This publication is categorised as a CSO Frontier Series Output. Particular care must be taken when interpreting the statistics in this release as it may use new methods which are under development and/or data sources which may be incomplete, for example, new administrative data sources.
Labour productivity for the Domestic sector (€53.7 per hour) fell by 0.1% in Q1 2023 compared to Q4 2022.
Labour productivity for the Foreign sector (€428.3 per hour) fell by 8.2%, while Total Economy labour productivity (€105.8 per hour) decreased by 3%.
There were significant reductions in labour productivity across several sectors in Q1 2023, particularly for the Manufacturing and Administrative & Support Services sectors.
Multifactor productivity for the Domestic sector grew by 1.5%, while the Foreign sector fell by 2.7%.
The level of capital services in the Domestic sector declined by 2.3% in Q1 2023 and Foreign capital services were also down by 0.8%.
Labour productivity is a key indicator for the Irish economy as it is the main measure of the efficiency of the labour force. Labour productivity is measured as output per hour worked, where output is measured as Gross Value Added (GVA). Changes in labour productivity for a sector can also be explained by factors other than changes in GVA and hours worked (see Figure 1.2), such as the level of capital and multifactor productivity (MFP) growth (see Figure 1.5).
| Timeperiod | Domestic Sector | Foreign Sector | Total Economy |
|---|---|---|---|
| 2019 - Q1 | 50.3 | 308.9 | 79.7 |
| 2019 - Q2 | 50.6 | 331.2 | 83.7 |
| 2019 - Q3 | 51.3 | 317.5 | 84.6 |
| 2019 - Q4 | 51.2 | 335.3 | 85.4 |
| 2020 - Q1 | 53 | 373.7 | 91.7 |
| 2020 - Q2 | 58.5 | 363.3 | 107.8 |
| 2020 - Q3 | 51.7 | 391.8 | 96.9 |
| 2020 - Q4 | 54 | 370.3 | 98.2 |
| 2021 - Q1 | 58.4 | 400.5 | 111.1 |
| 2021 - Q2 | 54.5 | 405.5 | 104.5 |
| 2021 - Q3 | 51.9 | 439.6 | 104.1 |
| 2021 - Q4 | 53.4 | 392.7 | 101.8 |
| 2022 - Q1 | 53.2 | 406.3 | 104.2 |
| 2022 - Q2 | 53.1 | 415 | 103.5 |
| 2022 - Q3 | 53.5 | 462 | 110.6 |
| 2022 - Q4 | 53.7 | 465.2 | 109 |
| 2023 - Q1 | 53.7 | 428.3 | 105.8 |
Get the data: PxStat PIQ02
Labour productivity for the total economy (€105.8 per hour2) fell by 3% in the first quarter of 2023, largely due to the 1.2% decline in GVA compared to the previous quarter. This fall in GVA was due to a significant slow-down in the Manufacturing sector, where GVA fell by 5.7%. Labour productivity declined in both the Domestic sector (€53.7 per hour, -0.1%) and Foreign sector (€428.3 per hour, -8.2%) compared to the previous quarter.
2 All results presented in this release are seasonally-adjusted unless otherwise stated.
| Timeperiod | Labour Productivity | Gross Value Added | Hours Worked |
|---|---|---|---|
| 2019 - Q1 | 0 | 1.4 | 1.4 |
| 2019 - Q2 | 0.5 | -0.1 | -0.6 |
| 2019 - Q3 | 1.4 | 1.1 | -0.3 |
| 2019 - Q4 | -0.1 | 1.2 | 1.3 |
| 2020 - Q1 | 3.4 | 0.2 | -3.2 |
| 2020 - Q2 | 9.9 | -18.5 | -28.4 |
| 2020 - Q3 | -12.4 | 11.5 | 23.9 |
| 2020 - Q4 | 4.4 | 1 | -3.4 |
| 2021 - Q1 | 7.7 | 1.3 | -6.4 |
| 2021 - Q2 | -6.9 | 2.8 | 9.7 |
| 2021 - Q3 | -4.9 | 0.8 | 5.7 |
| 2021 - Q4 | 2.8 | 2.6 | -0.2 |
| 2022 - Q1 | -0.3 | 1.5 | 1.8 |
| 2022 - Q2 | -0.2 | 2.5 | 2.7 |
| 2022 - Q3 | 0.7 | -0.1 | -0.8 |
| 2022 - Q4 | 0.4 | 1.6 | 1.2 |
| 2023 - Q1 | -0.1 | 1.1 | 1.2 |
Get the data: PxStat PIQ02
Domestic labour productivity fell by 0.1% in the first quarter of 2023 when compared to the previous quarter. Hours worked increased by 1.2%, while GVA increased by 1.1%, leading to the slight decline in labour productivity. The increase in Domestic GVA was due to growth in sectors such as Accommodation & Food (15.2%) and Financial & Insurance Activities (8%). Domestic hours worked growth was largely explained by Public Administration, Education & Health (1.8%) and Wholesale & Retail (2.2%).
There has been relatively small movement in Domestic labour productivity since the start of 2022. The impact of the setting and lifting restrictions at the time of the COVID-19 pandemic can be seen in the quarters of 2020 and 2021, where there were rapid changes in Domestic labour productivity.
| Description | Reallocation Effect | Productivity Effect | Contribution |
|---|---|---|---|
| Financial & Insurance Activities (K) | 0.331 | 0.715 | 1.045 |
| Public Administration, Education & Health (O-Q) | 1.301 | -0.264 | 1.037 |
| Real Estate Activities (L) | 0.248 | 0.532 | 0.779 |
| Wholesale & Retail (G) | 0.659 | -0.031 | 0.628 |
| Construction (F) | 0.313 | 0.273 | 0.586 |
| Accommodation & Food Service Activities (I) | 0.074 | 0.443 | 0.517 |
| Mining & Quarrying (B) | -0.029 | -0.001 | -0.03 |
| Domestic Sector | -0.844 | 0.755 | -0.089 |
| Agriculture, Forestry & Fishing (A) | -0.169 | 0.038 | -0.131 |
| ICT and Administrative & Support Services - Domestic | -0.261 | -0.127 | -0.389 |
| Manufacturing - Domestic | -0.269 | -0.156 | -0.425 |
| Arts, Entertainment & Other Services (R-T) | 0.183 | -0.614 | -0.431 |
| Professional, Scientific & Technical Activities (M) | 0.045 | -0.557 | -0.511 |
| Energy & Water (D-E) | -0.907 | 0.201 | -0.706 |
| Transportation & Storage (H) | -2.363 | 0.304 | -2.059 |
Get the data: PxStat PIQ04
Labour productivity growth for the Domestic sector can be broken down into the contributions of each of its subsectors3, as shown in Figure 1.3. The contribution of each subsector is determined by two factors: labour productivity growth for the individual subsector (Productivity Effect) and changes in the relative size of the subsector compared to the total Domestic sector (Reallocation Effect). Positive labour productivity growth for a subsector will always lead to a positive Productivity Effect, however the Reallocation Effect depends on how productive the subsector is compared to the overall Domestic sector. For example, if a low productivity subsector grows faster than the rest of the Domestic sector, it will account for a larger share and therefore reduce average labour productivity for the sector.
The 0.1% quarter-on-quarter fall in Domestic labour productivity can be explained by a Productivity Effect of 0.75% and a Reallocation Effect of -0.84%. This means that improvements in subsector productivity (Productivity Effect) were offset by changes in the composition of the sector (Reallocation Effect), leading to the slight decrease in Domestic labour productivity.
Transportation & Storage (-2.1%) made the most significant contribution to the overall slight fall of 0.1% in labour productivity for the Domestic sector. Labour productivity for Transportation & Storage (€32.1 per hour) was relatively low compared to the total Domestic sector (€53.7 per hour), which explains the negative Reallocation Effect of -2.4% for the sector. Conversely, Financial & Insurance Activities (1%) made the largest positive contribution to Domestic labour productivity growth in Q1 2023. As one of the most productive Domestic subsectors, Financial & Insurance Activities (labour productivity of €83.7 per hour) had the largest Productivity Effect (0.7%) of all Domestic subsectors, as well as a positive Reallocation Effect (0.3%) on Domestic labour productivity growth for the quarter.
3 For confidentiality purposes, the contributions of Information & Communications – Domestic and Administrative & Support Services – Domestic have been combined in Figure 1.3.
While changes in the level of labour in the economy are an important factor in explaining changes in efficiency in the economy, it is important to remember that overall productivity is not only dependent on labour. Capital, such as machinery and equipment, factories and vehicles (tangible capital) and intellectual property (intangible capital) is the other key element of production in any economy.
Changes in the level of capital available to labour (capital deepening) has a considerable influence on output, as more capital investment increases the productive capacity of workers. Capital deepening is measured as the change in capital services per hour worked, where capital services are units of capital in the same way that hours worked are units of labour.
Aside from the level of labour and capital, overall productivity is also influenced by factors such as education, skills, organisational practices and changes in technology, all of which have a significant influence on the quality of labour and capital. Multifactor productivity (MFP) is the measure of overall productivity in the economy, which attempts to capture all of these features.
| Timeperiod | Labour Contribution | Capital Contribution | Multifactor Productivity | Gross Value Added |
|---|---|---|---|---|
| 2019 - Q1 | 0.8 | 0.4 | 0.2 | 1.4 |
| 2019 - Q2 | -0.3 | 1.3 | -1 | -0.1 |
| 2019 - Q3 | -0.2 | -0.2 | 1.5 | 1.1 |
| 2019 - Q4 | 0.7 | 0.7 | -0.2 | 1.2 |
| 2020 - Q1 | -1.8 | 0.5 | 1.5 | 0.2 |
| 2020 - Q2 | -15.7 | 0.1 | -2.9 | -18.5 |
| 2020 - Q3 | 12.8 | 0.4 | -1.7 | 11.5 |
| 2020 - Q4 | -1.8 | 0.5 | 2.4 | 1 |
| 2021 - Q1 | -3.5 | 0.3 | 4.6 | 1.3 |
| 2021 - Q2 | 5.3 | 0.4 | -2.8 | 2.8 |
| 2021 - Q3 | 3.1 | 0.4 | -2.7 | 0.8 |
| 2021 - Q4 | -0.1 | 0.6 | 2.1 | 2.6 |
| 2022 - Q1 | 1 | 0.8 | -0.3 | 1.5 |
| 2022 - Q2 | 1.5 | 0.6 | 0.5 | 2.5 |
| 2022 - Q3 | -0.4 | 0.6 | -0.3 | -0.1 |
| 2022 - Q4 | 0.6 | 0.6 | 0.4 | 1.6 |
| 2023 - Q1 | 0.6 | -1.1 | 1.5 | 1.1 |
Get the data: PxStat PIQ02
Figure 1.4 shows the contributions of labour, capital and MFP growth to Gross Value Added (GVA) quarter-on-quarter growth for the Domestic sector. GVA growth is explained by the contributions of labour and capital, where the contributions capture changes in both of these factors. MFP growth is calculated as the difference between GVA growth and the sum of the labour and capital contributions.
Domestic GVA grew by 1.1% in the first quarter of 2023, due to MFP growth of 1.5%, a labour contribution of 0.6%, and a negative capital contribution of 1.1%. Changes in GVA for the Domestic sector are generally driven by labour or MFP growth, however capital has played a larger role in recent quarters. The negative capital contribution for Q1 2023 does not imply zero investment, but it does mean that the overall level of capital in the sector has reduced compared to the previous quarter, due to depreciation and disposal of assets.
| Timeperiod | Capital Deepening | Multifactor Productivity | Labour Productivity |
|---|---|---|---|
| 2019 - Q1 | -0.2 | 0.2 | 0 |
| 2019 - Q2 | 1.5 | -1 | 0.5 |
| 2019 - Q3 | -0.1 | 1.5 | 1.4 |
| 2019 - Q4 | 0.1 | -0.2 | -0.1 |
| 2020 - Q1 | 1.9 | 1.5 | 3.4 |
| 2020 - Q2 | 12.8 | -2.9 | 9.9 |
| 2020 - Q3 | -10.7 | -1.7 | -12.4 |
| 2020 - Q4 | 2 | 2.4 | 4.4 |
| 2021 - Q1 | 3.2 | 4.6 | 7.7 |
| 2021 - Q2 | -4.1 | -2.8 | -6.9 |
| 2021 - Q3 | -2.2 | -2.7 | -4.9 |
| 2021 - Q4 | 0.6 | 2.1 | 2.8 |
| 2022 - Q1 | 0 | -0.3 | -0.3 |
| 2022 - Q2 | -0.7 | 0.5 | -0.2 |
| 2022 - Q3 | 1 | -0.3 | 0.7 |
| 2022 - Q4 | 0.1 | 0.4 | 0.4 |
| 2023 - Q1 | -1.6 | 1.5 | -0.1 |
Get the data: PxStat PIQ02
Labour productivity growth can also be explained by the contribution of capital deepening and MFP growth. While Domestic labour productivity fell by 0.1% in Q1 2023 compared to the previous quarter, this was due to positive MFP growth (1.5%) and negative capital deepening (-1.6%). Capital deepening is influenced by both the level of labour and capital, and so low capital deepening (as in Q4 2022) does not mean that there was little investment in capital, it instead means that the level of labour grew at the same rate as the increase in capital.
The significant rise and fall in capital deepening in Q2 2020 and Q3 2020 was due to movement in hours worked rather than changes in capital. As hours worked fell with almost no change to capital, there was relatively more capital available to each worker, leading to positive capital deepening in Q2 2020. When hours worked rebounded in the subsequent quarter, there was an opposite effect, resulting in negative capital deepening.
| Timeperiod | Total Economy | Domestic Sector | Foreign Sector |
|---|---|---|---|
| 2019 | 100 | 100 | 100 |
| 2019 - Q1 | 97.3 | 100.2 | 94.2 |
| 2019 - Q2 | 98.9 | 99.2 | 98 |
| 2019 - Q3 | 99.8 | 100.7 | 97.4 |
| 2019 - Q4 | 96.9 | 100.5 | 90.1 |
| 2020 - Q1 | 97.7 | 102 | 88.6 |
| 2020 - Q2 | 97.6 | 99.1 | 91.2 |
| 2020 - Q3 | 101.1 | 97.3 | 98.9 |
| 2020 - Q4 | 100.1 | 99.7 | 94.9 |
| 2021 - Q1 | 110 | 104.4 | 109.4 |
| 2021 - Q2 | 110.4 | 101.5 | 113.5 |
| 2021 - Q3 | 114 | 98.8 | 123.9 |
| 2021 - Q4 | 111.7 | 101 | 117.8 |
| 2022 - Q1 | 115.1 | 100.7 | 125.2 |
| 2022 - Q2 | 116.1 | 101.1 | 127.9 |
| 2022 - Q3 | 123.1 | 100.9 | 143.2 |
| 2022 - Q4 | 122 | 101.3 | 142.6 |
| 2023 - Q1 | 121.4 | 102.8 | 138.8 |
Get the data: PxStat PIQ02
Figure 1.6 illustrates the evolution of MFP for the Total Economy and Domestic and Foreign sectors since the start of 2019. While there were decreases in MFP for both the Total Economy (-0.5%) and Foreign sector (-2.7%) in Q1 2023, there was positive MFP growth for the Domestic sector (1.5%). There has been relatively little long-term change in the MFP of the Domestic sector (2.8%) since 2019. However, due to globalisation events, the Foreign sector has seen MFP increase by 38.8% since 2019, leading to Total Economy MFP increasing by 21.4% over the same period.
| Timeperiod | Ireland - Total | Ireland - Domestic | EU Average | Czechia | France | Luxembourg | Spain |
|---|---|---|---|---|---|---|---|
| 2019 - Q1 | 79.7 | 50.3 | 38.2 | 22.3 | 52.1 | 90.6 | 34 |
| 2019 - Q2 | 83.7 | 50.6 | 38.4 | 22.6 | 52.2 | 90.9 | 34.3 |
| 2019 - Q3 | 84.6 | 51.3 | 38.5 | 23 | 52.1 | 90.6 | 34.3 |
| 2019 - Q4 | 85.4 | 51.2 | 38.6 | 23.1 | 51.9 | 91 | 34.4 |
| 2020 - Q1 | 91.7 | 53 | 38.9 | 23.6 | 51.2 | 93 | 34.3 |
| 2020 - Q2 | 107.8 | 58.5 | 39 | 22.9 | 54.2 | 101.2 | 36.1 |
| 2020 - Q3 | 96.9 | 51.7 | 38.9 | 22.7 | 52.1 | 91.5 | 33.6 |
| 2020 - Q4 | 98.2 | 54 | 39.1 | 24.4 | 53 | 91.7 | 33.3 |
| 2021 - Q1 | 111.1 | 58.4 | 39.2 | 23.6 | 52.6 | 95.2 | 33.8 |
| 2021 - Q2 | 104.5 | 54.5 | 38.7 | 23.5 | 52.1 | 92 | 32.7 |
| 2021 - Q3 | 104.1 | 51.9 | 39.3 | 23.4 | 50.9 | 89.8 | 33.8 |
| 2021 - Q4 | 101.8 | 53.4 | 39.2 | 23.4 | 50.6 | 90.4 | 34.4 |
| 2022 - Q1 | 104.2 | 53.2 | 39.2 | 23 | 50.8 | 91.1 | 33.6 |
| 2022 - Q2 | 103.5 | 53.1 | 39.3 | 23.1 | 50.4 | 91.2 | 34 |
| 2022 - Q3 | 110.6 | 53.5 | 39.5 | 23 | 50.4 | 91.9 | 34.3 |
| 2022 - Q4 | 109 | 53.7 | 39.3 | 22.8 | 50.2 | 88.2 | 34.6 |
| 2023 - Q1 | 105.8 | 53.7 | 41.3 | 26.1 | 51.8 | 93 | 36.4 |
Get the data: PxStat PIQ02 (CSO); NAMQ_10_A10 and NAMQ_10_A10_E (Eurostat)
Figure 1.7 compares labour productivity for Ireland’s Total Economy and Domestic sector to the EU average and several countries in the EU4. Ireland had the highest labour productivity (€105.8 per hour) in the EU in Q1 2023, above Luxembourg (€93 per hour) and over two-and-a-half times above the EU average (€41.3 per hour). Domestic labour productivity (€53.7 per hour) was also considerably above average, and higher than all countries shown other than Luxembourg. Labour productivity grew by 5.1% across the EU in the first quarter of 2023, while labour productivity fell in Ireland for both the Total Economy (-3%) and Domestic sector (-0.1%).
4 For which data was available at the time of release.
Statistician's Comment
The Central Statistics Office (CSO) has today (05 September 2023) published Productivity in Ireland Q1 2023.
Commenting on the results, Seán O’Boyle, Statistician in the National Accounts Analysis & Globalisation Division, said: “Productivity across the economy fell in the first quarter of 2023. Labour productivity for the Domestic1 sector declined by just 0.1%, while Foreign sector labour productivity declined by 8.2%. These falls in productivity were largely due to the Transportation & Storage and Professional, Scientific & Technical Activities sectors (Domestic sector) and reduced activity in the Manufacturing sector (Foreign sector).
These results are the first in a new series of productivity statistics by the CSO, which will now be published each quarter. While movements in productivity should generally be viewed over a longer time-period, these results provide the most up-to-date picture on productivity in the Irish economy to keep policy-makers, economists and the wider public as informed as possible. Due to the significant influence of the Foreign sector on productivity measures for the total economy, this release prioritises the Domestic sector for both presentational and analytical purposes. However, more detailed data on all sectors can be found on our dissemination database PxStat.
Labour Productivity
Labour productivity measures the amount of output per hour worked in a sector, so the fall in labour productivity in Q1 2023 indicates that the economy became less efficient compared to the previous quarter. Despite this, it is important to keep in mind that Ireland’s Domestic sector is still highly productive compared to most other European economies (See Figure 1.7). In Q1 2023 there were increases in labour productivity for Domestic sectors such as Financial & Insurance (8.9%), Accommodation & Food Services (12.5%) and Construction (5.1%).
The decline in productivity for the Total Economy of 3% was driven by a 10.6% fall in labour productivity for the Manufacturing sector. Elsewhere, labour productivity for the Professional, Scientific & Technical sector fell by 5.3%, while Administrative & Support Services also saw productivity decline by 6.8%.
Multifactor Productivity
Multifactor productivity (MFP), a more detailed measure of overall productivity that considers labour, capital and additional factors such as education, skills, organisational practices and changes in technology, fell by 0.5% for the Total Economy in Q1 2023. On the other hand, Domestic sector MFP grew by 1.5%, while Foreign sector MFP fell by 2.7%.”
1 It should be noted that the Foreign and Domestic classifications in this release differ slightly from those used elsewhere the CSO’s National Accounts. Rental & Leasing Services (NACE 77) is classified as Foreign MNE-dominated in this release due to the concentration of foreign-owned capital in the sector.