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Ireland’s Competitiveness Scorecard 2018 July 2018
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Introduction to the National Competitiveness Council
The National Competitiveness Council (NCC) reports to the Taoiseach and the Government, through the
Minister for Business, Enterprise and Innovation on key competitiveness issues facing the Irish economy and
offers recommendations on policy actions required to enhance Ireland’s competitive position.
In accordance with the European Council recommendation of September 2016 on the establishment of
National Productivity Boards by Eurozone countries, in March 2018, the Government mandated the National
Competitiveness Council as the body responsible for analysing developments and policies in the field of
productivity and competitiveness in Ireland.
Each year the NCC publishes two annual reports:
▪ Ireland’s Competitiveness Scorecard provides a comprehensive statistical assessment of Ireland's
competitiveness performance; and
▪ Ireland’s Competitiveness Challenge uses this information along with the latest research to outline the
main challenges to Ireland’s competitiveness and the policy responses required to meet them.
As part of its work, the NCC also:
▪ Publishes the Costs of Doing Business where key business costs in Ireland are benchmarked against costs
in competitor countries; and
▪ Issues competitiveness bulletins and other papers on specific competitiveness issues.
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National Competitiveness Council Members
Professor Peter Clinch Chair, National Competitiveness Council
Pat Beirne Chief Executive Officer, Mergon Group
Kevin Callinan Deputy General Secretary, IMPACT Trade Union
Micheál Collins Assistant Professor of Social Policy, University College Dublin
Isolde Goggin Chair, Competition and Consumer Protection Commission
Cathríona Hallahan CEO/Managing Director (Ireland), Microsoft
David Hegarty Assistant Secretary, Department of Business, Enterprise and Innovation
Jane Magnier Joint Managing Director, Abbey Tours
Fergal O’Brien Director of Policy and Chief Economist, Ibec
Seán O'Driscoll President, Glen Dimplex Group
Margot Slattery Country President, Sodexo Ireland
Martin Shanahan Chief Executive, IDA Ireland
Julie Sinnamon Chief Executive, Enterprise Ireland
Ian Talbot Chief Executive, Chambers Ireland
Patrick Walsh Managing Director, Dogpatch Labs
Jim Woulfe Chief Executive, Dairygold Co-Operative Society Limited
Council Advisers
John Conlon Department of Employment and Social Affairs
Patricia Cronin Department of Communications, Climate Action and Environment
Kathleen Gavin Department of Education and Skills
John McCarthy Department of Finance
Conan McKenna Department of Justice and Equality
Sinead McPhilips Department of Agriculture, Food and the Marine
David Moloney Department of Public Expenditure and Reform
Ray O’Leary Department of Transport, Tourism, and Sport
John Shaw Department of the Taoiseach
Kevin Smyth Department of Agriculture, Food and the Marine
David Walsh Department of Housing, Planning, Community and Local Government
Research, Analysis and Secretariat
Marie Bourke Department of Business, Enterprise and Innovation
Santosh Aryal 23 Kildare Street, Dublin 2, D02 TD30
Teodora Corcoran Tel: +353-1-631-2121
John Maher Email: info@competitiveness.ie
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Table of Contents
Introduction to the National Competitiveness Council 2
Table of Contents 4
Chairman’s Preface 5
Executive Summary 7
How Ireland Performs 8
Ireland’s Competitiveness Challenge - the policy challenges 16
Chapter 1: Ireland’s Competitiveness Performance and Outlook 17
Chapter 2: Sustainable Growth 23
2.1 Quality of Life 26
2.2 National Income 28
2.3 Environmental Sustainability 33
Chapter 3: Competitiveness Outputs 39
3.1 Business Performance 44
3.2 Prices and Costs 53
3.3 Productivity 612
3.4 Employment 69
Chapter 4: Competitiveness Inputs 77
4.1 Business Environment 82
4.2 Physical Infrastructure 90
4.3 Clusters and Firm Sophistication 95
4.4 Knowledge and Talent 100
Chapter 5: Essential Conditions 110
5.1 Institutions 114
5.2 Macroeconomic Sustainability 117
5.3 Endowments 126
Annex 1 Methodology 130
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Chairman’s Preface
Despite intense competition, Ireland experienced continued strong economic
growth in 2017. The economic outlook for 2018 and 2019 is for the most part,
positive but the Council is concerned that there is a significant threat to
competitiveness and the medium-term sustainability of Ireland’s economy.
In terms of competitiveness, Ireland’s fortunes are changing rapidly. In the
aftermath of the economic crisis, Ireland benefitted from a highly advantageous
set of circumstances that has led to rapid recovery: the low value of the euro
boosted our exports; global interest rates and oil prices remained low; a sizeable
cost reduction due to the downturn increased the competitiveness of firms; and,
excess infrastructural capacity allowed rapid expansion without associated cost
increases or congestion. Most of these factors are now turning against us and we
are beginning to see an erosion of Ireland’s competitiveness. Ireland’s economic model is vulnerable in terms of
our reliance on a small number of firms in a small number of sectors delivering the bulk of our productivity
performance. And, we are beginning to see a return to domestic policies that threaten the sustainability of the
economy such as rapid house-price inflation, transport congestion, failure to meet our climate obligations, and
failure to invest sufficiently in R&D and to address the funding crisis in higher education. Ireland is on an
inevitable path to competitiveness loss placing us in a vulnerable position if the international economic
conditions were to worsen.
Events which influence the performance of the Irish and global economy are unfolding rapidly. Several external
uncertainties and domestic challenges endanger national competitiveness in the medium-term. Global
economic uncertainty, particularly in trade policy, has increased and developments in US tax policy and
international proposals on tax reforms pose a threat to growth. Brexit remains the single biggest, and most
immediate, threat to Ireland’s medium-term prosperity.
Domestically, the economy cannot grow in a sustainable manner unless the macro-environment is stable. We
must avoid, at all costs, a return to short-term policymaking, which results in boom to bust effects when the
economic cycle inevitably slows. While the headline measures of economic growth are positive, it is worrying
that Ireland’s debt per capita is the highest in the EU at over €42,000 per person. In 2007, as the country entered
into the economic crisis, it was less than €11,000. To improve our capacity to absorb and respond to economic
shocks, the Government must continue its efforts to reduce debt and avoid any narrowing of the tax base.
Recent developments in the national accounts highlight the highly globalised nature of economic activity in
Ireland. Multinational enterprises have been, and will remain, integral to our economy. In comparative terms,
the share of multinational activity in Ireland is high, and their activities have a significant bearing on our
economy. A significant concern is that the sustainability of Irish growth is threatened by the reliance of the
economy on a small number of companies, a small number of export markets and a narrow range of products
and services. There is a need to evolve into new products, markets and sectors, whilst maintaining the
competitive advantages in existing ones. Improving Ireland’s relative tax competitiveness to create a supportive
environment for SMEs is crucial.
As the economy continues to grow, cost pressures and capacity constraint are becoming more prominent.
Ireland performs below competitor countries particularly in terms of costs of residential property, labour, credit,
energy and services prices. It is vital that policy development does not negatively impact on enterprise
competitiveness, particularly in terms of increased financial and administrative costs to business. Ireland’s
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projected failure to meet its 2020 emissions reduction obligations in respect of climate change requires a step-
change in policy development and societal behaviour.
As a small open economy, productivity remains fundamental to growth. Productivity levels and growth rates in
Ireland are strong but our performance is heavily influenced by a small cohort of enterprises which disguises, to
a degree, underperforming sectors and boosts Ireland’s productivity levels. Bridging the productivity gap that
exists between the most productive firms and lagging firms is vital for sustainable growth. The availability of
qualified, work-ready skills and talent is a fundamental source of competitive advantage and a key driver of
productivity growth. As the economy is approaching full employment, job vacancy levels are increasing and the
need for certain skills is becoming more pronounced. Increasingly rapid changes in the world of work, driven by
digitalisation, bring not only the need for ICT specialist skills but also affect the competency requirements across
all sectors, particularly those exposed to the risk of automation. Ireland's main challenge is to equip more than
half of the population with at least basic digital skills. Policies that facilitate skills adaptability are necessary to
prevent polarisation of the labour market.
In an economy approaching full employment, creating conditions for increasing participation rates and
attracting talent from abroad proves crucial. The availability of affordable high-quality child and after-school
care, and policies encouraging older workers to remain in the labour force longer, could help to address skills
shortages and improve Ireland’s attractiveness as a location to work and live. Currently, Ireland’s high marginal
personal tax rates are a major factor in deterring mobile skilled labour. The shortfall and affordability of
residential housing can also influence decisions around relocation of talent. Despite an increase in construction
activity, strong demand, particularly for apartments in urban areas, means that property price inflation is likely
to continue. High rents push the cost of living out of line with other developed European economies. Increasing
property prices and rental costs, combined with a tight labour market, are likely to result in higher wage
demands and diminish Ireland’s ability to attract and retain talent.
Innovation is a key driver of productivity growth. Ireland’s national R&D investment levels lag our key
competitors. Measures which enhance the absorptive capacity of domestic enterprises to utilise technology
would help reduce Ireland’s asymmetric productivity performance. Ireland must transform from an innovation
follower into a leader. Inadequate investment in higher-education, and the associated slide of Irish institutions
in the university rankings, is a perfect example of a failure to invest in Ireland’s future competitiveness.
Targeted and timely capital expenditure in infrastructure is one of the principal means by which government
can enhance productivity and competitiveness. Ireland’s planning and development framework must be
evidence-based, focussed, transparent, timely and agile. A critical challenge now is our capacity to deliver
effectively-connected infrastructure projects that drive future productivity growth, that maximise returns on
investment and which do not contribute to overheating the economy, and to do so in a way than ensures value
for money in the face of low productivity levels and high-demand in the construction sector.
Improving our competitiveness is the key to our efforts to ensure Ireland develops a sustainable economic model
that avoids a boom and bust cycle. Ireland’s recent fall from 6th to 12th most competitive economy, as
benchmarked by the Institute for Management Development, is a timely reminder that our relative
competitiveness is under constant threat. The near-perfect competitiveness conditions Ireland has enjoyed are
over. The risks to Ireland’s prosperity at this point are increasing and the process of reform and improvement
must be intensified if Ireland is to avoid the kind of trajectory that we experienced in the lead up to the last
economic crisis. In this report, the Council is sounding a competitiveness alarm.
Professor Peter Clinch
Chair, National Competitiveness Council
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Executive Summary
A range of indicators used in this year’s Scorecard shows that the Irish economy continued its expansion in
2017 and into 2018. As well as the headline measures of economic growth, the labour market and public
finances continue to improve. Our taxation regime, highly skilled young workforce, and environment in which
to do business remain for the most part relatively competitive. Ireland performs well in both subjective and
objective measures of well-being, indicating that the country is an attractive location to live and work.
While the economic outlook for Ireland appears positive, Ireland’s competitiveness is under threat. The
sustainability of growth is threatened by the reliance of the economy on a small number of highly productive
exporting companies. The globalised nature of the economy makes Ireland susceptible to negative economic
shocks, which are outside the influence of domestic policymakers. Global economic uncertainty, particularly in
trade policy, has increased in 2018. Along with continued ambiguity regarding the outcome of Brexit, external
factors as ever pose a serious risk.
Domestically, fast growth is beginning to manifest itself in cost pressures and capacity constraints and if not
addressed, these deficiencies could become more acute in the short term. As the economy continues to grow,
ensuring our economic model is competitive, balanced and resilient to shocks takes on even more significance.
It is important that we do not loosen fiscal discipline (i.e. unsustainable current expenditure increases, or
shrinking tax ratios) at this stage as this would undo much of the progress achieved to date, and would have
potentially significant negative implications for future competitiveness. It is vital that a careful balance is
struck between addressing weaknesses and deficiencies in infrastructure and implementing policy in a manner
which does not contribute to overheating or unbalancing the economy.
Cost competitiveness is critical for an economy like Ireland’s. While cost and price pressure has been modest in
recent years, Ireland remains a relatively expensive country in which to live and work. As the economy
continues to grow, cost pressures are evident in key areas – particularly in relation to property, labour costs,
credit and services prices, where Ireland performs below competitor countries. With the labour market likely
to tighten further, upward pressures on labour costs can be expected in several sectors and across
occupations. Measures to encourage labour force participation can help alleviate labour cost pressure.
Increasing productivity, particularly in the SMEs sector, is also vital. Productivity levels and growth rates in
Ireland are strong, but skewed by globalisation activities. Our performance is heavily influenced by a small
cohort of enterprises. Bridging the productivity gap that exists between the most productive firms and laggard
firms is vital for sustainable growth prospects. Developing Ireland’s infrastructure base is a fundamental
challenge to enhancing productivity. While capital investment levels are projected to increase over the
medium term, at present they remain low and infrastructure pressures are rising. Well planned infrastructure
is important in increasing labour mobility, encouraging enterprise and ensuring Ireland is an attractive location
for talent.
Although Ireland’s export performance is a major contributor to Ireland’s economic growth, the range of
products and services exported and the base of exporting enterprises is relatively concentrated. The
continuous digitalisation of the economy is altering the structure of long established business models, supply
and value chains, and productivity, consumption and competition patterns. Ireland’s long-term productivity
prospects will be dependent on the take up and diffusion of innovative technologies, infrastructure
development, skills availability and reform of regulatory frameworks.
While our competitiveness performance in recent years has been positive, it is vital that we act now to
preserve the progress made to date and to drive further improvements in Ireland’s competitiveness.
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How Ireland Performs
Competitiveness is a multidimensional concept incorporating many interlinked and interdependent factors;
reflecting this complexity, Ireland’s Competitiveness Scorecard analyses over 170 measures, each of which
articulates an aspect of Ireland’s competitiveness performance.
Given the disparate nature of these indicators, the National Competitiveness Council does not attempt to
create a single quantifiable measure of competitiveness – rather, each indicator is examined individually.
Thereafter, taking a bird’s-eye view of all the data collected, the Council can draw the various strands of
analysis together to present a comprehensive picture of Ireland’s international competitiveness performance.
The 2018 Scorecard is divided into four main sections - sustainable growth (Chapter 2), competitiveness
outputs (Chapter 3), competitiveness inputs (Chapter 4) and essential conditions for competitiveness (Chapter
5) which correspond to the segments of the NCC’s competitiveness pyramid. Key findings are set out below.
Competitiveness performance
Competitiveness performance reflects the interaction of a wide range of factors that, combined, determine
the ability of firms to compete successfully in international markets. Ireland’s performance across several
international competitiveness indices has improved in recent years. The 2017/2018 WEF Global
Competitiveness Report shows Ireland is currently ranked 24th most competitive economy, a decline of one
place in the year. Using the IMD measure of competitiveness, Ireland is currently ranked 12th,a fall from 6th
place in 2017. The World Bank’s 2017 Ease of Doing Business report places Ireland 17th out of 190 economies –
an improvement of one place from the previous year. Ireland’s relative competitiveness is under constant
threat, as other economies are striving to improve. Rankings serve to remind us that competitiveness is a
relative measure. The process of reform and improvement must be continuous.
While data for late 2017 and 2018 points to a slight fall in HCI competitiveness in Ireland, the upward
movement of the indices are linked to the exchange rate movements, with subdued inflation mitigating the
impact on the real HCI. Both the nominal and real Harmonised Competitiveness Indicator are currently at
relatively low levels by historic standards.
Because of the scale of Ireland’s non-euro denominated trade, (i.e. with the UK and US), euro exchange rates
have a greater impact on Ireland’s relative international competitiveness than is the case in many euro area
countries. The euro has appreciated against sterling and the US dollar over the past two years. The euro-
sterling exchange rate average was £0.88 in 2017 compared with £0.82 in 2016 and £0.73 in 2015. The
appreciation of the euro-sterling exchange rate and continued uncertainty regarding Brexit poses difficulties
for Irish export competitiveness.
Quality of Life
Ireland performs relatively well in objective measures of well-being (income, education attainment, air and
water quality) and health. The OECD Better Life Index indicates that Ireland performs better than most other
countries in subjective measures of well-being relating to jobs and earnings, housing, personal security, health
status, education and skills, work-life balance, social connections and environmental quality, but below
average in income and wealth, and civic engagement.
Ireland's exceptionally strong economic growth in recent years is reflected in several indicators: in 2017
Ireland's GDP per capita remains the second highest in the Euro area and the median equivalised income was
also above the Euro area and the UK income. However, annual adjusted disposable income per capita in
purchasing power standard, although increasing, was still below the Euro area average. Ireland's Gini
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coefficient was 29.5 (0 being the most equal distribution, 100 - the least equal distribution) in 2016, below the
Euro area average (30.7), indicating a more equal income distribution in Ireland than in the Euro area. Ireland's
at-risk-of-poverty rate remained below the Euro area average in 2016. In 2016 the percentage of working
persons at risk of poverty in Ireland fell to 4.8 per cent, half the Euro area average rate. In 2017 the proportion
of people residing in jobless households fell below the Euro area average.
Climate change presents very significant challenges for Ireland, both in terms of mitigating emissions and
achieving national and international binding targets, as well as adapting to the effects of a changing climate.
Ireland's 2020 target is to achieve a 20 per cent reduction of non-ETS sector emissions on 2005 levels, with
annual binding limits set for each year over the period 2013 to 2020. The EPA latest projections show that, at
best, Ireland will only achieve a one per cent reduction by 2020 compared to the 20 per cent reduction
target. Ireland remains heavily dependent on fossil fuel energy sources, which account for 93 per cent of the
gross inland consumption, compared to 73 per cent in the Euro area. In 2016, overall energy consumption grew
by 3.2 per cent. Energy use in transport grew by 3.3 per cent and accounted for 42 per cent of the total energy
use. Consumption in industry grew by 2 per cent and the highest increase in energy consumption (7.8%) was
recorded in the Commercial/Public Services Sector. Between 1990 and 2016 total emissions increased by 10.4
per cent. The agriculture (32%), transport (20%), energy (20%), and residential (10%) sectors accounted for
most of the emissions. Although Ireland has increased its use of renewable energy sources in the period 2012-
2016, at 9.5 per cent, Ireland remains below its target of 16 per cent share of renewables in gross final
consumption.
Business Performance
The 2018 Globalisation Report1 ranks Ireland the most globalised economy in the EU. Exports and Imports as a
percentage of GDP were 120 per cent and 88 per cent respectively in 2017. Trade as a proportion of GDP in
Ireland has increased since 2013 and is significantly above Euro area and OECD averages. 2017 was a record
year in terms of enterprise agency (Enterprise Ireland and IDA Ireland) employment. 209,338 people are now
employed in companies supported by Enterprise Ireland. This represents a net increase of 10,309 jobs for 2017,
taking account of job losses. 210,443 are now employed by IDA Ireland client companies, with employment
growing by 5.3 per cent on an annual basis.
Ireland’s share of total global export markets has increased in the last decade and was 1.3 per cent as of 2016.
Brexit has exposed how Irish export markets are geographically concentrated and the range of products and
services exported has likewise become increasingly concentrated. Ireland’s principal trading partners in terms
of goods exports are the US (27.2% share) and UK (13.4%). The Euro area accounted for 33 per cent of goods
exports, with the Belgium, Germany, Netherlands and France the EU primary markets. The top 15
commodities accounts for approximately 90 per cent of total goods exports from Ireland. The significance of
pharmaceuticals and chemical products is clear with these two commodity groups alone accounting for 45 per
cent of exports. The top 100 traders in Ireland account for 80 per cent of total export value.
New firms are especially relevant for expanding productivity and innovation performance. A continuous flow
of new business start-ups that can survive and thrive in international markets strengthens the productivity
base not only through the creation of new businesses, products and services but also by stimulating improved
performance in existing businesses. The World Bank’s latest Ease of Doing Business report shows that Ireland
has a relatively supportive environment for starting a business compared with many international
competitors. Ireland improved its ranking in terms of Ease of Starting a Business to 8th out of 190 countries
and is the highest-ranking EU member state in this category. The number of newly born enterprises as a
1 2018 Globalization Report, Who benefits most from globalization?
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proportion of the total number of active enterprises is increasing. The largest increase in births was in the
Construction sector. Ireland has a very high proportion of high growth enterprises (growth in employment by
10% or more). 86 per cent of the enterprises born in Ireland in 2014 survived in 2015. 3-year and 5-year survival
rates are significantly higher than most EU countries where less than half survive for a 5-year period.
Despite intense competition, Ireland has maintained a remarkably robust performance in terms of jobs and
investments from inward investment. Foreign-owned enterprises account for 2 per cent of all enterprises,
they account for 63 per cent of gross value added and 22 per cent of all persons engaged. In Industry, they
account for 89 per cent of value added and 42 per cent of all persons engaged. Foreign-controlled enterprises
outside the EU generated 43 per cent of the value added in the Irish non-financial business economies in 2014,
compared to 18 per cent in the UK and 11 per cent in the EU. Deepening and broadening the FDI base and
maintaining Ireland’s competitive advantage as a location for new and existing mobile investment should
continue as a cornerstone of enterprise policy.
Prices and Costs
The Council published its Costs of Doing Business in Ireland report in June 2018 and concluded that in terms of
consumer prices, Ireland remains an expensive location in which to live and do business with a price profile
which can be described as “high cost and rising”. Irish consumer prices in 2017 were 23.7 per cent above the
European Union average and increasing at an annual rate of 0.2 per cent. Services prices in Ireland have risen
continuously since the beginning of 2012 and the magnitude of the increase has been higher than the Euro
area average during this period also.
Despite robust growth in employment, labour cost growth has remained modest in recent years and below the
growth experienced in both the UK and the EU. However, this masks considerable divergence at sectoral level,
and most likely firm level. It is vital that Ireland’s labour cost base does not move significantly out of line with
competitors, particularly the UK.
Ireland is an expensive place to live, relative to many EU member states, particularly in terms of property
costs. Continued strong demand means property price inflation and rent increases are likely to continue in the
short term until additional supply becomes available. Commercial property price levels in Ireland compare
favourably to comparable cities in the UK and Europe. However, strong rental growth can be observed. The
supply and demand for credit has improved significantly since the height of the crisis. However, the cost of
credit, while falling, continues to remain relatively high. The divergence between Irish and Euro area interest
rates for enterprise is particularly noticeable for loans of up to €0.25 million, where the interest rate on new
business loans in Ireland was more than double the Euro area average rate throughout 2017.
The high dependence on imported fossil fuels makes Ireland’s transport and energy prices vulnerable to
substantial oil price fluctuations. Weighted average electricity prices (in purchasing power standard) for non-
household consumers in the lower consumption bands (below 20,000MWh) increased in the second half of
2017 but remained below the Euro area. However, average electricity prices in the high consumption bands
(20,000 to 70,000 MWh and 70,000 to 150,000 MWh) surpassed the Euro area average prices in the second half
of 2017. Given Ireland’s dependence on energy imports from the UK, Brexit could potentially have a significant
impact on Ireland’s energy market.
The openness of the economy means the enterprise sector remains vulnerable to negative price pressures and
cost shocks, which are outside the influence of domestic policymakers. Many downside risks have already
emerged that could undermine national competitiveness, growth and living standards. These include
unfavourable exchange rate movements, higher international energy prices and imported inflation from
Ireland’s major trading partners, particularly the UK. In the face of growing supply side constraints, there is a
risk that rising costs outstrip productivity gains, push up prices and erode competitiveness.
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Productivity
In the long-run, Ireland’s productivity is the primary determinant of living standards and the engine of
economic growth. Irish productivity growth rates and levels have been above the OECD average since the
recession. The economic cycle and more generally trends in the composition of value added and employment
have a significant effect on measured productivity levels in Ireland. Ireland had the highest output per hour
worked among OECD member states in 2016. Output per hour was $88 in 2017 and $83.1 in 2016 in GDP
terms, compared to $51.6 in the UK and $47.1 in the OECD in 2016. On average over the period 2006-2016,
Ireland’s productivity growth rate (4.6%) has been well above most Member States and the OECD total
(0.9%).
In recent years, Ireland’s performance is significantly affected by globalisation activities, which are reflected in
the national accounts. Irish labour productivity growth has been above that in competitor countries since
2010. However, corporate restructuring, including the relocation of firms with significant IP assets and aircraft
leasing, led to noteworthy increases in labour productivity, particularly in 2015.
Labour productivity growth was low immediately prior to the recession, with economic growth concentrated
in the Domestic and Other sectors, reflecting the importance of Construction over the period. Economic
growth considerably weakened to an average annual growth rate of around 2 percent for the period 2009-
2011. Over the course of the recession (2009-2011) as output and employment growth collapsed, labour
productivity growth increased at a stronger rate. The period 2015 and 2016 saw a significant increase in
industrial sector productivity due to the relocation of large multinational companies to Ireland. Gross Value
Added (GVA) substantially exceeded labour growth in 2014 and 2016, which explains increased labour
productivity. GVA grew by 27 per cent in 2015 because of major globalisation events, causing a 23 per cent
increase in labour productivity.
Ireland’s growing base of multinationals in high value-added, capital intensive sectors (particularly a small
cohort of manufacturing and ICT firms) disguises, to a degree, underperforming sectors and boosts Ireland’s
productivity levels. Recent research by the Department of Finance shows most businesses have experienced a
decline in productivity growth in recent years. The research suggests that the top 10 per cent of firms account
for 87 per cent of value added in manufacturing and 94 per cent in services. This highlights Ireland’s exposure
to firm-specific shocks. While Ireland’s productivity growth is relatively strong, there is a need to increase
productivity across many sectors and occupations. Supporting an uplift in productivity performance at firm
level across all sectors remains a significant competitiveness challenge across a range of policy spheres.
Employment
Employment is approaching peak pre-recession levels, illustrated by the over 2.2 million employed in Q1 2018,
an increase of 2.9 per cent or 62,100 in the year to Q1 2018. Employment increased in eleven of the fourteen
economic sectors over the year to Q1 2018. Consistent with the increase in employment levels, headline and
long-term unemployment are also on a steady downward trajectory. In Q1 2018 the seasonally adjusted
number of unemployed and long-term unemployed was 137,300 and 50,100 respectively. Long-term
unemployment accounted for 37.7 per cent of total unemployment in Q1 2018. The difference in
unemployment rates across Ireland's eight regions (18%) was the lowest in the Euro area. The youth
unemployment rate declined further in 2017 and 2018, and at 11.8 per cent in May 2018 it was below the Euro
area average of 16.8 per cent. The robust performance of the economy is reflected in the increasing number of
employment permits. At 11,361, the total number of employment permits issued (new and renewed) in 2017 is
almost three times the number of permits issued in 2013 (3,863), with the largest number of employment
permits issued in the Service sector (4,270).
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As the labour market is approaching full capacity, job vacancy levels are increasing and certain skills needs are
becoming more pronounced. There is a divergence in job vacancy rates not only at sectoral level within the
Irish economy, but also between Ireland, the Euro area and the UK in 2017. The sectors with the highest job
vacancy rates in Ireland are Professional, Financial & insurance and ICT.
Business Environment
While access to and affordability of credit has improved, Irish business continues to face higher interest rates
and greater volatility in those rates than competitors abroad. The divergence between the interest rates is
particularly noticeable in relation to new loans of up to €250,000, where the interest rate is more than the
double the Euro area average. Bank loans remain the relevant form of external financing for 55 per cent of
Irish SMEs (compared to 48% at EU level). Diversifying the lending market remains a challenge. Although
private equity investment as proportion of GDP increased in Ireland in the period 2013-2016, at 0.18 per cent
of GDP in 2016, it is below the UK (0.64%) and the best EU performers. The proportion of non-performing
loans (this includes all lending) in Ireland has decreased from 25 per cent to 14 per cent in the period 2012-
2016, however, Ireland’s performance remains below the Euro area average of 4.1 per cent and the OECD of
2.9 per cent in 2016.
Maintaining a growth and entrepreneurship-friendly taxation system, whilst simultaneously broadening the
tax base, is critical to maintaining existing levels of employment and creating new jobs. A broader stable tax
base is also crucial in achieving sustainability of the public finances. In terms of tax base, income tax remains
the Government’s largest tax stream (€20.5bn in 2017). The rise in income tax receipts illustrates the
improvement in the labour market. Over the period 2012-2017, income tax receipts recorded an increase of 34
per cent. Corporation tax receipts increased by 99 per cent over the same period. Ireland’s exposure related to
the concentration of corporation tax receipts among a very small cohort of firms remains a serious risk in
terms of the long-term sustainability of the public finances.
In terms of income tax and social security contributions for married couples and individuals as a per cent of
total labour costs, Ireland is more competitive than the Euro area. Marginal rates of income tax in Ireland for
married couples and individuals earning below the average wage are lower than the rates in the UK, Euro area
and OECD. The rates for individuals earning the average wage and above are less competitive.
Ireland’s corporation tax rate remains internationally competitive and is the third lowest in the OECD at 12.5
per cent. However, while Ireland’s rate has remained consistent over recent years, many economies have
reduced their rates (e.g. the UK and in 2018, the US). Ireland’s headline Capital Gains Tax (33%) is the third
highest in the OECD and above the UK tax rate of 28 per cent.
Physical Infrastructure
Government investment as percentage of GDP remains below pre-crisis levels in Ireland and across the OECD.
In 2015, average investment spending across OECD countries amounted to 3.2 per cent of GDP. Ireland’s
measures relative to GDP are skewed by the activities of multinationals and the equivalent figure for Ireland
was the second lowest in the OECD at 1.7 per cent. Expenditure increased to 1.9 per cent in 2016 but remains
low. Over the medium term, capital investment levels are projected to increase, but at present remain low
relative to pre-crisis levels. Developing Ireland’s infrastructure base is a fundamental challenge to enhancing
competitiveness. Perceptions regarding the overall quality of infrastructure in the economy remain low in
Ireland. Ireland’s score in international competitiveness rankings fell over the past five years to 2015 and in
2017 remains below the EU average (4.9). Ireland is ranked 51st in the world with the UK 27th. In an EU
context Ireland is ranked 21st with the UK 12th.
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Sustained investment needs to be made in quality public transport projects, broadband and housing which
offer the highest economic and social returns and is future-proofed. In view of demographic change and the
long lead times for the delivery of road, air and sea port infrastructure and services, it is critically important
that planning is effective and future proofed to ensure Ireland is well positioned to meet longer term
infrastructure needs.
Clusters and Firm Sophistication
Ireland has a relatively high degree of specialisation and cluster presence in biopharma, digital, medical
devices and business services sectors. Competitiveness and productivity is driven by firms capable of using
knowledge intensive production processes. In terms of relative sophistication of business processes as
perceived by national executives, Ireland is ranked 14th in the world and 7th in the Euro area and scores above
the Euro area average. Ireland is a strong innovation follower with performance improving over time but
behind the UK and the best innovation leaders. 46 per cent of SMEs in Ireland are reported as having
introduced a product or process innovation in 2016, the second highest in the EU. The proportion of SMEs in
Ireland who introduced a marketing or organisational innovation is high (52. 5%).The comparable figure in the
UK is 45 per cent with the EU average 35 per cent. E-sales accounted for 33 per cent of the total turnover
generated by Irish enterprises in 2016, which was the highest share recorded in Europe. The EU and UK rates
were both 18 per cent. Overall, the share of e-sales in total turnover has been increasing for Irish SMEs and
remains the highest in the EU.
Knowledge and Talent
In an international context, the IMD’s Competitiveness Yearbook 2018 ranks Ireland 5th for attracting and
retaining talent. Ireland’s other strengths are in relation to the availability of financial skills (7th) and the ability
to attract foreign talent (8th). Relative weaknesses include the pupil-teacher ratio in secondary education (43rd)
and language skills (46th).
In 2016, Irish expenditure on R&D as percentage of GDP accounted for 1.18 per cent, below the EU average
(2.03%) and UK (1.69%). Business expenditure on R&D (BERD) accounted for 0.8 per cent, with public
expenditure accounting for 0.3 per cent. R&D investment has increased in recent years but GNP/GDP levels
have increased at a faster rate. In 2016, Gross expenditure on R&D (GERD) increased to €3,243m and is at its
highest level in the period 2007-2016.
The proportion of the working age population with tertiary (third level) education in Ireland is above the Euro
area average the OECD average. As a percentage of total third level graduates, Ireland produced more
science, maths & statistics and ICT graduates than the Euro area. However, the proportion of engineering,
manufacturing and construction graduates is below the Euro area average. Ireland surpasses both the Euro
area and OECD average attainment for secondary education participation. With 6.1 per cent classified as early
school leavers, Ireland's retention rates in secondary education are above the Euro area average of 11 per cent.
However, the percentage of people aged 25-64 in receipt of education and training (both formal and non-
formal) in Ireland remains below the Euro area average.
Institutions
The World Bank's Doing Business index assesses regulations affecting SMEs and measures regulations
applying to companies throughout their life cycle. Ireland improved its ranking in 2017 and is now ranked 17th
in the world and 4th in the Euro area. Ireland ranks highly for ease of paying taxes, starting a business and
protecting minority investors. Relative to the UK, the biggest deficiencies are Ireland’s scores in enforcing
contracts, getting electricity and trading across borders. Ireland’s lead in registering a property and starting a
14
business is slim. Perceptions regarding institutional effectiveness and the quality of public services and
regulatory effectiveness are above the OECD average but behind the UK. Ireland's trade in services is relatively
open and Ireland has a relatively low level of trade restrictiveness across 19 major services sectors.
Macroeconomic sustainability
The Irish economy recorded strong growth in 2017 (7.8 %). The European Commission forecasts economic
growth of 5.7 per cent and the Department of Finance - 5.6 per cent in 2018. However, the Modified Gross
National Income (GNI*), which more accurately reflects the underlying state of the Irish economy as it
excludes the impact of multinationals’ activities, was more than 30 per cent lower (€189.2 billion) than the
Gross Domestic Product (€275.6 billion) in 2016.
Both the EU and Euro area economies grew by 2.4 per cent in 2017 and are predicted to grow by 2.3 per cent in
2018. National accounts data suggests that exports were the key driver of economic growth in Ireland in 2017
with both goods and service sector performing well. The growth in exports combined with significant
contractions in imports (-6.2%), resulted in an increased net export figure of 14.39 per cent (-9.11% in 2016).
Year on year, consumption spending grew moderately (1.9%) and there was a significant drop in investment
(-22%); the latter largely due to a low level of investment in intangible assets as well as the significant decline
in aircraft purchase.
Ireland’s GDP per capita remains the second highest in the EU after Luxembourg and significantly above the
Euro area average. Ireland’s current account surplus was €37bn for 2017, an increase of nearly €28bn on 2016.
Ireland’s debt as a percentage of GDP continued to decline in recent years and is below the UK (87.7%) and the
Euro area (86.7%) in 2017. It was 68 per cent in 2017 and is expected to decline to 66 per cent in 2018.
However, the Irish GDP figures are skewed by the activities of the multinational sectors, and the debt-to GNI*2
ratio, a better measure of sustainability in Ireland, remains very high (100.1 %) but are predicted to fall in the
period 2018-2021. Measured per capita, Ireland’s debt is the highest in the EU at over €42,000 per person. In
2007, as we entered into the economic crisis, it was less than €11,000. The Government’s mid-term budgetary
objective in accordance with EU Fiscal rules remains the achievement of a structural deficit of 0.5 percent of
GDP. Earlier estimates of achieving this target, as outlined in the government’s (MTO)3, by 2018 have been
revised and the Department of Finance now predicts it to be achieved around 2021. The general government
deficit was 0.3 percent of the GDP in 2017, in line with the threshold (3 percent of GDP) set out in the Stability
and Growth Pact. The exchequer’s revenue income represented 25.7 per cent of GDP in 2017, a fall of almost 2
per cent on 2016 (27.5%). Similarly, expenditure as a percentage of GDP also fell from 28 per cent in 2016 to
26.1 per cent in 2017. Beyond the public finances, Irish household debt as a proportion of income fell more
than 60% during the period 2011-2016. However, Irish households remain the fourth most indebted
households in the EU.
Endowments
In 2017, Ireland continued to have the youngest population in the Euro area. In the period 2012-2017, the Irish
population increased by 4.2 per cent. Ireland’s birth rate remains considerably higher compared to other EU
countries, even though it declined by around 3 percent in the period 2011-2016. The combination of positive
net migration and natural increase resulted in an overall increase in the population (population estimate of
4.79 million in April 2017). The median age of the Irish population remained below the EU average.
2GNI* - Modified Gross National Income
3 MTO- Medium Term (Budgetary) objective
15
The change in dependency ratios are important for long-term planning across a range of policy spheres.
Ireland has the 7th lowest old age dependency ratio in OECD and 2nd lowest in Europe. However, the Irish
dependency ratio rose in the period 2000-2015 and is expected to rise further by 2025. Ireland’s labour force
grew by almost 5 per cent in the period 2012-2017. In 2017, the overall labour force participation rate in Ireland
was 72.6 per cent, slightly below the Euro area average (73.1%). The female rate was below the Euro area
average, the male rate was above the Euro area average. The CSO recorded net inward migration in 2017
(+19,800), the highest level since 2008.
Population density in a country determines the infrastructures demand, such as road networks, educational
institutions, broadband connections and the transport system, and these are vital in maintaining and
improving a country’s competitiveness. Ireland is one of the most sparsely populated countries in the EU.
Census 2016 data shows the significant differences in change in population density between urban and rural
areas in the period 2011-2016, with density averaging 2,008 people per km2 in urban areas and 27 people per
km2 in rural areas in 2016.
16
Ireland’s Competitiveness Challenge _ the policy challenges
The future resilience of our economy will rely on the ability of our enterprises to compete effectively in
international markets and to anticipate and respond to customer demands for new products, services and
solutions in new and existing markets. Our improved performance is reflected in strong employment growth
across sectors and regions. However, the sustainability of Ireland’s economic model is under threat. There are
significant challenges in the external environment, particularly global ecomonic uncertainty, changes to the
business tax landscape, protectionist policies and Brexit related risks. Domestic pressures are also
undermining our ability to compete. Our debt levels remain high, increasing property prices and rental costs
diminish our ability to attract and retain talent, and the the economy relies on a small number of highly
productive companies, a small number of export markets, and a narrow range of products and services. The
overarching themes emerging from the analysis in Ireland’s Competititveness Scorecard 2018, which will be
considered in the Council’s 2018 Competitiveness Challenge Report are:
▪ Ensuring the sustainability of the economic model: The economy cannot grow in a sustainable
manner unless the macro environment is stable. Ireland’s debt levels remain high. The State cannot
provide services efficiently if it must make high-interest payments on its past debts. It is important to
improve Ireland’s tax competitiveness to support and reward employment, investment and
entrepreneurship. Ireland’s export performance remains strong, however the range of products and
services exported, the base of exporting enterprises, and the market destinations are relatively
concentrated. We need to continue to improve the environment for business in Ireland in order to
expand the export base and range of exported products and services.
▪ Maintaining cost competitiveness: As the economy continues to grow, cost pressures and capacity
constraints have emerged in key areas. Cost pressures are evident in property, labour, credit, services
and energy prices, where Ireland performs below competitor countries. Ireland remains an expensive
location in which to do business with a price profile described as “high cost and rising”. Increasing
business costs reduce the competitiveness of enterprises based in Ireland and our attractiveness as a
location for mobile investment. As the pressure on costs increases, it is critical that domestic policies
do not contribute to overheating the economy.
▪ Bridging the productivity gap between “the best and the rest”: productivity is a key driver of
national competitiveness. Improving levels of labour and capital productivity enables enterprises to
improve their efficiency and profitability, and enhances the ability of countries to maintain
international competitive advantage and sustainably improve living standards. Productivity levels and
growth rates in Ireland are strong but skewed by globalisation activities. Our performance is heavily
influenced by a small cohort of enterprises, which disguises, to a degree, underperforming sectors
and boosts Ireland’s productivity levels. Bridging the productivity gap that exists between the most
productive firms and laggard firms is vital for sustainable growth prospects. While we are improving
our innovation performance, we cannot stand still. Ireland’s firms must continue to move up the value
chain and embrace and support new technologies and opportunities, particularly in the digital
economy.
Ireland’s Competitiveness Scorecard does not provide the answers to these challenges. Rather, this report
informs the evidential base to assist in the identification of the key challenges affecting enterprise
competitiveness. The Council will put forward proposals to address many of these issues in its annual policy
document, Ireland’s Competitiveness Challenge, which will be published later this year.
17
Chapter 1: Ireland’s Competitiveness Performance and Outlook
International competitiveness performance
Competitiveness is a complex concept incorporating a myriad of interlinked and interdependent factors;
reflecting this complexity, Ireland’s Competitiveness Scorecard analyses data over 170 indicators each of
which tells a part of Ireland’s competitiveness story. These measure a range of inputs, outputs and outcomes.
Given the disparate nature of these indicators, the National Competitiveness Council does not attempt to
create a single quantifiable measure of competitiveness – rather, each indicator is examined individually.
Thereafter, taking a bird’s-eye view of all the data collected, the Council can draw the various strands of
analysis together to present a comprehensive picture of Ireland’s international competitiveness performance.
Figure 1.1 presents Ireland’s ranking across a range of international indices. In this figure, a ranking of 1 (i.e.
close to the centre of the chart) represents a robust performance (i.e. a ranking of 1 would imply that Ireland is
deemed to be the most competitive of 33 countries in the OECD). Ireland’s performance is compared relative
to Denmark and the UK. In comparison to the UK, Ireland performs well in international competitiveness
rankings as benchmarked by the IMD but is behind the UK in Global Innovation (Ireland is ranked 10th, the UK
5th in the Global Innovation Index), Entrepreneurship (Ireland is ranked 7th, the UK 4th in the Global
Entrepreneurship Index) and Ease of Doing Business (Ireland is ranked 17th, the UK 7th) indices.
Figure 1.1 Overview of Ireland’s international rankings amongst OECD countries 2016
These indices cover
several policy areas –
some based on directly
quantitative aspects of
policy (e.g. the World
Bank Doing Business
Index); others measure
qualitative, more
subjective issues; indices
such as the IMD and
WEF competitiveness
indices capture a
mixture of both.
Source: Various International Organisations
Indices and rankings are useful, if imperfect, measures of competitiveness performances. In some instances,
Ireland’s ranking is not a question of absolute deterioration or improvement in these categories, but rather a
matter of other countries improving their position relative to Ireland's. Advanced economies such as Ireland, at
the upper end of the rankings, can find it harder to get high impact from their reforms due to their already
robust performance (i.e. as a country nears the frontier or limit of best practice, the harder marginal
improvements are to achieve). In addition, the methodology, surveys and data used in these benchmarking
reports differ significantly. Methodologies are frequently revised and this can have an impact on Ireland’s
ranking. While acknowledging that year-on-year fluctuations in data may be subject to “data noise”,
(particularly about perception based indicators) performance across these rankings indicates the dynamic and
24
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8
10
0
5
10
15
20
25
WEF Global
Competitiveness Report
2017
IMD World
Competitiveness
Yearbook 2017
World Bank Doing
Business 2017
Global Entrepreneurship
Index 2017
Forbes Best Countries for
Business 2016
Global Innovation Index
2017
Ireland UK Denmark
18
global nature of competitiveness. Figure 1.2 examines how Ireland’s ranking has evolved in the last decade in
two of the most high-profile enterprise competitiveness-related indices. Ireland’s position in the World
Economic Forum (WEF) and Institute for Management Development (IMD) rankings deteriorated prior to and
over the course of the recession but has gradually started to recover in recent years. The 2017/2018 WEF
Global Competitiveness Report shows Ireland is currently ranked 24th most competitive economy, an
improvement of 1 place in the year. Using the IMD measure of competitiveness Ireland is currently ranked 12th,
a fall of 6 places from the previous year. Ireland’s fall in the IMD ranking is due to several reasons. Our
economic performance decline in the IMD ranking is due to distortions to Ireland’s GDP figures and gross fixed
capital formation. Perceptions of Government efficiency declined largely due to high effective personal tax
rates. Many of Ireland’s traditional assets continue to remain competitive. Ireland is ranked first in the world
by the IMD for labour productivity of industry, flexibility and adaptability of our workforce. We also perform
well in relation to the attracting and retaining talent (5th) competitiveness of our tax regime (2nd) and
measures which consider ease of doing business (7th) and ease of starting a business (5th). In terms of
quantitative data, international indices of competitiveness such as the WEF and IMD reports combine current
economic performance metrics (e.g. economic growth, fiscal position, productivity levels, employment, prices
indicators) with measures of potential future success (e.g. investment in infrastructure, education and
innovation) as well as qualitative measures.
Figure 1.2 Ireland’s global competitiveness rankings, 2007-2017
Since 2011, the trend in
Ireland’s international
competitiveness
ranking, as measured
by the IMD and WEF,
has generally been
upward. After strong
improvements in 2016
and 2017, Ireland is now
ranked 12th in the IMD’s
World Competitiveness
Yearbook 2018 and is
ranked 24th in the WEF
Global Competitiveness
Report 2017/2018.
Source: IMD, WEF
The World Bank’s 2017 Ease of Doing Business report places Ireland 17th out of 190 economies – an
improvement of 1 place from the previous year. While Ireland’s performance and overall score has
improved, other countries have also improved their performance and improved at a faster rate. Globally,
Ireland is a top 20 performer regarding measures of paying taxes (5th), ease of starting a business (10th),
protecting minority investors (13th) and resolving insolvency (18th). Ireland’s ranking is less impressive in
getting credit (32nd), getting electricity (33rd), dealing with construction permits (38th), registering property
(41st), trading across borders (47th) and enforcing contracts (90th).
12
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1
6
11
16
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31
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
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mpe
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ve
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g
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ore
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Ireland IMD Ranking Ireland WEF
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Harmonised Competitiveness and exchange rate trends
Ireland’s competitiveness narrative can be illustrated using Harmonised Competitiveness Indices (HCIs)4. The
purpose of HCIs is to provide comparable measures of countries' price and cost competitiveness that are
consistent with the real effective exchange rates.
Figure 1.3: Harmonised Competitiveness Indicators, Ireland, February 2012-February 2018 (1999 = 100)
HCI data for February
2018 show that the
nominal HCI increased
by 6% on an annual
basis. In real terms, the
HCI increased by 4.6%.
The upward movement
of the indices indicates a
decline in this measure
of competitiveness
linked to exchange rate
movements, with low
inflation mitigating the
impact on the real HCI.
Source: Central Bank of Ireland
Factors outside of the control of Irish policy makers and enterprises, such as exchange rates, exert a
considerable influence on national competitiveness and the cost base for enterprise based in Ireland.
Favourable exchange rates, vis-à-vis Ireland’s main trading partners, make firms based in Ireland more cost
competitive and allow them to trade more effectively in international markets. Because of the scale of
Ireland’s non-Euro denominated trade, (i.e. with the UK and US), euro exchange rates have a greater impact
on relative international competitiveness than is the case in many Euro area countries. The euro has
appreciated against sterling and the US dollar over the past year. The appreciation of the euro-sterling
exchange rate poses significant challenges for Irish export competitiveness to the UK. The €/£ exchange rate
average was £0.88 in 2017 compared with £0.82 in 2016 and £0.73 in 2015. In April 2018, the euro averaged
£0.87; this compares to an average value of £0.81 from 2007-2016. The permanency of the exchange rate shift
is an important competitiveness consideration. Analysis by the Central Bank5 has modelled the effects of a
sterling depreciation shock (the pound depreciates by 10% relative to the euro) on Irish output. The analysis
suggests the export economy is most affected with a decline in relative competitiveness leading to a fall in
output of 0.4 per cent after 3-4 years and by 0.2 per cent in the long run. Domestic demand and the non-
traded sector would also be affected negatively. In addition, inflation would be lower due to a decline in import
4 Features of the Irish economy can HCI can affect movements in HCIs and care should be taken in interpreting movements in the indices as a measure of
competitiveness. The nominal HCI is affected by exchange rate developments and relative to other Euro area countries a high share of Ireland’s exports are
destined for non-Euro area countries (UK and US). Real HCIs consider, relative price movements relative to trading partners. Using consumer prices as a
deflator means the impact of intermediate goods and capital goods are not directly considered and the influence of indirect taxes and non-traded goods and
services on the CPI limited its usefulness as an indicator of good indication of international competitiveness. See Barry, F, (2017) The Central Bank’s
harmonised, competitiveness indicators, users beware, Administration, vol. 65, no. 4, O’Brien, D. (2010) Measuring Ireland’s price and labour cost
competitiveness. Central Bank Quarterly Bulletin, Q1, 2010. 5 Central Bank of Ireland, Quarterly Bulletin No.2 2018
85
90
95
100
105
110
115
Feb-
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May
-12
Aug
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Nov
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Feb-
13
May
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Feb-
17
May
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Aug
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-17
Feb-
18
Inde
x (1
999
=100
)
Nominal HCI Real HCI
20
prices. The Central Bank estimate the aggregate impact of the shock as a reduction of the GDP level of
approximately 0.2 per cent in the long run.
Figure 1.4: Euro/Dollar, Euro/Sterling, exchange rates, April 2007-2018
The euro has
appreciated against
sterling and the US
dollar over the past year.
In the year to April 2018
the euro appreciated by
14% relative to the
dollar and 10% relative
to sterling. Since the
Brexit referendum, the
value of sterling has
been volatile and
depreciated by 10 per
cent relative to the euro.
In April 2018, the euro
averaged £0.87; this
compares to an average
value of £0.81 from
2007-2016.
Source: Central Bank
Figure 1.5: Real effective exchange rate (REER), Ireland, deflated by Consumer Prices, 2011-2017
The REER is a country’s
exchange rate relative to
a basket of exchange
rates of other countries
weighted by respective
trade shares. A negative
value indicates
improved
competitiveness. Recent
developments in
exchange rates and
inflation have served to
improve Ireland’s
performance.
Source: Eurostat
0.40
0.60
0.80
1.00
1.20
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r-10
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r-17
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r-18
€E
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ate
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82
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90
92
94
96
98
100
2011 2012 2013 2014 2015 2016 2017
Ind
ex 2
010
=10
0
EA 19 EU 28 37 Countries 42 Countries
21
Economic outlook
The European Commission’s forecast for economic growth for Ireland together with our major trading
partners are shown in Table 1.1 below. With a growth rate of 7.8 percent, the Irish economy outperformed the
rest of the Euro area countries, the EU and major global economies in 2017. The substantial improvement in
the labour market conditions meant the unemployment rate is projected to decrease year on year to 4.9 per
cent over 2018-2019. The European Commission report also indicates a slowing down in the economy in the
next two years with predicted growth rate of 5.7 per cent in 2018 and 4.1 in 2019 respectively. The Department
of Finance forecasts economic growth of 5.6 per cent in 2018 and 4 per cent in 2019. In the short-term the
major economic indicators such as private consumption, exports and investments are projected to remain
robust. The short-term economic outlook for both the EU and the Euro area is also positive. The EU is
forecasted to grow by 2.3 per cent in 2018 and 2 per cent in 2019 and the Euro area by 2.3 per cent and 2
percent in the same period.
Source: European Commission Spring Economic Forecast 2018
The OECD Outlook for Ireland report highlights the various domestic and foreign risk factors that could cloud
the Irish economic outlook in the short and long term. Domestically, the forecast warns that, combination of a
growing economy, expanding labour market and the disequilibrium in the housing sector could once again
lead to speculative property bubbles and elevated levels of property related loans. Also, the tightening of the
labour market could put upward and unsustainable cost pressure on businesses and dampen private
investment. Additionally, an open economy like Ireland is highly dependent on the global economic
environment and vulnerable to global/external risk factors. The combination of the global trade slowdown,
due to the rising possibility of the global trade war, and uncertainty caused by the Brexit poses a significant
challenge to the Irish economy.
Table1.1: Economic Growth Outlook (Annual percentage change), European Commission
2017 2018 2019
World 3.7 3.9 3.9
EU 2.4 2.3 2
Euro area 2.4 2.3 2
Ireland 7.8 5.7 4.1
Germany 2.2 2.3 2.1
France 1.8 2 1.8
Italy 1.5 1.5 1.2
UK 1.8 1.5 1.2
US 2.3 2.9 2.7
China 6.9 6.6 6.3
Japan 1.7 1.3 1.1
22
Table 1.2: Forecast Annual percentage change key indicators, Ireland,2018
GDP GNP HICP
Employment
Rate
Department of Finance 5.6 5.6 0.8 2.7
Central Bank of Ireland 4.8 4.4 0.8 2.4
ESRI 4.8 4.7 NA 2.7
European Commission 5.7 NA 0.9 NA
IMF 3.4 NA 1.5 1.6
OECD 2.9 NA 1.4 NA
Source: Various Bodies
The continuing negotiations on the future trading relationship between the EU and UK means the impact of
Brexit on the overall Irish economy remains uncertain. As the UK remains Ireland’s largest market in the EU,
the predicted low UK growth rate in the next two years (1.5% in 2018 and 1.2% in 2019) coupled with the
continued volatility of sterling would have an adverse effect on export demand and negatively affect the
overall economy. The economic outlook for the US, our principle trading partner outside the EU, indicates that
the US economy will continue to grow by 2.9 per cent in 2018 and2.7 per cent in 2019. This can change
significantly as the recent policy initiatives from the US administration have increased volatility in global
markets.
Despite domestic challenges and the uncertain global economic environment, the positive outlook for labour
force expansion, private investment, exports and consumption are the basis for a forecast of moderate growth
in the Irish economy in the short to medium term.
Table1.3: Forecast Annual percentage change in the composition of Irish economic growth, 2017-2021
2017 2018 2019 2020 2021
Real GDP 7.8 5.6 4 3.4 2.8
Real GNP 6.6 5.6 3.7 3.1 2.6
Exports 6.9 6.9 5.4 4.5 3.9
Imports -6.2 6.6 5.9 4.8 4.4
Personal Consumption 1.9 2.6 2.4 2.3 1.9
Government Consumption 1.8 1.9 1.9 1.8 1.7
Investment -22.3 8.5 7.4 5.2 4.7
Source: Department of Finance Stability Program Update 2018
23
Chapter 2
Sustainable Growth
24
Sustainable Growth
Competitiveness is not an end, but is a means of achieving sustainable improvements in growth and living
standards. The Council monitors progress on this goal by assessing economic, social and environmental
dimensions of societal wellbeing. Both in Ireland and internationally, there is increasing interest in
benchmarking quality of life improvements — incorporating aspects of living standards, income levels,
equality, health and life expectancy. The Scorecard benchmarks three elements of sustainable growth: quality
of life, income (growth rates, levels and distribution) and environment sustainability.
• Quality of Life: A key objective of competitiveness is to support a high quality of life, which is broader
than material living standards. Quality of life is measured by indicators of life satisfaction, health and
life expectancy.
▪ Ireland performs relatively well in objective measures of well-being (income, education attainment,
air and water quality). Eurostat data shows that life expectancy in Ireland has increased over the past
decade and in 2016 Irish life expectancy is 81.8 years, above the EU average of 81 years and
marginally below the Euro area average of 82 years. Healthy life years at birth for Irish females were
estimated at 69.8 years in 2016, the third highest rate in the EU and 5.6 years above the EU average.
Male healthy life years at birth in Ireland in 2016 were estimated at 67.3 years, the fourth highest rate
in the EU and 3.8 years above the EU average.
▪ Ireland performs well in many measures of subjective well-being relative to most other countries as
illustrated by the OECD Better Life Index. Data for 2015 shows that Ireland ranks above the average in
measures relating to social connections, jobs and earnings, housing, personal security, health status,
education and skills, work-life balance, and environmental quality. Ireland scores below average in
income and wealth, and civic engagement. Ireland continues to perform strongly in the UN’s Human
Development Index, which measures average achievement in three basic dimensions of human
development — a long and healthy life, knowledge and a decent standard of living. Ireland’s ranking is
8th in the world and above the OECD average. The World Happiness report 2018, which measures
happiness in terms of GDP per capita, healthy life expectancy, social support, generosity, perception
of corruption and freedom to make life choices, shows that Ireland ranks 13th happiest country (4th in
the Euro area). Ireland performs strongly within the Euro area in variables related to GDP per capita
(2nd), social support (2nd), generosity (3rd) and perceptions of corruption (3rd). Ireland also ranks
13th in terms of happiness of its immigrants.
• National Income: High and rising incomes are a key measure of the success of national
competitiveness. The indicators used in this section cover the level, growth and distribution of
Ireland’s national income. Indicators include median incomes, income distribution, risk of poverty
and material deprivation.
▪ Ireland's exceptionally strong economic growth in recent years has been reflected in GDP per capita:
in 2017 Ireland's GDP per capita remains the second highest in the Euro area. The median equivalised
income in Ireland was also above the Euro area and the UK income. However, annual adjusted
disposable income per capita in purchasing power standard, reflecting the idea of household income
better than GDP, shows that although disposable income increased by 2.6 per cent compared to
2012, in 2016 it was still below the Euro area average (Figure 2.2.3).
▪ Ireland's Gini coefficient was 29.5 in 2016, compared with 30.5 in 2012. The score is below the Euro
area average of 30.7, indicating a more equal income distribution than in the Euro area (Figure 2.2.9).
▪ Ireland's at-risk-of-poverty rate (16.6%) remained below the Euro area average (17.4%) in 2016. Social
transfers play a significant role in reducing poverty risk in Ireland; excluding social transfers, the at-
25
risk-of poverty rate was 34.7 per cent. In 2016 the percentage of working persons at risk of poverty in
Ireland fell to 4.8 per cent compared to 2012 (5.6%), and was significantly below the Euro area
average rate of 9.5 per cent and the UK rate of 8.6 per cent. The improvement in the labour market
has seen a significant reduction in the scale of household joblessness - the share of adult population in
jobless households was, 10.0 per cent in 2017 (14.4% in 2013), below the Euro area of 10.2 per cent.
• Environmental Sustainability: The quality of a natural environment and the commitment to
environmentally sustainable policies is a key determinant of sustainable growth. The essence of
environmental sustainability is a stable relationship between human activities and the natural world,
one that does not diminish the prospects for future generations to enjoy a quality of life at least as
good as our own. Indicators in this section include per capita CO2 emissions, waste generation and
renewable energy use.
▪ The Paris Agreement, in force since November 2016, represents a global effort to limit global
temperature increases to less than 2 degrees and to pursue efforts to limit the temperature increase
to 1.5 degrees above pre-industrial levels. Within Europe one of the main instruments to reduce
greenhouse gas emissions is the EU Emissions Trading Scheme (ETS), which currently covers about
45 per cent of EU emissions, and 28 per cent of total emissions in Ireland. The Scheme has an
objective to reduce emissions in energy intensive industry covered by the Scheme by 21 per cent
relative to 2005 levels by 2020 and 43 per cent by 2030. Under the 2009 EU Effort Sharing Decision
(ESD), which applies to the non-ETS sector, Ireland has a series of particularly challenging
commitments. Between 2013 and 2020, Ireland has a target to reduce GHG emissions to 20 per cent
below 2005 levels. This target is partially calculated based on GDP per capita and is one of the most
demanding 2020 reduction target allocated under the ESD — one shared only by Denmark and
Luxembourg. Ireland has also committed to increasing the share of renewables in final energy
consumption to 16 per cent by 2020 and to moving towards a 20 per cent increase in energy
efficiency.
▪ Figure 2.3.3 shows that Ireland remains heavily dependent on fossil fuel energy sources, which
account for 93 per cent of the gross inland consumption, compared to 73 per cent in the Euro area. In
2016, overall energy consumption grew by 3.2 per cent. Energy use in transport grew by 3.3 per cent
and accounted for 42 per cent of the total energy use. Consumption in industry grew by 2 per cent
and the highest increase in energy consumption (7.8%) was recorded in the Commercial/Public
Services Sector.
▪ Between 1990 and 2016, total emissions increased by 10.4 per cent to 61,188 kt of CO2 equivalent.
The agriculture (32%), transport (20%), energy (20%), and residential (10%) sectors accounted for
most of emissions. While emissions by agriculture and industrial sectors have declined below 1990
levels, transport emissions have increased by 138 per cent.
▪ Increasing the share of renewables in gross final consumption of energy is one of the headline
indicators of the Europe 2020 strategy. Although Ireland has increased its use of renewable energy
sources in the period 2012-2016, at 9.5 per cent Ireland remains below its target of 16 per cent share
of renewables in gross final consumption.
▪ The EU 2030 targets envisage a domestic EU greenhouse gas reduction target of at least 40 per cent
compared to 1990. Ireland's emissions levels have been falling since 2008 on a year-on-year basis.
Since 2012 there has been an increase in the greenhouse emissions, and in 2015 they were 9.2 per
cent above the 1990 level.
26
2.1 Quality of Life
Figure 2.1.1 OECD Better Life Index, Indicators of Life satisfaction6, Ireland 2015
Ireland performs well in
measures of well-being
in the Better Life Index.
Ireland is a top
performer in social
connections and above
average in jobs and
earnings, housing,
personal security, health
status, education and
skills, subjective well-
being, work-life balance,
and environmental
quality. Ireland is below
average in income and
wealth, and civic
engagement.
OECD rank: n/a
Source: OECD Economic Surveys, Ireland
Figure 2.1.2 Human development index, 2010-2015
The Human
Development Index
measures average
achievement in three
basic dimensions of
human development - a
long and healthy life,
knowledge and a decent
standard of living.
Ireland continues to
perform strongly in this
indicator, ranking 8th in
the world and above the
OECD average.
OECD rank: 8th
Source: UN
6 Life satisfaction is measured on a scale from 0 to 10, with 0 being the lowest score – indicating least satisfied
0123456789
10Income and wealth
Jobs and earnings
Housing
Work and life balance
Health status
Education and skillsSocial connections
Civic engagement and
governance
Environmental quality
Personal security
Subjective well-being
Ireland Best performing country UK
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
Sw
itze
rlan
d
Ge
rma
ny
De
nm
ark
Net
her
lan
ds
Ire
lan
d
US
New
Ze
ala
nd
Sw
ede
n
UK
Ja
pan
Sou
th K
ore
a
Fra
nce
Fin
lan
d
OEC
D
Ital
y
Sp
ain
Po
lan
d
Po
rtu
gal
Hu
ng
ary
Lat
via
Bra
zil
Ch
ina
Hu
ma
n D
evel
op
men
t In
dex
ra
nk
2015 2010
27
7 The overall length of each country bar represents the average ladder score. Each of these bars is divided into seven
segments, the first six sub-bars being GDP per capita, social support, healthy life expectancy, freedom to make life choices, generosity, and freedom from
corruption. The seventh bar, Dystopia (which has values equal to the world’s lowest national averages for 2015-2017 for each of the six key variables) is used
as a benchmark against which all countries can be favourably compared (in terms of each of the six key variables), thus allowing each sub-bar to be of positive
width.
Figure 2.1.3 Ranking of Happiness7, 2015-2017
The indicator measures
happiness in terms of six
key variables. At 7.0,
Ireland's overall
happiness rank is 13th
out of 156 countries (the
best performer is
Finland with a score of
7.6). Ireland performs
strongly within the Euro
area in GDP per capita
(2nd), social support
(2nd), generosity (3rd)
and perceptions of
corruption (3rd).
Euro area rank: 4th
Source: Sustainable Development Solutions Network
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0
South Korea
Japan
Latvia
Italy
Poland
Spain
Euro area
France
UK
US
Germany
Ireland
Sweden
New Zealand
Netherlands
Switzerland
Denmark
Finland
Score 0-10 (0=worst possible l ife, 10=best possible l ife)
GDP per capita Social support Healthy life expectancy
Freedom to make life choices Generosity Perceptions of corruption
Dystopia (1.92) + residual
28
2.2 National Income
Figure 2.2.1 GDP per capita, current prices, 20178
Ireland's exceptionally
strong economic growth
in recent years is reflected
in GDP per capita. At
€61,700, in 2017 Ireland's
GDP per capita remains
the second highest in the
Euro area. Over the course
of the recession, Ireland’s
GDP per capita declined
but remained relatively
high.
Euro area rank: 2nd
Source: Eurostat
Figure 2.2.2 GDP per capita, constant prices (PPS), 2016
Despite the economic
crisis, Ireland's GDP per
capita at purchasing
power standard (i.e.
adjusted for living costs
differences) remained
relatively stable and has
been on an upward
trajectory since 2012. At
€63,131, Ireland's GDP
per capita is the second
highest in the Euro area
(€37,480) in 2016.
Euro area rank: 2nd
Source: OECD
8 No data available for Switzerland for 2017, data from 2016 used instead.
0
10000
20000
30000
40000
50000
60000
70000
80000
Swit
zerl
and
Ire
lan
d
De
nm
ark
Swed
en
Net
her
lan
ds
Fin
lan
d
Ge
rma
ny
UK
Fran
ce
Eu
ro a
rea
EU
Ital
y
Spa
in
Latv
ia
GD
P p
er c
ap
ita
(€)
2017 2012
0
10000
20000
30000
40000
50000
60000
70000
Irel
and
Swit
zerl
and
US
Net
herl
ands
Swed
en
Den
mar
k
Ge
rma
ny
UK
Fin
lan
d
OEC
D
Japa
n
Euro
are
a
Fran
ce EU
Ko
rea
New
Zea
land
Ital
y
Spai
n
Pola
nd
Latv
ia
GD
P p
er c
apit
a (P
PP
$)
2016 2012
29
Figure 2.2.4 Median equivalised10 disposable income, 2016
Following a decline
during the recession, the
median equivalised net
income has been on an
upward trajectory since
2013. In 2016 the
median equivalised
income in Ireland was
€22,407, above the Euro
area income of €18,240
and the UK income of
€21,136.
Euro area rank: 5th
Source: Eurostat
9 Adjusted gross disposable income of households per capita in PPS reflects the net resources, earned by households which are available for consumption
and/or saving. It includes the flows corresponding to the use of individual services which households receive free of charge from the government. These
services, called "social transfers in kind", mainly include education, health and social security services.
10 Equivalised disposable income is defined as the total income of a household, after tax and other deductions, divided by the number of household
members.
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
Sw
itze
rlan
d
De
nm
ark
Sw
eden
Fin
lan
d
Ne
ther
lan
ds
Irel
an
d
Fra
nce
Ge
rma
ny
UK
Eu
ro a
rea
EU
Ital
y
Sp
ain
Lat
via
Po
lan
d
Eq
uiv
alis
ed i
nco
me
(€)
2016 2012
Figure 2.2.3 Adjusted gross disposable income of households per capita in PPS9, 2016
Disposable income, as a
concept, is closer to the
idea of household
income than GDP.
Ireland's annual adjusted
disposable income per
capita in PPS was
20,001, below the Euro
area figure of 23,280.
The disposable income
increased by 2.6%
compared to 2012.
Euro area rank: 9th
Source: Eurostat
0
5000
10000
15000
20000
25000
30000
35000
Swit
zerl
and
Ge
rma
ny
Fran
ce
Swed
en
Fin
lan
d
Fin
lan
d
Net
herl
ands
De
nm
ark
Euro
are
a
UK
Ital
y
Irel
and
Spai
n
Po
lan
d
Latv
ia
Gro
ss d
isp
osa
ble
inco
me
of h
ou
seh
old
s -
per
ca
pit
a in
PP
S
2016 2012
30
Figure 2.2.5 At-risk-of poverty rate (60% of median income after social transfers), 2016
Ireland's at-risk-of-
poverty rate (16.6%)
remained below the
Euro area average
(17.4%) in 2016. Social
transfers play a
significant role in
reducing poverty risk in
Ireland; excluding social
transfers, the at-risk-of
poverty rate was 34.7%.
Euro area rank: 8th
Source: Eurostat
0
5
10
15
20
25
Fin
lan
d
De
nm
ark
Ne
ther
lan
ds
Fra
nce
Sw
itze
rlan
d
UK
Sw
eden
Ge
rma
ny
Ge
rma
ny
Irel
an
d
Po
lan
d
EU
Eu
ro a
rea
Ital
y
Lat
via
Sp
ain
At
risk
of
po
vert
y ra
te (
per
cen
tag
e o
f to
tal p
op
ula
tio
n)
2016 2012
Figure 2.2.6 In-work at-risk-of poverty rate, persons employed aged 18+, 2016
In 2016 the percentage
of working persons aged
18+ at risk of poverty in
Ireland has fallen to
4.8% compared to 2012
(5.6%). Ireland's rate
remained significantly
below the Euro area
average rate of 9.5%
and the UK rate of 8.6%.
Euro area rank: 17th
Source: Eurostat
0
2
4
6
8
10
12
14
Fin
lan
d
Irel
an
d
De
nm
ark
Ne
ther
lan
ds
Sw
eden
Sw
itze
rlan
d
Fra
nce
Lat
via
UK
Eu
ro a
rea
Ge
rma
ny
EU
Po
lan
d
Ital
y
Sp
ain
Po
pu
lati
on
at
wo
rk a
t ri
sk o
f p
ove
rty
(%)
2016 2012
31
11 Students living in households composed solely of students of the same age class are not included
Figure 2.2.7 Share of persons aged 18-5911 who are living in households where no-one works, 2017
The improvement in the
labour market has seen
a significant reduction in
the scale of household
joblessness — the share
of adult population in
jobless households was,
10.0 per cent in 2017
(14.4% in 2013), below
the Euro area of 10.2 per
cent.
Euro area rank: 7th
Source: Eurostat
Figure 2.2.8 Percentage of population defined as severely materially deprived, 2016
Material deprivation
covers issues including
economic strain,
durables and housing.
After an increase in the
proportion of the
severely materially
deprived population
during the recession,
since 2013 the rate has
gradually decreased and
in 2016 it is 6.5%,
marginally below the
Euro area of 6.6% but
above the UK (5.2%).
Euro area rank: 8th
Source: Eurostat
0
2
4
6
8
10
12
14
16
18
Ge
rma
ny
Po
lan
d
Ne
ther
lan
ds
Lat
via
UK
Sw
eden EU
De
nm
ark
Irel
an
d
Fin
lan
d
Eu
ro a
rea
Fra
nce
Sp
ain
Ital
y
Per
cen
tag
e o
f to
tal p
op
ula
tio
n
2017 2013
0
5
10
15
20
25
30
Swed
en
Swit
zerl
and
Fin
land
Den
mar
k
Net
herl
ands
Ger
man
y
Fran
ce UK
Sp
ain
Ire
lan
d
Eu
ro a
rea
Po
lan
d
EU
Ita
ly
Latv
ia
Per
cen
tage
of
tota
l p
op
ula
tio
n
2016 2012
32
Figure 2.2.10 Unadjusted gender pay gap13, 2016
Female employees were
paid 13.9% an hour less
than male employees in
Ireland in 2014. This is
an increase on 12.2% in
2012. The average EU
gender pay gap in 2016
was 16.3% and 21% in
the UK. The lowest
gender pay gap in the
EU in 2016 was in
Romania at 5.8%, while
the highest was in
Estonia at 26.9%.
EU rank: 9th lowest
Source: Eurostat
12 The Gini coefficient is a measure of equality of income in the population where 0 represents a situation where all households have an equal income and 1
indicates that one household has all national income. 13 Data for enterprises employing 10 or more employees, NACE Rev. 2 B to S (-O) * Data for Ireland for 2016 is 2014 data. Data for UK provisional and
estimated by Eurostat. Data for Finland and Germany is provisional.
0
5
10
15
20
25
Ital
y
Lu
xem
bo
urg
Po
lan
d
Sw
eden
Irel
an
d*
Sp
ain
De
nm
ark
Fra
nce
Ne
ther
lan
ds
EU
Lat
via
Sw
itze
rlan
d
Fin
lan
d*
UK
*
Ge
rma
ny*
Dif
fere
nce
bet
wee
n a
vera
ge
gro
ss h
ou
rly
earn
ing
s o
f m
ale
and
fem
ale
emp
loye
es (
% o
f m
ale
gro
ss
earn
ing
s)
2016 2012
Figure 2.2.9 Gini12 coefficient of equalised disposable income, 2016
The Gini coefficient is a
measure of equality of
income in the
population. Ireland's
Gini coefficient was 29.5
in 2016, down from 30.5
in 2012. The score is
below the Euro area
average of 30.7, an
indication of a more
equal income
distribution than in the
Euro area.
Euro area rank: 11th
Source: Eurostat
0
5
10
15
20
25
30
35
40Fi
nla
nd
Net
her
lan
ds
Swed
en
De
nm
ark
Fran
ce
Swit
zerl
and
Ge
rma
ny
Ire
lan
d
Po
lan
d
Eu
ro a
rea
EU
UK
Ital
y
Spa
in
Latv
ia
Co
effi
cien
t o
f eq
uiv
ali
sed
dis
po
sab
le in
com
eSc
ale
(0-1
00
)
2016 2012
33
2.3 Environmental Sustainability
Figure 2.3.1 Environmental performance index (Scale 0-100), 2018
The Yale Environmental
Performance Index
assesses 24 indicators
grouped in 10 categories
which measure
environmental health
and ecosystem vitality.
Ireland's performance
over a 10-year period
has improved by 2.5%
and at 78.8 is above the
OECD average of 73.1
but below the UK of 80.
OECD rank: 8th
Source: Yale Centre for Environmental Law and Policy
Figure 2.3.2 Components of the ECO-Innovation index14, Ireland 2017
The European Eco-
Innovation Index
measures eco-
innovation performance
across five dimensions.
Ireland is considered an
average eco-innovation
performer, with scores
above the EU average in
inputs and resource
efficiency outcomes but
behind in socio-
economic outcomes,
outputs and activities.
EU-28 rank: 13th
Source: European Commission
14 The index covers various aspects of eco-innovation by applying 16 indicators grouped into five dimensions: 1) inputs comprising investments (financial or human resources), 2) activities, illustrating the extent companies are active in eco-innovation, 3) outputs, quantifying activities in terms of patents, academic literature, etc. 4) resource efficiency, covering resource (material, energy, water) efficiency and GHG emissions, 5) outcomes, illustrating the extent eco-innovation performance generates positive outcomes for social aspects (employment) and economic aspects (turnover, exports).
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
0
10
20
30
40
50
60
70
80
90
100
Swit
zerl
and
Fran
ce
De
nm
ark
Swed
en
UK
Ire
lan
d
Fin
lan
d
Spa
in
Ge
rma
ny
Ital
y
New
Ze
ala
nd
Net
her
lan
ds
Jap
an
OEC
D
USA
Latv
ia
Po
lan
d
Sou
th K
ore
a
Bra
zil
Ch
ina
Ten
yea
r p
erce
nta
ge c
ha
nge
in
sco
re
Sco
re (
0-1
00
)
2018 EPI score (left axis) 10-Year percentage change (right axis)
99
113
58
69174
55
0
20
40
60
80
100
120
140
160
180
Eco-Innovation Index
Eco-Innovation Inputs
Eco-Innovation Activities
Eco-Innovation Outputs
Resource Efficiency Outcomes
Socio Economic Outcomes
Ireland EU average
34
Figure 2.3.3 Gross inland consumption, percentage by fuel type, 2016
There is considerable
heterogeneity across
the EU in terms of fuel
consumption. Ireland
remains heavily
dependent on fossil fuel
energy sources (93% of
gross inland
consumption, compared
to 73% in the Euro area).
Rank: n/a
Source: Eurostat
Figure 2.3.4 Total final energy consumption by sector, Ireland, 1990-2016
In 2016, overall energy
consumption increased
by 3.2% to 11,679 ktoe.
Energy use in transport
accounts for 42% of the
total and grew by 3.3%.
Consumption in industry
grew by 2%. The highest
increase in energy
consumption (7.8%) was
recorded in the
Commercial/Public
Services Sector.
Rank: n/a
Source: SEAI
-10%
10%
30%
50%
70%
90%
110%
Irel
an
d
Sp
ain
Ne
ther
lan
ds
De
nm
ark
UK
Eu
ro a
rea
Ital
y
EU
Ge
rma
ny
Lat
via
Fra
nce
Fin
lan
d
Po
lan
d
Sw
eden
Gro
ss i
nla
nd
co
nsu
mp
tio
n (%
)
Total petrolium products Solid fuels
Gas Nuclear heat
Renewable energies Electrical energy
Waste (non-renewable)
0
2000
4000
6000
8000
10000
12000
14000
1990 2000 2005 2010 2011 2012 2013 2014 2015 2016
Kilo
to
nn
es o
f o
il eq
uiv
alen
t (k
toe)
Industry Transport Residential Commercial/Public Services Agriculture
35
Figure 2.3.5 Components of energy consumption, 2016
Since 2012 Ireland's
dependence on oil and
natural gas to meet its
energy consumption
needs has declined
marginally, from 75% to
74.7% but remains
above the OECD figure
of 64.8%. Green energy
accounts for 9.9% of the
energy consumption in
Ireland, above both the
OECD average of 4.9%
and the EU average of
8.3%.
OECD rank:
Oil dependency: 6th
Source: BP statistical review of world energy
Figure 2.3.6 Emissions by national climate change sectors (Kt CO2 equivalent), Ireland, 1990-2016
Between 1990 and 2016,
total emissions
increased by 10.4% to
61,188 kt of CO2
equivalent. The
agriculture (32%),
transport (20%), energy
(20%), and residential
(10%) sectors account
for most of emissions.
Emissions by agriculture
and industrial sectors
have declined below
1990 levels, but
transport emissions
have increased by 138%.
Rank: n/a
Source: EPA
-
10
20
30
40
50
60
70
80
90
100
Sin
gap
ore
Ne
ther
lan
ds
De
nm
ark
Bra
zil
Irel
an
d
Sp
ain
So
uth
Ko
rea
Jap
an UK
Sw
itze
rlan
d
Ital
y
US
OE
CD
EU
Ne
w Z
eal
an
d
Ge
rma
ny
Fin
lan
d
Hu
ng
ary
Fra
nce
Sw
eden
Po
lan
d
Ch
ina
Per
cen
tag
e o
f en
erg
y co
nsu
mp
tio
n
Oil Natural Gas Coal Nuclear Energy Hydro electric Renewables
0
5000
10000
15000
20000
25000
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
kt C
O2
eq
uiv
alen
t
Agriculture Energy Industries Transport
Residential Manufacturing Combustion Industrial Processes
36
Figure 2.3.8 Share of renewable energy in gross final consumption, 2016
Increasing the share of
renewables in gross final
consumption of energy
is one of the headline
indicators of the Europe
2020 strategy. Although
Ireland has increased its
use of renewable energy
sources in the period
2012-2016, at 9.5%
Ireland remains below
its target of 16% share
of renewables in gross
final consumption.
EU Rank: % distance
from target: 26th
Source: Eurostat
0
10
20
30
40
50
60
Swed
en
Finl
and
Latv
ia
Den
mar
k
Ital
y
Spai
n
EU
Fran
ce
Ger
man
y
Pol
and
Irel
and
UK
Net
herl
and
s
Ener
gy f
rom
rene
wab
le s
ourc
es (
%)
2016 2012 2020 Target
Figure 2.3.7 Greenhouse Gas emissions (Kt CO2 equivalent indexed to 1990), Ireland, EU-28, 1990-2015
The EU 2030 targets
envisage a domestic EU
greenhouse gas
reduction target of at
least 40% compared to
1990. Ireland's emissions
levels have been falling
since 2008 on a year-on-
year basis. Since 2012
there has been an
increase in the
greenhouse emissions,
and in 2015 they were
9.2% above the 1990
level.
Rank: n/a
Source: Eurostat
60
70
80
90
100
110
120
130
14019
90
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Emis
sion
s In
dex
(199
0 =1
00)
Ireland EU 28 1990 C02 level
37
Figure 2.3.9 Greenhouse Gas emissions per capita, 2015
The greenhouse
emissions per capita
have been gradually
decreasing in the period
2002-2010 to 14 tonnes
of CO2 equivalent per
capita. Between 2011
and 2014 the
greenhouse emissions
have been stable at 13
t/capita but 2015 saw an
increase to 13.3 t/capita,
a figure above the Euro
area of 9.7.
Euro area rank: 3rd
Source: Eurostat
Figure 2.3.10 Percentage of energy from renewable sources and per capita CO2 emissions, 2015
Ireland’s use of
renewable energy
sources has increased in
the period 2011-2015
but remains well below
the Euro area and the
target of a 16% share of
renewables in gross final
consumption. In terms
of emissions per capita,
Ireland’s absolute
performance has
improved but Ireland
remains significantly
behind leading EU
states.
Euro area rank:
Renewables: 15th
Emissions: 3rd
Source: Eurostat
0
2
4
6
8
10
12
14
Sw
eden
Lat
via
Sw
itze
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ain
UK
EU
De
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ark
Eu
ro a
rea
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rma
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ther
lan
ds
Irel
an
d
To
nn
es o
f C
O2
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uiv
alen
t p
er c
apit
a
2015 2011
0
2
4
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12
14
0.0
10.0
20.0
30.0
40.0
50.0
60.0
Sw
eden
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lan
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via
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ark
Eu
ro a
rea
Ital
y
EU
Sp
ain
Fra
nce
Ge
rma
ny
Po
lan
d
Irel
an
d
UK
Ne
ther
lan
ds
Gre
enh
ou
se g
as e
mis
sio
ns
(To
nn
es o
f C
O2
eq
uiv
alen
t) p
er
cap
ita
En
erg
y fr
om
Ren
ewab
le S
ou
rces
(%
)
Renewables (left axis) Greenhouse gas emissions (right axis)
38
Figure 2.3.11 Municipal waste generated and treatment, 2016
In the five-year period to
2016, the amount of
waste generated in
Ireland declined to 567
kg/capita, a 9.1%
decrease. In terms of
treatment options,
Ireland makes greater
use of recycling and
incineration than the
Euro area. While
performance has
improved, Ireland
generates more waste
per capita than the Euro
area average.
Euro area rank:
Total waste: 15th
Source: Eurostat
0
20
40
60
80
100
120Po
land
Latv
ia
Swed
en
Spai
n
EU
Fin
land U
K
Ita
ly
Fran
ce
Net
her
lan
ds
Irel
and
Ger
man
y
Den
mar
k
Wa
ste
gen
era
ted
(kg
per
ca
pit
a)
Landfilled Incinerated Recycled Composted Untreated
39
Chapter 3
Competitiveness Outputs
40
Competitiveness Outputs
The outputs of competitiveness are represented in the second tier of the competitiveness framework. These
could be seen as the metrics of current competitiveness. The metrics in this tier cover business performance,
costs, productivity and labour supply. These are defined as “competitiveness output” indicators and are not
directly within the control of policymakers. Ireland’s performance in these areas is directly related to the
quality of previous policies instituted at the input level and the ability to build a strong intermediate stage of
competitiveness.
• Business Performance: The performance of the business sector is central to the Council’s definition of
competitiveness. The enterprise sector is the driver of the economy and as such, is critical to income
growth and maintaining high employment levels in Ireland. A strong and vibrant enterprise sector is
also essential to sustaining the government finances and hence expenditure on public services.
Business performance is assessed across headings including trade and investment flows,
entrepreneurship, indigenous enterprise performance, and inward investment.
▪ Exports and Imports as a percentage of GDP were 120 per cent and 88 per cent respectively in 2017.
Trade as a proportion of GDP in Ireland has increased since 2013 and is significantly above Euro area
and OECD averages. Ireland’s share of total global export markets has increased in the last decade
and was 1.3 per cent, as of 2016. Ireland has expanded its share of the world’s commercial services
market, reaching 3 per cent in 2016, up from 2.4 per cent in 2006. Over the same period, Ireland’s
share of global merchandise exports has trended downwards but was 0.8 per cent in 2016, the same
share as 2006.
▪ Ireland’s principal trading partners in terms of goods exports are the US (27.2% share) and UK
(13.4%). The Euro area accounted for 33 per cent of goods exports, with the Belgium, Germany,
Netherlands and France the EU primary markets. While the share accounted for by these trading
partners (84%) is relatively unchanged in a decade, the importance of the US market has increased.
▪ The top 15 commodities account for approximately 90 per cent of total goods exports from Ireland.
The significance of pharmaceuticals and chemical products is clear with these two commodity groups
alone accounting for 45 per cent of exports. The top 100 traders in Ireland account for 80 per cent of
total export value.
▪ The number of newly born enterprises as a proportion of the total number of active enterprises is
increasing. There were 18,100 new enterprise births in 2015, an increase of over 11 per cent on 2014.
The largest increase in births was in the Construction sector. Ireland has a very high proportion of
high growth enterprises (growth in employment by 10% or more).
▪ 86 per cent of the enterprises born in Ireland in 2014 survived in 2015. 3-year and 5-year survival rates
are significantly higher than most EU countries where less than half survive for a five-year period.
▪ Foreign owned enterprises account for 2 per cent of all enterprises, 63 per cent of gross value added
and 22 per cent of all persons engaged. In Industry, they account for 89 per cent of value added and
42 per cent of all persons engaged. Foreign-controlled enterprises outside the EU generated 43 per
cent of the value added in the Irish non-financial business economies in 2014 compared to 18 per cent
in the UK and 11 per cent in the EU.
• Prices and Costs: Cost competitiveness is critical to ensuring that enterprises based in Ireland can
compete successfully in international markets. This section examines the overall cost level and the
rate of change for several key business inputs. Data on both pay and non-pay is included.
41
▪ The Council published its Cost of Doing Business in Ireland report in June 2018 and concluded that
Irish consumer prices in 2017 were 23.7 per cent above the EU average. The Council warns that
increasing business costs will reduce the competitiveness of enterprises based in Ireland and the
attractiveness of Ireland as a location for mobile investment and outlines the areas where upward
cost pressures are evident.
▪ Overall, despite robust growth in employment, labour cost growth has remained modest in recent
years and below the growth experienced in both the UK and the EU. The labour cost index shows
that Irish labour costs have been increasing since 2014, but at a slower rate than the UK and Euro
area. Between 2016 and 2017, hourly labour costs in the total economy expressed in Euro currency
rose by 1.9 per cent both in Ireland and the Euro area. The hourly labour costs expressed in own
currency increased by 2.6 per cent in the UK. The modest labour cost growth masks considerable
divergence at sectoral level and between Ireland and the UK. In Ireland, the sectors with the highest
rates of growth were Utilities (5%) and professional services (3.8%). Growth was negative in mining,
arts and other services. In the UK growth was highest in administrative (4.8%) and transport (4.7%).
▪ The last number of years has witnessed a sustained recovery in the Irish commercial property market
which resulted in sustained growth in commercial capital and rental values. Overall capital value
growth was recorded at 5.2 per cent in Q4 2017 – this comprised of annual increases of 8.4 per cent,
1.3 per cent and 3.2 per cent in Office, Retail and Industrial values respectively. However, while the
capital value index has increased, it remains 38 per cent below 2007 peak value. The take-up of office
space remained strong in 2017, reflecting the growth of existing businesses. Office rental prices in
Ireland in 2017 compare relatively favourably to cities in the UK. However, prices are increasing at a
faster rate, due to increased demand.
▪ Ireland remains heavily dependent on imported energy products which represent 82 per cent of the
gross inland consumption in Ireland. The high dependence on imported fossil fuels makes Ireland’s
energy prices vulnerable to substantial oil price fluctuations. Weighted average electricity prices (in
purchasing power standard) for non-household consumers in the lower consumption bands (below
20,000 MWh) increased in the second half of 2017 but remained below the Euro area. However,
average electricity prices in the high consumption bands (20, 000 to 70,000 MWh and 70,000 to
150,000 MWh) surpassed the Euro area average prices in the second half of 2017. Given Ireland’s
dependence on energy imports from the UK, Brexit could potentially have a significant impact on
Ireland’s energy market. Ireland is relatively cost competitive for telecoms, especially for business
mobile broadband. However, it is 10 per cent (Q3 2017) more expensive in cost for fixed and mobile
broadband than the UK. Concerns persist around the issues of quality (speed) and the regional
availability of high-speed services.
▪ In 2017 Ireland remained an expensive location in which to live and do business with a price profile
which can be described as “high cost and rising”. Irish consumer prices in 2017 were 23.7 per cent
above the European Union average and increased at an annual rate of 0.2 per cent (Figure 3.2.4). In
2017 Irish consumer prices increased by 0.3 per cent (year-on-year) compared with 1.5 per cent for the
Euro area and 2.7 per cent in the UK. Services prices in Ireland have risen continuously since the
beginning of 2012 and the magnitude of the increase has been higher than the Euro area average
during this period also. In 2016 service producer price levels in Ireland were 7.6 per cent higher than in
2010, while prices in the Euro area were 1.4 per cent higher on average, and 4 per cent higher in the
UK. In the year to Q3 2017, business services prices increased by approximately 4 per cent. The
biggest increases in prices in 2017 were recorded in Postal and Courier (8.9%) and Computer services
(5.8%). Motor insurance has moderated in recent months, however, in the period 2014-2016, prices as
measured by the CPI increased by approximately 40 per cent.
42
• Productivity: In the long run, a country’s standard of living is dependent upon productivity. The
indicators in this section examine Ireland’s labour productivity performance in an OECD context, as
well as data from the CSO’s experimental Productivity in Ireland report published in May 2018.
▪ Ireland had the highest output per hour worked among OECD member states in recent years. Output
per hour was $88 in 2017 and $83.1 in 2016 in GDP terms, compared to $51.6 in the UK and $47.1 in
the OECD in 2016. On average over the period 2006-2016, Ireland’s growth rate (4.6%) has been well
above most Member States and the OECD total (0.9%).
▪ In recent years, Ireland’s performance is significantly affected by globalisation activities, which are
reflected in the national accounts. Irish labour productivity growth has been above that in competitor
countries since 2010. However, corporate restructuring, including the relocation of firms with
significant IP assets and aircraft leasing, led to noteworthy increases in labour productivity,
particularly in 2015.
▪ Reflecting significant changes in the economic cycle, the pattern of Irish productivity growth shows
significant volatility. Median total productivity growth over the period was 4.7% peaking at 22% in
2015 with a low of -1.1% in 2012. Significant volatility is seen in Manufacturing, Construction,
Agriculture and Finance sectors.
▪ CSO data shows Irish productivity growth (gross value added per hour worked) averaged 4.5 per cent
in the period to 2000-2016. The contribution of the Foreign sector to labour productivity growth
averaged 10.9 percent and 2.5 per cent for the Domestic and Other sectors. The results are affected
by the significant economic developments in 2015. In 2016 productivity in both the foreign and the
domestic sector was 2.2 per cent. On average over the period 2006-2014, productivity in the foreign
sector (6.2%) has been higher than the Domestic sector average of 2.7 per cent.
▪ Industry and ICT have seen significant rises in productivity over this period, increasing by a factor of
2.7 and 2.4 respectively. A substantial proportion of the growth in Industry was driven by the
globalisation events in 2015. The Distribution, Transport, Retail and Construction sectors show minor
changes in productivity.
▪ Figure 3.3.13 shows that in general, growth in labour productivity over the last decade, and in 2015,
has been driven by increased capital deepening. In the period 2006-2016 Ireland’s capital stock per
employee increased by 99 per cent from €190,000 to €378,000. The CSO reports that the rate of
increase in capital stocks in Ireland in both the Foreign sector and the Domestic and Other sector was
the highest in the EU.
• Employment: Employment is a key determinant of living standards, and growth in employment,
combined with productivity growth, is the main driver of economic growth. This section considers a
range of indicators, measuring key aspects of labour market performance including employment and
unemployment. Some labour market indicators such as participation rates and several other
demographic and migration indicators are examined in the section on endowments (Chapter 6).
▪ Figure 3.4.2 shows the continued improvement in the labour market. Employment is approaching
peak pre-recession levels, illustrated by the over 2.2 million employed in Q1 2018, an increase of 2.9
per cent or 62,100 in the year to Q1 2018. The increase in total employment was represented by an
increase in full-time employment of 72,000 and a decrease in part-time employment of 9,900.
▪ Headline and long-term unemployment are also on a steady downward trajectory. The seasonally
adjusted unemployment rate was 5.1 per cent in June 2018 and the seasonally adjusted number of
persons unemployed was 120,200, a decrease of 34,300 when compared to June 2017. The long-term
unemployment rate decreased from 3.7 per cent to 2.1 per cent over the year to Q1 2018. Youth
43
unemployment (15-24-year-olds) was 11.8 per cent in May 2018, below the Euro area average (16.8
%).
▪ Strong employment growth is observed across sectors and regions. The difference in unemployment
rates across Ireland's eight regions (18%) is the lowest in the Euro area.
▪ The gap between the individual's jobs skills and the demand of the labour market is illustrated by
Figure 3.4.11. With 35 per cent of the workers employed in a different field from the area they
specialised in, and 44 per cent with a qualification mismatch, Ireland’s performance is below the Euro
area 15 (31.2% and 35.8% respectively).
▪ Figure 3.4.12 shows that for a long-term unemployed, one earner married couple with two children
earning 100 per cent of the average wage, the Irish replacement rate (79%) exceeds the OECD median
(58%) and the UK rate (71%). The rate for single persons (49%) also exceeds the OECD (32%) and UK
(37%) rates. The replacement rates are higher for lower-income families.
▪ The overall job vacancy rate remained flat (1.1% in Q4 2017) and significantly below the Euro area
(2%) and the UK (2.6%). There is a divergence in terms of job vacancy rates within the Irish economy
and between Ireland, the Euro area and the UK in 2017. The sectors with the highest job vacancy rates
in Ireland are Professional (2.7%), Financial & insurance (2.6%) and ICT (1.7%), in the Euro area
Administrative & support service (3.8%) and in the UK Accommodation & food services (3.9%).
▪ The robust performance of the economy is also reflected in the number of employment permits
issued. At 11,361, the total number of employment permits issued in 2017 is almost three times higher
compared to 2013 (3,863). The largest number of employment permits was issued in the Service
Industry sector (4,270), while the highest increase in the number of permits was recorded in the
Medical & Nursing sector (almost 10 times the amount between 2013 and 2017).
44
3.1 Business Performance
Figure 3.1.1 Exports and Imports as a percentage of GDP, 201715
Ireland's economy is
very open with elevated
levels of import and
export trade in both
goods and services.
Exports and Imports as a
percentage of GDP were
120% and 88%
respectively in 2017.
Trade as a proportion of
GDP in Ireland has
increased since 2013 and
is significantly above
Euro area and OECD
averages.
OECD rank: 2nd
(exports), 3rd (imports)
Source: OECD
Figure 3.1.2 Export Growth Rate, Ireland, selected economies16, 2007-2017
Figure 3.1.2 shows the
growth rate in Irish
exports over the past
decade. Exports grew by
6.9% in 2017. Except for
2008, growth rates have
been strong before and
after the crisis. The
exceptionally strong rise
in exports in 2014 and
2015 is mainly due to the
globalisation activities
of a very small number
of companies.
OECD rank: 7th
Source: OECD
15 2017 data for Japan, New Zealand, OECD and US is 2016 data 16 UK data for 2017 (5.7%) is reported by the OECD as an estimate. 2017 data for US and OECD not available
0
50
100
150
200
250
Lu
xem
bo
urg
Irel
and
Net
her
lan
ds
Sw
itze
rlan
d
Latv
ia
Den
ma
rk
Po
lan
d
Eu
ro a
rea
Ger
man
y
Sw
eden
Ko
rea
Finl
and
No
rway
Spa
in
Ita
ly
UK
Fran
ce
OE
CD
Ne
w Z
ea
lan
d
Jap
an US
Tra
de
as a
per
cen
tag
e o
f G
DP
Exports 2017 Imports 2017 Exports 2013 Imports 2013
-20
-10
0
10
20
30
40
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
An
nu
al g
row
th (
Per
cen
tag
e C
han
ge)
Ireland UK US Euro area OECD - Average
45
Figure 3.1.4 Irish goods exports and imports, percentage share by trading partner, 2017
Figure 3.1.4 shows the
importance of intra-EU
trade for Ireland. The EU
market accounts for
59% of imports and 49%
of exports. The US and
UK are Ireland’s most
important trading
partners accounting for
27% and 11% of total
exports. The UK is the
most important partner
for imports accounting
for 24% of total imports.
Rank: n/a
Source: CSO
-60 -40 -20 0 20 40 60
US
UK
Belgium
Germany
Switzerland
Euro area
EU
UK
US
France
Germany
China
Euro area
EU
Percentage of Total Exports/Imports
Export Share 2017 Import Share 2017
Figure 3.1.3 Ireland’s share of world trade, 2016
Ireland’s share of total
global export markets
has increased in the last
decade and was 1.3% as
of 2016. Ireland has
expanded its share of
the world’s commercial
services market,
reaching 3% in 2016, up
from 2.4% in 2006. Over
the same period,
Ireland’s share of global
merchandise exports
has trended downwards
but was 0.8% in 2016,
the same share as 2006.
Rank: n/a
Source: WTO
0
0.5
1
1.5
2
2.5
3
3.5
2006
20
07
20
08
2009
20
10
2011
20
12
20
13
20
14
20
15
20
16
Pro
po
rtio
n o
f W
orl
d T
rad
e (%
)
Commercial Services Goods Total
46
Figure 3.1.5 Goods Exports by Trading Partner, Ireland, 2007-2017
Ireland’s principal
trading partners in
terms of goods exports
are the US (27.2% share)
and UK (13.4%). The
Euro area accounted for
33% of goods exports,
with the Belgium,
Germany, Netherlands
and France the EU
primary markets. While
the share accounted for
by these trading
partners (84%) is
relatively unchanged in
a decade, the
importance of the US
market has increased.
Rank: n/a
Source: CSO
Figure 3.1.6 Goods Exports Top 15 Commodities 2017
Figure 3.1.6 shows the
top 15 commodities
which account for
approximately 90% of
total goods exports from
Ireland. The significance
of pharmaceuticals and
chemical products is
clear with these two
commodity groups
alone accounting for
45% of exports.
Rank: n/a
Source: CSO
0 5 10 15 20 25 30
US
Great Britain
Belgium
Germany
Switzerland
Netherlands
France
China
Italy
Spain
Japan
Northern Ireland
Share of total goods exports (%)
2007 2017
47
Figure 3.1.7 Goods Exports by Commodity and Trading Partner, 2016
Figure 3.1.7 shows
Chemicals account for
the largest share of
exported goods to the
US, UK, rest of the EU
and rest of the world.
The UK accounted for
€14.4 billion, (12%) of
total exports, and is the primary destination for
Food exports,
accounting for 28% of
total Food exports.
Rank: n/a
Source: CSO
Figure 3.1.8 Services Trade by Principal Trading Partner, Ireland, 2016
The Euro area is the
most important market
for services exports,
accounting for 28% of
total service exports.
The UK accounts for
16% of total services
exports (down from 23%
in 2007), with the US
accounting for 10.5%.
Japan, China and
Switzerland are the
largest markets outside
of the EU and US.
Rank: n/a
Source: CSO
0
10,000
20,000
30,000
40,000
50,000
60,000
UK Other
EU
US China Rest of
World
Exp
ort
s, €
mill
ion
Miscellaneous
manufactured
Machinery and transport
Manufactured goods
Chemicals and relatedproducts
Animal and vegetable oils,
fats and waxes
Mineral fuels, lubricants
Crude materials, inedible,
except fuels
Beverages and tobacco
Food and live animals
0 5 10 15 20 25 30
Euro areaUK
United StatesGermany
FranceItaly
JapanNetherlands
ChinaSpain
SwitzerlandOceania and Polar Regions (2)
LuxembourgAustraliaSwedenBelgium
Share of Services Trade (%)
48
Figure 3.1.9 Services Trade by Principal Category, Ireland, 2016
Figure 3.1.9 shows the
degree of concentration
in Irish services exports.
The significance of
computer services
exports is extremely
high accounting for 46%
of all services exports.
Financial and insurance
activities account for
15% combined.
Rank: n/a
Source: CSO
Figure 3.1.10 Value of exports by enterprise concentration, 2015
The share of total trade
accounted for by a small
number of traders is
high in Ireland relative
to many EU Member
States. Across the EU,
the top five traders
accounted for 15.1% of
total exports (in value
terms) compared to
29.5% in Ireland. The
top 100 traders in
Ireland account for 80%
of total export value.
EU rank: 2nd
Source: Eurostat
0
25
50
75
100
Lu
xem
bo
urg
Irel
an
d
Fin
lan
d
Ge
rma
ny
UK
Sw
eden
Fra
nce
De
nm
ark
EU
Sp
ain
Lat
via
Ne
ther
lan
ds
Po
lan
d
Ital
y
(% o
f to
tal e
xpo
rts
acco
un
ted
fo
r b
y th
e to
p X
en
terp
rise
s)
Top 5 Top 6-20 Top 21-100
49
Figure 3.1.11 Share of foreign-controlled enterprises, non-financial business economy, 2014
The number of foreign-
owned enterprises as a
proportion of all
enterprises in Ireland is
1.6%, above the UK and
EU rates (both 1.2%).
The proportion of total
value added generated
(53%) is the second
highest level in the EU,
behind Hungary.
Foreign-owned
enterprises accounted
for 25% of employment,
above the EU average
(15%) and the UK (19%)
EU rank: value added:
2nd
Source: Eurostat
Figure 3.1.12 Share of foreign-controlled enterprises in total value added, Extra and Intra EU, non-financial
business economy, 2014
Foreign-controlled
enterprises outside the
EU generated 43% of
the value added in the
Irish non-financial
business economies in
2014 compared to 18%
in the UK and 11% in the
EU. A high proportion of
extra EU foreign-
controlled enterprises in
Ireland and the UK are
ultimately controlled by
units from the US.
EU-27 rank: Extra-EU
1st, intra-EU 23rd
Source: Eurostat
0
10
20
30
40
50
60
Irel
an
d
Lu
xem
bo
urg
Po
lan
d
Lat
via
UK
Ne
ther
lan
ds
Sw
eden EU
Ge
rma
ny
Fin
lan
d
De
nm
ark
Sp
ain
Fra
nce
Ital
y
(% o
f to
tal)
Number of enterprises Value added Persons employed
0
10
20
30
40
50
60
Irel
and
Luxe
mbo
urg
Pol
and
Lat
via
UK
Net
her
land
s
Sw
eden EU
Por
tuga
l
Ger
man
y
Fin
lan
d
Den
ma
rk
Sp
ain
Fra
nce
Ita
ly
Sh
are
of
valu
e ad
ded
(%
)
Extra-EU Intra-EU
50
Figure 3.1.13 Share of foreign owned in gross value added, employment and enterprise population, 2015
Figure 3.1.13 underlines
the importance of
inward investment to
the Irish economy,
particularly in industry17.
While foreign-owned
enterprises account for
2% of all enterprises
they account for 63% of
gross value added and
22% of all persons
engaged. In Industry,
they account for 89% of
value added and 42% of
all persons engaged.
Rank: n/a
Source: CSO
17 Industry covers NACE Rev.2 (05-39) of which Manufacturing (10-33), Construction (41-43), Distribution (45-47) and Services covers NACE Rev. 2 H to N
(excluding K) and R92, R93, S95, S96.
18 Data for 2015 not available for Denmark
0 20 40 60 80 100
All sectors
Construction
Distribution
Services (excl. Financials)
Industry
Proportion of Total (%)
Enteprises Persons Engaged GVA
Figure 3.1.14 Enterprise births as a percentage of active enterprises, 2015
The number of newly
born enterprises as a
proportion of the total
number of active
enterprises increased in
Ireland in 2015
compared with 2014
from 6.8% to 7.2%. In
the EU18 birth rates
ranged from 5.1% in
Greece to 18.5% in
Lithuania. The rate in
the UK (14.7%) was
above the EU average
(10%).
EU rank: 23rd
Source: Eurostat
0
2
4
6
8
10
12
14
16
18
20
Latv
ia
UK
Po
lan
d
EU
Net
her
land
s
Fra
nce
Lu
xe
mb
ou
rg
Spa
in
Ital
y
Irel
and
Sw
ed
en
Ger
man
y
Sw
itze
rlan
d
Fin
lan
d
De
nm
ark
En
terp
rise
bir
th r
ate
(%)
2015 2014
51
Figure 3.1.15 Enterprise births by sector of activity, Ireland 2008-2015
There were 18,100 new
enterprise births in 2015,
an increase of over 11%
on 2014. The largest
increase in births was in
the Construction sector
which increased by 19%
to 4,226. This is the
highest number of births
recorded for the
Construction sector in
the period 2008 to 2015.
The Financial Service
sector experienced the
highest percentage
increase (30.1%)
between 2014 and 2015.
Rank: n/a
Source: CSO
Figure 3.1.16 Enterprise Survival rate 2015
Looking at enterprises
one-year survival rate
85.8 % of the enterprises
born in Ireland in 2014
survived in 2015. The EU
average rate was 83%
and 92% in the UK. In
Ireland 83% survived five
years and 87% 3 years.
These rates are
significantly higher than
most EU countries
where less than half
survive for a five-year
period.
EU rank: 1-year rate
10th, 3-year, 2nd, 5-year
2nd
Source: Eurostat
0
500
1000
1500
2000
2500
3000
3500
4000
4500
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
En
terp
rise
bir
ths(
nu
mb
er)
Construction Professional, scientific and technical
Wholesale and retail trade, motor repair Accommodation and food services
ICT Administrative and support services
Manufacturing Transportation and storage
Financial and insurance
30
40
50
60
70
80
90
100
Sw
eden
Net
her
land
s
UK
Luxe
mbo
urg
Irel
and
Pol
and
Fin
lan
d
EU
Lat
via
Fra
nce
Ital
y
Sp
ain
Ger
man
y
Su
rviv
al R
ate
(%)
1 Year 3 Years 5 Years
52
Figure 3.1.17 Share of high growth enterprises measured in employment, 2015
High-growth enterprises
(growth in employment
by 10% or more) play a
key role in economic
growth and jobs.
Considerable variation
exists across the EU. The
shares range from 14.8
% in Ireland 10.8% EU
average and 9.8% in the
UK. High-growth
enterprises in Ireland
were predominantly in
manufacturing and
retail.
EU rank: 1st
Source: Eurostat
0
2
4
6
8
10
12
14
16Ir
ela
nd
Lat
via
Sw
eden
Sp
ain
UK
Ge
rma
ny
Ne
ther
lan
ds
Po
lan
d
Fin
lan
d
EU
Lu
xem
bo
urg
Fra
nce
Ital
y
De
nm
ark
Sw
itze
rlan
d
Hig
h g
row
th e
nte
rpri
ses
as a
sh
are
of
acti
ve
ente
rpri
ses
wit
h a
t le
ast
10 e
mp
loye
es (
%)
2015 2014
53
3.2 Prices and Costs
Figure 3.2.1 Harmonised Index of Consumer Prices (HICP), Rate of Change, 2017
At 0.3% consumer price
inflation in Ireland as
measured by the HICP
was the lowest in the EU
in 2017. Core inflation
has grown at a very
subdued rate in recent
years. Irish inflation has
been ≤ 0.5% over the
last five years. Euro area
and UK inflation rates
have also been relatively
low by historic
standards.
EU rank: 1st (lowest)
Source: Eurostat
Figure 3.2.2 HICP, average inflation rate, Ireland, UK, Euro area, 2007-2017
Figure 3.2.2 shows the
trend in inflation in
Ireland, the Euro area,
and the UK. In 2017
Irish consumer prices
increased by 0.3% (yoy)
compared with 1.5% for
the Euro area and 2.7%
in the UK. Irish inflation
has tended to be below
the Euro area average
since 2008.
EU rank: 1st (lowest)
Source: Eurostat
0
0.5
1
1.5
2
2.5
3
3.5
Irel
an
d
Sw
itze
rlan
d
Fin
lan
d
De
nm
ark
Fra
nc
e
Ita
ly
Net
her
land
s
Eu
ro a
rea
Pol
and
Ger
ma
ny
US
Sw
ed
en
Sp
ain
Luxe
mbo
urg
UK
La
tvia
An
nu
al a
vera
ge
rate
of
chan
ge
(%)
2017 2013
-3
-2
-1
0
1
2
3
4
5
20
07
20
08
2009
20
10
2011
20
12
20
13
20
14
20
15
20
16
20
17
An
nu
al a
vera
ge
rate
of
chan
ge
(%)
Ireland UK Euro area
54
Figure 3.2.3 Comparative price levels of final consumption by private households including indirect taxes, 2016
In 2016 Ireland had the
4th highest prices levels
in the EU in 2016, after
Denmark, Sweden and
Luxembourg. Irish price
levels were 23.7% above
the EU level, with prices
in the UK 21.6% higher.
Between 2007- 2009
price levels in Ireland
were 25% above the EU
average. Price levels in
Ireland fell in 2010 to
18% above the EU
average and then
increased in the years to
2016.
EU rank: 4th highest
Source: Eurostat
Figure 3.2.4: Consumer price levels, 2016 and inflation rate of change, 2017
Figure 3.2.4 shows both
changes in prices
(inflation) and the price
level. Ireland’s current
price profile could be
described as “high cost,
rising slowly” while the
UK is “high cost, rising
quickly”. Price levels in
Ireland were 23.7 per
cent above the EU 28
average in 2016 and
increasing by 0.2% in
November 2017; the UK
was 21.6 per cent above
the EU average and
increasing by 2.6%.
EU rank: price level 4th
highest
Source: Eurostat
0
20
40
60
80
100
120
140
160
180
Sw
itze
rla
nd
Den
mar
k
Sw
eden
Luxe
mb
our
g
Ire
lan
d
UK
US
Net
her
land
s
Jap
an
Fra
nce
Ger
man
y
Eur
o ar
ea
Ita
ly
Sp
ain
La
tvia
Po
lan
d
Co
mp
arat
ive
Pri
ce I
nd
ex
(EU
28
= 1
00
)
2016 2012 EU 28 =100
EU 28
Euro area
Denmark
Germany
Ireland
Spain
FranceItaly
Latvia
Luxembourg
Netherlands
Poland
Finland
Sweden
UK
Switzerland
US
0.0
0.5
1.0
1.5
2.0
2.5
3.0
40 60 80 100 120 140 160 180
HIC
P 1
2 m
on
th M
ovi
ng
Ave
rag
e P
erce
nta
ge
Ch
ang
e (2
017
)
Comparative price levels of final consumption by private households including indirect taxes, 2016 (EU28 = 100)
55
Figure 3.2.5 Comparison of Service producer prices, 2016
Figure 3.2.5 compares
Service Producer Prices
levels in Ireland relative
to other European
countries. Following a
period of decline during
the recession, an
upward trend has been
evident since 2011.
Service producer price
levels in Ireland are 7.6%
higher than in 2010.
Prices in the Euro area
are 1.4% higher on
average and 4% higher
in the UK.
EU rank: 3rd
Source: Eurostat
Figure 3.2.6 Total economy hourly labour costs19, 2017
Total hourly labour costs
(denominated in euro) in
the EU ranged from €4.1
in Bulgaria to €42.5 in
Denmark. At €31 per
hour, Ireland's hourly
rate remained the 8th
highest in the Euro area,
2% and 20% higher than
the Euro area (€30.3)
and the UK (€25.7).
Euro area rank: 8th
Source: Eurostat
19 Eurostat total economy data refers to enterprises with 10 or more employees and excludes agriculture and public administration
85 90 95 100 105 110 115
Denmark
Spain
Italy
Luxembourg
France
Latvia
Euro area
Finland
Netherlands
UK
Poland
Sweden
Germany
Ireland
Index (2010 =100)
0
5
10
15
20
25
30
35
40
45
Den
mar
k
Sw
eden
Luxe
mb
ourg
Fran
ce
Net
herl
and
s
Ger
man
y
Finl
and
Irel
and
Eu
ro a
rea
Ital
y
EU
UK
Spa
in
Po
lan
d
Latv
ia
Tota
l Ho
urly
Lab
our
Co
sts
(€)
Wages & Salaries Labour costs other than wages and salaries
56
20 When comparing labour cost estimates over time, levels expressed in national currency should be used to eliminate the influence of exchange rate
movements.
Figure 3.2.7 Hourly Labour Costs, Business Economy, Detailed NACE sectors, 2017
Considering labour costs
at sectoral level, in 2017
hourly labour costs were
highest in Utilities (€55)
and lowest in
Accommodation and
Food (€16). Ireland (€46)
was behind the UK
(€46.2) in financial
services. In
manufacturing (IE € 31.6
and UK €24.6) and ICT
(€43.8 and €34.3) Ireland
is above UK levels.
Rank: n/a
Source: Eurostat
Figure 3.2.8 Growth in Hourly Labour Costs 201720
Between 2016 and 2017,
hourly labour costs in
the whole economy
expressed in € rose by
1.9% both in Ireland and
the Euro area. The
largest increases were
recorded in the Baltic
Member States.
Expressed in national
currency, hourly labour
costs increased in the
UK (+2.6%) (-4.1% in €).
Rank: n/a
Source: Eurostat
0.0
10.0
20.0
30.0
40.0
50.0
60.0
Bu
sine
ss E
cono
my
Min
ing
an
d q
ua
rry
ing
Man
ufa
ctur
ing
Ele
ctri
city
, gas
, ste
am
and
air
con
dit
ion
ing
Wat
er s
upp
ly; s
ewer
age,
was
tem
an
age
me
nt
Co
nst
ruct
ion
Wh
ole
sale
, re
tail
tra
de
, mo
tor
rep
air
Tra
nsp
ort
atio
n an
d s
tora
ge
Acc
om
mo
dati
on
and
foo
d
ICT
Fin
anci
al a
nd
insu
ran
ce
Pro
fess
ion
al, s
cien
tifi
c an
d te
chni
cal
Ad
min
istr
ativ
e an
d s
upp
ort
Art
s, e
nte
rtai
nm
ent
and
rec
reat
ion
Tota
l lab
our
co
sts
(€ p
er h
our
)
Ireland UK Euro area
-5
-3
-1
1
3
5
7
9
11
Lat
via
Po
lan
d
Ge
rma
ny
UK
Lu
xem
bo
urg
Ne
ther
lan
ds
EU
28
Sw
eden
Irel
an
d
Eu
ro a
rea
19
De
nm
ark
Fra
nce
Ital
y
Sp
ain
Fin
lan
d
Ch
ang
e in
ho
url
y la
bo
ur
cost
s (%
)
In national currency In euro
57
Figure 3.2.10 Growth in labour costs21, by economic sector, annual percentage change, 2017
The rate of labour cost
growth varies by sector.
In 2017 the highest
annual increase in
Ireland was recorded in
Financial & Insurance
(4.9%) and Professional
& Technical (3.8%).
Growth was lowest in
Construction (0.6%). In
the Euro area, the
strongest growth was in
Professional &Technical,
and in the UK in
Financial & Insurance.
Rank: n/a
Source: Eurostat
21 Labour cost for LCI (compensation of employees plus taxes minus subsidies)
0
1
2
3
4
5
6
7
8
9
Fin
anci
al&
Insu
ran
ce
Pro
fess
iona
l&Te
chni
cal
Who
lesa
le, r
etai
l, m
otor
Bus
ines
s Ec
ono
my
Acc
om
od
atio
n&
Foo
d
Adm
inis
trat
ive&
supp
ort
Publ
ic a
dmin
istr
atio
n
ICT
Man
ufa
ctur
ing
Tran
spo
rtat
ion
&st
ora
ge
Co
nst
ruct
ion
Per
cen
tage
ch
an
ge o
n p
revi
ou
s p
erio
d
Ireland UK EU28 Euro area
Figure 3.2.9 Labour costs index, 2011-2017
Expressing growth in an
index form, where 2012
labour costs are 100, the
graph shows that Irish
nominal labour costs
have been increasing
since 2014 but
cumulatively have
increased by less than
the EU, Euro area and
UK labour costs.
Rank: n/a
Source: Eurostat
95
97
99
101
103
105
107
109
111
2011 2012 2013 2014 2015 2016 2017
Lab
ou
r co
st in
dex
(2
012
-10
0)
EU28 Euro area Ireland UK
58
22 Until 2016, the domain of non-household consumers was defined as industrial consumers, consequently reporting authorities could include other non-
household consumers.
Figure 3.2.11 Non-household electricity prices, low consumption bands (excluding VAT and other recoverable
taxes and levies)22, S2 2017
The price of electricity
for non-household
consumers in the three
low bands were below
the Euro area in 2017 but
the gap has narrowed in
the second half of 2017.
The UK prices in the <20
MWh, and between 20
and 500 MWh bands,
were below the Irish
prices throughout the
period examined.
Rank: n/a
Source: Eurostat
Figure 3.2.12 Non-household electricity prices high consumption bands (excluding VAT and other recoverable
taxes and levies), S2 2017
The price of electricity
for non-household
consumers in the high
bands (20,000 to 70,000
MWh and 70,000 to
150,000 MWh) increased
in the second half of
2017 and surpassed the
Euro area average
prices. The UK prices in
all high bands were
above the Irish prices
since 2014.
Rank: n/a
Source: Eurostat
0.10
0.12
0.14
0.16
0.18
0.20
0.22
2013S1 2013S2 2014S1 2014S2 2015S1 2015S2 2016S1 2016S2 2017S1 2017S2
Kilo
wat
t h
ou
r (P
PS
)
Euro area < 20 MWh Ireland < 20 MWh UK < 20 MWh
Euro area 20 MWh to 500 MWh Ireland 20 MWh to 500 MWh UK 20 MWh to 500 MWh
Euro area 500 to 2000 MWh Ireland 500 to 2000 MWh UK 500 to 2000 MWh
0.06
0.07
0.08
0.09
0.10
0.11
0.12
2013S1 2013S2 2014S1 2014S2 2015S1 2015S2 2016S1 2016S2 2017S1 2017S2
Kil
ow
att
ho
ur
(PP
S)
Euro area 2 000 to 20 000MWh Ireland 2 000 to 20 000MWh UK 2 000 to 20 000MWh
Euro area 20 000 to 70 000MWh Ireland 20 000 to 70 000MWh UK 20 000 to 70 000MWh
Euro area 70 000 to 150 000MWh Ireland 70 000 to 150 000MWh UK 70 000 to 150 000MWh
59
Figure 3.2.14 Cost of renting a prime office unit, € per square metre per year, Q4 201723
Office rental prices in
Ireland in 2017 compare
favourably to cities in
the UK. In 2017,
Cushman and Wakefield
report the cost per SqM
per year in Dublin City
(€619) and Suburbs
(€324), Limerick and
Cork (€325) and Galway
(€295). UK costs range
from €1333 in the West
End, €406 in
Manchester, and €303 in
Cardiff.
Rank: n/a
Source: Cushman and Wakefield, Office Snapshot Reports
23 Figures for both Dublin (D2/D$) and Cork are from Q2 2016.
0
200
400
600
800
1000
1200
1400
1600
Gal
way
Car
diff
Du
blin
Su
bu
rbs
Co
rk
Lim
eric
k
Gla
sgo
w
Bri
sto
l
Bir
min
gham
Man
ches
ter
Edi
nbu
rgh
Du
blin
2/4
Lond
on C
ity
Lond
on W
est E
nd
€ p
er S
q.M
per
Yr
2017 2016 2013
Figure 3.2.13 Quarterly change in capital values in Ireland, Q1 2015-Q4 2017
The figure shows change
in capital values for a
range of commercial
property classes. Since
Q1 2015, values across
all categories have
consistently increased.
Overall capital value
growth was recorded at
5.2% in Q4 2017 – this
comprised of annual
increases of 8.4%, 1.3%
and 3.2% in Office,
Retail and Industrial
values respectively.
Rank: n/a
Source: Jones Lang LaSalle, Irish Property Index
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
0
200
400
600
800
1,000
1,200
1,400
1,600
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q2
2016
Q3
2016
Q4
2016
Q1
2017
Q2
2017
Q3
2017
Q4
2017
Ove
rall
Cap
ital V
alue
Inde
x
Cap
ital V
alue
Inde
x
Office Capital Retail Capital Industrial Capital Overall (Right Axis)
60
Figure 3.2.15 Out-of-pocket childcare costs for a two-earner couple family,2015
Net Irish childcare costs
for parents with two
children and combined
income at 167% of AW
as a percentage of
income are amongst the
highest in the OECD.
While Irish childcare
benefit/rebates (11.2%)
are above the UK, Euro
area and OECD
averages, high fees (50%
of average wages)
means the out-of-
pocket costs for Irish
childcare are relatively
high.
OECD 31 rank: 29th
Source: OECD
Figure 3.2.16 Residential Property Index, Average Annual Percentage Change, 2017
On average in 2017 the
rate of increase in house
prices was highest in the
West (16%) and lowest
in Fingal (6.6%).
National prices
increased by 10.8%. On
a national basis
apartments increased by
11% with prices
increasing by 9% in
Dublin.
Rank: n/a
Source: CSO
-60
-40
-20
0
20
40
60
80
Sw
itze
rlan
d *
UK
Ne
the
rla
nd
s
Lu
xem
bo
urg
New
Zea
lan
d
Irel
and
Japa
n *
US
OE
CD
Ave
rag
e
Po
lan
d *
Sp
ain
Eur
o a
rea
Ave
rag
e
EU
Ave
rag
e
Fra
nce
Lat
via
Fin
lan
d *
Ko
rea
Den
mar
k
Ger
man
y *
Sw
eden
Ch
ildca
re re
late
d c
ost
s an
d b
enef
its
(%o
f ave
rag
e w
age)
Childcare fee Childcare benefit/rebates Tax reduction
Changes in other benefits Net cost Net cost, % of family net income
0 2 4 6 8 10 12 14 16 18
West - houses
South-East excluding South Tipperary -…
Midland - houses
South-West - houses
Mid-East including Louth - houses
South Dublin - houses
National - apartments
National - all residential properties
Dublin City - houses
Border excluding Louth - houses
National - houses
Dublin - apartments
Mid-West including South Tipperary -…
Dublin - all residential properties
Dublin - houses
Dún Laoghaire-Rathdown - houses
Fingal - houses
Percentage Change
61
Figure 3.2.17 Residential Tenancies Board National Rental Index, Ireland 2007- 2018
The PRTB Index for
house rents stood at 107
in 2018 Q4, 7 index
points higher than the
peak in 2007 Q4. The
Index for apartment
rents stood at 119 in
2018 Q1, 11 index points
higher than the 2007 Q4
peak. Rents for houses
grew by 6.2% annually,
while apartment rents
increased by 7.5%
annually.
Rank: n/a
Source: RTB
60
70
80
90
100
110
120
130
20
07Q
3
20
08Q
1
20
08Q
3
20
09Q
1
20
09Q
3
20
10Q1
20
10Q3
20
11Q1
20
11Q3
20
12Q1
20
12Q3
20
13Q1
20
13Q3
20
14Q
1
20
14Q
3
20
15Q1
20
15Q3
20
16Q
1
20
16Q
3
20
17Q1
20
17Q3
20
18Q1
Ind
ex (
Q3
20
07=
100
)
National Houses Apartments
62
3.3 Productivity
24 2017 data for UK and OECD is 2016 data
Figure 3.3.1 GDP per hour worked, USD, constant prices, 2010 PPPs, 201724
Ireland’s output per
hour worked in GDP
terms was $88 in 2017,
the highest output
among OECD member
states. Ouput per hour
worked was $51.6 in the
UK and $47.1 in the
OECD. In recent years,
Ireland’s performance is
significantly affected by
globalisation activities
which are reflected in
the national accounts.
OECD rank: 1st
Source: OECD
Figure 3.3.2 GDP per hour worked, USD, constant prices, Index, 2006-2016
Figure 3.3.2 shows the
trend in GDP per hour
worked, in index form.
Irish labour productivity
growth has been above
that in competitor
countries since 2010.
However, corporate
restructuring, including
the relocation of firms
with significant IP assets
and aircraft leasing, led
to noteworthy increases
in labour productivity,
particularly in 2015.
OECD rank: 1st
Source: OECD
0
10
20
30
40
50
60
70
80
90
100
Irel
an
d
Lu
xem
bo
urg
De
nm
ark
US
Ne
ther
lan
ds
Fra
nce
Ge
rma
ny
Sw
itze
rlan
d
Sw
eden
Fin
lan
d
UK
Ital
y
Sp
ain
OE
CD
Jap
an
Ne
w Z
eal
an
d
Isra
el
Ko
rea
Po
lan
d
Lat
via
US
$, c
on
stan
t p
rice
s, 2
010
PP
Ps
2017 2011 2006
60
70
80
90
100
110
120
130
140
150
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
Ind
ex (
20
10 =
100
)
Ireland UK US OECD
63
25 2017 Data for Israel, Japan, Poland, New Zealand, Switzerland, US and the OECD total is 2016 data
Figure 3.3.3 GDP per hour worked, constant prices, annual growth percentage change, 201725
Source : OECD
Figure 3.3.4 Labour Productivity growth before and after the crisis (GDP per hour worked), 2016
Source : OECD
Large disparities exist
among OECD Member
States in terms of
productivity growth
rates. In 2017 Ireland’s
growth was 5.8 %, which
significantly exceeds the
UK (0.8%) and the OECD
total. On average over
the period 2006-2016,
Ireland’s growth rate
(4.6%) has been well
above most Member
States and the OECD
(0.9%).
OECD rank: 1st
In most OECD countries,
labour productivity has
grown at about half the
rate of the pre-crisis
period. Conversely, in
Ireland labour
productivity in the post-
crisis period has grown
at over double the rate
of the pre-crisis period.
The EU and UK labour
productivity growth
rates are still well below
the pre-crisis period.
OECD rank : post-crisis
period: 1st
-2
-1
0
1
2
3
4
5
6
7
Irel
an
d
Lat
via
Ko
rea
Po
lan
d
Fin
lan
d
Sp
ain
Ne
ther
lan
ds
Sw
eden
Ge
rma
ny
De
nm
ark
UK
Eu
ro a
rea
Ital
y
OE
CD
Jap
an
Isra
el
US
Ne
w Z
eal
an
d
Fra
nce
Sw
itze
rlan
d
Lu
xem
bo
urg
An
nu
al g
row
th/c
han
ge
(%)
2017 Average 2006-2016
-1
0
1
2
3
4
5
6
7
8
9
Ire
lan
d
La
tvia
Po
lan
d
Ko
rea
Isra
el
Ge
rma
ny
Sp
ain
EU
Sw
ed
en
Eu
roa
rea
De
nm
ark
Jap
an
Fra
nc
e
OE
CD
Au
str
ia
Ne
w Z
ea
lan
d
Ne
the
rla
nd
s
Fin
lan
d
US
Lu
xe
mb
ou
rg
UK
Sw
itz
erl
an
d
Ita
ly
Pe
rce
nta
ge
C
ha
ng
e a
t a
nn
ua
l ra
te
2010-2016 2001-2007
64
26 2016 data for Ireland is 2015 data
Figure 3.3.5 GNI and GDP per hour worked ( current prices), 201626
In most countries,
labour productivity
measures based on GDP
and GNI are similar.
However, in Ireland
there is a notable
difference, reflecting the
significant effects of the
impact of multinational
companies on Ireland’s
GDP. While significantly
lower compared to the
GDP measure, the GNI
per hour worked in
Ireland was still higher
than the EU and UK.
OECD rank: n/a
Source : OECD
Figure 3.3.6 Average annual growth in gross value added per hour worked, constant prices, 2006-2016
Productivity growth
across economic sectors
has tended to be higher
in Ireland compared to
the UK and Euro area.
The differential between
Ireland and the UK and
Euro area is highest in
manufacturing and ICT.
The Wholesale retail,
accommodation food
services, transportation
and storage is the only
sector where Irish
growth (1%) is close to
the UK (0.6%) and Euro
area averages (0.5%).
OECD rank: n/a
Source: OECD
-60
-40
-20
0
20
40
60
80
100
Irel
an
d
luxe
mb
ou
rg US
De
nm
ark
Ge
rma
ny
Sw
itze
rlan
d
Ne
ther
lan
ds
Fra
nce
Au
stri
a
Sw
eden
Eu
roar
ea
Fin
lan
d
Ital
y
EU
UK
Sp
ain
Jap
an
Ne
w Z
eal
an
d
Isra
el
Ko
rea
Po
lan
d
Lat
via
Per
cen
tag
e d
iffe
ren
ce f
rom
OE
CD
(OE
CD
=0
)
GNI per hour worked GDP per hour worked
-2
0
2
4
6
8
10
12
14
To
tal
Ma
nu
fact
uri
ng
Co
nst
ruct
ion
Wh
ole
sale
re
tail
tra
de
acc
om
mo
dat
ion
fo
od
serv
ice
s, t
ran
spo
rta
tio
n a
nd
sto
rag
e
ICT
Pro
fess
ion
al,
sc
ien
tifi
c a
nd
tech
nic
al a
ctiv
itie
s,A
dm
inis
tra
tive
an
d s
up
po
rtse
rvic
e a
ctiv
itie
s
Ag
ricu
ltu
re
Fin
an
cia
l an
d In
sura
nce
An
nu
al
gro
wth
/ch
an
ge
(%
)
Ireland UK Euro area
65
Figure 3.3.8 Contributions to labour productivity growth of business sector services, 2006-2016
In Ireland, the relative
contribution of
manufacturing (1.3%) and
ICT (1%) to business
sector productivity
growth is particularly
strong. The Professional
Services (0.6%) and
construction sectors
(0.4%) made positive
contributions to
productivity growth. The
Trade, Hotels and
Transport sector
contribution to growth is
relatively low.
OECD rank: n/a
Source: OECD
Figure 3.3.7 Median growth in gross value added per hour worked, constant prices, Ireland, 2006-2016
Reflecting significant
changes in the economic
cycle, the pattern of Irish
productivity growth
shows significant
volatility. Median total
productivity growth over
the period was 4.7%,
peaking at 22% in 2015
with a low of -1.1% in
2012. The spike in
manufacturing in 2015
(87%) is due to activities
of multinationals.
Significant volatility is
seen in Construction,
Agriculture and Finance
sectors.
OECD rank: n/a
Source: OECD
2015
2015
2017
2015
2011 2015 20142011
20122013
2011
2009 2012 2008
20122012
-40
-20
0
20
40
60
80
100
Tot
al
Ma
nu
fact
urin
g
Con
stru
ctio
n
Who
lesa
le r
etai
l tra
de
acco
mm
od
atio
n f
oo
dse
rvic
es, t
rans
port
atio
n a
nd…
ICT
Pro
fess
ion
al, s
cien
tifi
c an
dte
chn
ical
act
ivit
ies,
Adm
inis
trat
ive
and
supp
ort
…
Ag
ricu
ltu
re
Fina
ncia
l an
d In
sura
nce
An
nu
al g
row
th/c
han
ge
(%)
Median Max Min
-1.5 -0.5 0.5 1.5 2.5 3.5 4.5
Ireland
Poland
Israel
Latvia
Sweden
Spain
Germany
Euro area
Denmark
Netherlands
France
UK
Finland
Luxembourg
Italy
Contribution to productivity growth (%)
Manufacturing
ICT
Professional, scientific and technical activities, Administrative and support service activities
Wholesale retail trade accommodation food services, transportation and storage
Financial and insurance activities
Construction
Mining and utilities
66
Figure 3.3.10 Labour productivity, Domestic and Other and Foreign sectors28, 2006-2016
In 2016 productivity
growth in both the
foreign and the
domestic sector was
2.2%. On average over
the period 2006-2014,
productivity growth in
the foreign sector was
6.2% and in the
Domestic sector -2.7%.
Foreign labour
productivity grew by
over 23% in 2011, and
78% in 2015, due largely
to significant increases
in GVA.
Rank: n/a
Source: CSO
27 CSO, Productivity in Ireland 2016. Results are considered experimental by the CSO. 28 The Foreign Sector is defined by the CSO as sectors dominated by foreign MNEs include the following: Chemicals and Chemical Products (NACE 20),
Software and Communications (NACE 58-63), Reproduction of recorded media, Pharmaceutical products, Electrical equipment and Medical supplies (NACE
18.2, 21, 26, 27, and 32.5). The Domestic and Other Sector refers to all sectors not categorised as Foreign sector.
-10
0
10
20
30
40
50
60
70
80
90
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
Per
cen
tag
e ch
ang
e
Total Domestic Foreign owned
Figure 3.3.9 Labour Productivity growth, Ireland, 2006-2016
CSO data shows
productivity growth
falling in the period
preceding 2008, with
GVA growth declining
faster than hours
worked. During the
period 2009-2011, due
to recovering GVA and
falling labour hours,
labour productivity
improved. GVA growth
substantially exceeded
labour growth in 2014
and 2016, which
explains increased
labour productivity.
Rank: n/a
Source: CSO27
-10
-5
0
5
10
15
20
25
30
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
Per
cen
tag
e ch
ang
eLabourProductivity
Gross ValueAdded
Hours worked
67
Figure 3.3.12 Multifactor Productivity (MFP) growth before and after the crisis29
Source: OECD
Multifactor Productivity
(MFP) growth varied
considerably among the
OECD countries over the
past two decades.
Ireland recorded MFP
growth rate of 1.75 % in
the period 2010-2016, a
slight improvement on
pre-crisis years (1.19 %).
Rank : n/a
29 2016 data for Ireland is 2014. 2015 data for Sweden, Japan, New Zealand, Spain and Italy, Start year 1996 for Austria
Figure 3.3.11 Irish Labour productivity Index, (Base 2000=100) by Economic Sector, 2006-2016
Industry and ICT have
seen significant rises in
productivity over this
period, increasing by a
factor of 2.7 and 2.4
respectively. A
substantial proportion of
the growth in Industry
occurred between 2014
and 2016, driven by the
globalisation events in
2015. Distribution,
Transport, Retail and
Construction sectors
have seen relatively
minor changes.
Rank: n/a
Source: CSO
0
50
100
150
200
250
300
350
400
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
Ind
ex (
20
00
=10
0)
Total Industry
ICT Professional services
Agriculture Distribution, transport, hotels and restaurants
Construction
-1
-0.5
0
0.5
1
1.5
2
2.5
3
3.5
4
Irel
an
d
Ko
rea
Ge
rma
ny
Jap
an
Au
stra
lia
Sw
eden
Can
ad
a
De
nm
ark
Ne
w Z
eal
an
d
Fra
nce
Ne
ther
lan
ds
US
Au
stri
a
Fin
lan
d
UK
Sw
itze
rlan
d
Sp
ain
Ital
y
Be
lgiu
m
An
nu
al p
erce
nta
ge
po
int
chan
ge
2010-2016 2001-2007
68
Figure 3.3.13 Contribution of Multifactor Productivity30 and Capital Deepening31, 2006-2016
Figure 3.3.13 shows that
in general, growth in
labour productivity over
the last decade, and in
2015, has been driven by
increased capital
deepening. The declines
in labour productivity in
2005, 2008 and 2012
have also been
associated with
increased capital
deepening being offset
by declines in MFP.
Rank: n/a
Source: CSO
Figure 3.3.14 Capital Stock per employee, 2006-2016
Capital stock refers to
the amount of capital in
the economy. Over the
period 2006-2016,
Ireland’s capital stock
per employee increased
by 99% from €190,000
to €378,000. The CSO
reports that the rate of
increase in capital stocks
in Ireland in both the
Foreign sector and the
Domestic and Other
sector was the highest in
the EU.
Rank: n/a
Source: CSO
30 MFP reflects the overall efficiency with which labour and capital inputs are used together in the production process. Changes in MFP reflect the effects of
changes in management practices, brand names, organisational change, general knowledge, network effects, spillovers from production factors, adjustment
costs, economies of scale, the effects of imperfect competition and measurement errors.
31 Capital deepening is growth in the capital intensity of labour (the amount of capital available per hour worked).
-20
-10
0
10
20
30
402
00
6
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
Per
cen
tag
e ch
ang
e
Capital Deepening MFI Labour Productivity
150
200
250
300
350
400
2006
20
07
20
08
2009
20
10
2011
20
12
20
13
20
14
20
15
20
16
€ (0
00
's)
Capital Stock per employee
69
3.4 Employment
Figure 3.4.1 Employment rate and progress to EU2020 employment target, 2017
One of the targets of the
Europe 2020 strategy is
to have an employment
rate of at least 75 % for
persons aged 20-64 in
the EU by 2020. This
objective has been
translated into national
targets. 9 EU Member
States had reached or
exceeded their national
target in 2017. Ireland’s
2020 target is 69%. In
2017 the Irish rate was
73% up from 65.5% in
2013.
EU rank: 15th
Source: Eurostat
Figure 3.4.2 Employment, unemployment & long-term unemployment (000’s), Q1 2013 – Q1 2018
Figure 3.4.2 shows the
continued improvement
in the labour market. In
Q1 2018, over 2.2 million
were employed, an
increase of 2.9% in the
year to Q1 2018.
Headline and long-term
unemployment are also
on a steady downward
trajectory.
Rank: n/a
Source: CSO
50
55
60
65
70
75
80
85
Sw
ede
n
Ger
man
y
UK
Ne
ther
lan
ds
De
nm
ark
Lat
via
Fin
lan
d
Irel
and
EU
Lu
xem
bo
urg
Fra
nce
Po
lan
d
Sp
ain
Ital
y
Em
plo
ymen
t ra
te p
op
ula
tio
n 2
0-6
4 (
%)
2017 2013 2020 target
0
50
100
150
200
250
300
350
0
500
1000
1500
2000
2500
20
13Q
1
20
13Q
2
20
13Q
3
20
13Q
4
20
14Q
1
20
14Q
2
20
14Q
3
20
14Q
4
20
15Q
1
20
15Q
2
20
15Q
3
20
15Q
4
20
16Q
1
20
16Q
2
20
16Q
3
20
16Q
4
20
17Q
1
20
17Q
2
20
17Q
3
20
17Q
4
20
18Q
1
Per
son
s in
Em
plo
ymen
t (0
00
's)
In Employment (Full-Time) In Employment (Part-Time)
70
Figure 3.4.3 Employment growth rate, 2017
Ireland continues to
experience strong
employment growth. In
2017 the employment
growth rate was 2.8%,
above the Euro area rate
of 1.5% and the UK rate
of 1.1%. Other EU
countries also recorded
strong employment
growth, the highest
growth rates in the Euro
area being observed in
Slovenia, 4.8% and
Luxembourg, 4.3%.
EU rank: 6th
Source: Eurostat
Figure 3.4.4 Employment rate by gender, Ireland, UK, EU, 2008-2017
The female employment
rate in Ireland fell in the
period 2008-2012, but is
now above the 2008
level. In 2017 the female
employment rate in
Ireland was 62.4%,
below the EU average
(62.5%) and UK (69.7%).
The male employment
rate in 2017 was 73% in
2017, 4 percentage
points below the 2008
level, (EU 73%) and
below the UK rate 78%.
EU rank: Female
employment 14th
Source: Eurostat
-3.5
-2.5
-1.5
-0.5
0.5
1.5
2.5
3.5Ir
ela
nd
Sp
ain
Sw
eden
Ne
ther
lan
ds
Eu
ro a
rea
Eu
ro a
rea
Po
lan
d
Ital
y
Fra
nce UK
Fin
lan
d
Ge
rma
ny
Lat
via
An
nu
al c
han
ge
in e
mp
loym
ent
(%)
2017/2016 2013/2012
50
55
60
65
70
75
80
85
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
Em
plo
ymen
t ra
te (
%)
Ireland (M) Ireland (F) UK (M) UK (F) EU (M) EU (F)
71
Figure 3.4.5 Change in employment in Ireland by sector and gender, Q1 2013-Q1 2018
All key economic sectors
have experienced
growth in employment
between Q1 2013 and
Q1 2018. The highest
percentage growth was
recorded in the
Construction (57.2%)
and Administrative
Accommodation & Food
sectors (42.5%), while
Finance & insurance
(3.3%) and Agriculture
(6.4%) experienced the
lowest growth between
the two periods.
Rank: n/a
Source: CSO
Figure 3.4.6 Self-employed persons, employers and those without employees, 2017
The proportion of self-
employed in Ireland
(13.3%) is close to the
Euro area average
(13.6%) and UK (14%).
The proportion of self-
employed persons’
employers (4.2%) is
above the UK level
(2.2%). Own-account
workers account for
9.1% of employment in
Ireland, the same as the
Euro area average with
11.8% in the UK.
EU rank: 11th (self-
employed & own
account workers)
Source: Eurostat
0
10
20
30
40
50
60
70
80
-10
0
10
20
30
40
50
60
70
Con
stru
ctio
n (F
)
Acc
om
mo
dat
ion
& f
oo
d (
I)
Ind
ustr
y (B
to E
)
Pro
fess
iona
l (M
)
Ed
uca
tio
n (P
)
ICT
(J)
Pub
lic a
dmin
istr
atio
n (O
)
Wh
ole
sale
& r
eta
il (
G)
Adm
inis
trat
ive
(N)
Tra
nsp
ort
ati
on
& s
tora
ge
(H
)
Ag
ricu
ltu
re,
fore
stry
& f
ish
ing
(A)
Fina
nce
& in
sura
nce
(K,L
)
Per
cen
tag
e ch
ang
e in
em
plo
ymen
t
Ch
ang
e in
em
plo
ymen
t (0
00
)
Change in male employment (left axis) Change in female employment (left axis) Percentage change (right axis)
0
5
10
15
20
25
Ital
y
Pol
and
Spa
in
Ne
the
rla
nd
s
UK
Eur
o ar
ea
Irel
an
d
Latv
ia
Fin
lan
d
Sw
itze
rla
nd
Fra
nce
Ger
man
y
Lu
xe
mb
ou
rg
Sw
eden
Den
mar
k
Per
cen
t o
f to
tal e
mp
loym
ent
Self-employed persons with employees (employers)
Self-employed persons without employees (own-account workers)
72
Figure 3.4.7 Unemployment rate (seasonally adjusted, standardised rate)32
This indicator measures
the number of
unemployed people as a
percentage of the labour
force. Ireland's
unemployment rate has
declined substantially
and in Q4 2017 was
6.4%, much lower
compared to its highest
point of 15.9% in Q1
2012. The UK labour
market has proven more
resilient over the same
period.
Rank: n/a
Source: OECD
Figure 3.4.8 Labour force participation, persons aged 15 and over, Q1 2013 – Q1 2018
Participation rates in
Ireland have remained
relatively stable
between 2013 and 2018.
In Q1 2018, the
participation rate was
61.5%. The male
participation rate was
68.2% compared with a
female participation rate
of 55.1%.
Rank: n/a
Source: CSO
32 Harmonised unemployment rates define the unemployed as people of working age who are without work, are available for work, and have taken specific steps to find work.
2
4
6
8
10
12
14
16
18
20
12-Q
1
20
12-Q
2
20
12-Q
3
20
12-Q
4
20
13-Q
1
20
13-Q
2
20
13-Q
3
20
13-Q
4
20
14-Q
1
20
14-Q
2
20
14-Q
3
20
14-Q
4
20
15-Q
1
20
15-Q
2
20
15-Q
3
20
15-Q
4
20
16-Q
1
20
16-Q
2
20
16-Q
3
20
16-Q
4
20
17-Q
1
20
17-Q
2
20
17-Q
3
20
17-Q
4
Har
mo
nis
ed U
nem
plo
ymen
t (%
)
Ireland EU28 OECD Euro area UK
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20
13Q
1
20
13Q
2
20
13Q
3
20
13Q
4
20
14Q
1
20
14Q
2
20
14Q
3
20
14Q
4
20
15Q
1
20
15Q
2
20
15Q
3
20
15Q
4
20
16Q
1
20
16Q
2
20
16Q
3
20
16Q
4
20
17Q
1
20
17Q
2
20
17Q
3
20
17Q
4
20
18Q
1
Per
cen
tag
e o
f p
op
ula
tio
n a
ged
15
year
s an
d o
ver
In employment Unemployed Not in labour force
73
Figure 3.4.9 Dispersion of regional unemployment rates by NUTS 3 regions (%), 2016
The lower the dispersion
rate the greater the level
of cohesion between
regions. The difference
in unemployment rates
across Ireland's eight
regions (18%) is the
lowest in the Euro area.
Euro area-14 rank: 1st
Source: Eurostat
Figure 3.4.10 Youth unemployment rate, 2017
Unemployment
amongst those aged 15-
24 years, as a
percentage of the active
population has been on
a downward trajectory
in Ireland since 2014. In
2017, the youth
unemployment rate was
14.5% of the active
population, below the
Euro area average of
18.8%.
Euro area rank: 8th
Source: Eurostat
0
10
20
30
40
50
60
70
80
Sw
ed
en
Irel
and
Net
her
lan
ds
Fin
lan
d
Fra
nce
Spa
in
Eur
o ar
ea 1
4
Po
land
Lat
via
UK
Ital
y
EU
Un
emp
loym
ent
dis
per
sio
n r
ate
(%)
2016 2012
0
10
20
30
40
50
60
Ge
rma
ny
Ne
ther
lan
ds
De
nm
ark
UK
Irel
an
d
Po
lan
d
EU
Lat
via
Sw
eden
Eu
ro a
rea
Fin
lan
d
Fra
nce
Sp
ain
Per
cen
tag
e o
f ac
tive
po
pu
lati
on
2017 2013
74
Figure 3.4.11 Proportion of workers with skills mismatches, 2015
Figure 3.4.11 shows the
gap between the
individual’s jobs skills
and the demand of the
labour market. With
35% of the workers
employed in a different
field from the area they
specialised in, and 44%
with a qualification
mismatch (31%
underqualified and 13%
overqualified) Ireland
performs worse than the
Euro area 15.
Euro area-15 rank
mismatches:
Field of study: 12th
Qualification: 14th
Source: OECD
Figure 3.4.12 Net replacement rates for long-term unemployed, 2015
For a long-term
unemployed, one earner
married couple with two
children earning 100% of
the average wage, the
Irish replacement rate
(79%) exceeds the OECD
median (58%) and the
UK rate (71%). The rate
for single persons (49%)
also exceeds the OECD
(32%) and UK (37%)
rates. Rates are higher
for lower income
families.
OECD rank: Married:
33rd , Single 30th
Source: OECD
0
5
10
15
20
25
30
35
40
45
50
La
tvia
De
nm
ark
Fra
nc
e
Eu
ro a
rea
15
Sw
itze
rla
nd
Sw
ed
en
Ge
rma
ny
Ita
ly
Ne
the
rla
nd
s
UK
Sp
ain
Ire
lan
d
Pe
rce
nta
ge
o
f w
ork
ers
wit
h s
kil
ls m
ism
atc
h
Qualification mismatch Field-of-study mismatch
Underqualification Overqualification
0
10
20
30
40
50
60
70
80
90
Ita
ly
Sp
ain
US
Ko
rea
Fra
nc
e
OE
CD
Po
lan
d
Ge
rma
ny
Sw
ed
en
Sw
itze
rla
nd
De
nm
ark
UK
Ne
the
rla
nd
s
Jap
an
Fin
lan
d
Ire
lan
d
Re
pla
ce
me
nt
rate
(%
)
One-earner married couple, 2 children (2015) Single person (2015)
One-earner married couple, 2 children (2011)
75
Figure 3.4.13 Job vacancy rate, Q4 2017
Over the last two years,
Irish job vacancy levels
(whole economy) have
been flat at around 1%.
The Irish job vacancy
rate reached 1.1% in Q4
2017 but remains
significantly below the
rates in the Euro area
(2%) and the UK (2.6%)
over the corresponding
period.
Euro area rank: 4th
Source: Eurostat
Figure 3.4.14 Job vacancy rate by sector, 2017
In terms of job vacancy
rates at sectoral level,
there is a considerable
divergence within the
Irish economy and
between Ireland and the
UK in 2017. The sectors
with the highest job
vacancy rates are
Professional (2.7%),
Financial & insurance
(2.6%) and ICT (1.7%).
In the Euro area, the
highest rates are in
Administrative &
support service (3.8%),
in the UK
Accommodation & food
services (3.9%).
Rank: n/a
Source: Eurostat
0
1
2
3
20
15Q
1
20
15Q
2
20
15Q
3
20
15Q
4
20
16Q
1
20
16Q
2
20
16Q
3
20
16Q
4
20
17Q
1
20
17Q
2
20
17Q
3
20
17Q
4
Job
Vac
ancy
rat
e (%
)
EU Euro area Ireland UK
0
0.5
1
1.5
2
2.5
3
3.5
4
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ufac
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ctri
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re
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n
Job
vac
ancy
rat
e (%
)
Ireland Euro area UK
76
Figure 3.4.16 Jobs at risk of automation33, 2017
8% of Irish jobs are
estimated at high risk of
automation compared
to 9% and 10% in the UK
and OECD respectively.
A larger share of jobs
(22%), however, is
estimated to have a
lower risk of automation
(50-70%) but a
significant risk of seeing
the majority of the tasks
they entail changed by
technology.
OECD Rank: 10th
Source: OECD
33 The OECD have estimated the proportion of jobs at risk of automation by analysing the task content of individual jobs using the OECD Adult Skills Survey.
Jobs at high risk of automation are those with a probability of being automated of at least 70%. See OECD Employment Outlook 2017.
0
5
10
15
20
25
30
35
40
45
50
Kor
ea
Finl
and
Japa
n
Fran
ce
Irel
and
Den
mar
k
Spai
n
US
OEC
D UK
New
Zea
land
Net
herl
and
s
Pol
and
Ger
man
y
Ital
y
Jobs
at
risk
of a
utom
atio
n (%
)
Jobs at high risk of automation Jobs at risk of significant change
Figure 3.4.15 Number of employment permits issued by sector, 2017
At 11,361, the total
number of employment
permits issued in 2017 is
almost three times the
2013 level. The largest
number of employment
permits in 2017 was
issued in the Service
Industry sector (4,270),
while the highest
increase in the number
of permits issued was
recorded in the Medical
& Nursing sector (4,217
permits in 2017
compared to 483 in
2013).
Rank: n/a
Source: DBEI
0
2000
4000
6000
8000
10000
12000
2013 2017
Em
plo
ymen
t P
erm
its
To
tal I
ssu
ed (
nu
mb
er)
Service Industry Medical & Nursing Industry Catering Agriculture & Fisheries Education
77
Chapter 4
Competitiveness Inputs
78
Competitiveness Inputs
The third tier of the pyramid focuses on “competitiveness policy inputs”. Four categories of inputs are
examined – the business environment, physical infrastructure, clusters and firm sophistication and knowledge
and talent. These represent the drivers of current and future competitiveness.
• Business Environment: The business environment indicators examine the conditions within which
enterprise must operate. Benchmarked themes include the cost and availability of credit and the
taxation system.
▪ The supply and demand for credit has improved significantly since the height of the crisis. The ECB
Survey on Access to Finance of Enterprises (SAFE) indicates that access to finance was the most
important concern for 8 per cent of Irish SMEs, compared to 19 per cent of SMEs in 2013. Bank loans
remain the relevant form of external financing for 55 per cent of Irish SMEs (compared to 48% at EU
level). In 2017, some 21 per cent of the Irish firms surveyed applied for bank credit.
▪ The 2017 European Investment Bank survey34 suggests that while bank loans remain the main source
of external finance for investment activities (41%), their share fell compared to 2016 (57%); the share
of bank loans is also below the EU average of 56 per cent. Leasing has become more prominent as a
form of external finance and in 2017 it accounted for 36 percent of the overall external finance.
However, all other types of finance, including equity, bonds and grants represent less than 10 per cent
of the external finance used indicating that diversifying the lending market remains a challenge.
Figure 4.1.4 shows that although private equity investment as proportion of GDP increased in Ireland
in the period 2013-2016, at 0.18 per cent of GDP in 2016, it is below the UK (0.64%) and the best EU
performers. The intensity of total Venture Capital (VC) investment is above the OECD 30 average
(0.05%), with the greater portion of VC attributed to early stage investments, 0.06 per cent compared
to 0.02 per cent of later stage venture capital (Figure 4.1.3).
▪ Figure 4.1.6 shows that although the proportion of non-performing loans (this includes all lending) in
Ireland has decreased from 25 per cent to 14 per cent in the period 2012-2016, Ireland’s performance
remains below the Euro area average of 4.1 per cent and the OECD33 of 2.9 per cent in 2016.
▪ The cost of credit, while falling, continues to remain relatively high. The concentrated lending market
coupled with higher credit risk premiums in Ireland are some of the factors for higher interest rates
compared to the Euro area. Central Bank analysis shows the Irish SME lending market is highly
concentrated with the three main lenders accounting for approximately 80 per cent of market share.
The divergence between the interest rates is particularly noticeable in relation to new loans of up to
€250,000 where the interest rate is more than the double the Euro area average (Figure 4.1.7).
▪ Maintaining a growth and entrepreneurship-friendly taxation system, whilst simultaneously
broadening the tax base, is critical to maintaining existing levels of employment and creating new
jobs. A broader stable tax base is also crucial in achieving sustainability of the public finances. In terms
of tax base, income tax remains the Government’s largest tax stream (€20.5bn in 2017). The rise in
income tax receipts illustrates the improvement in the labour market - over the period 2012-2017
income tax receipts recorded an increase of 34 per cent. Corporation tax receipts increased by 99 per
cent over the same period. Ireland’s exposure related to the concentration of corporation tax receipts
among a very small cohort of firms remains a serious risk in terms of the long-term sustainability of
the public finances. In 2016 revenues from immovable properties in Ireland (1.3% of GDP) were below
the Euro area-16 average (1.8% of GDP) and the UK (4.1% of GDP).
34 EIB Investment Survey, Ireland Overview, 2017
79
▪ Ireland’s corporation tax rate remains internationally competitive and is the third lowest in the OECD
at 12.5 per cent. However, while Ireland’s rate has remained consistent over recent years, many
economies have reduced their rates (e.g. the UK and in 2018, the US). Ireland’s headline Capital Gains
Tax (33%) is the third highest in the OECD and above the UK tax rate of 28 per cent.
▪ OECD data shows (Figures 4.1.9 and 4.1.10) that in terms of income tax and social security
contributions for married couples and individuals as a percentage of total labour costs, Ireland is more
competitive than the Euro area. Marginal rates of income tax in Ireland for married couples and
individuals earning below the average wage are lower than the rates in the UK, Euro area and OECD.
The rates for individuals earning the average wage and above are less competitive. However, the
OECD’s calculations of the average wage for Ireland do not appear to include the cohort of
supervisory or managerial workers, while part-time workers are included on a non-adjusted basis. If
the average wage is calculated in line with the methodology used for most OECD countries, Ireland’s
average wage will be approximately €45,000 instead of €36,000, which will have an impact on the
level of average income tax and marginal rates of income tax, bringing them closer to the OECD
average figures.35
• Physical Infrastructure: The availability of competitively priced world-class infrastructure (e.g.
energy; telecoms; transport - road, public transport, airport, seaports; waste and water) and related
services is critical to support competitiveness. Well-developed infrastructure can increase mobility of
workers and goods reduce traffic congestion and increase productivity. As well as the immediate
impact on labour mobility, for instance, physical infrastructure also plays a key role in determining
quality of life and the attractiveness of place (a key factor in terms of attracting high skilled,
internationally mobile workers).
▪ Government investment as percentage of GDP remains below pre-crisis levels in Ireland and across
the OECD. In 2015, average investment spending across OECD countries amounted to 3.2 per cent of
GDP. The equivalent figure for Ireland was the second lowest in the OECD at 1.7 per cent.
Expenditure increased to 1.9 per cent in 2016 but remains low. Over the medium term, capital
investment levels are projected to increase but at present remain low relative to pre-crisis levels.
Developing the Irish infrastructure base is a fundamental challenge to enhancing competitiveness.
▪ Perceptions regarding the overall quality of infrastructure in the economy remain low in Ireland.
Ireland’s score in international competitiveness rankings fell over the past five years to 2015 and in
2017 remains below the EU average (4.9). Ireland is ranked 51st in the world with the UK 27th. In an
EU context Ireland is ranked 21st with the UK 12th.
▪ A key issue is balancing the developmental trajectory of Dublin and regional cities with other parts of
the country. With more people (and consequently more skills) concentrating in cities, urban areas are
increasingly becoming the driving forces of national economies. The spatial distribution of economic
activity in Ireland is not unusual for a very small country and Ireland cannot be competitive without
Dublin being competitive. It is critical that, in bringing forward the accelerated development of a
“next tier” of cities as key engines of economic performance, the competitiveness of Dublin is not
damaged by diverting expenditure away from investing in the critical infrastructure needed to avoid a
deterioration in quality of life and a rapid rise in the cost of living. Ireland needs to use the National
Planning Framework as the primary vehicle to ensure that, with scarce resources, a rigorous and
35 See http://economic-incentives.blogspot.ie/2018/05/why-is-irish-average-wage-in-oecd.html
80
transparent evaluation system is used to allocate funds across government departments so as they
are invested with the greatest return.
• Clusters and Firm Sophistication: Firm sophistication concerns two elements that are intricately
linked: the quality of a country’s overall business networks, and the quality of individual firms’
operations and strategies. Clusters are diverse and varied in terms of development; some originate
out of the third level sector or Government research centres, others are loose networks of SMEs, and
some orbit around anchor firms. Despite Ireland’s small size it has many cities and towns that have
proven ability to attract FDI and develop new enterprises.
▪ The European Commission’s Cluster Mapping tool indicates that Ireland has a relatively high degree
of specialisation and cluster presence in biopharma, digital, medical devices and business services
sectors. The European Commission’s Regional Ecosystem Scoreboard shows both the Southern and
Eastern and Border, Midland and Western regions have relative strengths in Tertiary education and
SME innovation and weaknesses in Lifelong learning and R&D expenditure.
▪ Competitiveness and productivity is driven by firms using knowledge intensive production processes.
Figure 4.3.3 shows the relative sophistication of business processes as perceived by national
executives. In international competitiveness rankings Ireland is ranked 14th in the world and 7th in the
Euro area and scores above the Euro area average.
▪ Ireland is a strong innovation follower with performance improving over time but behind the UK and
the best innovation leaders. 46 per cent of SMEs in Ireland are reported as having introduced a
product or process innovation in 2016. This is the second highest in the EU (Belgium 48%) and above
the EU average (31%) and the UK (33%). Ireland’s performance has increased from 36 per cent in 2015
and since 2011 (41%).
▪ Knowledge and Talent: The availability of knowledge, talent and skills are one of the main
differentiators in growth performance between countries. The global war for talent has never been
more intense. Ireland’s education system has long represented a competitive advantage in this
regard. This section examines the quality of formal education system at all levels.
▪ Competitive economies require sufficient and effective investment in knowledge-based capital,
especially by firms; the presence of high-quality scientific research institutions; extensive
collaboration in research between universities and industry. There is considerable heterogeneity in
R&D expenditure as a percentage of GDP in the EU. In 2016, Irish expenditure on R&D accounted for
1.18 per cent of GDP, below the EU average (2.03%) and UK (1.69%). Business expenditure on R&D
(BERD) accounted for 0.8 per cent, with public expenditure accounting for 0.3 per cent. R&D
investment has increased in recent years but GNP/GDP levels have increased at a faster rate. In 2016,
Gross Expenditure on R&D increased to €3,243m and is at its highest level in the period 2007-2016.
Estimated as a share of government budget appropriations or outlays on R&D, expenditure in Ireland
was 0.97 per cent in 2016, behind the UK (1.25%) and the EU average of 1.37 per cent.
▪ In an international context, the IMD’s Competitiveness Yearbook 2018 ranks Ireland 5th for attracting
and retaining talent. Ireland’s other strengths are in relation to the availability of financial skills (7th)
and the ability to attract foreign talent (8th). Relative weaknesses include the pupil-teacher ratio in
secondary education (43rd) and language skills (46th).
▪ Ireland is currently ranked 6th in the Digital Economy and Society Index 2018. While scoring top
rankings in the indicators relating to STEM graduates, the use of online trading by SMEs and Open
Data, in Ireland more than 50 per cent of the adult population is lacking at least basic digital skills and
6 per cent of rural households still do not have access to even basic fixed broadband. Ireland also fell
behind other EU countries with regard to the number of people actively using the internet.
81
▪ The proportion of the working age population with tertiary (third level) education in Ireland is 42.8 per
cent, above the Euro area average of 33.1 per cent and the OECD average of 35.5 per cent. Figure
4.4.4 shows the proportion of the active population aged 15-74 who are scientists in Ireland in 2016,at
8.9 per cent it is above the Euro area average 6.4 per cent but below the UK level of 10.5 per cent. In
Ireland and across most OECD countries, the largest share of graduates (24%), in tertiary education
programmes, complete degrees in business, administration and law. The share of students in Ireland
graduating from the fields of natural sciences, maths, statistics (8%), engineering, manufacturing and
construction, (10%) and ICT (6%) combined is 24 per cent. As a percentage of total third level
graduates, Ireland produced more Science, maths & statistics and ICT graduates than the Euro area.
However, the proportion of engineering, manufacturing and construction graduates is 3.6 per cent
below the Euro area average.
▪ Ireland surpasses both the Euro area and OECD average attainment for secondary education
participation. With 6.1 per cent classified as early school leavers, Ireland's retention rates in
secondary education are above the Euro area average of 11 per cent. There is a significant inverse
correlation between educational attainment and age in Ireland, while 52.6 per cent of the 25-34
cohort have third level education, in the 55-64 cohort the proportion is 28.7 per cent. Ireland performs
better than the Euro area in all age groups in terms of attainment of third level education.
▪ The percentage of people aged 25-64 in receipt of education and training (both formal and non-
formal) in Ireland has increased from 7.5 per cent to 8.9 per cent in the period 2013-2017. Despite the
increase, Ireland's performance remains below the Euro area average.
82
4.1 Business Environment
Figure 4.1.1 Ease of Doing Business Ranking, 2017/2018
The World Bank’s Ease
of Doing Business report
assesses regulations
affecting SMEs
throughout their life
cycle. Ireland improved
its ranking in 2017 and is
now ranked 17th in the
world. New Zealand is
1st, with Denmark the
highest in the EU at 3rd,
and the UK 7th of 190
economies. Ireland is
ranked 4th in the Euro
area.
OECD rank: 10th
Source: World Bank
Figure 4.1.2 Outstanding credit to SMEs sector, 2013 - 2017
Using Q1 2013 as the
base, the outstanding
amount of credit lent to
the SME in the sectors
examined shrunk over
the 5-year period. The
highest percentage
decline was observed in
the Construction sector,
where the outstanding
loans in Q4 2017 were
30% of the loans in Q4
2013.
Rank: n/a
Source: Central Bank of Ireland
0
10
20
30
40
50
60
70
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an
d
De
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ark
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ng
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40%
60%
80%
100%
120%
Mar
-13
May
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Jul-
13
Se
p-1
3
No
v-1
3
Jan
-14
Mar
-14
May
-14
Jul-
14
Se
p-1
4
No
v-1
4
Jan
-15
Mar
-15
May
-15
Jul-
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p-1
5
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v-1
5
Jan
-16
Mar
-16
May
-16
Jul-
16
Se
p-1
6
No
v-1
6
Jan
-17
Mar
-17
May
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Jul-
17
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p-1
7
No
v-1
7
Gro
wth
in N
ew L
end
ing
(Q
1 2
013
=10
0)
Manufacturing Primary Industries Total
Construction Transportation and Storage Information and Communication
83
Figure 4.1.3 Venture capital investment as a % of GDP36, 2016
The intensity of total
Venture Capital (VC)
investment as a
percentage of GDP in
Ireland (0.08%) is above
the OECD 30 average
(0.05%). The greater
portion of VC in Ireland
is attributed to early
stage investments,
0.06% compared to
0.02% of later stage
venture capital.
OECD rank: 5th
Source: OECD
Figure 4.1.4 Private equity investment (as a % of GDP), 2016
Private equity
investment as
proportion of GDP
increased in Ireland in
the period 2013-2016, as
it did across most of
benchmarked countries.
At 0.18% of GDP in
2016, it is below the UK
(0.64%) and the best EU
performers.
Rank: EU-21: 11th
Source: Invest Europe
36 Data for New Zealand and South Korea is based on total venture capital investment, data for Israel and Japan is from 2014.
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
US
A
Ko
rea
Irel
an
d
Fin
lan
d
OE
CD
30
Ne
w Z
eal
an
d
Lat
via
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itze
rlan
d
De
nm
ark
Sw
eden
Jap
an UK
Sp
ain
Fra
nce
Ge
rma
ny
Ne
ther
lan
ds
Ital
y
Ven
ture
Cap
ital
In
vest
men
t (%
of
GD
P)
Seed/start-up/early stage Later stage venture
0.00
0.20
0.40
0.60
0.80
1.00
Fra
nce UK
Sw
eden
De
nm
ark
Ne
ther
lan
ds
Fin
lan
d
Eu
ro a
rea
-11
Ital
y
Sw
itze
rlan
d
Sp
ain
Irel
an
d
Ge
rma
ny
Pri
vate
eq
uit
y in
vest
men
t (%
of
GD
P)
2016 2013
84
Figure 4.1.5 Demand and success in accessing credit, 2017
In 2017, some 21% of the
Irish firms surveyed
applied for bank credit.
12% of these applicants
were successful in
receiving the total
amount requested. The
Euro area average
success rate is 16%,
while the UK rate is
12.7%.
Euro area rank: Demand (15th),
Success (15th)
Source: ECB SAFE
Figure 4.1.6 Ratio of non-performing loans to total gross loans, 2016
Although the proportion
of non-performing loans
(this includes all lending)
in Ireland has decreased
from 25% to 14% in the
period 2012-2016,
Ireland’s performance
remains below the Euro
area average of 4.1%
and the OECD33 of 2.9%
in 2016.
OECD rank: 31st
Source: World Bank
0%
5%
10%
15%
20%
25%
30%
35%
40%F
ran
ce
Ital
y
Sp
ain
Ge
rma
ny
Fin
lan
d
Eu
ro a
rea
De
nm
ark
Sw
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Po
lan
d
UK
Lat
via
Irel
an
d
Ne
ther
lan
ds
Su
cces
s in
Acc
essi
ng
Cre
dit
Success rate Demand
-4
1
6
11
16
21
26
Sw
itze
rlan
d
UK
Sw
eden
US
A
Jap
an
Ge
rma
ny
Ne
ther
lan
ds
OE
CD
33
De
nm
ark
Fra
nce
Lat
via
Po
lan
d
Eu
ro a
rea
Sp
ain
Irel
an
d
Ital
y
No
n-P
erfo
rmin
g L
oan
s (%
of
To
tal
Lo
ans)
2016 2012
85
Figure 4.1.7 Interest rates for non-financial corporations by loan size (new business), 2012 - 2018
Irish loans have been
more volatile over the
period examined and
interest rates in Ireland
for all three categories
of loans are higher than
the Euro area rates. The
divergence is
particularly noticeable
for loans of up to €0.25
million, where Ireland's
interest rates are double
the Euro area rates.
Rank: n/a
Source: ECB
Figure 4.1.8 Corporation tax rates (%), 2008-2017
Ireland’s corporation tax
rate remains
internationally
competitive and is the
third lowest in the OECD
at 12.5%. While Ireland’s
rate has remained
consistent over recent
years, many of Ireland’s
competitors have
reduced their rates (e.g.
the UK and in 2018, the
US37).
OECD rank: 3rd
Source: OECD
37 The Tax Cuts and Jobs Act of 2017 reduced US corporate tax rates to one flat rate of 21% tax rate on corporate income from January 1 2018.
1.00
2.00
3.00
4.00
5.00
6.00
7.00
2012
Jan
2012
Ap
r
2012
Jul
2012
Oct
2013
Jan
20
13A
pr
20
13Ju
l
2013
Oct
2014
Jan
20
14
Ap
r
20
14Ju
l
2014
Oct
2015
Jan
2015
Apr
2015
Jul
2015
Oct
2016
Jan
2016
Apr
2016
Jul
2016
Oct
2017
Jan
2017
Ap
r
20
17Ju
l
2017
Oct
2018
Jan
Ireland ≤ €0.25m Ireland > €0.25 ≤ €1m Ireland> €1m
Euro area ≤ €0.25m Euro area > €0.25 ≤ €1m Euro area > €1m
0
5
10
15
20
25
30
35
40
Sw
itze
rlan
d
Irel
and
Can
ada
Latv
ia
Ger
man
y
Pol
and
UK
Fin
lan
d
Luxe
mbo
urg
US
*
Den
mar
k
Ko
rea
Sw
ed
en
Jap
an
Ital
y
Isra
el
Net
her
land
s
Spa
in
New
Zea
land
Fra
nce
Co
rpo
rate
In
com
e T
ax R
ate
(%)
2017 2013 2008
86
Figure 4.1.9 Income tax plus employee contributions minus cash benefits (% of gross wage earnings), single,
100% & 167% AW38), 2017
The income tax and
employee contributions
as a % of labour cost for
an individual earning the
average wage in Ireland
is 19.4%, below the Euro
area 16 (28.9%) and
OECD (25.5%). The
corresponding figure for
an individual earning
above the average wage
is below the Euro area
but above the OECD.
OECD rank:
Single, o ch, 100%: 8th,
Single, 0 ch, 167%: 17th
Source: OECD
Figure 4.1.10 Income tax plus employee contributions minus cash benefits (% of gross wage earnings), married
couples with 2 children, 100% & 167% AW), 2017
Ireland is competitive in
terms of income tax and
social security
contributions for
married couples as a %
of total labour costs. For
a married couple with 2
children on a combined
income of 100% or 167%
of the average wage, the
figure is below the
OECD and Euro area.
OECD rank:
100% AW: 3rd, 167%: 4th
Source: OECD
38 The OECD’s calculations of the average wage for Ireland do not appear to include the cohort of supervisory or managerial workers, while part-time
workers are included on a non-adjusted basis. If the average wage is calculated in line with the methodology used for most OECD countries, Ireland’s average
wage will be approximately €45,000 instead of €36,000, which will have an impact on the level of average income tax: See http://economic-
incentives.blogspot.ie/2018/05/why-is-irish-average-wage-in-oecd.html
0
5
10
15
20
25
30
35
40
45
50
Ko
rea
Sw
itze
rla
nd
New
Zea
land
Ire
lan
d
Sp
ain
Jap
an UK
Sw
eden
Pol
and
OEC
D
US
Eu
ro a
rea
16
Fra
nc
e
Lat
via
Fin
lan
d
Net
her
lan
ds
Ital
y
Den
mar
k
Ger
man
y
% o
f la
bo
ur
cost
s
Single 100% AW Single 167% AW
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
Pol
and
Irel
an
d
Sw
itze
rlan
d
New
Zea
land
Ko
rea
Spa
in
OEC
D
US
Eur
o ar
ea
Jap
an
Lat
via
UK
Fra
nc
e
Sw
eden
Ital
y
Ger
man
y
Net
her
land
s
Fin
lan
d
Den
mar
k
% o
f la
bo
ur
cost
s
Married 100% AW Married 167% AW
87
Figure 4.1.12 Average tax wedge (%), 2017
Ireland’s tax wedge
levels are low compared
to the Euro area and
OECD at average wages
for individuals (Ireland-
27.2%, OECD-35.9%,
Euro area-42.4%) and at
all wage levels for
married couples. At
higher incomes the
wedge for individuals is
above the UK wedge.
OECD rank: Single, o ch,
100%: 29th, Married, 2
ch, 100%:32
Source: OECD
0
5
10
15
20
25
30
35
40
45
50
Single, 100% avg
earnings (0 child)
Single, 167% avg
earnings (0 child)
Married, 100% avg
earnings (2 children)
Married, 133% avg
earnings (2 children)
Married, 167% avg
earnings (2 children)
Ave
rag
e ta
x w
edg
e (%
)
Euro area 16 Ireland UK OECD
Figure 4.1.11 Marginal rate of income tax plus employee contributions (% of gross wage earnings), 2017
Marginal rates of
income tax in Ireland for
married couples and
individuals earning
below the average wage
are lower than the rates
in the UK, Euro area and
OECD. The rates for
individuals earning the
average wage and above
are less competitive.
OECD rank:
Single, o ch, 100%: 32nd
Married, 2 ch, 100%: 10th
OECD rank:
Source: OECD
0
10
20
30
40
50
60
Single
67% Avg
earning (0
child)
Single
100% Avg
earning (0
child)
Single
167% Avg
earning (0
child)
Married
100% Avg
earning (2
children)
Married
133% Avg
earning (2
children)
Married
167% Avg
earning (2
children)
Mar
gin
al t
ax r
ate
(%)
Euro area-16 Ireland UK OECD
88
Figure 4.1.13 Tax rate on low wage earners (Unemployment trap39), 2015
Figure 4.1.13 shows the
implicit tax rate of
taking up employment.
The tax rate on low
wage earners has been
on a downward
trajectory in Ireland
since 2009 and in 2015 it
was 71.8%, below the
tax rate in the Euro area
average of 76.5%, but
above the UK rate of
61.7%.
Euro area rank: 13th
Source: Eurostat
39 The unemployment trap measures the percentage of gross earnings lost to taxes when a person becomes employed. This occurs through the loss of
unemployment benefits combined with higher tax and social security contributions.
0
10
20
30
40
50
60
70
80
90
100
Jap
an UK
Sw
eden U
S
Irel
an
d
Ge
rma
ny
EU
Fin
lan
d
Fra
nce
Eu
ro a
rea
Ital
y
Sp
ain
Po
lan
d
Ne
ther
lan
ds
Lat
via
De
nm
ark
Imp
licit
tax
rat
e o
n re
turn
ing
to
wo
rk (
%)
2015 2011
Figure 4.1.14 Capital Gains Tax, 2015
Benchmarking Capital
Gains Taxes across the
OECD shows that in
2015 Ireland had the
third highest headline
CGT in the OECD (33%),
a fall of 5 places since
2011. The OECD average
rate was 18.4% in 2015.
The equivalent rate in
the UK is 28%.
OECD-34 rank: 32nd
Source: Deloitte/Tax Foundation
0
5
10
15
20
25
30
35
40
45
Net
her
land
s
New
Zea
land
Sw
itze
rlan
d
Hu
ng
ary
OE
CD
Ger
man
y
Sp
ain
UK
US
Sw
eden
Finl
and
Ire
lan
d
Fran
ce
Den
mar
k
Cap
ital
Gai
ns
Tax
(%
)
2015 2011
89
Figure 4.1.15 Standard Value Added Tax (%), 2017
The standard VAT rates
varied between 15% and
25% across the EU in the
period 2013-2017.
Ireland's VAT rate of
23% is above the Euro
area average of 20.8%
and among the highest
in the EU. The lowest
standard VAT rate was
recorded in Germany
(19%).
Euro area rank: 3rd
Source: Eurostat
15
17
19
21
23
25
27
Ge
rma
ny
UK
Fra
nce
Eu
ro a
rea
Sp
ain
Lat
via
Ne
ther
lan
ds
EU
-28
Ital
y
Po
lan
d
Irel
an
d
Fin
lan
d
De
nm
ark
Sw
eden
Sta
nd
ard
VA
T r
ate
(%)
2017 2013
90
4.2 Physical Infrastructure
Figure 4.2.1 Gross fixed capital formation as a percentage of GDP, current prices, 2017
In 2017, gross fixed
capital formation as a
share of GDP was 4th
highest in Ireland at
23.4% compared to
20.6% in the Euro area.
GFC in Ireland is
dominated by
intellectual property
which accounts for 42%
of the total. At 10%, the
proportion of
investment in dwellings
is half the UK and Euro
area levels and remains
well below pre-crisis
levels.
Rank: n/a
Source: Eurostat
Figure 4.2.2 Government investment as percentage of GDP, 2007, 2009, 2015 and 2016
Government investment
as % of GDP remains
below pre-crisis levels in
Ireland and across the
OECD. In 2015, average
investment spending
across OECD amounted
to 3.2% of GDP. The
equivalent figure for
Ireland was the second
lowest in the OECD at
1.7%. Expenditure
increased to 1.9% in
2016 but remains low.
OECD rank: 33rd
Source: OECD
0
10
20
30
40
50
60
70
80
90
100
Ireland UK Euro area
Per
cen
tag
e o
f to
tal G
FC
Dwellings Other buildings and structures
Transport equipment ICT equipment
Other machinery and equipment Intellectual property products
0
1
2
3
4
5
6
7
8
Ko
rea
Lat
via
Sw
ed
en
Po
lan
d
Ne
w Z
eal
and
Ch
ina
Jap
an
Fin
lan
d
Lu
xem
bo
urg
Fra
nce
Den
mar
k
Ne
ther
lan
ds
OE
CD
US
Sw
itze
rlan
d
UK
Sp
ain
Ital
y
Ger
man
y
Ire
lan
d
% o
f G
DP
2015 2007 2009 2016
91
Figure 4.2.3 Trend in Capital Expenditure, Ireland, 1997-2016
Figure 4.2.3 shows the
long-term trend in
capital expenditure. In
2009, the rate of
spending growth
dropped sharply at the
onset of the economic
and fiscal crisis. In the
late 90’s and early
2000’s expenditure grew
strongly. In the
following years, as part
of the fiscal
consolidation effort,
total voted spending
was reduced annually.
Rank: n/a
Source: Department of Public Expenditure and Reform
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
10,000,00019
97
199
8
199
9
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
Capital Expenditure
Figure 4.2.4 General government expenditure on Transport, 2006-2016
Figure 4.2.4 shows the
trend in transport
expenditure expressed
as a percentage of total
general government
expenditure. The Irish
share was above or
equal to equivalent
levels in the UK and
Euro area in the period
2006-2012. It peaked at
7.3% in 2008 and
declined to 3.7% in 2013.
At 4.2% the Irish share
was equal to the UK and
above the Euro area
average (3.7%) in 2016.
EU rank: 18th
Source: Eurostat
0
1
2
3
4
5
6
7
8
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Per
cen
tag
e o
f T
ota
l Go
vern
men
t E
xpen
dit
ure
Ireland Euro area UK
92
Figure 4.2.6 Perception of Infrastructure Quality, Ireland, EU41, UK, 2017/2018
Perceptions of the
quality of the Irish
transport infrastructure
by respondents to the
Executive survey of the
World Economic Forum
tend to be lower for Irish
respondents than the
UK and the EU average.
Ireland performs best
on-air transport
infrastructure (14th in
the EU) but ranks
relatively poorly on rail
and roads 19th and 17th
in the EU respectively.
OECD rank: 27th
Source: OECD
40 Participants in the WEF survey are asked How do you assess the general state of infrastructure (e.g., transport, communications, and energy) in your
country? [1 = extremely underdeveloped—among the worst in the world; 7 = extensive and efficient—among the best in the world]
41 EU excludes Malta and Cyprus in rail and Austria, Czech Republic, Hungary, Luxembourg, Romania, and Slovakia in Ports.
1
2
3
4
5
6
7
Overall Rail Roads Ports Air Transport Electrictysupply
Po
or
Qu
alit
y
S
cale
1-7
H
igh
Qu
alit
y=
Ireland UK EU 28
Figure 4.2.5 Perception of Infrastructure Quality40, 2017/2018
Perceptions regarding
the overall quality of
infrastructure in the
economy remain low in
Ireland. Ireland’s score
fell over the past 5 years
to 2015 and in 2017 (4.4)
remains below the EU
average (4.9). Ireland is
ranked 51st in the world
with the UK 27th. In an
EU context Ireland is
ranked 21st with the UK
12th.
OECD rank: 27th
Source: WEF
1
2
3
4
5
6
7S
wit
zerl
and
Sin
gap
ore
Ne
ther
lan
ds
Jap
an
Fin
lan
d
Fra
nce US
De
nm
ark
Ger
man
y
Ko
rea
Sw
ede
n
Lu
xem
bo
urg
Sp
ain
Can
ada
UK
EU
28
ave
rag
e
Isra
el
Ne
w Z
eala
nd
Ch
ina
Irel
and
Ital
y
Lat
via
Po
lan
d
Bra
zil
Po
or
Qu
alit
y
S
cale
1-7
H
igh
Qu
alit
y
2017/2018 2013/2014
93
Figure 4.2.8 Enterprises considering the speed of their fixed internet connection to be sufficient, by enterprise
size, 2017
In Ireland the share of
enterprises that
considered the speed of
their fixed internet
connection to be
sufficient in 2017 was
84% the same as in the
UK and the EU-28
average. 83% of Irish
SMEs and 94% of large
enterprises considered
their broadband speed
sufficient.
EU rank: 20th
Source: Eurostat
42 All enterprises, without financial sector (10 persons employed or more)
70
75
80
85
90
95
100
Latv
ia
Sw
ed
en
Net
her
land
s
Po
lan
d
Den
mar
k
Luxe
mbo
urg
Finl
and
Spa
in
Irel
and
EU
Ital
y
UK
Fra
nc
e
Ger
man
y
(% o
f en
terp
rise
s u
sin
g a
fixe
d b
road
ban
d
conn
ecti
on)
Total (SMEs and large) SMEs Large enterprises
Figure 4.2.7 Enterprises42 with broadband access by maximum contracted download speed of fixed internet
connection, 2017
Figure 4.2.7 shows the
share of Irish enterprises
using the fastest
internet connections
was 18% in 2017. In
2017, 30% of Irish
enterprises had an
internet connection
speed that was in the
range of ≥ 30 Mb/s but <
100 Mb/s. This was
greater than UK and
Euro area average and
up from 17% in 2014.
24% had a connection in
the range of ≥ 10 Mb/s
but < 30 Mb/s.
EU rank: (at least 30: 5th
at least 100: 12th)
Source: Eurostat
0
5
10
15
20
25
30
35
40
45
Den
mar
k
Sw
eden
Finl
and
Net
her
land
s
Spa
in
Luxe
mb
our
g
Latv
ia
Irel
and
EU
Ger
man
y
Po
lan
d
UK
Fran
ce
Ital
y
Per
cen
tag
e o
f en
tere
pri
ses
at least 100 Mb/s at least 30 Mb/s but less than 100 Mb/s
at least 10 Mb/s but less than 30 Mb/s at least 2 Mb/s but less than 10 Mb/s
94
43 The World Bank uses six key dimensions to benchmark countries' logistics/ freight forwarding performance in index form. The data used in the ranking
comes from a survey of logistics professionals who are asked questions about the foreign countries in which they operate. The components analysed
International LPI are based on recent theoretical and empirical research and on the practical experience of logistics professionals involved in international
freight forwarding. The six dimensions considered are: 1) Efficiency of the clearance process (i.e., speed, simplicity and predictability of formalities) by border
control agencies, including customs; 2) Quality of trade and transport related infrastructure (e.g., ports, railroads, roads, information technology); 3) Ease of
arranging competitively priced shipments; 4) Competence and quality of logistics services (e.g., transport operators, customs brokers); 5) Ability to track and
trace consignments;6) Timeliness of shipments in reaching destination within the scheduled or expected delivery time.
Figure 4.2.9 Logistics Performance Index43 (LPI) Score, 2016
The most recent data on
logistics (for 2016) ranks
Ireland’s performance
18th in the world.
Germany is first, with
the UK, 8th overall.
Ireland’s best ranking
(11th) is on ease of
arranging competitively
priced shipments.
Relative to the UK,
Ireland is less
competitive on
timeliness of delivery,
efficiency of customs
clearance and
infrastructure.
rank: n/a
Source: World Bank
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
LP
I Sco
re
Ireland UK Germany High income OECD
95
4.3 Clusters and Firm Sophistication
Figure 4.3.1 Regional Ecosystem Scoreboard (RES), Median Country Scores, 2016
The RES presents a
composite index to rate
the quality of the
regional entrepreneurial
and innovation
ecosystem that support
clusters. Both the
Southern and Eastern
and Border, Midland and
Western regions have
relative strengths in
Tertiary education and
SME innovation and
weaknesses in Lifelong
learning and R&D
expenditure.
OECD rank: n/a
Source: European Commission
Figure 4.3.2 Perceived State of Cluster Development44, 2017/2018
Figure 4.3.2 presents
WEF data provided
based on personal
assessment of managers
in surveyed companies
about cluster
development in their
country. In Ireland the
weighted average score
in 2017/18 was 4.8,
above the Euro area
average score of 4.3 but
below the UK (5.4).
OECD rank: 8th
Source: WEF
44 The WEF survey asks, “In your country, how widespread are well-developed and deep clusters (geographic concentrations of firms, suppliers, producers of
related products and services, and specialized institutions in a particular field)?” [1 = non-existent; 7 = widespread in many fields]
0
20
40
60
80
100
120
140
160
180
200
Sw
itze
rlan
d Z
üric
h
Sw
eden
Sto
ckho
lm
Den
mar
k H
ove
dst
aden
Sou
th E
ast E
ngla
nd
Ger
man
y O
ber
bay
ern
Lond
on
Fin
lan
d E
telä
-Su
om
i
Net
her
lan
ds
Utr
ech
t
Fran
ce Îl
e de
Fra
nce
Sco
tlan
d
Wal
es
Aus
tria
Süd
öst
erre
ich
Ire
lan
d S
&E
No
rthe
rn Ir
elan
d
Irel
and
BM
W
EU
28
Spa
in P
aís
Vas
co
Ita
ly F
riu
li-V
en
ezi
a G
iulia
Pol
and
Maz
ow
ieck
ie
Reg
iona
l Inn
ovat
ion
Sco
re-
(Sca
le E
U in
20
11 =
100
)
2017 2013
1
2
3
4
5
6
7
US
Ge
rma
ny
Ne
ther
lan
ds
UK
Ital
y
Jap
an
Sw
itze
rlan
d
Lu
xem
bo
urg
Sw
eden
Fin
lan
d
Irel
an
d
Fra
nce
De
nm
ark
Ch
ina
Ko
rea
Sp
ain
Eu
ro a
rea
ave
rag
e
Bra
zil
Ne
w Z
eal
an
d
Po
lan
d
No
n-e
xist
ent
(1)
W
ell
Dev
elo
ped
(7)
2017/2018 2013/2014
96
Figure 4.3.4 European Digital Economy and Society Index Innovation Scoreboard46, Overall ranking, 2017
The EU shows Ireland as
a strong innovation
follower with
performance improving
over time but behind the
UK and the best
innovation leaders. In
2017, all Member States
improved in the DESI.
Ireland progressed the
most (close to 5 points
as opposed to an EU
average of 3.2).
EU rank: 6th
Source: European Commission
45 The WEF survey asks, “In your country, how sophisticated are production processes?” [1 = not at all—production uses labour-intensive processes; 7 =
highly—production uses latest technologies] 46 The Digital Economy and Society Index (DESI) is a composite index that summarises relevant indicators on Europe’s digital performance and tracks the
evolution of EU member states in digital competitiveness.
01020304050607080
De
nm
ark
Sw
ede
n
Fin
lan
d
Ne
ther
lan
ds
Lu
xem
bo
urg
Irel
and
UK
Sp
ain
Ger
man
y
EU
Fra
nce
Lat
via
Po
lan
d
Ital
y
Co
mp
osi
te In
dex
(w
eig
hte
d s
core
)
Connectivity Human Capital
Use of Internet Integration of Digital Technology
Digital Public Services
Figure 4.3.3 Perceived State of Enterprise Business Sophistication45, 2017/2018
Competitiveness and
productivity is driven by
firms using knowledge
intensive production
processes. Figure 4.3.3
shows the relative
sophistication of
business processes as
perceived by national
executives. Ireland is
ranked 14th in the world
and 7th in the Euro area
and scores above the
Euro area average. The
UK is ranked 12th in the
world. Ireland's rank has
fallen compared to 2013.
OECD rank: 14th
Source: WEF
1
2
3
4
5
6
7S
wit
zerl
and
Jap
an
Ne
the
rla
nd
s
Sw
eden
Fin
lan
d
US
Ger
man
y
Lu
xe
mb
ou
rg UK
Den
mar
k
Eur
o ar
ea a
vera
ge
Ire
lan
d
Fra
nc
e
Ital
y
New
Zea
lan
d
Sp
ain
Chi
na
Po
lan
d
Lat
via
Bra
zil
Lab
ou
r In
ten
sive
Sca
le 1
-7 K
now
ledg
e in
tens
ive
2017/2018 2013/14
97
Figure 4.3.5 SMEs introducing product or process innovations (percentage of SMEs), 2015
46% of SMEs in Ireland
are reported as having
introduced a product or
process innovation in
2015. This is the second
highest in the EU
(Belgium 48%) and
above the EU average
(31%) and the UK (33%).
Ireland’s performance
has increased from 36%
in 2015 and since 2011
(41%).
EU rank: 2nd
Source: European Commission
Figure 4.3.6 SMEs introducing marketing or organisational innovations (percentage of SMEs), 2015
Figure 4.3.6 shows the
proportion of SMEs in
Ireland who introduced
a marketing or
organisational
innovation is high
(52.5%). The UK is 45%.
with the EU average
35%. Previous iterations
of the Community
Innovation Survey
suggest the proportion
of SMEs engaging in
marketing innovations
in Ireland is greater than
organisational
innovation.
EU rank: 2nd
Source: European Commission
0
10
20
30
40
50
60
Sw
itze
rlan
d
Irel
and
Fin
lan
d
Net
her
land
s
Ger
man
y
Sw
ed
en
Luxe
mbo
urg
Fra
nce
Den
ma
rk
Ital
y
UK EU
Spa
in
Pol
and
La
tvia
Per
cen
tag
e o
f al
l SM
Es
2015 2011
0
10
20
30
40
50
60
70
Sw
itze
rlan
d
Luxe
mbo
urg
Irel
an
d
Ger
man
y
UK
Fra
nc
e
Den
mar
k
Fin
land
Sw
ed
en
EU
Ital
y
Net
her
land
s
Spa
in
Latv
ia
Pol
and
Per
cen
tag
e o
f al
l SM
Es
2015 2011
98
Figure 4.3.8 Enterprises' total turnover from e-commerce, 2017
E-sales accounted for
33% of the total
turnover generated by
Irish enterprises in 2016,
which was the highest
share recorded in the
EU. The EU and UK rates
were both 18%. Overall,
the share of e-sales in
total turnover has been
increasing for Irish SMEs
and remains the highest
in the EU47. The share of
turnover for Irish SMEs
was 23% compared with
9% in the UK.
EU rank: 1st
Source: Eurostat
47 SME data not available for Finland and Luxembourg
0
5
10
15
20
25
30
35
Irel
and
Den
mar
k
Ge
rma
ny
Fin
lan
d
Fra
nc
e
Sw
eden EU UK
Spa
in
Net
her
land
s
Pol
and
Luxe
mbo
urg
Ita
ly
La
tvia
Per
cen
tag
e o
f tu
rno
ver
All enterprises SMEs (10-249 persons employed)
Figure 4.3.7 Sales of new-to-market and new-to-firm innovations as percentage of turnover, 2015
Figure 4.3.7 shows sales
as a percentage of
turnover attributed to
new/ significantly
improved products, and
includes both products
which are only new to
the firm and products
which are also new to
the market. Ireland
ranks 3rd in the EU with
sales estimated at 18.1%
compared to the EU
average of 13.4%. The
relevant figure for the
UK is 20.8%.
EU rank: 3rd
Source: European Commission
0
5
10
15
20
25
UK
Sw
itze
rlan
d
Irel
an
d
Spa
in
Fra
nce
EU
Ger
man
y
Net
her
land
s
Ital
y
Fin
land
Den
mar
k
Sw
eden
Luxe
mbo
urg
Pol
and
Latv
ia
Sal
es a
s a
per
cen
tag
e o
f tu
rno
ver
2015 2011
99
Figure 4.3.9 Enterprises with web sales, by place of sale, 2016
In 2016 the highest
proportions of
enterprises with web
sales to other EU
Member States
countries were recorded
in Ireland (13%). In 2016,
Ireland also recorded the
highest share of
enterprises declaring
that they made web
sales outside of the EU,
this proportion was 11%.
Ireland was the only EU
Member State with a
share that was in
double-digits.
EU rank: 1st
Source: Eurostat
0
5
10
15
20
25
30Ir
elan
d
Sw
eden
Net
her
la…
Den
mar
k
Fin
lan
d
Ger
man
y
UK
EU
Spa
in
Fra
nce
Ital
y
Luxe
mb…
Lat
via
Pol
and
(% o
f en
terp
rise
s)
Home country Other EU Member States Rest of the world
100
4.4 Knowledge and Talent
Figure 4.4.1 R&D expenditure (GERD48) as a percentage of GDP, 2016
There is considerable
heterogeneity in R&D
expenditure as a
percentage of GDP in
the EU. In 2016, Irish
expenditure on R&D
accounted for 1.18% of
GDP, below the EU
average (2.03%) and UK
(1.69%). Business
expenditure on R&D
accounted for 0.8%,
with public expenditure
accounting for 0.3%.
EU rank: 18th
Source: Eurostat
Figure 4.4.2 Expenditure on R&D by sector, Ireland, 2007-2016
Figure 4.4.2 shows R&D
investment has
increased over this
period but GNP/GDP
levels have increased at
a faster rate. In 2016,
Gross Expenditure on
R&D increased to
€3,243m and is at its
highest level in the 11
years of this time-series
and represents a 47%
increase over 2006
(€2,214m). The highest
expenditure on R&D
continues to be in the
business sector.
EU rank: 18th
Source: Eurostat
48 Gross Expenditure on Research and Development (GERD) is the sum of R&D expenditure in the business, higher education and government sectors.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Sw
eden
Ge
rma
ny
De
nm
ark
Fin
lan
d
Fra
nce
Eu
ro a
rea
Ne
ther
lan
ds
EU UK
Ital
y
Lu
xem
bo
urg
Sp
ain
Irel
an
d
Po
lan
d
Lat
via
Per
cen
tag
e o
f G
DP
2016 2012
0
500
1,000
1,500
2,000
2,500
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
Mill
ion
eu
ro
Business enterprise sector Higher education sector
Government sector
101
Figure 4.4.4 Scientists and engineers as a percentage of the active population aged 15-74, 2016
Figure 4.4.4 shows the
proportion of the active
population aged 15-74
who are scientists in
Ireland in 2016 was
8.9%. This is above the
Euro area average 6.4%
but below the UK level
10.5%. The Irish rate is
down marginally since
2012 (9%) but has been
above 8% since 2011.
EU rank: 7th
Source: Eurostat
49 Data on Government Budget Appropriations or Outlays on Research and Development (GBAORD) refer to budget provisions, not to actual expenditure, i.e.
GBAORD measures government support for R&D using data collected from budgets. The GBAORD indicator should be seen as a complement to indicators
based on surveys of R&D performers, which are considered to be a more accurate but less timely way of measuring R&D activities. In this chart, total
GBAORD is expressed as a percentage of total general government expenditure
0
2
4
6
8
10
12
Sw
ed
en
UK
Fin
lan
d
Sw
itze
rlan
d
Den
mar
k
Ne
ther
lan
ds
Ire
lan
d
Lu
xem
bo
urg
Ger
man
y
Po
lan
d
Eu
ro a
rea
Fra
nce
Sp
ain
Lat
via
Ital
y
Per
cen
tag
e o
f ac
tive
po
pu
lati
on
(ag
ed 1
5-74
)
2016 2012
Figure 4.4.3 Share of government49 budget appropriations or outlays on research and development, 2016
Estimated as a share of
government budget
appropriations or
outlays on research and
development,
expenditure in Ireland
was 0.97% in 2016,
behind the UK (1.25%)
and the EU average of
1.37%. Expenditure fell
to 0.76% in 2010. In
2008, it stood at 1.19%
and was 1.02% in 2012.
EU rank: 18th
Source: Eurostat
0
0.5
1
1.5
2
2.5G
erm
an
y
De
nm
ark
Ne
ther
lan
ds
Sw
eden
Fin
lan
d
Lu
xem
bo
urg
EU
Sp
ain
UK
Fra
nce
Ital
y
Irel
an
d
Lat
via
Po
lan
d
% o
f to
tal g
ener
al g
ove
rnm
ent
exp
end
itu
re
2016 2012 2008
102
50 * 2016 data for France, New Zealand, Poland, US, UK and OECD refers to 2015
Figure 4.4.5 Researchers per thousand employees, 2016
Researchers are
professionals engaged in
the creation of new
knowledge, products,
processes and systems.
In Ireland, there were
12.8 researchers per
1000 employees
compared to 9.1 in the
UK and 8.2 in the
OECD50. The number of
researchers in Ireland is
up from 8.7 in 2012.
OECD rank: 5th
Source: OECD
Figure 4.4.6 Graduates by Field of Study, 2015
In Ireland and across
most OECD countries,
the largest share of
graduates (24%) in
tertiary education
programmes complete
degrees in business,
administration and law.
The share of students in
Ireland graduating from
the fields of natural
sciences, maths,
statistics (8%),
engineering,
manufacturing and
construction, (10%) and
ICT (6%) combined is
24%.
OECD rank: n/a
Source: OECD
0
2
4
6
8
10
12
14
16
18D
enm
ark
Sw
ed
en
Fin
lan
d
Ko
rea
Ire
lan
d
Fra
nce
Jap
an
Ne
ther
lan
ds
Ger
man
y
UK
US
Sw
itze
rlan
d
OE
CD
Ne
w Z
eal
and
Sp
ain
Lu
xem
bo
urg
Po
lan
d
Ital
y
Lat
via
Ch
ina
To
tal,
Per
1 0
00
em
plo
yed
2016* 2012
24
22
20
24
17
13
17
15
13
15
20
10
10
9
7
14
8
13
7
6
8
10
7
10
7
12
12
10
6
4
4
4
5
0
7
5
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Ireland
UK
US
OECD average
Business, administration and law Health and welfareArts and humanities Engineering, manufacturing and constructionNatural sciences, mathematics and statistics EducationSocial sciences, journalism and information Information and communication technologies
103
Figure 4.4.7 STEM graduates (% of total third level graduates), 2015
As a percentage of total
third level graduates,
Ireland produced more
Science, maths &
statistics and ICT
graduates than the Euro
area. However, the
proportion of
engineering,
manufacturing and
construction graduates
is 3.6% below the Euro
area average.
Euro area rank:
Science & Maths: 3rd,
ICT: 3rd, Engineering:
15th
Source: Eurostat
Figure 4.4.8 Educational attainment of population aged 25-64 by highest level of education (%), 201651
The proportion of the
working age population
with tertiary education
in Ireland is 42.8%,
above the Euro area
average of 33.1% and
the OECD average of
35.5%. The proportion
with just pre-primary,
primary or lower
secondary education is
marginally below the
Euro area and OECD
figures.
OECD rank:
Upper secondary (26th),
Tertiary (11th)
Source: OECD
51 2016 data for Ireland refers to 2015
0
5
10
15
20
25
30
35
40
Ge
rma
ny
Fin
lan
d
UK
Sw
eden
Sp
ain
Fra
nce
Irel
an
d
Eu
ro a
rea
18
Ital
y
Po
lan
d
Lat
via
De
nm
ark
Ne
ther
lan
ds
% o
f to
tal t
hir
d le
vel
gra
du
ates
Science, maths&statistics ICT Engineering, manufacturing and construction
0%
20%
40%
60%
80%
100%
Po
lan
d
US
Lat
via
Fin
lan
d
Sw
itze
rlan
d
Ko
rea
Ge
rma
ny
Sw
eden
De
nm
ark
UK
Irel
an
d
Fra
nce
OE
CD
Eu
ro a
rea
-16
Ne
ther
lan
ds
Ne
w Z
eal
an
d
Ital
y
Sp
ain
Jap
an
% o
f P
op
ula
tio
n a
ged
25-
64
Pre-Primary, Primary and Lower Secondary Upper Secondary and Non-Tertiary Tertiary
104
Figure 4.4.9 Annual expenditure on education institutions, per student ($ US PPP), 2014
Ireland spends more per
student at secondary
level than the OECD or
Euro area average but
less at both primary and
tertiary level. The gap
between Ireland and the
UK and US expenditure
is particularly wide at
tertiary level.
OECD rank:
Primary (20th)
Secondary (16th)
Tertiary (18th)
Source: OECD
Figure 4.4.10 Breakdown of tertiary educational expenditure, 2014
Tertiary education in
Ireland and the Euro
area is primarily funded
by the public sector. In
2014, 74% of the
expenditure on tertiary
education in Ireland was
funded by public sources
and 26% by private
sources. The breakdown
for the Euro area is 78%
and 22% respectively.
OECD rank:
Public 18th, Private 16th
Source: OECD
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
Ireland Euro Area 16 OECD United Kingdom United States
US
$ P
PP
per
Stu
den
t p
er A
nn
um
Primary Secondary Tertiary
0%
20%
40%
60%
80%
100%
UK US Ireland Euro Area OECD
Per
cen
tag
e o
f E
xpen
dit
ure
Public Private
105
Figure 4.4.11 Average annual hours of tuition by subject at primary education, 2017
In 2016, Irish primary
school students received
less hours of tuition in
science and reading,
writing and literature as
a percentage of total
tuition hours than the
average student across
the OECD and the Euro
area 13. Irish primary
school students received
marginally more hours
of tuition in maths than
the OECD and Euro area
average student.
OECD rank:
Maths hours: 15th,
Science hours: 26th
Source: OECD
Figure 4.4.12 Percentage of population aged 25-64 that has at least upper secondary education52, 2016
Some 80% of 25-64-
year-olds had attained
at least upper secondary
education in Ireland in
2016 compared with
91% of 25-34-year-old
cohort. Ireland
surpasses both the Euro
area and OECD average
attainment for both age
cohorts.
OECD rank:
25-34 olds: 10th
25-64-year olds: 20th
Source: OECD
52 2016 data for Ireland refers to 2015 for 25-34 olds
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Poland
Ireland
Denmark
Latvia
Korea
Spain
Finland
Japan
OECD
Euro Area 13
Norway
Germany
France
% of Total Tuition Hours
Reading, writing and literature Mathematics Natural sciences Other
0
20
40
60
80
100
Po
lan
d
US
Lat
via
Fin
lan
d
Sw
itze
rlan
d
Ko
rea
Ge
rma
ny
Sw
eden
De
nm
ark
Irel
an
d
Fra
nce
OE
CD
Eu
roa
are
a 16
Ne
ther
lan
ds
Ne
w Z
eal
an
d
UK
Ital
y
Sp
ain
Per
cen
tag
e o
f th
e P
op
ula
tio
n
25-64 year-olds 25-34 year-olds
106
Figure 4.4.13 Early school leavers as a percentage of population aged 18-24, 2017
Figure 4.4.13 measures
the percentage of the
population aged
between 18 and 24 who
have attained at most
lower secondary
education. Ireland's
performance has been
improving since 2009.
With 6.1% of this age
cohort classified as early
school leavers, Ireland's
retention rates in
secondary education are
above the Euro area
average of 11%.
Euro area rank: 3rd
Source: OECD
Figure 4.4.14 Average annual hours of tuition by subject, lower secondary education, 2017
Ireland's Lower
Secondary Education
dedicates less time to
maths tuition (11.9) than
the Euro area 15 (13.7) as
proportion of the total
tuition time. The Irish
figure is in line with the
OECD average for the
same subject. Irish
students receive less
tuition time on reading,
writing and literature
than both the Euro area
and OECD countries.
Euro area rank:
Maths: 15th
Source: OECD
0
5
10
15
20
25
Sw
itze
rlan
d
Po
lan
d
Irel
an
d
Ne
ther
lan
ds
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eden
Fin
lan
d
De
nm
ark
Fra
nce
Lat
via
Ge
rma
ny
EU
Eu
ro a
rea
Ital
y
Sp
ain
Per
cen
tag
e o
f P
op
ula
tio
n A
ged
18
-24
2017 2013
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Ireland
Finland
Japan
Germany
Korea
Poland
OECD
Latvia
Euro area 15
Spain
France
Denmark
Italy
% of Total Tuition Time
Reading, writing and literature Mathematics Other
107
Figure 4.4.15 Population by age cohort that has at least third level education, 2015
There is a significant
inverse correlation
between educational
attainment and age in
Ireland, while 52.6% of
the 25-34 cohort have
third level education, in
the 55-64 cohort the
proportion is 28.7%.
Ireland performs better
than the Euro area in all
age groups.
Euro area rank:
25-34yrs: 3rd
35-44 yrs.: 1st
45-54yrs: 2nd
55-64yrs: 5th
Source: Eurostat
Figure 4.4.16 Lifelong learning (as a percentage of population aged 25-64), 2017
The percentage of
people aged 25-64 in
receipt of education and
training (both formal
and non-formal) in
Ireland has increased
from 7.5% to 8.9% in the
period 2013-2017.
Despite the increase,
Ireland's performance
remains below the Euro
area average and below
the target set by the
European Agenda for
Adult Learning of 15% to
be achieved by 2020.
Euro area rank: 11th
Source: Eurostat
0
10
20
30
40
50
60
Irel
and
Sw
ed
en
UK
Ne
the
rla
nd
s
Den
mar
k
Fra
nc
e
Fin
lan
d
Eu
ro a
rea
Ger
ma
ny
Per
cen
tag
e o
f th
e p
op
ula
tio
n
25 to 34 35-44 45-54 55-64
0
5
10
15
20
25
30
35
Sw
itze
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nm
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ther
lan
ds
Fra
nce UK
Eu
ro a
rea
EU
Sp
ain
Irel
an
d
Ge
rma
ny
Ital
y
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via
Po
lan
d
Per
cen
tag
e o
th
e P
op
ula
tio
n A
ged
25-
64
2017 2013
108
Figure 4.4.17 International students (as a percentage of all students in third level education)53, 2016
The proportion of
international students in
the total number of
students in tertiary
education in Ireland has
increased from 6.5% to
8.2% between 2013 and
2016. Ireland's
performance is below
the Euro area (10.4%)
and the UK (18.5%) in
attracting international
students in tertiary
education.
Euro area-18 rank: 8th
Source: Eurostat
Figure 4.4.18 Population having at least basic digital skills (as a percentage of individuals aged 16-74), 2018
In Ireland only 48% of
the population report as
having at least basic
digital skills, one of the
lowest levels in the
entire EU and the
second last in the Euro
area. Ireland also fell
significantly behind
other EU countries
regarding the number of
people actively using the
internet (Ireland 79 %,
Euro area average 82%).
Euro area-18 rank:
Individuals with at least
basic digital skills (17th)
Source: Digital Economy and Society Index
53 2016 data for the UK refers to 2015
0
2
4
6
8
10
12
14
16
18
20U
K
Sw
itze
rlan
d
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ce
Ire
lan
d
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man
y
Finl
and
Latv
ia
Sw
eden
Po
lan
d
Sp
ain
Inte
rnat
ion
al s
tud
ents
as
% o
f al
l st
ud
ents
in t
erti
ary
edu
cati
on
2016 2013
30
40
50
60
70
80
90
100
Ne
the
rla
nd
s
Sw
eden
Fin
lan
d
De
nm
ark UK
Ger
ma
ny
Eur
o ar
ea 1
8
EU
Fran
ce
Sp
ain
Lat
via
Irel
and
Po
lan
d
% o
f in
div
idu
als
aged
16
-74
Individuals who have at least basic digital skills Internet users
109
Figure 4.4.19 Proportion of households with broadband coverage and 4G coverage, 2018
Ireland has improved its
performance in the
overall Connectivity
dimension, currently
ranking 11th among EU
countries (compared to
15th in 2015). However,
in terms of fixed
broadband coverage
(96.6% of the
households) and 4G
coverage (92.1%),
Ireland is behind the
Euro area (97.3% and
92.9% respectively.
Euro area rank:
Fixed broadband
coverage: 14th
Source: Eurostat
80
82
84
86
88
90
92
94
96
98
100
Ne
ther
lan
ds
Fra
nce UK
De
nm
ark
Ital
y
Sw
eden
Ge
rma
ny
EU
Eu
ro a
rea
Fin
lan
d
Irel
an
d
Sp
ain
Lat
via
Po
lan
d
% o
f h
ou
seh
old
s
Fixed broadband coverage 4G Coverage
110
Chapter 5
Essential Conditions
111
Essential Conditions A range of factors which are either beyond the immediate reach of policy makers (such as demographic
effects) or which are determined by institutional effectiveness or other exogenous factors (e.g. the global
economic climate) but which have a significant impact upon relative competitiveness are considered in this
chapter.
• Institutions: The quality of institutions has a strong bearing on competitiveness and growth and the
ease of doing business. Institutions influence investment decisions and play a key role in the ways in
which societies distribute the benefits and bear the costs of development strategies and policies.
While difficult to benchmark internationally, indicators in this section address government and
public-sector effectiveness and ease of tax compliance.
▪ The World Bank’s Ease of Doing Business report assess regulations affecting SMEs throughout their
life cycle. Ireland improved its ranking in 2017 and is now ranked 17th in the world and 4th in the Euro
area. Ireland ranks highly for ease of paying taxes, starting a business and protecting minority
investors. Performance in time/cost of contract enforcement, trading across borders and getting
electricity lags. Relative to the UK, the biggest deficiencies are Ireland’s scores in enforcing contracts,
getting electricity and trading across borders. Ireland’s lead in registering a property and starting a
business is slim.
▪ World Bank research suggests that perceptions regarding the quality of public services and regulatory
effectiveness are above the OECD average but behind the UK.
▪ Ireland is ranked in the top ten in terms of perceptions of judicial independence, protection of
minority shareholders, strength of investor protection and property rights. Ireland's performance is
above the OECD average.
▪ Ireland's trade in services is relatively open. This is measured by the Services Trade Restrictiveness
Index which helps identify which policy measures restrict trade across 19 major services sectors.
Ireland's index is lower than the OECD average in all sectors, indicating less restrictiveness in service
trade.
• Macroeconomic sustainability: Macroeconomic environment plays a vital role in determining the
sustainability of the economic growth. This pillar evaluates the stability of this environment. A range
of indicators are monitored under this heading, including the components of growth, government
finances (debt, deficit) and overall debt to income ratio.
▪ Following strong economic growth of 5.1 per cent in 2016 and 7.8 per cent in 2017, the European
Commission projects economic growth of 5.7 per cent and the Department of Finance 5.6 per cent in
2018. However, the Modified Gross National Income (GNI*), which more accurately reflects the
underlying state of the Irish economy as it excludes the impact of multinationals’ activities, was more
than 30 per cent lower (€189.2 billion) than the Gross Domestic Product (€275.6 billion) in 2016.
▪ Both EU and Euro area economies also continued their upward trend from recent years growing by
2.4 per cent in 2017 and predicted to grow by 2.3 per cent in 2018. In terms of Ireland’s main trading
partners outside of the Euro area, the UK economy grew moderately (0.1 %) year on year in 2017,
whereas the US economy expanded by 0.8 per cent.
▪ Preliminary national accounts data suggests that export was the key driver of economic growth in
Ireland in 2017. While exports of both goods and services performed well, imports contracted
112
significantly in 2017 (-6.2%), resulting in current account surplus for the year. Exports increased year-
-on-year from just over 103 per cent of GDP in 2011, to 124 per cent in 2015, before decreasing to 121
per cent in 2016 as shown in Fig 5.2.6. Ireland had the second highest level of exports as a percentage
of GDP in the OECD after Luxembourg. Year-on-year, consumption spending was subdued (1.9%
growth) and there was a significant drop in investment (-22%); the latter largely due to low level of
investment in intangible assets as well as the significant decline in aircraft purchase.
▪ Strong public finances are imperative to a country’s competitiveness. As shown in Figure 5.2.3, in
recent years, debt as a percentage of GDP has continued to decline reflecting the country’s continued
robust economic performance. It stood at 68 per cent in 2017 and is expected to decline to 66 per cent
this year. The debt-to-GNI*54 ratio, a better measure of sustainability in Ireland, remains very high
(100.1 per cent) but is predicted to fall in the period 2018-2021. Measured per capita, Ireland’s debt is
the highest in the EU at over €42,000 per person. In 2007, as we entered into the economic crisis, it
was less than €11,000. Additionally, earlier estimates of achieving structural deficit of 0.5 per cent, as
outlined in the government’s (MTO)55, by 2018 have been revised and the Department of Finance now
predicts it to be achieved around 2021. The government deficit stood at 0.3 percent of the GDP in
2017, in line with the threshold (3 percent of GDP) set out in the Stability and Growth Pact. It is
predicted to fall to 0.2 per cent this year and to 0.1 per cent in 2019.The euro area deficit stood at 0.9
per cent with nine countries recording surpluses.
▪ Irish sovereign bonds are continuing to trade in line with core European sovereign yields reflecting the
strong market confidence in the Irish economy. The yield on a 10-year Irish government bond was
trading at just over 0.5 per cent in 2017, well below Greece, Spain and Portugal.
▪ Irish government revenue represented 25.7 per cent of GDP in 2017, a fall of almost 2 per cent on 2016
(27.5%). Similarly, expenditure as percentage of GDP also fell from 28 per cent in 2016 to 26.1 per
cent in 2017. Fig 5.2.7 shows that, ” Social Protection” continues to account for the major share of
government spending across the EU, followed by “Health”, “General Public Services”, and
“Education”.
▪ In terms of Irish households, Figure 5.2.13 shows Irish households debt as a proportion of income fell
by more than 60 per cent during the period 2011-2016. However, Irish households are still the fourth
most indebted households in the EU.
• Endowments: The productivity-based view of competitiveness emphasises the importance of
endowments - that is natural resources, geographic location, demographics and size as key
dimensions in determining national competitive performance. Every country has a range of natural
endowments pre-determined by geography (e.g. natural resources). While such factors cannot easily
be impacted by policy, it is important to be cognisant of their impact on competitiveness. Factors
such as demographic trends (i.e. population growth), labour force participation, migration and
population density are examined here.
▪ In 2017, Ireland continued to have the youngest population in the Euro area. The CSO forecasts that
the young population in Ireland will increase until 2021 before falling slightly in 2026. However,
OECD population projections indicate the rising age profile of the population across the OECD
countries. Ireland’s population increased by 4.2per cent in the period 2012-2017 and recorded the
fourth highest percentage increase in population in the EU. In the period 2011-2016, Ireland’s birth
rate declined by around 3 per cent, however, Figure 5.3.2 shows the Irish rate is still considerably high
compare to the birth rate in other EU countries.
54GNI* - Modified Gross National Income
55 MTO- Medium Term (Budgetary) objective
113
▪ The Irish median age increased from 35.5 to 36.9 during the period 2013-2017 but remained well
below the EU median age of 42.8. The combination of positive net migration and natural increase in
the population resulted in an overall increase in the population of 52,900 bringing the total population
estimate to 4.79 million in April 2017.
▪ In Ireland the dependency ratio rose from 19.2 to 21.2 during the period 2000-2015 and is expected to
rise further to 27.3 by 2025. Ireland has the 7th lowest old age dependency ratio in OECD and 2nd
lowest in Europe. As the dependency ratio increases, important debates on the range of policies like
retirement age, immigration, size of pension, healthcare expenditure and labour force growth
become more urgent. In line with the population growth during the period 2012-2017, Ireland’s labour
force also grew by almost 5 percent during the same period.
▪ Emigration of skilled and qualified people is detrimental to any country’s social and economic
development. CSO figures shows that more people left Ireland than came into the country during the
period 2010-2014. A reversal of that trend is observed with net migration figures being positive for
three consecutive years since then.
▪ Ireland is one of the most sparsely populated countries in the world, especially in an EU context. In
the period 2006-2016, population density in Ireland has gone up from 62.5 persons per km2, to 69.3
persons per km2. The census figures also reveal the significant increase in population density in the
urban areas, with a density average of 2,008 people per km2 in urban areas in 2016, compared to 1,736
in 2011. In rural areas in 2016 the average density was 27 people per km2.
114
5.1 Institutions
Figure 5.1.1 Ease of Doing Business Ranking, 2017/2018
The World Bank’s Ease
of Doing Business report
assesses regulations
affecting SMEs
throughout their life
cycle. Ireland improved
its ranking in 2017 and is
now ranked 17th in the
world. New Zealand is
1st, with Denmark the
highest in the EU at 3rd
and the UK 7th of 190
economies. Ireland is
ranked 4th in the Euro
area.
OECD rank: 10th
Source: World Bank
Figure 5.1.2 Ease of Doing Business Ranking by Theme, Ireland, Denmark, New Zealand, UK, 2017/2018
Figure 5.1.2 shows
Ireland's performance
across the themes
examined by the World
Bank. It shows variation
in performance across
themes even in the best
performing economies.
Ireland ranks highly for
ease of paying taxes,
starting a business and
protecting minority
investors. Performance
in time/cost of contract
enforcement, trading
across borders and
getting electricity lags.
OECD rank: n/a
Source: World Bank
0
10
20
30
40
50
60
70
Ne
w Z
eal
an
d
De
nm
ark
Ko
rea
Ho
ng
Ko
ng
SA
R,
Ch
ina
US
UK
Sw
eden
Fin
lan
d
Irel
an
d
Lat
via
Ge
rma
ny
Po
lan
d
Sp
ain
Fra
nce
Ne
ther
lan
ds
Sw
itze
rlan
d
Jap
an
Ital
y
Isra
el
Lu
xem
bo
urg
Ran
k o
ut
of
190
co
un
trie
s
1
17
8
3035
40 42
104
47
98
17
1
10
19
28
37
46
55
64
73
82
91
100
Eas
e of
Do
ing
Bus
ines
s R
ank
Sta
rtin
g a
Bus
ines
s
Dea
ling
wit
h C
onst
ruct
ion
Per
mit
s
Get
ting
Ele
ctri
city
Reg
iste
ring
Pro
per
ty
Get
ting
Cre
dit
Pro
tect
ing
Min
orit
y In
vest
ors
Pay
ing
Tax
es
Tra
ding
acr
oss
Bor
ders
En
forc
ing
Co
ntr
acts
Res
olvi
ng
Inso
lven
cy
Ran
k o
ut
of
190
co
un
trie
s
New Zealand UK Ireland Denmark
115
Figure 5.1.3 Ease of Doing Business, Distance to the Frontier, Ireland and the UK, 2017/2018
An economy’s rank is
based on its distance to
frontier (best) score,
which measures how far
an economy is from the
best performance.
Figure 5.1.3 shows
relative to the UK, the
biggest deficiencies are
Ireland’s scores in
enforcing contracts,
getting electricity and
trading across borders.
Ireland’s lead in
registering a property
and starting a business is
slim.
OECD rank: n/a
Source: World Bank
Figure 5.1.4 Perception of Government effectiveness56, 2016
Figure 5.1.4 ranks scores
in perceptions of the
quality of public
services, the quality and
independence of the
civil service, the quality
of policy formulation
and implementation.
Ireland is 19th in the
OECD and scores
88/100, above the OECD
average (85), but behind
the UK (92).
OECD rank: 19th
Source: World Bank
56 The Worldwide Governance Indicators (WGI) are a research dataset summarizing the views on the quality of governance provided by many enterprise,
citizen and expert survey respondents in industrial and developing countries. These data are gathered from several survey institutes, think tanks, non-
governmental organizations, international organizations, and private sector firms.
+7.76
+1.78
+1.33
0-1.24 -3.4
-5
-6.51-9.07
-12.36
40
50
60
70
80
90
100P
ayin
g T
axes
Reg
iste
ring
Pro
per
ty
Sta
rtin
g a
bu
sin
ess
Pro
tec
tin
g M
ino
rity
Inv
est
ors
Res
olvi
ng
Inso
lven
cy
Dea
ling
wit
h C
onst
ruct
ion
Per
mit
s
Get
ting
Cre
dit
Tra
din
g A
cro
ss B
ord
ers
Get
ting
Ele
ctri
city
Enf
orci
ng
Co
ntra
cts
Dis
tanc
e to
Fro
ntie
r S
core
0-1
00 (
100
is b
est)
Ireland UK
50
55
60
65
70
75
80
85
90
95
100
Sin
ga
po
re
Sw
itze
rla
nd
Den
mar
k
New
Zea
lan
d
Fin
lan
d
Net
her
lan
ds
Jap
an
Sw
eden
Ge
rma
ny
Lu
xe
mb
ou
rg UK
US
Fran
ce
Isra
el
Ire
lan
d
OE
CD
ave
rag
e
Sp
ain
Ko
rea
La
tvia
Po
lan
d
Ita
ly
Ch
ina
Per
cen
tile
Sco
re R
ank,
(0
-10
0)
2016 2012
116
Figure 5.1.6 Services Trade Restrictiveness Index (STRI), 2017
The STR Index
quantifies restrictions on
foreign entry,
restrictions to
movement of people,
barriers to competition
and regulatory
transparency. Figure
5.1.6 shows Ireland’s
score on the STRI in 22
sectors relative to the
UK and OECD average.
Ireland has a lower score
than the average in all
22 sectors.
OECD rank: n/a
Source: OECD
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
Insu
ran
ce
Tel
ecom
Sou
nd
reco
rdin
g
Dis
trib
uti
on
Com
mer
cial
ban
king
Co
uri
er
Mot
ion
pic
ture
s
Logi
stic
s cu
stom
s b
roke
rage
Lo
gis
tics
fre
igh
t fo
rwa
rdin
g
Eng
inee
ring
Co
nst
ruct
ion
Lo
gis
tics
sto
rag
e
Com
put
er
Rai
l fre
igh
t tr
ansp
ort
Logi
stic
s ca
rgo-
han
dlin
g
Bro
adca
stin
g
Ro
ad f
reig
ht
tra
nsp
ort
Mar
itim
e tr
ansp
ort
Arc
hite
ctur
e
Acc
ou
nti
ng
Leg
al
Air
tra
nsp
ort
Ind
ex (
0 o
pen
-1
clo
sed
)
Ireland UK OECD average
Figure 5.1.5 Perception of Regulatory Effectiveness, 2016
Figure 5.1.5 ranks scores
in perceptions of the
ability of the
government to
formulate and
implement sound
policies and regulations
that permit and
promote private sector
development. Ireland’s
score (94.71/100) has
improved since 2012 and
was 9th highest in the
OECD in 2016. The UK
was 7th with a score of
95.19.
OECD rank: 9th
Source: World Bank
40
50
60
70
80
90
100
Sin
gapo
re
New
Zea
land
Net
her
land
s
Sw
itze
rlan
d
Sw
eden
Finl
and
Ger
man
y
UK
Ire
lan
d
Luxe
mbo
urg
Den
mar
k
US
Jap
an
Isra
el
OEC
D a
vera
ge
Ko
rea
La
tvia
Fran
ce
Sp
ain
Po
lan
d
Ital
y
Chi
na
Per
cen
tile
Sco
re R
ank
(0-1
00
)
2016 2012
117
5.2 Macroeconomic Sustainability
Figure 5.2.1 Components of Irish economic growth, 2007-2017
Net exports continue to
be the main contributor
to Irish economic growth
since the recession,
except in 2016 when it
dropped significantly.
Contribution of
consumption and
government spending
has recovered since the
recession, but remain
modest. Investment
remained positive until
the dramatic drop in
2017.
Rank: n/a
Source: CSO
Figure 5.2.2 Gross Domestic Product and Gross National Income GNI*, Ireland 2007-2016
Source: Department of Finance
GDP at current market
prices decreased from
€197 billion in 2007 to
€167.6 in 2011. It has
increased every year
since and stood at
€275.6 billion in 2016.
Modified GNI (GNI*) at
current prices fell from
€168.6 billion in 2007 to
€131.3 billion in 2011,
before increasing over
the next 5 years to stand
at €189.2 billion in 2016.
GNI* as a percentage of
GDP decreased from
85% in 2007 to 68% in
2016.
Rank: n/a
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
20
07
2008
20
09
2010
20
11
2012
2013
2014
2015
2016
2017
Per
cen
tag
e o
f G
DP
gro
wth
Consumption Investment Government Net Exports
100
120
140
160
180
200
220
240
260
280
300
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
bill
ion
€
Gross Domestic Product (GDP) Modified Gross National Income (GNI*)
118
Figure 5.2.4 Government Debt to National Income Ratio, Ireland 2010-2017
General government
consolidated gross debt
as a percentage of GDP
in Ireland peaked at 24%
in 2012. The debt to
modified GNI (GNI*)
ratio in Ireland followed
a similar pattern and
rose steeply from 28% in
2007 to 157.8% in 2012,
before falling to 106% in
2016. The sharp fall in
the debt to GDP ratio in
2015 is due to the
unprecedented increase
in GDP.
Rank: n/a
Source: Department of Finance
0
20
40
60
80
100
120
140
160
180
2010 2011 2012 2013 2014 2015 2016 2017
Deb
t R
elat
ive
to In
com
e (%
)
General Government Debt-to-GDP General Government Debt-to-GNI*
Figure 5.2.3 General government gross debt, 2017
Driven by cost of
capitalisation of
financial institutions as
well as the Exchequer
running large deficits,
Ireland’s debt increased
significantly in the early
part of this decade
peaking at 119.5% in the
period 2012-2013.
However, the figure has
come down significantly
and stood at 68% in
2017. It is below the UK
87.7% and the Euro area
86.7%.
Euro area rank: 10th
Source: Eurostat
0
20
40
60
80
100
120
140D
en
ma
rk
Lat
via
Sw
ed
en
Pol
and
Ne
the
rla
nd
s
Finl
and
Ger
ma
ny
Irel
and
EU
Eu
ro a
rea
UK
Fra
nce
Spa
in
Ital
y
Per
cen
tag
e o
f G
DP
2017 2011
119
Figure 5.2.5 Government Consolidated Gross Debt per capita, 2007-2017
In 2007 , as we entered
into the economic crisis,
the Government
consolidated gross debt
per capita was €10,863.
At €42,073, in 2017
Ireland’s gross debt per
capita was the highest in
the EU.
EU rank: 1st
Source: NCC calculations based on Eurostat data
Figure 5.2.6 Balance of Payments Current Account as percentage of GDP 3-year average
The Balance of payment
current account
provides information
about the transactions
of a country with the
rest of the world.
Ireland's current account
has moved from deficit
in 2012 to surplus in
2017. The figure is
significantly above EU
average and has jumped
from 13th in 2012 to 1st
in 2017 in the ranking.
Euro area rank: 1st
Source: Eurostat
€0
€5,000
€10,000
€15,000
€20,000
€25,000
€30,000
€35,000
€40,000
€45,000Ir
elan
d
Be
lgiu
m
Ital
y
Fran
ce
Au
stri
a
UK
Gre
ece
Eur
o A
rea
Ge
rma
ny
Finl
and
Sp
ain EU
Ne
ther
lan
ds
Sw
eden
De
nm
ark
Po
lan
d
Lat
via
Go
vern
men
t d
ebt
per
cap
ita
2017 2007
-6
-4
-2
0
2
4
6
8
10
Ne
ther
lan
ds
Irel
an
d
Ge
rma
ny
De
nm
ark
Sw
eden
Eu
ro-a
rea
Ital
y
EU
Sp
ain
Lat
via
Fin
lan
d
Po
lan
d
Fra
nce UK
% o
f G
DP
3 y
ear
aver
age
2017 2012
120
Figure 5.2.7 Exports of goods and services as a percentage of GDP,201757
The Irish economy is
very open with elevated
levels of trade in both
goods and services.
Exports as a percentage
of GDP has increased
from just over 103% in
2011, to 124% in2015,
before sliding down to
121% in 2016. Ireland
has the second highest
level of exports as a
percentage of GDP in
the OECD after
Luxembourg.
OECD rank: 2nd
Source: OECD
Figure 5.2.8 Total general government expenditure by area, 2016
In 2016, the share of
social protection
expenditure in total
expenditure was 36.4%
in Ireland compared to
42.1% in the Euro area.
“Health” accounted for
19.2% of total
expenditure in Ireland,
the highest share in the
EU. Education
accounted for 12.1%,
compared to 9.7% in the
Euro area.
Rank: n/a
Source: Eurostat
57 Data for 2016 & 2017 for France and Spain are estimates
0
20
40
60
80
100
120
140
Irel
an
d
Ne
ther
lan
ds
Sw
itze
rlan
d
Lat
via
De
nm
ark
Po
lan
d
Ge
rma
ny
Eu
ro-a
rea
Sw
eden
So
uth
Ko
rea
Fin
lan
d
Sp
ain
Ital
y
Fra
nce UK
OE
CD
Ne
w Z
eal
an
d
Ch
ina
Jap
an US
Per
cen
tag
e o
f G
DP
2016 2011
0
10
20
30
40
50
60
70
80
90
100
EU
28
Eu
ro a
rea
De
nm
ark
Ge
rma
ny
Irel
an
d
Sp
ain
Fra
nce
Ital
y
Lat
via
Lu
xem
bo
urg
Ne
ther
lan
ds
Po
lan
d
Fin
lan
d
Sw
eden U
K
Sw
itze
rlan
d
Per
cen
tag
e o
f T
ota
l
Social protection Health
Education General public services
Economic affairs Environment protection
Housing and community amenities Recreation, culture and religion
Defence Public order and safety
121
Figure 5.2.9 Tax revenue in Ireland by category, 2017
Overall, Irish tax
revenues have increased
by €14.5bn (36.7%) in
the period 2012-2017. At
€20.5bn in 2017, Income
tax remains the
Government's largest
tax stream (40% of total
tax revenue).
Corporation tax revenue
has increased by 99% in
the period 2012-2017
and represents 15.7% of
total tax revenue.
Rank: n/a
Source: Department of Finance
Figure 5.2.10 Income from property taxes58, 2016
At 1.3% of GDP, revenue
from immovable
property in Ireland in
2016 was below the
Euro area-16 average of
1.8% and the OECD-33
average of 1.9%. The UK
is the best performer in
the OECD with revenue
generated from
immovable property
accounting for 4.1% of
GDP.
OECD-33 rank: 14th
Source: OECD
58 Tax on property is defined as recurrent and non-recurrent taxes on the use, ownership or transfer of property. These include taxes on immovable property
or net wealth, taxes on the change of ownership of property through inheritance or gift and taxes on financial and capital transactions. Empirical work by the
OECD suggests a tax and economic growth hierarchy with recurrent taxes on immovable property being the least distortive tax instrument, followed by
consumption taxes and other property taxes as well as environmentally-related taxes, personal income taxes and corporate income taxes.
€0
€4,000
€8,000
€12,000
€16,000
€20,000
Inco
me
Ta
x
VA
T
Co
rpo
rati
on
Tax
Exc
ise
Du
ty
CG
T
Lo
cal P
rop
ert
y T
ax
CA
T
Cu
sto
ms
Mill
ion
s (€
)
2017 2012
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Lat
via
Sw
eden
Ge
rma
ny
Irel
an
d
Po
lan
d
Fin
lan
d
Ne
ther
lan
ds
De
nm
ark
Sw
itze
rlan
d
OE
CD
-33
Ne
w Z
eal
an
d
Jap
an
Sp
ain US
Ital
y
Ko
rea
Fra
nce UK
Tax
Rev
enu
e as
a %
of
GD
P
2016 2011
122
Figure 5.2.11 Social security contributions (% GDP), 2016
Social security is
comprised of employee
and employer
contributions, self-
employed, non-
employed contributions
and some “unallocable”
contributions. Social
security contributions in
Ireland generate
significantly less
revenue as % of GDP
(3.9%), compared to the
OECD-33 (9.3%).
OECD-33 rank: 28th
Source: OECD
Figure 5.2.12 Balance of payments, current account (€ millions), 2017
The balance of
payments current
account is a measure of
Ireland's financial flows
with the rest of the
world. Ireland’s current
account was in deficit in
the 2nd quarter of 2017
of (-€872m). This is
largely related to a fall in
general trade relative to
Q1. For the year 2017,
the current account
surplus is €37,090m, an
increase of €27,897m on
2016.
Rank: n/a
Source: CSO
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00N
ew
Ze
ala
nd
De
nm
ark
Irel
an
d
US
UK
Sw
itze
rlan
d
So
uth
Ko
rea
Lat
via
OE
CD
-33
Sw
eden
Sp
ain
Po
lan
d
Fin
lan
d
Ital
y
Ge
rma
ny
Ne
ther
lan
ds
Co
ntr
ibu
tio
ns
(% o
f G
DP
)
2016 2012
-€10,000
-€5,000
€0
€5,000
€10,000
€15,000
€20,000
€25,000
€30,000
€35,000
€40,000
2011 2012 2013 2014 2015 2016 2017
Mill
ion
s (€
)
Current Account Balane
123
Figure 5.2.13 Gross debt to income ratio of households,201659
Between 2011 and 2016,
Irish households
reduced their debt as a
proportion of disposable
income by more than
60% – the largest
reduction in the EU.
Aggregate household
indebtedness has
declined in Ireland in
recent years in nominal
terms, but remains
above Euro area
average.
Euro-17 rank: 14th
Source: Eurostat
Figure 5.2.14 General government revenue, expenditure and deficit, 2017
In 2017, Irish
Government revenue
represents 25.7% of
GDP, a decline from
33.9% recorded in 2012.
Expenditure also
decreased from 41.9% in
2012 to26.1% of GDP in
2016. Ireland's deficit
level is on a steady
downward trend in
recent years with -0.4%
of GDP in 2017.
Euro area rank:
Deficit: 9th
Source: Eurostat
59 EU- 24 Data for Greece, Croatia, Hungary, Malta & Romania not available Euro area-17- Data for Greece, Malta not available Figures for France, Cyprus,
Netherland, Portugal for 2016 are provisional
0
50
100
150
200
250
300L
atvi
a
Po
lan
d
Ital
y
Ge
rma
ny
Fra
nce
Eu
ro a
rea
-17
Sp
ain EU
Fin
lan
d
UK
Irel
an
d
Sw
eden
Ne
ther
lan
ds
De
nm
ark
Gro
ss d
ebt
to in
com
e (%
)
2016 2011
-10
0
10
20
30
40
50
60
Ge
rma
ny
Sw
eden
Ne
ther
lan
ds
De
nm
ark
Irel
an
d
Lat
via
Fin
lan
d
EU
Eu
ro-a
rea
Po
lan
d
UK
Ital
y
Fra
nce
Sp
ain
Per
cen
tag
e o
f G
DP
Total Income Total Expenditure Net lending / borrowing
124
Figure 5.2.15 General government deficit/surplus (as percentage of GDP),2017
The chart shows that the
general government
deficit has fallen
significantly since 2012
(0.8% of the GDP). The
trend has continued
with another 2% fall
between 2016 (0.5%) to
2017(0.3%). Eight states
in the Euro area
recorded surpluses while
overall Euro area deficit
stands at 0.9%.
Euro area rank: 9th
Source: Eurostat
Figure 5.2.16 Ten – year government bonds (Interest Rates),2011-201860
The Irish sovereign bond
yield has come down
significantly in recent
years since the peak of
July 2011 (12.45%). 10-
year government bonds
yields are continuing to
trade in line with core
European sovereign
yields reflecting the
strong market
confidence in Ireland.
Rank: n/a
Source: ECB
60 The gap in the series for Greece on July 2015 is due to the lack of data owing to the market closure.
-12
-10
-8
-6
-4
-2
0
2
Ge
rma
ny
Sw
eden
Ne
ther
lan
ds
De
nm
ark
Irel
an
d
Lat
via
Fin
lan
d
Eu
ro-a
rea
EU
Po
lan
d
UK
Ital
y
Fra
nce
Sp
ain
Gen
eral
go
vern
men
t d
efic
it/s
urp
lus(
%G
DP
)
2017 2012
0%
5%
10%
15%
20%
25%
30%
20
11
-Ja
n
20
11
-Ap
r
20
11
-Ju
l
20
11
-Oc
t
20
12
-Ja
n
20
12
-Ap
r
20
12
-Ju
l
20
12
-Oct
20
13
-Ja
n
20
13
-Ap
r
20
13
-Ju
l
20
13
-Oc
t
20
14
-Ja
n
20
14
-Ap
r
20
14
-Ju
l
20
14
-Oc
t
20
15
-Ja
n
20
15
-Ap
r
20
15
-Ju
l
20
15
-Oc
t
20
16
-Ja
n
20
16
-Ap
r
20
16
-Ju
l
20
16
-Oc
t
20
17-
Jan
20
17-
Ap
r
20
17-
ul
20
17-
Oct
20
18
-Ja
n
Inte
rest
Ra
te
Germany Spain France Greece Ireland Portugal
125
Figure 5.2.17 Non-Financial Corporation Debt- to- GDP ratio, 2011-2017
Ireland has one of the
highest indebted NFC
sectors in Europe in
terms of debt -to-GDP
ratio but relatively less
indebted in terms of the
size of balance sheet.
This is due to the large
and increasing activities
of multinationals in
Ireland. In 2017, the
debt-to-GDP ratio of
Ireland's NFCs was
247.76 % and the Euro
area average was
(106.73%).
rank: n/a
Source: ECB
0
50
100
150
200
250
300
350
2011Q4 2012Q4 2013Q4 2014Q4 2015Q4 2016Q4 2017Q3
Deb
t-to
-gd
p r
atio
(N
FC
)
Ireland Euro area 19
126
5.3 Endowments
Figure 5.3.1 Median Population age, 2017
Due to ageing and
changes in family
formation, the median
age of the Irish and EU
population has steadily
increased in the last
decades. In 2017 Ireland
continues to have the
youngest population in
the EU (median age
36.9). The median age of
the EU population was
42.8.
Euro area rank: 1st
Source: Eurostat
Figure 5.3.2 Crude Birth Rate, 2016 61
The crude birth rate is the
ratio of the number of live
births during the year to
the average population in
that year. Ireland has
consistently topped the
EU rankings. The birth
rate in 2016 is 13.4,
considerably higher than
the birth rate in EU area-
19 (9.7). However,
Ireland's birth rate has
decreased in the period
2011-2016.
Euro area rank: 1st
Source: Eurostat
61 Data for EU-28, EU-19, France and Germany are provisional. Data for UK is estimated
30
32
34
36
38
40
42
44
46
48
50
Irel
an
d
UK
Po
lan
d
Sw
eden
Fra
nce
De
nm
ark
Sw
itze
rlan
d
Ne
ther
lan
ds
Fin
lan
d
EU
Lat
via
Sp
ain
Eu
ro-a
rea
Ge
rma
ny
Ital
y
Ag
e(Y
ears
)
2017 2013
0
2
4
6
8
10
12
14
16
18
Irel
an
d
Sw
eden U
K
Fra
nce
Lat
via
De
nm
ark
Sw
itze
rlan
d
EU
Po
lan
d
Ne
ther
lan
ds
Eu
ro-
are
a
Fin
lan
d
Ge
rma
ny
Sp
ain
Ital
y
Cru
de
bir
th r
ate
per
10
00
per
son
s
2016 2006 2011
127
Figure 5.3.3 Old age dependency ratio, 2015
The age dependency
ratio shows the ratio of
persons older than 64 to
the working-age
population. At 21.2%,
Ireland has the 7th
lowest ratio in the
OECD, and the 2nd
lowest in Europe.
Ireland's dependency
ratio is increasing
steadily but is still
expected to be below
the OECD average in
2025
OECD rank: 7th
Source: OECD
Figure 5.3.4 Net Migration (000s), 2001-201762
Total emigration from
Ireland continues to
decline and the
preliminary estimate for
2017 is 64,800. The
number of immigrants
increased to 84,600
resulting in total net
inward migration of
19,800. This is the third
year in a row Ireland
recorded a positive net
migration with significant
jump in the last two years.
Rank: n/a
Source: CSO
62 Data for 2017 is preliminary
0.0
10.0
20.0
30.0
40.0
50.0
60.0
Bra
zil
Ch
ina
So
uth
Ko
rea
Ire
lan
d
Po
lan
d
US
Ne
w Z
ea
lan
d
OE
CD
Hu
ng
ary
Sw
itz
erl
an
d
Sp
ain
Ne
the
rla
nd
s
UK
De
nm
ark
Fra
nc
e
Sw
ed
en
Ge
rma
ny
Fin
lan
d
Ita
ly
Jap
an
Ra
tio
of
old
er
de
pe
nd
en
ts-t
o-t
he
w
ork
ing
ag
e p
op
ula
tio
n(%
)
2015 2000 2025
-150
-100
-50
0
50
100
150
200
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
Mig
rati
on
(0
00
s)
Immigrants Emigrants Net migration
128
Figure 5.3.5 Net Migration 15 years and over by educational attainment, 2012-201763
Figure 5.3.5 shows the
estimated net migration
by educational
attainment. There is a
significant positive trend
with more people with
third level qualification
coming into Ireland
(48,600) than leaving
the country (24,900)
during the period 2012-
2017. The net migration
figure for 2017 was
19,200 an increase of
over 3000 from 2016.
Rank: n/a
Source: CSO
Figure 5.3.6 Population and labour force growth, 2012 - 201764
In the period 2012-2017,
Ireland’s population
increased at slower rate
(4.2%) than preceding 5-
year period (5.7%). In 2017
Ireland was fourth in the
euro area in terms of
increase in population.
Ireland’s labour force
growth has increased from
5.2% in 2007-2012, to 4.9%
in 2012-2017.
Euro area rank:
Population: 4th
Labour Force: 4th
Source: Eurostat and CSO
63Data for 2017 is preliminary. 64 Labour force is defined as the population ≥15 years of age
-25
-20
-15
-10
-5
0
5
10
15
20
25
30
2012 2013 2014 2015 2016 2017
Net
Mig
rati
on
(0
00
's)
Higher secondary and below Post leaving cert Third level Not stated
-8
-6
-4
-2
0
2
4
6
8
Sw
itz
erl
an
d
Sw
ed
en
Ire
lan
d
Ge
rma
ny
Fra
nc
e
UK
De
nm
ark
Ita
ly
EU
Eu
ro-a
rea
Ne
the
rla
nd
s
Fin
lan
d
Po
lan
d
Sp
ain
La
tvia
Pe
rce
nta
ge
C
ha
ng
e
Percentage change population Percentage change labour force
129
Figure 5.3.8 Population density, 2006 - 201666
In 2016 Ireland’s
population density was
69.3 persons per km2, up
from 62.5 persons in
2006. Ireland ‘s
population density is
relatively low compared
to UK (270.5) and the EU
(117.5). There is a
significant divergence in
population density
across regions in Ireland.
EU-28 rank: 22nd
Source: Eurostat
65 Data for France for the period 2008-2013 for male and female is not available 66 Data for EU 28 is estimated
0
100
200
300
400
500
600
Ne
ther
lan
ds
UK
Ge
rma
ny
Sw
itze
rlan
d
Ital
y
De
nm
ark
Po
lan
d
EU
Sp
ain
Irel
an
d
Lat
via
Sw
eden
Fin
lan
d
Per
son
per
sq
uar
e km
2016 2006
Figure 5.3.7 Labour Force Activity Rate65, 2008-2017
In 2017, the total labour
force activity rate was
72.6%, slightly below the
Euro area average (73.1%).
While the female rate
(66.6%) in 2017 is slightly
higher than in 2008 (66%), it
is still below the Euro area
average (67.7%). However,
the male rate is still above
the Euro area average
(78.5%) even though it has
come down significantly
during the same period
(83.6%-78.8%).
Euro area rank: Total 12th,
Male 8th, Females 13th
Source: Eurostat
50
55
60
65
70
75
80
85
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Ac
tiv
ity
ra
te -
% o
f to
tal
po
pu
lati
on
ag
ed
15
-64
Euro- area male Euro area total Euro area Female Ireland Male Ireland Total Ireland Female
130
Annex 1 Methodology
The Council uses a “competitiveness pyramid” to illustrate the several factors (essential conditions, policy
inputs and outputs), which combine to determine overall competitiveness and sustainable growth. Under this
framework, competitiveness is not an end but as a means of achieving improvements in living standards and
quality of life.
▪ At the top of the pyramid is sustainable growth in living standards – the fruits of competitiveness
success.
▪ Below this are the key policy outputs for achieving competitiveness, including business performance
(such as trade and investment), costs, productivity, and employment. These can be seen as representing
the metrics of current competitiveness.
▪ Below this in the third tier are the policy inputs covering three pillars of future competitiveness, namely
the business environment (taxation, regulation, and finance), physical infrastructure, clusters and firm
sophistication, and knowledge and talent.
▪ Finally, at the base of the pyramid are the essential conditions for competitiveness, these foundations are
based on institutions, macroeconomic sustainability, and endowments.
The 2018 Competitiveness Scorecard is set out in four main sections - sustainable growth (Chapter 2),
competitiveness outputs (Chapter 3), competitiveness inputs (Chapter 4) and essential conditions for
competitiveness (Chapter 5) – these correspond to the layers of the NCC’s competitiveness framework.
This report uses internationally comparable data, with the OECD, the EU, the UN, IMF and the WTO as the
sources. Indicators from specialist international competitiveness bodies (e.g. from the World Bank’s Doing
Business report, the World Economic Forum’s Global Competitiveness Report and the Institute for
131
Management Development’s World Competitiveness Yearbook) are also used. Where further depth is of
benefit, national sources such as the Central Bank and the CSO are used.
Subject to data availability, Ireland’s performance is benchmarked over time against 19 other countries.
Countries have been chosen to provide a mix of Euro area members (Finland, France, Germany, Italy, the
Netherlands and Spain), other non-Euro area European countries (Denmark, Sweden, Switzerland and the
UK), and newer EU member states (Latvia and Poland). Seven non-European countries which are global
leaders or are of a comparable size to Ireland are also included where data is available. These countries include
Brazil, China, Japan, South Korea, New Zealand, Singapore, and the US. This allows for comparison between
Ireland and many of its closest trading partners and competitors. Ireland is also compared to a relevant peer
group average – either the OECD, EU or the Euro area average67. Given the importance of the UK as a trading
partner and the potential implications of Brexit on the economy, Ireland’s performance relative to the UK is
also highlighted.
Measuring and benchmarking competitiveness performance relative to third countries highlights Ireland’s
strengths in several areas but is also intended to identify potential threats and elaborate on weaknesses and to
determine corrective actions. Benchmarking competitiveness is useful - it informs the policymaking process
and raises awareness of the importance of national competitiveness to Ireland’s wellbeing. We have
endeavoured to collect data from high-quality, internationally respected sources, and where necessary,
caveats on data are set out. Performance is generally considered over a five year or annual basis. In some
instances, a longer time frame is used, particularly considering changes in the economic cycle pre- and post-
recession. Nonetheless, there are limitations to comparative analysis:
▪ The most recent and up-to-date data is used. While every effort is made to ensure the timeliness of the
data, there is a natural lag in collating comparable official statistics across countries. As much of this data
is collected on an annual basis, there may be a time lag in capturing recent changes in cost levels.
▪ Competitiveness indices and rankings can seek to measure a vast range of issues. Generally, these indices
are based on weighting systems. The relevance and importance of the individual metrics included will vary
across countries. There are also factors that are difficult to benchmark (e.g. the benefit of being in the
GMT time zone or of speaking English fluently);
▪ Given the different historical contexts and economic, political and social goals of various countries, and
their differing physical geographies and resource endowments, it is not realistic or even desirable for any
country to seek to outperform other countries on all cost measures.
▪ There are no generic strategies to achieve an optimum level of cost competitiveness; as countries face
trade-offs and may be at different points in the economic cycle.
▪ Where possible, Irish cost levels are compared to a relevant peer group average (e.g. the OECD, EU and
Euro area average). Given the importance of the UK as a trading partner and the potential implications of
Brexit on the economy, the UK’s performance is also benchmarked. It is also worth noting that individual
cost metrics have strengths and weaknesses (i.e. in terms of definitions used, in how the data is collected
etc.). When analysing the individual metrics, it is important, therefore, to consider all the data as the
analysis of the individual metrics combine to tell a coherent story about Ireland’s current competitiveness
performance.
67 OECD rankings and averages are based on a maximum of 32 countries. Turkey and Mexico are not included in the analysis, in part due to how their size and
income levels affect averages and in part due to data availability.
The OECD-32 countries are as follows: Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece,
Hungary, Iceland, Ireland, Israel, Italy, Japan, South Korea, Luxembourg, Netherlands, New Zealand, Norway, Poland, Portugal, Slovakia, Slovenia, Spain,
Sweden, Switzerland, UK and the US.
National Competitiveness Council c/o Department of Business, Enterprise and Innovation 23 Kildare Street, Dublin 2, D02 TD30 Tel: 01 6312121 Email: info@competitiveness.ie Web: www.competitiveness.ie
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