In other countries, there is a business class. In Ireland, we have, instead, a whinging class – or at least whinging spokespersons for the Irish business class. And they have so much to whinge over – taxes, regulations, energy costs, water and waste charges and, of course, the dreaded omnipresent labour costs. Listening to their spokespersons, you’d wonder how Irish business ever manages to export a single ready-meal or turn a penny profit. But in a recent survey published by the National Competitiveness Council (a body not known for undermining the claims of employers' organisations), we are presented with data which suggests, contrary to received wisdom, that Irish business costs are not so great and, in particular, that labour costs are certainly not the issue.
The Costs of Doing Business in Ireland was published late last year, basing its results on an exhaustive survey conducted by OCO consultancy. They took a sampling of businesses engaged in seven sectors across a range of European, Asian and American cities and analysed their costs including labour, telecommunications, property and rents, etc. They concluded that:
Overall, Irish cities are reasonably cost competitive compared to other high-income cities . . .
In other words, cheap. The survey covered twelve cities, through the inclusion of two of them – Bangalore and Singapore – is somewhat dubious (costs in these cities are going to be cheaper than absolutely any European country), while Budapest’s inclusion only tells us that Hungarians have lower living standards as measured by GNP and, therefore, costs.
That being said, when compared to high-income cities (Boston, London, Copenhagen, Maastricht and Manchester), Irish cities do quite well, even expensive Dublin. What’s more interesting is that on the full range of comparisons, average business costs in most Irish cities are even lower than business-friendly Boston.
Labour costs: Given that an average 59% of business costs across all sectors are made up of payroll costs, this is a key issue. What the NCC found was that businesses in four Irish cities – Dublin, Galway, Limerick and Cork – experienced the lowest labour costs among high-income countries. Only Manchester was found to have lower costs while Copenhagen, Maastricht, London and even Boston all had higher labour costs.
Property: Property purchase and rents make up the next largest cost category. Dublin ranked 2nd, behind London, while the other three Irish cities come in much lower than all other cities except for Copenhagen.
Communication: In this category, Ireland is higher than all the high-income cities. Not a great advertisement for privatisation.
Utilities: This is another category that Irish cities do poorly in – but not greatly so and not even the worst: that pleasure belongs to Manchester. Now, if the Energy Regulator would stop artificially jacking up electricity prices and let the market determine the price instead, Irish businesses would certainly benefit.
Transport and miscellaneous costs also show Irish businesses to be quite ‘competitive’.
The NCC is right to point out that we should be cautious about generalising these results. They are, after all, a sampling of selected sectors in a few cities. But they felt confident enough that publication of these findings would ‘stimulate debate and action’. Indeed, it should.
There are two issues here: first, the extent to which business ‘spokespersons’ are out of touch with the reality of doing business in Ireland. Their ideological or knee-jerk laziness, which informs their promulgations, is of little benefit to businesspeople, employees and the economy. If one doesn’t take account of the reality, then one’s proposals are not likely to have much affect on reality.
Secondly, the Left is usually shy about attacking business spokespersons for fear of being ‘anti-business’ and, therefore, of being anti-growth and anti-prosperity. Yet, this fear means that it is unable to construct a fact-based analysis. The ultimate loser is the business community (and the workers, and the economy).
So here’s an idea. The Left should tell the business spokespersons to get stuffed when they start whinging. To help that stuffing, they should use reports such as this one. That would certainly start to put the Left on the pitch regarding the economic debate. They should further demand that real evidence be uncovered to find out why our indigenous sector is so unproductive, so weak, so unable to compete in the international marketplace. A special Oireachtas Committee maybe. Let's drag the business spokespersons before it, and force them to defend their mantras. Because all the evidence shows that it’s not the cost of doing business that is the problem.
Maybe it’s down to the ‘way of doing business’. If so, business spokespersons have a lot to answer for.