Irish economy productivity increased in second quarter of year, figures show

Productivity increased across the Irish economy in the second quarter of the year as the economy became more efficient, with both the domestic and foreign sectors showing an increase of more than 2 per cent, new data showed.

Figures from the Central Statistics Office showed total labour productivity for the economy was up 2.3 per cent to €105.5 per hour, with workers in the domestic sector adding, on average, €55.20 of value per hour of work, and the foreign sector adding €414.5 per hour. That followed a decrease in the prior quarter.

Labour productivity measures the amount of output per hour worked in a sector.

The data showed Ireland had the highest labour productivity in the second quarter, in advance of Luxembourg, and running at more than two-and-a-half times above the European Union average of €41.2 per hour.

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While the foreign sector had a significant impact on the overall figure, domestic labour productivity was above average, beating all other countries in the EU, with the exception of Luxembourg.

The increase in Ireland’s domestic figures was attributed to improvements in subsector productivity of 6 per cent, which outweighed the changes in the composition of the sector, also known as the reallocation effect, on domestic labour productivity growth for the quarter.

“Productivity across the economy increased in the second quarter of 2023. Labour productivity for the domestic sector rose by 2.2 per cent when compared with the previous quarter, while there was also an increase of 2.2 per cent for the foreign sector,” statistician Seán O’Boyle said.

Labour productivity typically measures the value of work done in an economy over time with higher value-added jobs generating the greatest productivity.

The manufacturing sector showed significant increases, with domestic labour productivity up 14.4 per cent, while the foreign sector was up almost 6 per cent. Professional, scientific and technical activities increased by 5.1 per cent quarter on quarter.

However, there was a decrease in several domestic sectors, with transportation and storage down 7.1 per cent, construction declining 4.1 per cent, and accommodation and food was down 3.8 per cent.

The data also showed multifactorial productivity for the domestic sector, which takes into account labour, capital and factors such as education, skills, organisational practices and changes in technology, was up 2.4 per cent, with the foreign sector up 3.5 per cent.

Meanwhile, capital services in the domestic sector declined by 0.4 per cent, with foreign capital services down by 1.2 per cent.