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Quality Adjusted Labour Input

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The Quality adjusted labour input differs from conventional labour input as it weights the hours worked by the earnings of workers. The earnings of workers are stratified by economic sector and within the sector by age, education and gender thus enabling a more comprehensive examination of labour input. The objective is to distinguish between contribution to productivity of an hour’s work by a surgeon compared to a worker in the retail trade.  Producing the detailed time series required for this analysis over the entire eighteen years was challenging and required additional estimation and aggregation.  More details of the methodology followed can be found in the appendix.

In the section below, graphs are presented showing the growth in hours worked versus the quality adjusted labour input. Further graphs are also presented on labour composition, which attempt to measure the quality of labour input provided by the workforce.  Considerable additional research work was necessary following on from the initial indicative estimates presented in the Productivity in Ireland 2017 publication that covered a small number of selected sectors.  This has resulted in the entire series of QALI estimates being now available on StatBank although these data should still be considered experimental and the results interpreted carefully.

X-axis labelQuality Adjusted Labour InputGrowth in Hours worked
200012.480997655834813.3314246554835
20015.794874245871445.96955923603552
2002-0.73410153576754-0.731420125297104
20033.233839936074663.2872838941505
200411.711435005689812.4559588527446
200514.777796922750516.7305708399204
200610.18620419300110.7431594339231
2007-0.478579030431057-0.195107563833167
2008-23.1169297482062-20.4193245366229
2009-77.4261039534788-53.6349316402925
2010-52.8716809635728-40.7734968826389
2011-2.45665390813976-2.4269634446652
2012-14.3045180417402-10.3440203872656
2013-1.200588158255171.25517088180206
201416.1686617910319.0334057248641
201510.73963970455911.5143065851706
20168.240790903329314.453686234652
20176.442896158991647.53972863590382
201812.451190871652413.0983255623804

Get the data: Statbank PIA08

The chart above shows growth in hours worked and the quality adjusted labour input, known as QALI. It is clear from the graph above that both hours worked and QALI followed a similar pattern up until 2008. From 2008 to 2011, clear differences emerge between the two measures. In the depths of the recession from 2009 to 2011 for the Construction sector, the fall in QALI was much greater than the fall in hours worked. The QALI measure fell more sharply as this accounts for the education levels of those working in the sector, while hours worked does not. The gap between the two measures indicates that the majority of those who left the sector during the period were those who were in aggregate more educated including engineers and architects or were more experienced when compared to total workforce in the sector.  This could reflect both the labour composition of companies that went into liquidation but also cost cutting measures in the remaining firms where those with the highest salaries went first. By 2012 and 2013, the gap between growth in hours and QALI narrowed, reflecting the impact of the relative education and experience of the additional workers being hired on overall labour composition in the sector. By 2016, growth in hours worked rose above QALI, perhaps leading to the conclusion that as the economy recovers, the sector is hiring people with a lower level of education. For the latest 2 years, 2017 and 2018, QALI and hours worked grew at the same rate, suggesting that the labour composition of the sector is now more stable in terms of professional and lower skilled workers.

Growth in HoursLabour CompositionQuality Adjusted Labour Input
200013.3314246554835-0.85042699964867112.4809976558348
20015.96955923603552-0.174684990164085.79487424587144
2002-0.731420125297104-0.00268141047043641-0.73410153576754
20033.2872838941505-0.05344395807583833.23383993607466
200412.4559588527446-0.74452384705476611.7114350056898
200516.7305708399204-1.9527739171698714.7777969227505
200610.7431594339231-0.55695524092210410.186204193001
2007-0.195107563833167-0.28347146659789-0.478579030431057
2008-20.4193245366229-2.69760521158336-23.1169297482062
2009-53.6349316402925-23.7911723131863-77.4261039534788
2010-40.7734968826389-12.0981840809338-52.8716809635728
2011-2.4269634446652-0.0296904634745621-2.45665390813976
2012-10.3440203872656-3.96049765447468-14.3045180417402
20131.25517088180206-2.45575904005723-1.20058815825517
201419.0334057248641-2.8647439338340416.16866179103
201511.5143065851706-0.77466688061159510.739639704559
201614.453686234652-6.212895331322678.2407909033293
20177.53972863590382-1.096832476912186.44289615899164
201813.0983255623804-0.6471346907280112.4511908716524

Get the data: Statbank PIA08

The chart above shows QALI decomposed into Labour composition, otherwise known as labour quality, and hours worked for the Construction sector. The early years were characterised by QALI and hours worked growing at a similar rate, however it is during the recessionary period that labour quality begins to make an impact. Labour quality decreased by 2% in 2009 and 2010, when the worst of the recession hit. As discussed above, the higher educated were hit the hardest. This could be due to governments and MNEs cutting spending on designing new offices, factories and industrial units, while lower skilled workers were still employed in finishing pre-planned projects.   This collapse in the construction sector led to a fall in demand for engineers and architects resulting in job losses. In recent years, the labour composition has remained low, however this could be due to increases in lower skilled labourers joining. As construction activity picks up demand for labourers and manual workers has increased, perhaps because the focus is now turning to building more social and affordable housing.

X-axis labelQuality Adjusted Labour InputGrowth in Hours worked
20005.959854180150146.14484117022625
20012.041139378277742.06225850280921
20021.206181125364371.21351451889677
20030.5936913863420390.595460740129498
20043.503037012988333.56586497755781
20055.626600560164578.28736577482753
20064.93057769276235.05628001346392
20076.237376040941125.34044242393733
2008-1.084220128806051.52124812510915
2009-14.8751005828001-14.1613733453898
20105.148170413555044.7873641399358
20110.5619954842382770.563580620579322
20122.675797855581241.65592105080874
20131.91504096569032.07266010974454
2014-0.2279414307840331.26999236329824
20153.183463499377163.30725823984488
20162.813275546232532.38845768390578
20172.945122778605413.29347110255455
20180.862722236638301-0.251793150826422

Get the data:  Statbank PIA08

The chart above compares growth in hours worked and QALI in the Wholesale and Retail sector. It is clear once again from the graph above that both hours worked and QALI followed a similar pattern over the period. Between 2008 and 2010, a slight gap emerges between the two measures, however it is not as pronounced as in the Construction sector. At the height of the recession in 2009, the fall in QALI was slightly greater than the fall in hours worked, suggesting that a small number of higher educated people left the sector. In 2018, the fall in hours was greater than the fall in QALI, suggesting that it was lower educated workers left the sector at a greater rate.

Growth in HoursLabour CompositionQuality Adjusted Labour Input
20006.14484117022625-0.1849869900761125.95985418015014
20012.06225850280921-0.02111912453147162.04113937827774
20021.21351451889677-0.007333393532405091.20618112536437
20030.595460740129498-0.001769353787458950.593691386342039
20043.56586497755781-0.06282796456948473.50303701298833
20058.28736577482753-2.660765214662975.62660056016457
20065.05628001346392-0.1257023207016164.9305776927623
20075.340442423937330.8969336170037936.23737604094112
20081.52124812510915-2.60546825391519-1.08422012880605
2009-14.1613733453898-0.713727237410361-14.8751005828001
20104.78736413993580.3608062736192325.14817041355504
20110.563580620579322-0.001585136341045180.561995484238277
20121.655921050808741.01987680477252.67579785558124
20132.07266010974454-0.1576191440542441.9150409656903
20141.26999236329824-1.49793379408227-0.227941430784033
20153.30725823984488-0.1237947404677253.18346349937716
20162.388457683905780.4248178623267422.81327554623253
20173.29347110255455-0.3483483239491442.94512277860541
2018-0.2517931508264221.114515387464720.862722236638301

Get the data: Statbank PIA08

The chart above shows QALI analysed by Labour composition and hours worked in the Wholesale and Retail sector. The early years were characterised by QALI and hours worked growing at a similar rate, however, in line with the Construction sector above, it is during the recessionary period that the impact on labour quality begins to be more apparent. As discussed above, labour quality decreased in 2009, as many higher educated and higher paid workers left the sector, however a slight balancing out occurred between 2010 and 2012 with a small increase in the labour composition. This was an indication that some lower paid workers also lost jobs during the period. In contrast by 2018, as mentioned above, labour quality increased by 1%. However, no growth in hours occurred indicating that the growth in 2018 was attributed entirely to higher educated workers joining the workforce, rather than those already working in the sector increasing the hours they worked.

X-axis labelQuality Adjusted Labour InputGrowth in Hours worked
20007.728302722318628.0432729880762
20014.837870575797044.95881235001825
20021.073659865057151.07946518289052
20030.1091919990305840.109251656925566
20046.933296685862147.18537099915082
20056.123131478371837.83452125864717
20067.175182995834837.44561573336759
20074.306539542611616.55596242015495
20082.45801346177845-1.56870824467401
2009-18.8273796569823-14.6976585694763
2010-4.36397546629866-10.4173300518737
20112.850319948944012.89173035199779
2012-2.476044206222810.465673004423451
20134.053680443529393.04686280399331
20145.42617152253266.3144647604578
20154.939818606619416.04422838722897
20165.877568644984555.22970233935371
20175.044054962113535.23081512709436
201811.20145228201559.79400126357382

Get the data: Statbank PIA08

The chart above shows the growth in the QALI and hours worked in the Professional and Scientific activities. Like the sectors above, both measures follow a similar pattern over the period. However, during the years between 2008 and 2010 a small gap emerges between the two measures, with employment of professional and more experienced workers falling quicker that the general trend for all workers in this sector. A gap of 3% emerges between the two measures in 2009. This sector which comprises both foreign and domestic activities typically employs many professional and scientific workers. These higher paid or more experienced employees were first to go during the crisis period resulting in composition effects evident from the chart below.

Growth in HoursLabour CompositionQuality Adjusted Labour Input
20008.0432729880762-0.3149702657575757.72830272231862
20014.95881235001825-0.120941774221214.83787057579704
20021.07946518289052-0.005805317833368351.07365986505715
20030.109251656925566-5.96578949814148E-050.109191999030584
20047.18537099915082-0.2520743132886826.93329668586214
20057.83452125864717-1.711389780275346.12313147837183
20067.44561573336759-0.2704327375327647.17518299583483
20076.55596242015495-2.249422877543344.30653954261161
2008-1.568708244674014.026721706452462.45801346177845
2009-14.6976585694763-4.12972108750601-18.8273796569823
2010-10.41733005187376.05335458557509-4.36397546629866
20112.89173035199779-0.04141040305378072.85031994894401
20120.465673004423451-2.94171721064626-2.47604420622281
20133.046862803993311.006817639536094.05368044352939
20146.3144647604578-0.8882932379252085.4261715225326
20156.04422838722897-1.104409780609564.93981860661941
20165.229702339353710.6478663056308345.87756864498455
20175.23081512709436-0.1867601649808285.04405496211353
20189.794001263573821.407451018441711.2014522820155

Get the data: Statbank PIA08

The chart above provides additional information on the Professional and Scientific sector and gives more information of the labour composition. As mentioned above, the labour composition decreased by 4% in 2009, suggesting that higher paid professionals had been laid off and possibly replaced by service providers delivering these services rather than employees. In the recent years, the labour composition has seen growth of about 1% with many higher educated professionals joining the workforce. This increase of higher educated workers joining in recent years may be a sign of the increased uptake of professionals working in the expanding Aircraft Leasing activities and also additions to the legal, accounting and scientific partnerships and companies servicing a growing economy.

X-axis labelQuality Adjusted Labour InputGrowth in Hours worked
20005.889081637075885.10589294294583
20013.646631663793973.34711493190469
20020.6893959336901910.690783969251535
20030.9327073705732661.3868228587542
20043.272284385470892.74568972376258
20058.098552664523026.43708175941542
20065.465645103320194.97360753513027
20076.39825227683022.95316490282845
2008-1.11379696109888-2.2212202177554
2009-8.41142962838468-9.69323203128308
2010-12-12.4658400942454
2011-0.74952277759373-1.17243901366087
20120.8297773068346530.267482110221255
20132.936506939912172.72233110575528
201443.80798156599089
20155.591748325856834.63687640697848
20164.396560466361593.86489133618157
20174.208655550990384.10670184087602
20182.858648371783154.39661869269083

Get the data: Statbank PIA07 

The chart above shows the situation in terms of growth in quality adjusted labour input and hours worked on an economy wide scale. During the early years between 2005 and 2007 when the economy was booming, and opportunities were abundant, the growth in QALI outstripped growth in hours. This growth may be due to the increased availability of grants and people accessing third level that led to an increase in growth of higher educated workers joining the workforce. As the economy collapsed in 2009 and 2010, it was employees with lower and higher levels of education, who experienced unemployment.  This was due to the recessionary effects on the economy with house building and overseas investment stalling, falling demand for business and personal services and lower levels of discretionary spending. Since the recession, growth has recovered and in 2018 hours worked grew faster than the growth in QALI.  

Growth in HoursLabour CompositionQuality Adjusted Labour Input
20005.105892942945830.7831886941300525.88908163707588
20013.347114931904690.2995167318892723.64663166379397
20020.690783969251535-0.001388035561343880.689395933690191
20031.3868228587542-0.4541154881809320.932707370573266
20042.745689723762580.5265946617083093.27228438547089
20056.437081759415421.66147090510768.09855266452302
20064.973607535130270.4920375681899155.46564510332019
20072.953164902828453.445087374001756.3982522768302
2008-2.22122021775541.10742325665652-1.11379696109888
2009-9.693232031283081.2818024028984-8.41142962838468
2010-12.46584009424540.465840094245382-12
2011-1.172439013660870.422916236067136-0.74952277759373
20120.2674821102212550.5622951966133980.829777306834653
20132.722331105755280.214175834156892.93650693991217
20143.807981565990890.1920184340091114
20154.636876406978480.9548719188783575.59174832585683
20163.864891336181570.5316691301800184.39656046636159
20174.106701840876020.1019537101143584.20865555099038
20184.39661869269083-1.537970320907682.85864837178315

Get the data: Statbank PIA07 

The final graph shows QALI decomposed into Labour composition and hours worked for the total economy. The period of 2009 - 2010 is characterised by an improvement in composition while large numbers of employees became unemployed. The composition of workers becoming unemployed was lower in terms of education and experience compared to the remaining workforce and labour quality is positive. The latter years are characterised by further positive contributions from labour composition. However, this is more likely to be indicative of higher skilled workers joining the workforce. 


Go to the next chapter: Summary