The Myth of Irish Productivity: Examining the Discrepancies

Irish workers have long been hailed as the most productive in the world, but a new study challenges this perception. According to a study conducted between 2017 and 2019, workers in the domestic economy in Ireland have an average 'value-added per hour worked' of just €28, ranking them last among eight comparator countries in Europe. This figure is 16% below the average and a staggering 57% below the top-ranked country, Luxembourg [cd14a4d0].

This study debunks the previous notion that Ireland has one of the most productive workforces globally. The perception of high productivity was largely based on the inclusion of high-value multinationals in productivity statistics. In contrast, labor productivity in the multinational-dominated foreign sector was €381 per hour in 2023, according to the Central Statistics Office (CSO) [cd14a4d0] [52cf8b7a].

The presence of multinational firms in Ireland has been a key factor in driving up productivity figures. In the foreign sector, labor productivity was €414 per hour, while in the domestic sector, it was only €55 per hour. The gross value added (GVA) per worker, per hour for foreign firms in Ireland is €414, compared to just €55 for domestic firms [52cf8b7a].

This raises questions about the accuracy of Ireland's productivity rankings and whether they truly reflect the productivity levels of the domestic workforce. The study highlights the need to consider alternative measures, such as gross national income (GNI), to obtain a more accurate picture of Ireland's productivity [52cf8b7a].

The findings of this study challenge the narrative of Ireland's productivity boom and prompt a reevaluation of the factors driving productivity in the country. While Ireland's attractiveness as a country to do business is often attributed to tax advantages, it is also influenced by factors such as its English-speaking status, membership in the European Union, and a well-educated workforce [52cf8b7a].

The debate around productivity is particularly relevant in the context of populist politics and growing inequality. Understanding the true productivity levels in different sectors of the Irish economy is crucial for policymakers and economists alike [cd14a4d0] [f88b0815].