The economy enters 2006 with a fair wind behind it. Baring some unforeseen shock, economic activity will continue to be propelled by the twin engines of consumer spending and the construction sector. But competitiveness will once again be the main issue of concern. As with this year, general buoyancy will mask the decline in the capacity of the Irish economy to compete. Economic output may have grown by 5 per cent or more this year but the Republic remained well off the pace in terms of global competitiveness.
The annual competitiveness rankings published by the World Economic Forum placed Ireland 26th overall and 31st when viewed from the standpoint of technology. The overall figure represented an improvement from the 30th place achieved in 2004 but it is some way off the levels enjoyed during the height of what has become known as the Celtic Tiger. More significantly it is not the sort of position that a small open economy as dependent on external trade as the Republic's can comfortably occupy.
There is nothing particularly new in this and part of the problem is that while all and sundry pay lip service to the need to improve the economy's competitiveness, the word itself has been so overused as to render it almost meaningless. It is only when something like the Irish Ferries dispute comes along that the issue comes into focus.
Admittedly, the situation at Irish Ferries had its own peculiarities. But it did - among other things - highlight the fact that the cost of employing people here is out of kilter in the global marketplace. And it is inevitable that jobs will be lost here when they are not sheltered from competition. We may continue to levy some of the lowest taxes on work in the developed world, but that cannot compensate for the very high wage rates that have accrued over the last 10 years of economic growth. Whatever else it achieved (and much of it was negative), the Irish Ferries dispute underlined in the starkest terms the central importance of this issue.
There is, at least, a general consensus as to what should be done. But again, the message has been stated so often by so many different bodies that it has become part of the background noise in the wider debate about the economy.
The most recent iteration of that consensus was a National Economic and Social Council strategy document published in December. The NESC report is the commonly agreed position of the social partners as they enter the process of negotiating the seventh national partnership.
Its message that the high level of costs in Ireland relative to our trading partners must be addressed by measures that contain further increases and boost productivity, could have come as easily from the pages of the National Competitiveness Council annual review or the Economic and Social Research Institute (ESRI) medium term review, both of which were published in the closing stages of this year.
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Translating these sentiments into concrete actions is the over-riding economic challenge facing the Government and the social partners in the coming year. The first step in this process will be the attempt shortly to formulate the next partnership agreement.
The talks will take place against an economic backdrop that is benign to say the least. There is general agreement among commentators that the economy will grow at close to its sustainable trend rate of 5 per cent next year.
All of the forecasts carry health warnings most of which have been heard before. These include the dependence of the economy on construction; the risks associated with spiralling levels of personal debt and the potential impact of external economic shocks. Declining productivity and its impact on competitiveness also features highly on such lists.
A new caveat was added by the ESRI in its recent medium term review. It identified our growing sense of economic invulnerability as a potential Achilles' heel. After 10 years of strong economic growth, it appears that many of us find it hard to believe that things can be any other way. The "apparent insouciance" - as the ESRI described it - that has developed is driving borrowing levels that on a per capita basis, will soon be among the highest in the developed world.
The fear is that a similar complacency will invest - if it has not done so already - the debate about competitiveness. The other threats to economic growth, such as a collapse in house prices or a global economic reversal, are either clearly defined or beyond out control. Hence we can either take a calculated risk that issues such as the property bubble will resolve themselves via a soft landing or else - as with external shocks - safely ignore them on the basis that there is nothing we can realistically do to make a difference.
However, we are not afforded either luxury when it comes to the Republic's competitiveness. Equally there is no straightforward solution. The clock cannot be wound back. Wages cannot come down, nor should they. The consensus, once again, is that the economy needs to focus on areas in which it remains competitive. These are sectors which require above average levels of expertise and education and in which Ireland can excel.
In tandem with this is the need to enhance the skills set within the existing workforce, primarily through continuing education and retraining.
If the next partnership agreement differs in any real measure from the predecessors which have served us well, it should be because it is the first to respond to the negative realities of falling competitiveness.
Agreement by the social partners to adopt the measures necessary to arrest this decline should be at the heart of any new deal.