Worker productivity 40% higher in Republic than Northern Ireland – study

Results mostly due to differences in investment levels and education between the two economies

Worker productivity levels in the Republic of Ireland “noticeably exceed” those of Northern Ireland, a new study has highlighted, mostly due to differences in investment levels and education between the two economies.

The analysis by the Economic and Social Research Institute (ESRI), conducted in partnership with the Department of the Taoiseach’s Shared Island Unit, has indicated that “large gaps” exist between worker output levels on either side of the Border in some of the 17 economic sectors covered by the study.

In 14 out of the 17 sectors, output per worker in the Republic exceeded those of Northern Ireland, with particularly sizeable gaps evident in the administration and support services sector, financial and insurance activities as well as legal and accounting services, the ESRI said.

Northern Irish employees had the advantage in just two sectors: electricity and gas supply, and construction.

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Overall, productivity per worker was about 40 per cent higher in the Republic than in Northern Ireland in 2020.

The study, authored by ESRI researchers Dr Adele Bergin and Prof Seamus McGuinness, found that at the turn of the century, worker productivity levels were broadly similar in the two economies.

However, since 2001, productivity levels in the Republic have trended “slightly upwards” while in Northern Ireland output has declined.

The researchers found that lower proportions of workers educated to post-secondary level in Northern Ireland accounted for some 15 per cent of the overall gap, however, the factor with the largest impact was lower levels of investment in the North compared with the Republic. This accounted for 22.7 per cent of the disparity, they said.

Dr Bergin said the study – the first comprehensive analysis of productivity levels between the two parts of the island – showed “a widening productivity gap”.

“The usual factors [education, investment, exports] were found to be important determinants of Irish productivity. However, no significant relationship is found between these factors and Northern Irish productivity,” she said.

This analysis “points to the need to rapidly expand investment and improve skills in Northern Ireland, particularly at the post-secondary level”. However, they said it also suggests that “without a comprehensive strategy aimed at improving competitiveness among Northern Ireland firms, the reform of education and skills provision and increasing investment in isolation are not guaranteed to enhance Northern Ireland’s productivity”.

Ian Curran

Ian Curran

Ian Curran is a Business reporter with The Irish Times