Business productivity in Ireland’s domestic economic sector lags well behind that of comparable small, advanced, open European economies, according to a new study, ‘Productivity in Ireland’s Domestically-Owned Market Economy: a Comparative Survey’, by the Nevin Economic Research Institute (NERI) and SIPTU published today (Thursday, 27th June).

NERI Researcher, Chris Smart, said: “Our study shows that productivity in domestically-owned businesses in Ireland, in sectors such as manufacturing, retail, transport and hospitality, fell well behind the average of our peer group in Europe, other small open economies. This means that on average our businesses in our domestic economic sectors, with the same amount of inputs, produce less extra value than those in comparative economies.”

The research utilises the Eurostat’s Globalisation in Business Statistics database, for pre-Covid years, and focuses exclusively on domestically owned enterprises, excluding foreign-owned companies.

“When price differences are factored in, we found that Irish productivity in our domestic economic sectors would have to increase by 17% just to reach the average of our peer group in Europe,” said Smart.

The research found that this disparity is not evenly distributed across our domestic economic sectors. While most sectors fall well behind our peer group average, the performance for the Irish construction sector is about average. The professional and scientific sector greatly exceeds the productivity performance of other countries, boosted by a strong performance in the management consultancy sector.

SIPTU researcher, Michael Taft, said: “Low levels of productivity are not due to workers’ efforts. In fact, Irish employees work far longer throughout the year than employees in all other countries in our peer group.”

“There can be a number of reasons for low productivity including low investment, lack of scale, entry barriers which limit business competition, our peripheral location, and lack of employee participation such as collective bargaining.

He added: “Ireland’s productivity problem is not an issue which should divide workers and employers. Increasing productivity raises wages and living standards while increasing business prosperity.”