Ireland now ranks 16th out of 24 EU countries in the overall cost of employment with a figure of €38,541, up 4.6pc on the previous year, but has been warned to be aware of the threat from emerging economies.
The survey by Deloitte shows there is a clear grouping of new member states with cheaper labour costs.
Poland has the lowest cost of employment with a figure of €10,021. Seven countries, including Slovakia, Hungary and Latvia, have a cost of employment less than €13,000. In contrast, France tops the table with an average figure of €52,567, followed closely by Germany with €51,593.
When assessing the impact of Budget 2008 on the overall cost of employment in Ireland, Deloitte says it should be noted that the budget in December did not add to the total cost in Ireland.
The survey also reveals Ireland continues to have the lowest level of tax and social security as a percentage of total cost of employment at 15.92pc. Budget 2008 further reduced this by almost 1pc.
“The Government tax policy continues to support business by maintaining a low tax environment on employment and thus trying to ensure tax continues not to be a negative factor for business investment in Ireland,” Deloitte tax partner Brian McDonald explained.
McDonald said it is interesting to note that Cyprus, which has the second lowest level, had a percentage of 17.87pc in 2006 but this has increased to 19.60pc in 2007.
However he warned, “It is clear the Baltic States and Eastern European countries continue to be a challenge to Ireland’s continued success.
“As those economies develop and improve their infrastructure, it may prove difficult to maintain Ireland’s success in attracting international investment. All businesses are becoming more focused on labour and transport costs.
“For manufacturing concerns it may also make commercial sense to locate closer to the European markets,” McDonald added.
By John Kennedy
