Irish businesses treading a productivity tightrope
Irish businesses treading a productivity tightrope
The latest CSO Productivity report highlights how staffing and energy pressures continue to raise business costs in Ireland. This is having a major effect in the “Transportation and Storage” sector which creates longer term risks for all businesses in Ireland as logistics costs tend to raise factor costs throughout the economy.
Following the release of the CSO’s “Productivity in Ireland” Q1 2023 report, Chambers Ireland’s Head of Policy, Shane Conneely, said:
“Today’s productivity figures for 2023Q1 demonstrate how Irish businesses are treading a tightrope when it comes to maintaining productivity in the face of increased operating costs, factor costs, and labour costs.
“The underlying story for business is better than we had hoped, while productivity in the Domestic sector is down marginally, there was a continued increase in the numbers of hours worked.
“With unemployment at 4.1% for this period, this increase in labour hours is being met in part by the 100k people who entered the workforce in the previous 12 months.
“Growth in the workforce accounts for a large part of the reduction in productivity as people take on new roles in areas where they have limited experience.
“More concerning is the contribution of the “Transportation and Storage” sector where costs have been climbing, this is amplified by the increased costs of energy, and compounded by the reduced output of the Multinational manufacturing sector.
“With both overhead and marginal costs increasing in a tight labour market, businesses are clearly trying to reduce costs, as is seen in the reduced investment in capital. However, this can only be a short-term measure for firms as underinvestment in capital quickly erodes competitive advantage.”
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For Further Information:
Shane Conneely, Director of Policy and Communications, 086 3244 940 or email shane.conneely@chambers.ie
About Chambers Ireland:
Chambers Ireland is the voice of business throughout Ireland, with 40 member chambers across every major city, town and region of the island. Aligning our strategic priorities with the UN’s Sustainable Development Goals, our aim is to make places better to live, work and do business