This publication is categorised as a Frontier Series Output. Particular care must be taken when interpreting the statistics in this release as it may use new methods which are under development and/or data sources which may be incomplete, for example, new administrative data sources.
Labour productivity for the Domestic sector (€54.40 per hour) decreased by 1.8% in Q3 2023 compared with the previous quarter.
Labour productivity for the Foreign sector (€405.90 per hour) fell by 0.5%, while Total Economy labour productivity (€103.90 per hour) declined by 0.9%.
There were significant reductions in labour productivity for Domestic sectors such as Domestic Manufacturing (-10.6%), Financial & Insurance Activities (-8.5%), and Accommodation & Food (-5%).
Multifactor productivity for the Domestic sector was down by 1.5%, while Foreign sector multifactor productivity grew by 1.1%.
It should be noted that the Foreign and Domestic classifications in this release differ slightly from those used elsewhere the CSO’s National Accounts. Rental & Leasing Services (NACE 77) is classified as Foreign MNE-dominated in this release due to the concentration of foreign-owned capital in the sector.
All growth rates presented in this release are log growth rates for presentational purposes. For more information, please see the Background Notes.
Labour productivity is a key indicator for the Irish economy as it is the main measure of the efficiency of the labour force. Labour productivity is measured as output per hour worked, where output is measured as Gross Value Added (GVA). Changes in labour productivity for a sector can also be explained by factors other than GVA and hours worked, such as the level of capital and multifactor productivity (MFP) growth, all of which are presented below.
| Timeperiod | Domestic Sector | Foreign Sector | Total Economy |
|---|---|---|---|
| 2019 - Q1 | 50.4 | 305.3 | 79.4 |
| 2019 - Q2 | 50.6 | 327.6 | 83.3 |
| 2019 - Q3 | 51.3 | 325.8 | 85.6 |
| 2019 - Q4 | 51.2 | 334.4 | 85.2 |
| 2020 - Q1 | 53 | 369.5 | 91.3 |
| 2020 - Q2 | 58.5 | 359.5 | 107.1 |
| 2020 - Q3 | 51.7 | 402.3 | 98.3 |
| 2020 - Q4 | 54.1 | 368.7 | 98 |
| 2021 - Q1 | 58.4 | 395.6 | 110.5 |
| 2021 - Q2 | 54.4 | 401.3 | 103.8 |
| 2021 - Q3 | 51.9 | 451.5 | 105.6 |
| 2021 - Q4 | 53.4 | 390.5 | 101.6 |
| 2022 - Q1 | 53.3 | 401.3 | 103.8 |
| 2022 - Q2 | 52.9 | 410.5 | 102.7 |
| 2022 - Q3 | 53.4 | 475 | 112.2 |
| 2022 - Q4 | 53.8 | 461.4 | 108.6 |
| 2023 - Q1 | 54 | 410.3 | 103.8 |
| 2023 - Q2 | 55.3 | 408.1 | 104.9 |
| 2023 - Q3 | 54.4 | 405.9 | 103.9 |
Get the data: PxStat PIQ02
Labour productivity for the total economy (€103.9 per hour1) fell by 0.9% in the third quarter of 2023, due to the 0.7% decrease in GVA compared to the previous quarter. This decrease in GVA was largely due to reduced activity in the Foreign Manufacturing sector, where GVA fell by 1.8%. Labour productivity declined for both the Domestic sector (€54.4 per hour, -1.8%) and the Foreign sector (€405.9 per hour, -0.5%) compared to the previous quarter.
1 All results presented in this release are seasonally-adjusted unless otherwise stated.
| Timeperiod | Labour Productivity | Hours Worked | Gross Value Added |
|---|---|---|---|
| 2019 - Q1 | 0.1 | 1.3 | 1.4 |
| 2019 - Q2 | 0.5 | -0.5 | -0.1 |
| 2019 - Q3 | 1.4 | -0.3 | 1.1 |
| 2019 - Q4 | -0.1 | 1.2 | 1.1 |
| 2020 - Q1 | 3.5 | -3.3 | 0.2 |
| 2020 - Q2 | 9.8 | -28.2 | -18.4 |
| 2020 - Q3 | -12.4 | 23.9 | 11.5 |
| 2020 - Q4 | 4.5 | -3.5 | 1 |
| 2021 - Q1 | 7.8 | -6.5 | 1.2 |
| 2021 - Q2 | -7.1 | 9.9 | 2.9 |
| 2021 - Q3 | -4.7 | 5.7 | 0.9 |
| 2021 - Q4 | 2.9 | -0.3 | 2.6 |
| 2022 - Q1 | -0.3 | 1.7 | 1.4 |
| 2022 - Q2 | -0.7 | 2.9 | 2.2 |
| 2022 - Q3 | 0.9 | -0.8 | 0.1 |
| 2022 - Q4 | 0.7 | 1.1 | 1.8 |
| 2023 - Q1 | 0.3 | 1.1 | 1.3 |
| 2023 - Q2 | 2.5 | -0.1 | 2.3 |
| 2023 - Q3 | -1.8 | 0.2 | -1.6 |
Get the data: PxStat PIQ02
Domestic labour productivity fell by 1.8% in the third quarter of 2023 when compared to the previous quarter. GVA decreased by 1.6%, while there was a slight increase in hours worked (0.2%), leading to a decline in Domestic labour productivity. The fall in Domestic GVA was due to decreases in sectors such as Financial & Insurance Activities (-8.5%) and Domestic Manufacturing (-10.6%).
While total Domestic hours worked grew by 0.2% in Q3 2023 when compared to Q2 2023, there were significant changes to hours worked within the sector. There were increases in hours worked for sectors such as Agriculture (11.9%) and Domestic Manufacturing (5.1%). This growth was almost entirely offset by decreases in hours worked for Wholesale & Retail (-5.2%) & Construction (-3.1%).
| Description | Reallocation Effect | Productivity Effect | Contribution |
|---|---|---|---|
| Transportation & Storage (H) | 0.89 | -0.26 | 0.63 |
| Energy & Water (D-E) | 0.145 | 0.038 | 0.184 |
| Public Administration, Education & Health (O-Q) | -0.124 | 0.207 | 0.083 |
| Mining & Quarrying (B) | 0.019 | -0.015 | 0.004 |
| Professional, Scientific & Technical Activities (M) | -0.203 | 0.178 | -0.025 |
| Construction (F) | -0.149 | 0.105 | -0.044 |
| Arts, Entertainment & Other Services (R-T) | -0.028 | -0.04 | -0.068 |
| ICT and Administrative & Support Services - Domestic | -0.319 | 0.216 | -0.103 |
| Real Estate Activities (L) | 2.284 | -2.413 | -0.129 |
| Agriculture, Forestry & Fishing (A) | 0.366 | -0.519 | -0.152 |
| Accommodation & Food Service Activities (I) | -0.114 | -0.196 | -0.309 |
| Wholesale & Retail (G) | -0.787 | 0.472 | -0.315 |
| Financial & Insurance Activities (K) | -0.037 | -0.706 | -0.744 |
| Manufacturing - Domestic | 0.116 | -0.889 | -0.773 |
| Domestic Sector | 2.059 | -3.821 | -1.762 |
Get the data: PxStat PIQ04
Labour productivity growth for the Domestic sector can be broken down into the contributions of each of its subsectors2, as shown in Figure 1.3. The contribution of each subsector is determined by two factors: labour productivity growth for the individual subsector (Productivity Effect) and changes in the relative size of the subsector compared to the total Domestic sector (Reallocation Effect). Positive labour productivity growth for a subsector will always lead to a positive Productivity Effect, however the Reallocation Effect depends on how productive the subsector is compared to the overall Domestic sector. For example, if a low productivity subsector grows faster than the rest of the Domestic subsectors, it will account for a larger share and therefore reduce average labour productivity for the total Domestic sector.
The 1.8% quarter-on-quarter decrease in Domestic labour productivity can be explained by a Productivity Effect of -3.8% and a Reallocation Effect of 2.1%. This means that reductions in subsector productivity (Productivity Effect) had a larger impact than changes in the composition of the sector (Reallocation Effect) on Domestic labour productivity growth for the quarter.
Domestic Manufacturing (-0.8%) and Financial & Insurance Activities (-0.7%) made the most significant contributions to the 1.8% decrease in Domestic labour productivity. Transportation & Storage (0.6%) made by far the largest positive contribution, while most other sectors made a small or negligible contribution to Domestic labour productivity growth.
Real Estate had the largest influence on the Productivity and Reallocation Effects for the quarter, with a Productivity Effect of -2.4% and a Reallocation Effect of 2.3%. In the context of productivity analysis, results for the Real Estate sector are not meaningful due to the relatively low level of labour in the sector and the influence of imputed rents3 on its output.
2 For confidentiality purposes, the contributions of Information & Communications – Domestic and Administrative & Support Services – Domestic have been combined in Figure 1.3.
3 Imputed rent represents the rent that homeowners would pay if they rented their homes rather than owning them.
While changes in the level of labour in the economy are a crucial factor in explaining changes in efficiency in the economy, it is important to remember that overall productivity is not only dependent on labour. Capital, such as machinery and equipment, factories and vehicles (tangible capital) and intellectual property (intangible capital) is the other key element of production in any economy.
Changes in the level of capital available to labour (capital deepening) has a considerable influence on output, as more capital investment increases the productive capacity of workers. Capital deepening is measured as the change in capital services per hour worked, where capital services are units of capital in the same way that hours worked are units of labour.
Aside from the level of labour and capital, overall productivity is also influenced by factors such as education, skills, organisational practices and changes in technology among others, all of which have a significant influence on the quality of labour and capital. Multifactor productivity (MFP) is the measure of overall productivity in the economy, which attempts to capture all of these features.
| Timeperiod | Labour Contribution | Capital Contribution | Multifactor Productivity | Gross Value Added |
|---|---|---|---|---|
| 2019 - Q1 | 0.8 | 0.1 | 0.5 | 1.4 |
| 2019 - Q2 | -0.3 | 0.3 | -0.1 | -0.1 |
| 2019 - Q3 | -0.2 | 0.4 | 0.9 | 1.1 |
| 2019 - Q4 | 0.7 | 0.4 | 0 | 1.1 |
| 2020 - Q1 | -1.8 | 0 | 2 | 0.2 |
| 2020 - Q2 | -15.6 | -0.1 | -2.7 | -18.4 |
| 2020 - Q3 | 12.8 | -0.1 | -1.2 | 11.5 |
| 2020 - Q4 | -1.9 | -0.1 | 3 | 1 |
| 2021 - Q1 | -3.6 | 0.4 | 4.4 | 1.2 |
| 2021 - Q2 | 5.4 | 0 | -2.5 | 2.9 |
| 2021 - Q3 | 3.1 | 0.1 | -2.2 | 0.9 |
| 2021 - Q4 | -0.2 | 0 | 2.8 | 2.6 |
| 2022 - Q1 | 0.9 | -0.1 | 0.6 | 1.4 |
| 2022 - Q2 | 1.6 | 0.4 | 0.3 | 2.2 |
| 2022 - Q3 | -0.4 | 0.6 | 0 | 0.1 |
| 2022 - Q4 | 0.6 | 0.5 | 0.8 | 1.8 |
| 2023 - Q1 | 0.6 | 1.7 | -0.9 | 1.3 |
| 2023 - Q2 | -0.1 | -0.5 | 2.9 | 2.3 |
| 2023 - Q3 | 0.1 | -0.2 | -1.5 | -1.6 |
Get the data: PxStat PIQ02
Figure 1.4 shows the contributions of labour, capital and MFP growth to Gross Value Added (GVA) quarter-on-quarter growth for the Domestic sector. GVA growth is explained by the contributions of labour and capital, where the contributions capture changes in both of these factors. MFP growth is calculated as the difference between GVA growth and the sum of the labour and capital contributions.
Domestic GVA fell by 1.6% in the third quarter of 2023, almost entirely explained by MFP growth of -1.5%, with low contributions from labour (0.1%) and capital (-0.2%). The negative capital contribution for Q3 2023 does not imply zero investment, but it does mean that the overall level of capital in the sector has reduced compared to the previous quarter, due to depreciation and disposal of assets.
| Timeperiod | Capital Deepening | Multifactor Productivity | Labour Productivity |
|---|---|---|---|
| 2019 - Q1 | -0.5 | 0.5 | 0.1 |
| 2019 - Q2 | 0.6 | -0.1 | 0.5 |
| 2019 - Q3 | 0.5 | 0.9 | 1.4 |
| 2019 - Q4 | -0.1 | 0 | -0.1 |
| 2020 - Q1 | 1.5 | 2 | 3.5 |
| 2020 - Q2 | 12.5 | -2.7 | 9.8 |
| 2020 - Q3 | -11.2 | -1.2 | -12.4 |
| 2020 - Q4 | 1.5 | 3 | 4.5 |
| 2021 - Q1 | 3.3 | 4.4 | 7.8 |
| 2021 - Q2 | -4.6 | -2.5 | -7.1 |
| 2021 - Q3 | -2.5 | -2.2 | -4.7 |
| 2021 - Q4 | 0.1 | 2.8 | 2.9 |
| 2022 - Q1 | -0.9 | 0.6 | -0.3 |
| 2022 - Q2 | -1 | 0.3 | -0.7 |
| 2022 - Q3 | 0.9 | 0 | 0.9 |
| 2022 - Q4 | 0 | 0.8 | 0.7 |
| 2023 - Q1 | 1.2 | -0.9 | 0.3 |
| 2023 - Q2 | -0.5 | 2.9 | 2.5 |
| 2023 - Q3 | -0.3 | -1.5 | -1.8 |
Get the data: PxStat PIQ02
Changes in labour productivity can also be explained by capital deepening and MFP growth, as shown in Figure 1.5. Domestic labour productivity fell by 1.8% in Q3 2023 compared to the previous quarter, due to negative MFP growth (-1.5%) and negative capital deepening (-0.3%). Capital deepening is influenced by both the level of labour and capital, and so low capital deepening (as in 2022Q4) does not mean that there was little investment in capital, it instead means that the level of labour grew at the same rate as the increase in capital.
The significant rise and fall in capital deepening in Q2 2020 and Q3 2020 were due to movement in hours worked rather than changes in capital. As hours worked fell with almost no change to capital, there was relatively more capital available to each worker, leading to positive capital deepening in Q2 2020. When hours worked rebounded in the subsequent quarter, there was an opposite effect, resulting in negative capital deepening.
| Timeperiod | Total Economy | Domestic Sector | Foreign Sector |
|---|---|---|---|
| 2018 - Q4 | 100 | 100 | 100 |
| 2019 - Q1 | 97.2 | 100.5 | 93.3 |
| 2019 - Q2 | 101.5 | 100.4 | 103 |
| 2019 - Q3 | 101.5 | 101.4 | 99.9 |
| 2019 - Q4 | 97.7 | 101.4 | 90.3 |
| 2020 - Q1 | 100.7 | 103.4 | 93.2 |
| 2020 - Q2 | 98.6 | 100.6 | 91.1 |
| 2020 - Q3 | 104.7 | 99.4 | 102.8 |
| 2020 - Q4 | 102.5 | 102.4 | 96 |
| 2021 - Q1 | 112.4 | 107.1 | 110.5 |
| 2021 - Q2 | 113 | 104.4 | 114.8 |
| 2021 - Q3 | 119.4 | 102.1 | 129.6 |
| 2021 - Q4 | 115.6 | 105 | 119.7 |
| 2022 - Q1 | 120.1 | 105.6 | 128 |
| 2022 - Q2 | 120.9 | 106 | 130 |
| 2022 - Q3 | 131.1 | 105.9 | 150.6 |
| 2022 - Q4 | 127.7 | 106.7 | 145 |
| 2023 - Q1 | 121.8 | 105.8 | 136.2 |
| 2023 - Q2 | 124.1 | 108.9 | 137.6 |
| 2023 - Q3 | 123.8 | 107.3 | 139.2 |
Get the data: PxStat PIQ02
Figure 1.6 illustrates the evolution of MFP for the Total Economy and Domestic and Foreign sectors since the start of 2019. MFP decreased for the Total Economy (-0.2%) and the Domestic sector (-1.5%) in Q3 2023, while there was an increase in MFP for the Foreign sector (1.1%). MFP in the Domestic sector has grown by 7.0% since the start of 2019. Due to globalisation events, the Foreign sector has seen MFP increase by 33.1% over the same period, resulting in Total Economy MFP growth of 21.3%.
| Timeperiod | Ireland - Total | Ireland - Domestic | EU Average | Czechia | France | Luxembourg | Spain |
|---|---|---|---|---|---|---|---|
| 2019 - Q1 | 79.4 | 50.4 | 38.2 | 22.3 | 52.1 | 88.8 | 34.1 |
| 2019 - Q2 | 83.3 | 50.6 | 38.5 | 22.6 | 52.2 | 89.4 | 34.4 |
| 2019 - Q3 | 85.6 | 51.3 | 38.5 | 23 | 52.1 | 89.5 | 34.5 |
| 2019 - Q4 | 85.2 | 51.2 | 38.6 | 23.1 | 51.9 | 89.8 | 34.5 |
| 2020 - Q1 | 91.3 | 53 | 38.9 | 23.6 | 51.1 | 91.1 | 34.5 |
| 2020 - Q2 | 107.1 | 58.5 | 39.1 | 22.9 | 54.1 | 99.2 | 36.3 |
| 2020 - Q3 | 98.3 | 51.7 | 39 | 22.7 | 52.1 | 90.1 | 33.6 |
| 2020 - Q4 | 98 | 54.1 | 39.2 | 24.4 | 53.1 | 89.5 | 33.4 |
| 2021 - Q1 | 110.5 | 58.4 | 39.3 | 23.6 | 52.6 | 94.8 | 34.2 |
| 2021 - Q2 | 103.8 | 54.4 | 38.8 | 23.5 | 52.1 | 92.5 | 33.1 |
| 2021 - Q3 | 105.6 | 51.9 | 39.3 | 23.4 | 50.9 | 90.9 | 34.1 |
| 2021 - Q4 | 101.6 | 53.4 | 39.3 | 23.4 | 50.6 | 91.6 | 34.6 |
| 2022 - Q1 | 103.8 | 53.3 | 39.3 | 23 | 50.8 | 91.5 | 34.3 |
| 2022 - Q2 | 102.7 | 52.9 | 39.4 | 23.1 | 50.4 | 91.5 | 34.3 |
| 2022 - Q3 | 112.2 | 53.4 | 39.6 | 23 | 50.4 | 91.5 | 34.8 |
| 2022 - Q4 | 108.6 | 53.8 | 39.4 | 22.8 | 50.2 | 89 | 35.2 |
| 2023 - Q1 | 103.8 | 54 | 41.3 | 26.1 | 51.8 | 91.7 | 36.8 |
| 2023 - Q2 | 104.9 | 55.3 | 41.4 | 25.9 | 51.9 | 94.7 | 36.4 |
| 2023 - Q3 | 103.9 | 54.4 | 41.4 | 26 | 51.8 | 93.9 | 36.5 |
Get the data: PxStat PIQ02 (CSO); NAMQ_10_A10 and NAMQ_10_A10_E (Eurostat)
Figure 1.7 compares labour productivity for Ireland’s Total Economy and Domestic sector to the EU average and several countries in the EU4. Ireland had the highest labour productivity (€103.9 per hour) in the EU in Q3 2023, above Luxembourg (€93.9 per hour) and over two-and-a-half times above the EU average (€41.4 per hour). Domestic labour productivity (€54.4 per hour) was also considerably above average, and higher than all countries shown other than Luxembourg. Labour productivity growth was generally flat across the EU (0.1%) in the third quarter of 2023, while labour productivity fell in Ireland for both the Total Economy (-0.9%) and the Domestic sector (-1.8%).
4 For which data was available at the time of release.
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Statistician's Comment
The Central Statistics Office (CSO) has today (21 December 2023) published Productivity in Ireland Quarter 3 (Q3) 2023.
Commenting on the results, Seán O’Boyle, Statistician in the National Accounts Analysis & Globalisation Division, said: “Productivity across the economy decreased in July, August, and September (Q3) 2023. Labour productivity for the Domestic sector fell by 1.8% when compared with the previous quarter, while the Foreign sector was also down by 0.5% (See Editor’s Note below).
While movements in productivity should generally be viewed over a longer time-period, these results provide the most up-to-date picture on productivity in the Irish economy to keep policy-makers, economists, and the wider public as informed as possible. Due to the considerable influence of the Foreign sector on productivity measures for the total economy, this release prioritises the Domestic sector for both presentational and analytical purposes. However, more detailed data on all sectors can be found on our open data site, PxStat.
Labour Productivity
Labour productivity measures the amount of output per hour worked in a sector, so the fall in productivity in Q3 2023 indicates that the economy became less efficient compared with the previous quarter.
Many Domestic sectors saw reductions in labour productivity in Q3 2023 such as Domestic Manufacturing (-10.6%), Financial & Insurance Activities (-8.5%), and Accommodation & Food (-5%). While overall productivity declined, there were increases in labour productivity for several sectors such as Wholesale & Retail (3.5%) and Construction (1.9%).
Multifactor Productivity
Multifactor productivity (MFP), a more detailed measure of overall productivity that considers labour, capital, and additional factors such as education, skills, organisational practices, and changes in technology fell by 0.2% for the Total Economy in Q3 2023. Domestic sector MFP decreased by 1.5%, while Foreign sector MFP rose by 1.1%.”