ONE OF the most talked-about lines in finance minister Brian Lenihan's budget speech was his view that "the worst is over" and "this country is turning the corner".
But he also warned that "unless we regain our competitive edge, we will be unable to return to the tried-and-tested strategy of export-led growth that ushered in the boom in the early 1990s".
While there has been much deliberation over Lenihan's view that "the worst is over", there is almost universal agreement with his warning that Ireland needs to return to competitiveness.
But how far do wage and energy costs have to drop? How low will property and rental costs fall before the recession bottoms out?
Has the jobs market hit rock-bottom or are further job losses forecast for 2010? How low does Ireland Inc have to go before we are competitive again?
Watch this space. The government has already cut public-sector wages and private-sector workers are taking similar cuts. Now the debate over a possible cut to the €8.65 minimum wage is brewing.
In his budget speech, Lenihan said: "Membership of monetary union also means devaluation is not an option. Therefore the adjustment process must be made by way of reductions in wages, prices, profits and rents."
Patricia Callan of the Small Firms Association (SFA) recommended to the Labour Court earlier this year that the minimum wage should be cut by €1 to €7.65.
She claims that the current rate is a major cause of youth unemployment and it is "symptomatic of what Ireland has become – a high-cost, uncompetitive economy."
According to David Begg, Irish Congress of Trade Unions (Ictu) general secretary, "the logic of the government and employer position – driving down wages across the economy – would suggest that at some stage there will be an attempt to cut the minimum wage.
"The idea that the minimum wage acts as some form of impediment or obstruction to competitiveness does not stand up either, as it applies to just 4.2% of the workforce, far too small a percentage to have any impact in that sense."
Begg argues that the lowest-paid workers save less and spend more so virtually all of their money is going back into the economy and a cut will mean the loss of even more money to the economy.
Interestingly, respected Nobel economics prize-winner Paul Krugman wrote recently: "The only way a general cut in wages can increase employment is if it leads people to buy more across the board."
Despite receiving submissions from the unions and the business sector, the Labour Court has yet to make a recommendation on any alteration of the minimum wage.
High energy costs are a major handicap for Ireland Inc and unless they fall it will be impossible to restore competitiveness.
The National Competitiveness Council (NCC) stated in October that "a reliable and competitively priced supply of energy is vital to enable Irish exporters compete successfully in global markets. While recent reductions in gas and electricity prices are welcome, further immediate action is required to improve Ireland's ranking relative to other countries."
The council remarked that electricity prices for business in Ireland are significantly out of line with other EU countries.
Ireland has the fourth highest industrial electricity price of the 27 EU countries and is a staggering 35.5% more expensive than the Eurozone average.
Recently, Fine Gael leader Enda Kenny called for the break-up of the ESB as a means towards bringing down energy costs and the issue is set to be a feature on the 2010 political agenda.
Independent commentator Derek Brawn remarked: "We need to reduce our energy costs by 25% to bring them in line with EU averages."
Patricia Callan of the SFA, said: "We are trying to match our competitiveness against our international trading partners and Eurostat surveys show that we have the second-highest energy costs in Europe so the very least we need is to have them reduced to the European average."
Irish retailers claim that the high cost of rents is one of the most debilitating factors in the current crisis and rents need to drop significantly to save retailers from the brink.
This harsh reality was expressed first in the Sunday Tribune by John Corcoran, owner of Korky's shoe shop on Dublin's Grafton Street. As it is the fifth highest rent of any street in the world, his annual rent for his 850sq ft shop is a staggering €445,000.
"It is a very modest shop in a very small country. We are crippled by rent. The rents are double what is sustainable for us," said Corcoran.
Daft.ie economist Ronan Lyons told the Sunday Tribune: "I am not an expert on the commercial side as we are more focused on residential but the drive downwards in rents is part of the legacy of over-construction during the boom years.
"I don't see why commercial rents are not falling as much as residential rents. In the first six months of 2010, residential rents will be about a third lower than they were two years previously. It may take longer for commercial rents to fall but the same thing will happen.
"They have only just abolished the upward-only rent review so that should start to have an effect. Commercial rents will drop in 2010 and 2011 and it depends on the level of over construction in a given area so it may take longer in certain parts of the country. You are going to see Dublin and other cities bottom out first. As there is more movement there they are able to find the floor quicker."
The property bubble has burst, so should we be building any more new houses when we have a clear over-supply?
Last week, Tom Parlon of the Construction Industry Federation, refuted Lenihan's claim that "the worst is over" and argued that the cut of almost €1bn to the government's capital-spending budget for next year will only compound the job losses in the sector.
While it is difficult to argue with Parlon's claim that the construction sector is far from turning a corner, some commentators contend that we need to stop building as a means towards recovery.
Derek Brawn, commentator and author of Ireland's House Party: What the estate agents don't want you to know, said: "From January to October we built 22,354 new homes, or roughly 500 a week. Davy Stockbrokers estimate we are selling 150 new homes per week, or 7,500 this year, so we are still adding to the stockpile of unsold new homes."
He estimates that after building 25,000 new homes this year, a further 14,500 will be built next year even though he believes there are 160,000 unsold homes in the country.
"We need a moratorium on all building work, just to get rid of the backlog," said Brawn. "Last year we built 51,724 homes, this year we will halve that and do the same again in 2010. Therefore the big drop in construction employment that we have witnessed this year will be replicated again next year."
The exodus of southern shoppers to the North has been a significant indicator that the cost of goods and services exploded out of control during the boom.
Trips to the North to buy alcohol have compounded the fate of retailers south of the border. The government's lowering of excise duties on alcohol in the budget has attempted to halt that exodus.
Paddy Malone, president of the Dundalk Chamber of Commerce, believes that the price of alcohol has to fall further in the south and the budget decrease did not go far enough. So how far does the overall consumer price index need to fall?
Dermot Jewell, of the Consumer Association of Ireland, commented: "It is difficult to answer the question on how low prices of consumer goods and services will drop as the market will decide and this is determined by the consumer.
"In the current situation, there seems to be no bottom in the consumers' minds as affordability is the only issue on their minds.
"Whereas reason prevails in most areas, for example the cost of food and clothing is coming down and that means a lot to consumers, there are increases in other areas. There have been increases in areas such as the insurance market and other services and as long as that inequality exists, the consumer will continue to look for lower prices.
"The services sector needs to realise that they need to play their part in bring the economy back to a steady flow. It is so haphazard at the moment that it is frightening.
"I do believe there is still some room to drop. If you look at price comparisons between sterling and euro you might expect a mark-up of 10%-13% but there are mark ups of 20%-30%. Until they come down, there will be a demand for more reductions in prices from consumers, especially as those prices already include a profit margin."
Fine Gael's Richard Bruton labelled Brian Lenihan's budget "a jobless and joyless budget" but it did contain initiatives such as the €20m activation fund for business start-ups and €36m allocated to an employers' job incentive scheme.
There are also indications that, even though areas such as wages and rent have still some way to fall, the jobs market is starting to bottom out.
Derek Brawn does not have such a positive outlook and points to the fact that it took eight years of Celtic Tiger growth to get Irish unemployment down from 15.7% in January 1993 to 3.7% (or full-employment) in January 2001.
He believes that mass emigration of young people will bring down the unemployment rate in Ireland.
"Estimates for peak unemployment have dropped since the pace of emigration has exploded, but this is a double-edged sword," he said. "Fewer people means there are fewer consumers, fewer renters and fewer homebuyers so we will have a massive surplus, which Nama will not be able to shift."
So even if mass emigration takes the bad look off the unemployment figures, it does have other negative economic results, not to mention the dire social consequences.
Lenihan's budget forecast a return to positive growth with "six to nine months". History has unfortunately shown that job-creation does not immediately follow the green shoots of recovery.