My Department uses OECD data to make productivity comparisons across countries. This database presents productivity figures at the national level and does not present data broken down by firm ownership (i.e. indigenous or foreign owned firms). It is therefore not possible to present productivity data on indigenous/foreign firms in EU Member States as requested as the data are not available.
In an Irish context, in May 2018, the CSO released a statistical publication titled ‘Productivity in Ireland 2016’, the first of an annual series of publications by the CSO aimed to help users understand productivity in the globally integrated Irish economy.
While this publication did not present productivity figures on domestic indigenous firms relative to others, it did present productivity data broken down by sectors. In an attempt to capture something similar to firm ownership, the CSO presented results on the productivity of the ‘foreign’ sector and the ‘domestic and other’ sector.
The CSO classed a sector as ‘foreign’ when, on average, the turnover of foreign-owned multinational enterprises (MNEs) operating in that sector exceeds 85% of the sector total.
The sectors captured in this definition were: chemicals and chemical products; software and communications sectors and reproduction of recorded media; basic pharmaceutical products and pharmaceutical preparations; computer, electronic and optical products; electrical equipment; medical and dental instruments and supplies. Corporate inversions are also considered to be foreign-owned MNEs in this analysis.
All other sectors were categorised as ‘Domestic and Other’ sectors.
The CSO data shows that the cumulative labour productivity growth for Ireland as a whole between 2000 and 2016 was 87.4%. For Ireland’s ‘foreign’ sectors, the cumulative productivity growth was 342.1%. For Ireland’s ‘domestic and other’ sectors, productivity growth was 48.8%.
Through Future Jobs Ireland, the Government is pursuing measures to increase the productivity of indigenous SMEs over time. Progress towards this goal will be made by diversifying our enterprise base, promoting links between high performing firms and SMEs to increase positive interaction and collaborative working, ensuring existing supports for R&D are useful for smaller business, enhancing business framework conditions for firm creation and growth and investment in digital and managerial skills.
Future Jobs Ireland includes a target for annual average increases in multifactor productivity in the domestic sectors of the economy of 1% per year to 2025.
The Government hosted an SME and Entrepreneurship Strategy Conference on 12 July, where we announced the development of a major new policy on SMEs under Future Jobs Ireland. The conference brought together SMEs, policy makers, programme providers and international experts to look at a range of policy interventions in the area, with a particular focus on improving productivity among indigenous SMEs. The conference discussed a draft roadmap for SME and entrepreneurship policy, which was prepared by the OECD for my Department.
I also announced two new funds which will enhance the productivity of firms in every region. The first is the €2.5m Competitive Fund. The Local Enterprise Offices will compete for this on behalf of their clients. Projects should focus on the priority areas identified in Future Jobs Ireland, and the Regional Enterprise Plans. For example, they could look at themes like innovation, Brexit readiness or market diversification. The second is the Productivity Challenge Fund worth €500,000. This is for businesses who are not currently LEO clients. The funding will be used to address productivity gaps, including through the adoption of lean business practices.