Labour productivity is almost eight times higher in the foreign-dominated manufacturing and IT sectors in Ireland because of multinationals, according to the Central Statistics Office (CSO).
New CSO figures indicate that labour productivity was €65.8 per hour in the domestic sector here compared to €507.3 per hour in sectors dominated by foreign-owned companies.
Productivity is defined as the rate at which goods or services are produced in an economy. It is a key driver of earnings and prosperity.
The mismatch reflects the significant value-add attached to certain multinational products and the high level of spending on R&D by these companies.
READ MORE
The foreign-dominated manufacturing sector, which contains the State’s pharma sector, recorded the highest labour productivity in 2025 at €524.8 per hour, while labour productivity in the information and communication sector stood at €415.9 per hour.
The CSO said labour productivity for the economy as a whole rose by 6.1 per cent in 2025, as growth in gross value added (7.8 per cent) outpaced growth in hours worked (1.6 per cent).
“This increase was driven by the foreign-dominated sector, which saw labour productivity rise by 14.2 per cent in 2025 compared with 2024,” it said.
The CSO also noted that 43.6 per cent of foreign-owned companies reported using AI technologies last year, nearly 2.7 times higher than the uptake among Irish-owned companies, at 16.3 per cent.
Irish productivity metrics are flattered by the presence of multinationals. When the multinational element is removed, labour productivity here is similar to rates seen elsewhere in Europe.
Despite the current era being defined by technological advancement, productivity growth across the world, in both advanced and developing economies, has been sluggish in recent decades. Flagging productivity has been at the core of the UK’s stumbling economic performance since the 2008 financial crisis.
The so-called “productivity puzzle” in the UK and other countries has perplexed economists. Many believe the new jobs created since the crash are predominantly in low-skilled, low-paid sectors where productivity is low anyway.
