Competitiveness should be without doubt the most important issue on the Republic's economic, social and political agenda.

For many years IBEC has expended considerable effort in convincing government, policy makers, trade union leaders and others of this fact: if our prices are too high, our customers will go elsewhere.

The contribution this effort has made to the success the Irish economy has enjoyed over the past few years hardly needs to be articulated: the gains made in the past decade speak for themselves.

Over the past 12 or 18 months, however, the agenda has shifted away from competitiveness as a central issue and this, we believe, is a dangerously premature and ill-considered development. If we consider the challenges posed to Irish business over the past 12 months it is obvious that Irish-based companies are battling against increasingly difficult circumstances.

Even before the appalling events of September 11th, there were clear indications of a slowdown in the US economy and growing global trading difficulties.

Irish business had to face this and other, more local, problems.

Rapidly increasing pay costs, the difficulties experienced by many sectors through the threatened outbreak of foot-and-mouth disease, an increasingly unstable industrial relations environment especially in the public sector, increases in the price of energy and insurance, traffic congestion and blockages in the planning system represent examples of the challenges being faced by business on a daily basis.

If we also consider our vulnerability to a strengthening of the euro against sterling and the dollar, the situation is indeed serious.

So it is hardly a surprise that the report of the National Competitiveness Council issued earlier this week highlights the Republic's deteriorating competitiveness position across a whole range of key parameters.

Whilst acknowledging our good performance in key areas such as "economic performance" and "internationalisation", the overall trends cannot be ignored. What is particularly worrying is our poor performance in areas such as productivity, labour costs and non-labour enterprise costs.

The report clearly states that wage costs in the Republic are rising faster than productivity. In fact, wage costs in the State are rising faster than in any other member of the OECD. This is not accompanied by a corresponding increase in productivity, so the inevitable outcome must be a loss in competitiveness and employment.

The report also highlights other major shortcomings in our ability to compete in an increasingly competitive global marketplace. For example, it challenges recent findings that our education system is up there with the best. Similar concerns exist in relation to our transport and telecommunications infrastructure.

It is time we faced up to a simple fact. The Republic is no longer a low-cost economy; we are a relatively high-cost economy. This shift, while gradual, has not been unplanned.

Our industrial policy as promoted by Government is clear: the Republic wishes to position itself as a high value-added economy offering highly paid employment. It is difficult to argue with this approach but it does require a major commitment on the part of Government and the social partners to provide the conditions conducive to such a significant shift.

Against this background, it is absolutely essential that government restore competitiveness to the top of the agenda: all measures must focus on creating the conditions that enhance our ability to compete. It is in everyone's interest that some of these measures are initiated immediately.

The cost of employment must be reduced; the problems relating to PRSI addressed further in future budgets. Initiatives to upskill or cross-skill the existing workforce would pay handsome dividends in creating flexibility for both employee and enterprise alike.

Public expenditure must be ruthlessly controlled: comprehensive, high-quality services combined with value for money cannot be beyond our ability to devise. The National Development Plan must be implemented on time and on budget.

We cannot control the global environment and, as part of a wider economic union, our ability to take unilateral economic action is limited. But it is certain that the solution to many of the problems we face is in our own hands.

In fact, our success in keeping the Republic free of foot-and-mouth disease is evidence of what can be achieved by fast, decisive and focused action.

A similar concentration by Government on competitiveness will enable us to ride out the current storm and place us in a good position to take advantage of the economic recovery we have no doubt will occur.

Brendan Butler is Director of Enterprise, IBEC. He can be contacted at brendan.butler@ibec.ie