Irish workers are among the most productive in the world, adding on average €95.76 to the value of the economy for every hour they work, according to the Central Statistics Office (CSO).
Productivity, defined as the rate at which goods or services are produced in an economy, is a key driver of earnings and prosperity.
The CSO’s latest Productivity in Ireland report shows that labour productivity in the Republic rose 14.1 per cent to €95.76 per hour of work in 2020 despite the impact of the pandemic, which triggered the closure of certain sectors of the economy.
The headline figure is, however, highly inflated by the multinational-dominated manufacturing and ICT sectors.
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Productivity in the manufacturing sector was the highest, at €631 per hour of work (up 21.9 per cent year on year) while, in the ICT sector, it was €322 (up 10.6 per cent).
When these globalised/multinational sectors are removed, productivity in the domestic sector was €51 per hour of work, which was more in line with peer countries.
Due to prolonged lockdowns and restrictions on opening hours associated with the pandemic, the transport and the accommodation and food sectors were among the least productive.
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Productivity in the transport sector was just €20 per hour of work (down 56 per cent), while in the accommodation and food sector it was €17 per hour (down 9 per cent).
Labour productivity typically measures the value of work done in a given economy over time with higher value-added jobs generating the greatest productivity.
A huge level of investment by multinationals in the Irish economy since 2015, including billions of euro worth of intellectual property, has boosted labour productivity here.
The CSO figures show Ireland had the highest level of capital assets per employee in the EU in 2020 at €496,000, followed by Luxembourg (€448,000) and Austria (€353,000).
Between 2011 and 2020, Ireland’s capital stock per employee increased from €287,000 per employee to €496,000 per employee, a rise of 71 per cent, the agency said.
“Surprisingly despite the widespread impact of Covid-19 on the country in 2020, overall labour productivity increased by 14.1 per cent,” the CSO’s Michael Connelly said.
“There were very different outcomes for key sectors across the economy; ICT and pharma in the foreign sector (+18.2 per cent) produced more output than ever before, adding hugely to productivity measures,” he said.
“Tellingly, labour productivity was down by 56 per cent in transport and by 9 per cent in accommodation and food, two of the sectors most impacted by Covid-19,” he said.
“In fact, for many domestic-facing sectors, they were either closed-down or were operating in line with the tight Government restrictions, resulting in mixed productivity outcomes. For some sectors such as construction, this resulted in employment declining faster than output, leading to positive productivity results which need to be carefully interpreted,” Mr Connelly said.
“For other sectors, the fall in gross value added exceeded the labour reductions, with negative productivity recorded. In addition, the impact of the Government employment wage subsidy scheme (EWSS) had a significant influence on these results,” he said.
