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Labour Productivity - Sectoral Contributions

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Labour productivity is presented in terms of the overall economy, the Domestic and Other sector and the Foreign sector, as well as the Market sector. An analysis of Ireland’s relative position with its EU counterparts in terms of labour productivity is also presented.

 

Labour Productivity
20004.03228303564842
20011.22511683058293
20025.52515572457362
20030.206769753035041
20041.99625894496469
20050.522341155385542
20060.147847880458607
20074.07303533658456
2008-0.48551143079324
20093.36517783074286
201012.0790419446332
20119.26853980434559
2012-1.09414499010412
2013-1.49828558888827
20144.27557189903955
201521.7878573472618
20162.46354686214738
20172.82974229232236

Source publication:  National Income and Expenditure 2017 Tables 1-22 and Annex 1 for 1995-2017 (XLS 393KB)

Get the data: StatBank PIA04

Overall labour productivity for the period 2000 to 2017 increased by an annual average of 3.9% (2.9% for 2000 to 2014). For the latest year the result is 2.8%. There was a gradual downward trend in labour productivity from 2000 to 2008, however, the post-crash period was characterised by strong increases in labour productivity, due to the layoffs of workers, particularly in sectors such as Construction, Real Estate and Distribution, Transport, Hotels and Restaurants. A short period of labour hoarding by employers in 2008 was followed by these large layoffs of employees in the wake of the collapse in the Construction sector in 2008. The extreme globalisation-related events of 2015 in the Irish economy result in a further spike in labour productivity in the period 2014 to 2017.

X-axis labelLabour ProductivityHoursGVA
20004.032283035648423.989513643452848.1826651609511
20011.225116830582932.621852504545163.87909009143432
20025.525155724573620.5560381032883036.11191579895656
20030.2067697530350410.9208188558742721.12949258378352
20041.996258944964692.761117384088554.8124953818141
20050.5223411553855425.355776413883695.90609299366938
20060.1478478804586074.378748677333214.53307044490185
20074.073035336584563.600068836820567.81973624927019
2008-0.48551143079324-1.75044307874241-2.22745590829881
20093.36517783074286-9.4448261265535-6.39748349077363
201012.0790419446332-8.876480892805152.13036720157882
20119.26853980434559-1.272196467369077.87842930100895
2012-1.09414499010412-0.470561081328946-1.55955745093632
2013-1.498285588888273.280842205997541.73340023114263
20144.275571899039553.498756399136377.92392014359322
201521.78785734726184.4172490911286427.1675303690387
20162.463546862147383.268055869273355.81211281924143
20172.829742292322363.704876517467986.63945726748343

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As mentioned above, labour productivity showed a gradual downward trend in the period from 2000 to 2008. In overall terms, GVA growth and growth in hours and employment all rose at rates of close to 5%. The year 2008 shows evidence of labour hoarding, with GVA growth declining faster than hours worked, resulting in falling labour productivity. The substantial productivity improvement between 2009 and 2011 was due to hours worked falling at a faster pace than GVA.

Labour productivity growth is practically unchanged in 2012 due to negligible growth in GVA and labour hours. However, labour productivity declined in 2013 as labour growth outstripped that of GVA. GVA grew by 26% in 2015 because of major globalisation events causing a 21.7% increase in labour productivity, i.e.  change in total GVA per hour worked.  GVA growth exceeded labour growth between 2014 and 2017, which explains the increased labour productivity.

X-axis labelLabour ProductivityHoursGVA
20002.142159798953854.082644569035516.31226113868142
20010.5780785707205192.52664461697583.1193291787853
20021.486772620106811.122000859866052.62545508155472
20031.718746154249851.694981354036633.44285993512423
20042.415344904257173.209171480531155.7020289446122
2005-0.8352693276481925.82231616359054.93841481486914
2006-0.528719815026894.796527406716434.24244740085704
20072.80725203913974.140356194371327.06383846720513
2008-0.115448116515748-1.95637900220296-2.06956851600876
20091.68318797958147-10.4002020225665-8.89206899328111
201010.1973355881918-8.440660783030650.895952299254654
201112.1029098164201-1.5926738618456210.3174760734056
2012-1.16323421652791-0.659830151753482-1.81538899818523
2013-0.4051550587155123.23019449288342.81195213777363
20142.673001124068273.45239074296386.2176743103987
20153.844065991570414.430429426811768.44480404925876
20162.23568605704013.097688316374625.40262895919446
20170.6312419112861623.667085348891694.32147543982269

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The chart above shows labour productivity for the Domestic and Other sector of the economy. Labour productivity grew consistently between 2000 and 2004 because of GVA continually exceeding increases in labour hours worked. There was a significant fall in labour productivity growth between 2005 and 2008, explained largely by the developments in the Real Estate and Construction sectors. Productivity growth was negligible in 2008 because of hours and GVA both declining at a rate close to 2%. Labour hours worked fell from 2008 to 2012. The fall was particularly sharp in 2009 with a decline of over 10%. GVA growth declined in 2008 and 2009 and was positive in 2010 and 2011, resulting in positive labour productivity growth. GVA declined at a faster rate than labour hours in 2012, causing falls in productivity, while the fall in productivity in 2013 was a result of labour growth exceeding growth in GVA. Labour productivity growth was higher in the periods 2014 and 2015, due to higher GVA growth. However, labour productivity has fallen since 2015, due to falling levels of GVA resulting in growth of 0.6% in 2017 for the Domestic and Other sector.

X-axis labelLabour ProductivityHoursGVA
20009.824331474815213.2557123773932613.3998958280302
20012.581861008764433.37802848529926.04710549439054
200220.037024000327-3.9020227049535415.3531520694837
20030.900807179218144-5.49602823651324-4.64472967422147
20043.33373730972466-1.23528842436572.05726761427316
20058.074697790787691.007229979847419.16325854756599
20065.274018221868770.2990643927406785.58885532517772
200712.9979444663423-1.9125134856919410.8368435398689
2008-3.345096751409590.480394085891489-2.88077231247921
20092.691227255309860.6534688450890783.36228243206294
201021.685615103317-12.97719364692755.89423719090467
2011-1.587378262471151.900430571913670.282885287650592
2012-2.134776071536911.33891431287489-0.824444581031658
2013-4.995119754443813.75550099207953-1.42721053429798
20148.879580434727073.9310847416234313.1597290079402

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For the Foreign sector, labour productivity up to 2014 has followed a very different pattern compared to the Domestic and Other sector (see above). Productivity growth in the Foreign dominated sector has been significantly higher than the Domestic and Other sector, due to the high concentration of multinational enterprises (MNEs) operating in this sector. Labour productivity grew by 20% in 2002 and by just over 20% in 2010. In both cases this growth was caused by increases in GVA. The Foreign sector had a sharp decline in productivity growth in 2003, probably due to the end of the dot-com bubble, as many of the foreign MNEs were technology firms. In the Foreign sector, like the Domestic and Other sector, labour productivity growth was positive in 2009 and 2010, since hours worked were falling, while GVA was increasing.

X-axis labelLabour ProductivityHoursGVA
20009.824331474815213.2557123773932613.3998958280302
20012.581861008764433.37802848529926.04710549439054
200220.037024000327-3.9020227049535415.3531520694837
20030.900807179218144-5.49602823651324-4.64472967422147
20043.33373730972466-1.23528842436572.05726761427316
20058.074697790787691.007229979847419.16325854756599
20065.274018221868770.2990643927406785.58885532517772
200712.9979444663423-1.9125134856919410.8368435398689
2008-3.345096751409590.480394085891489-2.88077231247921
20092.691227255309860.6534688450890783.36228243206294
201021.685615103317-12.97719364692755.89423719090467
2011-1.587378262471151.900430571913670.282885287650592
2012-2.134776071536911.33891431287489-0.824444581031658
2013-4.995119754443813.75550099207953-1.42721053429798
20148.879580434727073.9310847416234313.1597290079402
201575.0856902233664.2949174392687182.6054760664333
20161.493313877531734.851355729739386.41711557563174
20176.117776582573714.0502122251718610.4157717428017

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Extreme results are witnessed in 2015 in the Foreign sector due to globalisation related activity, with labour productivity rising to 75%. As a result, much of the data underlying the years prior to 2015 is difficult to observe. Growth in labour productivity in 2017 stood at 6.1%. This is primarily driven by the increase in GVA growth from 6.4% in 2016 to 10.4% in 2017.

X-axis labelAnnual Average Growth
Luxembourg0.205721972007014
Italy0.246297963713966
Greece0.528556291677177
Belgium0.796712608962454
Portugal0.86475252674184
Spain0.884505044562936
Netherlands0.935190663191922
Euro area (19 countries)0.995117110414403
United Kingdom1.07831165930823
Denmark1.09534593404765
Cyprus1.13656099623053
Germany1.14919014552098
Austria1.23050239569522
European Union 1.25259866660496
Finland1.35210568228668
Sweden1.49146719850781
Ireland Domestic & Other2.3
Czechia2.716760385035
Hungary2.77262150294723
Bulgaria3.42766923358064
Ireland3.83910810824102
Lithuania4.17078290151669
Romania5.49155015946085
Ireland Foreign 9.3

Get the data: Eurostat

Annual average Labour Productivity for the entire period for Ireland as a whole was 3.9% which compares with the EU 28 average of 1.25% and the EuroArea average of 1%.  The highest reported result is for the Ireland - Foreign Sector of 9.3% followed by Romania at 5.4%.  The Ireland -  Domestic and Other Sector growth rate in labour productivity is 2.3% reflecting the importance of looking beyond the National rate.  The lowest rate reported is for Luxembourg at 0.2% for the period.   

X-axis labelFinancial and Insurance ActivitiesConstructionPublic Admin and DefenceInformation and Communication TotalManufacturing
2000100100100100100100
2001106.44297.2872194.54021101.0014101.2251105.7956
2002112.095898.4771185.89933109.1366106.818124.485
2003106.5514101.550783.61919104.9633107.0388126.5076
2004112.2414100.640486.93159124.3137109.1756128.8787
2005110.233897.1314181.11383127.3619109.7459138.1426
2006119.696190.9826679.25761138.4668109.9081143.0907
2007119.615789.3394182.04187162.1932114.3847150.9865
2008115.200397.1217383.32113177.7429113.8294143.3502
2009107.1093111.621573.77596189.1216117.6599149.4309
2010144.626127.989466.85706241.3051131.8721188.3813
2011190.2675118.959694.86547237.3649144.0947196.3807
2012173.2665126.635288.00798230.8218142.5181195.5747
2013161.7021133.59487.70351239.8502140.3828178.5846
2014176.9929121.828585.79189273.9615146.385190.0833
2015197.5064112.446380.3322301.0957178.2791344.7408
2016205.0409117.443888.86934300.7258182.6711346.5565
2017215.5896123.828983.79052317.8563187.8402371.9824

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Labour productivity growth has not been uniform across the sectors of the economy during the period 2000 to 2017. Manufacturing and Information and Communication have seen significant rises in labour productivity over this period, with the result that the Manufacturing sector has become 3.7 times more productive in 2017 than in 2000, while the Information and Communication sector is over three times more productive. In this period, labour productivity in Financial and Insurance activities has become twice as productive, while productivity in Public Administration and Defence decreased by 17% since 2000. Productivity in the Construction sector increased by 23 % over the entire period. In overall terms, GVA per hour worked for the whole economy has grown by 87% between 2000 and 2017.

A large proportion of the growth in labour productivity associated with the Manufacturing sector occurred between 2014 and 2017, driven by the globalisation events in 2015. Information and Communication was the second largest growing sector, with labour productivity increasing by a factor of 3 between 2000 and 2017. Labour productivity in the Construction sector increased by less than the overall economy, while Public Administration and Defence decreased over the period.

   .

 

X-axis labelAverage Percentage Contribution
Real Estate-0.160254055643771
Wholesale and Retail-0.0766488349852588
Public Admin and Defence-0.0345632673646738
Accomodation and Food Service Activities-0.000395381430879018
Mining and Quarrying0.013648175410688
Arts Entertainment and recreation0.019120353243259
Water Supply Sewerage Waste Management0.0195580130856803
Agriculture Forestry Fishing0.0279281952720216
Education0.0359867934807699
Other Service activities 0.0418002461647059
Construction0.0471008983254215
Transport and Storage0.0510170001072363
Electricity, Gas and Steam0.0787158151900075
Human Health and Social Work0.0793168384799817
Professional Scientific, Admin and Support Services0.391188774520024
Financial and Insurance Activities0.407093590013348
Information and Communication 0.561371445234112
Manufacturing 1.37752629507513
Total2.90927987534727

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Manufacturing made the largest contribution to overall labour productivity growth over the period up to 2014. This was followed by Information and Communication and by Financial and Insurance activities. Positive contributions also came from sectors such as Professional, scientific, Admin and support services, Human Health and social work, as well as Electricity, Gas and Steam. Real estate, Wholesale and Retail and Public Admin and Defence made a slightly negative contribution to growth in the period up to 2014.

  

X-axis labelAverage Percentage Contribution
Real Estate-0.1638
Public Admin and Defence-0.03016
Wholesale and Retail-0.01951
Mining and Quarrying0.01086
Accomodation and Food Service Activities0.013787
Water Supply Sewerage Waste Management0.010031
Education0.018656
Arts Entertainment and recreation0.022663
Other Service activities0.029914
Agriculture Forestry Fishing0.032023
Construction0.039702
Transport and Storage0.054383
Human Health and Social Work0.065563
Electricity, Gas and Steam0.069831
Financial and Insurance Activities0.427463
Professional Scientific, Admin and Support Services0.506348
Information and Communication 0.566464
Manufacturing 2.599658
Total3.928908

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The chart above shows average annual contributions to total labour productivity (GVA per hour) growth in the whole economy, using the standard twenty-one sector presentation of the economy. Manufacturing has made the largest average contribution to total productivity growth, followed by Information and Communications and Professional, Scientific and Technical activities, although it should be noted the large additions from GVA to Manufacturing in 2015. The only negative contributions to total productivity growth over the period came from the Real estate sector, Public Admin and Defence as well as Wholesale and Retail, while the Construction sector, the Agriculture sector and the Education sector contributed very little over the entire period to 2017.

X-axis labelGrowth Market sector
20005.17088382890483
20011.98546087692242
20027.19791468324555
2003-0.103604219805031
20042.14513793649622
20051.46686073980695
2006-0.0543172082607568
20075.36137511875105
20080.403371733650237
20095.31633821936643
201014.9619268474587
20118.60384286761817
2012-0.92195402749462
2013-2.13914102600513
20146.25066474985778
201528.9718415062546
20162.271680574473
20174.15209921146631

Get the data: StatBank PIA06

The chart above shows labour productivity for the Market sector. The Market sectors includes all NACE categories, excluding Real Estate, Public Admin and Defence, Education, Health and Social Work. Labour productivity in the Market sector has been consistently positive in the period to 2017, except in the years 2012 and 2013, when labour productivity stood at -1% and -2% respectively. Two large peaks are evident from the chart where labour productivity stood at over 10%. This was in 2010 and 2015, the latter relating to the globalisation events of 2015. The spike in 2010 may be explained by the large redundancies that occurred in various sectors during the recessionary period, which led to the remaining workers increasing their productivity. The Market sector recorded labour productivity growth of 4.2% in 2017, mainly driven by the increased level of GVA in 2017.

Go to the next chapter: Labour Productivity - Breakdown by MFP and Capital