The Republic remains close to the top of the league in labour productivity although the rate at which productivity is growing is in decline, according to the Executive Action Report On Productivity, published yesterday.
The report was compiled for the Conference Board, an international business think tank. In terms of gross domestic product (GDP) per hour, the Republic ranks fourth place behind France, Norway and Luxembourg. But productivity growth in the State slowed to 1.0 per cent in 2005, compared with 1.4 per cent in 2004 and 4.0 per cent in 2003.
Irish labour productivity growth now falls considerably behind China, India and the new member states of the EU.
Productivity in India and China grew by 8.4 and 4.4 per cent respectively in 2004 - no data are yet available for 2005 - and by just under 2 per cent in the US and Japan. Productivity growth was 1 per cent in the EU as a whole, but this was biased upwards by the strong performance amongst the 10 new member states, where growth averaged 6.2 per cent. In the 15 pre-enlargement states, productivity grew by an average of just 0.5 per cent.
The number of hours worked in the economy increased by 4.1 per cent last year, second only to Spain's 4.8 per cent, prompting concern that economic growth is low in productivity.
"There is fairly strong evidence that employment in the Irish economy is concentrated in low productivity activities such as construction and the public sector. It is clear that wider technology diffusion is the corrective factor needed to avoid us sleepwalking into a competitiveness demise," said Danny McCoy, director of economic policy for employers' federation Ibec.
Labour productivity measures economic output obtained per hour of work and indicates the efficiency of the economy and its potential to sustain higher living standards. Multinational activity in the State causes GDP to exceed gross national product, a measure excluding multinational activity.
