Productivity in Ireland 2024 - 2025

This chapter focuses on the factors that contribute to Gross Value Added (GVA) growth: Capital, Labour and Multifactor Productivity (MFP). Changes in GVA can be measured as the contribution of labour (hours worked), the contribution of capital (capital services) and their combined efficiency of use (MFP). While the contribution of labour is clearly critical to output in the Irish economy, both capital and MFP have been major drivers of GVA growth in recent years. 

Figure 8.1 shows GVA growth for the total economy over the period 2015-2025, broken down into the contributions of labour, capital and MFP growth. GVA increased by 7.8% in 2025, driven by positive contributions from labour (0.5%) and MFP (7.2%). In 2021, the contribution of capital was negative for the first time since 2000, as imports of IPP failed to outpace the level of depreciation. This trend continued throughout the subsequent three years, with the contribution of capital to GVA negative and decreasing from 2022 and 2024. In 2025, capital did not contribute to the annual rise in GVA. 

Figure 8.2 presents GVA growth for the Domestic sector from 2015-2025, again broken down into the contributions of labour, capital and multifactor productivity growth. The Domestic sector had GVA growth of 1.2% in 2025. This was driven by positive contributions from labour (1.1%) and capital (1.2%), offset partially by a negative MFP (-1.1%).

GVA growth broken down by factor inputs by sector in 2025 is shown in Figure 8.3. There was significant movement in GVA across the economy in 2025. Information & Communication saw strong growth in GVA of 13.8%, driven primarily by significant multifactor productivity growth of 15.3%. Similarly, the growth in GVA generated by Foreign Dominated Manufacturing (13.3%) was driven by MFP (14.0%). Professional, Scientific, & Technical Activities saw the greatest decline, with GVA falling by 6.2% in 2025. This was driven by a fall in multifactor productivity of 7.4%, a small negative labour contribution of -0.3%, offset by a positive contribution from capital of 1.5%. 

Figure 8.4 compares Irish GVA growth to that of comparable EU economies in 2024. Ireland’s GVA grew by 3.9% in 2024, with the Foreign and Domestic sectors similarly exhibiting growth rates of 3.8% and 3.9%, respectively. Average GVA growth for the EU was 1.0%, meaning that Domestic Irish GVA growth was nearly four times that of the EU average.

Figure 8.5 shows compound growth rates for a selection of EU countries over the period 2014 to 2024. Ireland’s economy grew marginally faster than any comparable country, with an average GVA growth rate of 7.9% per year. Ireland’s Domestic sector GVA grew on average by 4.2% per year, which was just below the EU average of 4.4% per year and above similar sized EU counterparts Finland and Sweden. Ireland's Foreign sector GVA grew on average by 13.3% per year from 2014 to 2024, over three times the EU average annual growth rate.