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Wages and Ireland’s International Competitiveness

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  • 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
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    References listed on IDEAS

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    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.

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    Keywords

    wages; competitiveness; Ireland;
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