For a considerable period, we boasted of having one of the world’s most efficient workforces. As presented by the Central Statistics Office (CSO), Irish workers in 2023 managed to generate an impressive €97 of value for each hour of work, placing us at the helm of the Organisation for Economic Co-operation and Development’s list of 36 advanced economies. What’s noteworthy is that our figure is over twice the average recorded by the EU.
However, these exciting numbers always seemed somewhat questionable. They largely depended on the substantial presence of multinationals in Ireland’s economy. Labour productivity per hour in the foreign sector, which houses most multinationals, stood remarkably high at €381 in 2023, as per CSO estimates.
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What this implies is that one hour of work at Apple produces nearly €400 of value – perhaps even more, as we lack a break-down of figures for individual firms. This impressive figure is mainly because Apple’s valuable, in-demand iPhones, which retail for as much as $1,500 (€1,426), are a product of a well thought-out, multifaceted supply chain designed to draw out maximum value.
Nevertheless, involving these companies in our productivity calculations always tainted the perception of the economy. This misunderstanding was shattered during the week when a new study, unveiled at an event hosted by the Nevin Economic Research Institute, showed that most Irish workers, particularly those in the domestic economy, were among Europe’s least productive.
Between 2017 and 2019, the average “value-added per hour worked” by local workers in Ireland was a mere €28, casting Irish workers at the lowest rank compared to countries like Luxembourg, Denmark, Norway, Belgium, Austria, Netherlands, Finland, and Sweden, in a group of eight.
This €28 per hour figure was 16 per cent shy of the average (€32.4) and 57 per cent less than the highest-ranked Luxembourg. This discovery implies that despite the dominant position held by multinationals, celebrated for their high-grade research, development, and overall investment (the ideal recipe for improving productivity), there hasn’t been any impactful spill-over effects into the domestic economy as many would have wished.
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