Post on 27-Jun-2020
Cost of Doing Business in Ireland April 2019
Costs of Doing Business 2019
1 April 2019
Introduction to the National Competitiveness Council
The National Competitiveness Council (NCC) reports to the Taoiseach and the Government, through the Minister for Business, Enterprise and Innovation on key competitiveness issues facing the Irish economy and offers recommendations on policy actions required to enhance Ireland’s competitive position.
In accordance with the European Council recommendation of September 2016 on the establishment of National Productivity Boards by Eurozone countries, in March 2018, the Government mandated the National Competitiveness Council as the body responsible for analysing developments and policies in the field of productivity and competitiveness in Ireland.
Each year the NCC publishes two annual reports:
▪ Ireland’s Competitiveness Scorecard provides a comprehensive statistical assessment of Ireland's competitiveness performance; and
▪ Ireland’s Competitiveness Challenge uses this information along with the latest research to outline the main challenges to Ireland’s competitiveness and the policy responses required to meet them.
As part of its work, the NCC also publishes:
▪ The annual Costs of Doing Business report;
▪ An annual Productivity Review report; and,
▪ A series of competitiveness bulletins and other papers on specific competitiveness issues.
The work of the National Competitiveness Council is underpinned by research and analysis undertaken by the Enterprise Strategy, Competitiveness and Evaluation Division of the Department of Business, Enterprise and Innovation.
The NCC’s Competitiveness Framework
The Council defines national competitiveness as the ability of enterprises to compete successfully in international markets. This is a significant factor influencing economic growth, jobs, wage rates and the quality of public services. National competitiveness is determined by a diverse range of factors. The Council uses an evidence-based “competitiveness pyramid” to illustrate the various factors (essential conditions, policy inputs and outputs), which combine to determine overall competitiveness and sustainable growth. Under this framework, competitiveness is not an end in itself, but a means of achieving sustainable improvements in living standards and quality of life.
2 April 2019
National Competitiveness Council Members
Professor Peter Clinch Chair, National Competitiveness Council
Pat Beirne Chief Executive Officer, Mergon Group
Kevin Callinan Senior General Secretary designate, Fórsa
Micheál Collins Assistant Professor of Social Policy, University College Dublin
Isolde Goggin Chair, Competition and Consumer Protection Commission
David Hegarty Assistant Secretary, Department of Business, Enterprise and Innovation
Fergal O’Brien Director of Policy and Chief Economist, Ibec
Seán O'Driscoll President, Glen Dimplex Group
Margot Slattery Country President, Sodexo Ireland
Martin Shanahan Chief Executive, IDA Ireland
Julie Sinnamon Chief Executive, Enterprise Ireland
Ian Talbot Chief Executive, Chambers Ireland
Patrick Walsh Managing Director, Dogpatch Labs
Jim Woulfe Chief Executive, Dairygold Co-Operative Society Limited
Departmental Advisers
John Conlon Department of Employment and Social Affairs
Patricia Cronin Department of Communications, Climate Action and Environment
Kathleen Gavin Department of Education and Skills
John McCarthy Department of Finance
Conan McKenna Department of Justice and Equality
David Moloney Department of Public Expenditure and Reform
Ray O’Leary Department of Transport, Tourism, and Sport
John Shaw Department of the Taoiseach
Sinead McPhillips Department of Agriculture, Food and the Marine
Maria Graham Department of Housing, Planning and Local Government
Research, Analysis and Secretariat
Marie Bourke Department of Business, Enterprise and Innovation
Manus O’Donnell 23 Kildare Street, Dublin 2, D02 TD30
Santosh Aryal Tel: +353-1-631-2121
Email: info@competitiveness.ie
Web: www.competitiveness.ie
Costs of Doing Business 2019
3 April 2019
Table of Contents
Preface 5 Executive Summary 6
Chapter 1 – Broader Cost Competitiveness Environment 10
Chapter 2 – How Do Costs Impact on Enterprise? 14
Chapter 3 – Labour Costs, Earnings and Tax 19
Chapter 4 – Property Costs 27
Chapter 5 – Transport Costs 31
Chapter 6 – Utility Costs 38
Chapter 7 – Credit and Financial Costs 44
Chapter 8 – Business Services and Other Input Costs 47
Chapter 9 – Focus on Residential Property and Childcare Costs 52
4 April 2019
Chairman’s Preface
After two years of difficult negotiations, the exact outcome and implications of the Brexit
process are still unclear. However, we know that Brexit uncertainty is costly, exchange
rate movements have damaged the competitiveness of Irish goods in the UK market, and
all forms of Brexit are unfavourable to the Irish economy with hard Brexit scenarios
particularly damaging to key sectors.
Compounding this - the latest reports from a number of key international organisations
suggest that global econ0mic growth is slowing, and will continue to slow. Storm clouds in
the international economy, in addition to Brexit, include: growing tension regarding
international trade; a poor outlook for growth in the euro area with further risks emerging;
the danger of the persistent current account deficit in the US; and, slower growth in China. Some combination of these
could have a destabilising effect on the global economy and, as interest rates are near historic lows, there is one fewer
lever available to address a future economic slowdown. Meanwhile, any increase in interest rates would put downward
pressure on growth.
Slow growth in the euro area is particularly concerning. Germany, the engine of the European economy, has been
sluggish. In Italy, the third largest economy in the euro area, concerns about sovereign and financial risks have been
weighing on domestic demand and remain a threat to the entire euro area.
Ireland’s economy is performing well. This is very welcome in the face of these international threats. As a small open
economy, however, Ireland is particularly vulnerable to a slowdown of the global economy, which underscores the
importance of maintaining an internationally competitive cost base. This is a key lever within our control that would
ameliorate the negative impacts from more turbulent economic conditions. On the whole, Irish prices are high relative
to other EU countries, but are increasing at the slowest rate in the whole of the euro area. This is good news, as
relatively slow price growth makes Ireland more competitive compared to the rest of the euro area.
Headline figures may be misleading, however, as they paper over large price increases in key areas. The most
concerning observation is that, after years of moderate growth, labour costs have increased by 2.9%, four times faster
than average prices. Without similar increases in labour productivity, this increase in costs will simply put pressure on
Irish prices, particularly for essential consumer products like housing and residential rent, and childcare costs. We also
need to be mindful of the tax system. While Ireland has one of the lowest tax wedges in the OECD for people at the
average income, those on higher incomes face one of the highest marginal tax rates, creating a disincentive to work for
highly skilled employees.
There are other pressure points. The rental price of Irish commercial property continues to increase at a steady pace,
and Irish businesses face higher costs when accessing credit relative to the euro area, and for accessing electricity
compared to the EU average. Interest rates (3.3%) in Ireland are considerably higher than rates in the euro area (2%)
meaning that an Irish business, looking to borrow money to futureproof its operations, faces costs that are on average
65% higher than their EU counterparties. Rising costs have a disproportionate impact on Irish start-ups – creating
challenges for some of our most innovative companies – as well as barriers to investment in management talent,
training and innovation in employment-intensive smaller firms that are currently low productivity.
As valuable as these statistics are – they do not paint a complete picture of the Irish economy. They do not reflect the
hidden costs of operating a business in Ireland, such as increasing traffic congestion in the cities, costs involved in our
(often lengthy) planning permission process, or the transaction costs (e.g. international search and selection,
navigating the immigration system, and finding appropriate housing) involved in filling certain roles in the context of a
tightening labour market. These hidden costs place a further burden on businesses over and above what is presented in
this report.
Costs of Doing Business 2019
5 April 2019
In the face of a turbulent international economic backdrop, it is essential we use those levers within our control to
maintain the competitiveness of Irish firms in international trade. This will help to ameliorate the impacts of a slowing
international economy and maintain jobs and living standards. To secure our prosperity, we must not price ourselves
out of international markets.
Professor Peter Clinch
Chair, National Competitiveness Council
6 April 2019
Executive Summary
Competitiveness is a complex concept, which results from many different factors. Two of the most important factors
determining competitiveness performance are productivity (i.e. the efficiency with which factors of production – such
as labour and capital – are used to produce output) and cost competitiveness (i.e. the relative price of employing a
given factor of production).
If prices in Ireland are too high relative to productivity, it damages Ireland’s competitiveness. When this scenario
persists, Irish businesses would find it more difficult to export, and internationally mobile firms would be
disincentivised from locating here. Ultimately, high costs would make international engagement (through trading or
investment) more expensive, reducing the Irish economy’s beneficial exposure to the international economy.
As a member of the euro area, maintaining cost competitiveness in Ireland has an added dimension making it even
more important. Within the euro area, currency devaluations relative to the rest of the euro area are not possible. Were
Ireland to become less competitive, it could result in large current account deficits (meaning that, annually, Ireland
would be spending much more money abroad than it makes, e.g. importing more than we export). In the short term, a
current account deficit can be funded by increased borrowing, or by selling off Irish owned assets. However, in the long
run, any imbalances must be addressed, and loans must be repaid by running current account surpluses (or spending
less money abroad than what we take in).
Ultimately, if competitiveness is lost now, it must be restored in the future. Without currency devaluations, this can
only be achieved by productivity improvements or by painful cost reduction measures (or some combination of the
two).
Bearing all this in mind, the evidence is clear that Ireland is a high cost economy. In 20171, Ireland was the 5th most
expensive economy in the EU and prices were 13% higher than the EU average. Prices in Ireland are comparable to
other jurisdictions that would traditionally be thought of as high cost, such as Japan, the UK and the Netherlands. The
evidence also suggests that Dublin is one of the most expensive cities in the EU. In S1 2018, the cost of living in Dublin
was 18%2 more expensive than living in Brussels. This makes Dublin the 5th most expensive capital city in the EU (and
on a par with Paris and Helsinki).
While the absolute price level in a jurisdiction is important, it is also crucial to observe how fast prices are increasing. In
this regard, Ireland performs quite well. In 2018, prices in Ireland increased by 0.7%3. This was the slowest rate of
inflation of all euro area economies, and it was the joint slowest rate of price increases in the EU (alongside Denmark).
Inflation in 2018 was faster than price growth in previous years (in 2017, prices in Ireland rose by just 0.3%), but still well
below the inflation rate for the euro area as a whole (1.8%) and the UK (2.5%).
On the basis of these observations, the cost profile of Ireland can be described as ‘high cost, slowly increasing’ and in
this regard, Ireland finds itself in the company of countries like Iceland, Denmark and Sweden. The slow growth in costs
– and particularly the fact that it is well below comparator countries - is welcome from a cost competitiveness
perspective.
The overall figures suggest that Ireland is maintaining a cost competitive position, but headline figures tend to mask
important changes in the price of certain goods and services. Indeed, over the last ten years4, the price of goods has
decreased, while the price of services has increased by 13.6%. Drilling down into these figures at a sectoral level
demonstrates further divergences. For example, in 20185, the price of housing, water, electricity and gas increased by
5%, the price of alcohol and tobacco increased by 2.8%, and the price of restaurants and hotels increased by 2.1%. In
the same period, the price of furniture and household equipment fell by 3.8%, the price of clothes fell by 1.5%, and the
1 Eurostat Price Level Index, EU28=100 (2017 figure) 2 Eurostat Correction coefficients (duty station) in the EU (S1 2018 figure) 3 Eurostat HICP annual change (2018 figure) 4 CSO CPI (December 2018 figures) 5 CSO CPI (2018 figure)
Costs of Doing Business 2019
7 April 2019
price of food and non-alcoholic drinks fell by 2.0%. That said, average figures can be misleading, understating price
pressures in key areas.
In previous years, the Cost of Doing Business report has also looked in detail at residential property and childcare costs
in Ireland and following on from the Cost of Doing Business 2018 Report, this document includes a specific chapter on
these costs. The EU’s House Price Index6 shows that Irish house prices continued to rise in 2018, with the latest figures
suggesting that property prices had increased 7%7, comparable only to house price increases in the Netherlands,
Portugal and Slovenia. Compounding this is the estimated increases in Irish residential rents. The EU estimates that
Irish rents increased by 6.4%8 in 2018, after similar annual increases in rental prices starting in 2014. Estonia is the only
EU Member State to have experienced faster rent increases. The Irish experience is even more stark when compared to
the annual average increase in the EU, euro area and UK of roughly 1%.
Childcare costs are higher relative to other EU Member States. According to the OECD9, net childcare fees (i.e. when
childcare benefits and any tax reliefs are considered) in Ireland make up 28% of the average wage of a couple. This is
much higher than the EU average, where net childcare costs account for only 12% of the average wage of a couple.
As housing and childcare are necessities for working people, these increases in price put pressure on wages. This is
something we are starting to see in the nominal labour cost data (which have increased by 2.9% in 2018), which is
higher than the inflation rate. Higher real wages are certainly a positive development, and one that the Council
welcomes, but real wage increases need to be matched with increases in productivity to prevent either domestic prices
from increasing faster, or an erosion of the Irish competitiveness position.
Focus on Individual Cost Categories
Labour Costs
Labour costs in Ireland are broadly in line with the euro area average. The total hourly labour cost in Ireland was
€30.9010, which was lower than the corresponding figures for Denmark, Sweden, France and Germany. However, it was
higher than the total hourly labour cost in the UK (€25.70). After remaining flat between 2012 and 2014, Irish labour
costs have started to increase in line with the growth in labour costs in other jurisdictions. The last data shows that Irish
labour costs increased by 2.9% in 2018 – which is concerning as it is four times higher than the inflation rate.
Labour costs vary considerably between sectors. In Ireland, labour costs are highest in the utilities sector (€55/hour)
and are lowest in the accommodation and food sector (€16/ hour). In most sectors, labour costs were greater than, or
equal to, the UK.
The tax burden, as a percentage of labour costs for a single individual earning the average wage stood at 27%11, which
is below the OECD average (36%) and the UK (31%). The tax burden, as a percentage of labour costs, for Irish married
couples (with two children) earning the average income was 11% of labour costs, while the corresponding figure in the
UK was 26%.
While the Irish average tax rate for those earning the average income is very competitive, the marginal tax rate these
earners face tells a different story. In Ireland, a person earning the average wage pays the second highest marginal tax
rate (49%) of the countries examined. High earners (those earning 167% of the average wage) face the same rate in
Ireland as those earning the average income (49%), which means Ireland becomes more competitive relative to the
Scandinavian countries where marginal rate increase dramatically for people in this bracket.
6 Eurostat House Price Index (2018 Q3 data) 7 In the year to Q3 2018. 8 Eurostat HICP, actual rentals for housing (2018 figure) 9 OECD Taxing Wages (2018) 10 Eurostat Labour Cost Levels (2017) 11 OECD Taxing Wages (2018)
8 April 2019
Property Costs
Over the last year, there has been a steady increase in commercial property prices and the cost of constructing office
space. In the office rental market, in the last five years, prices are up 15.9% in Dublin (Suburbs) and up 16.5% in Galway.
The Jones Lang LaSalle Property Index suggests that prices in the Irish commercial property market continued to grow
at a relatively steady pace, with capital values increasing by 3.1% in the year to Q4 2018. The capital values of office
(1.5%), retail (5%), and industrial (5.3%) property all increased over the same period, and vacancy rates in Dublin stood
at 7.4% in Q4 2018 (a fall of 1.7% from Q3).
The rental price of prime office space varies greatly across Europe. In Q4 2018, office rental in Dublin cost €646/m2.
This was lower than Paris (€810/m2) and London City (€804/m2), but considerably higher than Amsterdam (€450/m2),
Berlin (€396/m2) and Brussels(€275/m2).
According to Turner and Townsend12, Dublin is one of the most expensive cities in the world in which to construct
prime office buildings. In 2018, the construction cost per square meter of a prime office building in Dublin was
$3,065/m2, lower only than London ($3,919/m2) among the major cities measured. Similarly, construction costs for a
high-tech factory in Dublin ($2,679/m2) is comparable to London ($2,812/m2), and costs in Dublin have risen by 27%
from 2013 to 2018.
Transport Costs
In recent years, aggregate transport sector prices in Ireland have increased moderately. Prices in all transport sectors
(except sea and coastal transport) have steadily increased, with postal and courier services recording the highest price
increase, followed by warehousing, storage and cargo services.
In 2018, the average price per litre of petrol and diesel were €1.43 and €1.34 respectively. Prices of both petrol and
diesel have fallen off since their peak. Petrol prices in December 2018 (€1.43/litre) were 4.6 % lower than the peak in
November 2018 (€1.50/litre). Similarly, diesel prices were down by 2.8 % December (€1.36/litre) compared to the peak
in October (€1.40/litre). Over the course of 2018, petrol prices increased by 2.8% and the price of diesel increased by
4.6%. After increases at the start of the year, bus and taxi fares remained stable, but fares on other purchased
transport services have increased significantly (3.9%), since the start of 2017.
It is not only transport costs that have been on the increase. Traffic has increased across the road network by 3%. In the
Border and Mid-West regions, traffic increased by almost 4% in 2017. Heavy goods vehicle traffic in the South East and
Dublin increased by 4.6% in the same period. The increased congestion is supported by the fact that 11% of all
commuters spend an hour or more commuting to work in 2017.
Utility Costs
Certain utility costs (including electricity and gas) tend to be higher in Ireland than other jurisdictions, while Ireland is
more competitive regarding other utility costs (telecoms). The EU is among the most expensive locations for electricity
and gas globally – and within the EU – Ireland is one of the most expensive countries for electricity for both large and
small users. In S1 2018, electricity in Ireland (for those in the low consumption band13) cost €0.14/ kilowatt-hour, which
is higher than both the UK (€0.12/ kilowatt-hour) and euro area average (€0.10/ kilowatt-hour) price. In the higher
consumption band14, Irish consumers are still paying more (€0.09) compared to the euro area average (€0.08) but lower
than UK (€0.11). Gas prices15 in Ireland are in line with the euro area average but higher than the UK prices.
Ireland is relatively cost competitive for telecoms. In Q4 2018, the Business Fixed Broadband 60GB Basket (>25Mbps)
cost in Ireland (€42.56) was lower than the UK (€44.4) and slightly above the Netherlands (€41.9)16. However, the high
post-paid mobile broadband costs in Ireland (€30) compared less favourably to the UK (€13.71)17.
12 http://www.turnerandtownsend.com/media/3352/international-construction-market-survey-2019.pdf; 2018 figures 13 Band IV (20MWh < consumption < 500MWh) – prices in euro excluding VAT and other recoverable taxes and levies- 14 Band IE (2000MWh < consumption < 70000MWh) – prices in euro excluding VAT and other recoverable taxes and levies 15 PPS for business consumers 16 https://www.comreg.ie/publication-download/quarterly-key-data-report-q4-2018 17 https://www.comreg.ie/publication-download/quarterly-key-data-report-q4-2018
Costs of Doing Business 2019
9 April 2019
Credit and Financial Costs
Businesses in Ireland face higher interest rates than the average business in the EU, or the euro area. This is a
consistent feature of the data regardless of intrinsic features of the loan, whether it is large or small, or whether it is for
a short or long duration. However, this was not always the case. In 2014, Irish companies faced a similar interest rate
(around 3%) to their counterparts in Germany and France, but while the average rate businesses face has dropped in
these economies (to around 2%), overall Irish companies face higher rates now (3.3%) than they did in 2014 (3%)18.
For Irish SMEs, the average interest rate is 3.4%, but there is considerable sectoral variation. SMEs in the transport and
storage (4.2%), construction (4%), and ICT (4.2%) sectors are all higher than average interest rates, and the rates on
gross new lending for Irish transport and storage SMEs stood at 5.1%19 as of September 2018.
Business Services and Input Costs
In Ireland, the overall price of services is rising much faster than the price of goods. In total, the price of services has
increased by 7%20 since 2015, but this masks widely different changes in the price of certain services. For example, the
price of warehouse, storage and cargo handling services increased by 6.2%, while sea and costal transport prices
declined by 0.2%.
When compared to other EU countries, services prices are rising relatively quickly in Ireland, with Luxembourg being
the only economy measured where services prices increased faster than Ireland. In Denmark, services producer prices
declined since 2015, and are now around 4.5% lower than they were in 201521.
Insurance costs, which increased rapidly in Ireland from 2013 to 2016, have decreased since the end of 2016. The price
of car (and other transport) insurance is now roughly what it was in 2015 (like the EU and euro area average)22.
Residential Property and Childcare Costs
Real wages are the key measure of how well-off a person feels – real wages account for what a person can buy with the
wages they receive – and so consider price changes. If prices are increasing faster than nominal wages, then real wages
are declining, and people are becoming less well off. The Competitiveness Council have decided to include a chapter
that looks specifically at residential property costs and childcare costs given the importance of these items and because
of their impact on wage pressures, and the competitiveness of firms and of Ireland as a place in which to do business.
Residential property prices have been growing consistently across the country since a low point in early 201323.
Property prices are now roughly where they were at the start of 2005. Irish rents have also been growing since 2013 and
have been increasing by over 5% per annum for the last four years24. According to the Residential Tenancies Board25,
the average rent in Dublin was €1,527 in Q1 2018.
18 ECB, MIR dataset 19 CBI, Trends in SME and Large Enterprise Credit and Deposits 20 CSO, Services Producer Price Index 21 Eurostat, Services Producer Prices, Annual Data (2017 figure) 22 Eurostat, HICP (November 2018) 23 CSO, Residential Property Price Index (Nov 2018 figure) 24 Eurostat, HICP 25 Residential Tenancies Board, Rent Index 2018
10 April 2019
Chapter 1 – Broader Cost Competitiveness Environment
Measures of Overall Cost Competitiveness
Cost competitiveness is determined by a combination of exchange rates and movements in relative prices between
trading partners. For example, holding the exchange rate fixed, Ireland would become more cost competitive if the
domestic price of goods and services increased at a slower rate than the price of those goods and services in foreign
countries. Similarly, Ireland would also become more cost competitive if relative prices remained constant, but the
euro depreciated against foreign currencies. Harmonised Competitiveness Indices (HCIs) effectively apply this concept
to the whole economy. The real HCI figures suggest that Ireland experienced a large improvement in cost
competitiveness between April 2014 and April 2015. While there was a decline in cost competitiveness in the second
half of 2017, overall, Ireland is in a relatively competitive position as far as overall costs are concerned.
26 Features of the Irish economy can HCI can affect movements in HCIs and care should be taken in interpreting movements in the indices as a measure of competitiveness. The nominal HCI is affected by exchange rate developments and relative to other Euro area countries a high share of Ireland’s exports are destined for non-Euro area countries (UK and US). Real HCIs consider, relative price movements relative to trading partners. Using consumer prices as a deflator means the impact of intermediate goods and capital goods are not directly considered and the influence of indirect taxes and non-traded goods and services on the CPI limited its usefulness as an indicator of good indication of international competitiveness. See Barry, F, (2017) The Central Bank’s harmonised, competitiveness indicators, users beware, Administration, vol. 65, no. 4.
Figure 1.1: Harmonised Competitiveness Indicators26, Ireland, Jan 2012-Jan 2019
The nominal HCI is
a nominal effective
exchange rate for
the Irish economy
that reflects, on a
trade-weighted
basis, movements
in the exchange
rates vis-à-vis
trading partners.
The real HCI
(deflated by
consumer prices)
takes into account
relative price
changes along with
exchange rate
movements. Real
HCI fell by 1.9% In
the year to Jan
2019.
Source: Central Bank of Ireland
The real effective exchange rate (REER) assesses a country’s price or cost competitiveness relative to its selected
trading partners in international markets. The REER is the weighted average of a country's currency in relation to
a basket of trading countries’ currencies’ deflated by the weighted average of price changes in the various
countries. The decline in the REER indicates the weakening of home currency against the currency of its trading
partners. The REER takes account of relative inflation rates between a country and its trading partners.
85
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115
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ind
ex (
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9q
1=10
0)
Nominal HCI Real HCI
Costs of Doing Business 2019
11 April 2019
Broader Cost Environment
In a market economy, relative prices for goods and services are always changing. In any given year, some prices rise,
and others fall. Inflation figures are designed to capture the broad increase in the prices of goods and services, not just
of individual items. It is important to note that inflation measures (i.e. the Harmonised Index of Consumer Prices) are
designed to capture the changes in consumer prices, rather than the prices that businesses face. This means that these
figures will not give a precise estimate of the increase in business costs, but in the absence of a business price index, it
is a useful proxy for the price changes for businesses.
Figure 1.2: Real effective rate (REER), Ireland, deflated by Consumer Prices (42 trading partners)
Source: Eurostat
The UK’s REER has
fallen significantly
since the end of
2015, leading to
increased cost
competitiveness
for UK exporters,
largely due to the
depreciation of
sterling in the wake
of the Brexit
referendum. The
REERs for Ireland
have remained
stable over the past
year whereas the
US REER has
increased
substantially since
2015.
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12 April 2019
Figure 1.3: Annual Changes in Prices, selected economies
The 2018 inflation
for Ireland (0.7%)
figures suggest
that, while prices
are increasing
slightly faster than a
year previously
(0.3% in 2017), price
increases in Ireland
have been relatively
muted when
compared to the
euro area (1.7%) and
the UK (2.5%).
Source: Harmonised Index of Consumer Prices, Eurostat
Figure 1.4: Consumer Price Index, selected indices (Dec 2011 = 100)
While overall prices
in Ireland have been
relatively stable in
recent years
(increasing by 2.4%
since December
2011), there has
been a marked
divergence in the
price of goods
(down 11%), and
the price of services
(up 13.6%).
Source: Consumer Price Index, CSO
These graphs reveal that there are several important narratives that are not necessarily captured by the headline
inflation figure – both within Ireland, and when comparing Ireland to other EU countries. Over the past 5 years,
headline inflation has been relatively low, but when this figure is broken down, there is a marked difference between
-2.5
-1.5
-0.5
0.5
1.5
2.5
3.5
4.5
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
%
Euro area Germany Ireland France UK
80
85
90
95
100
105
110
115
2013 2014 2015 2016 2017 2018
Ind
ex (
Dec
20
11=
100
)
Goods CPI excluding Energy and Unprocessed Food Services All items
Costs of Doing Business 2019
13 April 2019
price changes in goods and services. The same can be said about the inflation rates across the euro area, with Ireland
experiencing the lowest headline inflation rate in the EU, at the same time as relatively robust price growth in Germany
and France.
Figure 1.5: Consumer Price Levels and Inflation, selected countries
This chart
demonstrates that
Ireland is a high cost
economy, with
prices higher (13%)
than the EU, and in
line with the
Netherlands, Austria
and the UK.
However, it suggests
that, on average,
prices are growing
slowly in Ireland
(0.7% in 2018),
especially compared
with the UK (2.5%).
Ireland’s current
price profile could
be described as
‘high cost, slowly
increasing’.
Source: PPP (2017)/ HICP (2018), Eurostat
Poland
Lithuania
Czechia
Latvia
Portugal
Spain
Italy
EU
Euro area
Germany
FranceAustria
United Kingdom
Netherlands
Ireland
Luxembourg
Finland
United States
Sweden
Denmark
Switzerland
Norway
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
40 60 80 100 120 140 160
20
18 In
flat
ion
(%
)
PPP, EU 28 = 100, 2017
14 April 2019
Chapter 2 – How Do Costs Impact on Enterprise?
Why Costs Matter
Generating broad-based, sustainable economic growth is fundamental for Ireland’s economic prosperity. As a small
open economy, it is crucial that Ireland’s international competitiveness position is maintained relative to our key
competitors.
Competitiveness is a complex concept, which results from many different factors. Two of the most important factors
determining competitiveness performance are productivity (i.e. the efficiency with which factors of production – such
as labour and capital – are used to produce output) and cost competitiveness (i.e. the relative price of employing any
given factor of production).
An improvement in either of these elements – productivity growth, or relative price improvements – allows Irish
businesses to compete more effectively internationally and as a result makes Ireland a more favourable place in which
to locate international businesses. This exposure to international competition, and international best practice, can
result in further productivity gains.
Cost competitiveness remains a critical determinant of success. Indeed, as a member of the euro area, Ireland has a
fixed exchange rate relative to other euro area members. This means that it is not possible to use currency devaluation
to manage short term competitiveness pressures vis-à-vis other euro area members, and so a combination of cost
competitiveness, essential elements, enhancements in productivity and strong labour force participation must provide
the foundations for sustaining growth. In the longer term, productivity growth is the preferred mechanism to improve
competitiveness as it can support cost competitiveness in tandem with high and increasing real income levels.
A high cost environment weakens competitiveness in several ways:
▪ High costs make Ireland less attractive in terms of mobile investment and business expansion, if unchecked this
could see companies relocating to other jurisdictions;
▪ Higher costs can make firms less competitive when they are selling into foreign markets – this is a concern for
indigenous goods and services exporters;
▪ High costs in areas such as childcare and transport, and a high marginal tax rate, can affect incentives to work and
suppress labour force participation; and,
▪ A high cost environment can impact on firms which may not export, but which rely on the domestic market – their
customers (consumers and other firms) may source cheaper inputs from abroad due to currency fluctuations,
rather than from within Ireland, leading to a loss of market share for Irish-based enterprises.
More broadly, all sectors of the economy are interlinked and interdependent - high and increasing business costs have
implications for the costs of living. These in turn have knock on implications for wage demands, and so the cycle
continues. It remains vital, therefore, that Ireland protects the gains made to date, and that we continue to act to
address inappropriately high costs (i.e. where price increases are not matched by corresponding increases in
productivity) wherever they arise. In this regard, there is a role for both the public and private sectors alike to
proactively manage their cost base and drive efficiency, thus creating a virtuous circle between the costs of living, wage
expectations and cost competitiveness
While cost competitiveness matters to all firms, Figure 2.1 shows that, in 2018, only 11% of Irish SMEs cited costs as the
most pressing issue that they were facing. In the context of a growing economy, Irish SMEs noted that finding
customers (25%) and staff (22%), and pressures brought on because of competition (14%) were all more urgent issues
than increasing costs.
Costs of Doing Business 2019
15 April 2019
Figure 2.1: Most Pressing Problems faced by Irish SMEs
In 2018, the most
pressing issue for Irish
SMEs was finding
customers (25%). In
Ireland, 11% of SMEs
identified costs as the
most pressing issue
they were facing.
Given the structure of
the survey questions,
it is difficult to
determine whether
this is due to an
absolute decline in
importance of costs,
or a relative increase
in the importance of
other factors.
Source: SAFE Survey, ECB/ European Commission
Figure 2.2: Costs as the Most Pressing Problem faced by European SMEs
Across the EU, 12% of
all SMEs consider costs
to be the most
significant issue they
are facing. In Italy,
roughly one in every
five SMEs consider
costs to be the biggest
issue. A slightly smaller
proportion of Irish
SMEs (11%) consider
costs the most
significant issue when
compared to the EU
average (12%), and
roughly on par with
the Netherlands (10%). Source: SAFE Survey, ECB/ European Commission
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
EU
28
Bel
giu
m
De
nm
ark
Fin
lan
d
Fra
nce
Ger
man
y
Irel
and
Ital
y
Lat
via
Ne
ther
lan
ds
Po
lan
d
Sp
ain
UK
2018 2017
0
20
40
60
80
100
20
10H
1
20
10H
2
20
11H
1
20
11H
2
20
12H
1
20
12H
2
20
13H
1
20
13H
2
20
14H
1
20
14H
2
20
15H
1
20
15H
2
20
16H
1
20
16H
2
20
17H
1
20
17H
2
20
18H
1
Access to finance Regulation
Other Costs of production or labour
Competition Availability of skilled staff or experienced managers
Finding customers
16 April 2019
Box 1. Data
In each chapter, a range of internationally comparable, enterprise-focussed cost indicators are examined
for Ireland and key trading partners, particularly the UK. We have endeavoured to collect data from high-
quality, internationally respected sources, and where necessary, caveats on data are set out. Nonetheless,
there are limitations to comparative analysis:
▪ While every effort is made to ensure the timeliness of the data, there is a natural lag in collating
comparable official statistics across countries. As much of this data is collected on an annual basis,
there may be a time lag in capturing recent changes in cost levels;
▪ The Council is also constrained in terms of the availability of metrics and their impact on enterprises of
different sizes and sectors, and across several important areas such as water, transport and
international freight, waste, commercial insurance and Local Authority rates;
▪ Where possible, Irish cost levels are compared to a relevant peer group average (e.g. the OECD and
euro area average). Given the importance of the UK as a trading partner and the potential implications
of Brexit on the economy, the UK’s performance is also benchmarked.
▪ It is also worth noting that individual cost metrics have strengths and weaknesses (i.e. in terms of
definitions used, in how the data is collected etc.). When analysing the individual metrics, it is
important to consider all the data as the analysis of the individual metrics combine to tell a coherent
story about Ireland’s current cost competitiveness performance.
There are no generic strategies to achieve an optimum level of cost competitiveness, as countries face trade-offs and may be at different points in the economic cycle.
Costs of Doing Business 2019
17 April 2019
Interest Rates
Interest rates are the primary method by which policymakers react to prices, with the desired goal of maintaining price
stability. In most advanced economies, the responsibility to set interest rates has been delegated to independent
Central Banks. In the euro area, the European Central Bank (ECB) – which is independent from policymakers – is
responsible for maintaining price stability and setting the interest rate. The ECB aims at maintaining inflation rates
below, but close to, 2% over the medium term.
Higher interest rates increase the relative cost of holding cash, and so encourage saving and discourage borrowing,
thereby taking money out of the real economy, which reduces prices. Lower interest rates have the opposite effect.
In the wake of the Global Financial Crisis, the ECB – like other major Central Banks – reduced interests rates to mitigate
against deflationary pressures (where prices decrease year-on-year).
Figure 2.3: ECB Marginal Lending Facility (1999 – 2019)
This figure charts the
ECB’s rate on the
marginal lending
facility, which offers
overnight credit to
banks from the euro
area. The large decline
in the interest rate that
took place in the wake
of the Global Financial
Crisis was mirrored in
other jurisdictions.
Source: Financial Market Data, ECB
Administered prices
In the EU, Governments have tended to avoid setting prices directly, choosing instead to allow market forces
determine the appropriate price level for most goods and services. However, there are several areas where product
prices are either directly set or influenced to a significant extent by the Government.
Where prices are completely set by the Government, the EU classifies them as directly administered. Where prices are
influenced to a significant extent by the Government, the EU classifies them as mainly administered.
As this classification will depend on the role the Government of each Member State chooses to play in a given market,
the markets where prices are directly or mainly administered by the Government vary in each Member State.
In Ireland, there are no prices that are directly set by the Government. However, some prices are influenced by
Government (generally through the regulator for that market). The goods and services classified as ‘administered’ (i.e.
the products that are either fully or mainly administered, in Ireland’s case this only includes goods that are mainly
administered) represent a small subset of the overall Irish CPI basket. Table 1 outlines the services categories defined
as mainly administered prices in Ireland.
0
1
2
3
4
5
6
01/
01/
20
06
01/
01/
20
07
01/
01/
20
08
01/
01/
20
09
01/
01/
20
10
01/
01/
20
11
01/
01/
20
12
01/
01/
20
13
01/
01/
20
14
01/
01/
20
15
01/
01/
20
16
01/
01/
20
17
01/
01/
20
18
01/
01/
20
19
%
18 April 2019
Table 1: Mainly-administered prices in Ireland
COICOP Sub indices Mainly administered prices Date of inclusion
04.41 Water Supply From 2015
04.43 Sewage From 2015
06.3 Hospital services
07.31 Passenger transport by railway From 2011
07.32 Passenger transport by road
07.35 Combined passenger transport From 2011
08.1 Postal services
Source: Harmonised Index of Consumer Prices, Eurostat
Figure 2.4: HICP and mainly-administered prices in Ireland, 2012- 2017
Price changes have
been much more
volatile for
administered prices
than they have been
for prices in general.
In 2015, there was a
massive jump in the
price of water supply
and sewerage
collection followed by
a subsequent
decrease in 201627.
These movements in
water prices drove the
overall result for
mainly administered
prices.
Source: Harmonised Index of Consumer Prices, Eurostat
27 Domestic water charges were introduced in 2015 for homes that were connected to a public water supply or to public wastewater services. This system of domestic water charging has now been repealed and a new system of charging is being introduced.
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
2013 2014 2015 2016 2017 2018
An
nu
al a
vera
ge
rate
of
chan
ge
(%)
HICP Administered prices
Costs of Doing Business 2019
19 April 2019
Chapter 3 – Labour Costs, Earnings and Tax
Fig 3.1: Total economy hourly labour costs, 2017
Source: Eurostat, Labour Cost Database28
Figure 3.1 shows
total hourly labour
cost across selected
countries. In 2017,
hourly labour costs
in Ireland (€31) were
higher than the euro
area (€30.30) and
the UK (€25.70).
Wages and salaries
accounted for 86%
of total labour cost
in Ireland compared
to 74% in the euro
area and 82% in the
UK.
Figure 3.2: Employer and employee social security contributions, 2017
Source: OECD, Taxing Wages 2018
Ireland has one of the
lowest rate of social
security contributions
among OECD
countries (14.75%). In
Ireland, total revenues
from employee and
employer SSC29 equals
to 16.2% of total tax
revenue30 which is
lower than OECD
average (24.6%) and
UK (18.69%).
28 Labour cost levels by NACE Rev. 2 activity [lc_lci_lev] 29 Employer & employee social security contribution 30 (SSC revenue/total tax revenue *100)
0
5
10
15
20
25
30
35
40
45
Den
mar
k
Sw
ed
en
Fra
nce
Ne
ther
lan
ds
Ger
man
y
Au
stri
a
Fin
lan
d
Ire
lan
d
Eu
ro a
rea
Ital
y
EU
UK
Sp
ain
Po
lan
d
Lat
via
To
tal H
ou
rly
Lab
ou
r C
ost
(€
)
Wages and salaries Labour costs other than wages and salaries
0
5
10
15
20
25
30
35
40
Ger
man
y
Fra
nce
Est
on
ia
Sp
ain
Ne
ther
lan
ds
Lat
via
Ital
y
Fin
lan
d
Lu
xem
bo
urg
OE
CD
- A
vera
ge
Ko
rea
Sw
itze
rlan
d
Un
ite
d S
tate
s
Sw
ed
en
Un
ite
d K
ing
do
m
Ire
lan
d
Isra
el
Den
mar
k
Ne
w Z
eal
and
Rat
e o
f ta
xati
on
(%)
Average rate of employer social security contributions
Average rate of employee social security contributions
20 April 2019
Figure 3.3: Growth in nominal labour costs, Labour Cost Index, 2018
Source: Eurostat, Labour Cost Database
This chart shows the
growth in nominal
labour costs. In
Ireland, nominal
labour costs have
been increasing
since 2015.
Cumulatively, labour
costs have increased
by less than the EU,
euro area and the
UK. In 2018, growth
in nominal labour
cost in Ireland
(2.9%) was far
above the rate of
inflation (0.7 %).
Figure 3.4: Hourly Labour Costs, Business Economy, Detailed NACE sectors, 2017
Source: Eurostat
This chart shows
hourly labour cost
in the euro area,
Ireland and the UK
(by sector). In
Ireland, hourly
labour cost are
highest in the
utilities sector (€55)
and lowest in the
accomodation and
food sector (€16).
Compared to the
UK, hourly labour
costs are higher in
Ireland in all sector
execpt the mining,
and financial
services, sectors.
98
100
102
104
106
108
110
112
114
116
2012 2013 2014 2015 2016 2017 2018
Lab
ou
r co
st in
dex
(2
012
=10
0)
EU 28 Euro area Ireland UK
0.0
10.0
20.0
30.0
40.0
50.0
60.0
Ele
ctri
city
& G
as
Fin
anci
al
ICT
Pro
fess
ion
al
Min
ing
Man
ufa
ctu
rin
g
Bu
sin
ess
eco
no
my
Tra
nsp
ort
atio
n
Co
nst
ruct
ion
Art
s
Wat
er
& W
aste
wat
er
Re
tail
trad
e
Ad
min
. Ser
vice
Acc
o. a
nd
fo
odTo
tal l
abo
ur
cost
(€
per
ho
ur)
Euro area Ireland UK
Costs of Doing Business 2019
21 April 2019
Figure 3.5: Annual change in nominal hourly labour cost (by sector), 2018
Source: Eurostat
In 2018, year-on-
year hourly labour
costs recorded
growth in all
sectors of economy
in the euro area.
Sectorally, hourly
labour costs grew
by 6.1%, 4.5% and
4.3% in ICT,
Construction and
Financial sector
respectively in
Ireland compared
to 4.1%, 5.4% and
2.4% in the UK.
Figure 3.6: Average hourly earnings in Ireland, 2013 Q4-2018 Q4
Source: CSO, Earnings & Labour Costs Statistics
Figure 3.7 compares
Irish average hourly
earning across
sectors between Q4
2013 and Q4 2018.
Since Q4 2013, hourly
earnings in Ireland
have increased in all
economic sectors. In
Q4 2018, average
hourly earnings were
highest in the
education sector
(€35.81) .
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0W
ate
r &
Was
te w
ater IC
T
Tra
nsp
ort
atio
n
Min
ing
Co
nst
ruct
ion
Fin
anci
al
Acc
o. &
fo
od
Bu
sin
ess
Eco
no
my
To
tal E
con
om
y
Ad
min
. se
rvic
e
Man
ufa
ctu
rin
g
Re
tail
trad
e
Pro
fess
ion
al
Art
s
Ele
ctri
city
& G
as
%
Euro area Ireland UK
0
5
10
15
20
25
30
35
40
Ed
uca
tio
n
Fin
anci
al &
insu
ran
ce ICT
Pro
fess
ion
al
Pu
blic
ad
min
.
Min
ing
Re
al e
stat
e
All
sect
ors
Hu
man
he
alth
Tra
nsp
ort
atio
n
Man
ufa
ctu
rin
g
Co
nst
ruct
ion
Re
tail
Ad
min
istr
ativ
e
Art
s
Acc
om
.& f
oo
d
€/h
r
2018Q4 2013Q4
22 April 2019
Figure 3.7: Percentage change in average hourly earnings (by sector), Q4 2018
Source: CSO, Earnings & Labour Costs Statistics
Annual earnings
across all sectors
have increased in
the last five years
to Q4 2018. Year-
on-year, all sectors
of the economy
recorded growth to
Q4 2018 with the
transportation &
storage sector
recording the
highest growth
(9.2%) and arts &
entertainment
sector recording
the lowest (0.88%).
Figure 3.8: Growth in average hourly earnings (excluding irregular earnings) by size of enterprise, Ireland Q4
2015-Q4 2018
Source: CSO, Earnings & Labour Costs Statistics
This graph shows
average hourly
earnings by size of the
enterprise between Q4
2015 and Q4 2018. The
average earnings in
enterprises with ≤ 50
people have been more
volatile during the
period compared with
earnings in large
enterprises. Earning in
enterprises employing
50 - 250 people
recorded the highest
year–on-year growth in
the year to Q4 2018
(4.12%).
0 2 4 6 8 10 12
Arts
Professional
Public admin.
Human health
Retail
ICT
Financial
All sectors
Education
Accom. & food
Construction
Administrative
Mining
Transportation
% change
5 year 1 year
-2
-1
0
1
2
3
4
5
20
15 Q
4
20
16 Q
4
20
17 Q
4
20
18 Q
4
Ave
rag
e h
ou
rly
earn
ing
s (%
ch
ang
e)
> 50 50 - 250 >250
Costs of Doing Business 2019
23 April 2019
Figure 3.9: Monthly minimum wage PPS (biannual) 2014 - 2018
Source: Eurostat, Labour Market Earnings Database
Figure 3.10 shows the
trend in monthly
minimum wages in
selected EU countries
for the period 2014-
2018. The minimum
wage in Ireland is
greater than the UK
and Spain, but the
UK’s minimum wage
(€1,269) has caught
up with Ireland’s
minimum wage
(€1,287) recently.
Figure 3.10: Average Income tax plus employee and employer contributions less cash benefits - Single (no children) &
married couple with two children, earning 100% of average income31, 2017
Source: OECD Taxing Wages 2018
In 2017, average income tax
in Ireland for a single
person (and married
couples with two children)
earning 100% of the
average wage was one of
the lowest in the OECD.
The tax burden as a
percentage of labour cost
for a single individual (27%)
was slightly below the UK
(30%) and substantially
below the OECD (36%), and
significantly lower for
married couples with Irish
couples paying 11%
compared to 26% in the
UK.
31 Universal Social Charge is included in the Irish data, where applicable
800
900
1,000
1,100
1,200
1,300
1,400
1,500
20
14S
1
20
14S
2
20
15S
1
20
15S
2
20
16S
1
20
16S
2
20
17S
1
20
17S
2
20
18S
1
20
18S
2
Mo
nth
ly m
inim
um
wag
e (P
PS
)
Ireland UK France Spain
5
10
15
20
25
30
35
40
45
50
Ger
man
y
Ital
y
Fra
nce
Fin
lan
d
Sw
ede
n
Lat
via
Sp
ain
Ne
ther
lan
ds
De
nm
ark
OE
CD
-ave
rag
e
Po
lan
d
Jap
an US
UK
Irel
and
Ko
rea
Sw
itze
rlan
d
Ne
w Z
eala
nd
Rat
e o
f ta
xati
on
(%)
Single person (No Children) Married Couple (2 children)
24 April 2019
Figure 3.11: Average tax wedge, single individual earning average wage, no children32, 2017
Source: OECD Taxing Wages 2018
For the average earner, the
tax wedge in Ireland has
been low compared to
other OECD countries. In
2017, at 27% , it was below
the UK figure (31%) and the
OECD average (36%). New
Zealand is the country with
the lowest tax wedge
(18%) for average earners.
Figure 3.12: Average income tax rate, single individual earning 100 % of average earnings,2017
Source: OECD Taxing Wages 2018
The average income tax
rate in Ireland for a single
person earning 100% of the
average wage has been
consistently lower than the
OECD average, and the US
UK rates since 2007. After
the significant jump in
2010, the Irish rate steadily
rose and peak in 2014
(27.9%) before starting to
fall. In 2017, Irish rates
(27.2%) were lower than
the UK (30.9%), the US
(31.7%) and the OECD
average (35.9%).
32 The tax wedge is defined as the ratio between the amount of taxes paid by an average single worker (no children – 100% of average earning) and the corresponding
total labour cost for the employer (including employer social insurance cost)
0
10
20
30
40
50
60
Ne
w Z
eala
nd
Sw
itze
rlan
d
Ko
rea
Irel
and
Can
ada
UK
US
A
Jap
an
Po
lan
d
OE
CD
-ave
rag
e
De
nm
ark
Lu
xem
bo
urg
Ne
ther
lan
ds
Sp
ain
Lat
via
Sw
ede
n
Fin
lan
d
Fra
nce
Ital
y
Ger
man
y
% o
f la
bo
ur
cost
20
22
24
26
28
30
32
34
36
38
2000 2007 2010 2011 2012 2013 2014 2015 2016 2017
Rat
e o
f ta
xati
on
(%)
Ireland UK US OECD-Average
Costs of Doing Business 2019
25 April 2019
Figure 3.13: Marginal rate of income tax plus employee and employer contribution less cash benefits, Single individual,
no children, 2017
Source: OECD Taxing Wages 2018
Ireland has a progressive tax
system33. A person earning 67%
of average earnings pays a
marginal rate of 29%, below the
UK (32%) and OECD average
(31%). However, at the average
wage, the marginal rate of
taxation is quite high (49 %),
which remains the same when
earning 167% of the average
wage, unlike Denmark or Sweden
where rates increased.
Figure 3.14: Marginal income tax, married couples with 2 children, earning 100%, 133%, or 167% of average earnings
Source: OECD Taxing Wages, 2018
In Ireland, the marginal tax
rate for married couples
with children is 29%, and
remains at that rate in all
incomes examined, in
contrast to the rate for
single individuals. However,
this rate is lower than the
OECD average (35%) & the
UK (32%).
33 The average tax rate increases as the taxable amount increases. It means that lower incomes are taxed at a lower marginal rate than higher incomes.
0
10
20
30
40
50
60
Sw
itze
rlan
d
Fra
nce
Ko
rea
Po
lan
d
Jap
an
Ire
lan
d
US
Sp
ain
UK
Lat
via
Sw
ed
en
OE
CD
-Ave
rag
e
Ital
y
Den
mar
k
Ger
man
y
Fin
lan
d
Ne
w Z
eal
and
Ne
ther
lan
ds
Rat
e o
f ta
xati
on
(%
)
Married (2 Ch), 100 % avg earnings Married (2ch),100-33 % avg earnings
Married (2 ch),100-67 % avg earnings
0
10
20
30
40
50
60
70
Ko
rea
Sw
itze
rlan
d
Po
lan
d
Jap
an
Ne
w Z
eal
and
UK
Lat
via
Sw
ed
en
Sp
ain
OE
CD
-Ave
rag
e
US
Ital
y
Den
mar
k
Fra
nce
Fin
lan
d
Ne
ther
lan
ds
Ire
lan
d
Ger
man
y
Rat
e o
f ta
xati
on
(%)
Single person at 100% of Average wage, no child
Single person at 67% of Average wage, no child
Single person at 167% of Average wage, no child
26 April 2019
Figure 3.15: Corporation Tax Rates, 2009-2018
Source: OECD Tax Database
Ireland has one of the
lowest corporation tax rates
among the OECD countries
(12.5%) and has remained
unchanged since it was
introduced. Most of the
countries examined
continue to lower their
corporation tax rates in the
last decade with the UK
rate down from 28% in
2009 to 19% in 2018 and
the US rate down from 35%
to 21% in the same period.
Labour costs in Ireland are broadly in line with the euro area average. The total hourly labour cost in Ireland was
€30.9034, which was lower than the corresponding figures for Denmark, Sweden, France and Germany. However, it was
higher than the total hourly labour cost in the UK (€25.70). After remaining flat between 2012 and 2014, Irish labour
costs have started to increase in line with the growth in labour costs in other jurisdictions. The last data shows that Irish
labour costs increased by 2.9% in 2018 – which is concerning as it is four times higher than the inflation rate.
Labour costs vary considerably between sectors. In Ireland, labour costs are highest in the utilities sector (€55/hour)
and are lowest in the accommodation and food sector (€16/ hour). In most sectors, labour costs were greater than, or
equal to, the UK.
The tax burden, as a percentage of labour costs for a single individual earning the average wage stood at 27%35, which
is below the OECD average (36%) and the UK (31%). The tax burden, as a percentage of labour costs, for Irish married
couples (with two children) earning the average income was 11% of labour costs, while the corresponding figure in the
UK was 26%.
While the Irish average tax rate for those earning the average income is very competitive, the marginal tax rate these
earners face tells a different story. In Ireland, a person earning 100% of the average wage pays the second highest
marginal tax rate (49%) of the countries examined. High earners (those earning 167% of the average wage) face the
same rate in Ireland as those earning the average income (49%), which means Ireland becomes more competitive
relative to the Scandinavian countries where marginal rate increase dramatically for people in this bracket.
34 Eurostat Labour Cost Levels (2017) 35 OECD Taxing Wages (2018)
0
5
10
15
20
25
30
35
40S
wit
zerl
and
Ire
lan
d
Can
ada
Ger
man
y
Po
lan
d
UK
Lu
xem
bo
urg
Fin
lan
d
Lat
via
US
Den
mar
k
Sw
ed
en
Isra
el
Jap
an
Ital
y
Ko
rea
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ther
lan
ds
Sp
ain
Ne
w Z
eal
and
Fra
nce
Co
rpo
rate
inco
me
tax
(%)
2018 2014 2009
Costs of Doing Business 2019
27 April 2019
Chapter 4 – Property Costs
Figure 4.1: Quarterly change in capital values in Ireland, Q1 2016-Q4 2018
Source: Jones Lang LaSalle, Irish Property Index
This graph shows the Irish
capital value index in the
left axis and overall Irish
property index (capital +
rental value) in the right
axis. The overall property
index recorded a return of
8.4% for the year to
December 2018.
Sectorally, capital value
grew by 5%, 1.5% and
5.3% in Retail, Office and
Industrial capital
respectively during the
period.
Figure 4.2: Cost of constructing a prime office unit36, $/m2, 2018
Source: Turner and Townsend Construction Cost Survey
In 2018, the cost of
constructing a prime
office unit in Dublin
was $3,065/m2, almost
a 29% increase from
2013 ($2,382/m2) .
Among the selected
cities, the cost of
construction of prime
offices was highest in
London ($3,919/m2).
Singapore and Beijing
recorded a fall in
construction costs of
prime offices during
the period.
36 A prime office unit refers to a city centre, self-contained building of a size and height typical of major cities in a country; prices quoted are upper boundary of the cost of
construction.
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
0
200
400
600
800
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20
18
Ove
rall
Cap
ital
Val
ue
Ind
ex
Cap
ital
Val
ue
Ind
ex
Office Capital Retail Capital
Industrial Capital Overall (Right Axis)
0
1,000
2,000
3,000
4,000
5,000
UK
(L
on
do
n)
Ire
lan
d (D
ub
lin)
Ne
ther
lan
ds
(Am
ster
dam
)
Ger
man
y (M
un
ich
)
Can
ada
(To
ron
to)
Sin
gap
ore
So
uth
Ko
rea
(Se
ou
l)
Po
lan
d (W
arsa
w)
Ch
ina
(Bei
jing
)
Ind
ia (
Ban
gal
ore
)
$/m
2
2018 2013
28 April 2019
Figure 4.3: Cost of constructing a High-Tech Factory, €/m2, 2018
Source: Turner and Townsend Construction Cost Survey
This figure shows
the considerable
variation across
cities in the cost of
building a high-
tech factory/ or
laboratory. In
Dublin in 2017, the
cost was
estimated at
$2,679/m2, a 27%
increase since
2013. The
comparable figure
for London was
$2,812/m2. The
highest cost was
recorded in Seoul
($3,130/m2).
Figure 4.4: Rental Price of Prime Office Properties (in €/m2) 2018 Q4
Source: Cushman and Wakefield, Office Snapshot Reports
As of Q4 2018,
London was the
most expensive
city in which to
rent a prime office
property (West
End- €1,311).
Dublin (2/4), at
€646m2 was the
third most
expensive city in
terms of rental
price of prime
office properties
among the
benchmarked
countries. Brussels
was one of the
cheapest at €275/
m2.
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Sou
th K
ore
a (S
eou
l)
UK
(Lo
nd
on
)
Ire
lan
d (
Du
blin
)
Sin
gap
ore
Ger
man
y (M
un
ich
)
Net
her
lan
ds
(Am
ste
rdam
)
Can
ada
(To
ron
to)
Po
lan
d (
War
saw
)
Ch
ina
(Be
ijin
g)
Ind
ia (
Ban
galo
re)
$/m
2
2018 2013
275
285
306
396
408
450
580
646
804
810
1,311
0 200 400 600 800 1000 1200 1400
Brussels
Warsaw
Vienna
Berlin
Madrid
Amsterdam
Milan
Dublin
London (City)
Paris
London (West End)
cost per sq.meter in euros
Costs of Doing Business 2019
29 April 2019
Figure 4.5: Level & Five -year growth in rental price of a prime office unit in Irish cities, December 2018
Source: Cushman and Wakefield, Office Snapshot Reports
In Dec 2018, demand
for prime offices was
high in Dublin. In the
capital, the rental
price of a prime
office unit was
€646/m2. In the five
years to Dec 2018,
rental prices
increased across Irish
cities – Dublin
Suburbs (15.9%),
Cork (11.8%),
Limerick (10.8%)
with Galway (16.5%)
recording the highest
rental price.
Figure 4.6: Prime Retail (Zone A) Rent levels in selected Irish & UK cities, December 2018
Source: Cushman and Wakefield, Retail Market Snapshots
In Ireland,
Dublin was the
most expensive
location to rent
a prime high
street retail unit
(€6,750/m2). In
the sample,
London’s West
End was the
most expensive
location
(€16,084/m2)
and Limerick
was the least
expensive
location
(€1,000/m2).
0
2
4
6
8
10
12
14
16
18
0
100
200
300
400
500
600
700
Du
blin
(2/4
)
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blin
(su
bu
rb)
Co
rk
Gal
way
Lim
eric
k
gro
wth
(%
)
€ p
er s
q.m
5-year
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
Lo
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on
(W
est
En
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blin
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sgo
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way
Co
rk
Lo
nd
on
(C
ity)
Ed
inb
urg
h
Man
ches
ter
Lee
ds
Bri
min
gh
am
Car
dif
f
Lim
eric
k
€ p
er s
q. m
per
yea
r
30 April 2019
Figure 4.7: Prime Retail Rental growth, Ireland, December 201837
Source: Cushman and Wakefield, Retail Market Snapshots
Demand for prime
city centre retail
units and shopping
centres across
Ireland continued for
the fourth quarter of
2018. Retail rent
prices remains
highest in Dublin city
centre with rental
prices up by 11% in
the last five years.
Limerick recorded
the highest retail
rent growth with
9.1% in the year to
December 2018.
Figure 4.8: Time and Cost of Dealing with Construction Permits in building a warehouse, 2017
Source: World Bank, Doing Business 2019
Ireland scores well on
building control and
regulatory quality, but
poorly on time and
cost to build. It takes
149.5 days to build a
warehouse in Dublin
compared to 86 days
in London, and 65 days
in Finland. This means
that building a
warehouse in Ireland
takes the 3rd longest
amount of time of all
countries selected.
37 5-year growth data for Dublin (out of Town) is unavailable
0
2
4
6
8
10
12
Dublin Cork Galway Limerick Out of Town(Dublin)
gro
wth
rat
e (%
)
1-year 5-year
0
50
100
150
200
250
300
0
1
2
3
4
5
6
Po
lan
d
Jap
an
Lat
via
Lu
xem
bo
urg
Sw
itze
rlan
d
Fin
lan
d
US
UK
Ger
man
y
Den
mar
k
Isra
el
Can
ada
Sw
ed
en
Ne
w Z
eal
and
Fra
nce
Ital
y
Ne
ther
lan
ds
Ire
lan
d
Ko
rea
Sp
ain
Tim
e (d
ays)
Co
st (%
of
War
eho
use
val
ue)
Dealing with Construction Permits - Cost
Dealing with Construction Permits - Time (Right Axis)
Costs of Doing Business 2019
31 April 2019
Figure 4.9: Time and Cost of Registering a Property, 2017
Source: World Bank, Doing Business 2019
This graph shows the
time and cost involved
in registering a
property using a
standardised case of
an entrepreneur
purchasing land and a
building already
registered and free of
dispute. In terms of
cost as a percentage
of value, Ireland
(6.5%) is costlier than
UK (4.8%) to register
a property, and the 5th
most expensive of
selected countries.
The process takes 31.5
days in Ireland
compared to 21.5 days
in the UK and 2.5 days
in the Netherlands.
Over the last year, there has been a steady increase in commercial property prices and the cost of constructing office
space. In the office rental market, in the last five years, prices are up 15.9% in Dublin (Suburbs) and up 16.5% in Galway.
The Jones Lang LaSalle Property Index suggests that prices in the Irish commercial property market continued to grow
at a relatively steady pace, with capital values increasing by 3.1% in the year to Q4 2018. The capital values of office
(1.5%), retail (5%), and industrial (5.3%) property all increased over the same period, and vacancy rates in Dublin stood
at 7.4% in Q4 2018 (a fall of 1.7% from Q3).
The rental price of prime office space varies greatly across Europe. In Q4 2018, office rental in Dublin cost €646/m2.
This was lower than Paris (€810/m2) and London City (€804/m2), but considerably higher than Amsterdam (€450/m2),
Berlin (€396/m2) and Brussels(€275/m2).
According to Turner and Townsend38, Dublin is one of the most expensive cities in the world in which to construct
prime office buildings. In 2018, the construction cost per square meter of a prime office building in Dublin was
$3,065/m2, lower only than London ($3,919/m2) among the major cities measured. Similarly, construction costs for a
high-tech factory in Dublin ($2,679/m2) is comparable to London ($2,812/m2), and costs in Dublin have risen by 27%
from 2013 to 2018.
38 http://www.turnerandtownsend.com/media/3352/international-construction-market-survey-2019.pdf; 2018 figures
0
10
20
30
40
50
60
0
2
4
6
8
10
12
Ne
w Z
eal
and
Po
lan
d
Sw
itze
rlan
d
Den
mar
k
Lat
via
US
Can
ada
Fin
lan
d
Sw
ed
en
Ital
y
UK
Ko
rea
Jap
an
Ne
ther
lan
ds
Sp
ain
Ire
lan
d
Ger
man
y
Isra
el
Fra
nce
Lu
xem
bo
urg
Tim
e (d
ays)
(% o
f p
rop
erty
val
ue)
Registering Property - Cost Registering Property -Time (Right Axis)
32 April 2019
Chapter 5 – Transport Costs
Figure 5.1: Europe Brent Spot Oil Price, USD per Barrel
Source: US Energy Information Association
As a primary benchmark
for global oil prices, the
movement in the price of
Brent crude has a
significant impact on
Irish businesses. Since
2016, the monthly oil
price continued on stable
upward trend, with price
peaking in Oct- 2018,
($81.03) before falling to
$57.36 per barrel in Dec-
2018. The oil price has
since started to recover
with prices 11% higher in
Feb - 2019 ($63.96)
compare to Dec- 2018
($57.36).
Figure 5.2: Average petrol and diesel cost costs per litre in Ireland, January 2016-December 2018
Source: European Commission, Energy Statistics
Figure 5.2 shows the
trends in consumer
prices for petroleum
products in Ireland
over the period Dec
2015 - Dec 2018. Both
petrol (November
2018) and diesel prices
(October 2018) have
fallen from their peak.
In December 2018,
petrol prices were
€1.43/litre and diesel
prices were €1.36/litre.
0
10
20
30
40
50
60
70
80
90
Dec
-15
Fe
b-1
6
Ap
r-16
Jun
-16
Au
g-1
6
Oct
-16
Dec
-16
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b-1
7
Ap
r-17
Jun
-17
Au
g-1
7
Oct
-17
Dec
-17
Fe
b-1
8
Ap
r-18
Jun
-18
Au
g-1
8
Oct
-18
Dec
-18
Fe
b-1
9
US
$ p
er b
arre
l
Monthly Price
1
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
De
c-15
Feb
-16
Ap
r-16
Jun
-16
Au
g-1
6
Oct
-16
De
c-16
Feb
-17
Ap
r-17
Jun
-17
Au
g-1
7
Oct
-17
De
c-17
Feb
-18
Ap
r-18
Jun
-18
Au
g-1
8
Oct
-18
De
c-18
pri
ce p
er li
tre
(€)
Petrol Diesel
Costs of Doing Business 2019
33 April 2019
Figure 5.3: Petrol and Diesel costs per 1,000 litres, December 2018, selected countries
Source: European Commission, Energy Statistics
In December 2018, Italy
(€1,540) recorded the
highest petrol price,
Poland had the lowest
(€1,135). Sweden
(€1,491) had the
highest diesel price,
while Spain (€1,179)
recorded the lowest.
Compared to the UK,
the final price of petrol
was higher in Ireland
(€1,436), but the price
of diesel (€1,359) was
lower. Overall taxes39
on fuel prices were
similar in Ireland (62%)
and the euro area (also
62%).
Figure 5.4: Trends in Transport Related Prices in Ireland, 2015-2018 (2015 = 100)
Source: CSO, Services Producer Price Index
Between 2015 and 2018,
Irish transport sector
prices have increased
moderately. Though
Sea & Coastal transport
prices have fallen
sharply (11.4%), prices in
all other sectors of
transport have steadily
increased. Postal &
Courier services
recorded the highest
price increase (18.4%),
followed by Air
transport (17.1%) &
Warehousing, storage &
cargo (17.1%).
39 Includes VAT and all indirect taxes
0
200
400
600
800
1000
1200
1400
1600P
ola
nd
Lat
via
Sp
ain
UK
Sw
ed
en
Eu
ro a
rea
Fra
nce
Ire
lan
d
Ger
man
y
Fin
lan
d
Den
mar
k
Ital
y
Ne
ther
lan
ds
€/1
,00
0 li
tres
Petrol (incl taxes) Diesel (incl taxes)
Petrol (no taxes) Diesel (no taxes)
80
90
100
110
120
130
20
15
20
16 Q
1
20
16 Q
2
20
16 Q
3
20
16 Q
4
20
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1
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20
17 Q
3
20
17 Q
4
20
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1
20
18 Q
2
20
18 Q
3
20
18 Q
4
All Sectors Freight & Removal by Road
Sea & Coastal Transport Air Transport
Warehousing,Storage & Cargo Postal & Courier
34 April 2019
Figure 5.5: Administrative Costs and Time to Export, 2018
Source: World Bank, Doing Business 2019
In Ireland, the
total cost to
export a
standardised
cargo is $380,
higher than the
UK ($305) and the
OECD high
income average
($174). It takes 25
hours to complete
the compliance
processes in
Ireland - slower
than the OECD
average (15 hrs)
but quicker than
the UK (28 hrs).
Figure 5.6: Administrative Costs and Time to Import, 2018
Source: World Bank, Doing Business 2019
At $328, the cost of
importing a
container to Ireland
was significantly
higher when
compared to the
OECD high income
average ($104). The
total hours required
to complete the
various compliance
forms was 25 hours
in Ireland, compared
to 11.4 hours for the
OECD high income
average.
0
10
20
30
40
50
60
0
50
100
150
200
250
300
350
400
OE
CD
hig
h in
com
e
Lat
via
Ko
rea
Isra
el US
Sw
itze
rlan
d
Fin
lan
d
UK
Jap
an
Can
ada
Sin
gap
ore
Irel
and
Ch
ina
Ger
man
y
Ne
w Z
eala
nd
To
tal T
ime
to E
xpo
rt (
Hrs
)
Co
st o
f E
xpo
rtin
g (
US
D)
Cost to export : Border compliance Cost to export: Documentary compliance
Total Time to Export (border+compliance)
0
20
40
60
80
100
120
0
100
200
300
400
500
Lat
via
Fin
lan
d
UK
Ger
man
y
OE
CD
hig
h in
com
e
Sin
gap
ore US
Sw
itze
rlan
d
Irel
and
Can
ada
Ko
rea
Isra
el
Jap
an
Ne
w Z
eala
nd
Ch
ina
To
tal T
ime
to Im
po
rt (
Hrs
)
Co
st o
f Im
po
rtin
g (
US
D)
Cost to import : Documentary compliance Cost to import : Border compliance
Total time to import (border +compliance)
Costs of Doing Business 2019
35 April 2019
Figure 5.7: Growth in traffic by region, Ireland 2017
Source: Transport Infrastructure Ireland
In 2017, there was a
3% increase in traffic
across the road
network40. Growth
was highest in the
Border and Mid-west
regions (3.9%). All-
vehicle traffic grew by
2.8% in Dublin
whereas the Midlands
and the Mid-east
recorded 3.5%
growth. For HGVs,
both the South-East
and Dublin recorded
the highest regional
growth with 4.6% and
the West recorded the
lowest (0.9%).
Figure 5.8: Travelling time for persons at Work, School or College, by region, 2016
Source: CSO, Census 2016
In 2016, nearly
200,000 commuters
(almost 11% of all
commuters) spent an
hour or more
commuting to work.
This was an increase
of 50,000 persons (or
31%) over the five-
year period. The
average time for
travel for work in 2016
was 74 minutes.
Commuting times
rose in every county,
but with significant
variation in times
travelled depending
on where people
lived.
40 http://www.tii.ie/tii-library/strategic-planning/nra-road-network-indicators/TII-National-Roads-Network-Indicators-2017.pdf
0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5
Border
Mid-West
Midlands
Mid-East
South-East
Dublin
West
South-West
Annual Percentage Change (%)
HGVs All Vehicles
0
10000
20000
30000
40000
50000
60000
1 h
ou
r -
< 1
½ h
ou
rs
Bo
rder
Mid
lan
d
Wes
t
Du
blin
Mid
-Eas
t
Mid
-We
st
So
uth
-Eas
t
So
uth
-We
st
1½ h
ou
rs a
nd
ove
r
Bo
rder
Mid
lan
d
Wes
t
Du
blin
Mid
-Eas
t
Mid
-We
st
So
uth
-Eas
t
So
uth
-We
st
Po
pu
lati
on
ag
ed 1
5 ye
ars
and
ove
r at
wo
rk
Travel Time by Region
2011 2016
36 April 2019
Figure 5.9: Trends in Transport fares, Ireland (2016 = 100)
Source: CSO, CPI Transport Cost
After increases in
late 2017/ early 2018,
taxi fares have
remained relatively
stable up to early
2019. The bus fares
recorded 1.28%
increase in the last
three month to Feb
2019. The fares on
other transport
services have fallen
by 1.15% in the same
period reversing the
singinificant
increase recorderd
from June 2017 to
Dec 2018 (3.9%).
Figure 5.10: Traffic congestion levels, Europe 2016
Source: Tom Tom International, Congestion Index 2017
Traffic congestion
based on Tom Tom’s
Congestion Index
shows that, on
average, journey
times in busy
periods in Dublin,
Cork and Limerick
take 43%, 34% and
27% more time
compared to free
flow. With morning
and evening
congestion times
80% and 86% higher
compared to a free
flow, Dublin is one of
the most traffic
congested cities in
Europe.
98
99
100
101
102
103
104
105
20
16M
12
20
17M
2
20
17M
4
20
17M
6
20
17M
8
20
17M
10
20
17M
12
20
18M
2
20
18M
4
20
18M
6
20
18M
8
20
18M
10
20
18M
12
20
19M
02
ind
ex (
20
16=
100
)
Bus fares Taxi fares Other purchased transport services
0
10
20
30
40
50
60
70
80
90
Bel
fast
Du
blin
Ed
inb
urg
h
Lo
nd
on
Ro
me
Par
is
Bru
ssel
s
Man
ches
ter
Ath
ens
War
saw
Lis
bo
n
Co
rk
Lu
xem
bo
urg
Zu
rich
Vie
nn
a
Bar
celo
na
Ber
lin
Sto
ckh
olm
Fra
nkf
urt
Lim
eric
k
Car
dif
f
Mad
rid
Co
pen
hag
en
Am
ste
rdam
%
Congestion Level Morning Peak Evening Peak
Costs of Doing Business 2019
37 April 2019
Figure 5.11: Traffic Congestion levels, Ireland, 2012-2016
Source: Tom Tom International, Congestion Index 2017
This figure shows the
trend in traffic
congestion level
during the period
2008-2016 in the
three major Irish
cities. Increasing
numbers of people at
work, and a higher
number of people
using private cars
relative to public
transport, have
resulted in increased
traffic congestion
levels in all cities
since 2013.
In recent years, aggregate transport sector prices in Ireland have increased moderately. Prices in all transport sectors
(except sea and coastal transport) have steadily increased, with postal and courier services recording the highest price
increase, followed by warehousing, storage and cargo services.
In 2018, the average price per litre of petrol and diesel were €1.43 and €1.34 respectively. Prices of both petrol and
diesel have fallen off since their peak. Petrol prices in December 2018 (€1.43/litre) were 4.6 % lower than the peak in
November 2018 (€1.50/litre). Similarly, diesel prices were down by 2.8 % December (€1.36/litre) compared to the peak
in October (€1.40/litre). Over the course of 2018, petrol prices increased by 2.8% and the price of diesel increased by
4.6%. After increases at the start of the year, bus and taxi fares remained stable, but fares on other purchased
transport services have increased significantly (3.9%), since the start of 2017.
It is not only transport costs that have been on the increase. Traffic has increased across the road network by 3%. In the
Border and Mid-West regions, traffic increased by almost 4% in 2017. Heavy goods vehicle traffic in the South East and
Dublin increased by 4.6% in the same period. The increased congestion is supported by the fact that 11% of all
commuters spend an hour or more commuting to work in 2017.
20
25
30
35
40
45
2012 2013 2014 2015 2016
Incr
ease
d in
tra
vel t
ime
com
par
ed t
o a
fre
eflo
w
situ
atio
n (%
)Dublin Cork Limerick
38 April 2019
Chapter 6 – Utility Costs
Figure 6.1: Non-household electricity prices (excluding VAT and other recoverable taxes and levies), Band IB41, S1 2018
Source: Eurostat Electricity Prices Data
Figure 6.1 compares
electricity prices in
selected EU countries in
S1 2014 and S1 2018.
Prices in Ireland have
fallen almost (9%) since
S1 2014, but still remain
highest among the
benchmark countries.
In 2018 S1, the
electricity price for non-
household customers in
Ireland (€0.14/kilowatt-
hour) was higher
compared to the euro
area (€0.10/kilowatt-
hour) and the UK
(€0.12/kilowatt-hour).
41 Band IB (20 MWh< consumption<500 mWh) 42 Euro area data is only up to 2017 S2
0.00
0.04
0.08
0.12
0.16
0.20
Irel
and
UK
Sp
ain
Lat
via
Ital
y
Fra
nce
Eu
ro a
rea
Ger
man
y
Po
lan
d
De
nm
ark
Sw
ede
n
Fin
lan
d
Ne
ther
lan
ds
€ /k
ilow
att-
ho
ur
2018S1 2014S1
Figure 6.2: Non-household electricity prices (excluding VAT and other recoverable taxes and levies), low
consumption bands, 2014 S1-2018 S142
Source: Eurostat Electricity Prices Data
In Ireland, the price of
electricity for non-
household consumers
in the most populated
band (IB, 20-
500MWh) fell from
€0.14 (PPS) in S2 2013
to €0.13 in S2 2017
before increasing to
€0.14 in S1 2018.
Prices in the UK have
risen steadily during
the period ( S1 2018,
€0.13), and have now
caught up with Irish
prices.
0.10
0.12
0.14
0.16
0.18
0.20
0.22
20
14S
1
20
14S
2
20
15S
1
20
15S
2
20
16S
1
20
16S
2
20
17S
1
20
17S
2
20
18S
1
€ k
ilow
att
ho
ur
(PP
S)
Euro area < 20 MWh Ireland < 20 MWhUK < 20 MWh Euro area 20 MWh to 500 MWhIreland 20 MWh to 500 MWh UK 20 MWh to 500 MWhEuro area 500 to 2000 MWh Ireland 500 to 2000 MWh
Costs of Doing Business 2019
39 April 2019
Figure 6.3: Non-household electricity prices (excluding VAT and other recoverable taxes and levies), high consumption
bands, 2014 S1-2018 S1
Source: Eurostat
This graph shows the
trends in the price of
electricity in three bands
of non-household
customers over time. The
price of electricity in
Ireland in two of the three
bands has been
consistently below the
euro area average until S1
2017 when the prices for
customers in band (20 000
to 70 000MWh) deviate
significantly upward from
the euro area average. UK
prices in all three bands
have increased during the
period and were above
the euro area average and
Ireland in S1 2018.
Figure 6.4: Gas prices for non-household consumers, excluding taxes and levies,2041 S1-2018S1
Source: Eurostat
Until S2 2016, Irish gas
prices were lower than the
euro area average.
However, since then price
levels have converged.
The cost of gas for all
categories of non-
household consumers in
Ireland have fluctuated
and are trending
downward over time. UK
prices categories have
been below the euro area
and Ireland since 2013.
0.0600
0.0700
0.0800
0.0900
0.1000
0.1100
0.1200
20
14S
1
20
14S
2
20
15S
1
20
15S
2
20
16S
1
20
16S
2
20
17S
1
20
17S
2
20
18S
1
€/k
ilow
att-
ho
ur
(PP
S)
Euro area 2 000 to 20 000MWh Ireland 2 000 to 20 000MWh
UK 2 000 to 20 000MWh Euro area 20 000 to 70 000MWh
Ireland 20 000 to 70 000MWh UK 20 000 to 70 000MWh
Euro area 70 000 to 150 000MWh Ireland 70 000 to 150 000MWh
UK 70 000 to 150 000MWh
0.015
0.020
0.025
0.030
0.035
0.040
0.045
0.050
0.055
0.060
S12
014
S2
20
14
S12
015
S2
20
15
S12
016
S2
20
16
S12
017
S2
20
17
S12
018
€/k
ilow
att
ho
ur
(PP
S)
Euro area (< 1 000 GJ) Ireland (< 1 000 GJ)
UK (< 1 000 GJ) Euro area (1 000 GJ to 10 000 GJ)
Ireland (1 000 GJ to 10 000 GJ) UK (1 000 GJ to 10 000 GJ)
Euro area (10 000 GJ to 100 000 GJ) Ireland (10 000 GJ to 100 000 GJ)
UK (10 000 GJ to 100 000 GJ) Euro area (100 000 GJ to 1 000 000 GJ)
Ireland (100 000 GJ to 1 000 000 GJ) UK (100 000 GJ to 1 000 000 GJ)
40 April 2019
Figure 6.5: Share of non-recoverable taxes and levies in the overall electricity price for non-household consumers,
2018 S1
Source: Eurostat
The proportion of
recoverable & non-
recoverable taxes and
levies in Ireland was
relatively low
compared to other EU
countries in S1 2018.
The overall price of
electricity in Ireland
consisted of 21 % of
recoverable and non-
recoverable taxes,
levies and VAT
whereas it was 36 % in
UK.
Figure 6.6: Share of non-recoverable taxes and levies in the overall gas price for non-household consumers, 2018 S1 9
Source: Eurostat
The proportion of
non-recoverable
taxes and levies in the
overall natural gas
price was relatively
low in Ireland (8.5%)
compared to UK (5%)
in the first six months
of 2018. In terms of
the proportion of
VAT and other
recoverable taxes and
levies, at 11.66%, it is
also lower than the
UK (14.44%).
0102030405060708090
100
Ne
ther
lan
ds
Ger
man
y
Ital
y
Fra
nce UK
Lat
via
Po
lan
d
Irel
and
De
nm
ark
Fin
lan
d
Sp
ain
Sw
ede
n
Tax
es a
nd
levi
es a
s %
of
ove
rall
pri
ce (P
PS
)
Proportion of price excluding taxes and levies
Proportion of VAT and other recoverable taxes and levies
Proportion of non-recoverable taxes and levies
0102030405060708090
100
Ne
ther
lan
ds
Den
mar
k
Fin
lan
d
Ital
y
Fra
nce
Ger
man
y
Sw
ed
en
Ire
lan
d
UK
Lat
via
Po
lan
d
Sp
ain
Taxe
s an
dle
vies
as
% o
f o
vera
ll p
rice
(P
PS)
Proportion of price excluding taxes and levies
Proportion of VAT and other recoverable taxes and levies
Proportion of non-recoverable taxes and levies
Costs of Doing Business 2019
41 April 2019
Figure 6.7: Business Standalone Fixed Voice Basket43 € per month excluding VAT44
Source: Comreg
The trend in the
Standalone Fixed Voice
charges for business in
selected countries in the
last quarter is depicted
here. The charges for a
basket of Standalone
Fixed Voice in Ireland
remained flat last year
before falling sharply in
the Q4 2018. Ireland
was the least expensive
(€38.88) and the
Netherland (€74.21) was
the most expensive
country in Q4 2018.
Figure 6.8: Business Fixed Broadband45, € per month excluding VAT
Source: Comreg
The price of Fixed
Broadband Services for
business in Ireland is
trending slightly
downwards in the last
four quarters and was
€42.56 in Q3-Q4 2018.
Although the fixed
broadband charge in the
UK fluctuated during the
period, it remained
higher than the
corresponding charges in
Ireland for all quarters
and was €44.4 in Q4
2018.
43 OECD Business Standalone Fixed Voice 260 calls (606 minutes) 44 ComReg uses independently collated Strategy Analytics (Teligen) pricing data using OECD-approved methodologies to examine the relative prices of several specific
fixed voice usage baskets of national and international telecoms services for both residential and business users. The pricing data used for international comparisons
currently includes pricing information for selected countries, namely Germany, Denmark, Spain, Netherlands and the UK. 45 OECD Business Fixed Broadband 60GB Basket (>25Mbps)
30.00
35.00
40.00
45.00
50.00
55.00
60.00
65.00
70.00
75.00
80.00
Q4 2017 Q 12018 Q2 2018 Q3 2018 Q4 2018
€/ m
on
th (
excl
.VA
T)
-P
PP
Denmark Germany Netherlands
Spain UK Ireland
30
40
50
Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
€/ m
on
th (
excl
.VA
T)
-P
PP
Denmark Germany Netherlands
Spain UK Ireland
42 April 2019
Figure 6.9: Business Mobile Broadband, € per month excluding VAT
Source: Comreg
Mobile Broadband prices
have fallen slightly in
Ireland in the last four
quarters. Prices in most
of the countries
presented remained
relatively stable. Though
there was a significant
fall in prices in Germany
between Q2 and Q3
2018. At €15.76 in Q3-Q4
2018, Ireland had the
lowest cost among the
benchmarked countries
since the first quarter of
2018 overtaking the UK.
Figure 6.10: Business post-paid mobile phone services, € per month excluding VAT
Source: Comreg
After the early decline,
Business bill pay mobile
services in Ireland
remained stable in the
first three quarters of
2018 before going up in
the last quarter. At €30/
month in Q4 2018,
Ireland had the 2nd
highest price among the
benchmarked countries.
The UK continued to be
the least expensive
country during the
period with the price
falling since Q2 2018
(€13.71).
Certain utility costs (including electricity and gas) tend to be higher in Ireland than other jurisdictions, while Ireland is
more competitive regarding other utility costs (telecoms). The EU is among the most expensive locations for electricity
and gas globally – and within the EU – Ireland is one of the most expensive countries for electricity for both large and
small users. In S1 2018, electricity in Ireland (for those in the low consumption band46) cost €0.14/ kilowatt-hour, which
46 Band IV (20MWh < consumption < 500MWh) – prices in euro excluding VAT and other recoverable taxes and levies-
10
20
30
40
50
Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
€/ m
on
th (
excl
.VA
T)
-P
PP
Denmark Germany Netherlands
10
15
20
25
30
35
40
Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
€/ m
on
th (
excl
. VA
T)
-P
PP
Denmark Germany Netherlands
Spain UK Ireland
Costs of Doing Business 2019
43 April 2019
is higher than both the UK (€0.12/ kilowatt-hour) and euro area average (€0.10/ kilowatt-hour) price. In the higher
consumption band47, Irish consumers are still paying more (€0.09) compared to the euro area average (€0.08) but lower
than UK (€0.11). Gas prices48 in Ireland are in line with the euro area average but higher than the UK prices.
Ireland is relatively cost competitive for telecoms. In Q4 2018, the Business Fixed Broadband 60GB Basket (>25Mbps)
cost in Ireland (€42.56) was lower than the UK (€44.4) and slightly above the Netherlands (€41.9)49. However, the high
post-paid mobile broadband costs in Ireland (€30) compared less favourably to the UK (€13.71)50.
47 Band IE (2000MWh < consumption < 70000MWh) – prices in euro excluding VAT and other recoverable taxes and levies 48 PPS for business consumers 49 https://www.comreg.ie/publication-download/quarterly-key-data-report-q4-2018 50 https://www.comreg.ie/publication-download/quarterly-key-data-report-q4-2018
44 April 2019
Chapter 7 – Credit and Financial Costs
Figure 7.1: Interest Rates for Non-Financial Corporations, selected countries
In 2014, Irish companies
faced lower interest rates
(3%) when compared to
euro area companies (3.3%).
However, there has been a
marked divergence since
then. Irish interest rates
have increased (3.3% in
January 2019) while interest
rates in the euro area have
fallen to just under 2%. In
France, the interest rate is
even lower at 1.74%
On this evidence, Irish
companies now face higher
rates than they did in 2014.
Source: MIR dataset, ECB
Figure 7.2: Interest Rates for Non-Financial Corporations (new business) by loan size,
selected economies
This figure underlines the
interest rate divergence set
out in the chart above. In
Ireland and the euro area,
interest rates are
substantially lower on loans
that are larger than
€250,000 (but smaller than
€1 million). But regardless
of the loan size, interest
rates are higher overall for
Irish companies. In Jan
2019, Irish loans under
€250,000 had an average
interest rate of 5.5% while
euro area loans for the same
amount had an interest rate
of 2.2%.
Source: MIR data, ECB
0
0.5
1
1.5
2
2.5
3
3.5
4
20
14Ja
n
20
14A
pr
20
14Ju
l
20
14O
ct
20
15Ja
n
20
15A
pr
20
15Ju
l
20
15O
ct
20
16Ja
n
20
16A
pr
20
16Ju
l
20
16O
ct
20
17Ja
n
20
17A
pr
20
17Ju
l
20
17O
ct
20
18Ja
n
20
18A
pr
20
18Ju
l
20
18O
ct
20
19Ja
n
%
Germany France Ireland Euro area
0
1
2
3
4
5
6
7
20
13Ja
n
20
13A
pr
20
13Ju
l
20
13O
ct
20
14Ja
n
20
14A
pr
20
14Ju
l
20
14O
ct
20
15Ja
n
20
15A
pr
20
15Ju
l
20
15O
ct
20
16Ja
n
20
16A
pr
20
16Ju
l
20
16O
ct
20
17Ja
n
20
17A
pr
20
17Ju
l
20
17O
ct
20
18Ja
n
20
18A
pr
20
18Ju
l
20
18O
ct
20
19Ja
n
%
Ireland ≤ €0.25mn €0.25mn ≤ Ireland ≤ €1mn
€0.25mn ≤ Euro Area ≤ €1mn €0.25mn ≤ Euro Area ≤ €1mn
Costs of Doing Business 2019
45 April 2019
Figure 7.3: Interest rates on outstanding amount for Non-Financial Corporations, by
duration
In the years leading up to
2014, interest rates on
outstanding amounts were
universally lower in Ireland
than the euro area.
However, since 2016, rates
for all durations have been
significantly higher in
Ireland. In Jan 2019, for
short loans (lasting less than
a year), Irish firms faced
interest rates of 4.1% while
the euro area average was
2.1%.
Source: MIR data, ECB
Figure 7.4: Interest Rates for Irish SMEs, selected sectors
The overall average interest
rate that Irish SMEs face is
3.4%. However, this masks
differences at the sectoral
level. This figure shows that
interest rates for the
transport and storage
(4.2%) , construction (4.0%),
and ICT (4.2%) sectors are
much higher than the
overall rate. This was not
always the case for ICT,
which experienced a large
jump in late 2018.
Source: Trends in SME and Large Enterprise Credit and Deposits, CBI
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
20
13Ja
n
20
13A
pr
20
13Ju
l
20
13O
ct
20
14Ja
n
20
14A
pr
20
14Ju
l
20
14O
ct
20
15Ja
n
20
15A
pr
20
15Ju
l
20
15O
ct
20
16Ja
n
20
16A
pr
20
16Ju
l
20
16O
ct
20
17Ja
n
20
17A
pr
20
17Ju
l
20
17O
ct
20
18Ja
n
20
18A
pr
20
18Ju
l
20
18O
ct
20
19Ja
n
%
Ireland < 1 year 1 year < Ireland < 5 years
5 years < Ireland Euro Area < 1 year
1 year < Euro Area < 5 years 5 years < Euro Area
2.5
2.7
2.9
3.1
3.3
3.5
3.7
3.9
4.1
4.3
4.5
Mar
-16
May
-16
Jul-
16
Se
p-1
6
No
v-16
Jan
-17
Mar
-17
May
-17
Jul-
17
Se
p-1
7
No
v-17
Jan
-18
Mar
-18
May
-18
Jul-
18
Se
p-1
8
%
Total Construction
Transportation and Storage Information and Communication
46 April 2019
Figure 7.5: Interest Rates on Gross New Lending for Irish SMEs, selected sectors
The interest rate on
gross new lending for
SMEs has remained
close to 4%. However,
similar to the previous
chart, there is an
amount of sectoral
variation. The interest
rate that transport and
storage SMEs face (5%)
is much higher than the
rate on new lending that
SMEs in the hotel and
restaurant sector face
(3.1%).
Source: Trends in SME and Large Enterprise Credit and Deposits, CBI
Businesses in Ireland face higher interest rates than the average business in the EU, or the euro area. This is a
consistent feature of the data regardless of intrinsic features of the loan, whether it is large or small, or whether it is for
a short or long duration. However, this was not always the case. In 2014, Irish companies faced a similar interest rate
(around 3%) to their counterparts in Germany and France, but while the average rate businesses face has dropped in
these economies (to around 2%), overall Irish companies face higher rates now (3.3%) than they did in 2014 (3%)51.
For Irish SMEs, the average interest rate is 3.4%, but there is considerable sectoral variation. SMEs in the transport and
storage (4.2%), construction (4%), and ICT (4.2%) sectors are all higher than average interest rates, and the rates on
gross new lending for Irish transport and storage SMEs stood at 5.1%52 as of September 2018.
51 ECB, MIR dataset 52 CBI, Trends in SME and Large Enterprise Credit and Deposits
2.5
3
3.5
4
4.5
5
5.5
6
Mar
-16
May
-16
Jul-
16
Se
p-1
6
No
v-16
Jan
-17
Mar
-17
May
-17
Jul-
17
Se
p-1
7
No
v-17
Jan
-18
Mar
-18
May
-18
Jul-
18
Se
p-1
8
%
Total Manufacturing
Transportation and Storage Hotels and Restaurants
Information and Communication
Costs of Doing Business 2019
47 April 2019
Chapter 8 – Business Services and Other Input Costs
Figure 8.1: Services Producer Price Index, (2015=100)
The Services Producer
Price Index shows the
changes in the price that
services producers receive
for their products. In 2018,
services producers have
been charging the highest
prices in the last 3 years. In
2018, services prices were
approximately 7% higher
than they were in 2015.
Source: CSO (Services Producer Price Index)
Figure 8.2: Services Producer Price Index, Annual Percentage Change (2018)
While services prices are
overall trending upwards,
there is considerable
variation at a sectoral level
on the size of price
changes . The price that
producers are receiving in
sectors like sea and
coastal transport and
advertising, media and
market research have
remained stagnent, while
warehousing, storage and
cargo handling (6.8%) and
postal and courier (6.2%)
services increased
substantially.
Source: CSO Services Producer Price Index
95
100
105
110
2015 2016 2017 2018
-1 0 1 2 3 4 5 6 7 8
Warehousing, Storage and Cargo Handling
Postal and Courier
Employment and Human Resource Activities
Computer Programming and Consultancy
Air transport
Industrial and Building Cleaning
Security and Investigation
Architecture, Engineering and Technical Testing
Legal, Accounting, Public Relations and BusinessManagement Consultancy
Freight and Removal by Road
Advertising, Media Representation and Market Research
Sea and Coastal Transport
Annual Percentage Change
48 April 2019
Figure 8.3: Comparison of Services producer prices, 2017 (Index, 2015 = 100)
This figure compares Ireland’s
Services Producer Price Index
with the corresponding index in
other EU Member States.
Of the selected countries, only
Luxembourg has experienced a
faster increase in the prices that
services producers receive than
that observed in Ireland.
In 2017, the prices services
producers received were 3%
higher in Ireland relative to
2015, while they were 6%
higher in Luxembourg. In
Denmark, prices were 4.5%
lower than the figures for 2015.
The corresponding figure for
the euro area was 0.9%.
Source: Eurostat Services producer prices - annual data
Figure 8.4: The cost of enforcing a commercial contract
Ireland is a relatively
expensive location in
which to resolve a
commercial dispute
through a first-instance
court. The total cost of
enforcing a contract was
27% of the total award,
with lawyer’s fees
accounting for the bulk
(70%) of the cost.
Enforcing contracts in
the UK was the most
expensive relative to the
award (46%), compared
to 27% in Ireland.
Source: World Bank Doing Business 2019
90 95 100 105 110
Denmark
Spain
Italy
France
Lithuania
Netherlands
Euro area
Poland
Germany
Finland
Sweden
UK
Austria
Ireland
Luxembourg
0
5
10
15
20
25
30
35
40
45
50
Lu
xem
bo
urg
So
uth
Ko
rea
Ger
man
y
Fin
lan
d
Sp
ain
Fra
nce
Ch
ina
Po
lan
d
Can
ada
US
A
Ital
y
Lat
via
De
nm
ark
Jap
an
Ne
ther
lan
ds
Sw
itze
rlan
d
Isra
el
Sin
gap
ore
Irel
and
Ne
w Z
eala
nd
Sw
ede
n
UK
Co
st o
f E
nfo
rcem
ent
(% o
f to
tal c
laim
)
Attorney fees Court fees Enforcement fees
Costs of Doing Business 2019
49 April 2019
Figure 8.5: Time to enforce a commercial contract, 2018
In terms of time taken to
resolve a dispute, the
World Bank Doing
Business report shows
that the time taken for
filing and service, trial
and judgement and
enforcement (including
time for appeal) is 650
days in Ireland,
compared to 437 days in
the UK and 578 days on
average across OECD
countries.
Source: World Bank Doing Business 2019
Figure 8.6: Cost of starting a new business (% of income per capita)
In the last five years,
Ireland has maintained its
competitive position in
terms of the cost to
register a business as a
percentage of gross
national income.
In 2018, registering a
business in Ireland cost an
amount equal to
approximately 0.1% of
GDP/ capita. This
compares favourably with
the OECD average (3.1%)
and South Korea (14.6%).
Source: World Bank Doing Business 2019
0
200
400
600
800
1000
1200S
ing
apo
re
Ne
w Z
eala
nd
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Ko
rea
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Jap
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US
A
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Lat
via
Sw
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Fin
lan
d
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man
y
Ch
ina
Sp
ain
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lan
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Sw
itze
rlan
d
Irel
and
Po
lan
d
Can
ada
Isra
el
Ital
y
Tim
e (D
ay)
Filing and service Trial and judgment Enforcement of judgment
0
2
4
6
8
10
12
14
16
So
uth
Ko
rea
Ital
y
Po
lan
d
Jap
an
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man
y
Ne
ther
lan
ds
Sp
ain
OE
CD
Sw
itze
rlan
d
Lat
via
US
A
Fin
lan
d
Fra
nce
Sw
ede
n
Ch
ina
Ne
w Z
eala
nd
De
nm
ark
Irel
and
UK
% o
f in
com
e p
er c
apit
a
50 April 2019
Figure 8.7: Consumer Insurance Costs (2015=100)
Headline inflation
has been relatively
stable in recent
years, but there
have been big
changes in the price
of car and general
transport insurance.
In Q3 2016, car
insurance was 30%
higher than it was in
2015. Since then
prices have
normalised, and
now prices are 4%
higher than the
2015 figure, but still
32% higher than
they were in 2013.
Source: CSO Harmonised Consumer Price Index
Figure 8.8: Price of car (and other transport) insurance (2015=100)
The price of car, and
general transport,
insurance in Ireland
increased rapidly up
to the end of 2016,
but has since
experienced
deflation. This
means that
insurance inflation
in Ireland from 2015
to now is like the EU
and euro area
average. In the UK
prices are
substantially higher
now than they were
in 2015.
Source: Eurostat Harmonised Index of Consumer Prices
70
80
90
100
110
120
130
140
20
13M
01
20
13M
04
20
13M
07
20
13M
10
20
14M
01
20
14M
04
20
14M
07
20
14M
10
20
15M
01
20
15M
04
20
15M
07
20
15M
10
20
16M
01
20
16M
04
20
16M
07
20
16M
10
20
17M
01
20
17M
04
20
17M
07
20
17M
10
20
18M
01
20
18M
04
20
18M
07
20
18M
10
Insurance Home insurance
Health insurance Car (and general transport) insurance
70
80
90
100
110
120
130
140
20
13M
01
20
13M
04
20
13M
07
20
13M
10
20
14M
01
20
14M
04
20
14M
07
20
14M
10
20
15M
01
20
15M
04
20
15M
07
20
15M
10
20
16M
01
20
16M
04
20
16M
07
20
16M
10
20
17M
01
20
17M
04
20
17M
07
20
17M
10
20
18M
01
20
18M
04
20
18M
07
20
18M
10
EU Euro area Ireland UK
Costs of Doing Business 2019
51 April 2019
In Ireland, the overall price of services is rising much faster than the price of goods. In total, the price of services has
increased by 7%53 since 2015, but this masks widely different changes in the price of certain services. For example, the
price of warehouse, storage and cargo handling services increased by 6.2%, while sea and costal transport prices
declined by 0.2%.
When compared to other EU countries, services prices are rising relatively quickly in Ireland, with Luxembourg being
the only economy measured where services prices increased faster than Ireland. In Denmark, services producer prices
declined since 2015, and are now around 4.5% lower than they were in 201554.
Insurance costs, which increased rapidly in Ireland from 2013 to 2016, have decreased since the end of 2016. The price
of car (and other transport) insurance is now roughly what it was in 2015 (like the EU and euro area average)55.
53 CSO, Services Producer Price Index 54 Eurostat, Services Producer Prices, Annual Data (2017 figure) 55 Eurostat, HICP (November 2018)
52 April 2019
Chapter 9 – Focus on Residential Property and Childcare Costs
Figure 9.1: Residential Construction Cost Index, 2015 = 100
The Q3 2018 figure
demonstrate that the
costs incurred by
contractors when
building residential
property have been
on the increase in all
the selected
economies since
2016. Costs have
exhibited the fastest
increase in the UK
(7.9% in Q2 2018).
Cost increases in
Ireland (6.6%) are
broadly in line with
those in the rest of
the EU and euro area
(5.7%).
Source: Residential Construction Cost Index, Eurostat
Figure 9.2: Residential Property Price Index, Ireland (Jan 2005 = 100)
This figure shows
the large decline in
the price of
residential
property over the
2008- 2013 period
– a trend that was
observed in Dublin
and throughout
the country. Since
2013, property
prices nationwide
have been
increasing, and are
now roughly at the
level they were in
January 2005,
though well below
their peak levels in
April 2007.
Source: Residential Property Price Index, CSO
40
50
60
70
80
90
100
110
120
130
140
20
08
M0
2
20
08
M0
7
20
08
M12
20
09
M0
5
20
09
M10
20
10M
03
20
10M
08
20
11M
01
20
11M
06
20
11M
11
20
12M
04
20
12M
09
20
13M
02
20
13M
07
20
13M
12
20
14M
05
20
14M
10
20
15M
03
20
15M
08
20
16M
01
20
16M
06
20
16M
11
20
17M
04
20
17M
09
20
18M
02
20
18M
07
National National (ex. Dublin) Dublin
94
96
98
100
102
104
106
108
110
20
16Q
1
20
16Q
2
20
16Q
3
20
16Q
4
20
17Q
1
20
17Q
2
20
17Q
3
20
17Q
4
20
18Q
1
20
18Q
2
20
18Q
3
Euro area EU Ireland UK
Costs of Doing Business 2019
53 April 2019
Residential Property Price Index, CSO
Figure 9.4: Annual Average Change in Rents, 2009 - 2018
In tandem with the
increase in the price
of residential
property, there have
been large increases
in rents in Ireland
since 2012.
In 2018, Irish rents
increased by 6%, far
more than the EU
(1%), euro area (1%),
or the UK (1%).
Source: HICP, Eurostat
Figure 9.3: Residential Price Index (Houses), Average Percentage Change (in the
year to November 2018)
While national
property prices
increased by 7% in
the year to
November 2018,
there was more
muted price
increases in Dublin
(4.6%), and double
digit increases in the
South-East (10.2%),
West (12.2%),
Midlands (12.6%),
and Mid-West
(20.7%).
Source: Residential Property Price Index, CSO 0 5 10 15 20 25
Mid-West (inc. South Tipperary)
Midland
West
South-East (ex. South Tipperary)
South-West
Mid-East (inc. Louth)
National
Border (ex. Louth)
Dublin
% change
-15
-10
-5
0
5
10
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
An
nu
al P
erce
nta
ge
Ch
ang
e
EU Euro Area Ireland UK
54 April 2019
Figure 9.5: Residential Tenancies Board, National Rent Index (2007 = 100)
This broad increase
in rents in Ireland
since 2012 has been
across both houses
and apartments. The
rental price of both
houses and
apartments in
Ireland has now
surpassed the 2008
figures. In Q1 2018,
the rental price of an
apartment in Ireland
was 19% higher than
it was in 2007. The
corresponding figure
for renting a house
was 4% higher.
Source: Residential Tenancies Board
Figure 9.6: Rent Index, regional variation (2007=100)
The regional
breakdown of the
rental price index
shows that rents
nationwide have
broadly followed
the same trend. At
the start of 2012,
rents were roughly
20% lower than
they were in 2007.
In Q1 2018, rents
were equal to or
above rents in
2012. Rents in
Dublin, and the
Greater Dublin
Area have
increased faster
than the rest of the
country.
Source: Residential Tenancies Board
70
80
90
100
110
120
130
Q1
20
08
Q3
20
08
Q1
20
09
Q3
20
09
Q1
20
10
Q3
20
10
Q1
20
11
Q3
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11
Q1
20
12
Q3
20
12
Q1
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Q3
20
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Q1
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Q3
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20
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Q3
20
15
Q1
20
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Q3
20
16
Q1
20
17
Q3
20
17
Q1
20
18
Total Houses Apartments
60
70
80
90
100
110
120
130
Q1
20
08
Q3
20
08
Q1
20
09
Q3
20
09
Q1
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10
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10
Q1
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Q1
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Q1
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14
Q3
20
14
Q1
20
15
Q3
20
15
Q1
20
16
Q3
20
16
Q1
20
17
Q3
20
17
Q1
20
18
Dublin GDA (excluding Dublin) Outside GDA
Costs of Doing Business 2019
55 April 2019
Figure 9.7: Average Rents, broken down by county (Q1 2018)
The average rents
that are paid in
each county reveal
large differences
throughout the
country.
In Q1 2018, the
highest average
rent was in Dublin
(€1,527), while the
lowest average
rent was in Leitrim
(€487).
Source: Residential Tenancies Board
Figure 9.8: Gross full-time childcare fees (2 children), as percentage of average wage
(2018)
Source: Childcare Costs Statistics, OECD
Gross childcare
fees in Ireland are
relatively high
compared to the
OECD, and EU
averages. For two
children in full-time
care, the gross fees
are 39% of the
average wage,
compared to an
OECD average
(24%) and the EU
average (18%).
However, Ireland
does compare well
to the UK (61%)
and Switzerland
(69%).
0
200
400
600
800
1000
1200
1400
1600
1800
Du
blin
Wic
klo
w
Kild
are
Mea
th
Co
rk
Lo
uth
Gal
way
Lim
eric
k
Kilk
enn
y
Car
low
Lao
is
Ke
rry
Wes
tmea
th
Slig
o
Wat
erfo
rd
Wex
ford
Cla
re
Off
aly
Tip
per
ary
Mo
nag
han
May
o
Cav
an
Ro
sco
mm
on
Do
neg
al
Lo
ng
ford
Lei
trim
€
0
10
20
30
40
50
60
70
Sw
itze
rlan
d
UK
Ne
ther
lan
ds
Ne
w Z
eal
and
Jap
an
Lu
xem
bo
urg
Ire
lan
d
US
Po
rtu
gal
OE
CD
Ave
rag
e
Fra
nce
Po
lan
d
Sp
ain
EU
Fin
lan
d
Ko
rea
Den
mar
k
Lat
via
Ger
man
y
Sw
ed
en
Gro
ss C
hild
care
Fee
s (%
of
Ave
rag
e W
ages
)
56 April 2019
Figure 9.9: Out-0f-pocket childcare costs for a two-earner couple family, 2018
When looking at
the net childcare
cost, there are the
different models
that OECD
countries use to
ease the cost of
childcare. In
Ireland, the net
cost of childcare is
28% of the average
wage, with the
reduction due to
childcare benefits.
In the UK, the
corresponding
figure was 36%,
while the EU
average was 12%.
Source: Childcare Costs Statistics, OECD
Figure 9.10: Childcare inflation compared to overall and services inflation, Dec 2016 =
100
This figure shows the
trend in the price of
childcare services
and compares it to
overall inflation and
inflation in services.
It shows that while
childcare costs have
been rising in recent
years, this increase is
in line with the
observed increases in
services prices.
Source: CPI, CSO
-60
-40
-20
0
20
40
60
80S
wit
zerl
and
UK
Ne
ther
lan
ds
Ne
w Z
eala
nd
Jap
an
Lu
xem
bo
urg
Irel
and
US
Po
rtu
gal
OE
CD
Ave
rag
e
Fra
nce
Po
lan
d
Sp
ain
EU
Fin
lan
d
Ko
rea
De
nm
ark
Lat
via
Ger
man
y
Sw
ede
n
Ch
ildca
re r
elat
ed c
ost
s an
d b
enef
its
(% o
f av
erag
e w
ages
)
Childcare fees Childcare benefits Tax reduction Changes in other benefits Net cost
90
92
94
96
98
100
102
104
106
20
13M
01
20
13M
04
20
13M
07
20
13M
10
20
14M
01
20
14M
04
20
14M
07
20
14M
10
20
15M
01
20
15M
04
20
15M
07
20
15M
10
20
16M
01
20
16M
04
20
16M
07
20
16M
10
20
17M
01
20
17M
04
20
17M
07
20
17M
10
20
18M
01
20
18M
04
20
18M
07
20
18M
10
Childcare Services All items
Costs of Doing Business 2019
57 April 2019
Real wages are the key measure of how well-off a person feels – real wages account for what a person can buy with the
wages they receive – and so consider price changes. If prices are increasing faster than nominal wages, then real wages
are declining, and people are becoming less well off. The Competitiveness Council have decided to include a chapter
that looks specifically at residential property costs and childcare costs given the importance of these items and because
of their impact on wage pressures, and the competitiveness of firms and of Ireland as a place in which to do business.
Residential property prices have been growing consistently across the country since a low point in early 201356.
Property prices are now roughly where they were at the start of 2005. Irish rents have also been growing since 2013 and
have been increasing by over 5% per annum for the last four years57. According to the Residential Tenancies Board58,
the average rent in Dublin was €1,527 in Q1 2018.
56 CSO, Residential Property Price Index (Nov 2018 figure) 57 Eurostat, HICP 58 Residential Tenancies Board, Rent Index 2018
National Competitiveness Council c/o Department of Business, Enterprise and Innovation 23 Kildare Street, Dublin 2, D02 TD30 Tel: 01 6312121 Email: info@competitiveness.ie Web: www.competitiveness.ie