Construction: A National Accounts Perspective 2024

Gross Value Added (GVA) is primarily made up of Gross Operating Surplus (GOS), Compensation of Employees (COE) and Gross Mixed Inome (GMI). This chapter explores each of these components in some detail for the Construction sector. It also looks at investment in dwellings and other construction products over time as an indication of the output of the construction sector.

Figure 2.1 shows the gross operating surplus (GOS) i.e. profits after payment of labour costs for companies in Construction. In 2024, the three largest subsectors were: Construction of Residential & Non-Residential Buildings (€1.48bn), Development of Building Projects (€949m), and Electrical, Plumbing & Other Construction Installation Activities (€888m). The top three subsectors accounted for 71% of GOS generated by construction in 2024. All subsectors showed upward trends in GOS from 2015 onwards.

The compensation of employees (COE) timeseries is shown in Figure 2.2. COE includes both wages and salaries and employers' social contributions, it represents the total labour cost to an enterprise. In 2024, Electrical, Plumbing and Other Construction Installation Activities accounted for 37% of all COE paid to employees in the construction sector, followed by Construction of Residential & Non-Residential Buildings at 27%. While Other Specialised Construction Activities and Building Completion & Finishing made up 12% and 11% respectively. Similar to the trends observed in GOS, all subsectors saw an upward trend in COE over the past decade.

Figure 2.3 shows gross mixed income (GMI) by subsectors in Construction and is an indication of profits earned by self-employed persons. Building Completion & Finishing was the largest subsector by a significant margin. In 2024, its GMI was €759m and accounted for 39% of all GMI generated by the Construction sector. All major subsectors showed strong recovery from COVID-19 related shocks to the sector. However, a levelling off in GMI was observed from 2023 to 2024, with GMI in Construction falling by just under 3%.

GVA in basic prices is shown in Figure 2.4. The two largest subsectors are Electrical, Plumbing & Other Construction Installation Activities (€4.1bn) and the Construction of Residential & Non-Residential Buildings (€3.8bn). Both have shown strong year-on-year growth from 2020 onwards. Building Completion & Finishing (€1.9bn) and Other Specialised Construction Activities (€1.7bn) have also seen good recovery from 2020 to 2024, however, Development of Building Projects peaked with a GVA of €1.4bn in 2022, followed by a 12% decrease in 2023 and its GVA now stands at €1.2bn in 2024.

Figure 2.5 shows gross fixed capital formation (GFCF) as a percentage of modified gross national income from 2000 to 2024. Modified Gross National Income (GNI*) is a deglobalised measure, more relevant for analysis of the domestic Irish economy. Investment in dwellings peaked in 2006 accounting for 14.3% of GNI*, it reached its lowest point in 2013 (1.9%), and in 2024 it accounted for 5.6% of GNI*.

Investment in dwellings as a proportion of GNI* fell by 0.5% in 2024 for the first time since 2020. The decrease was driven by a denominator effect where GNI* rose at faster pace than investment in dwellings. The strong growth in investment in dwellings from 2020 onwards slowed considerably in 2024, and was outpaced by a rise in GNI*. Investment in dwellings rose by 1.4% (€242m) in 2024, compared with 35% in 2023 when investment rose by €4.6bn to €17.9bn.

GFCF in dwellings is shown as a percentage of GDP in Figure 2.6, with the exception of Ireland, where GFCF is given as a percentage of GNI* to offset the globalisation effects associated with the Irish economy. Other EU member states with similar sized populations are shown as a comparison.

Ireland’s investment in dwelling well exceeded the EU average before the financial crash of 2008. Post financial crash, investment in dwellings in Ireland fell considerably below the EU average, only recovering to comparable levels from 2022 onwards. Ireland's growth in investment from 2020 onwards significantly outpaced other comparable EU member states. In 2020, Ireland ranked 20th overall but by 2024 Ireland ranked 6th, behind Cyprus, Italy, and Germany.

Figure 2.7 shows GFCF or investment in total construction as a proportion of GDP, as in Figure 2.6, Ireland is shown as a proportion of GNI*. Investment in total construction accounted for 11.2% of Ireland's GNI* in 2024. Ireland ranked 13th against other EU member states and marginally above the EU average of 10.9%.

Figure 2.8 shows the construction sector’s GVA as a share of GNI* versus GDP per capita in Ireland from 1995 to 2024. The graph shows the prominence of construction when measured by GNI* as a percentage of the total economy against the relative wealth of Ireland in GDP per capita. Details of the year, construction share of GNI*, and GDP per capita can be seen by hovering over each data point. 

Three distinct groups emerge. The years from 1995 to 2008 are shown in green and are characterised by the growing prominence of construction. During this period, the rise in construction out-paces the rise in GDP per capita. The average size of the Construction sector relative to the Irish economy during this period was 7.8%. The blue data points correspond to years from 2009 to 2014. Directly after the financial crash, construction's share of GNI* stayed relatively constant and did not rise above 3.2%. GDP per capita also did not rise significantly and remained below €44K per person.

It is not until 2015 where a significant jump in GDP per capita is observed. From 2015 onwards, GDP growth remained strong year-on-year while construction's share of GNI* stays level, averaging at 4.4%. By 2024, the Construction sector accounted for 4.5% of Ireland's GNI*. The size of the Construction sector relative to the Irish economy never recovered to levels observed prior 2008 and the financial crisis. 

Figure 2.9 shows the share of GDP attributed to the construction sector against GDP per capita for the EU 27 member states in 2024. Ireland has been adjusted to show the percentage of GNI* from construction to account for the globalisation effects associated with the Irish economy. Details of the EU Member State, construction share of GDP/MDD, and GDP per capita can be seen by hovering over each data point.

In 2024, Ireland had the second largest GDP per capita among EU Member States behind Luxembourg. Both countries were distinct outliers with respect to the remaining EU member states. However, Ireland’s construction sector was smaller than nearly all of its European counterparts. The size of Ireland's construction sector relative to its entire economy is on a par with Bulgaria and Luxembourg, marginally larger of Malta and significantly ahead of Greece.