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.
Figure 6.1 shows ULC growth for the Total economy for 2015-2025, decomposed into growth in hourly compensation and labour productivity. In 2025, ULC declined by 2.8%, as labour productivity rose (6.1%) faster than hourly compensation (3.3%).
| Timeperiod | Unit Labour Cost Growth | Hourly Compensation Growth | Labour Productivity Growth |
|---|---|---|---|
| 2015 | -14.6 | 2.7 | 17.3 |
| 2016 | 5 | 0.9 | -4.1 |
| 2017 | -1.6 | 1.4 | 3 |
| 2018 | -3.5 | 1.7 | 5.2 |
| 2019 | 1.8 | 3.7 | 1.9 |
| 2020 | -9 | 7.9 | 17 |
| 2021 | -3.9 | 4.5 | 8.4 |
| 2022 | 2 | 2.6 | 0.6 |
| 2023 | 9.8 | 5.5 | -4.3 |
| 2024 | 5.1 | 7 | 1.8 |
| 2025 | -2.8 | 3.3 | 6.1 |
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To highlight the changes in the relative cost of labour across the economy, Figure 6.2 shows growth in hourly compensation, labour productivity and ULC by sector in 2025. There were large movements in ULC for many sectors in 2025, with both changes in hourly compensation and labour productivity playing a role.
Foreign Dominated Manufacturing and Information and Communication saw the largest declines in ULC in 2025, with both sectors seeing drops of 10.3%. In Foreign Dominated Manufacturing labour productivity grew (8.7%) and hourly compensation fell (-1.6%). In Information & Communication both labour productivity and hourly compensation grew, at rates of 18.5% and 8.2%, respectively.
Water Supply, Sewerage & Waste Management saw the largest growth in ULC in 2025 at 12.4%, followed by Professional, Scientific & Technical Activities (12.2%).
| Description | Hourly Compensation Growth | Labour Productivity Growth | Unit Labour Cost Growth |
|---|---|---|---|
| Foreign Sector | 3.6 | 14.2 | -10.6 |
| Foreign Manufacturing (NACE 18,20,21,26,27,31,32) | -1.6 | 8.7 | -10.3 |
| Information and communication (J) | 8.2 | 18.5 | -10.3 |
| Administrative and Support Service Activities (N) | 5.1 | 8.8 | -3.8 |
| Aggregate NACE Activities A - T | 3.3 | 6.1 | -2.8 |
| Transportation and Storage (H) | 3.9 | 6 | -2.1 |
| Real estate activities (L) | -5.1 | -5 | -0.1 |
| Construction (F) | 2.7 | 1.8 | 0.9 |
| Mining and Quarrying (B) | 21.6 | 20.3 | 1.3 |
| Arts, Entertainment and Recreation (R) | 2.5 | 0.6 | 1.9 |
| Wholesale and Retail Trade (G) | 3.3 | 1 | 2.3 |
| Agriculture, Forestry and Fishing (A) | 6.4 | 2.8 | 3.5 |
| Education (P) | -0.1 | -3.8 | 3.6 |
| Financial and insurance activities (K) | -3.3 | -7.1 | 3.8 |
| Human Health and Social Work Activities (Q) | 4.6 | 0.8 | 3.8 |
| Accommodation & Food Service Activities (I) | 6.1 | 2.1 | 4 |
| Domestic Sector | 3.3 | -0.8 | 4.1 |
| Other service activities (S) | 8.6 | 4.3 | 4.3 |
| Public Administration and Defence (O) | 3.5 | -1.1 | 4.6 |
| Domestic Manufacturing (NACE 10-17,19,22-25,28-30,33) | -2.1 | -7.6 | 5.6 |
| Electricity, Gas, Steam and air conditioning supply (D) | 14.5 | 7.1 | 7.4 |
| Professional, Scientific and Technical Activities (M) | 6.5 | -5.7 | 12.2 |
| Water Supply, Sewerage & Waste Management (E) | 17.6 | 5.2 | 12.4 |
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Figure 6.3 shows ULC growth for the Domestic dominated economy between 2015-2025, decomposed into growth in hourly compensation and labour productivity. In 2025, ULC grew by 4.1%, as labour productivity decreased (-0.8%) while hourly compensation rose (3.3%).
| Timeperiod | Unit Labour Cost Growth | Hourly Compensation Growth | Labour Productivity Growth |
|---|---|---|---|
| 2015 | 0.3 | 2.1 | 1.8 |
| 2016 | 5.8 | 0.7 | -5.1 |
| 2017 | -0.4 | 1.8 | 2.2 |
| 2018 | -0.3 | 1.9 | 2.2 |
| 2019 | 2 | 3.3 | 1.3 |
| 2020 | 1.7 | 9.1 | 7.5 |
| 2021 | 1.6 | 4.4 | 2.8 |
| 2022 | 5.9 | 2.3 | -3.6 |
| 2023 | -0.5 | 4.8 | 5.2 |
| 2024 | 5.2 | 7.3 | 2 |
| 2025 | 4.1 | 3.3 | -0.8 |
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In 2025, as shown in Figure 6.4, Foreign sector labour productivity grew by 14.2%, while hourly compensation grew by 3.6%, leading to a decline in ULC of 10.6%.
| Timeperiod | Unit Labour Cost Growth | Hourly Compensation Growth | Labour Productivity Growth |
|---|---|---|---|
| 2015 | -37.1 | 5.4 | 42.5 |
| 2016 | 5.2 | 2 | -3.2 |
| 2017 | 0.6 | -2.3 | -2.9 |
| 2018 | -2.3 | -0.9 | 1.4 |
| 2019 | 3.8 | 5.5 | 1.7 |
| 2020 | -13.4 | -0.3 | 13.1 |
| 2021 | -5.1 | 4.4 | 9.4 |
| 2022 | -1.9 | 4.3 | 6.2 |
| 2023 | 20.1 | 9.2 | -10.9 |
| 2024 | 4.7 | 5.3 | 0.5 |
| 2025 | -10.6 | 3.6 | 14.2 |
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Changes in ULC can be used as a means of comparing competitiveness within a sector across countries. Figure 6.5 compares ULC growth for Ireland to the EU average for 2024 to facilitate such a comparison. For the total economy, Ireland's growth in ULC (5.1%) was above the EU average (4.7%) representing a loss of competitiveness. For a large number of sectors, Ireland reported changes in ULC far above the EU average. For example, in 2024, ULC for Irish Manufacturing grew by 8.2% while EU average growth stood at 5.8%. This indicates that Irish Manufacturing became less competitive relative to Manufacturing in other EU countries. This was driven by Ireland's Foreign Dominated Manufacturing sector which saw ULC grow by 8.7%, while more moderate growth of 4.6% was observed in Domestic Manufacturing.
| Description | EU Average | Ireland | Ireland - Domestic Sector | Ireland - Foreign Sector |
|---|---|---|---|---|
| Real estate activities (L) | 3.23625152941049 | -14.4 | 0 | 0 |
| Mining and Quarrying (B) | 7.67571962087701 | -10.7 | 0 | 0 |
| Financial and insurance activities (K) | 3.77837570487722 | -8.5 | 0 | 0 |
| Information and communication (J) | 3.12171950378516 | -0.1 | 0 | 0 |
| Administrative and Support Service Activities (N) | 3.32094891584818 | 1 | 0 | 0 |
| Agriculture, Forestry and Fishing (A) | 4.47861203950758 | 1.6 | 0 | 0 |
| Total Economy | 4.70854431331871 | 5.1 | 5.2 | 4.7 |
| Human Health and Social Work Activities (Q) | 5.42222180367675 | 5.2 | 0 | 0 |
| Education (P) | 6.03405591213444 | 5.3 | 0 | 0 |
| Public Administration and Defence (O) | 4.53200271836157 | 5.7 | 0 | 0 |
| Transportation and Storage (H) | 5.09266620200771 | 7.7 | 0 | 0 |
| Accommodation & Food Service Activities (I) | 4.35377744631786 | 7.8 | 0 | 0 |
| Manufacturing (C) | 5.79547839055227 | 8.2 | 4.6 | 8.7 |
| Water Supply, Sewerage & Waste Management (E) | 7.64535456006663 | 8.4 | 0 | 0 |
| Wholesale and Retail Trade (G) | 4.55430449663738 | 8.8 | 0 | 0 |
| Professional, Scientific and Technical Activities (M) | 3.1307281425047 | 8.9 | 0 | 0 |
| Construction (F) | 6.7097226420896 | 11.1 | 0 | 0 |
| Other service activities (S) | 6.1250573706389 | 15.2 | 0 | 0 |
| Electricity, Gas, Steam and air conditioning supply (D) | 5.40922398231609 | 15.6 | 0 | 0 |
| Arts, Entertainment and Recreation (R) | 4.92586919378976 | 16.9 | 0 | 0 |
| Activities of Households as Employers (T) | 2.40493276268679 | 26.1 | 0 | 0 |
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