"Irish prices among highest in EU"

[bugler]

Article in the IT today: [broken link removed]

Irish consumers are still paying almost 20 per cent more than the European average for goods and services, despite a drop in inflation, according to the latest figures from Central Statistics Office (CSO).

Consumer prices fell in 2010 but remained high by EU standards. Ireland was the fifth most expensive EU state in 2010, after Denmark, Finland, Luxembourg and Sweden, with prices 18 per cent above the EU average.

That is strange company for Ireland to be keeping on any table. Is it odd for a country with 14%+ unemployment to be so expensive? Or is it a case that there is a "lag" effect and prices will continue to fall?

What is the cause of goods and services being so expensive here? Wage demands, fuelled by a still too high cost of shelter?

The full CSO report can be found here: [broken link removed]

 

[Purple]

Costs are high so wages are high.
Those costs are; wages, rates and utilities etc.

 

[DerKaiser]

High costs and lack of competitiveness will continue as long as those on higher than average salaries (relative to other countries) continue to argue that these salaries are appropriate due to the higher costs. The situation suits them.

There are plenty of cynical people who recognise that if general costs are 20% higher than OECD averages they will have less problem justifying their wage being 50% above average. Others again are naive and don't actually understand such wages are the only real cause of our living costs.

 

[Ryandd]

It comes as no surprise that we have been shown as the 5th highest cost of living country, and I read an article not so long ago to say that under contract bankers will have their bonus payment resumed, I understood the government done away with this! Cost of living utilities fuel extra charges being introduced ie water, property tax, its never ending and for so many unemployed I hear media discuss how we have the highest social welfare payments, but realistically 180 pw in this country won't get you very far. So anyone lucky enough to hold their jobs I understand you suffering increase in tax and reduction in credits and having to endure uncertainty every day. I was there not so long ago until I was made redundant and it is the worst feeling for me. Cost of living is extreamly high just covering bills and mortgages.

 

[browtal]

Until we line up with other countries and have comparative salaries we are going to experience job losses through our lack of competition.
Does our Taoiseach still earn more than the US President.
It is time we got out on the streets and made our feelings known. The current round of offers of retirement pay offers are very disturbing. These conditions were laid down in different times, as percieved by the politicians. They have reduced wages last year, we need another round of cuts to bring the public sector in line with the Private sector. I suppose many of the public sector will be invited back, next year, when there is no one to fill their positions.
Browtal

 

[Sunny]

Out of curioristy, how many people here are willing to admit they are overpaid compared to people doing the same job in other Countries? Why is all the attention on public sector? I work in the private sector by the way. Willing to bet that the vast majority of AAM contributors are overpaid compared to their European colleagues so we should stop the sanctimonious rubbish of pretending it is a public sector problem.

 

[serotoninsid]

Out of curioristy, how many people here are willing to admit they are overpaid compared to people doing the same job in other Countries? Why is all the attention on public sector? I work in the private sector by the way. Willing to bet that the vast majority of AAM contributors are overpaid compared to their European colleagues so we should stop the sanctimonious rubbish of pretending it is a public sector problem.

That's not an argument NOT to tackle this. If public sector rates are higher than the euro equivalent, then nobody can justify this issue not being tackled.

I'm in the private sector - and I definitely am not above the euro average. However, I appreciate that there are others who are - but nobody could possibly say that this is to the same extent as the public sector. In general, the private sector reacts to market forces in every aspect of business (including pay rates). The public sector does not - and we all know it's the elephant in the room - that neither the previous administration or the present one are prepared to tackle.

 

[PaddyW]

I imagine I might be above the European average, but I work 55-59 hour weeks so this may balance it out.

 

[Chris]

Out of curioristy, how many people here are willing to admit they are overpaid compared to people doing the same job in other Countries? Why is all the attention on public sector? I work in the private sector by the way. Willing to bet that the vast majority of AAM contributors are overpaid compared to their European colleagues so we should stop the sanctimonious rubbish of pretending it is a public sector problem.

Very good point Sunny, wages in Ireland in both the public and private sector are too high in many areas. But there are certain areas where I think wages are quite competitive. I work in the IT industry and have been since '98, which means I have seen the huge effects of volatility of salaries and availability of work twice in 13 years. I know for certain that I would earn more if I moved to Dublin or London, and on average most IT work in Germany, Austria and Switzerland would be higher paid (not considering taxation here).
The very accessible competition from India, China, and now Indonesia and the Philippines has also had an effect on IT wage rates in Europe and the US. Basically I am in competition with people around the world which means I have to constantly improve my work and provide better quality, so that I don't justify my job going to someone lower paid in the far east.

I imagine I might be above the European average, but I work 55-59 hour weeks so this may balance it out.

Just out of interest, do your European counterparts put in less hours? You make a good point though, higher income is only warranted by higher productivity.

 

[Firefly]

I work in the IT industry and have been since '98, which means I have seen the huge effects of volatility of salaries and availability of work twice in 13 years. I know for certain that I would earn more if I moved to Dublin or London, and on average most IT work in Germany, Austria and Switzerland would be higher paid (not considering taxation here).

As someone who also works in IT (for a year longer that you newbie!) I can confirm that contract rates in the UK in my line of work are a little bit higher than what I earn here. I don't have the data for the rest of Europe but from conversations with other contractors over the years the rates in the countries you mention plus The Netherlands would be higher IMO.

 

[onq]

We've discussed this point recently in relation to Architects and found general agreement that you can only so low based on your personal income needs.
The assumption that market forces and price are the only factors involved in a cost is incorrect - value added factors are important and may outweigh cost.
In particular accessibility and quality of service seems to be holding up prices in countries where the cost of living - and therefore prices generally - are higher.

On of the professional costs, third level education, seems to have gone from a vocation to an industry and now we see monetarist arguments against adequate remuneration for those who have invested time and money in achieving their qualifications and experience.

It seems logical that if professionals like me were to take the cost-cutting issue to heart we'd be sending our kids to Indian universities to study instead of paying the fees that are likely to be introduced here or the extortionate ones that are already introduced in Britain.

We've already seen anecdotal TV Reports that India solicitors offer legal services into Britain at a fraction of the cost of British lawyers.

And the benefit of being thought in places like India, Russia, China or Brazil is that these are emerging economies with huge potential for the growth of new enterprises and new middle income earners in the next ten to twenty years, both sectors which seek professional services.

ONQ.

 

[csirl]

Annual salary comparisons are irrelevent red herrings. Irish workers work longer hours and have less holidays that the majority of EU workers. So you would expect their annual salaries to be higher. Employee cost per hour of productive work i.e. including costs associated with holidays/benefits, would be a fairer comparison - I'm sure that we're not that much higher than the EU average when compared this way.

 

[Chris]

We've discussed this point recently in relation to Architects and found general agreement that you can only so low based on your personal income needs.
The assumption that market forces and price are the only factors involved in a cost is incorrect - value added factors are important and may outweigh cost.

You may personally only accept offers above a certain amount for whatever reasons, but that does not mean that those buying your services would or should pay an amount above that. Prices are purely the result of supply and demand, nothing else. Prices may differ for certain more or less identical things, but then the subjective valuation of the demand side decides what has higher value.
You are correct though that costs are not directly set by market forces of supply and demand for the actual product. But if you cannot bring costs down to offer a price that is closer to the market equilibrium price, then you are unfortunately out of business.

In particular accessibility and quality of service seems to be holding up prices in countries where the cost of living - and therefore prices generally - are higher.

This is in many ways correct. The more that laws and regulations dictate who and how many people can practice certain professions, the higher the cost of those services and products are going to be. I work in IT, there is absolutely no rule or regulation that says you have to have a certain qualification to be a programmer. I know many people that are extremely good and successful programmers who never set foot inside a university. There is no reason that this cannot be applied to other professions, including your own.

On of the professional costs, third level education, seems to have gone from a vocation to an industry and now we see monetarist arguments against adequate remuneration for those who have invested time and money in achieving their qualifications and experience.

It seems logical that if professionals like me were to take the cost-cutting issue to heart we'd be sending our kids to Indian universities to study instead of paying the fees that are likely to be introduced here or the extortionate ones that are already introduced in Britain.

We've already seen anecdotal TV Reports that India solicitors offer legal services into Britain at a fraction of the cost of British lawyers.

And the benefit of being thought in places like India, Russia, China or Brazil is that these are emerging economies with huge potential for the growth of new enterprises and new middle income earners in the next ten to twenty years, both sectors which seek professional services.

Some very good points in there. My daughter is not even two yet, but if she were of university going age now I would encourage her to go to university in the far east. Global competition is a good thing, as it drives prices down, freeing up capital and resources to do other things.

 

[Chris]

Annual salary comparisons are irrelevent red herrings. Irish workers work longer hours and have less holidays that the majority of EU workers. So you would expect their annual salaries to be higher. Employee cost per hour of productive work i.e. including costs associated with holidays/benefits, would be a fairer comparison - I'm sure that we're not that much higher than the EU average when compared this way.

I agree that hourly rates are a more accurate measure, but I do not believe that people in Ireland work longer hours in general. Certainly when compared to France's 35 hour work week, but the normal working day in Germany and Austria for example is 8 to 5, not 9 to 5, and in most professions overtime is just something you do.

 

[PaddyW]

Just out of interest, do your European counterparts put in less hours? You make a good point though, higher income is only warranted by higher productivity.

Hi Chris, yes they would do a 37.5 hour week as far as I'm aware.

 

[Firefly]

On of the professional costs, third level education, seems to have gone from a vocation to an industry and now we see monetarist arguments against adequate remuneration for those who have invested time and money in achieving their qualifications and experience.
ONQ.

Hi ONQ,
As has been pointed out before it all comes down to supply & demand. If the demand isn't there or is very low then the price will fall. Some can operate at the lower price, others can't and will either close or seek other work. Professional institutes are pretty good at restricting the supply in the first place so that even when demand is low prices can still be high. GPs would be a good example here. I suspect that's what's behind the recent moves by your own governing body the RIAI to restrict the use of the term "Architect". I doubt it is to protect the consumer rather than to limit the supply in the first place whereby those "architects" can command a higher fee.

 

[onq]

The RIAI are not my governing body Firefly - following my impending Registration application but not yet.
Many of us who weren't Members of the Institute know the restriction on use of the title position that the BCA 2007 brought in.
If you want to discover more on this issue read my contributions to the debates over on http://www.archiseek.com - I post as ONQ other there also.

ONQ.

 

[onq]

As for the market, it does not all come down to supply and demand.
If that were the case all the people in one jurisdiction would be driving Ladas or suchlike.

The truth is far more complex.
Different people supply different goods at different prices.
There is not just one market for even one good or service, but several.

And sometimes these differences are perceived and not actual and prices can go higher!
That's good marketing and product differentiation - think of the Müller yoghurt ads with Joanna Lumley.

Most business customers understand that others have to live and to make enough today to continue in business.
And most layperson consumers aren't so bloody minded as to expect people to beggar themselves.
Their own children may be seeking employment in such businesses so there is a balance struck.
Thinking about economics in some idealized impersonal way is where monetarists fail.

In terms of the professions, apart from familial issues, most are mobile and their professional competences are transferable.
Sometimes prices don't even fall to near to the break even level - its easier to supply a different product or service or relocate.
The aftermath of driving professionals to relocate or to supply other products is that when the market recovers there are shortages.
And this sends the cost of professional services skyward again - so there is a benefit in not pile-driving professional fees through the floor.

The same thing occurs in a recovering retail market, where accumulated profits can help weather the lean times, but then sales prices rise with the market to recoup losses.
This is part of the drivers of rapidly rising prices that can follow a recessionary period - retailers and the like trying to claw back their missing profits from the lean years.

ONQ.

 

[Firefly]

The RIAI are not my governing body Firefly - following my impending Registration application but not yet.
Many of us who weren't Members of the Institute know the restriction on use of the title position that the BCA 2007 brought in.
If you want to discover more on this issue read my contributions to the debates over on http://www.archiseek.com - I post as ONQ other there also.

ONQ.

Hi ONQ,
I know you have raised issues in the past regarding the term "Architect" and I didn't intend to bring any attention to the use of this by qualified and experienced architects like your goodself. My point is that the reason I suspect that the RIAI are bringing this in at all is to restrict the supply of what it deems as "architects" to protect their pay. It was just an example like so many others such as GPs, accountants, solicitors...even taxi drivers want the number of licenses reduced...all to reduce competition and keep/raise prices. Of course the official lines from all these bodies is that quality for the customer can be assured, but would they and at what cost?

 

[Firefly]

As for the market, it does not all come down to supply and demand.
If that were the case all the people in one jurisdiction would be driving Ladas or suchlike.

The truth is far more complex.
Different people supply different goods at different prices.
There is not just one market for even one good or service, but several.

I totally agree. The fact though, in the case of architects (as we are discussing this now) at the moment, is that the majority of work out there (and I could be wrong) is for relatively minor projects such as a house extension. As most architects could provide this service and there's little other work, then the consumer can expect to get a good deal by pricing around. I'm sure there are some fantastic architectural projects out there at the moment, perhaps not in Ireland but abroad where architects can demand huge fees. Again though, you would expect there to be fierce competition where the best architect for the best price gets the job. If the best architect comes in too high then they won't get the work.

And sometimes these differences are perceived and not actual and prices can go higher!
That's good marketing and product differentiation - think of the Müller yoghurt ads with Joanna Lumley.

Absolutely agree. Marketing is a phenominal tool. All you have to do is look at Apple. The iPhone, the iPad, the iPod all sell for a premium over other equally good rivals. The thing is though, Apple can still only charge so much. If the iPad was 2,000 euro for example they would still sell some but they would lose money due to reduced sales. To further complicate this, Apple could actually drop the price of the iPad by a lot and sell perhaps 5 times as many units. This would probably increase profits now, but they would lose their core customer who wants something relatively exclusive. The same would apply to Rolex....they could I'm sure knock a third off their watches and make a fortune this year. The problem is that all those who were happy to buy into the exclusivity of having a Rolex next year and the years after will start buying something else.

Most business customers understand that others have to live and to make enough today to continue in business.
And most layperson consumers aren't so bloody minded as to expect people to beggar themselves.
Their own children may be seeking employment in such businesses so there is a balance struck.
Thinking about economics in some idealized impersonal way is where monetarists fail.

I agree with this. No-one expects something for nothing. However, if I can buy the same product somewhere else for cheaper then I would be mad not to at least consider it. Again, it's back to the best product/service for the best price (or what I can afford).

In terms of the professions, apart from familial issues, most are mobile and their professional competences are transferable.
Sometimes prices don't even fall to near to the break even level - its easier to supply a different product or service or relocate.
The aftermath of driving professionals to relocate or to supply other products is that when the market recovers there are shortages.
And this sends the cost of professional services skyward again - so there is a benefit in not pile-driving professional fees through the floor.

This is the nature of any business. In my own area, I have worked with various different programming languages / operating systems / database vendors over the years based on the demand from my clients...it's ever changing. If IT went down the tubes tomorrow I would happily re-train and do something else (sometimes I wish it did!).

If and when prices go skyward again as you mention, this will have the effect of attracting more entrants...all you have to do it look at the changes in CAO points as students chase what they perceive to be where the jobs will be. It's all very natural. I appreciate the time and effort put into something like architecture, but unless the work is out there your options are grim (for now). It's a call each and every architect needs to make - do they ride it out or do something else. The answer will vary depending on personal circumstances (age, health, wealth etc). However, back to my earlier point, by defining the term "architect" the RIAI will end up protecting rates of pay to what they deem to be "architects" as they will now be branding them as a higher quality product. The increase in rates will depend on what higher quality the public will put on this

Phew!


The same thing occurs in a recovering retail market, where accumulated profits can help weather the lean times, but then sales prices rise with the market to recoup losses.
This is part of the drivers of rapidly rising prices that can follow a recessionary period - retailers and the like trying to claw back their missing profits from the lean years.

ONQ.[/QUOTE]