This release was compiled during the COVID-19 crisis. The results contained in this release reflect some of the economic impacts of the COVID-19 situation.The full series of information notes on the implications of COVID-19 on the National Accounts can be found on our Information Notes page.
Nominal unit labour costs (ULC) show how wages and other labour costs are growing in relation to labour productivity. They are often presented as an indicator of competitiveness and are defined as the ratio of hourly compensation relative to labour productivity, measured as Gross Value Added per hour worked. Increases in nominal unit labour costs for a particular sector mean that the cost of labour is increasing relative to labour productivity. This indicates that a sector has become relatively less competitive when compared to its international peers. On the other hand, decreases in nominal unit labour costs indicate increased competitiveness for a sector.
| X-axis label | Unit Labour Cost | Hourly Compensation | Labour Productivity |
|---|---|---|---|
| 2011 | -3.25421802761346 | 0.00868005831784274 | 3.2628980859313 |
| 2012 | 2.91509387121432 | 1.2330119226738 | -1.68208194854064 |
| 2013 | 0.401315097287089 | -2.07518786129859 | -2.47650295858546 |
| 2014 | -3.71577114733786 | 0.387980852636296 | 4.10375199997398 |
| 2015 | -15.7951333582445 | 2.54493985874641 | 18.3400732169906 |
| 2016 | 4.38240425763321 | 0.762449259172709 | -3.61995499846053 |
| 2017 | -0.613439238384059 | 1.89251836040773 | 2.50595759879174 |
| 2018 | -4.42614958601393 | 1.78302249573094 | 6.20917208174519 |
| 2019 | 1.25915086051397 | 3.54358502512129 | 2.28443416460741 |
| 2020 | -8.57358707061921 | 8.72041688637898 | 17.2940039569981 |
| 2021 | -2.8007584019758 | 2.7349681934773 | 5.53572659545313 |
Get the data: PxStat PIA15
Figure 8.1 shows ULC growth for the total economy between 2011-2021, decomposed into growth in hourly compensation and labour productivity. In 2021, ULC declined by 2.8%, as labour productivity increased faster than hourly compensation. Labour productivity grew by 5.5% in 2021 with hourly compensation growing by 2.7%.
ULCs have in general declined over the period which indicates increased competitiveness. However, in some instances this has been explained by the economic impact of the onshoring of intangibles rather than more competitive behaviours on behalf of firms.
| Table 8.1 Unit Labour Cost Growth Decomposition by Sector: 2021 (Percentage Change)1 | |||
| Sector | Hourly Compensation | Labour Productivity | Unit Labour Cost |
| Agriculture, Forestry & Fishing (A) | -5.9 | -1.7 | -4.1 |
| Manufacturing - Domestic | 6.3 | 14.2 | -7.8 |
| Manufacturing - Foreign | -1.4 | 10.5 | -11.9 |
| Electricity, Gas & Steam (D) | -9.3 | -33.4 | 24.1 |
| Water Supply, Sewerage & Waste Management (E) | 14.0 | 10.4 | 3.7 |
| Construction (F) | 6.8 | -9.2 | 16.1 |
| Wholesale & Retail (G) | 9.0 | 7.2 | 1.7 |
| Transportation & Storage (H) | 3.8 | -11.8 | 15.6 |
| Accommodation & Food Service Activities (I) | 4.6 | -36.3 | 40.9 |
| Information & Communication (J) | 4.8 | 4.2 | 0.6 |
| Financial & Insurance Activities (K) | 4.2 | 14.7 | -10.5 |
| Professional, Scientific & Technical Activities (M) | 0.2 | -3.3 | 3.5 |
| Administrative & Support Service Activities (N) | 7.3 | -9.6 | 16.9 |
| Public Administration & Defence (O) | -1.1 | 2.7 | -3.8 |
| Education (P) | -7.6 | -16.2 | 8.6 |
| Human Health & Social Work (Q) | 3.2 | -3.3 | 6.4 |
| Arts, Entertainment & Recreation (R) | 3.1 | -6.3 | 9.3 |
| 1Due to rounding, the various inputs may not sum exactly to the numbers referenced above. | |||
To highlight the changes in the relative cost of labour across the economy, Table 8.1 shows growth in hourly compensation, labour productivity and ULC by sector in 2021.
There were large movements in ULC for many sectors in 2021, however in most cases this was due to changes in labour productivity rather than changes in hourly compensation. Accommodation & Food (40.9%) and Electricity, Gas & Steam (24.1%) saw the largest growth in ULC, while Manufacturing - Foreign (-11.9%) and Financial & Insurance (-10.5%) had the largest decreases.
In general, ULC increased for most domestic sectors, with wage growth exceeding labour productivity growth. The Employment Wage Subsidy Scheme (EWSS) made a significant contribution to wage growth for Accommodation & Food, Construction and Transportation & Storage.
| Description | 2020 | 2021 |
|---|---|---|
| Accommodation & Food Activities (I) | 24.7 | 38.5 |
| Arts, Entertainment & Recreation (R) | 14.5 | 18.7 |
| Transportation & Storage (H) | 7.9 | 8.6 |
| Construction (F) | 8.2 | 6.9 |
| Wholesale & Retail (G) | 6.9 | 4.5 |
| Total Economy | 3.9 | 3.8 |
Get the data: Annual National Accounts 2021
Figure 8.2 highlights the sectors for which the EWSS made the most significant contribution to wages in 2020 and 2021. While the EWSS only accounted for 3.8% of total COE in 2021, it had a far larger influence for several domestic sectors. Nearly two-fifths of wages for Accommodation & Food came from the EWSS, up from 24.7% in 2020. Arts, Entertainment & Recreation (18.7%) and Transportation & Storage (8.6%) also became more reliant on the EWSS in 2021. The EWSS has the effect of increasing ULC as it increases hourly compensation but has no direct effect on GVA.
| X-axis label | Unit Labour Cost | Hourly Compensation | Labour Productivity |
|---|---|---|---|
| 2011 | -3.46965750793852 | 0.25023317164068 | 3.71989067957937 |
| 2012 | 3.45407711175498 | 1.47867544850772 | -1.97540166324761 |
| 2013 | -1.63042979606705 | -3.32799105384888 | -1.69756125778177 |
| 2014 | -2.46605750215561 | 0.221579890044924 | 2.68763739220089 |
| 2015 | -1.15082387932323 | 1.77720203346316 | 2.92802591278651 |
| 2016 | 3.52156976342059 | 0.669461933142467 | -2.85210783027865 |
| 2017 | 1.28778325922679 | 2.55460224328164 | 1.26681898405493 |
| 2018 | -1.10847745636545 | 1.93195361533481 | 3.04043107170046 |
| 2019 | 1.73993316015855 | 3.01306634860218 | 1.27313318844364 |
| 2020 | 4.64234599490258 | 9.81263713935016 | 5.17029114444749 |
| 2021 | 3.79925427032716 | 2.78257058795013 | -1.01668368237684 |
Get the data: PxStat PIA15
| X-axis label | Unit Labour Cost | Hourly Compensation | Labour Productivity |
|---|---|---|---|
| 2011 | -3.44613454691975 | -1.71217880119728 | 1.73395574572248 |
| 2012 | 1.66013098279893 | -0.714543672154303 | -2.37467465495334 |
| 2013 | 11.1276347269545 | 7.08521742269742 | -4.04241730425713 |
| 2014 | -6.31894825579944 | 1.4047104990189 | 7.72365875481841 |
| 2015 | -44.805301594899 | 7.0018208709415 | 51.807122465841 |
| 2016 | 6.76575035420672 | 1.43909507952357 | -5.32665527468394 |
| 2017 | -1.0645431044192 | -3.34035658929292 | -2.27581348487383 |
| 2018 | -5.77530910483981 | 0.146723201866631 | 5.92203230670665 |
| 2019 | 3.13339986496257 | 6.35767488123057 | 3.22427501626793 |
| 2020 | -17.3519330883675 | 1.61839173997189 | 18.9703248283395 |
| 2021 | -6.034931545284 | 2.24904709659387 | 8.28397864187808 |
Get the data: PxStat PIA15
ULC growth in the Foreign sector and the Domestic sector shows a different picture in recent years. Looking at the Foreign sector, labour productivity grew faster than wages in 2020 and 2021, while in the Domestic sector, wages grew faster than labour productivity, resulting in decreased competitiveness. Some sectors such as Construction and Accommodation & Food experienced prolonged lockdowns in 2021 hampering the competitiveness of the Domestic sector overall.
Get the data: PxStat PIA15 (Irish Data) and Eurostat (Gross Value Added, Hours Worked and Compensation of Employees)
Changes in ULC can be used as a means of comparing competitiveness within a sector across countries. Figure 8.5 shows ULC growth for Ireland and similar-sized EU countries in 2021 to facilitate such a comparison. For the total economy, Ireland (-2.8%) had one of the largest decreases in ULC in 2021, below the EU average of 0.6% growth. For a large number of sectors, Ireland reported some of the most extreme changes in ULC across the EU. For example, in 2021, Manufacturing - Ireland (-11.4%) became more competitive relative to Manufacturing in other EU countries. A similar result is reported for Manufacturing – Foreign (-11.9%) and Manufacturing – Domestic (-7.8%). On the other hand, Admin & Support – Ireland (16.9%) became less competitive relative to other EU counterparts, due to decreases in labour productivity.
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