Irish economy 'less efficient' but remains most productive in Europe, CSO data finds

Labour productivity decreased by 2.9% in the first few months of this year, with its value at €111.70 per hour

Professional, scientific and technical activities experienced the largest growth in labour productivity at the beginning of this year, said the CSO. File picture.

Ireland continued to have the highest level of labour productivity in the EU in the first three months of 2026, because of "a high level" of value in sectors dominated by foreign-owned multinational enterprises, latest figures from the Central Statistics Office (CSO) show.

Without the foreign sector, productivity amongst domestic sectors in Ireland decreased slightly at the beginning of 2026, totalling €58.90 per hour between January and April 2026.

This remains broadly similar to the average of €59.60 per hour for the domestic sector between the last quarter of 2022 and the beginning of this year, and above pre-pandemic levels of €54.20 per hour recorded between 2017 and 2019, said the CSO.

Foreign sector productivity fell by 1.9% in the first three months of 2026 but remained "at a high level" of €460 per hour. Foreign sector labour productivity in Ireland has averaged €462 since the beginning of 2023.

Combining the two sectors, productivity decreased by 2.9% in the first few months of this year, with its value at €111.70 per hour, more than double the EU average of €47.90. Productivity in Luxembourg, the country with the second highest labour productivity rate, was €109.40 per hour during the same period.

CSO statistician Kenneth Kennedy said labour productivity is a "key indicator" for the Irish economy as it is the main measure of the efficiency of the labour force.

The decrease in the total value of labour productivity indicates that "the economy became less efficient compared with the previous quarter," he said.

Breaking the figures down by sector, professional, scientific and technical activities experienced the largest growth in labour productivity at the beginning of this year, with manufacturing close behind, according to CSO data. The professional sector's growth saw gross value added (GVA) increase by 1.9% and hours worked drop by 4.1%.

Mining and quarrying, which had the largest growth in labour productivity in the last quarter of 2025, reduced its productivity by 58.3% as hours worked increased by more than half and GVA decreased by 7.3%.

While movements in productivity should generally be viewed over a longer time period, Mr Kennedy said these results provide the most up-to-date picture of productivity in the Irish economy to keep policymakers, economists, and the wider public as informed as possible.

Due to the considerable influence of the foreign sector on productivity measures for the total economy, Mr Kennedy said the CSO's research prioritised the domestic sector.

Total economy multifactor productivity went down by 4.2% in the quarter analysed, compared with statistics from the previous quarter.

Meanwhile, quarter-on-quarter multifactor productivity, which includes capital and education and skills levels, for the domestic sector was down by 1%, which, in addition to capital deepening of 0.6%, contributed to lower labour productivity in the domestic sector.

While the foreign sector multifactor productivity experienced a larger decrease of 5.3% quarter-on-quarter, globalisation events meant the sector's multifactor productivity has increased 37.6% since the last three months of 2021.