Productivity in Ireland 2019

Source publication: Estimates of the Capital Stock of Fixed Assets 2019

Get the data: PxStat CSA02

Capital Stock per Employee has followed an increasing trend since 2000, with a large step-change occurring in 2015. Over the period 2000-2019, Ireland’s Capital Stock per Employee increased from €164,000 to €445,000 in 2019, an increase of 171% over the nineteen years. The substantial increases in Capital Stock per employee in recent years, particularly since 2015, have been as a result of large additions to the Capital Balance Sheet for Ireland due to large imports of IPP and corporate relocations. However, prior to this step change, Capital Stock per Employee had been increasing steadily since 2000.

Get the data: PxStat CSA02 (Irish Capital Stocks), Eurostat (EU Capital Stocks), Eurostat (Employment)

The chart above compares Capital Stock per Employee among EU member states, for which data is available. The chart also looks at the evolving nature of Capital Stock per Employee and compares 2010 to 2019. In 2010, the UK had the lowest level of Capital Stock per Employee at €135,000, while Denmark had the highest level at €296,000. However, by 2019, due to the significant growth in investment associated with imports of Intangible Assets, Capital Stock per Employee increased significantly in Ireland. In 2019, Ireland recorded the highest level of Capital Stock per Employee, among the countries examined, at €446,000. This was followed closely by Austria at €374,000 and Denmark at €357,000. The United Kingdom had the lowest level of Capital Stock per Employee in 2019, at €168,000.

Get the data: PxStat CSA02 (Capital Stocks), PxStat PIA09 (Capital Services)

Capital Services growth since 2000 is dominated by the extraordinary increase in capital assets in 2015 associated with international corporate relocations and greatly increased contract manufacturing activities. It is important to note that the asset categories of Transport and Intangible assets have been combined for 2015 and subsequent years to protect the confidentiality of data providers. In 2019, Capital Services grew by 9.0%, which can be explained by a combination of increased investment in Transport and Intangibles.  This category grew by 8% in 2019, while the next largest contributor to Capital Services growth was Other Buildings and Structures at only 0.7%.

Looking briefly at the previous years, Capital Services grew at 6% or more during the years 2000 to 2007. The main reason was the growth in capital stock of dwellings and other buildings, during the boom period. There have been significant increases across almost all asset categories over the entire period, for example, there are additions to transport equipment in almost every year reflecting the increased importance of aircraft leasing activities in Ireland.

Get the data: PxStat CSA02 (Capital Stocks), PxStat PIA09 (Capital Services)

The chart above breaks Capital Services down by asset class in the Domestic and Other sector. In 2019, Capital Services growth increased further when compared to 2018. Growth of 4.6% was recorded in 2019, of which 2.9% of it can be explained by the combined category of Transport and Intangibles and 1.1% of it is attributed to Buildings and Structures. Since 2015, the main contributor to growth in Capital Services has been the combination of Transport and Intangibles. Over the period the large contributions of Transport assets to Capital Services growth are largely explained by the Aviation sector. During the boom years, Capital Services growth was driven predominantly by Dwellings and Other Buildings and Structures.

Get the data: PxStat CSA02 (Capital Stocks), PxStat PIA09 (Capital Services)

The period to 2019 is difficult to interpret with large swings in globalisation-related activity occurring, together with suppression of the asset details to protect confidentiality.  The chart above shows Capital Services in the Foreign-dominated sector for the period to 2014. However, unlike the Domestic and Other sector, Cultivated Assets and Dwellings do not appear in the Foreign sector. This sector is dominated since the early 2000s by Intangible Assets and to some extent investment in Machinery and Equipment. In 2011, Intangibles did not feature while in 2012 no investment in Machinery and Equipment was recorded.

Get the data: PxStat CSA02 (Capital Stocks), PxStat PIA09 (Capital Services)

The chart above shows the period 2016 to 2019 in the Foreign-dominated sector. Regrettably much of the data is suppressed for confidentiality purposes, however it is presented to highlight the strong growth in Capital Services in the Foreign-dominated sector in recent years. In 2019, growth in Capital Services of 14.7% was recorded, the majority of which could be explained by the combination of growth in Transport and Intangibles, which are combined for confidentiality. In contrast to 2019, Capital Services declined by 1.7% in 2018. In general Capital Services growth between 2016-2018 can also be explained by the combined growth of Transport and Intangibles.

Get the data: PxStat CSA02 (Capital Stocks), PxStat PIA09 (Capital Services)

The chart above shows the relationship between growth in Capital Services and Capital Stocks. Capital Services measure the productive use of Capital. The volume index of Capital Services estimates the flow of Capital Services derived from all the capital assets in the economy. The difference between Capital Stocks and Capital Services is that Capital Services is weighted by the user cost for each asset type. The user cost for each asset is based on the allocation of capital compensation in each asset’s sector. Capital Services tend to grow at a faster rate than Capital Stocks. This can be better understood from the fact that a Capital Asset’s value will generally decline more quickly than its overall usefulness. More information on calculating Capital Services can be found in the Appendix.

Get the data: PxStat CSA02 (Irish Capital Stocks), Eurostat (EU Capital Stocks)

The chart above compares the average growth for the period 2010-2019 across EU member states, for which data is available. Ireland - Total had average growth in Capital Stocks of 7.6%[1] , largely explained by extraordinary average growth of 26.6% per annum for the Foreign sector of the Irish economy. This result for the Foreign sector was due to the dramatic growth in Ireland’s Capital Stocks in 2015, associated with the level shift in GVA in the same year. Ireland - Domestic and Other had an average growth rate of 3.3% which is more in line with the growth rates of other EU member states in this period.

[1] CSO estimates are included for Ireland to allow subsectors- Foreign and Domestic and Other to be calculated.