Benchmarking Productivity in the Republic of Ireland presented by Paul Goldrick-Kelly, Economist, NERI Productivity is a matter of utmost significance for society and for policy makers. Productivity is a key determinant of economic growth and high productivity is associated with higher living standards. This paper benchmarks sectoral productivity in the Republic of Ireland, measured as value added per person employed, relative a peer weighted average, reflecting comparably developed EU states.

1. Benchmarking Productivity in
the Republic of Ireland
Paul Goldrick-Kelly
NERI (Nevin Economic Research Institute)
Dublin
PaulGK@NERInstitute.net
www.NERInstitute.net
Monthly Seminar
Dublin
December 13th 2017

2. Outline
• Methodology
– Which productivity metric?
– What are you benchmarking against?
• Sectoral Productivity in the Republic of
Ireland
– Relative Overall Productivity
– Outlier Sectors and Implied Gaps

3. METHODOLOGY
SECTION 1

4. Which Productivity Metric?
• This exercise focuses on Labour Productivity – a ratio of
volume measure of output to labour inputs (OECD), in
the form of numbers employed or hours worked.
• Gross Value Added is used as the output measure, as it
excludes taxes.Output less intermediate consumption.
• Labour Productivity is a proxy for overall productivity. It
sets a limit on employed income.
• These metrics offer a sense of the productive efficiency
of an economy that is standardised.

5. What are you benchmarking against?
• Benchmarking requires a standard against which one can
compare performance.
• This benchmarking exercise measures Irish Sectoral
productivity against a constructed Peer Weighted Comparator.
• Weighting is sector and metric specific and is determined by
the metric denominator (employment or Hours worked
weights)
• This comparator is constructed using data from the other
EU15 states excluding Spain, Greece, Italy and Portugal.
These states are comparable in development terms.

6. Data?
• Data Sources:
– EUROSTAT National Accounts Aggregates
– EUROSTAT National Accounts Employment Data
– Structural Business Statistics
• Data gaps in the areas of hours worked are addressed by way of an
imputed Hours worked – according to average numbers of hours
worked per job (broad sector).

7. SECTORAL PRODUCTIVITY IN
THE REPUBLIC OF IRELAND
SECTION 2

8. Benchmarking Aggregate Productivity
Ratio of GVA per Hour ROI/PWA €PPS
0.8
0.9
1
1.1
1.2
1.3
1.4
1.5
1.6
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

9. Outlier Sectors-
Ratio of GVA per Hour ROI/PWA €PPS by Selected A10
Sector
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Total
Agriculture, forestry and fishing
Manufacturing
Construction
Information and communication
Financial and insurance activities
Professional, scientific and technical activities; administrative and support service activities

10. Outlier Sectors-
Agriculture Implied GVA Gap and ROI/PWA Ratio 2007-2015
Sector Metric 2007 2008 2009 2010 2011 2012 2013 2014 2015
Crop and
animal
production,
hunting and
related
service
activities
Implied
Gap
Billions -€1.6 -€2.1 -€1.7 -€1.2 -€0.7 -€1.3 -€2.0 -€1.3 -€1.5
Ratio of
Republic
of
Ireland
GVA PPE
to PWA 53.5% 41.2% 31.5% 53.1% 73.8% 55.0% 47.9% 62.7% 58.4%
Forestry and
logging
Implied
Gap
Billions -€0.1 -€0.1 €0.0 -€0.1 -€0.2 -€0.2 -€0.2 -€0.2 -€0.2
Ratio of
Republic
of
Ireland
GVA PPE
to PWA 63.3% 43.8% 62.5% 68.9% -14.9% -2.0% 7.8% 7.9% 5.0%
Fishing and
aquaculture
Implied
Gap
Billions €0.0 €0.0 €0.0 -€0.1 €0.0 €0.1 €0.0 €0.0 €0.0
Ratio of
Republic
of
Ireland
GVA PPE
to PWA 95.0% 57.0% 95.9% 62.7%
140.4
%
152.5
%
109.2
%
112.6
% 84.7%

11. Outlier Sectors-
Manufacturing Implied GVA Gap 2007-2015
Sector 2007 2008 2009 2010 2011 2012 2013 2014 2015
A €2.2 €2.3 €2.4 €3.2 €3.6 €3.7 €4.2 €4.9 €5.0
B -€0.2 -€0.3 -€0.1 -€0.2 -€0.1 -€0.1 -€0.1 -€0.1 -€0.1
C -€0.5 -€0.6 -€0.4 -€0.4 -€0.4 -€0.4 -€0.4 -€0.3 -€0.3
D €4.5 €4.0 €5.4 €5.4 €9.8 €7.3 €7.3 €8.3 -
E €0.1 €0.0 €0.0 €0.0 -€0.3 -€0.4 -€0.4 -€0.3 €0.1
F -€1.2 -€1.0 -€0.6 -€0.6 -€0.5 -€0.5 -€0.4 -€0.4 -€0.5
G -€0.5 -€1.1 -€0.2 -€0.5 €0.3 €0.8 €0.7 €0.3 -
H €0.1 €0.2 €0.1 -€0.1 -€0.2 -€0.1 -€0.1 -€0.1 -€0.1
I -€1.2 -€1.1 -€1.4 -€2.0 -€0.3 -€0.2 -€0.3 -€0.3 -
J -€0.2 -€0.1 -€0.2 -€0.3 -€0.5 -€0.4 -€0.4 -€0.3 -€0.4
K €2.1 €2.4 €2.7 €1.9 €2.0 €1.3 €1.9 €2.1 -
L €1.2 €0.8 €1.1 €0.9 €2.4 €3.8 €2.0 €1.4 -
Total €10.6 €10.1 €15.1 €12.8 €18.1 €17.0 €16.0 €17.5 €66.9
Notes: Sector A encompasses the category “Manufacture of food products; beverages and tobacco products”, B: “Manufacture of textiles, wearing apparel,
leather and related products”, C: “Manufacture of wood, paper, printing and reproduction”, D: “Manufacture of basic pharmaceutical products and
pharmaceutical preparations”, E: “Manufacture of rubber and plastic products and other non-metallic mineral products”, F: “Manufacture of basic metals
and fabricated metal products, except machinery and equipment”, G:” Manufacture of computer, electronic and optical products”, H: “Manufacture of
electrical equipment”, I: “Manufacture of machinery and equipment n.e.c.”, J: “Manufacture of motor vehicles, trailers, semi-trailers and of other transport
equipment”, K:” Manufacture of furniture; jewellery, musical instruments, toys; repair and installation of machinery and equipment” and L the composite
constructed category “Manufacture of coke and refined petroleum products and Manufacture of chemicals and chemical products”. As the individual
subclassifications under L lack data in the Irish case, inferred data was constructed based on the other data here subtracted from the total.

12. Outlier Sectors-
Construction Implied GVA Gap 2007-2015
(€6.00)
(€5.00)
(€4.00)
(€3.00)
(€2.00)
(€1.00)
€0.00
€1.00
2010 2011 2012 2013 2014 2015
Construction of buildings PPE Gap Construction of buildings PH Gap Civil engineering PPE Gap
Civil engineering PHGap Specialised construction activities PPE Gap Specialised construction activities PH Gap
Construction PPE Gap Construction PH Gap

13. Outlier Sectors-
Information and Communication Implied GVA Gap 2007-
2015
Sector Comparator 2007 2008 2009 2010 2011 2012 2013 2014 2015
Publishing activities
Per Person
Employed Gap €
Billions 4.2 4.3 5.2 6.3 6.7 7.3 8.0 9.3 10.5
Estimated per
Hour Gap €
Billions 4.1 4.2 5.2 6.2 6.5 7.1 7.8 9.1 10.4
Motion picture, video,
television programme
production; programming
and broadcasting activities
Per Person
Employed Gap €
Billions -0.3 -0.4 -0.4 -0.6 -0.6 -0.6 -0.5 -0.5 -0.4
Estimated per
Hour Gap €
Billions -0.4 -0.5 -0.5 -0.7 -0.7 -0.6 -0.5 -0.5 -0.4
Telecommunications
Per Person
Employed Gap €
Billions -1.6 -1.1 -1.2 -1.1 -0.4 -0.5 -0.1 -0.1 -0.2
Estimated per
Hour Gap €
Billions -2.2 -1.9 -1.9 -1.7 -0.6 -0.8 -0.5 -0.5 -0.5
Computer programming,
consultancy, and
information service
activities
Per Person
Employed Gap €
Billions 1.1 1.8 1.2 1.0 1.1 1.6 1.8 2.9 3.7
Estimated per
Hour Gap €
Billions 0.7 1.4 0.7 0.4 0.8 1.2 1.3 2.4 3.2
Information and
Communication
Per Person
Employed Gap €
Billions 4.3 5.6 5.6 6.4 7.1 8.2 9.3 11.6 13.5
Estimated per
Hour Gap €
Billions 3.1 4.2 4.3 5.0 6.4 7.1 8.1 10.4 12.2

14. Outlier Sectors-
Financial and Insurance Activities Implied GVA Gap 2007-
2015
Sector Comparator 2007 2008 2009 2010 2011 2012 2013 2014 2015
Financial service
activities, except
insurance and
pension funding
Per Person
Employed Gap €
Billions
4.0 3.7 2.1 2.1 3.2 1.6 1.0 1.8 2.6
Estimated per
Hour Gap €
Billions
2.6 2.5 0.5 0.4 2.6 1.0 0.3 1.0 1.7
Insurance,
reinsurance and
pension funding,
except compulsory
social security
Per Person
Employed Gap €
Billions
1.0 1.2 0.6 1.5 0.7 1.6 0.7 1.3 1.0
Estimated per
Hour Gap €
Billions
0.4 0.6 0.1 0.9 0.5 1.3 0.4 0.9 0.7
Activities auxiliary
to financial
services and
insurance activities
Per Person
Employed Gap €
Billions
1.1 1.1 1.3 1.5 1.3 1.4 1.7 1.4 2.4
Estimated per
Hour Gap €
Billions
1.0 0.9 1.2 1.3 1.2 1.2 1.5 1.2 2.1
Financial and
insurance
activities
Per Person
Employed Gap €
Billions
6.9 6.7 5.2 6.3 5.6 4.6 3.3 4.5 5.9
Estimated per
Hour Gap €
Billions
4.9 5.0 3.2 4.2 4.6 3.5 2.0 3.0 4.3

15. Outlier Sectors-
Professional, scientific and technical activities Implied GVA
Gap 2007-2015
Sector Comparator 2007 2008 2009 2010 2011 2012 2013 2014 2015
Legal and accounting
activities; activities of head
offices; management
consultancy activities
Per Person
Employed Gap €
Billions 0.9 0.5 0.7 0.6 1.0 1.2 1.2 1.7 1.7
Estimated per Hour
Gap € Billions
0.5 0.2 0.3 0.2 0.8 1.1 0.9 1.6 1.4
Architectural and
engineering activities;
technical testing and
analysis
Per Person
Employed Gap €
Billions 0.1 0.0 -0.2 0.0 -0.1 -0.1 0.1 0.2 0.2
Estimated per Hour
Gap € Billions -0.5 -0.5 -0.6 -0.3 -0.3 -0.3 -0.2 -0.1 -0.1
Scientific research and
development
Per Person
Employed Gap €
Billions 0.3 0.2 0.1 0.3 0.0 -0.1 0.2 0.5 1.4
Estimated per Hour
Gap € Billions 0.2 0.2 0.0 0.2 -0.1 -0.1 0.1 0.4 1.3
Advertising and market
research
Per Person
Employed Gap €
Billions 0.1 0.2 0.3 0.2 0.2 0.0 0.0 0.0 0.1
Estimated per Hour
Gap € Billions 0.0 0.1 0.2 0.2 0.2 0.0 0.0 0.1 0.1
Other professional,
scientific and technical
activities; veterinary
activities
Per Person
Employed Gap €
Billions -0.4 -0.3 0.0 -0.1 -0.3 -0.3 -0.3 -0.3 -0.2
Estimated per Hour
Gap € Billions -0.9 -0.8 -0.2 -0.4 -0.4 -0.4 -0.4 -0.4 -0.3
Professional, scientific
and technical activities
Per Person
Employed Gap €
Billions 0.4 0.0 0.2 0.5 0.4 0.4 0.8 1.8 2.8
Estimated per
Hour Gap €
Billions -1.2 -1.6 -1.0 -0.8 -0.2 -0.1 0.0 1.1 2.0

16. Outlier Sectors-
Administrative and Support Services activities Implied GVA
Gap 2007-2015
Sector Comparator 2007 2008 2009 2010 2011 2012 2013 2014 2015
Rental and leasing
activities
Per Person
Employed Gap €
Billions 1.9 2.4 3.0 3.4 2.9 3.7 4.8 5.4 9.4
Estimated per
Hour Gap €
Billions 1.4 1.9 2.7 3.1 2.6 3.4 4.5 5.1 9.0
Employment activities
Per Person
Employed Gap €
Billions 0.1 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1
Estimated per
Hour Gap €
Billions 0.0 0.0 0.0 0.0 0.0 -0.1 0.0 0.0 0.0
Travel agency, tour
operator reservation
service and related
activities
Per Person
Employed Gap €
Billions -0.1 -0.1 -0.2 -0.2 -0.2 -0.1 -0.1 -0.1 -0.1
Estimated per
Hour Gap €
Billions -0.2 -0.2 -0.2 -0.3 -0.2 -0.2 -0.2 -0.2 -0.2
Security and
investigation, service
and landscape, office
administrative and
support activities
Per Person
Employed Gap €
Billions 0.6 0.6 0.5 0.5 0.7 0.4 0.2 0.6 0.4
Estimated per
Hour Gap €
Billions
0.0 0.0 -0.1 -0.1 0.6 0.2 0.1 0.4 0.2
Administrative and
support service
activities
Per Person
Employed Gap €
Billions 3.7 3.8 3.9 4.5 4.4 4.8 5.6 6.4 10.3
Estimated per
Hour Gap €
Billions 2.6 2.7 2.9 3.4 4.1 4.3 5.1 5.9 9.8

17. Conclusions
• The Republic of Ireland outperforms the peer weighted
significantly benchmark in the aggregate areas of
– Manufacturing
– Information and Communication
– Financial and Insurance Activities
– Professional, scientific and technical activities
– Administrative and Support Services.
• Performance in the areas of construction and agriculture don’t
fare as well.

18. Conclusions
• Relative “over-performance” is concentrated in certain
subsectors.
• These subsectors are often correlated with multinational
activity and as such, it is likely that labour productivity is
biased upwards by a small number of top performers and/or
reflects statistical relics from other activity.
• Further releases concentrating on the state of productivity and
policy actions which try and account for these discrepancies
are coming soon.

19. www.NERInstitute.net