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Productivity in Ireland Quarter 4 2023

Labour productivity down by 2.3% in the fourth quarter of 2023

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 (€97.1 per hour) declined by 2.3% in Q4 2023 compared with the previous quarter.

  • Labour productivity for the Domestic sector (€53.8 per hour) grew slightly by 0.1% in Q4 2023 while labour productivity for the Foreign sector (€381.0 per hour) fell by 0.2%.

  • Multifactor productivity for the Domestic sector rose by 0.2%, while Foreign sector multifactor productivity fell by 5.6%.

Statistician's Comment

The Central Statistics Office (CSO) has today (3 April 2024) published Productivity in Ireland Quarter 4 (Q4) 2023.

Commenting on the results, Doireann O’Brien, Statistician in the National Accounts Analysis & Globalisation Division, said: “Domestic productivity in Ireland remained relatively stable in October, November, and December (Q4) 2023. When compared with the previous quarter, labour productivity in the Domestic sector grew slightly by 0.1%. In the Foreign sector and the Total Economy, labour productivity fell by 0.2% and 2.3% respectively. (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 on 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 site, PxStat.

Labour Productivity

Labour productivity measures the amount of output per hour worked in a sector, so the fall in labour productivity for the Total Economy in Q4 2023 indicates that the economy became less efficient compared with the previous quarter.

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 fell by 2.8% for the Total Economy in Q4 2023. Domestic sector MFP rose slightly by 0.2%, while Foreign sector MFP decreased by 5.6%.

Editor's Note

It should be noted that the Foreign and Domestic classifications in this release differ slightly from those used elsewhere in the CSO’s National Accounts. Rental & Leasing Services (NACE 77) is classified as Foreign MNE-dominated 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. For more information, please see 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. Changes in labour productivity for a sector can also be explained by factors other than GVA and hours worked, such as the level of capital and multifactor productivity (MFP) growth, all of which are presented below.

TimeperiodDomestic SectorForeign SectorTotal Economy
2019 - Q150302.279
2019 - Q250.5328.583.4
2019 - Q351.1321.184.6
2019 - Q451.4332.185.5
2020 - Q152.6366.490.9
2020 - Q258.6359.5107.6
2020 - Q351.6390.596.5
2020 - Q453.9368.198.7
2021 - Q157.7391.1109.4
2021 - Q254.2397103.7
2021 - Q351.7424.3102.3
2021 - Q453.2386.1102.5
2022 - Q152.5389.5101.8
2022 - Q252.8406.7103
2022 - Q353.2447.4108.6
2022 - Q453.6450.1108.6
2023 - Q152.7415.7102.9
2023 - Q254.8404.2103.9
2023 - Q353.7381.999.4
2023 - Q453.838197.1

Get the data: PxStat PIQ02

Labour productivity for the total economy (€97.1 per hour1) fell by 2.3% in the fourth quarter of 2023. Labour productivity fell in the Foreign sector (€381.0 per hour, -0.2%) and grew slightly in the Domestic sector (€53.8 per hour, +0.1%) compared to the previous quarter.

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

TimeperiodLabour ProductivityHours WorkedGross Value Added
2019 - Q1-
2019 - Q21-0.90.1
2019 - Q31.1-0.20.9
2019 - Q40.61.31.9
2020 - Q12.4-3-0.6
2020 - Q210.9-28.9-18
2020 - Q3-12.824.211.4
2020 - Q44.4-3.11.3
2021 - Q16.8-60.8
2021 - Q2-6.392.7
2021 - Q3-
2021 - Q43-0.22.8
2022 - Q1-
2022 - Q20.622.6
2022 - Q30.8-0.20.5
2022 - Q40.71.11.9
2023 - Q1-
2023 - Q24-1.13
2023 - Q3-20.9-1.1
2023 - Q40.10.10.2

Get the data: PxStat PIQ02

Domestic labour productivity grew by 0.1% in Q4 2023, compared to the previous quarter. Both GVA and hours worked increased slightly, with growth of 0.2% and 0.1% respectively. The increase in Domestic GVA was due to increases in sectors such as Domestic Manufacturing (5.9%) and Transportation and Storage (4.9%). Other sectors showed decreases in GVA, for example, Construction (-1.9%) and Energy and Water (-1.8%). Hours worked showed different results across the domestic sectors with Energy and Water (4.1%) and Wholesale and Retail (3.8%) showing increased hours worked in the quarter, whilst Construction (-3.3%) and Transport and Storage (-3.0%) showing declines in hours worked.

The Manufacturing sector (+1.4%) made the strongest positive contribution to domestic GVA growth while Professional, Scientific & Technical Activities (-1.7%) made the most significant negative contribution.

DescriptionReallocation EffectProductivity EffectContribution
Transportation & Storage (H)0.8880.881.768
ICT and Administrative & Support Services - Domestic-0.2350.4140.179
Domestic Sector0.726-0.5990.127
Arts, Entertainment & Other Services (R-T)000
Public Administration, Education & Health (O-Q)000
Real Estate Activities (L)000
Agriculture, Forestry & Fishing (A)000
Financial & Insurance Activities (K)000
Construction (F)000
Mining & Quarrying (B)-0.2250.176-0.049
Accommodation & Food Service Activities (I)0.251-0.366-0.115
Wholesale & Retail (G)0.798-0.964-0.166
Energy & Water (D-E)-0.052-0.304-0.356
Manufacturing - Domestic-1.6251.201-0.424
Professional, Scientific & Technical Activities (M)0.925-1.635-0.71

Get the data: PxStat PIQ04

Labour productivity growth for the Domestic sector can be broken down into the contributions of each of its subsectors2, as shown in Figure 1.3. 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 to the total Domestic sector (Reallocation Effect). Positive labour productivity growth for a subsector will always lead to a positive Productivity Effect, however the Reallocation Effect depends on how productive the subsector is compared to 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 0.1% quarter-on-quarter increase in Domestic labour productivity can be explained by a Productivity Effect of -0.6% and a Reallocation Effect of 0.7%. This means that changes in the composition of the sector (Reallocation Effect) had a larger impact than reductions in subsector productivity (Productivity Effect) on Domestic labour productivity growth for the quarter.

Domestic Manufacturing (-0.4%) and Professional, Scientific & Technical Activities (-0.7%) made the most significant negative contributions to Domestic labour productivity growth. Transportation & Storage (+1.8%) made by far the largest positive contribution, while most other sectors made a small or negligible contribution to Domestic labour productivity growth.

2 For confidentiality purposes, the contributions of Information & Communications – Domestic and Administrative & Support Services – Domestic have been combined in Figure 1.3.

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 of these features.

TimeperiodLabour ContributionCapital ContributionMultifactor ProductivityGross Value Added
2019 - Q110.1-0.40.7
2019 - Q2-
2019 - Q3-
2019 - Q40.
2020 - Q1-1.70.11-0.6
2020 - Q2-15.9-0.2-1.9-18
2020 - Q313-0.1-1.511.4
2020 - Q4-1.7-
2021 - Q1-
2021 - Q24.80-2.22.7
2021 - Q33.40.1-2.11.4
2021 - Q4-
2022 - Q11.1-0.4-0.10.6
2022 - Q21.
2022 - Q3-
2022 - Q40.
2023 - Q11.31.4-20.6
2023 - Q2-0.6-0.543
2023 - Q30.5-0.2-1.4-1.1
2023 - Q40.1-

Get the data: PxStat PIQ02

Figure 1.4 shows the contributions of labour, capital and MFP growth to Gross Value Added (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.

Domestic GVA rose by 0.2% in the fourth quarter of 2023, explained by MFP growth of 0.2%, labour growth of 0.1%, and capital growth of -0.1%. This negative capital contribution for Q4 2023 does not imply zero investment, but it does mean that the overall level of capital in the sector has reduced compared to the previous quarter, due to depreciation and disposal of assets.

TimeperiodCapital DeepeningMultifactor ProductivityLabour Productivity
2019 - Q1-0.7-0.4-1.1
2019 - Q20.80.31
2019 - Q30.40.71.1
2019 - Q4-
2020 - Q11.412.4
2020 - Q212.8-1.910.9
2020 - Q3-11.3-1.5-12.8
2020 - Q41.43.14.4
2021 - Q133.96.8
2021 - Q2-4.1-2.2-6.3
2021 - Q3-2.7-2.1-4.8
2021 - Q40.22.83
2022 - Q1-1.3-0.1-1.4
2022 - Q2-
2022 - Q30.70.10.8
2022 - Q40.10.60.7
2023 - Q10.3-2-1.7
2023 - Q2044
2023 - Q3-0.6-1.4-2
2023 - Q4-

Get the data: PxStat PIQ02

Changes in labour productivity can also be explained by capital deepening and MFP growth, as shown in Figure 1.5. Domestic labour productivity grew slightly by 0.1% in Q4 2023 compared to the previous quarter, due to positive MFP growth (0.2%) and negative capital deepening (-0.1%). Capital deepening is influenced by both the level of labour and capital, and so low capital deepening does not mean that there was little investment in capital, it instead means that the level of labour grew at the same rate as the increase in capital.

The significant rise and fall in capital deepening in Q2 2020 and Q3 2020 were due to movement 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 - Q197.699.695.5
2019 - Q2101.899.9104.3
2019 - Q3100.5100.698.7
2019 - Q498.5101.391.9
2020 - Q1101.2102.395.5
2020 - Q299.1100.492.3
2020 - Q3103.198.9100.6
2020 - Q410410299.4
2021 - Q1112.7106112.6
2021 - Q2113.3103.6116.2
2021 - Q3116.3101.5124.6
2021 - Q4118104.4125.6
2022 - Q1119.6104.2128.8
2022 - Q2121.9105.4132.8
2022 - Q3127.6105.4144.4
2022 - Q4129.2106.1149.6
2023 - Q1123.1104141.3
2023 - Q2124.3108.2138.9
2023 - Q3120106.7131.8
2023 - Q4116.7107124.6

Get the data: PxStat PIQ02

Figure 1.6 illustrates the evolution of MFP for the Total Economy and Domestic and Foreign sectors since the start of 2019. MFP decreased for the Total Economy (-2.8%) and for the Foreign sector (-5.6%) in Q4 2023, while there was an increase in MFP for the Domestic sector (+0.2%). MFP in the Domestic sector has grown by 7.4% since the start of 2019. Due to globalisation events, the Foreign sector has seen MFP increase by 29.1% over the same period, resulting in Total Economy MFP growth of 19.1%.

International Comparisons

TimeperiodIreland - TotalIreland - DomesticEU AverageCzechiaFranceLuxembourgSpain
2022 - Q1101.852.539.22350.891.634.3
2022 - Q210352.839.423.150.491.434.3
2022 - Q3108.653.239.62350.590.534.8
2022 - Q4108.653.639.422.850.289.935.2
2023 - Q1102.952.741.326.151.891.836.8
2023 - Q2103.954.841.4265294.636.4
2023 - Q399.453.741.42651.993.736.5
2023 - Q497.153.841.325.751.892.236.5

Get the data: PxStat PIQ02 (CSO); NAMQ_10_A10 and NAMQ_10_A10_E (Eurostat)

Figure 1.7 compares labour productivity for Ireland’s Total Economy and Domestic sector to the EU average and several countries in the EU3. Ireland had the highest labour productivity (€97.1 per hour) in the EU in Q4 2023, above Luxembourg (€92.2 per hour) and over double the EU average (€41.3 per hour). Ireland’s domestic labour productivity (€53.8 per hour) was also considerably above the EU average, and higher than all countries shown other than Luxembourg. Labour productivity for the Total Irish Economy fell (-2.3%) however remained stable for the Domestic sector (+0.1%). Across the EU, average labour productivity decreased slightly (-0.2%) in Q4 2023, compared to the previous quarter.

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

Table 1.1: Labour Productivity by Sector (Euro per Hour)
Table 1.2: Labour Productivity by Sector (Euro per Hour) (Seasonally-Adjusted)
Table 1.3: Labour Productivity Growth by Sector (%) (Quarter-on-Quarter, Seasonally-Adjusted)
Table 1.4: Sector Contributions to Domestic Labour Productivity Growth in Q4 2023 (%) (Quarter-on-Quarter, Seasonally-Adjusted)
Table 1.5: Sector Contributions to Total Economy Labour Productivity Growth in Q4 2023 (%) (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, Seasonally-Adjusted)