45126-Invest. Qual-No111

Investment in QualityThe NAPS review framework document commits the Governmentto ensuring that the low paid have access to higher incomes and theopportunity to progress to better-paid employment (GoodbodyEconomic Consultants, 2001). The Council welcomes the recentsecond rise in the NMW and the associated sub-minimum rates asagreed under the PPF. The Council recommends that over time theNMW should be uprated in a manner that encourages people toenter and remain in the labour force and is consistent with Ireland’smove to long-term prosperity and a more equal and sociallyinclusive society.The percentage of the minimum wage that is exempt from taxdepends on both the level of the minimum wage and the level of taxcredits. The 2003 Budget ensured that 90 per cent of the annualisedminimum wage continued to be exempt from tax. This is a welcomedevelopment. The Council recommends that tax credits should, at aminimum, be indexed to price inflation and should—as soon ascircumstance permit—lift those on the minimum wage out of thetax net.6.4.3 Developments in ProductivityA substantial part of economic growth cannot be explained byincreased utilisation of factor inputs, primarily capital and labour.This part of growth represents improvements in the efficiency ofproduction, namely productivity. Productivity is commonly definedas a ratio of a volume measure of output to a volume measure ofinput use.The Council has recognised the importance of productivity as ameasure of economic sustainability by its inclusion of labourproductivity as a headline indicator in its recent report on nationalprogress indicators (NESC, 2002a). In that report, the Council choseto measure labour productivity by annual growth rate of GNP perworker and absolute levels by GDP and GNP at constant marketprices per person at work.Over the past decade the growth in labour productivity in Irelandfluctuated considerably from year to year but has averaged close to260