Dáil Éireann Debate, Thursday - 30 March 2006
28 Mr. McGinley asked the Minister for Finance his views on the contrasting trends reported by the Central Statistics Office in respect of employment growth and output growth in the economy, which implies an unexplained collapse in productivity growth in the economy here. [12502/06]
Amharc ar fhreagraThe CSO's most recent employment figures, taken from the quarterly national household survey, show that average employment in 2005 was 1,952,000 people. This was an increase of 87,000 jobs or 4.7% on 2004. The sectors making the greatest contribution to this increase were construction, up by 30,900 or 14.4%, financial and other business services, up by 18,500 or 7.7%, wholesale and retail trades, up by 11,700 or 4.4%, and health, up by 9,400 or 5.2%. On the other hand, employment in industry fell by 7,600 persons or 2.5%.
The CSO's most recent national accounts data show that GDP rose by 4.7% last year. Output in all sectors was up on 2004 with the exception of the agricultural sector. The growth in employment and GDP can be used to calculate a crude indicator of the trend in labour productivity. Employment growth of 4.7% and estimated GDP growth of 4.7% implies no increase in aggregate labour productivity in 2005. Care should be taken in interpreting differences between trends in employment and in GDP because timing differences and statistical volatility can affect the results. In particular, estimates of GDP are still subject to revision. However, there is evidence in recent years to suggest that while labour productivity levels continue to increase, the rate of growth is slower than previously.
A major factor influencing the slowdown in the rate of increase in labour productivity is the change in the sectoral composition of the workforce. Productivity growth rates in Ireland have been exceptionally high compared with other countries because of the large numbers of foreign owned high technology industries that generate very high levels of output or value added. However, much of the strong growth in employment in recent years has been in other sectors, such as construction and retail, with the result that the overall productivity levels have not grown as quickly as in the past, although the total numbers employed have increased at a record rate.
While employment growth in 2005 has marginally exceeded the estimated growth in output as measured by GDP, it is too early to conclude that there has been an unexplained collapse in labour productivity. The available information is still limited and part of the fall is explained by changes in the composition of employment. However, this is something that needs to be monitored as more information becomes available.
