Heading into 2003, the early indications for the jobs market do not look encouraging. Enterprise Ireland, the agency responsible for assisting indigenous industry, yesterday reported a 4,000 drop in employment in its client companies last year and warned of further losses this year.
Meanwhile Experian, the credit rating agency, has forecast a rise in liquidations this year - even though there was an 11 per cent drop to 379 last year - while a purchasing index from NCB stockbrokers shows a sharp weakening in manufacturing performance last month.
None of this should come as a surprise. It has been clear for some months now that the international economy was performing poorly and this was bound to affect performance here. Likewise, whether there is recovery this year will largely depend on what happens in the economies of our major trading partners.
That said, the latest news should put some domestic policy priorities sharply into focus. If the economy here is to continue to outperform the international average, then it is essential that it remains competitive in comparison with our main trading partners. There is now serious cause for concern that competitiveness is slipping, with the cost of doing business in Ireland increasing sharply, due both to direct factors - such as wage and insurance costs - and indirect factors relating to poor infrastructure and congestion.
This trend will not be easily reversed.
However the Government must start the process. It has promised, for example, to implement the recommendations of the Motor Insurance Advisory Board to help bring down insurance costs. This agenda must be pursued vigorously and policy measures must also aim to reduce the exorbitant cost of public liability insurance to business.
More generally, the Government must also act to break the general inflationary psychology now becoming embedded in the economy. Unfortunately, this goal will be hindered by the indirect tax increases announced on Budget day.
The Government - and the Competition Authority - must take an active role in tackling high cost areas of the service industry where restrictive practices still apply. Meanwhile, with or without a new national pay agreement, some way must be found to avoid a damaging upward spiral of wages and prices crippling the economy.
Competitiveness must be the watchword in all policy areas during 2003; otherwise the price will be paid in rising unemployment.