Despite some improvements in the cost of doing business, Ireland is still a high-cost location for a number of key businesses, according to a report released Tuesday.
The report, "Costs of Doing Business in Ireland 2014", was published by Ireland's National Competitiveness Council (NCC). It cautioned that recent deterioration in cost competitiveness could threaten jobs and growth.
"Ireland's relative cost competitiveness is now deteriorating vis-a-vis our main competitors. Labor costs are rising again following a number of years' decline, industrial electricity prices have increased in recent years. And an upward trend is evident across a range of business service costs," the report said.
On labor costs, the report said Irish gross earnings are the eight highest in the euro area, while net wages are the sixth highest. It says Irish unit labor costs increased by 1.4 percent in 2013 after several years of improvement.
Diesel prices in Ireland are 7 percent more expensive than the euro area average. Electricity costs in Ireland are the fifth highest in the euro area for small and medium enterprises and the sixth highest for large firms.
On credit costs, new business rates of interest are significantly higher in Ireland than the euro area average. Rates on loans of up to 1 million euros (1.3 million U.S. dollars) are 31 percent higher, while loans over 1 million euros are 27 percent higher than the average. Meanwhile, interest rates on revolving loans and overdrafts are 11.5 percent above the average.
The report said business services costs have also been rising since 2012, after several years of declines, and are now 3.4 percent above 2010 levels.
It said that in 2012 Ireland was the third most expensive country in the euro area for consumer goods and services, with prices 14.6 percent above the euro area average, adding that Irish price levels remain above the average in ten of the 12 measured categories.
In the report, the NCC said the importance of Ireland's international cost competitiveness remains a key economic priority for the government, cautioning that further structural change is required to ensure that costs do not escalate and erode competitiveness gains already made.
Ireland's Jobs Minister Richard Bruton said Tuesday's report showed that Ireland's competitiveness faces enormous challenges.
The report must serve as "a major wake-up call for anyone who thought that our competitiveness issues were resolved," he said.
"Now is not the time for businesses to hike their prices, now is not the time for unions to make wage demands, and now is not the time for the government to take its foot off the pedal in making the structural reforms we need," he added.