NIB predicts strong export expansion

IRISH EXPORTS will grow by 7 per cent this year, continuing their recent strong performance, National Irish Bank (NIB) economist Ronnie O’Toole has forecast.

The growth in trade could translate to an increase of 3,000 in net employment by foreign multinationals based in Ireland this year, with a similar increase in 2012, NIB said.

However, this will have very limited impact on Ireland’s unemployment rate in the short term.

“While this increase in employment is welcome, the export sector is not sufficiently labour-intensive, in itself, to make a dent in unemployment,” said Dr O’Toole. Tourism is the only export sector in Ireland considered labour-intensive.

“However, increased exports can result in higher household incomes and tax revenues, which in time will improve confidence and domestic demand,” he added.

Manufacturing wages in Ireland are now below all major northern European economies, but above those in Mediterranean economies.

Figures from the European Commission’s Ameco database show that the cost to a company of employing a manufacturing worker in Ireland is €43,000. This compares to €63,000 in Norway – the highest-cost country. In the UK, the same cost is €50,000, while in Germany it is €47,000.

Italy, Spain and Greece all have lower costs, with all eastern European members of the EU having lower labour costs again.

“Obviously we’re a multiple of the eastern European countries, and in a direct contest on labour costs, they would win. But in general our manufacturing wages are not out of kilter with Europe,” said Dr O’Toole. Non-wage costs still have further to fall to meet euro zone averages, he noted.