reland’s domestically-owned economy is falling further behind comparable European economies on productivity, investment, research and development and goods exports, according to new research presented at the Nevin Economic Research Institute (NERI) Labour Market Conference in Waterford
The updated analysis of productivity in Ireland’s domestically-owned economy, excluding the impact of foreign multi-national companies, shows that Ireland’s domestic sector is now 19.4% below the average of small, advanced open European economies, compared to 14.6% in the pre-Covid period.
SIPTU Researcher, Michael Taft, said: “The Irish domestically-owned sector continues to experience low productivity relative to other European small, advanced open economies. Ireland is now at the bottom of the table in both nominal and real productivity terms. This is not a marginal issue. If Ireland reached the productivity level of its peer group, it would raise value-added by approximately €25 billion, to be divided between wages and profits.”
He added: “Only one sector, Professional and Scientific, exceeds the peer group average. At the other end, Transport and Construction are among the worst-performing sectors, with Construction 30% below our peer group average. This is particularly concerning given the urgent need to rapidly scale up housing delivery.”
The analysis also finds that Irish domestic businesses would need to more than double investment to reach the peer group average, while Irish companies would have to increase research and development expenditure fivefold. Domestic goods exports are also well below the peer group average.
Taft said: “Poor productivity increases costs across the economy, undermines the ability of Irish firms to reinvest and reduces export earnings. One of the biggest challenges facing the Irish economy is addressing the poor performance of our domestic sector by developing strategies with the full and equal participation of all the main stakeholders. This must be done as a matter of urgency.”