If you are running a business you cannot be oblivious to the fact that many other people are competing with you and nudging your sales away from you. The correct response is to continue to strive to reduce costs, and improve quality and productivity. This means that you add as much value as you can to your raw materials before you sell them and keep your costs down. Your employees are your greatest assets.

The well-being of everyone in this State depends largely on what we sell overseas. The prices we can charge for these goods are limited by what we can get on an open market. Anything that adds to the cost of doing business in Ireland makes it more difficult for us to trade successfully.

The recent report from the National Competitiveness Council puts Ireland (along with Finland) as the most expensive country in the euro zone. We welcome the Competitiveness Council's statement that driving down the cost of doing business in Ireland requires not just a pro-competitiveness budgetary policy but also more domestic competition. Ireland ranks 13th out of 16 countries in terms of the intensity of domestic competition.

Irish businesses have come through rough weather. The level of job losses in 2002 was at its highest for almost 20 years. Jobs were lost where they were most critically needed - in those sectors at the cutting edge of trade. The jobs that were created, however, were largely in the public sector. This is not logical.

Following the considerable cost of benchmarking it would be suicidal for private sector unions to contemplate seeking to restore their relative position with public servants.

In the negotiations for the next phase of social partnership, it will be essential that we do nothing that further weakens our already worsening competitive position with our trading partners. We have slipped badly.

Thankfully inflation has reduced substantially but it needs to reduce still further to the EU average.

We all want the best public services we can get. This will begin to happen when public service management behaves with the same sort of mindset as any business in the private sector.

I work with public servants from across the European Union and beyond. I have no hesitation in saying that the quality of personnel in the Irish service ranks amongst the very highest. The difficulty lies in staffing levels and the management and delivery systems within which the majority still work.

There is a cruel sense in which the private sector ultimately sorts itself out. If it has to trim its sails to meet the needs of the marketplace it is inevitable that jobs are lost and incomes fall.

All of this suggests that we need to build on what progress has been made and take real advantage of the Government decision to decentralise. This will provide an excellent opportunity to radically restructure public services.

New management, new systems, new reporting arrangements and new reward mechanisms can be put in place if there is the will to do it.

We need change in the public service that goes much deeper than the sort of things that have arisen in the benchmarking debate. There should be a free flow of personnel between the public and the private sectors. Government Departments should have boards of directors. The secretary general might well be recruited from outside the public service.

There have been some welcome changes. Public servants are more visible than several decades ago. But because responsibility is vested in the Minister, the system is more cumbersome than that of any business which could hope to survive commercial life.

I can think of no other business where it is the norm for the majority of personnel to join straight after school or college and then spend their entire working lives with the same employer. Without turnover of personnel, organisations wither and die. Energy becomes directed at maintaining the status quo and not on importing best practices. Budgeting becomes a matter of just increasing last year's allocation without radical reappraisal.

Irish business is not one simple heterogeneous family. Today, Irish businesses are so vastly different from each other, with such a range of concerns, that it comes close to making no sense to treat their pay structures in the simple "same for all" models that we used in the past. There are some sectors and enterprises where almost any increase in costs will put them out of business.

There are others for whom the primary concern is transport. For others it is that Ireland, almost uniquely in Europe, is having political difficulty implementing a coherent waste management strategy. I know of companies being pushed over the edge by insurance costs.

All this is a far cry from the experience in the public sector where there have been vast increases in payroll costs in recent years for no appreciable benefit to the consumer. This can only happen because, with most public services, the consumer pays but has no choice.

We all have an interest in seeing Ireland trade successfully. It is time we came together around policies and practices that allow us do that. The coming report of the Enterprise Strategy Group will be a welcome contribution in this connection. A healthy and thriving productive sector is in the interests of all our citizens.

Turlough O'Sullivan is director general of IBEC