GJ to 100 000 GJ)

UK (10 000 GJ to 100 000 GJ) Euro area (100 000 GJ to 1 000 000 GJ)

Ireland (100 000 GJ to 1 000 000 GJ) UK (100 000 GJ to 1 000 000 GJ)

40 April 2019

Figure 6.5: Share of non-recoverable taxes and levies in the overall electricity price for non-household consumers,

2018 S1

Source: Eurostat

The proportion of

recoverable & non-

recoverable taxes and

levies in Ireland was

relatively low

compared to other EU

countries in S1 2018.

The overall price of

electricity in Ireland

consisted of 21 % of

recoverable and non-

recoverable taxes,

levies and VAT

whereas it was 36 % in

UK.

Figure 6.6: Share of non-recoverable taxes and levies in the overall gas price for non-household consumers, 2018 S1 9

Source: Eurostat

The proportion of

non-recoverable

taxes and levies in the

overall natural gas

price was relatively

low in Ireland (8.5%)

compared to UK (5%)

in the first six months

of 2018. In terms of

the proportion of

VAT and other

recoverable taxes and

levies, at 11.66%, it is

also lower than the

UK (14.44%).

0102030405060708090

100

Ne

ther

lan

ds

Ger

man

y

Ital

y

Fra

nce UK

Lat

via

Po

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d

Irel

and

De

nm

ark

Fin

lan

d

Sp

ain

Sw

ede

n

Tax

es a

nd

levi

es a

s %

of

ove

rall

pri

ce (P

PS

)

Proportion of price excluding taxes and levies

Proportion of VAT and other recoverable taxes and levies

Proportion of non-recoverable taxes and levies

0102030405060708090

100

Ne

ther

lan

ds

Den

mar

k

Fin

lan

d

Ital

y

Fra

nce

Ger

man

y

Sw

ed

en

Ire

lan

d

UK

Lat

via

Po

lan

d

Sp

ain

Taxe

s an

dle

vies

as

% o

f o

vera

ll p

rice

(P

PS)

Proportion of price excluding taxes and levies

Proportion of VAT and other recoverable taxes and levies

Proportion of non-recoverable taxes and levies


41 April 2019

Figure 6.7: Business Standalone Fixed Voice Basket43 € per month excluding VAT44

Source: Comreg

The trend in the

Standalone Fixed Voice

charges for business in

selected countries in the

last quarter is depicted

here. The charges for a

basket of Standalone

Fixed Voice in Ireland

remained flat last year

before falling sharply in

the Q4 2018. Ireland

was the least expensive

(€38.88) and the

Netherland (€74.21) was

the most expensive

country in Q4 2018.

Figure 6.8: Business Fixed Broadband45, € per month excluding VAT

Source: Comreg

The price of Fixed

Broadband Services for

business in Ireland is

trending slightly

downwards in the last

four quarters and was

€42.56 in Q3-Q4 2018.

Although the fixed

broadband charge in the

UK fluctuated during the

period, it remained

higher than the

corresponding charges in

Ireland for all quarters

and was €44.4 in Q4

2018.

43 OECD Business Standalone Fixed Voice 260 calls (606 minutes) 44 ComReg uses independently collated Strategy Analytics (Teligen) pricing data using OECD-approved methodologies to examine the relative prices of several specific

fixed voice usage baskets of national and international telecoms services for both residential and business users. The pricing data used for international comparisons

currently includes pricing information for selected countries, namely Germany, Denmark, Spain, Netherlands and the UK. 45 OECD Business Fixed Broadband 60GB Basket (>25Mbps)

30.00

35.00

40.00

45.00

50.00

55.00

60.00

65.00

70.00

75.00

80.00

Q4 2017 Q 12018 Q2 2018 Q3 2018 Q4 2018

€/ m

on

th (

excl

.VA

T)

-P

PP

Denmark Germany Netherlands

Spain UK Ireland

30

40

50

Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

€/ m

on

th (

excl

.VA

T)

-P

PP


Spain UK Ireland

42 April 2019

Figure 6.9: Business Mobile Broadband, € per month excluding VAT

Source: Comreg

Mobile Broadband prices

have fallen slightly in

Ireland in the last four

quarters. Prices in most

of the countries

presented remained

relatively stable. Though

there was a significant

fall in prices in Germany

between Q2 and Q3

2018. At €15.76 in Q3-Q4

2018, Ireland had the

lowest cost among the

benchmarked countries

since the first quarter of

2018 overtaking the UK.

Figure 6.10: Business post-paid mobile phone services, € per month excluding VAT

Source: Comreg

After the early decline,

Business bill pay mobile

services in Ireland

remained stable in the

first three quarters of

2018 before going up in

the last quarter. At €30/

month in Q4 2018,

Ireland had the 2nd

highest price among the

benchmarked countries.

The UK continued to be

the least expensive

country during the

period with the price

falling since Q2 2018

(€13.71).

Certain utility costs (including electricity and gas) tend to be higher in Ireland than other jurisdictions, while Ireland is

more competitive regarding other utility costs (telecoms). The EU is among the most expensive locations for electricity

and gas globally – and within the EU – Ireland is one of the most expensive countries for electricity for both large and

small users. In S1 2018, electricity in Ireland (for those in the low consumption band46) cost €0.14/ kilowatt-hour, which

46 Band IV (20MWh < consumption < 500MWh) – prices in euro excluding VAT and other recoverable taxes and levies-

10

20

30

40

50

Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

€/ m

on

th (

excl

.VA

T)

-P

PP


10

15

20

25

30

35

40

Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018

€/ m

on

th (

excl

. VA

T)

-P

PP


Spain UK Ireland


43 April 2019

is higher than both the UK (€0.12/ kilowatt-hour) and euro area average (€0.10/ kilowatt-hour) price. In the higher

consumption band47, Irish consumers are still paying more (€0.09) compared to the euro area average (€0.08) but lower

than UK (€0.11). Gas prices48 in Ireland are in line with the euro area average but higher than the UK prices.

Ireland is relatively cost competitive for telecoms. In Q4 2018, the Business Fixed Broadband 60GB Basket (>25Mbps)

cost in Ireland (€42.56) was lower than the UK (€44.4) and slightly above the Netherlands (€41.9)49. However, the high

post-paid mobile broadband costs in Ireland (€30) compared less favourably to the UK (€13.71)50.

47 Band IE (2000MWh < consumption < 70000MWh) – prices in euro excluding VAT and other recoverable taxes and levies 48 PPS for business consumers 49 https://www.comreg.ie/publication-download/quarterly-key-data-report-q4-2018 50 https://www.comreg.ie/publication-download/quarterly-key-data-report-q4-2018

44 April 2019

Chapter 7 – Credit and Financial Costs

Figure 7.1: Interest Rates for Non-Financial Corporations, selected countries

In 2014, Irish companies

faced lower interest rates

(3%) when compared to

euro area companies (3.3%).

However, there has been a

marked divergence since

then. Irish interest rates

have increased (3.3% in

January 2019) while interest

rates in the euro area have

fallen to just under 2%. In

France, the interest rate is

even lower at 1.74%

On this evidence, Irish

companies now face higher

rates than they did in 2014.

Source: MIR dataset, ECB

Figure 7.2: Interest Rates for Non-Financial Corporations (new business) by loan size,

selected economies

This figure underlines the

interest rate divergence set

out in the chart above. In

Ireland and the euro area,

interest rates are

substantially lower on loans

that are larger than

€250,000 (but smaller than

€1 million). But regardless

of the loan size, interest

rates are higher overall for

Irish companies. In Jan

2019, Irish loans under

€250,000 had an average

interest rate of 5.5% while

euro area loans for the same

amount had an interest rate

of 2.2%.

Source: MIR data, ECB

0

0.5

1

1.5

2

2.5

3

3.5

4

20

14Ja

n

20

14A

pr

20

14Ju

l

20

14O

ct

20

15Ja

n

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15A

pr

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ct

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ct

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pr

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ct

20

18Ja

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18A

pr

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ct

20

19Ja

n

%

Germany France Ireland Euro area

0

1

2

3

4

5

6

7

20

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pr

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ct

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20

15A

pr

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15Ju

l

20

15O

ct

20

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n

20

16A

pr

20

16Ju

l

20

16O

ct

20

17Ja

n

20

17A

pr

20

17Ju

l

20

17O

ct

20

18Ja

n

20

18A

pr

20

18Ju

l

20

18O

ct

20

19Ja

n

%

Ireland ≤ €0.25mn €0.25mn ≤ Ireland ≤ €1mn

€0.25mn ≤ Euro Area ≤ €1mn €0.25mn ≤ Euro Area ≤ €1mn


45 April 2019

Figure 7.3: Interest rates on outstanding amount for Non-Financial Corporations, by

duration

In the years leading up to

2014, interest rates on

outstanding amounts were

universally lower in Ireland

than the euro area.

However, since 2016, rates

for all durations have been

significantly higher in

Ireland. In Jan 2019, for

short loans (lasting less than

a year), Irish firms faced

interest rates of 4.1% while

the euro area average was

2.1%.

Source: MIR data, ECB

Figure 7.4: Interest Rates for Irish SMEs, selected sectors

The overall average interest

rate that Irish SMEs face is

3.4%. However, this masks

differences at the sectoral

level. This figure shows that

interest rates for the

transport and storage

(4.2%) , construction (4.0%),

and ICT (4.2%) sectors are

much higher than the

overall rate. This was not

always the case for ICT,

which experienced a large

jump in late 2018.

Source: Trends in SME and Large Enterprise Credit and Deposits, CBI

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

20

13Ja

n

20

13A

pr

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ct

20

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n

20

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pr

20

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l

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14O

ct

20

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n

20

15A

pr

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20

15O

ct

20

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n

20

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pr

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20

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20

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n

20

17A

pr

20

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l

20

17O

ct

20

18Ja

n

20

18A

pr

20

18Ju

l

20

18O

ct

20

19Ja

n

%

Ireland < 1 year 1 year < Ireland < 5 years

5 years < Ireland Euro Area < 1 year

1 year < Euro Area < 5 years 5 years < Euro Area

2.5

2.7

2.9

3.1

3.3

3.5

3.7

3.9

4.1

4.3

4.5

Mar

-16

May

-16

Jul-

16

Se

p-1

6

No

v-16

Jan

-17

Mar

-17

May

-17

Jul-

17

Se

p-1

7

No

v-17

Jan

-18

Mar

-18

May

-18

Jul-

18

Se

p-1

8

%

Total Construction

Transportation and Storage Information and Communication

46 April 2019

Figure 7.5: Interest Rates on Gross New Lending for Irish SMEs, selected sectors

The interest rate on

gross new lending for

SMEs has remained

close to 4%. However,

similar to the previous

chart, there is an

amount of sectoral

variation. The interest

rate that transport and

storage SMEs face (5%)

is much higher than the

rate on new lending that

SMEs in the hotel and

restaurant sector face

(3.1%).

Source: Trends in SME and Large Enterprise Credit and Deposits, CBI

Businesses in Ireland face higher interest rates than the average business in the EU, or the euro area. This is a

consistent feature of the data regardless of intrinsic features of the loan, whether it is large or small, or whether it is for

a short or long duration. However, this was not always the case. In 2014, Irish companies faced a similar interest rate

(around 3%) to their counterparts in Germany and France, but while the average rate businesses face has dropped in

these economies (to around 2%), overall Irish companies face higher rates now (3.3%) than they did in 2014 (3%)51.

For Irish SMEs, the average interest rate is 3.4%, but there is considerable sectoral variation. SMEs in the transport and

storage (4.2%), construction (4%), and ICT (4.2%) sectors are all higher than average interest rates, and the rates on

gross new lending for Irish transport and storage SMEs stood at 5.1%52 as of September 2018.

51 ECB, MIR dataset 52 CBI, Trends in SME and Large Enterprise Credit and Deposits

2.5

3

3.5

4

4.5

5

5.5

6

Mar

-16

May

-16

Jul-

16

Se

p-1

6

No

v-16

Jan

-17

Mar

-17

May

-17

Jul-

17

Se

p-1

7

No

v-17

Jan

-18

Mar

-18

May

-18

Jul-

18

Se

p-1

8

%

Total Manufacturing

Transportation and Storage Hotels and Restaurants

Information and Communication


47 April 2019

Chapter 8 – Business Services and Other Input Costs

Figure 8.1: Services Producer Price Index, (2015=100)

The Services Producer

Price Index shows the

changes in the price that

services producers receive

for their products. In 2018,

services producers have

been charging the highest

prices in the last 3 years. In

2018, services prices were

approximately 7% higher

than they were in 2015.

Source: CSO (Services Producer Price Index)

Figure 8.2: Services Producer Price Index, Annual Percentage Change (2018)

While services prices are

overall trending upwards,

there is considerable

variation at a sectoral level

on the size of price

changes . The price that

producers are receiving in

sectors like sea and

coastal transport and

advertising, media and

market research have

remained stagnent, while

warehousing, storage and

cargo handling (6.8%) and

postal and courier (6.2%)

services increased

substantially.

Source: CSO Services Producer Price Index

95

100

105

110

2015 2016 2017 2018

-1 0 1 2 3 4 5 6 7 8

Warehousing, Storage and Cargo Handling

Postal and Courier

Employment and Human Resource Activities

Computer Programming and Consultancy

Air transport

Industrial and Building Cleaning

Security and Investigation

Architecture, Engineering and Technical Testing

Legal, Accounting, Public Relations and BusinessManagement Consultancy

Freight and Removal by Road

Advertising, Media Representation and Market Research

Sea and Coastal Transport

Annual Percentage Change

48 April 2019

Figure 8.3: Comparison of Services producer prices, 2017 (Index, 2015 = 100)

This figure compares Ireland’s

Services Producer Price Index

with the corresponding index in

other EU Member States.

Of the selected countries, only

Luxembourg has experienced a

faster increase in the prices that

services producers receive than

that observed in Ireland.

In 2017, the prices services

producers received were 3%

higher in Ireland relative to

2015, while they were 6%

higher in Luxembourg. In

Denmark, prices were 4.5%

lower than the figures for 2015.

The corresponding figure for

the euro area was 0.9%.

Source: Eurostat Services producer prices - annual data

Figure 8.4: The cost of enforcing a commercial contract

Ireland is a relatively

expensive location in

which to resolve a

commercial dispute

through a first-instance

court. The total cost of

enforcing a contract was

27% of the total award,

with lawyer’s fees

accounting for the bulk

(70%) of the cost.

Enforcing contracts in

the UK was the most

expensive relative to the

award (46%), compared

to 27% in Ireland.

Source: World Bank Doing Business 2019

90 95 100 105 110

Denmark

Spain

Italy

France

Lithuania

Netherlands

Euro area

Poland

Germany

Finland

Sweden

UK

Austria

Ireland

Luxembourg

0

5

10

15

20

25

30

35

40

45

50

Lu

xem

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urg

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uth

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rea

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UK

Co

st o

f E

nfo

rcem

ent

(% o

f to

tal c

laim

)

Attorney fees Court fees Enforcement fees


49 April 2019

Figure 8.5: Time to enforce a commercial contract, 2018

In terms of time taken to

resolve a dispute, the

World Bank Doing

Business report shows

that the time taken for

filing and service, trial

and judgement and

enforcement (including

time for appeal) is 650

days in Ireland,

compared to 437 days in

the UK and 578 days on

average across OECD

countries.


Figure 8.6: Cost of starting a new business (% of income per capita)

In the last five years,

Ireland has maintained its

competitive position in

terms of the cost to

register a business as a

percentage of gross

national income.

In 2018, registering a

business in Ireland cost an

amount equal to

approximately 0.1% of

GDP/ capita. This

compares favourably with

the OECD average (3.1%)

and South Korea (14.6%).


0

200

400

600

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1200S

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Filing and service Trial and judgment Enforcement of judgment

0

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Irel

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% o

f in

com

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apit

a

50 April 2019

Figure 8.7: Consumer Insurance Costs (2015=100)

Headline inflation

has been relatively

stable in recent

years, but there

have been big

changes in the price

of car and general

transport insurance.

In Q3 2016, car

insurance was 30%

higher than it was in

2015. Since then

prices have

normalised, and

now prices are 4%

higher than the

2015 figure, but still

32% higher than

they were in 2013.

Source: CSO Harmonised Consumer Price Index

Figure 8.8: Price of car (and other transport) insurance (2015=100)

The price of car, and

general transport,

insurance in Ireland

increased rapidly up

to the end of 2016,

but has since

experienced

deflation. This

means that

insurance inflation

in Ireland from 2015

to now is like the EU

and euro area

average. In the UK

prices are

substantially higher

now than they were

in 2015.

Source: Eurostat Harmonised Index of Consumer Prices

70

80

90

100

110

120

130

140

20

13M

01

20

13M

04

20

13M

07

20

13M

10

20

14M

01

20

14M

04

20

14M

07

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14M

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20

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15M

04

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15M

07

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07

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10

Insurance Home insurance

Health insurance Car (and general transport) insurance

70

80

90

100

110

120

130

140

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13M

01

20

13M

04

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07

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04

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07

20

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10

20

18M

01

20

18M

04

20

18M

07

20

18M

10

EU Euro area Ireland UK


51 April 2019

In Ireland, the overall price of services is rising much faster than the price of goods. In total, the price of services has

increased by 7%53 since 2015, but this masks widely different changes in the price of certain services. For example, the

price of warehouse, storage and cargo handling services increased by 6.2%, while sea and costal transport prices

declined by 0.2%.

When compared to other EU countries, services prices are rising relatively quickly in Ireland, with Luxembourg being

the only economy measured where services prices increased faster than Ireland. In Denmark, services producer prices

declined since 2015, and are now around 4.5% lower than they were in 201554.

Insurance costs, which increased rapidly in Ireland from 2013 to 2016, have decreased since the end of 2016. The price

of car (and other transport) insurance is now roughly what it was in 2015 (like the EU and euro area average)55.

53 CSO, Services Producer Price Index 54 Eurostat, Services Producer Prices, Annual Data (2017 figure) 55 Eurostat, HICP (November 2018)

52 April 2019

Chapter 9 – Focus on Residential Property and Childcare Costs

Figure 9.1: Residential Construction Cost Index, 2015 = 100

The Q3 2018 figure

demonstrate that the

costs incurred by

contractors when

building residential

property have been

on the increase in all

the selected

economies since

2016. Costs have

exhibited the fastest

increase in the UK

(7.9% in Q2 2018).

Cost increases in

Ireland (6.6%) are

broadly in line with

those in the rest of

the EU and euro area

(5.7%).

Source: Residential Construction Cost Index, Eurostat

Figure 9.2: Residential Property Price Index, Ireland (Jan 2005 = 100)

This figure shows

the large decline in

the price of

residential

property over the

2008- 2013 period

– a trend that was

observed in Dublin

and throughout

the country. Since

2013, property

prices nationwide

have been

increasing, and are

now roughly at the

level they were in

January 2005,

though well below

their peak levels in

April 2007.

Source: Residential Property Price Index, CSO

40

50

60

70

80

90

100

110

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130

140

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M0

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National National (ex. Dublin) Dublin

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Euro area EU Ireland UK


53 April 2019

Residential Property Price Index, CSO

Figure 9.4: Annual Average Change in Rents, 2009 - 2018

In tandem with the

increase in the price

of residential

property, there have

been large increases

in rents in Ireland

since 2012.

In 2018, Irish rents

increased by 6%, far

more than the EU

(1%), euro area (1%),

or the UK (1%).

Source: HICP, Eurostat

Figure 9.3: Residential Price Index (Houses), Average Percentage Change (in the

year to November 2018)

While national

property prices

increased by 7% in

the year to

November 2018,

there was more

muted price

increases in Dublin

(4.6%), and double

digit increases in the

South-East (10.2%),

West (12.2%),

Midlands (12.6%),

and Mid-West

(20.7%).

Source: Residential Property Price Index, CSO 0 5 10 15 20 25

Mid-West (inc. South Tipperary)

Midland

West

South-East (ex. South Tipperary)

South-West

Mid-East (inc. Louth)

National

Border (ex. Louth)

Dublin

% change

-15

-10

-5

0

5

10

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

An

nu

al P

erce

nta

ge

Ch

ang

e

EU Euro Area Ireland UK

54 April 2019

Figure 9.5: Residential Tenancies Board, National Rent Index (2007 = 100)

This broad increase

in rents in Ireland

since 2012 has been

across both houses

and apartments. The

rental price of both

houses and

apartments in

Ireland has now

surpassed the 2008

figures. In Q1 2018,

the rental price of an

apartment in Ireland

was 19% higher than

it was in 2007. The

corresponding figure

for renting a house

was 4% higher.

Source: Residential Tenancies Board

Figure 9.6: Rent Index, regional variation (2007=100)

The regional

breakdown of the

rental price index

shows that rents

nationwide have

broadly followed

the same trend. At

the start of 2012,

rents were roughly

20% lower than

they were in 2007.

In Q1 2018, rents

were equal to or

above rents in

2012. Rents in

Dublin, and the

Greater Dublin

Area have

increased faster

than the rest of the

country.


70

80

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Total Houses Apartments

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Dublin GDA (excluding Dublin) Outside GDA


55 April 2019

Figure 9.7: Average Rents, broken down by county (Q1 2018)

The average rents

that are paid in

each county reveal

large differences

throughout the

country.

In Q1 2018, the

highest average

rent was in Dublin

(€1,527), while the

lowest average

rent was in Leitrim

(€487).


Figure 9.8: Gross full-time childcare fees (2 children), as percentage of average wage

(2018)

Source: Childcare Costs Statistics, OECD

Gross childcare

fees in Ireland are

relatively high

compared to the

OECD, and EU

averages. For two

children in full-time

care, the gross fees

are 39% of the

average wage,

compared to an

OECD average

(24%) and the EU

average (18%).

However, Ireland

does compare well

to the UK (61%)

and Switzerland

(69%).

0

200

400

600

800

1000

1200

1400

1600

1800

Du

blin

Wic

klo

w

Kild

are

Mea

th

Co

rk

Lo

uth

Gal

way

Lim

eric

k

Kilk

enn

y

Car

low

Lao

is

Ke

rry

Wes

tmea

th

Slig

o

Wat

erfo

rd

Wex

ford

Cla

re

Off

aly

Tip

per

ary

Mo

nag

han

May

o

Cav

an

Ro

sco

mm

on

Do

neg

al

Lo

ng

ford

Lei

trim

€

0

10

20

30

40

50

60

70

Sw

itze

rlan

d

UK

Ne

ther

lan

ds

Ne

w Z

eal

and

Jap

an

Lu

xem

bo

urg

Ire

lan

d

US

Po

rtu

gal

OE

CD

Ave

rag

e

Fra

nce

Po

lan

d

Sp

ain

EU

Fin

lan

d

Ko

rea

Den

mar

k

Lat

via

Ger

man

y

Sw

ed

en

Gro

ss C

hild

care

Fee

s (%

of

Ave

rag

e W

ages

)

56 April 2019

Figure 9.9: Out-0f-pocket childcare costs for a two-earner couple family, 2018

When looking at

the net childcare

cost, there are the

different models

that OECD

countries use to

ease the cost of

childcare. In

Ireland, the net

cost of childcare is

28% of the average

wage, with the

reduction due to

childcare benefits.

In the UK, the

corresponding

figure was 36%,

while the EU

average was 12%.

Source: Childcare Costs Statistics, OECD

Figure 9.10: Childcare inflation compared to overall and services inflation, Dec 2016 =

100

This figure shows the

trend in the price of

childcare services

and compares it to

overall inflation and

inflation in services.

It shows that while

childcare costs have

been rising in recent

years, this increase is

in line with the

observed increases in

services prices.

Source: CPI, CSO

-60

-40

-20

0

20

40

60

80S

wit

zerl

and

UK

Ne

ther

lan

ds

Ne

w Z

eala

nd

Jap

an

Lu

xem

bo

urg

Irel

and

US

Po

rtu

gal

OE

CD

Ave

rag

e

Fra

nce

Po

lan

d

Sp

ain

EU

Fin

lan

d

Ko

rea

De

nm

ark

Lat

via

Ger

man

y

Sw

ede

n

Ch

ildca

re r

elat

ed c

ost

s an

d b

enef

its

(% o

f av

erag

e w

ages

)

Childcare fees Childcare benefits Tax reduction Changes in other benefits Net cost

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Childcare Services All items


57 April 2019

Real wages are the key measure of how well-off a person feels – real wages account for what a person can buy with the

wages they receive – and so consider price changes. If prices are increasing faster than nominal wages, then real wages

are declining, and people are becoming less well off. The Competitiveness Council have decided to include a chapter

that looks specifically at residential property costs and childcare costs given the importance of these items and because

of their impact on wage pressures, and the competitiveness of firms and of Ireland as a place in which to do business.

Residential property prices have been growing consistently across the country since a low point in early 201356.

Property prices are now roughly where they were at the start of 2005. Irish rents have also been growing since 2013 and

have been increasing by over 5% per annum for the last four years57. According to the Residential Tenancies Board58,

the average rent in Dublin was €1,527 in Q1 2018.

56 CSO, Residential Property Price Index (Nov 2018 figure) 57 Eurostat, HICP 58 Residential Tenancies Board, Rent Index 2018

National Competitiveness Council c/o Department of Business, Enterprise and Innovation 23 Kildare Street, Dublin 2, D02 TD30 Tel: 01 6312121 Email: [email protected] Web: www.competitiveness.ie

Cost of Doing Business in Ireland · 2019-10-22 · As a member of the euro area, maintaining cost...

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