Productivity in Ireland 2017

This publication has presented the latest CSO results for productivity in the Irish economy since 2000. Some key aspects of this publication are set out below.

Irish labour productivity growth has been one of the highest in the EU, mainly because of increased GVA in the economy over the period. However the contribution of the Foreign Sector is the key driver for this result.  Nevertheless, the Domestic and Other Sector has also performed well with labour productivity in 2017 showing results for this Domestic sector above both Eurozone and EU 28 averages.

Multi-factor productivity (MFP) has played a small part in explaining Ireland’s economic growth over the entire period 2000-2017. However, when the period 2000 -2014 is examined, i.e. excluding the effects of 2015, the picture for multi-factor productivity in the Irish economy improves. This is clearly illustrated in Figure 5.7.

A major aspect of Ireland’s growth, and therefore its productivity story over the period, is the growth in capital.

Another notable aspect of productivity in Ireland over the period has been the substantial differences in both input and output growth in the periods before and after the crisis. Hours worked tended to increase at a rate close to or faster than output prior to the crisis. This resulted in falling and negative labour productivity growth. However, since 2009, labour productivity growth has tended to be substantially higher. A similar pattern is observed when labour productivity is examined in the context of unit labour cost. Labour productivity growth was slower than nominal employee compensation before 2009, resulting in decreased competitiveness. However, since 2009, labour productivity has tended to grow faster than nominal employee compensation, resulting in increased competitiveness. Total capital services were dominated by construction related growth up to 2009. However, since then, other asset classes of capital services have taken up a much greater share. Finally, growth in GVA, the measure of output used in this analysis, was persistently close to five percent up to 2007, but has been substantially more volatile in subsequent years.

The Research Chapter indicates the direction of future work in the productivity area with a focus on Gross Output or KLEMS based analysis which takes the inputs of energy, materials and services used in production along with capital and labour. Further development is required in the QALI estimates of labour input where the details of age, education, gender and sector for the workforce are used to arrive at more informed estimates of labour input.  

The twenty one sector model of the economy may also be reviewed following the various presentations of this information and the feedback received from stakeholders.