This release was compiled during the COVID-19 crisis. The results contained in this release reflect some of the economic impacts of the COVID-19 situation.The full series of information notes on the implications of COVID-19 on the National Accounts can be found on our Information Notes page.
This chapter focuses on the factors that contribute to Gross Value Added (GVA) growth: Capital, Labour and Multifactor Productivity (MFP). Changes in GVA can be measured as the contribution of labour (hours worked), the contribution of capital (capital services) and their combined efficiency of use (MFP). While the contribution of labour is clearly critical to output in the Irish economy, capital has been the major driver of GVA growth in recent years. At the same time, MFP has fallen significantly since 2015.
| Timeperiod | Labour Contribution | Capital Contribution | Multifactor Productivity | Gross Value Added |
|---|---|---|---|---|
| 2011 | -0.9 | 1.3 | 1 | 1.5 |
| 2012 | -0.4 | 2.2 | -4.2 | -2.4 |
| 2013 | 1.8 | 2 | -2.5 | 1.3 |
| 2014 | 1.5 | 3.7 | 2.1 | 7.4 |
| 2015 | 1.2 | 54.1 | -33.9 | 21.4 |
| 2016 | 1.8 | 7.8 | -8.2 | 1.4 |
| 2017 | 1.5 | 4.3 | 0.8 | 6.6 |
| 2018 | 1.3 | 4.1 | 4.5 | 9.8 |
| 2019 | 1 | 10.9 | -6.7 | 5.2 |
| 2020 | -3.2 | 4.7 | 5.7 | 7.1 |
| 2021 | 1.9 | -1.7 | 11.7 | 11.9 |
Get the data: PxStat PIA15
Figure 10.1 shows GVA growth for the total economy over the period 2011-2021, broken down into the contributions of labour and capital and MFP growth. GVA increased by 11.9% in 2021, which was almost entirely explained by MFP growth of 11.7%. The contribution of capital (-1.7%) was negative for the first since 2000, as imports of IPP failed to outpace the level of depreciation. The contribution of labour to GVA growth was 1.9%, driven by a significant increase in hours worked across the economy which had fallen in 2020 due to the initial impact of the COVID-19 pandemic.
| Timeperiod | Labour Contribution | Capital Contribution | Multifactor Productivity | Gross Value Added |
|---|---|---|---|---|
| 2011 | -1.1 | 1.3 | 1.7 | 1.9 |
| 2012 | -0.6 | 1 | -3.4 | -3 |
| 2013 | 2.2 | 1.5 | -1.5 | 2.2 |
| 2014 | 1.7 | 3.3 | 0.8 | 5.8 |
| 2015 | 1.4 | 6.1 | -1.9 | 5.7 |
| 2016 | 2.6 | 1.6 | -2.1 | 2 |
| 2017 | 1.6 | 2.7 | 0.1 | 4.4 |
| 2018 | 1.5 | 3.1 | 1.2 | 5.9 |
| 2019 | 1.5 | 2.6 | 0 | 4.1 |
| 2020 | -6.3 | 0.2 | -1 | -7 |
| 2021 | 2.9 | -0.1 | 1.9 | 4.6 |
Get the data: PxStat PIA15
The Domestic sector had GVA growth of 4.6% in 2021, rebounding after a 7% fall in 2020. This increase in GVA growth was largely driven by a positive labour contribution of 2.9%. This result was due to a significant rebound in hours, following the easing of COVID-19 related restrictions. Due to falls in income, the contribution from capital was negligible in 2021. MFP in the sector increased by 1.9% in 2021, the first increase since 2018.
| Description | Labour Contribution | Capital Contribution | Multifactor Productivity | Gross Value Added |
|---|---|---|---|---|
| Manufacturing - Foreign | 0.7 | -2.9 | 23 | 20.8 |
| Manufacturing - Domestic | 1.1 | 4 | 12 | 17.1 |
| Financial & Insurance Activities (K) | 0.9 | 1.2 | 14.2 | 16.4 |
| Information & Communication (J) | 1.6 | -4 | 17.3 | 15 |
| Total Economy | 1.9 | -1.7 | 11.7 | 11.9 |
| Professional, Scientific & Technical Activities (M) | 6.1 | -2.1 | 4.4 | 8.4 |
| Arts, Entertainment & Recreation (R) | 6.9 | 0 | 1.5 | 8.4 |
| Public Administration & Defence (O) | 4.5 | 0.3 | 3.5 | 8.3 |
| Wholesale & Retail (G) | 0.3 | -2.3 | 9.9 | 7.9 |
| Water Supply, Sewerage & Waste Management (E) | -3.6 | 0.4 | 5 | 1.8 |
| Agriculture, Forestry & Fishing (A) | 1.4 | 1.2 | -2.2 | 0.4 |
| Construction (F) | 3.9 | 2.1 | -9.2 | -3.2 |
| Administrative & Support Service Activities (N) | 0.8 | -2.7 | -4.6 | -6.6 |
| Transportation & Storage (H) | 2 | 0.4 | -11.8 | -9.4 |
| Accommodation & Food Service Activities (I) | 12.4 | 0.2 | -34.4 | -21.8 |
| Electricity, Gas & Steam (D) | 2 | 0.2 | -29.2 | -26.9 |
Get the data: PxStat PIA15
GVA growth broken down by factor inputs by sector in 2021 is shown in Figure 10.3. There was significant movement in GVA across the economy in 2021. Accommodation & Food (-21.8%) and Transportation & Storage (-9.4%) were most exposed to the effects of the COVID-19 pandemic and experienced large reductions for the second year in a row.
While the MNE-dominated ICT (15%) and Manufacturing - Foreign (20.8%) sectors continued growing, Financial & Insurance (16.4%) and Manufacturing - Domestic (17.1%) also saw extremely strong growth.
Interpreting the MFP result is difficult on account of the impact that COVID-19 subsidies and other government supports had on labour input, as well as the rapid growth of remote working.
| Description | Labour Contribution | Capital Contribution | Multifactor Productivity | Gross Value Added |
|---|---|---|---|---|
| Information & Communication (J) | 1 | 15.7 | -3.3 | 13.4 |
| Manufacturing - Foreign | 0.4 | 18.2 | -5.9 | 12.7 |
| Professional, Scientific & Technical Activities (M) | 2.1 | 7.1 | -1.7 | 7.4 |
| Administrative & Support Service Activities (N) | 0.6 | 7.8 | -1.6 | 6.8 |
| Total Economy | 0.7 | 8.5 | -2.7 | 6.5 |
| Agriculture, Forestry & Fishing (A) | -0.6 | 0.5 | 5 | 4.9 |
| Manufacturing - Domestic | -0.2 | 3 | 1.3 | 4.1 |
| Public Administration & Defence (O) | 2.3 | 0.1 | 0.6 | 3 |
| Wholesale & Retail (G) | 0.2 | 1.7 | 0.9 | 2.9 |
| Water Supply, Sewerage & Waste Management (E) | -0.3 | 1.1 | 1.9 | 2.7 |
| Arts, Entertainment & Recreation (R) | -0.6 | 1.1 | 1.8 | 2.2 |
| Construction (F) | 2.1 | 0.9 | -1.1 | 1.9 |
| Electricity, Gas & Steam (D) | 0.2 | 0.7 | -1.6 | -0.7 |
| Financial & Insurance Activities (K) | 1 | 2.1 | -5.2 | -2.2 |
| Transportation & Storage (H) | -0.2 | 0.6 | -3.8 | -3.5 |
| Accommodation & Food Service Activities (I) | -0.9 | 0.3 | -4.2 | -4.8 |
Get the data: PxStat PIA15
Average GVA growth for the period 2011-2021 is shown in Figure 10.4, highlighting that capital and MFP growth have generally been the more important factors in explaining GVA growth over the period. Both foreign sectors (ICT and Manufacturing - Foreign) had by far the largest growth over the period, explained by significant capital contributions and falls in MFP. For Domestic sectors, MFP growth has explained the largest proportion of average GVA growth, particularly for sectors which saw a decline over the period such as Accommodation & Food (-4.2%) and Transportation & Storage (-3.8%).
| label | EU Countries | EU Average | Ireland |
|---|---|---|---|
| Ireland - Foreign | 0 | 0 | 18.8 |
| Ireland | 0 | 0 | 11.9 |
| Hungary | 7.2 | 0 | 0 |
| Belgium | 5.6 | 0 | 0 |
| EU Average | 0 | 5.1 | 0 |
| Netherlands | 5 | 0 | 0 |
| Denmark | 4.9 | 0 | 0 |
| Sweden | 4.9 | 0 | 0 |
| Portugal | 4.7 | 0 | 0 |
| Luxembourg | 4.7 | 0 | 0 |
| Ireland - Domestic | 0 | 0 | 4.6 |
| Czechia | 3.4 | 0 | 0 |
| Finland | 3.2 | 0 | 0 |
Get the data: PxStat PIA15 (Irish Data) and Eurostat
Figure 10.5 compares Irish GVA growth to that of comparable EU economies in 2021. Ireland’s economy grew by 11.9% in 2021, far faster than any of the countries shown. This was largely explained by 18.8% growth for the Foreign sector. Ireland’s Domestic sector grew by 4.6% in 2021, which was more in line with our European counterparts. Average growth for the EU was 5.1%, meaning that Irish GVA growth was more than twice that of the EU.
| label | EU Countries | EU Average | Ireland |
|---|---|---|---|
| Ireland - Foreign | 0 | 0 | 12.7 |
| Ireland | 0 | 0 | 6.5 |
| Hungary | 2.7 | 0 | 0 |
| Ireland - Domestic | 0 | 0 | 2.4 |
| Luxembourg | 2.3 | 0 | 0 |
| Sweden | 2 | 0 | 0 |
| Czechia | 1.8 | 0 | 0 |
| Denmark | 1.6 | 0 | 0 |
| Netherlands | 1.3 | 0 | 0 |
| Belgium | 1.3 | 0 | 0 |
| EU Average | 0 | 1.2 | 0 |
| Finland | 0.7 | 0 | 0 |
| Portugal | 0.3 | 0 | 0 |
Get the data: PxStat PIA15 (Irish Data) and Eurostat
Figure 10.6 shows average GVA growth for a selection of EU countries over the period 2011 to 2021. Similar to Figure 10.5, Ireland’s economy grew much faster than any comparable country, with average GVA growth of 6.5%. Ireland’s Domestic sector recorded a result of 2.4%, which was double the EU average of 1.2% and above many of its similar sized EU counterparts such as Denmark, Czechia and Sweden.
| Timeperiod | Domestic Sector | Foreign Sector | Total Economy |
|---|---|---|---|
| 2010 | 100 | 100 | 100 |
| 2011 | 101.7 | 99.1 | 101.1 |
| 2012 | 98.3 | 92.7 | 96.9 |
| 2013 | 96.8 | 87.7 | 94.5 |
| 2014 | 97.6 | 93.1 | 96.5 |
| 2015 | 95.8 | 44.5 | 68.7 |
| 2016 | 93.8 | 37.5 | 63.3 |
| 2017 | 93.9 | 38.1 | 63.9 |
| 2018 | 95 | 41.7 | 66.8 |
| 2019 | 95.1 | 35.8 | 62.5 |
| 2020 | 94.2 | 40.4 | 66.1 |
| 2021 | 96 | 49.9 | 74.3 |
Get the data: PxStat PIA15
Figure 10.7 shows MFP (indexed to 2010) for the Foreign, Domestic and Total Economy. Since 2015, MFP has fallen dramatically in the Foreign sector, decreasing by 60% from 2010 to 2015. In the total economy, the MFP index fell by 35% between 2010 to 2015, highlighting the impact of the Foreign sector on total economy MFP.
For the Domestic sector, the MFP index has remained relatively flat over the period, with the index only falling by 4% between 2010 and 2021.
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