Author: Seamus Coffey

Eurostat have published their first estimates of hourly labour costs in 2012.  Ireland had the tenth highest hourly labour costs in the EU27 (eighth in the EA17), though is fifth highest for ‘wage and salaries’ (third in the EA17) due to lower than average ‘other costs’, which is primarily employers’ social contributions.

In 2008, Irish labour costs were 112.5% of the EA17 average and in 2012 this had fallen to 104.0%.  Over the same five years, hourly labour costs in Ireland are estimated to have been largely unchanged (+0.8%) compared to rise of nearly 9% in the EA17.  Only Greece in the EA17 recorded a decline (-11%) over the five years and all of that occurred in the last two years.

For Ireland, non-wage costs are estimated to be 14% of hourly labour costs, compared to an EA17 average of 26%.  Only Luxembourg (13%) and Malta (8%) are lower.

Most of the major retailers have introduced customer restrictions on the purchase of infant formula.  See this BBC report. The restrictions also apply in their Irish divisions.

Although the last month mightn’t testify to it, Ireland has an advantage when it comes to a key factor in the production of high-quality powdered cow’s milk – a generally mild, moist climate conducive to grass growth.

When thinking about the future one question that will always perplex is “where will the growth come from?”.  The removal of EU quota restrictions on milk production in 2015 is one potential source but 15,000 additional jobs may be overstating it.

Perhaps the Irish Dairy Board, which today announced €2 billion of sales for 2012,  would consider adding a new product to its Kerrygold range.

The Q1 2013 Funding of the Exchequer Balance note published by the NTMA on Friday contains the following:

31/03/13 Balances of €33,049m (31/12/12: €23,997m) were held in Departmental Funds & Other Accounts, including the Exchequer A/C.

These balances are now equal to 20% of GDP.  Of the total, €3.9 billion is accounted for by notes from the Housing Finance Agency which still leaves €29 billion in the Exchequer and Other Accounts (though presumably the HFA notes could be sold).

The Exchequer Borrowing Requirement (EBR) for the remainder of 2013 could be around €10 billion (depending on the outcome of the IBRC liquidation) and there is bond of just over €4.5 billion maturing in a little over a week’s time.  The full-year EBR for 2014 is projected to be around €8 billion with a €7.5 billion bond maturing in the middle of January.  These total €30 billion and could be met from existing resources but it is expected that additional funding will be sought.

There is still around €10 billion of funds to be drawn from the €67.5 billion total available under the EU/IMF programme as €57.3 billion had been forwarded to Ireland by the end of March. 

The NTMA has announced an intention to raise €10 billion through the issue of new government bonds in 2013.  Three-quarters of this has already been achieved with €2.5 billion raised from a 2017 bond in January and €5 billion from a 2023 bond in March.

Since 2008 contributions to the national savings schemes have increased significantly.  At the end of 2007, these schemes had attracted a total of €4.5 billion.  In 2012, around €2.2 billion was placed with the schemes and the total had increased to €14.5 billion by the end of the year.  These contributions have continued in 2013 with the NTMA Funding note showing that a further €0.6 billion was added in the first quarter.

The Treasury Bill programme was resumed last July and there is now €1.5 billion in issue across three €500 million tranches (maturing April 22, May 20 & June 24) with monthly auctions likely to continue.

Just over €1 billion was paid into the Exchequer Account in January as a result of the sale of BOI contingent capital notes.  A further €1.3 billion will be received when the sale of Irish Life is completed.

This means that cash balances could be maintained at around €30 billion in December 2013 if the EU/IMF draw downs, bond/bill issues, and savings contributions set out above are made which would roughly cover twice over the €15.5 billion gross financing need for 2014.  Whatever significant difficulties the economy faces, the government running out of cash in the near term is not one of them.