An Inside Look Into Ireland’s Economy
Is their labour force fully-productive?
In terms of GDP per hours worked, which is a measure of labour productivity, Ireland is considered the most productive country in the world according to the OECD Compendium of Productivity Indicators published in 2023.
But, the question remains what is boosting these productivity figures?
It is being tied to a large presence of multinational firms that have opted to setup their headquarters in Ireland for its low corporate tax rate. Central to this point is the fact that there is a stark difference between domestic labour productivity and foreign sector productivity.
So, largely, it is foreign productivity that is relatively high compared to domestic productivity.
Productivity Needs To Be Measured Better
Most economists argue that the presence of these multinational firms are skewing the country’s GDP figures.
And it’s down flawed measurement of data.
The implied suggestion is to use a different measurement tool such as the GNI, which would place Ireland amongst its European counterparts.
The danger of relying on skewed data is that it sends policymakers in the wrong direction, incorrectly allocating resources in the economy.
