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Productivity in Ireland Quarter 3 2024

Labour productivity up by 5.7% in the third quarter of 2024

Online ISSN: 2811-5929
CSO statistical publication, , 11am
A CSO Frontier Series Output

This publication is categorised as a Frontier Series Output. Particular care must be taken when interpreting the statistics in this release as it may use new methods which are under development and/or data sources which may be incomplete, for example, new administrative data sources.

Key Findings

  • Total Economy labour productivity (€106.70 per hour) increased by 5.7% in Q3 2024 compared with Q2 2024.

  • Labour productivity for the Domestic sector (€61.50 per hour) fell by 0.4% in Q3 2024 compared with Q2 2024, while labour productivity for the Foreign sector (€391.70 per hour) was up by 15.8%.

  • Total Economy multifactor productivity went up by 6% in Q3 2024 compared with Q2 2024.

  • Quarter-on-quarter multifactor productivity for the Domestic sector was down by 0.2%, while Foreign sector multifactor productivity grew by 13.2%.

  • Multifactor productivity for the Domestic sector increased by 1.6% in Q3 2024 compared with Q3 2023, while Foreign sector multifactor productivity rose by 16.9%.

Statistician's Comment

The Central Statistics Office (CSO) has today (08 January 2025) published Productivity in Ireland Quarter 3 (Q3) 2024.

Commenting on the results, Kenneth Kennedy, Statistician in the National Accounts Analysis & Globalisation Division, said: “Domestic productivity in Ireland fell in July, August, and September (Q3) 2024. When compared with the previous quarter, labour productivity in the Domestic sector decreased by 0.4% to a value of €61.50 per hour. In the Foreign sector and the total economy, labour productivity increased by 15.8% and 5.7% respectively in Q3 2024 (See Editor’s Note below).

While movements in productivity should generally be viewed over a longer time period, these results provide the most up-to-date picture of productivity in the Irish economy to keep policymakers, economists, and the wider public as informed as possible. Due to the considerable influence of the Foreign sector on productivity measures for the total economy, this release prioritises the Domestic sector for both presentational and analytical purposes. However, more detailed data on all sectors can be found on our open data portal, data.cso.ie, or PxStat.

Labour Productivity

Labour productivity is a key indicator for the Irish economy and measures the amount of output per hour worked in a sector. The rise in labour productivity for the total economy in Q3 2024 indicates that the economy became more efficient compared with the previous quarter. Output is measured using Gross Value Added (GVA) in constant prices in this release.

Multifactor Productivity

Multifactor productivity (MFP) is a more detailed measure of overall productivity that considers labour, capital, and additional factors such as education, skills, organisational practices, and changes in technology. MFP increased by 6% for the total economy in Q3 2024. Domestic sector MFP fell by 0.2%, while the Foreign sector MFP increased by 13.2%.

Editor's Note

In this release, the term Foreign sector refers to those sectors dominated by Foreign-Owned Multinational Enterprises (MNEs). These are sectors where Foreign-Owned MNE turnover on average exceeds 85% of the sector total. The term Domestic sector is used to refer to all other sectors not classified as Foreign.

It should be noted that the Foreign and Domestic classifications in this release also differ slightly from those used elsewhere in the CSO’s National Accounts. Rental & Leasing Services (NACE 77) is classified as Foreign in this release due to the concentration of foreign-owned capital in the sector.

All growth rates presented in this release are log growth rates for presentational purposes.

Information on the hours worked in secondary jobs is included with hours worked in primary jobs in this release for the first time.

More information is available in the Background Notes.

Labour Productivity

Labour productivity is a key indicator for the Irish economy as it is the main measure of the efficiency of the labour force. Labour productivity is measured as output per hour worked, where output is measured as Gross Value Added (GVA) in constant prices. Therefore, changes in labour productivity for a sector can be explained by changes in GVA and changes in hours worked.  

TimeperiodDomestic SectorForeign SectorTotal Economy
2019 - Q157.2328.388
2019 - Q258356.392.8
2019 - Q358.7343.993.7
2019 - Q459352.794.3
2020 - Q161392.1101
2020 - Q266.2385.6117.4
2020 - Q358.6414.3105
2020 - Q461.4383.9106.9
2021 - Q165.4421.6119.8
2021 - Q261.4431.5113.6
2021 - Q358.7453.3111.2
2021 - Q461.1402.7111
2022 - Q158.7417.4110.4
2022 - Q258.5446.2111.7
2022 - Q359.2471.9116.1
2022 - Q458.9469.3114.9
2023 - Q160.9398107.7
2023 - Q261.5408.7108.9
2023 - Q360.8366.7103
2023 - Q461.2373.1102.3
2024 - Q162.3352.9101.7
2024 - Q261.7334.3100.8
2024 - Q361.5391.7106.7

Labour productivity for the Total Economy (€106.70 per hour1) rose by 5.7% in the third quarter of 2024. Labour productivity was up in the Foreign sector (€391.70 per hour, up 15.8%) and decreased in the Domestic sector (€61.50 per hour, down 0.4%) compared with Q2 2024. Figure 1.1 shows the evolution of productivity in the Total Economy as well as in the Domestic and Foreign sectors since Q1 2019.

All results presented in this release are seasonally-adjusted unless otherwise stated.

DescriptionHours Worked (sign reversed)Gross Value AddedLabour Productivity
Manufacturing - Foreign6.419.626
Mining & Quarrying (B)4.75.210
Professional, Scientific & Technical Activities (M)1.88.210
Arts, Entertainment & Other Services (R-T)7.90.48.3
Information & Communication (J)-0.26.36
Administrative & Support Service Activities (N)6.9-3.13.7
Energy & Water (D-E)-1.33.82.5
Financial & Insurance Activities (K)-2.73.91.1
Transportation & Storage (H)1.5-0.60.9
Construction (F)-5.13.5-1.6
Public Administration, Education & Health (O-Q)-1.6-0.1-1.7
Wholesale & Retail (G)-2.9-0.8-3.7
Manufacturing - Domestic-4.6-1.3-5.9
Agriculture, Forestry & Fishing (A)-81.3-6.7
Accommodation & Food Service Activities (I)-6.7-1.1-7.9
Real Estate Activities (L)-10.82.6-8.2
Domestic Sector-1.91.5-0.4
Foreign Sector3.312.515.8
Total Economy-1.26.95.7

We can look at labour productivity individually in each of the subsector activities of the economy. Figure 1.2 shows the changes in labour productivity in the subsectors being analysed in this release. It shows how changes in GVA and hours worked make up these productivity changes. For example, the largest growth in labour productivity in Q3 2024 was in Foreign Manufacturing (+26%). This was made up of growth in GVA of 19.6% and a drop in hours worked of 6.4%. In contrast, a fall in productivity in Accommodation & Food Service Activities of 7.9% was made up of a decrease in GVA of 1.1% and an increase in hours worked of 6.7%. Total Economy productivity was driven by a rise in GVA of 6.9% and an increase in hours worked of 1.2%.

Domestic Labour Productivity

TimeperiodLabour ProductivityHours WorkedGross Value Added
2019 - Q1-0.71.71
2019 - Q21.5-0.51
2019 - Q31.2-0.30.9
2019 - Q40.51.21.8
2020 - Q13.3-3.10.1
2020 - Q28.3-28.3-20.1
2020 - Q3-12.323.911.6
2020 - Q44.8-3.11.7
2021 - Q16.3-5.40.9
2021 - Q2-6.49.12.7
2021 - Q3-4.56.21.7
2021 - Q44.2-0.24
2022 - Q1-4.12.5-1.6
2022 - Q2-0.32.42.1
2022 - Q31.1-1.2-0.1
2022 - Q4-0.41.41
2023 - Q13.40.94.3
2023 - Q21-0.10.9
2023 - Q3-1.20.1-1.1
2023 - Q40.70.10.7
2024 - Q11.80.62.4
2024 - Q2-10-1
2024 - Q3-0.41.91.5

Domestic labour productivity decreased by 0.4% in Q3 2024, compared with the previous quarter. This was caused by hours worked (+1.9%) growing faster than GVA (+1.5%) in the quarter. Figure 1.3 shows labour productivity broken down into both GVA and hours worked in the period since Q1 2019.  

Looking at the growth in Domestic GVA in Q3 2024, Professional, Scientific & Technical Activities (1.1%) and Real Estate Activities (0.4%) made the largest positive contributions. Administration & Support Service Activities (-0.4%) made the most significant negative contribution.

The main contributors to the increase in Domestic Hours worked include Agriculture, Forestry & Fishing (0.5%) and Accommodation & Food Service Activities (0.5%), while Arts, Entertainment & Other Services (-0.4%) and Administration & Support Service Activities (-0.2%) made the most significant negative contributions.

Productivity and Composition Effects in the Domestic Sector

DescriptionComposition EffectProductivity EffectContribution
Manufacturing - Domestic0.932-0.4270.504
Agriculture, Forestry & Fishing (A)0.314-0.130.183
Financial & Insurance Activities (K)0.0260.10.126
Arts, Entertainment & Other Services (R-T)-0.1180.2020.085
Construction (F)0.149-0.0840.065
ICT and Administrative & Support Services - Domestic0.138-0.0890.048
Transportation & Storage (H)-0.0290.0340.005
Mining & Quarrying (B)-0.0180.0220.004
Energy & Water (D-E)-0.1230.062-0.061
Professional, Scientific & Technical Activities (M)-1.4531.39-0.063
Accommodation & Food Service Activities (I)0.14-0.26-0.12
Real Estate Activities (L)0.867-1.047-0.179
Domestic Sector0.658-1.051-0.394
Public Administration, Education & Health (O-Q)-0.127-0.346-0.473
Wholesale & Retail (G)-0.039-0.479-0.518

The growth in Domestic Labour productivity can be broken down into the contributions of each of its subsectors2, as shown in Figure 1.4. The contribution of each subsector is determined by two factors: labour productivity growth for the individual subsector (Productivity Effect) and changes in the relative size of the subsector compared with the total Domestic sector (Composition Effect). Positive labour productivity growth for a subsector will always lead to a positive Productivity Effect, however the Composition Effect3 depends on how productive the subsector is compared with the overall Domestic sector. For example, if a low productivity subsector grows faster than the rest of the Domestic subsectors, it will account for a larger share and therefore reduce average labour productivity for the total Domestic sector.

The 0.4% quarter-on-quarter decrease in Domestic labour productivity can be explained by a Productivity Effect of -1.1% and a Composition Effect of 0.7%. This means that declines in subsector productivity (Productivity Effect) had a larger impact than improvements in the composition of the sector (Composition Effect) on Domestic labour productivity growth for the quarter. Wholesale & Retail (-0.5%) and Public Administration, Education & Health (-0.5%) made the most significant negative contributions to Domestic labour productivity growth. Domestic Manufacturing (0.5%) made the largest positive contribution.

2 For confidentiality purposes, the contributions of Information & Communications – Domestic and Administrative & Support Services – Domestic have been combined in Figure 1.4.

3 Also called the Reallocation Effect.

Capital Deepening and Multifactor Productivity

While changes in the level of labour in the economy are a crucial factor in explaining changes in efficiency in the economy, it is important to remember that overall productivity is not only dependent on labour. Capital, such as machinery, equipment, factories, and vehicles (tangible capital) and intellectual property (intangible capital) is the other key element of production in any economy.

Changes in the level of capital available to labour (capital deepening) has a considerable influence on output, as more capital investment increases the productive capacity of workers. Capital deepening is measured as the change in capital services per hour worked, where capital services are units of capital in the same way that hours worked are units of labour.

Aside from the level of labour and capital, overall productivity is also influenced by factors such as education, skills, organisational practices, and changes in technology among others, all of which have a significant influence on the quality of labour and capital. Multifactor productivity (MFP) is the measure of overall productivity in the economy, which attempts to capture all these features.

TimeperiodLabour ContributionCapital ContributionMultifactor ProductivityGross Value Added
2019 - Q110.3-0.31
2019 - Q2-0.31.10.21
2019 - Q3-0.201.10.9
2019 - Q40.70.70.31.8
2020 - Q1-1.80.31.60.1
2020 - Q2-15.90.1-4.3-20.1
2020 - Q313.10.5-211.6
2020 - Q4-1.70.52.91.7
2021 - Q1-30.13.70.9
2021 - Q24.90.5-2.72.7
2021 - Q33.40.5-2.21.7
2021 - Q4-0.10.63.54
2022 - Q11.30.8-3.8-1.6
2022 - Q21.30.60.12.1
2022 - Q3-0.60.60-0.1
2022 - Q40.80.6-0.41
2023 - Q10.50.834.3
2023 - Q200.60.40.9
2023 - Q30.10.6-1.7-1.1
2023 - Q400.700.7
2024 - Q10.3-1.13.12.4
2024 - Q200.4-1.4-1
2024 - Q310.7-0.21.5

Figure 1.5 shows the contributions of labour, capital, and MFP growth to GVA quarter-on-quarter growth for the Domestic sector. GVA growth is explained by the contributions of labour and capital, where the contributions capture changes in both of these factors. MFP growth is calculated as the difference between GVA growth and the sum of the labour and capital contributions (i.e. a residual measure).

Domestic GVA rose by 1.5% in the third quarter of 2024, explained by a MFP decline of 0.2%, increased labour contribution of 1%, and by a capital contribution growth of 0.7%.

TimeperiodCapital DeepeningMultifactor ProductivityLabour Productivity
2019 - Q1-0.4-0.3-0.7
2019 - Q21.30.21.5
2019 - Q30.11.11.2
2019 - Q40.20.30.5
2020 - Q11.71.63.3
2020 - Q212.5-4.38.3
2020 - Q3-10.4-2-12.3
2020 - Q41.92.94.8
2021 - Q12.63.76.3
2021 - Q2-3.7-2.7-6.4
2021 - Q3-2.3-2.2-4.5
2021 - Q40.73.54.2
2022 - Q1-0.3-3.8-4.1
2022 - Q2-0.50.1-0.3
2022 - Q31.201.1
2022 - Q4-0.1-0.4-0.4
2023 - Q10.433.4
2023 - Q20.70.41
2023 - Q30.5-1.7-1.2
2023 - Q40.600.7
2024 - Q1-1.33.11.8
2024 - Q20.4-1.4-1
2024 - Q3-0.2-0.2-0.4

Changes in labour productivity can also be explained by capital deepening and MFP growth, as shown in Figure 1.6. The decline in Domestic labour productivity of 0.4% in Q3 2024 compared with the previous quarter was due to negative MFP growth (-0.2%) and decreased capital deepening (-0.2%).

The significant rise and fall in capital deepening in Q2 2020 and Q3 2020 were due to movements in hours worked rather than changes in capital. As hours worked fell with almost no change to capital, there was relatively more capital available to each worker, leading to positive capital deepening in Q2 2020. When hours worked rebounded in the subsequent quarter, there was an opposite effect, resulting in negative capital deepening.

TimeperiodTotal EconomyDomestic SectorForeign Sector
2018 - Q4100100100
2019 - Q197.499.794.6
2019 - Q2100.599.9101.4
2019 - Q3100.9101100.5
2019 - Q498.4101.493.3
2020 - Q199.410392.6
2020 - Q298.798.796.3
2020 - Q3101.296.8102.6
2020 - Q4101.499.6100.6
2021 - Q1111.5103.4117.4
2021 - Q2112.1100.6122.2
2021 - Q3113.698.4128.5
2021 - Q4114.1101.9126.3
2022 - Q1114.898.1132.9
2022 - Q2117.398.3139.1
2022 - Q3120.398.2146.5
2022 - Q4120.697.9149.7
2023 - Q1113.2100.8130.5
2023 - Q2113.9101.2132.4
2023 - Q3107.899.4121.7
2023 - Q4106.299.5119.1
2024 - Q1107.8102.6118.5
2024 - Q2108.9101.2126
2024 - Q3115.7101143.8

Figure 1.7 illustrates the evolution of MFP for the Total Economy and the Domestic and Foreign sectors since the fourth quarter of 2018. In Q3 2024, MFP recorded a quarter-on-quarter increase for the Total Economy (6%) and for the Foreign sector (13.2%). For the same period MFP decreased for the Domestic sector (-0.2%). Due to globalisation events, the Foreign sector has seen MFP increase by 43.8% since Q4 2018, resulting in Total Economy MFP growth of 15.7% over the displayed period. The multifactor productivity index for the Foreign sector has now reached the value of 143.8, close to the peak of 149.3 in Q4 2022. Domestic sector MFP has remained relatively flat over the period.

TimeperiodIreland - TotalIreland - DomesticEU AverageCzechiaFranceLuxembourgSpain
2022 - Q1110.458.741.827.453.298.436
2022 - Q2111.758.541.927.752.896.736.3
2022 - Q3116.159.242.227.65396.436.6
2022 - Q4114.958.94227.552.89536.9
2023 - Q1107.760.941.727.552.692.936.6
2023 - Q2108.961.541.927.452.893.936.9
2023 - Q310360.841.827.552.893.936.6
2023 - Q4102.361.241.927.35393.736.9
2024 - Q1101.762.344.630.75696.439.7
2024 - Q2100.861.744.630.656.19839.8
2024 - Q3106.761.544.830.556.496.940
 

Figure 1.8 compares labour productivity for Ireland’s Total Economy and Domestic sector to the EU average and several countries in the EU4. Ireland had the highest labour productivity (€106.7 per hour) in the EU in Q3 2024, above Luxembourg (€96.9 per hour) and over double the EU average (€44.8 per hour). Ireland’s Domestic labour productivity (€61.5 per hour) was also considerably above the EU average, and higher than all countries shown other than Luxembourg. Across the EU, average labour productivity showed a modest uptick (+0.4%) in Q3 2024, compared with the previous quarter.

4 For which data was available at the time of release.

Table 1.1 Labour Productivity by Sector (Seasonally-Unadjusted)

Table 1.2 Labour Productivity by Sector (Seasonally-Adjusted)

Table 1.3: Labour Productivity Growth by Sector (Quarter-on-Quarter Log Growth Rates, Seasonally-Adjusted)

Table 1.4 Sector Contributions to Domestic Labour Productivity Growth Q3 2024 (Quarter-on-Quarter, Seasonally-Adjusted)

Table 1.5 Sector Contributions to Total Labour Productivity Growth Q3 2024 (Quarter-on-Quarter, Seasonally-Adjusted)

Table 1.6 Labour Share of Gross Value Added (Seasonally-Adjusted)

Table 1.7 Multifactor Productivity Growth (Quarter-on-Quarter Log Growth Rates, Seasonally-Adjusted)