Professor John McHale:

The standard measure of productivity is where total output is measured by GDP divided by the number of workers so it is GDP per worker. One can have different measures of productivity at sectoral levels but that is the standard national measure of productivity. The projected growth for the Irish economy is reasonably strong and we will also have growth in the number of workers, but still the most likely scenario for productivity growth is reasonably encouraging. The point that we have been making is that even though the central scenario is reasonably encouraging there are huge risks around that given the uncertainties that exist in the world. In terms of this particular graph, it is complicated, but if one sees those red dots flattening out as the unemployment rate falls, that is looking at the Government's projections for wage growth. Even as the unemployment rate falls, one is not seeing faster growth in wages. What one really should be expecting moving up along the black line is that as the unemployment rate falls, pressures in the labour market build and wage growth increases.

This is part of our assessment of the projections for wage growth in the economy. We believe they are too weak. We would expect that as the unemployment rate falls - we certainly hope that continues - wage growth in the economy will be faster than is currently projected by the Department of Finance. That is what the graph is getting at.