The level of wage growth is hitting Ireland's competitiveness, the Small Firms Association warned today.
In its Spring Economic Statement the SFA said the general outlook for the economy remained reasonably favourable, but said it was "seriously concerned" over wage increases.
It says wages rose on average by 5.4 per cent last year against productivity growth of just 2.6 per cent.
Small Firms Association
"The current level of wage drift is not sustainable and will further undermine employment prospects in the exposed sectors of the economy. Irish labour is now overpriced at 134 per cent of the EU average. There is no competitive reason for production industries to develop bases in Ireland," the statement said.
SFA director Pat Delaney said: "The changing economic environment brings Irelands competitive position into sharper focus and makes a compelling case for spending growth to be limited to revenue growth, wage moderation, major changes in the costs of providing local authority services such as water, waste, environmental and delivery of the long overdue benefits of the liberalised energy market."
Overall employment prospects were only "fair", the SFA said, predicting employment growth to be below 2 per cent for 2005. The manufacturing sector remains a major cause of concern with over 9,500 jobs lost in the past year.