Tánaiste and Minister for Enterprise and Employment Mary Coughlan admitted today the cost of doing business in Ireland was having a negative impact on the economy’s sustainability.
Ms Coughlan said that while many in the private sector had taken substantial reductions in their salaries or were working extra hours, labour and energy costs remained too high and the country needed to regain its “competitive edge”.
She was speaking after an interim report by a Government taskforce established to tackle unemployment in the midwest called for a national cost competitive strategy to reduce costs and make the country more competitive.
The report, which was published yesterday, said unemployment may rise to 20 per cent in the region if the issue of competitiveness is not tackled.
It recommended the development of national strategy, targeting a 20 per cent reduction in costs.
“Without this foundation, unemployment will continue to rise and remain at unacceptable levels for years to come,” it said.
The Midwest Taskforce, chaired by former Kerry Group chief executive Denis Brosnan, was established by Ms Coughlan last February to consider the serious economic fallout in the midwest following Dell’s decision to cease manufacturing in Limerick which resulted in the loss of 1,900 jobs.
In a statement today, Mr Brosnan said: “Loss of competitiveness is an important national issue but it has a particular impact in the midwest region which relies heavily on manufacturing, construction and tourism.
He said:"To drive coherent thinking and delivery across all the relevant government departments, the taskforce recommends that the inter-relationship of employment, education/training and social welfare".
The report said that the Limerick-Shannon Gateway is central to the growth and prosperity of the midwest region, and that Limerick needs immediate investment to address its critical social and economic issues.
The taskforce said the governance of the city must be addressed as a priority.
The closure of Dell’s manufacturing facility in the Raheen Industrial Estate resulted in the direct loss of 1,900 jobs at Limerick’s largest employer while thousands more jobs in the midwest will be affected by the closure.
Since Dell’s announcement last January, hundreds of jobs have been lost at some of its subsidiary companies including RR Donnelly formerly Banta Global Turnkey and Flextronics.
According to the latest figures, the number of people on the Live Register for the midwest in December 2008 was 25,915. Unless action is taken, this figure is likely to peak at close to 55,000 in 2010, warns the report.
Fine Gael Clare TD Joe Carey said the report highlighted the scale of the unemployment crisis facing the region and claimed it was “a damming indictment of the failure of Fianna Fáil Government policy”.
Mr Carey said the taskforce noted the lack of any marketing strategy for the region following the Open Skies initiative.
He claimed Fianna Fáil had made repeated promises to act on Open Skies but had failed to take any significant action.
“This is a glaring failure of the Government to live up to its responsibilities to the region. Tourism is a hugely important industry to the region but is heavily under-supported. This must be addressed with immediate effect.”