IDEAS home Printed from https://ideas.repec.org/a/eso/journl/v46y2015i3p429-458.html
   My bibliography  Save this article

Wages and Ireland’s International Competitiveness

Author

Listed:
  • Rory O'Farrell

    (OECD, Paris, France)

Abstract

At the beginning of the crisis in 2008 it was a widely reported view that Ireland had become uncompetitive, leading to calls for wage cuts. Since then wage rates in the private sector have been largely stable. However, Ireland has shown a strong improvement in exports despite a difficult international trading situation. This presents a puzzle. If wages in Ireland were uncompetitive, how could Ireland improve its export position so rapidly, without a general fall in wages? Ireland can best be described as having moved from a position of “super-competitiveness” to “competitiveness”. During the construction boom, exports remained an important driver of growth. Since 2008, the fall in nominal unit labour costs is entirely due to a move away from the labour intensive construction sector. However, while labour costs have been stagnant in Ireland, they have increased amongst our trading partners.

Suggested Citation

  • Rory O'Farrell, 2015. "Wages and Ireland’s International Competitiveness," The Economic and Social Review, Economic and Social Studies, vol. 46(3), pages 429-458.
    • Handle: RePEc:eso:journl:v:46:y:2015:i:3:p:429-458
    as

    Download full text from publisher

    File URL: https://www.esr.ie/article/view/401/117
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Luc Everaert & Céline Allard, 2010. "Lifting Euro Area Growth; Priorities for Structural Reforms and Governance," IMF Staff Position Notes 10/19, International Monetary Fund.
    2. Luc Everaert & Céline Allard, 2010. "Lifting Euro Area Growth; Priorities for Structural Reforms and Governance," IMF Staff Position Notes 10/09, International Monetary Fund.
    3. Philip Du Caju & Theodora Kosma & Martina Lawless & Julian Messina & Tairi Rõõm, 2013. "Why firms avoid cutting wages: Survey evidence from European firms," Working Paper Research 251, National Bank of Belgium.
    4. Casey, Eddie, 2012. "Unit Labour Costs in Irish Manufacturing," Research Notes RN2012/2/1, Economic and Social Research Institute (ESRI).
    5. Bergin, Adele & Kelly, Elish & McGuinness, Seamus, 2012. "Explaining Changes in Earnings and Labour Costs During the Recession," Papers EC9, Economic and Social Research Institute (ESRI).
    6. Philip Du Caju & Theodora Kosma & Martina Lawless & Julián Messina & Tairi Rõõm, 2015. "Why Firms Avoid Cutting Wages," ILR Review, Cornell University, ILR School, vol. 68(4), pages 862-888, August.
    7. FitzGerald, John, 2013. "The Effect on Major National Accounting Aggregates of the Ending of Pharmaceutical Patents," Research Notes RN2013/2/1, Economic and Social Research Institute (ESRI).
    8. Zsolt Darvas, 2012. "Compositional effects on productivity, labour cost and export adjustments," Policy Contributions 730, Bruegel.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Niamh Hardiman & Spyros Blavoukos & Sebastian Dellepiane-Avellaneda & George Pagoulatos, 2016. "Austerity in the European periphery: the Irish experience," Working Papers 201604, Geary Institute, University College Dublin.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aedín Doris & Donal O’Neill & Olive Sweetman, 2015. "Wage flexibility and the great recession: the response of the Irish labour market," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-24, December.
    2. Luca Gambetti & Julián Messina, 2018. "Evolving Wage Cyclicality in Latin America," The World Bank Economic Review, World Bank, vol. 32(3), pages 709-726.
    3. Jean-Paul Fitoussi & Francesco Saraceno, 2013. "European economic governance: the Berlin–Washington Consensus," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 37(3), pages 479-496.
    4. repec:jes:wpaper:y:2011:v:3:p:579-591 is not listed on IDEAS
    5. Matthias Efing & Harald Hau & Patrick Kampkktter & Jean-Charles Rochet, 2018. "Bank Bonus Pay as a Risk Sharing Contract," Working Papers hal-01847442, HAL.
    6. Cristina Puiu, 2011. "Labour Mobility As An Adjustment Mechanism In The Euro Area," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 3(4), pages 579-591, December.
    7. Zsolt Darvas & Jean Pisani-Ferry, 2011. "Europe's growth emergency," Policy Contributions 623, Bruegel.
    8. International Monetary Fund, 2015. "Finland: Selected Issues," IMF Staff Country Reports 2015/312, International Monetary Fund.
    9. Ahrens, Steffen & Pirschel, Inske & Snower, Dennis J., 2014. "A theory of wage adjustment under loss aversion," Kiel Working Papers 1977, Kiel Institute for the World Economy (IfW Kiel).
    10. Anderson, Derek & Hunt, Benjamin & Snudden, Stephen, 2014. "Fiscal consolidation in the euro area: How much pain can structural reforms ease?," Journal of Policy Modeling, Elsevier, vol. 36(5), pages 785-799.
    11. Noélie Delahaie & Coralie Perez, 2018. "Ajustements de l'emploi et des salaires : quels compromis en temps de crise ? Une analyse quantitative et qualitative à partir de l'enquête REPONSE 2010-2011," Documents de travail du Centre d'Economie de la Sorbonne 18006, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    12. Eva Branten & Ana Lamo & Tairi Room, 2018. "Nominal wage rigidity in the EU countries before and after the Great Recession: evidence from the WDN surveys," Bank of Estonia Working Papers wp2018-03, Bank of Estonia, revised 15 Jun 2018.
    13. Andrea Bassanini, 2012. "Aggregate Earnings and Macroeconomic Shocks: the Role of Labour Market Policies and Institutions," Review of Economics and Institutions, Università di Perugia, vol. 3(3).
    14. repec:hal:wpspec:info:hdl:2441/53r60a8s3kup1vc9k2c8h4u2h is not listed on IDEAS
    15. Marotzke Petra & Anderton Robert & Bairrao Ana & Berson Clémence & Tóth Peter, 2020. "Asymmetric wage adjustment and employment in European firms," The B.E. Journal of Macroeconomics, De Gruyter, vol. 20(2), pages 1-25, June.
    16. repec:spo:wpecon:info:hdl:2441/53r60a8s3kup1vc9k2c8h4u2h is not listed on IDEAS
    17. Lilian N. Rolim & Carolina Troncoso Baltar & Gilberto Tadeu Lima, 2023. "Income distribution, productivity growth, and workers’ bargaining power in an agent-based macroeconomic model," Journal of Evolutionary Economics, Springer, vol. 33(2), pages 473-516, April.
    18. Noélie Delahaie & Coralie Perez, 2018. "Wages and employment adjustment in times of crisis in France: which concessions bargaining? A mixed-method approach based on the 2010-2011 REPONSE survey [Ajustements de l'emploi et des salaires : ," Post-Print halshs-01802272, HAL.
    19. David Howden, 2013. "Separating the Wheat from the Chaff: Icelandic and Irish Policy Responses to the Banking Crisis," Economic Affairs, Wiley Blackwell, vol. 33(3), pages 348-360, October.
    20. Poeschel, Friedrich, 2018. "Why do employers not pay less than advertised? Directed search and the Diamond paradox," MPRA Paper 87920, University Library of Munich, Germany.
    21. Berson Clémence, 2020. "Shocks and wage adjustments [Chocs économiques et ajustements salariaux]," Bulletin de la Banque de France, Banque de France, issue 231.
    22. Peter Toth & Katarina Valkova, 2015. "Wage Rigidities and Jobless Recovery in Slovakia: New Survey Evidence," Working and Discussion Papers OP 3/2015, Research Department, National Bank of Slovakia.
    23. Alexander V. Larin, 2014. "Downward Nominal Wage Rigidity: Unions’ Merit Or Firms’ Foresight?," HSE Working papers WP BRP 86/EC/2014, National Research University Higher School of Economics.

    More about this item

    Keywords

    wages; competitiveness; Ireland;
    All these keywords.

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eso:journl:v:46:y:2015:i:3:p:429-458. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Aedin Doris (email available below). General contact details of provider: https://www.esr.ie .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.