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.
Foreign-owned companies were at least twice as productive as domestic-owned companies in eight of the 20 economic sectors analysed. This result was more pronounced in sectors where there was a high concentration of multinationals such as Software & Computer Programming, Pharmaceuticals and Computer, Electronic & Optical Products (See Chapter).
An analysis of Labour Productivity in 2021 by Foreign and Domestic ownership within sectors presents similar results in the sectors of Financial & Insurance Activities (approx. €140,000 per employee), Accommodation & Food (approx. €15,000) and Transportation & Storage (approx. €50,000) (See Chapter).
Ireland’s Domestic labour share of Gross Value Added (49.7%) was below the EU average of 53.4%. Wholesale & Retail (47.8%) and Professional & Technical Activities (52.7%) reported labour share results well below the EU average for these sectors (See Chapter).
For the first time in 20 years, Capital services fell (-2.4%) in 2021, due to reduced imports of Intellectual Property Products (See Chapter).
Quality-Adjusted Labour Input (QALI) for the total economy grew by 6.7% in 2021, due to growth in hours worked of 6.4% and a quality improvement in the labour force of 0.3% (See Chapter).
While Ireland had one of the highest productivity levels (Gross Value Added per Employee) in the EU, it also reported Greenhouse Gas Emissions per Employee in 2021 that were over 1.5 times that of the EU average (See Chapter).
This report is published in the context of the COVID-19 pandemic with restrictions impacting several Domestic sectors such as Construction, Accommodation & Food and Wholesale & Retail.
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Statistician's Comment
The Central Statistics Office (CSO) has today (24 April 2023) released Productivity in Ireland 2021.
Commenting on the release, Yvonne Hayden, Statistician in the National Accounts Analysis and Globalisation Division, said: "This publication by the CSO presents a comprehensive picture of productivity and the sources of economic growth in the Irish economy in 2021 for both the Domestic and the Foreign sectors. For the first time, detailed labour productivity results for both Irish and foreign-owned firms are presented, providing greater insight into productivity developments for Irish-owned firms. In addition, new indicators on greenhouse gas emissions associated with production are provided.
Productivity - Major Developments
In 2021, Domestic labour productivity declined by 1%, as hours worked (5.7%) grew faster than Gross Value Added (4.6%). This was associated with a return to work in sectors such as Accommodation & Food, Transportation & Storage, Construction, and Arts, as the COVID-19 restrictions were gradually eased during the year. For the total economy, overall labour productivity growth of 5.5% was recorded, largely explained by Financial Services (14.7%), and Manufacturing (13.4%).
Capital assets per employee were €469,000 in 2021, a fall of 7.8% compared with 2020. This marked the first decrease since 2013 and was largely explained by reduced investment in intangible assets, specifically intellectual property products (IPP).
In 2021, Domestic Unit Labour Costs increased by 3.8%, indicating that the domestic sector became less competitive. In contrast, Total Unit Labour Costs fell by 2.8%, as the economy became more competitive, reflecting the impact of foreign multinational dominated sectors.
Productivity - Foreign and Domestic Split by Ownership
To illustrate the contrast in the productivity performance between Domestic and Foreign-owned companies, the CSO has for the first-time published labour productivity results for both Foreign and Domestic-owned companies within each sector.
Because of the concentration of high performing multi-national enterprises (MNEs), foreign-owned companies are in general at least five times more productive than domestic firms. This applies in particular to sectors such as Software & Computer Programming, Pharmaceuticals, and Computer, Electronic & Optical Products. Although these sectors had a high concentration of MNE activity, there were significant domestic activities also associated with them. Many of these domestic companies are also significant employers. For example, domestic companies in Software & Computer Programming accounted for 35% of employment in the sector.
In some of the other sectors, such as Financial & Insurance Activities, Accommodation & Food, and Transportation & Storage, Domestic productivity was closer to the Foreign result. For example, in Financial & Insurance, productivity for both foreign (€152,981) and domestic companies (€129,947) was relatively similar in 2021. At the same time, employment in the sector was evenly split.
Productivity – International Comparisons
The publication also shows how Ireland and its Domestic and Foreign sectors compared with a selection of EU partner countries in 2021. Driven by the strong performance of multinationals, Ireland had one of the highest labour productivity (€102/hour) results, while the Domestic sector (€56/hour) was considerably closer to the EU average (€38/hour). The high performing sectors were Manufacturing (€302/hour), Information & Communications (€255/hour), and Administrative & Support Services (€141/hour).
Ireland’s Domestic labour share (49.7%) was below the EU average of 53.4% in 2021. In contrast, Ireland's Foreign sector had the lowest labour share compared with many EU countries at 9.2%. This was mainly explained by the dominance of Manufacturing - Foreign and Information & Communications (ICT) within this subsector.
Ireland had the highest level of capital assets per employee (€469,000 per employee) in 2021, among similar sized economies, which was higher than Denmark (€348,000), Finland (€310,000), and Belgium (€293,000).”